Exhibit 4-J
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 11, 2002
AMONG
TRUSERV CORPORATION,
VARIOUS FINANCIAL INSTITUTIONS,
AND
BANK OF AMERICA, N.A.,
AS AGENT
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................... 1
1.2 Other Interpretive Provisions....................................................... 23
1.3 Accounting Principles............................................................... 24
ARTICLE II THE CREDITS..................................................................... 24
2.1 Amounts and Terms of Commitments.................................................... 24
2.2 Notes............................................................................... 24
2.3 Procedure for Borrowing............................................................. 25
2.4 Termination or Reduction of Commitments............................................. 25
2.5 Prepayments......................................................................... 26
2.6 Repayment........................................................................... 26
2.7 Interest............................................................................ 26
2.8 Fees................................................................................ 27
2.9 Computation of Fees and Interest.................................................... 28
2.10 Payments by the Company............................................................. 28
2.11 Payments by the Lenders to the Agent................................................ 28
2.12 Sharing of Payments, Etc............................................................ 29
2.13 Swing Line Commitment............................................................... 30
2.14 Borrowing Procedures for Swing Line Loans........................................... 30
2.15 Prepayment or Refunding of Swing Line Loans......................................... 30
2.16 Participations in Swing Line Loans.................................................. 31
2.17 Participation Obligations Unconditional............................................. 31
2.18 Conditions to Swing Line Loans...................................................... 32
ARTICLE III TAXES AND YIELD PROTECTION AND ILLEGALITY....................................... 32
3.1 Taxes............................................................................... 32
3.2 Increased Costs and Reduction of Return............................................. 33
3.3 Certificates of Lenders............................................................. 33
3.4 Substitution of Lenders............................................................. 33
3.5 Survival............................................................................ 34
ARTICLE IV CONDITIONS PRECEDENT............................................................ 34
4.1 Conditions to Effectiveness......................................................... 34
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(continued)
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4.3 Conditions to All Credit Extensions................................................. 36
ARTICLE V REPRESENTATIONS AND WARRANTIES.................................................. 36
5.1 Organization; Subsidiary Preferred Stock............................................ 36
5.2 Financial Statements................................................................ 36
5.3 Actions Pending..................................................................... 37
5.4 Outstanding Debt.................................................................... 37
5.5 Title to Properties................................................................. 37
5.6 Taxes............................................................................... 37
5.7 Conflicting Agreements and Other Matters............................................ 37
5.8 Use of Proceeds..................................................................... 38
5.9 ERISA............................................................................... 38
5.10 Governmental Consent................................................................ 38
5.11 Environmental Compliance............................................................ 38
5.12 Disclosure.......................................................................... 39
5.13 Priority of Obligations............................................................. 39
ARTICLE VI AFFIRMATIVE COVENANTS........................................................... 39
6.1 Financial Statements................................................................ 39
6.2 Certificates; Other Information..................................................... 40
6.3 Notices............................................................................. 41
6.4 Preservation of Corporate Existence, Etc............................................ 42
6.5 Maintenance of Property............................................................. 42
6.6 Insurance........................................................................... 42
6.7 Payment of Obligations.............................................................. 43
6.8 Compliance with Laws................................................................ 43
6.9 Compliance with ERISA............................................................... 43
6.10 Inspection of Property and Books and Records........................................ 43
6.11 Environmental Laws.................................................................. 43
6.12 Use of Proceeds..................................................................... 43
6.13 Covenant to Secure Obligations Equally.............................................. 44
6.14 Cooperative Status.................................................................. 44
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TABLE OF CONTENTS
(continued)
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6.15 Further Assurances.................................................................. 44
6.16 Insurance and Condemnation Proceeds................................................. 44
ARTICLE VII NEGATIVE COVENANTS.............................................................. 45
7.1 Fixed Charge Coverage Ratio......................................................... 45
7.2 Lien Restrictions................................................................... 45
7.3 Debt Restrictions................................................................... 46
7.4 Sale of Assets...................................................................... 47
7.5 Merger.............................................................................. 47
7.6 Restrictions on Transactions with Affiliates and Stockholders....................... 47
7.7 Issuance of Stock by Subsidiaries................................................... 47
7.8 Compliance with ERISA............................................................... 47
7.9 No Change in Subordination Terms, etc............................................... 48
7.10 Nature of Business.................................................................. 48
7.11 Restricted Investments.............................................................. 48
7.12 Restricted Payments................................................................. 49
7.13 Use of Proceeds..................................................................... 49
7.14 Interest Coverage Ratio............................................................. 50
7.15 Minimum Sales....................................................................... 50
7.16 Capital Expenditures................................................................ 51
7.17 Minimum Adjusted EBITDA............................................................. 51
7.19 Amendments to Financing Agreements.................................................. 52
7.20 Subordinated Notes.................................................................. 53
7.21 Chief Executive Officer............................................................. 53
7.22 Sale of Hagerstown Facility......................................................... 53
ARTICLE VIII EVENTS OF DEFAULT............................................................... 53
8.1 Event of Default.................................................................... 53
8.2 Remedies............................................................................ 55
8.3 Rights Not Exclusive................................................................ 56
ARTICLE IX THE AGENT....................................................................... 56
9.1 Appointment and Authorization; "Agent".............................................. 56
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TABLE OF CONTENTS
(continued)
PAGE
9.2 Delegation of Duties................................................................ 56
9.3 Liability of Agent.................................................................. 57
9.4 Reliance by Agent................................................................... 57
9.5 Notice of Default................................................................... 57
9.6 Credit Decision..................................................................... 58
9.7 Indemnification of Agent............................................................ 58
9.8 Agent in Individual Capacity........................................................ 58
9.9 Successor Agent..................................................................... 59
9.10 Withholding Tax..................................................................... 59
ARTICLE X MISCELLANEOUS................................................................... 61
10.1 Amendments and Waivers.............................................................. 61
10.2 Notices............................................................................. 61
10.3 No Waiver; Cumulative Remedies...................................................... 62
10.4 Costs and Expenses.................................................................. 62
10.5 Company Indemnification............................................................. 63
10.6 Payments Set Aside.................................................................. 63
10.7 Successors and Assigns.............................................................. 63
10.8 Assignments, Participations, etc.................................................... 64
10.9 Confidentiality..................................................................... 65
10.10 Set-off............................................................................. 65
10.11 Automatic Debits of Fees............................................................ 66
10.12 Notification of Addresses, Lending Offices, Etc..................................... 66
10.13 Counterparts........................................................................ 66
10.14 Severability........................................................................ 66
10.15 No Third Parties Benefited.......................................................... 66
10.16 Governing Law and Jurisdiction...................................................... 66
10.17 Waiver of Jury Trial................................................................ 67
10.18 Judgment............................................................................ 67
10.19 Entire Agreement.................................................................... 68
10.20 Amendment and Restatement........................................................... 68
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TABLE OF CONTENTS
(continued)
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10.21 Collateral Matters.................................................................. 68
SCHEDULES
Schedule 1.1(a) Borrowing Base
Schedule 1.1(b) Proprietary Rights
Schedule 2.1 Commitments and Pro Rata Shares
Schedule 5.3 Pending Actions
Schedule 4.1(f) Material Adverse Effect
Schedule 5.7 Restrictive Agreements
Schedule 6.16 Mortgaged Property
Schedule 7.2(d) Liens
Schedule 7.2(l) Specified Facilities
Schedule 7.4 Designated Permitted Asset Sales
Schedule 7.10 Business Activities
Schedule 7.11 Investments
Schedule 7.12 Adjusted EBITDA
Schedule 10.2 Offshore and Domestic Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B [Intentionally Deleted]
Exhibit C Form of Consent
Exhibit D Form of First Amendment to Security Agreement
Exhibit E Form of Compliance Certificate
Exhibit F Form of Legal Opinion of Counsel to the Company
Exhibit G Form of Assignment and Acceptance
Exhibit H-1 Form of Series A Note
Exhibit H-2 Form of Series B Note
Exhibit I Form of Subordinated Note
Exhibit J Form of Trademark Security Agreement
Exhibit K Form of Guaranty
Exhibit L Form of Pledge Agreement
Exhibit M Form of Security Agreement
Exhibit N Form of Intercreditor Agreement
Exhibit O Form of Borrowing Base Certificate
Exhibit P Form of Lumber Note Notice
Exhibit Q Form of Excess Cash Flow Report
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
April 11, 2002, among TRUSERV CORPORATION, a Delaware corporation (the
"Company"), the several financial institutions from time to time party to this
Agreement (collectively the "Lenders"; individually each a "Lender"), and BANK
OF AMERICA, N.A. (in its individual capacity, "Bank of America"), as Swing Line
Lender and Agent.
WHEREAS, the Company, the Lenders and Bank of America, as agent, are
parties to an Amended and Restated Credit Agreement dated as of April 14, 2000
(the "Original Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate the Original
Agreement to make various changes thereto;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following
meanings:
Account Debtor means any Person who is obligated to the Company or
any Subsidiary under, with respect to, or on account of an Account
Receivable.
Account Receivable means, with respect to any Person, any right of
such Person to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or
not yet earned by performance.
Adjusted EBITDA means, for any period, EBITDA plus Restructuring
Charges to extent taken in such period.
Adjusted Cash Flow means, with respect to any period, Consolidated
Net Earnings for such period less (a) the sum of (i) to extent not already
deducted in the calculation of Consolidated Net Earnings, gains from Asset
Sales realized during such period, (ii) Capital Expenditures during such
period, (iii) amortization of all Indebtedness (including amortization of
Indebtedness from payments of Excess Cash Flow but excluding amortization
of Indebtedness from the proceeds of Asset Sales) for such period, (iv)
patronage dividends accrued in the current fiscal year to be paid in the
following fiscal year, (v) any increase in restricted cash during such
period and (vi) Restructuring Charges taken during such period; plus (b)
the sum of (i) to the extent deducted in the calculation of Consolidated
Net Earnings, losses from Asset Sales realized during such period, (ii)
depreciation and amortization expense for such period, (iii) non-cash
income tax expense for such period and (iv) any decrease in restricted
cash during such period.
Adjusted Working Capital means, at any date of determination, the
result of (a) current assets of the Borrower and its Subsidiaries at such
date, minus (b) without duplication, cash and restricted cash of the
Borrower and its Subsidiaries at such date, minus (c) current liabilities
of the Borrower and its Subsidiaries at such date plus (d) the sum of (i)
the current portion of Subordinated Debt and other Debt at such date, (ii)
accrued and unpaid patronage dividends at such date, (iii) the value of
current assets purchased, transferred or assumed in connection with Asset
Sales consummated during such period, minus (e) the value of current
liabilities purchased, transferred or assumed in connection with Asset
Sales consummated during such period.
Adjusted Working Capital Change means, for any fiscal year, the
result of (a) Adjusted Working Capital for such fiscal year minus (b)
Adjusted Working Capital for the fiscal year immediately preceding such
fiscal year.
Affected Lender - see Section 3.4.
Affiliate means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
such other Person, whether through the ownership of voting securities,
membership interests, by contract, or otherwise. A Person that is or was a
Member, Substantial Stockholder or material customer shall not be deemed
an Affiliate solely on account of such status.
Agent means BofA in its capacity as agent for the Lenders hereunder,
and any successor agent arising under Section 9.9.
Agent-Related Persons means the Agent and any successor thereto in
such capacity hereunder, together with their respective Affiliates, and
the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
Agent's Fee Letter - see subsection 2.8(a).
Agent's Payment Office means the address for payments to the Agent
set forth on Schedule 10.2 or such other address as the Agent may from
time to time specify in accordance with Section 10.2.
Agreement means this Second Amended and Restated Credit Agreement.
Asset Sale means the sale, lease, assignment, transfer or other
disposition for value (each a "Disposition") by the Company or any
Subsidiary to any Person (other than the Company or a Subsidiary) of any
assets of the Company or such Subsidiary, other than (i) the Disposition
of inventory in the ordinary course of business, (ii) the Disposition of
inventory or receivables to a Guarantor or to the Company, (iii) leases or
subleases entered into in the ordinary course of business, (iv) the
licensing of Proprietary
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Rights by the Company or any Subsidiary in the ordinary course of business
(so long as such licensing does not prevent the Company or such Subsidiary
from using Proprietary Rights material to the business of the Company or
such Subsidiary) or (v) the Disposition of other assets having a value not
exceeding $250,000 in the aggregate in any fiscal year.
Assignee - see subsection 10.8(a).
Attorney Costs means and includes all fees and charges of any law
firm or other external counsel, and, without duplication, the allocated
cost of internal legal services and all disbursements of internal counsel.
Bankruptcy Code means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
Bankruptcy Law - see subsection 8.1(h).
Base Rate means, for any day, a per annum rate equal to the higher
of: (a) the sum of 0.50% plus the latest Federal Funds Rate; and (b) the
rate of interest in effect for such day as publicly announced from time to
time by BofA as its "prime rate." (The "prime rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return,
general economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the prime rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
Benefited Obligations has the meaning set forth in the Intercreditor
Agreement.
Benefited Parties has the meaning set forth in the Intercreditor
Agreement.
BofA means Bank of America, N.A., a national banking association.
Borrowing means a borrowing hereunder consisting of Committed Loans
made to the Company on the same day by one or more Lenders under Article
II.
Borrowing Base means, at any time as of the last day of the prior
week, the total of (i) 85% of all Eligible Accounts Receivable plus (ii)
50% of all Eligible Inventory plus (iii) 60% of the appraised value of
Eligible Real Estate plus (iv) 50% of the appraised value of Eligible
Machinery and Equipment plus (v) the Overadvance Amount minus (vi) the
aggregate amount of Reserves. The Borrowing Base shall be adjusted on a
periodic basis as set forth on Schedule 1.1(a) or as often as the Agent or
the Required Lenders may request. The above percentages may be decreased
from time to time by the Agent in its sole discretion after notice to the
Company.
Borrowing Base Certificate means a certificate substantially in the
form of Exhibit O.
Borrowing Date means any date on which a Borrowing occurs or a Swing
Line Loan is made under Section 2.3 or 2.14.
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Business Day means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City, Chicago or Charlotte are
authorized or required by law to close.
Business Plan means the business plan delivered by the Company to
the Agent on March 20, 2002.
Capital Adequacy Regulation means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law, in
each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
Capital Expenditures means, for any period, the sum without
duplication of (a) the aggregate amount of all expenditures of the Company
and its Subsidiaries for fixed or capital assets made during such period
which, in accordance with GAAP, would be classified as capital
expenditures; and (b) the aggregate amount of all Capitalized Lease
Obligations incurred during such period excluding, in each case,
expenditures made pursuant to Section 6.16(ii) hereof and refinancings or
renewals of Capitalized Lease Obligations in effect on the Closing Date.
Capitalized Lease Obligation means any rental obligation which,
under GAAP, is or will be required to be capitalized on the books of the
Company or any Subsidiary, taken at the amount thereof accounted for as
indebtedness (net of interest expense).
Closing Date means the date on which all conditions precedent set
forth in Section 4.1 are satisfied or waived by all Lenders (or, in the
case of subsection 4.1(e), waived by the Person entitled to receive the
applicable payment).
Code means the Internal Revenue Code of 1986.
Collateral Agent means BofA in its capacity as collateral agent
under the Intercreditor Agreement, together with any successor thereto in
such capacity.
Collateral Documents means the Security Agreement, the Trademark
Security Agreement, the Pledge Agreement, each Mortgage and any other
document or instrument pursuant to which the Company or any Guarantor
grants to the Collateral Agent, for the benefit of the Benefited Parties,
a security interest in any of its property to secure the payment of any of
the Benefited Obligations.
Commitment - see Section 2.1.
Committed Loan means a Loan by a Lender to the Company under Section
2.1.
Company - see the Preamble.
Compliance Certificate means a certificate substantially in the form
of Exhibit E.
Consent means the consent of the Guarantors in the form of Exhibit
C.
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Consolidated Net Earnings means with respect to any period:
(i) consolidated gross revenues of the Company and its
Subsidiaries, minus
(ii) all operating and non-operating expenses of the Company and
its Subsidiaries including all charges of a proper character (including
current and deferred taxes on income, provision for taxes on unremitted
foreign earnings which are included in gross revenues, current additions
to reserves and merger integration costs),
but not including in gross revenues:
(a) any extraordinary gains or losses (net of expenses and
taxes applicable thereto) resulting from the sale, conversion or
other disposition of capital assets (i.e., assets other than current
assets);
(b) any gains resulting from the appraised write-up of
assets;
(c) any equity of the Company or any Subsidiary in the
unremitted earnings of any corporation which is not a Subsidiary;
(d) any earnings of any Person acquired by the Company or
any Subsidiary through purchase, merger or consolidation or
otherwise for any year prior to the year of acquisition; or
(e) any deferred credit representing the excess of equity in
any Subsidiary at the date of acquisition over the cost of the
investment in such Subsidiary;
all determined in accordance with GAAP.
Contractual Obligation means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
Credit Extension means and includes the making of any Loan
hereunder.
Debt means Short Term Debt and Funded Debt.
Designated Permitted Asset Sale means the sale or other disposition
of the properties set forth on Schedule 7.4.
Dollars, dollars and $ each mean lawful money of the United States.
EBITDA means, for any period, Consolidated Net Earnings for such
period plus, to the extent deducted in computing such Consolidated Net
Earnings, interest expense (including rent expense with respect to
Synthetic Leases), taxes, depreciation and amortization.
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Effective Date - see Section 4.1.
Eligible Accounts Receivable mean all Accounts Receivable of the
Company and its Subsidiaries, other than Accounts Receivable which the
Agent in the exercise of its reasonable commercial discretion determines
not to be Eligible Accounts Receivable. Without limiting the discretion of
the Agent to establish other criteria of ineligibility, Eligible Accounts
Receivable shall not include any Account Receivable:
(a) which is (i) due more than 180 days beyond the issuance of the
applicable Borrowing Base Certificate or (ii) more than 60 days past due;
(b) with respect to which any of the representations, warranties,
covenants, and agreements contained in the Security Agreement are
incorrect in any material respect or have been breached in any material
respect;
(c) with respect to which Account Receivable (or any other Account
Receivable due from such Account Debtor), in whole or in part, a check,
promissory note, draft, trade acceptance or other instrument for the
payment of money has been received, presented for payment and returned
uncollected for any reason;
(d) which represents a progress billing (as hereinafter defined)
or as to which the Company or any Subsidiary has extended the time for
payment beyond original terms without the consent of the Agent; for the
purposes hereof, "progress billing" means any invoice for goods sold or
leased or services rendered under a contract or agreement pursuant to
which the Account Debtor's obligation to pay such invoice is conditioned
upon the completion by the Company or any Subsidiary of any further
performance under the contract or agreement; provided that "progress
billing" shall not refer to the Company's practice of billing an Account
Debtor for program fees, such as advertising assessments, on a percentage
of sales, straight-line or other periodic basis;
(e) with respect to which any one or more of the following events
has occurred to the Account Debtor on such Account Receivable: death or
judicial declaration of incompetency of an Account Debtor who is an
individual; the filing by or against the Account Debtor of a request or
petition for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as a bankrupt, winding-up, or other relief under the
bankruptcy, insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter in
effect; the making of any general assignment by the Account Debtor for the
benefit of creditors; the appointment of a receiver or trustee for the
Account Debtor or for all or any substantial portion of the assets of the
Account Debtor, including, without limitation, the appointment of or
taking possession by a "custodian," as defined in the Bankruptcy Code; the
institution by or against the Account Debtor of any other type of
insolvency proceeding (under the bankruptcy laws of the United States or
otherwise) or of any formal or informal proceeding for the dissolution or
liquidation of, settlement of claims against, or winding up of affairs of,
the Account Debtor; the sale, assignment, or transfer of all or any
material part of the assets of the Account Debtor; the nonpayment
generally by the Account Debtor of its debts as they become due; or the
cessation of the business of the
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Account Debtor as a going concern, in each case unless such Account
Receivable is supported by a letter of credit satisfactory to the Agent in
its sole discretion;
(f) if twenty-five percent (25%) or more of the aggregate Dollar
amount of outstanding Accounts Receivable owed at such time by the Account
Debtor thereon is classified as ineligible under clause (a)(ii) above;
(g) owed by an Account Debtor which: (i) does not maintain its
chief executive office in the United States of America or Canada (other
than the Province of Quebec or Newfoundland) (unless the Account Debtor's
obligations are supported by letters of credit or cash collateral deposits
satisfactory to the Agent in its sole discretion); or (ii) is not
organized under the laws of the United States of America or any state
thereof or Canada or any province thereof (other than the Province of
Quebec or Newfoundland) (unless the Account Debtor's obligations are
supported by letters of credit or cash collateral deposits satisfactory to
the Agent); or (iii) is the government of any foreign country or sovereign
state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or
other instrumentality thereof; except to the extent that such Account
Receivable is secured or payable by a letter of credit satisfactory to the
Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of
the Company;
(i) except as provided in clause (k) below, with respect to which
either the perfection, enforceability, or validity of the Collateral
Agent's Liens in such Account Receivable, or the Collateral Agent's right
or ability to obtain direct payment to the Agent of the proceeds of such
Account, is governed by any federal, state, or local statutory
requirements other than those of the UCC;
(j) owed by an Account Debtor to which the Company or any of its
Subsidiaries, is indebted in any way, or which is subject to any right of
setoff or recoupment by the Account Debtor, unless the Account Debtor has
entered into an agreement acceptable to the Agent to waive setoff rights;
or if the Account Debtor thereon has disputed liability or made any claim
with respect to any other Account Receivable due from such Account Debtor;
but in each such case only to the extent of such indebtedness, setoff,
recoupment, dispute, or claim;
(k) owed by the government of the United States of America, or any
department, agency, public corporation, or other instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 3727 et seq.), and any other steps necessary to perfect the
Agent's Liens therein, have been complied with to the Agent's satisfaction
with respect to such Account;
(l) owed by any state, municipality, or other political
subdivision of the United States of America, or any department, agency,
public corporation, or other instrumentality thereof and as to which the
Agent determines that its Lien therein is not or cannot be perfected;
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(m) which represents a sale on a xxxx-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or
return basis;
(n) which is evidenced by a promissory note or other instrument or
by chattel paper;
(o) if the Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account Receivable is
impaired or that the Account Receivable may not be paid by reason of the
Account Debtor's financial inability to pay;
(p) with respect to which the Account Debtor is located in any
state requiring the filing of a Notice of Business Activities Report or
similar report in order to permit the Company or a Subsidiary to seek
judicial enforcement in such State of payment of such Account Receivable,
unless such Company or a Subsidiary has qualified to do business in such
state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;
(q) which arises out of a sale not made in the ordinary course of
the business of the Company and its Subsidiaries;
(r) with respect to which the goods giving rise to such Account
Receivable have not been shipped and delivered to and accepted by the
Account Debtor or the services giving rise to such Account Receivable have
not been performed by the Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods
or services;
(s) owed by an Account Debtor which is obligated to the Company
and its Subsidiaries respecting Accounts Receivable the aggregate unpaid
balance of which exceeds ten percent (10%) of the aggregate unpaid balance
of all Accounts owed to the Company and its Subsidiaries at such time by
all of the Account Debtors of the Company and its Subsidiaries, but only
to the extent of such excess; or
(t) which is not subject to a first priority and perfected
security interest in favor of the Agent for the benefit of the Lenders.
An Account Receivable of the Company or any Subsidiary which is at
any time an Eligible Account Receivable but which subsequently fails to
meet any of the foregoing requirements shall forthwith cease to be an
Eligible Account Receivable unless otherwise agreed by the Required
Lenders.
Eligible Inventory means all Inventory of the Company and its
Subsidiaries, valued at the lower of cost (on a first-in, first-out basis)
or market, other than Inventory which the Agent, in its reasonable
discretion, determines not to be Eligible Inventory. Without limiting the
discretion of the Agent to establish other criteria of ineligibility,
Eligible Inventory shall not include any Inventory:
(a) that is not owned by the Company or a Subsidiary;
8
(b) that is not subject to the Collateral Agent's Liens, which are
perfected as to such Inventory, or that are subject to any other Lien
whatsoever;
(c) that does not consist of finished goods or raw materials;
(d) that consists of work-in-process, samples, prototypes,
supplies, packing and shipping materials, labels or sales aids or
inventory capitalization, including freight and insurance costs;
(e) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority, having
regulatory authority over such goods, their use or sale;
(f) that is not currently either usable or salable, at prices
approximating at least cost, in the normal course of the business of the
Company and its Subsidiaries, or that is slow moving or stale;
(g) that is obsolete, no longer sold in the ordinary course of
business or returned or repossessed or used goods taken in trade;
(h) that is more than a six (6) month forecasted supply;
(i) that is located outside the United States of America;
(j) that is located in a public warehouse or in possession of a
bailee or in a facility leased by the Company and its Subsidiaries, if the
warehouseman, or the bailee, or the lessor has not delivered to the Agent,
if requested by the Agent, a subordination agreement in form and substance
satisfactory to the Agent or if a reserve for rents or storage charges has
not been established for Inventory at that location;
(k) that contains or bears any Proprietary Rights licensed to the
Company and its Subsidiaries by any Person, if the Agent is not satisfied
that the Collateral Agent may sell or otherwise dispose of such Inventory
in accordance with the terms of the Security Agreement without infringing
the rights of the licensor of such Proprietary Rights or violating any
contract with such licensor (and without payment of any royalties other
than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and, as to which
the Company and its Subsidiaries have not delivered to the Collateral
Agent a consent or sublicense agreement from such licensor in form and
substance acceptable to the Agent if requested;
(l) that is not reflected in the details of a current perpetual
inventory report;
(m) that consists of raw materials or work-in-process related to
paint manufacturing; or
(n) that is Inventory placed on consignment.
9
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
Inventory of the Company or any Subsidiary which is at any time
Eligible Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible Inventory
unless otherwise agreed by the Required Lenders.
Eligible Machinery and Equipment means all machinery and equipment
of the Company and its Subsidiaries valued at market (based upon
appraisals in effect on the date hereof, which appraisals shall be updated
in a manner acceptable to the Agent no later than August 31, 2002, and
annually thereafter), other than machinery and equipment which the Agent,
in its reasonable discretion, determines not to be Eligible Machinery and
Equipment. Without limiting the discretion of the Agent to establish other
criteria of ineligibility, Eligible Machinery and Equipment shall not
include any machinery and equipment:
(a) that is not owned by the Company or a Subsidiary,
(b) that is not subject to the Collateral Agent's Liens, which are
perfected as to such machinery and equipment; or
(c) that is not in good condition, is unmerchantable, or does not
meet all standards imposed by any Governmental Authority having regulatory
authority over such machinery and equipment.
Any machinery and equipment of the Company or any Subsidiary which
is at any time Eligible Machinery and Equipment but fails to meet any of
the foregoing requirements shall cease to be Eligible Machinery and
Equipment unless otherwise agreed by the Required Lenders.
Eligible Real Estate means all real estate of the Company and its
Subsidiaries, valued at market (based upon appraisals in effect on the
date hereof, which appraisals shall be updated in a manner acceptable to
the Agent no later than August 31, 2002, and annually thereafter), other
than real estate which the Agent, in its reasonable discretion, determines
not to be Eligible Real Estate, it being understood that the Hagerstown
Facility shall not be included in Eligible Real Estate. Without limiting
the discretion of the Agent to establish other criteria of ineligibility,
Eligible Real Estate shall not include any real estate:
(a) that is not owned by the Company or a Subsidiary;
(b) that is not subject to the Collateral Agent's Liens, which are
perfected as to such real estate;
(c) that is located in a flood zone and is not covered by flood
insurance coverage reasonably acceptable to the Agent; or
10
(d) that is subject to title defects, restrictions, Environmental
Claims or other liabilities unsatisfactory to the Agent in its sole
discretion.
Any real estate of the Company or any Subsidiary which is at any
time Eligible Real Estate but fails to meet any of the foregoing
requirements shall cease to be Eligible Real Estate unless otherwise
agreed by the Required Lenders.
Environmental Claims means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment.
Environmental Laws means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with
all administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
ERISA means the Employee Retirement Income Security Act of 1974 and
regulations promulgated thereunder.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a substantial cessation of operations which is treated as such a
withdrawal; (c) a complete or partial withdrawal by the Company or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
Event of Default - see Section 8.1.
Excess Cash Flow means, for any period, 80% of the result of (a)
Adjusted Cash Flow for such period, plus (b) any negative Adjusted Working
Capital Change for such period, minus (c) any positive Adjusted Working
Capital Change for such period.
11
Exchange Act means the Securities Exchange Act of 1934 and
regulations promulgated thereunder.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
First Amendment to Security Agreement means a first amendment to
security agreement substantially in the form attached as Exhibit D.
Fixed Charge Coverage Ratio means, as of the last day of any fiscal
quarter, the ratio of
(a) the result, for the period of four consecutive fiscal quarters
ending on such day, of (i) Consolidated Net Earnings, plus (ii) to the
extent deducted in determining such Consolidated Net Earnings, interest
expense (including rent expense with respect to Synthetic Leases), taxes,
depreciation and amortization, plus (iii) Restructuring Charges taken
during such period, minus (iv) gains from Asset Sales realized during such
period, to the extent included in determining Consolidated Net Earnings,
plus (v) losses from Asset Sales realized during such period, to the
extent deducted in determining Consolidated Net Earnings
to
(b) the sum for such period of (i) scheduled payments of principal
with respect to the Shelf Notes and the Senior Notes (each as defined in
the Intercreditor Agreement), (ii) interest expense (including rent
expense with respect to Synthetic Leases but excluding interest expense
with respect to Make-Whole Obligations and new Make-Whole Obligations of
principal arising in such period) and (iii) Capital Expenditures;
each as determined for the Company and its Subsidiaries on a
consolidated basis. The amount in each of clauses (a) and (b) shall be
calculated for the period ending (x) March 31, 2002 based upon such period
and then multiplied by four, (y) June 30, 2002 based upon the period of
two consecutive fiscal quarters ending on such date and then multiplied by
two and (z) September 30, 2002 based upon the period of three consecutive
fiscal quarters ending on such date and then multiplied by one and
one-third.
FRB means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
Funded Debt means and includes, (i) any obligation payable more than
one year from the date of creation thereof which under GAAP is shown on a
balance sheet as a
12
liability (including Capitalized Lease Obligations, notes payable to
Members and other Subordinated Debt but excluding reserves for deferred
income taxes and other reserves to the extent that such reserves do not
constitute an obligation); (ii) indebtedness payable more than one year
from the date of creation thereof which is secured by any lien on property
owned by the Company or any Subsidiary and (iii) Guarantees (excluding
Guarantees of loans made to Members in an amount not exceeding in the
aggregate $20,000,000).
Further Taxes means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account
of amounts payable or paid pursuant to Section 3.1.
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the date of determination.
Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
Guarantee means, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including,
without limitation, any such obligation directly or indirectly guaranteed,
endorsed (other than for collection of deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or in
respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by
such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor,
or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or any balance
sheet or other financial condition of the obligor of such obligation, or
to make payment for any products, materials or supplies or for any
transportation or services regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected against loss in
respect thereof. The amount of any Guarantee shall be equal to the
outstanding principal amount of the obligation guaranteed or such lesser
amount to which the maximum exposure of the guarantor shall have been
specifically limited.
13
Guarantor means, on any day, each Subsidiary that has executed a
counterpart of the Guaranty on or prior to that day (or is required to
execute a counterpart of the Guaranty on that day).
Guaranty means the Guaranty dated April 14, 2000 executed by various
Subsidiaries.
Hagerstown Facility means the distribution center located at 00000
Xxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx.
Hardship Case Payment means the payment to any stockholder that has
notified the Company of his termination and requested an accelerated
redemption payment of any portion of his stock and/or Subordinated Debt
investment pursuant to a hardship case request authorized in the by-laws
of the Company. Such redemption payment must be administered by a
Responsible Officer and made according to the Company's hardship case
guidelines.
Inactive Subsidiary means any Subsidiary which does not actively
conduct business and which has less than $100,000 of assets.
Indebtedness means, with respect to any Person, without duplication,
(i) all items (excluding items of contingency reserves or of reserves for
deferred income taxes) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance
sheet of such Person as of the date on which Indebtedness is to be
determined, (ii) all indebtedness secured by any Lien on any property or
asset owned or held by such Person subject thereto, whether or not the
indebtedness secured thereby shall have been assumed, (iii) all
indebtedness of others with respect to which such Person has become liable
by way of Guarantee and (iv) obligations of such Person with respect to
Synthetic Leases.
Indemnified Liabilities - see Section 10.5.
Indemnified Person - see Section 10.5.
Independent Auditor - see subsection 6.1(a).
Insolvency Proceeding means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
Intercreditor Agreement means the First Amended and Restated
Intercreditor Agreement dated as of April 11, 2002, among the Agent, the
Collateral Agent and various other parties, substantially in the form of
Exhibit N.
14
Interest Coverage Ratio means, as of the last day of any fiscal
quarter, the ratio of (a) the sum, for the period of four consecutive
fiscal quarters ending on such day, of (i) Consolidated Net Earnings plus
(ii) to the extent deducted in determining such Consolidated Net Earnings,
interest expense (including rent expense with respect to Synthetic
Leases), taxes, depreciation and amortization, plus (iii) Restructuring
Charges less (iv) gains from Asset Sales, to the extent included in
determining Consolidated Net Earnings plus (v) losses from Asset Sales, to
the extent deducted in determining Consolidated Net Earnings to (b)
interest expense for such period (including rent expense with respect to
Synthetic Leases but excluding interest expense with respect to Make-Whole
Obligations and new Make-Whole Obligations of principal arising in such
period); each as determined for the Company and its Subsidiaries on a
consolidated basis. Notwithstanding the foregoing, the amount in each of
clauses (a) and (b) shall be calculated for the period ending (x) March
31, 2002 based upon such period and then multiplied by four, (y) June 30,
2002 based upon the period of two consecutive fiscal quarters ending on
such date and then multiplied by two and (z) September 30, 2002 based upon
the period of three consecutive fiscal quarters ending on such date and
then multiplied by one and one-third.
Interest Payment Date means the last day of each calendar quarter.
Inventory has the meaning given to it in the UCC.
Investments means any loan or advance to, or ownership, purchase or
acquisition of any security (including stock) or obligations of, or any
other interest in, or any capital contribution made to, any Person.
IRS means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
Lender - see the Preamble.
Lending Office means, as to any Lender, the office or offices of
such Lender specified as its "Lending Office", on Schedule 10.2, or such
other office as such Lender may from time to time notify the Company and
the Agent.
Lien means any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a
creditor against loss or securing the payment or performance of an
obligation.
Loan means an extension of credit by a Lender to the Company under
Article II and shall include Committed Loans and Swing Line Loans.
Loan Documents means this Agreement, any Note, the Guaranty, the
Collateral Documents, the Agent's Fee Letter, the Intercreditor Agreement,
the Consent and all
15
other documents delivered to the Collateral Agent, the Agent or any Lender
in connection herewith.
Lumber Note means the $19,500,000 promissory note of Builder Marts
of America, Inc. payable to the Company.
Lumber Note Notice means a notice in the form attached as Exhibit P.
Make-Whole Obligations has the meaning set forth in the
Intercreditor Agreement.
Margin Stock means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material impairment
of the ability of the Company or any Subsidiary to perform its obligations
under any Loan Document; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Company
or any Subsidiary of any Loan Document.
Member means any Person which is a stockholder of the Company or has
applied for stock ownership of the Company.
Minimum Tranche means, in respect of Committed Loans, comprising
part of the same Borrowing, $1,000,000 or a higher integral multiple
thereof.
Mortgage means a mortgage, deed of trust, leasehold mortgage or
similar instrument granting the Collateral Agent a Lien on real property
owned or leased by the Company or any Subsidiary.
Multiemployer Plan means any Plan which is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
Net Debt Proceeds means, as to any issuance of Indebtedness for
borrowed money (other than any such Indebtedness incurred to refinance
existing Indebtedness, provided that the principal amount of such existing
Indebtedness is not increased) by any Person, cash proceeds received by
such Person in connection therewith, net of reasonable out-of-pocket costs
and expenses paid or incurred in connection therewith in favor of any
Person not an Affiliate of such Person, such costs and expenses not to
exceed 5% of the gross proceeds of such issuance.
Net Disposition Proceeds means, as to any Asset Sale, proceeds in
cash, checks or other cash equivalent financial instruments as and when
received by such Person, net of: (a) the direct costs relating to such
disposition, excluding amounts payable to such Person or any Affiliate of
such Person, (b) an estimate of cash taxes paid or payable by such Person
within nine months of the disposition as a direct result of such Asset
Sale and (c)
16
amounts required to be applied to repay principal, interest and prepayment
premiums and penalties on purchase money liens on the asset which is the
subject of such Asset Sale. Net Disposition Proceeds shall include any
insurance proceeds received upon the loss of, damage to, or destruction of
property, except to the extent such insurance proceeds are applied to
replace, repair, restore or rebuild such property in accordance with
Section 6.16(ii).
Note means a Series A Note or a Series B Note, as the context
requires.
Notice of Borrowing means a notice in substantially the form of
Exhibit A.
Obligations means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to any Lender, the Agent or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, or now existing or hereafter arising.
Organizational Documents means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
Original Agreement - see the Recitals.
Other Taxes means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Document.
Overadvance Amount means the following amount during the following
periods:
Month Maximum Overadvance
March 2002 $ 64,412,000
April 2002 $ 50,442,000
May 2002 $ 0
June 2002 $ 28,975,000
July 2002 $ 40,204,000
August 2002 $ 55,923,000
September 2002 $ 63,963,000
October 2002 $ 52,486,000
November 2002 $ 28,960,000
December 2002 $ 39,661,000
January 2003 $ 100,723,000
17
February 2003 $ 88,416,000
March 2003 $ 69,011,000
April 2003 $ 42,056,000
May 2003 $ 0
June 2003 $ 0
July 2003 $ 0
August 2003 $ 5,795,000
September 2003 $ 20,392,000
October 2003 $ 7,782,000
November 2003 $ 0
December 2003 $ 0
January 2004 $ 24,316,000
February 2004 $ 13,809,000
March 2004 $ 0
April 2004 $ 0
May 2004 $ 0
June 2004 $ 539,000
Paint Business means the manufacturing portion of the business
classified as the "Paint Segment" in the Company's form 10-K for the
fiscal year ended December 31, 2000.
Participant - see subsection 10.8(c).
PBGC means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
Pension Plan means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA with respect to which the Company or
any ERISA Affiliate may have any liability.
Person means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
Plan means any employee pension benefit plan (as such term is
defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the
Company or any ERISA Affiliate.
Pledge Agreement means the Pledge Agreement among the Company,
various Subsidiaries of the Company and the Collateral Agent, dated April
14, 2000.
18
Pro Rata Share means, as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Lender's Commitment divided by the combined Commitments
of all Lenders (or, after the Commitments have terminated, of (i) the
amount of such Lender's Loans plus (without duplication) the participation
of such Lender in (or, in the case of the Swing Line Lender, its
unparticipated portion of) all Swing Line Loans divided by (ii) the amount
of all outstanding Loans).
Proprietary Rights means all of the Company's and its Subsidiaries'
now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, service marks, trade names, trade
styles, patent, trademark and service xxxx applications, and all licenses
and rights related to any of the foregoing, including those patents,
trademarks, service marks, trade names and copyrights set forth on
Schedule 1.1(b) hereto, and all other rights under any of the foregoing,
all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to xxx for
past, present and future infringement of any of the foregoing.
Replacement Lender - see Section 3.4.
Reportable Event means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived by the
PBGC.
Required Lenders means Lenders having Pro Rata Shares of 66-2/3% or
more.
Requirement of Law means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
Reserves means the sum of (a) 100% of the positive result of (i) the
total Accounts Receivable set forth in the most recent month-end Accounts
Receivable aging report delivered to the Agent minus (ii) the related
general ledger Accounts Receivable balance for such month-end plus (b)
such other reserves that limit the availability of credit hereunder,
consisting of reserves against such availability, Eligible Accounts
Receivable or Eligible Inventory, established by the Agent from time to
time in the Agent's reasonable credit judgment.
Responsible Officer means the chief executive officer, chief
operating officer, chief financial officer, treasurer or chief accounting
officer of the Company, general counsel of the Company or any other
officer of the Company involved principally in its financial
administration or its controllership function.
Restricted Investments shall mean any Investment prohibited by
Section 7.11.
Restricted Payment - see Section 7.12.
19
Restructuring Charges means any charges recorded under "Emerging
Issues Task Force 94-3: Liability Recognition for Certain Employee
Benefits and Other Costs to Exit an Activity (including certain costs
incurred in a Restructuring)" issued by the American Institute of
Certified Public Accounts; provided that any such charges in excess of
$2,000,000 in the aggregate after the date hereof may not be taken by the
Company or its Subsidiaries for purposes of covenant calculations and
related definitions without the prior written consent of the Required
Lenders. Such charges include, but are not limited to, costs related to
employee benefits, such as severance and termination benefits, costs
associated with the elimination and reduction of product lines, costs to
consolidate or relocate facilities, costs for new systems development or
acquisition, costs to retrain employees to use newly-deployed systems,
costs incurred to reduce excess inventory (defined to be inventory on hand
in excess of 180 days' worth of supply), costs incurred to dispose of any
remaining inventory on hand at the time of closure of a facility, and
losses and asset impairments and disposals of assets.
Same Day Funds means immediately available funds.
SEC means the Securities and Exchange Commission or any Governmental
Authority succeeding to any of its principal functions.
Security Agreement means the Security Agreement among the Company,
various Subsidiaries and the Collateral Agent dated April 14, 2000.
Senior Funded Debt means Funded Debt of the Company which is not
Subordinated Debt.
Series A Note means a promissory note executed by the Company in
favor of a Lender pursuant to subsection 2.2, in substantially the form of
Exhibit H-1.
Series B Note means a promissory note executed by the Company in
favor of a Lender pursuant to subsection 2.2, in substantially the form of
Exhibit H-2.
Short Term Debt means, as of any date of determination with respect
to any Person, (i) all Indebtedness of such Person for borrowed money
other than Funded Debt of such Person and (ii) Guarantees by such Person
of Short Term Debt of Persons other than Members.
Specified Facilities - see Section 7.2(l).
Subordinated Debt shall mean any Indebtedness of the Company which
contains terms of subordination identical to or, in the reasonable
determination of the Agent no less favorable to the Lenders than, the
terms of subordination set forth in Exhibit I hereto and, which by virtue
of such language and any necessary action of the Board of Directors of the
Company, is subordinated to the Obligations.
Subsidiary means any corporation all of the stock of every class of
which, except directors' qualifying shares, shall, at the time as of which
any determination is being made, be owned by the Company either directly
or through Subsidiaries.
20
Substantial Stockholder means (i) any Person owning, beneficially or
of record, directly or indirectly, either individually or together with
all other Persons to whom such Person is related by blood, adoption or
marriage, stock of the Company (of any class having ordinary voting power
for the election of directors) aggregating five percent (5%) or more of
such voting power or (ii) any Person related by blood, adoption or
marriage to any Person described or coming within the provisions of clause
(i) of this definition.
Swing Line Lender means BofA in its capacity as swing line lender
hereunder, together with any successor thereto in such capacity.
Swing Line Loan - see Section 2.13.
Synthetic Lease means (a) a so-called synthetic, off-balance sheet
or tax retention lease, or (b) an agreement for the use or possession of
property creating obligations that do not appear on the balance sheet of
such Person but which, upon the insolvency or bankruptcy of such Person,
would be characterized as the indebtedness of such Person (without regard
to accounting treatment).
Taxes means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, charges or withholdings, fees,
withholdings or similar charges, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, such taxes (including
income taxes or franchise taxes) as are taxes imposed on or measured by
its net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Lender or the Agent, as the case may be, is
organized or maintains a lending office.
Termination Date means the earlier to occur of:
(a) June 30, 2004 (the "Scheduled Termination Date"); and
(b) the date on which the Commitments terminate in accordance with
the provisions of this Agreement;
provided, that the Scheduled Termination Date shall be June 30, 2003,
unless on June 30, 2003 (i) the sum of the Commitments (less $30,000,000)
plus the result of (w) the aggregate outstanding principal amount of the
Shelf Notes (as defined in the Intercreditor Agreement) plus (x) the
aggregate outstanding principal amount of the Senior Notes (as defined in
the Intercreditor Agreement) plus (y) the Synthetic Maximum Shortfall (as
such term is defined in the Intercreditor Agreement) minus (z) the
aggregate amount of Make-Whole Obligations is less than $320,000,000 and
(ii) the result of (x) the aggregate outstanding principal amount of the
Shelf Notes, the Senior Notes and the Loans plus (y) the Synthetic Maximum
Shortfall minus (z) the aggregate amount of Make-Whole Obligations is less
than $270,000,000.
TIP Notes means the registered subordinated debt securities, as
amended from time to time, issued under the Company's investment program
and designated "Variable Denomination Redeemable Subordinated Fixed Rate
Term Notes."
21
Total Outstandings means at any time the principal amount of all
outstanding Loans (whether Committed Loans or Swing Line Loans).
Trademark Security Agreement means the Trademark Security Agreement
between the Company and the Collateral Agent dated as of April 14, 2000.
UCC means the Uniform Commercial Code as in effect from time to time
in the State of Illinois.
Unfunded Pension Liability means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for
the applicable plan year.
United States and U.S. each means the United States of America.
Unmatured Event of Default means any event or circumstance which,
with the giving of notice, the lapse of time, or both, would (if not cured
or otherwise remedied during such time) constitute an Event of Default.
Unusable Amount means the following amounts during the following
periods:
Period Minimum Unusable Commitment
3/1/31-3/31/02 $ 10,000,000
4/1/02-6/29/02 $ 0
6/30/02-7/31/02 $ 60,000,000
8/1/02-8/31/02 $ 50,000,000
9/1/02-9/30/02 $ 40,000,000
10/1/02-10/31/02 $ 30,000,000
11/1/02-12/30/02 $ 20,000,000
12/31/02 $ 70,000,000
1/1/03-6/29/03 $ 0
6/30/03 $ 30,000,000
7/1/03-7/31/03 $ 20,000,000
8/1/03-8/31/03 $ 20,000,000
9/1/03-9/30/03 $ 10,000,000
10/1/03-11/29/03 $ 0
11/30/03-12/30/03 $ 20,000,000
12/31/03 $ 60,000,000
1/1/04-6/30/04 $ 0
Unused Commitment Share means, for any Lender at any time, a
fraction (a) the numerator of which is the remainder of (i) the Commitment
of such Lender minus (ii) the
22
aggregate principal amount of all then outstanding Loans of such Lender
(excluding, in the case of the Swing Line Lender, all Swing Line Loans)
and (b) the denominator of which is the remainder of (i) the aggregate
Commitments of all Lenders, minus (ii) the principal amount of all then
outstanding Loans of all Lenders. Solely for purposes of the foregoing,
(i) Loans to be repaid with the proceeds of Loans proposed to be made
shall be deemed not to be outstanding; and (ii) funded participations in
Swing Line Loans pursuant to Section 2.16 shall be deemed to constitute
Loans (but unfunded participations of the types described above shall not
constitute Loans).
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(i) The term "including" is not limiting and means
"including without limitation."
(ii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided herein, any reference to any action of the Agent, the Lenders or the
Required Lenders by way of consent, approval or waiver shall be deemed modified
by the phrase "in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Company
and the other
23
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Lenders or the Agent merely because of the Agent's or
Lenders' involvement in their preparation.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied; provided that if the Company notifies the Agent that
the Company wishes to amend any covenant in Article VII to eliminate the effect
of any change in GAAP on the operation of such covenant (or if the Agent
notifies the Company that the Required Lenders wish to amend Article VII for
such purpose), then the Company's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the relevant change
in GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Company and the Required Lenders.
(b) References herein to "fiscal year", "fiscal quarter" and
"fiscal month" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. Each Lender severally agrees, on
the terms and conditions set forth herein, to make Committed Loans to the
Company from time to time on any Business Day during the period from the Closing
Date to the Termination Date, in an aggregate amount not to exceed at any time
outstanding the amount set forth on Schedule 2.1 (such amount, as the same may
be reduced under Section 2.4 or as a result of one or more assignments under
Section 10.8, such Lender's "Commitment"); provided, however, that the Total
Outstandings shall not at any time exceed the lesser of (i) combined Commitments
minus the Unusable Amount or (ii) the Borrowing Base; and provided, further,
that the aggregate principal amount of all outstanding Loans of any Lender plus
such Lender's participation interest in all Swing Line Loans shall not at any
time exceed the lesser of (i) such Lender's Commitment minus its Pro Rata Share
of the Unusable Amount or (ii) such Lender's Pro Rata Share of the Borrowing
Base. Within the foregoing limits, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.1, prepay under Section 2.5
and reborrow under this Section 2.1. All Loans and payments with respect thereto
shall be in Dollars.
2.2 Notes. The Committed Loans made by each Lender shall be evidenced by
two Notes payable to such Lender. One such Note (the "Series A Note") shall be
in the amount of such Lender's Pro Rata Share of $169,130,000 and the second
such Note (the "Series B Note") shall be in Lender's Pro Rata Share of
$30,870,000. All Loans shall be made first under the Series B Note until the
full amount thereof is outstanding. All payments shall be applied to the Series
A Note until it is paid in full. Each such Lender shall endorse on the schedules
annexed to its Notes the date, amount and maturity of each Committed Loan made
by it and the amount of each payment of principal made by the Company with
respect thereto. Each such Lender is
24
irrevocably authorized by the Company to endorse its Notes and each Lender's
record shall be rebuttably presumptive evidence; provided, however, that the
failure of a Lender to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Company hereunder or under any such Note to such Lender.
2.3 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing, which notice must be received by the Agent prior to 11:00
a.m. (Chicago time) on the requested Borrowing Date, specifying:
(i) the amount of the Borrowing, which shall be in an
aggregate amount not less than the Minimum Tranche;
(ii) the requested Borrowing Date, which shall be a Business
Day; and
(iii) the Borrowing Base determined as of the latest of (x)
the Friday immediately preceding the date of such Notice of Borrowing for
which a Borrowing Base Certificate has been (or was required to be)
delivered, (y) the date of the most recent Borrowing Base Certificate
delivered to the Agent or (z) such later date selected by the Agent.
(b) The Agent will promptly notify each Lender of its receipt of
any Notice of Borrowing and of the amount of such Lender's Unused Commitment
Share of such Borrowing.
(c) Each Lender will make the amount of its Unused Commitment
Share of each Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office on the Borrowing Date requested by the Company in
Same Day Funds by noon (Chicago time). The proceeds of all such Committed Loans
will then be made available to the Company by the Agent at such office by
crediting the account of the Company on the books of BofA with the aggregate of
the amounts made available to the Agent by the Lenders and in like funds as
received by the Agent.
2.4 Termination or Reduction of Commitments.
2.4.1 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by an aggregate amount of
$5,000,000 or a higher integral multiple of $1,000,000; unless, after giving
effect thereto and to any payments or prepayments of Loans made on the effective
date thereof, the aggregate principal of all Loans would exceed the amount of
the combined Commitments minus the Unusable Amount then in effect.
2.4.2 Mandatory Reductions of Commitments. Upon any required prepayment
under Section 2.5.2(b), (c) or (d), the Commitments shall be reduced by the
amount of the required prepayment, even if such reduction is in excess of the
outstanding amount of the Loans prior to such required prepayment.
2.4.3 All Reductions of Commitments. Once reduced in accordance with this
Section 2.4, the Commitments may not be increased. Any reduction of the
Commitments shall be
25
applied to each Lender according to its Pro Rata Share. All accrued commitment
fees to, but not including, the effective date of any reduction or termination
of Commitments, shall be paid on the effective date of such reduction or
termination.
2.5 Prepayments.
2.5.1 Optional Prepayments. The Company may, from time to time, upon
irrevocable notice to the Agent not later than 11:00 a.m. (Chicago time) on any
Business Day, ratably prepay Committed Loans in whole or in part, in minimum
amounts of not less than the Minimum Tranche, except that any prepayment
pursuant to Section 4 of the Security Agreement shall not be required to be in
the amount of the Minimum Tranche or greater. The Company shall deliver a notice
of prepayment in accordance with Section 10.2 to be received by the Agent not
later than 10:00 a.m. (Chicago time) on the prepayment date. Such notice of
prepayment shall specify the date and amount of such prepayment. Such notice
shall not thereafter be revocable by the Company. The Agent will promptly notify
each Lender of its receipt of any such notice, and of such Lender's share of
such prepayment (ratably in accordance with each Lender's aggregate principal
amount of Committed Loans outstanding). If such notice is given by the Company,
the Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.
2.5.2 Mandatory Prepayments. (a) If on any date the Total Outstandings
exceed the aggregate amount of the Commitments minus the Unusable Amount, the
Company shall immediately prepay Loans in an amount equal to such excess.
(b) Upon receipt of Net Disposition Proceeds or Net Debt Proceeds,
the Company shall prepay the Loans by an amount equal to the amount payable to
the Lenders under the Intercreditor Agreement.
(c) Within 90 days after each fiscal year (beginning with the
fiscal year ending on or about December 31, 2002), the Company shall prepay the
Loans by an amount equal to the portion of Excess Cash Flow payable to the
Lenders under the Intercreditor Agreement.
(d) Within one Business Day after receipt, the Company shall
prepay the Loans by an amount equal to the portion of proceeds of the Lumber
Note payable to the Lenders under the Intercreditor Agreement. The Company
agrees that at any time the Agent may give notice, pursuant to the Lumber Note
Notice, to the payor on the Lumber Note to make payments directly to the
Collateral Agent.
(e) The Company shall immediately prepay the Loans by an amount
equal to the excess of the principal amount of the outstanding Loans over the
Borrowing Base.
2.6 Repayment. The Company shall repay all Loans on the Termination
Date.
2.7 Interest. (a) Beginning February 28, 2002, each Loan shall bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the sum of the Base Rate as in
effect from time to time plus 3.25%.
26
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. During the existence of any Event of Default, interest
shall be paid on demand of the Agent at the request or with the consent of the
Required Lenders.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists, the Company shall pay interest (after as well as before
entry of judgment thereon to the extent permitted by law) on the principal
amount of all outstanding Loans and, to the extent permitted by applicable law,
on any other amount payable hereunder or under any other Loan Document, at a
rate per annum equal to the Base Rate plus 6.25%. All such interest shall be
payable on demand.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Lender hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Lender, and in such event the Company shall pay such Lender interest at the
highest rate permitted by applicable law.
2.8 Fees.
(a) Certain Fees. The Company shall pay certain fees to the Agent
and the Arranger for their own respective accounts at the times and in the
amounts required by the letter agreement (the "Agent's Fee Letter") among the
Company, the Agent and the Arranger dated January 4, 2002.
(b) Commitment Fees. The Company shall pay to the Agent for the
account of each Lender a commitment fee in such Lender's Pro Rata Share of the
unused amount of the combined Commitments, as calculated by the Agent on a
quarterly basis in arrears on each Interest Payment Date and on the Termination
Date, at 0.75% per annum. Such commitment fees shall accrue from the Effective
Date to the Termination Date and shall be due and payable quarterly in arrears
on the last Business Day of each calendar quarter and on the Termination Date.
The commitment fees shall accrue at all times after February 28, 2002, including
at any time during which one or more conditions in Article IV are not met. For
purposes of calculating commitment fees, Swing Line Loans shall not be deemed to
constitute usage of the Commitments.
(c) Supplemental Funding Fees. The Company shall pay to the Agent
for the account of each Lender a quarterly supplemental funding fee equal to
0.4375% of the daily average of the unpaid principal amount of such Lender's
Loans for each quarter. Such supplemental funding fees shall accrue from
February 28, 2002 to the Termination Date and shall be due and payable quarterly
in arrears on each Interest Payment Date; provided that the first such
supplemental funding fee shall accrue from February 28, 2002 through the Closing
Date and shall be payable on the Closing Date.
(d) Annual Fee. On each anniversary of the date of this Agreement
until the Obligations shall have been paid in full and the Agreement terminated,
the Company shall pay
27
each Lender a fee of 0.50% of such Lender's Commitment on such date; provided
that if the Scheduled Termination Date is less than 12 months after any such
anniversary date, such annual fee shall be prorated for the period from such
anniversary date through the Scheduled Termination Date.
2.9 Computation of Fees and Interest. (a) All computations of
interest when the Base Rate is determined by BofA's "prime rate" shall be made
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of interest and fees shall be made on the basis
of a 360-day year and actual days elapsed. Interest and fees shall accrue during
each period during which such interest or such fees are computed from the first
day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Company and the Lenders in the absence of manifest
error. The Agent will, at the request of the Company or any Lender, deliver to
the Company or such Lender, as the case may be, a statement showing the
quotations used by the Agent in determining any interest rate.
2.10 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Agent for the account of the Lenders at the Agent's Payment Office or the
Collateral Agent pursuant to the Intercreditor Agreement, if applicable, and
shall be made in Dollars. Such payments shall be made in Same Day Funds and no
later than 11:00 a.m. (Chicago time) on the date specified herein. The Agent
will promptly (a) distribute to each Lender its Pro Rata Share (or other
applicable share as expressly provided herein) of any payment received by the
Agent in like funds as received or (b) make such payment to the Collateral Agent
to the extent such payment is required to be paid to the Collateral Agent
pursuant to the Intercreditor Agreement. Any payment received by the Agent later
than the time specified above shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Whenever any payment is due on a day other than a Business
Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Lenders that the Company will not make
such payment in full as and when required, the Agent may assume that the Company
has made such payment in full to the Agent on such date in Same Day Funds and
the Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent the Company has not made such payment in
full to the Agent, each Lender shall repay to the Agent on demand such amount
distributed to such Lender, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Lender until
the date repaid.
2.11 Payments by the Lenders to the Agent. (a) Unless the Agent receives
notice from a Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
a Borrowing that such Lender will not make
28
available as and when required hereunder to the Agent for the account of the
Company the amount of such Lender's Pro Rata Share of such Borrowing, the Agent
may assume that such Lender has made such amount available to the Agent in Same
Day Funds on the Borrowing Date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Company on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to the Agent in Same Day Funds and the Agent in
such circumstances has made available to the Company such amount, such Lender
shall on the Business Day following such Borrowing Date make such amount
available to the Agent, together with interest at the Federal Funds Rate. A
notice of the Agent submitted to any Lender with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such Lender's
Committed Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business Day following the
Borrowing Date, the Agent will notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for the
Agent's account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Committed Loans comprising such Borrowing.
(b) The failure of any Lender to make any Loan on any Borrowing
Date shall not relieve any other Lender of any obligation hereunder to make a
Loan on such Borrowing Date, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender on any
Borrowing Date.
2.12 Sharing of Payments, Etc. (a) Whenever any payment received by the
Agent to be distributed to the Lenders is insufficient to pay in full the
amounts then due and payable to the Lenders, such payment shall be distributed
to the Lenders (and for purposes of this Agreement shall be deemed to have been
applied by the Lenders, notwithstanding the fact that any Lender may have made a
different application in its books and records) in the following order: first,
to the payment of the principal amount of the Loans which is then due and
payable, ratably among the Lenders (including the Swing Line Lender) in
accordance with the aggregate amount of such Obligations owed to each Lender;
second, to the payment of interest then due and payable on the Loans ratably
among the Lenders (including the Swing Line Lender) in accordance with the
aggregate amount of interest owed to each Lender; third, to the payment of the
fees payable under subsection 2.8, ratably among the Lenders in accordance with
their respective Pro Rata Shares; and fourth, to the payment of any other amount
payable under this Agreement, ratably among the Lenders in accordance with the
aggregate amount owed to each Lender.
(b) If, other than as expressly provided elsewhere herein, any
Lender shall obtain any payment or other recovery (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on
account of principal of or interest on any Loan or any other amount payable
hereunder, in excess of the share of payments and other recoveries such Lender
would have received if such payment or other recovery had been distributed
pursuant to the provisions of subsection 2.12(a), such Lender shall immediately
(i) notify the Agent of such fact and (ii) purchase from the other Lenders such
participations in the Loans made by (or other Obligations owed to) them as shall
be necessary to cause such purchasing Lender to share the excess payment or
other recovery pro rata with each of them in accordance with the order of
payments set forth in subsection 2.12(a); provided that if all or any portion of
such excess
29
payment or other recovery is thereafter recovered from the purchasing Lender,
such purchase shall to that extent be rescinded and each other Lender shall
repay to the purchasing Lender the purchase price paid therefor, together with
an amount equal to such paying Lender's ratable share (according to the
proportion of (A) the amount of such paying Lender's required repayment to (B)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Company agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 10.10) with respect to such participation as fully as if such Lender
were the direct creditor of the Company in the amount of such participation. The
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each
case notify the Lenders following any such purchases or repayments.
2.13 Swing Line Commitment. Subject to the terms and conditions of this
Agreement, the Swing Line Lender agrees to make loans to the Company on a
revolving basis (each such loan, a "Swing Line Loan") from time to time on any
Business Day during the period from the Closing Date to the Termination Date in
an aggregate principal amount at any one time outstanding not to exceed
$30,000,000; provided, however, that, after giving effect to any proposed Swing
Line Loan, the Total Outstandings shall not exceed the lesser of (i) the
combined Commitments minus the Unusable Amount and (ii) the Borrowing Base.
2.14 Borrowing Procedures for Swing Line Loans. The Company shall provide
a Notice of Borrowing or telephonic notice (followed by a confirming Notice of
Borrowing) to the Agent and the Swing Line Lender of each proposed borrowing
pursuant to Section 2.13 not later than 12:00 noon (Chicago time) on the
proposed Borrowing Date. Each such notice shall be effective upon receipt by the
Agent and the Swing Line Lender and shall specify the date and the principal
amount of borrowing. Unless the Swing Line Lender has received written notice
prior to 11:00 a.m. (Chicago time) on the proposed Borrowing Date from the Agent
or any Lender that one or more of the conditions precedent set forth in Article
IV with respect to such borrowing is not then satisfied, the Swing Line Lender
shall pay over the requested principal amount to the Company on the requested
Borrowing Date in Same Day Funds. Each Swing Line Loan shall be made on a
Business Day and shall be in the amount of at least $500,000 and an integral
multiple of $100,000. The Swing Line Lender will promptly notify the Agent of
the making and amount of each Swing Line Loan.
2.15 Prepayment or Refunding of Swing Line Loans. (a) The Company may, at
any time and from time to time, prepay any Swing Line Loan in whole or in part,
in an amount of at least $500,000 and an integral multiple of $100,000. The
Company shall deliver a notice of prepayment to the Agent and the Swing Line
Lender not later than 11:00 a.m. (Chicago time) on the Business Day of such
prepayment, specifying the date and amount of such prepayment. If such notice is
given by the Company, the payment amount specified in such notice shall be due
and payable on the date specified therein. The Company shall pay in full all
outstanding Swing Line Loans no later than 11:00 a.m. (Chicago time) on Friday
of each week.
(b) The Swing Line Lender will on Friday of each week and may, at
any other time in its sole and absolute discretion, on behalf of the Company
(which hereby irrevocably
30
directs the Swing Line Lender to act on its behalf), request each Lender to make
a Committed Loan in an amount equal to such Lender's Unused Commitment Share of
the principal amount of the Swing Line Loans outstanding on the date such notice
is given. Unless any of the events described in subsection 8.1(g), (h), (i) or
(j) shall have occurred (in which event the procedures of Section 2.16 shall
apply), and regardless of whether the conditions precedent set forth in this
Agreement to the making of a Committed Loan are then satisfied or the aggregate
amount of such Committed Loans is not in the minimum or integral amount
otherwise required hereunder, each Lender shall make the proceeds of its
Committed Loan available to the Agent for the account of the Swing Line Lender
at the Agent's Payment Office prior to 12:00 noon (Chicago time) in Same Day
Funds on the Business Day next succeeding the date such notice is given. The
proceeds of such Committed Loans shall be immediately applied to repay the
outstanding Swing Line Loans.
2.16 Participations in Swing Line Loans. (a) If an event described in
subsection 8.1(g), (h), (i) or (j) occurs (or for any reason the Lenders may not
make Committed Loans pursuant to Section 2.15), each Lender will, upon notice
from the Agent, purchase from the Swing Line Lender (and the Swing Line Lender
will sell to each Lender) an undivided participation interest in all outstanding
Swing Line Loans in an amount equal to such Lender's Unused Commitment Share of
the outstanding principal amount of the Swing Line Loans (and each Lender will
immediately transfer to the Agent, for the account of the Swing Line Lender, in
immediately available funds, the amount of its participation).
(b) Whenever, at any time after the Swing Line Lender has received
payment for any Lender's participation interest in the Swing Line Loans pursuant
to subsection 2.16(a), the Swing Line Lender receives any payment on account
thereof, the Swing Line Lender will distribute to the Agent for the account of
such Lender its participation interest in such amount (appropriately adjusted,
in the case of interest payments, to reflect the period of time during which
such Lender's participation interest was outstanding and funded) in like funds
as received; provided, however, that in the event that such payment received by
the Swing Line Lender is required to be returned, such Lender will return to the
Agent for the account of the Swing Line Lender any portion thereof previously
distributed by the Swing Line Lender to it in like funds as such payment is
required to be returned by the Swing Line Lender.
2.17 Participation Obligations Unconditional. (a) Each Lender's
obligation to make Committed Loans pursuant to Section 2.15 and/or to purchase
participation interests in Swing Line Loans pursuant to Section 2.16 shall be
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including (a) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, the
Company or any other Person for any reason whatsoever; (b) the occurrence or
continuance of an Event of Default; (c) any adverse change in the condition
(financial or otherwise) of the Company or any other Person; (d) any breach of
this Agreement or any other Loan Document by the Company or any other Lender;
(e) any inability of the Company to satisfy the conditions precedent to
borrowing set forth in this Agreement on the date upon which any Loan is to be
refunded or any participation interest therein is to be purchased; or (f) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
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(a) Notwithstanding the provisions of subsection 2.17(a), no
Lender shall be required to make any Committed Loan to the Company to refund a
Swing Line Loan pursuant to Section 2.15 or to purchase a participation interest
in a Swing Line Loan pursuant to Section 2.16 if, prior to the making by the
Swing Line Lender of such Swing Line Loan, the Swing Line Lender received
written notice from any Lender specifying that such Lender believes in good
faith that one or more of the conditions precedent to the making of such Swing
Line Loan were not satisfied and, in fact, such conditions precedent were not
satisfied at the time of the making of such Swing Line Loan; provided that the
obligation of such Lender to make such Committed Loan and to purchase such
participation interest shall be reinstated upon the earlier to occur of (i) the
date on which such Lender notifies the Swing Line Lender that its prior notice
has been withdrawn and (ii) the date on which all conditions precedent to the
making of such Swing Line Loan have been satisfied (or waived by the Required
Lenders or all Lenders, as applicable).
2.18 Conditions to Swing Line Loans. Notwithstanding any other provision
of this Agreement, the Swing Line Lender shall not be obligated to make any
Swing Line Loan if an Event of Default or Unmatured Event of Default exists or
would result therefrom.
ARTICLE III
TAXES AND YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Company to each Lender and
each Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In addition,
the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Lender or the Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to the Agent for the account
of any applicable Lender or the Agent, at the time interest is paid, all
additional amounts which such Lender or the Agent specifies as necessary
to preserve the after-tax yield such Lender or Agent would have received
if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Lender
and the Agent for the full amount of Taxes, Other Taxes and Further Taxes in the
amount that such
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Lender or the Agent specifies as necessary to preserve the after-tax yield such
Lender would have received if such Taxes, Other Taxes or Further Taxes had not
been imposed, and any liability (including penalties, interest, additions to tax
and reasonable expenses) arising therefrom or with respect thereto, whether or
not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the date
the Company receives written demand therefor from such Lender or the Agent.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Lender
and the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Lender or the Agent.
(e) If the Company is required to pay any amount to any Lender or
the Agent pursuant to subsection (b) or (c) of this Section, then such Lender or
the Agent shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office or other relevant
office so as to eliminate any such additional payment by the Company which may
thereafter accrue, if such change in the good faith judgment of such Lender or
the Agent is not otherwise disadvantageous to such Lender or the Agent.
3.2 Increased Costs and Reduction of Return.
(a) If after the date hereof any Lender shall have determined that
(i) the introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by the Lender (or its Lending Office) or any
corporation controlling the Lender with any Capital Adequacy Regulation, affects
or would affect the amount of capital required or expected to be maintained by
the Lender or any corporation controlling the Lender and (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Company through the Agent, the Company shall pay to the Lender,
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
(b) Notwithstanding the foregoing Section 3.2(a) if any Lender
fails to notify the Company of any event which will entitle such Lender to
compensation pursuant to this Section 3.2 within 180 days after such Lender
obtains knowledge of such event, then such Lender shall not be entitled to any
compensation from the Company for any such increased cost or reduction of return
arising prior to the date which is 180 days before the date on which such Lender
notifies the Company of such event.
3.3 Certificates of Lenders. Any Lender claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Lender hereunder and such certificate shall be conclusive and binding on
the Company in the absence of manifest error.
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3.4 Substitution of Lenders. Upon the receipt by the Company from any
Lender (an "Affected Lender") of a claim for compensation under Section 3.1 or
3.2 (which claim results from circumstances applicable to such Lender and not
Lenders generally) the Company may: (i) request the Affected Lender to use its
best efforts to obtain a replacement bank or financial institution satisfactory
to the Company to acquire and assume all or a ratable part of all of such
Affected Lender's Loans and Commitment (a "Replacement Lender"); (ii) request
one more of the other Lenders to acquire and assume all or part of such Affected
Lender's Loans and Commitment; or (iii) designate a Replacement Lender. Any such
designation of a Replacement Lender under clause (i) or (iii) shall be subject
to the prior written consent of the Agent and the Swing Line Lender (which
consents shall not be unreasonably withheld).
3.5 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations and the
termination of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. This Agreement shall become effective,
all loans outstanding under the Original Agreement shall be deemed to be Loans
made hereunder, and all accrued interest and fees payable under the Original
Agreement shall be payable hereunder, on the date on which the Agent has
received the following (the "Effective Date"):
(a) Agreement. This Agreement executed by the Company and the
Lenders.
(b) Resolutions; Incumbency; Certificate of Incorporation; Bylaws.
(i) Copies of the resolutions of the board of directors of
the Company and each Guarantor authorizing the transactions contemplated
hereby, certified as of the Effective Date by the Secretary or an
Assistant Secretary of the Company or such Guarantor;
(ii) a certificate of the Secretary or Assistant Secretary of
the Company and each Guarantor certifying the names and true signatures of
the officers of the Company and each Guarantor authorized to execute and
deliver this Agreement, the Intercreditor Agreement and all other Loan
Documents to be delivered by it hereunder; and
(iii) copies of the certificate of incorporation and by-laws
(or other Organizational Documents) of the Company and each Guarantor,
certified by the Secretary or an Assistant Secretary of the Company or
such Guarantor.
(c) Good Standing. A copy of a good standing certificate as of a
recent date for the Company and each Guarantor from the Secretary of State (or
similar, applicable Governmental Authority) of its respective state of
incorporation.
(d) Legal Opinion. An opinion of counsel to the Company and the
Guarantors in form and substance reasonably acceptable to the Agent.
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(e) Payment of Fees.
(i) Evidence of payment by the Company of all accrued and
unpaid fees, costs and reasonable expenses to the extent then due and
payable on the Effective Date, together with Attorney Costs of the Agent
to the extent invoiced prior to or on the Effective Date, plus such
additional amounts of Attorney Costs as shall constitute the Agent's
reasonable estimate of Attorney Costs incurred or to be incurred by it
through the closing proceedings (provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and the
Agent), including any such costs, fees and reasonable expenses arising
under or referenced in Sections 2.8 and 10.4; and
(ii) Evidence of payment by the Company of an up-front fee
for the account of each Lender in an amount set forth in a separate
agreement between the Company and the Lenders.
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
V are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Event of Default or Unmatured Event of Default exists
or would result from the execution and delivery of this Agreement and the
other Loan Documents; and
(iii) since December 31, 2000, no event or circumstance has
occurred that has resulted or could reasonably be expected to result in a
Material Adverse Effect, except as set forth on Schedule 4.1(f).
(g) Consent. The Consent, signed by each Guarantor.
(h) First Amendment to Security Agreement. The First Amendment to
Security Agreement signed by the Company and each Guarantor.
(i) Intercreditor Agreement. The Intercreditor Agreement, signed
by the parties thereto and consented to by the Company and the Guarantors.
(j) Amendment of Certain Agreements. Evidence, satisfactory to the
Agent, that each of the "Operative Documents" as defined in the Synthetic Lease
Guaranty, the Shelf Agreement and each Senior Note Agreement (each as defined in
the Intercreditor Agreement) has been amended to conform in all material
respects with the representations, warranties, covenants and defaults contained
in this Agreement.
(k) Fleet Blocked Account Agreement. A blocked account agreement
with Fleet National Bank satisfactory to the Administrative Agent.
(l) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Lender may reasonably request.
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4.2 Other Condition to Effectiveness; Prepayment of Loans under Original
Agreement. All proceeds received by the Collateral Agent from the prepayment of
the indebtedness under the Original Agreement shall have been applied as set
forth under the Intercreditor Agreement.
4.3 Conditions to All Credit Extensions. The obligation of each Lender
to make any Credit Extension to be made by it is subject to the satisfaction of
the following conditions precedent on the date of such Credit Extension:
(a) Notice. The Agent (and, in the case of a Swing Line Loan, the
Swing Line Lender) shall have received a Notice of Borrowing.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct in all
material respects on and as of the date of such Credit Extension with the same
effect as if made on and as of such date (except to the extent such
representations and warranties expressly refer to an earlier date, in which case
they shall have been true and correct in all material respects as of such
earlier date).
(c) No Existing Default. No Event of Default or Unmatured Event of
Default shall exist or shall result from such Credit Extension (after giving
effect to this Agreement and the amendments referred to in Section 4.1(j)).
Each Notice of Borrowing submitted by the Company hereunder shall constitute a
representation and warranty by the Company that, as of the date of such notice
or request and as of the date of the applicable Credit Extension, the conditions
in this Section 4.3 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Lender as
follows:
5.1 Organization; Subsidiary Preferred Stock. The Company is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware, each Subsidiary is duly organized and existing in good
standing under the laws of the jurisdiction in which it is formed, and the
Company has and each Subsidiary has the power to own its respective property and
to carry on its respective business as now being conducted. No Subsidiary has
outstanding any shares of stock of a class which has priority over any other
class as to dividends or in liquidation.
5.2 Financial Statements. The audited consolidated financial statements
of the Company and its Subsidiaries as at December 31, 2000 and the unaudited
consolidated financial statements of the Company and its Subsidiaries as at
September 30, 2001, copies of each of which have been delivered to each Lender,
were prepared in accordance with GAAP (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end adjustments) and
present fairly the consolidated financial condition of the Company and its
Subsidiaries as at such dates and the results of their operations for the
periods then ended.
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5.3 Actions Pending. Except as specified on Schedule 5.3, there is no
action, suit, investigation or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, or any
properties or rights of the Company or any of its Subsidiaries, by or before any
court, arbitrator or administrative or governmental body which could be
reasonably expected to result in any material adverse change in the business,
property or assets, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole or the ability of the Company to
perform its obligations under this Agreement.
5.4 Outstanding Debt. Neither the Company nor any of its Subsidiaries
has outstanding any Debt except as permitted by Section 7.3. There exists no
default under the provisions of any instrument (as defined in the UCC) or
agreement evidencing Debt of the Company or any of its Subsidiaries in an amount
greater than $250,000 or of any agreement relating thereto (it being understood
that the representation and warranty in this sentence is made after giving
effect to the effectiveness of this Agreement and the amendments referred to in
subsection 4.1(j)).
5.5 Title to Properties. The Company has and each of its Subsidiaries
has good and marketable title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the most
recent audited balance sheet referred to in Section 5.2 (other than properties
and assets disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by Section 7.2. All leases necessary in any
material respect for the conduct of the respective businesses of the Company and
its Subsidiaries are valid and subsisting and are in full force and effect.
Attached as Schedule 5.5 is a list of all real estate owned or leased by the
Company and its Subsidiaries.
5.6 Taxes. The Company has and each of its Subsidiaries has filed all
federal, state and other income tax returns which, to the best knowledge of the
officers of the Company and its Subsidiaries, are required to be filed, and each
has paid all taxes as shown on such returns and on all assessments received by
it to the extent that such taxes have become due, except such taxes (i) as are
being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP or (ii) the non-payment
of which (a) could not be reasonably expected to have a material adverse effect
on the business, condition (financial or otherwise) or operations of the Company
and its Subsidiaries taken as a whole and (b) does not result in the creation of
any Lien other than Liens permitted by Section 7.2.
5.7 Conflicting Agreements and Other Matters. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and adversely
affects its business, property or assets, condition (financial or otherwise) or
operations. None of the execution and delivery of this Agreement or any other
Loan Document, the making of the Loans or the fulfillment of or compliance with
the terms and provisions hereof and of the other Loan Documents will conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries pursuant to, the charter or by-laws of the Company or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with stockholders), instrument, order, judgment, decree, statute, law,
rule or regulation to which the
37
Company or any of its Subsidiaries is subject. Neither the Company nor any of
its Subsidiaries is a party to, or otherwise subject to any provision contained
in, any instrument evidencing Indebtedness of the Company or such Subsidiary,
any agreement relating thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of the Company of the type that the Obligations constitute
except as set forth in the agreements listed in Schedule 5.7 attached hereto (as
such Schedule 5.7 may have been modified from time to time by written
supplements thereto delivered by the Company and accepted in writing by the
Required Lenders).
5.8 Use of Proceeds. None of the proceeds of any Loan will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any "margin stock" as defined in Regulation
U of the FRB (herein called "margin stock") or for the purpose of maintaining,
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry any stock that is then currently a margin stock or for any other
purpose which might constitute the transactions contemplated hereby a "purpose
credit" within the meaning of such Regulation U. Neither the Company nor any
agent acting on its behalf has taken or will take any action which might cause
this Agreement or the Loans to violate Regulation T, Regulation U or any other
regulation of the FRB or to violate the Exchange Act, in each case as in effect
now or as the same may hereafter be in effect.
5.9 ERISA. No accumulated funding deficiency (as defined in section 302
of ERISA and section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the PBGC
has been or is expected by the Company or any ERISA Affiliate to be incurred
with respect to any Plan (other than a Multiemployer Plan) by the Company, any
Subsidiary or any ERISA Affiliate which is or would be materially adverse to the
business, property or assets, condition (financial or otherwise) or operations
of the Company and its Subsidiaries taken as a whole. Neither the Company, any
Subsidiary nor any ERISA Affiliate has incurred or presently expects to incur
any withdrawal liability under Title IV of ERISA with respect to any
Multiemployer Plan which is or would be materially adverse to the business,
property or assets, condition (financial or otherwise) or operations of the
Company and its Subsidiaries taken as a whole. The execution and delivery of
this Agreement and the making of Loans will be exempt from or will not involve
any transaction which is subject to the prohibitions of section 406 of ERISA and
will not involve any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed pursuant to
section 4975 of the Code.
5.10 Governmental Consent. Neither the nature of the Company or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Company or any Subsidiary and any other Person, nor any
circumstance in connection with the making of the Loans is such as to require
any authorization, consent, approval, exemption or any action by or notice to or
filing with any court or administrative or governmental body (other than routine
filings after the Closing Date with the SEC and/or state Blue Sky authorities)
in connection with the execution and delivery of this Agreement, the making of
the Loans, or the fulfillment of or compliance with the terms and provisions of
the Loan Documents.
5.11 Environmental Compliance. The Company and its Subsidiaries and all
of their respective properties and facilities have complied at all times and in
all respects with all
38
applicable foreign, federal, state, local and regional statutes, laws,
ordinances and judicial or administrative orders, judgments, rulings and
regulations relating to protection of the environment except, in any such case,
where failure to so comply could not reasonably be expected to result in a
material adverse effect on the business, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole or the ability
of the Company to perform its obligations under this Agreement.
5.12 Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Agent or any Lender by or on behalf of
the Company in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein not misleading in light of the circumstances in
which they were made.
5.13 Priority of Obligations. The Obligations constitute "Superior
Indebtedness" as such term is defined in the Company's Promissory (subordinated)
Notes, the form of which is attached hereto as Exhibit I, and the Subordinated
Debt is subordinated to the Obligations.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Lenders
waive compliance in writing:
6.1 Financial Statements. The Company shall deliver to the Agent, in
form and detail reasonably satisfactory to the Agent and the Required Lenders,
with sufficient copies for each Lender:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet of the
Company and its Subsidiaries as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, and accompanied by the opinion of
PriceWaterhouseCoopers LLP or another nationally-recognized independent public
accounting firm ("Independent Auditor") which report (x) shall state that such
consolidated financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years and (y) shall not be qualified or limited because of a restricted or
limited examination by the Independent Auditor of any material portion of the
Company's or any Subsidiary's records;
(b) as soon as available, but not later than 60 days after the end
of each of the first three fiscal quarters of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to the absence of
footnotes and ordinary,
39
good faith year-end audit adjustments), the financial position and the results
of operations of the Company and the Subsidiaries; and
(c) as soon as available, but not later than 30 days after the end
of each fiscal month (or 60 days after the end of December of each year), a copy
of the financial report delivered to the Board of Directors of the Company (or,
if no such report is delivered to the Board of Directors of the Company for any
month, a copy of a substantially similar financial report for such month),
including unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such month and the related consolidated statements
of income and cash flows for the period commencing on the first day and ending
on the last day of such month, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to the absence of footnotes and
ordinary, good faith year-end audit adjustments), the financial position and the
results of operations of the Company and the Subsidiaries.
6.2 Certificates; Other Information. The Company shall furnish to the
Agent, with sufficient copies for each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a) for the year ended December 31, 2002 and each
year thereafter, to the extent not prohibited by applicable accounting
guidelines, a certificate of the Independent Auditor stating that in making the
examination necessary therefor no knowledge was obtained of any Event of Default
or Unmatured Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.1(a), (b) and (c), a Compliance Certificate
executed by a Responsible Officer, together with calculations necessary to
demonstrate compliance with Sections 7.1, 7.12, 7.14, 7.15, 7.16 and 7.17;
(c) promptly, copies of all financial statements and reports that
the Company sends to its shareholders, and copies of all financial statements
and regular, periodical or special reports (including Forms 10K, 10Q and 8K)
that the Company or any Subsidiary may make to, or file with, the SEC;
(d) within 90 days after the end of each fiscal year, a
calculation in reasonable detail of Excess Cash Flow for such fiscal year,
substantially in the form of Exhibit Q;
(e) within three Business Days after the end of each week (or more
frequently at the request of the Agent), a detail of the Borrowing Base
Certificate;
(f) within three Business Days after the 15th and last day of each
month, an Accounts Receivable aging report as of such day;
(g) no later than 45 days after the end of each fiscal quarter, a
12-month forecast (to include forecasted consolidated balance sheets, income
statements and cash flow statements) for the Company and its Subsidiaries in
fiscal quarter periods;
40
(h) concurrently with the execution of any amendment to the
Synthetic Lease Guaranty, the Senior Note Agreements or the Shelf Note Agreement
(each as defined in the Intercreditor Agreement), a copy of such executed
amendment;
(i) as soon as available, but not later than 15 days after
delivery of the financial report described in Section 6.1(c), and at the
Company's expense, a report from Zolfo Xxxxxx (or another consultant acceptable
to the Agent and the Required Lenders) on the performance of the Company as set
forth in such financial report against the Business Plan;
(j) simultaneously with the delivery thereof under the Senior Note
Agreements (as defined in the Intercreditor Agreement), copies of all
information and notices required to be given by the Company pursuant to
paragraph 5A thereof (or any successor provision thereto) or any other notice,
report or other written information delivered to any noteholder under the Senior
Note Agreements; and
(k) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the Agent, at
the request of any Lender, may from time to time request.
6.3 Notices. The Company shall promptly notify the Agent promptly after
a Responsible Officer obtains knowledge of:
(a) the occurrence of any Event of Default or Unmatured Event of
Default;
(b) any of the following matters that has resulted or may
reasonably be expected to result in a Material Adverse Effect: (i) any breach or
non-performance of, or any default under, a Contractual Obligation of the
Company or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary including pursuant to any applicable Environmental Law;
(c) the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after a
Responsible Officer obtains knowledge of such event; provided that the Company
shall notify the Agent and each Lender not less than 10 days before the
occurrence of any event described in clause (ii) below), and deliver to the
Agent a copy of any notice with respect to such event that is filed with a
Governmental Authority and any notice delivered by a Governmental Authority to
the Company or any ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) a contribution failure with respect to a Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA;
(iii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
41
(iv) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate; or
(v) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase
in contributions or Unfunded Pension Liability; and
(d) any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated Subsidiaries.
Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Company or any affected Subsidiary proposes
to take with respect thereto and at what time. Each notice under subsection
6.3(a) shall describe with particularity any and all clauses or provisions of
this Agreement or any other Loan Document that have been breached or violated.
6.4 Preservation of Corporate Existence, Etc. The Company shall, and
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business except
(i) in connection with transactions permitted by Section 7.6 and sales of assets
permitted by Section 7.5 and (ii) to the extent the non-preservation or
non-maintenance thereof could not reasonably be expected to have a Material
Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
Notwithstanding the provisions of this Section 6.4, the Company may
dissolve or liquidate any Inactive Subsidiary or any Canadian Subsidiary.
6.5 Maintenance of Property. The Company shall, and shall cause each
Subsidiary to, maintain and preserve all its property which is used or useful in
its business in good working order and condition, ordinary wear and tear
excepted and make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. The Company and each Subsidiary shall use the
standard of care typical in the industry in the operation and maintenance of its
facilities.
6.6 Insurance. The Company shall, and shall cause each Subsidiary to,
maintain with financially sound and reputable insurers, insurance in such
amounts and against such liabilities and hazards as customarily maintained by
the Company in accordance with its practices, policies
42
and procedures prior to the Closing Date. Together with each delivery of
financial statements under subsection 6.1(a), the Company will, upon the request
of the Agent, deliver a certificate of a Responsible Officer specifying the
details of such insurance in effect.
6.7 Payment of Obligations. The Company shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable all
their respective obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all Debt, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Debt.
6.8 Compliance with Laws. The Company shall, and shall cause each
Subsidiary to, comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its business
(including the Federal Fair Labor Standards Act), except such as may be
contested in good faith or as to which a bona fide dispute may exist.
6.9 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Company shall, and
shall cause each Subsidiary to, maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Company and such Subsidiary. The Company shall, and
shall cause each Subsidiary to, permit representatives and independent
contractors of the Agent or any Lender to visit and inspect any of their
respective properties, to examine their respective corporate, financial and
operating records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the reasonable
expense of the Company and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to the
Company; provided that when an Event of Default exists the Agent or any Lender
may do any of the foregoing at the reasonable expense of the Company at any time
during normal business hours without advance notice.
6.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
material compliance with all material Environmental Laws.
43
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans for
working capital and other general corporate purposes not in contravention of any
applicable Requirement of Law or of any Loan Document.
6.13 Covenant to Secure Obligations Equally. The Company covenants that,
if it or any Subsidiary shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, other than Liens permitted
by the provisions of Section 7.2 (unless prior written consent to the creation
or assumption thereof shall have been obtained pursuant to Section 10.1), it
will 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 thereby
secured so long as any such other Debt shall be so secured.
6.14 Cooperative Status. The Company covenants that it will at all times
maintain its status as a cooperative for purposes of Subchapter T of the Code;
provided, however, in the event that the Code or other applicable law is
modified after the date hereof and as a result of such modification the Company
is unable to satisfy its obligations under this Section, then the Required
Lenders and the Company shall agree, or in good faith negotiate to agree, to
amend the covenants contained in this Agreement so that the application of such
covenants (following such modification of the Code or other applicable law and
the effect thereof on the Company) will be substantially the same as prior
thereto.
6.15 Further Assurances. The Company shall (a) cause all Subsidiaries to
guarantee the obligations of the Company hereunder pursuant to the Guaranty (and
in furtherance of the foregoing, immediately upon the creation or acquisition of
any Subsidiary, cause such Subsidiary to execute and deliver a counterpart of
the Guaranty, together with such other documents, including resolutions and
opinions of counsel, as the Agent or any Lender may reasonably request),
provided that (i) none of TruServ Specialty Company, LLC nor any Foreign
Subsidiary shall have an obligation to execute a counterpart of the Guaranty and
(ii) neither of Advocate Services, Inc. nor Servistar Paint Company shall have
an obligation to execute a counterpart of the Guaranty prior to the date which
is 180 days following the Closing Date; and (b) take, and cause each of
Guarantors to take, such actions as are necessary or as the Agent or the
Required Lenders may reasonably request from time to time (including the
execution and delivery of security agreements, pledge agreements, financing
statements, mortgages, deeds of trust and other documents, the filing or
recording of any of the foregoing, the delivery of stock certificates and other
collateral with respect to which perfection is obtained solely by possession,
the notation of the Collateral Agent's Liens on certificates of title for
vehicles and the delivery of opinions of counsel) to ensure that the obligations
of the Company and each Guarantor hereunder and under the Guaranty, as
applicable, are secured by perfected security interests in substantially all of
the personal property of each such entity, and provided further that neither the
Company nor any Guarantor shall be required to pledge more than 65% of the stock
of any Foreign Subsidiary.
6.16 Insurance and Condemnation Proceeds. The Company shall promptly
notify the Agent of any loss, damage, or destruction to any of the Collateral
(as defined in the applicable Collateral Document), whether or not covered by
insurance. Subject to the Intercreditor Agreement, the Agent is hereby
authorized to collect all insurance and condemnation proceeds in respect of
Collateral directly and to apply or remit them as follows:
44
(i) With respect to insurance and condemnation proceeds
relating to Collateral other than real estate, machinery and equipment,
after deducting from such proceeds the reasonable expenses, if any,
incurred by the Agent in the collection or handling thereof, the Agent
shall apply such proceeds, ratably, to the reduction of the Obligations.
(ii) With respect to insurance and condemnation proceeds
relating to Collateral consisting of real estate, machinery and equipment,
the Agent shall permit or require the Company to use such proceeds, or any
part thereof, to replace, repair, restore or rebuild the relevant real
estate, machinery and equipment in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction so long as (1) no Event of Default
or Unmatured Event of Default has occurred and is continuing, (2) the
aggregate proceeds with respect to any such loss do not exceed $1,000,000
and (3) the Company demonstrates to the reasonable satisfaction of the
Agent that the funds available to it will be sufficient to complete such
project. In all other circumstances, the Agent shall apply such insurance
and condemnation proceeds, ratably, to the reduction of the Obligations.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Required Lenders
waive compliance in writing:
7.1 Fixed Charge Coverage Ratio. The Company will not permit the Fixed
Charge Coverage Ratio as of the end of any fiscal quarter to be less than the
applicable ratio set forth below:
Fiscal quarter ending on or about Ratio
--------------------------------- -----
March 31, 2002 0.80 to 1
June 30, 2002 0.90 to 1
September 30, 2002 0.90 to 1
December 31, 2002 0.70 to 1
March 31, 2003 0.70 to 1
June 30, 2003 0.70 to 1
September 30, 2003 0.60 to 1
December 31, 2003 0.75 to 1
March 31, 2004 0.70 to 1
June 30, 2004 0.65 to 1
The provisions of this Section shall be subject to change, upon the sale of the
Paint Business (if sold prior to June 30, 2003) or other asset sales not
presently disclosed to the Lenders, upon the mutual agreement of the Company and
the Required Lenders.
45
7.2 Lien Restrictions. The Company will not and will not permit any
Subsidiary to create, assume or suffer to exist any Lien upon any of its
property or assets, whether now owned or hereafter acquired (whether or not
provision is made for the equal and ratable securing of the Obligations in
accordance with the provisions of Section 6.13), except:
(a) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings and with respect to which the
Company or the applicable Subsidiary maintains adequate reserves,
(b) Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred in connection with
the borrowing of money or the obtaining of advances or credit,
(c) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Company or another Subsidiary,
(d) Liens in existence on the Closing Date and described on
Schedule 7.2(d),
(e) Liens in respect of capital leases entered into in connection
with, or any Lien arising in connection with, the acquisition of property, after
the date hereof and attaching only to the property being acquired, if the
Indebtedness secured thereby does not exceed 100% of the lesser of (i) the fair
market value of the property acquired at the time of acquisition thereof and
(ii) the total purchase price of the property so acquired,
(f) other Liens (including Liens arising under capital leases), in
addition to the Liens permitted by clauses (a) through (e) above and clauses (g)
through (m) below, securing Indebtedness of the Company or any Subsidiary (other
than Indebtedness that constitutes Subordinated Debt); provided, however, that
(i) such Indebtedness is permitted by the provisions of Section 7.3 and (ii) the
aggregate outstanding principal amount of all such Indebtedness (other than
Indebtedness listed on Schedule 7.2(f)) does not at any time exceed $25,000,000,
(g) Liens in favor of the Collateral Agent,
(h) any interest or title of a lessor in property subject to any
lease other than (i) except as permitted by clauses (e) and (f) above, a capital
lease, (ii) a lease entered into as part of a sale and leaseback transaction or
(iii) except as permitted by clause (d) above, a Synthetic Lease,
(i) any interest of a lessee or a sublessee in property owned or
leased by the Company or any Subsidiary,
(j) any escrow, holdback or similar arrangement in connection with
any sale, lease, transfer or other disposition of any asset not prohibited
hereunder (including any sale of the Paint Business),
(k) Liens in favor of Bank of America on cash collateral securing
obligations of the Company or any Subsidiary under letters of credit issued by,
or with respect to cash management services provided by, Bank of America,
46
(l) Liens in respect of mortgages on properties listed on Schedule
7.2(l) (the "Specified Facilities"), and
(m) Liens in favor of Fleet National Bank on cash collateral
securing obligations of the Company or any Subsidiary with respect to cash
management services provided by Fleet National Bank.
7.3 Debt Restrictions. The Company will not and will not permit any
Subsidiary to create, incur, assume or suffer to exist any Debt, except:
(a) Senior Funded Debt,
(b) Subordinated Debt,
(c) Debt under the Guaranty, and
(d) Short Term Debt of the Company.
7.4 Sale of Assets. The Company will not and will not permit any
Subsidiary to sell, lease or transfer or otherwise dispose of any assets of the
Company or any Subsidiary other than in the ordinary course of business;
provided that the Company and its Subsidiaries may sell, lease, transfer or
otherwise dispose of assets (a) to the extent that such sale, lease, transfer or
disposition relates to a Designated Permitted Asset Sale, (b) in connection with
the sale and leaseback of distribution centers owned by the Company or any
Subsidiary, (c) in connection with the dissolution of any Subsidiary permitted
by Section 6.4 and (d) outside the ordinary course of business so long as (i)
the aggregate amount of all assets sold, leased, transferred or otherwise
disposed of outside the ordinary course of business for the 36 months preceding
such proposed sale when added together, without duplication, with (x) any shares
of stock or Debt of any Subsidiary sold or otherwise disposed of, or with
respect to which the Company or any Subsidiary has parted control of, except to
the Company or another Subsidiary, during such period and (y) any assets then
proposed to be sold outside of the ordinary course of business do not constitute
more than 10% of the consolidated total assets of the Company as of the end of
the most recent fiscal quarter for which the Company has delivered financial
statements pursuant to Section 6.1 and (ii) any such sale of assets is not in
excess of $2,500,000 per such sale; and provided, further, that in the case of
clauses (a) through (d) above, all such assets have been sold, leased,
transferred or otherwise disposed of for fair market value and the Net
Disposition Proceeds from such sales shall be paid to the Collateral Agent for
distribution in accordance with the Intercreditor Agreement or Section 2.5.2.
7.5 Merger. The Company will not and will not permit any Subsidiary to
merge or consolidate with any other Person, except that Subsidiaries may be
merged or consolidated with or into the Company or any other Subsidiary.
7.6 Restrictions on Transactions with Affiliates and Stockholders. The
Company will not and will not permit any Subsidiary to directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property (other than shares of stock of the Company) to, or otherwise deal with
(i) any Affiliate or Substantial Stockholder, or (ii) any corporation in which
an Affiliate, Substantial Stockholder or the Company (either directly or through
47
Subsidiaries) owns 5% or more of the outstanding voting stock, except that (a)
any such Affiliate or Substantial Stockholder may be a director, officer or
employee of the Company or any Subsidiary and may be paid reasonable
compensation in connection therewith, (b) the Company and its Subsidiaries may
perform or engage in any of the foregoing in the ordinary course of business
upon terms no less favorable to the Company or such Subsidiary (as the case may
be) than if no such relationship described in clauses (i) and (ii) above existed
and (c) the Company may sell to or purchase from any such Person shares of the
Company's stock subject to the provisions of Section 7.11.
7.7 Issuance of Stock by Subsidiaries. The Company will not permit any
Subsidiary to (either directly, or indirectly by the issuance of rights or
options for, or securities convertible into, such shares) issue, sell or
otherwise dispose of any shares of any class of its stock (other than directors'
qualifying shares) except to the Company or another Subsidiary.
7.8 Compliance with ERISA. The Company will not and will not permit any
Subsidiary to (i) engage in any transaction in connection with which the Company
or any Subsidiary could be subject to either a civil penalty assessed pursuant
to section 502(i) of ERISA or a tax imposed by section 4975 of the Code,
terminate or withdraw from any Plan (other than a Multiemployer Plan) in a
manner, or take any other action with respect to any such Plan (including,
without limitation, a substantial cessation of operations within the meaning of
section 4062(e) of ERISA), which could result in any liability of the Company or
any Subsidiary to the PBGC, to a trust established pursuant to section
4041(c)(3)(B)(ii) or (iii) or 4042(i) of ERISA, or to a trustee appointed under
section 4042(b) or (c) of ERISA, (ii) incur any liability to the PBGC on account
of a termination of a Plan under section 4064 of ERISA, (iii) fail to make full
payment when due of all amounts which, under the provisions of any Plan, the
Company or any Subsidiary is required to pay as contributions thereto, or (iv)
permit to exist any accumulated funding deficiency, whether or not waived, with
respect to any Plan (other than a Multiemployer Plan), if, in any such case,
such penalty or tax or such liability, or the failure to make such payment, or
the existence of such deficiency, as the case may be, could be reasonably
expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
7.9 No Change in Subordination Terms, etc. The Company will not and will
not permit any Subsidiary to amend, alter or otherwise change any provision of
any of the subordinated promissory notes now or hereafter issued by the Company
or take any other action (or refrain from taking an action) which would have the
effect of eliminating or altering in any way the effect of the subordination
language appearing in such subordinated promissory notes or the rights of the
Agent and the Lenders arising as a result thereof.
7.10 Nature of Business. The Company will not and will not permit any
Subsidiary to engage in the business of underwriting risks for insurance
purposes, or in any other aspect of insurance related business other than in the
ordinary course of business in accordance with its practices as of the Closing
Date; or purchase and sell real estate (other than on an agency basis) for
purposes other than those relating directly to its principal business except for
(i) purchases and sales of store locations in the ordinary course of business
which in the aggregate for the Company and its Subsidiaries taken as a whole do
not exceed $10,000,000 during any rolling consecutive five year period and (ii)
sales of the Specified Facilities.
48
7.11 Restricted Investments. The Company will not and will not permit any
Subsidiary to make or permit a Subsidiary to make any Investment except the
Company and any Subsidiary may:
(a) make or permit to remain outstanding loans or advances to any
Subsidiary other than an Inactive Subsidiary,
(b) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Company or any Subsidiary,
(c) own, purchase or acquire prime commercial paper, banker's
acceptances and certificates of deposit in United States and Canadian commercial
banks (having combined capital and surplus of not less than U.S. $100,000,000)
and repurchase agreements with respect to the foregoing, in each case due within
one year from the date of purchase and payable in the United States in United
States dollars, obligations of the government of the United States or any agency
thereof, and obligations guaranteed by the government of the United States,
(d) make or permit to remain outstanding travel and other similar
advances to officers and employees in the ordinary course of business,
(e) permit to remain outstanding Investments existing on the
Closing Date and described on Schedule 7.11,
(f) maintain deposit accounts with Bank of America containing cash
collateral permitted to be held under Section 7.2(k),
(g) maintain deposit accounts with Fleet National Bank containing
cash collateral permitted to be held under Section 7.2(m),
(h) maintain other deposit accounts with financial institutions in
the ordinary course of business; provided that the amount maintained in deposit
accounts with financial institutions other than the Lenders shall not exceed (x)
in the case of any one such account, $200,000 for more than three consecutive
Business Days; and (y) in the case of all such accounts in the aggregate,
$600,000 for more than two consecutive Business Days,
(i) to the extent applicable, make Investments permitted under
Section 7.12 below, and
(j) enter into escrow, seller note, holdback or similar
arrangements in connection with any sale, lease, transfer or other disposition
of any asset not prohibited hereunder (including any sale of the Paint
Business).
Notwithstanding the foregoing, the Company will not permit the aggregate amount
of Investments in TruServ Specialty Company, LLC to exceed $1,500,000 at any
time.
7.12 Restricted Payments. (a) The Company will not and will not permit
any Subsidiary to pay or declare cash dividends or cash patronage dividends or
redeem, purchase or otherwise acquire, or make any redemptions, purchase, or
other acquisition of any of its stock or apply
49
miscellaneous deductions in lieu of patronage dividends, or make or permit any
Subsidiary to make any Restricted Investment (each a "Restricted Payment")
except that the Company or any Subsidiary may pay cash patronage source
dividends in an amount not to exceed 20% (or such greater percentage as required
under the Code) of all patronage source income; provided that if Adjusted EBITDA
for the fiscal year most recently ended is at least equal to the amount set
forth on Schedule 7.12 for such fiscal year, the Company may pay cash patronage
source dividends in an amount not to exceed 30% of the patronage source income
attributable to patronage source income other than income resulting from gains
on Asset Sales plus 20% of the patronage source income resulting from gains on
Asset Sales; provided, however, that none of the foregoing dividends based on
Adjusted EBITDA may be paid unless the Company demonstrates on a pro forma basis
that it has sufficient liquidity to meet its obligations for the six months
following any such proposed payment.
(b) The Company may not redeem or purchase any shares of stock
except for Hardship Case Payments in an amount not to exceed $2,000,000 in the
aggregate in any fiscal year.
7.13 Use of Proceeds. The Company will not, and will not permit any
Subsidiary to, use any portion of the proceeds of any Credit Extension, directly
or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act.
7.14 Interest Coverage Ratio. The Company will not permit the Interest
Coverage Ratio as of the end of any fiscal quarter to be less than the
applicable ratios set forth below:
Fiscal quarter ending on or about Ratio
--------------------------------- -----
March 31, 2002 1.20 to 1
June 30, 2002 1.50 to 1
September 30, 2002 1.70 to 1
December 31, 2002 1.70 to 1
March 31, 2003 1.70 to 1
June 30, 2003 1.75 to 1
September 30, 2003 1.65 to 1
December 31, 2003 1.70 to 1
March 31, 2004 1.65 to 1
June 30, 2004 1.50 to 1
The provisions of this Section shall be subject to change, upon the sale of the
Paint Business (if sold prior to June 30, 2003) or other asset sales not
presently disclosed to the Lenders, upon the mutual agreement of the Company and
the Required Lenders.
50
7.15 Minimum Sales. The Company will not permit consolidated gross sales
for the Company and its Subsidiaries to be less than the following amounts for
the following fiscal periods.
Fiscal period ending on or about Amount
-------------------------------- ------
March 31, 2002 $ 460,000,000
April 30, 2002 $ 625,000,000
May 31, 2002 $ 805,000,000
June 30, 2002 $ 990,000,000
July 31, 2002 $1,200,000,000
August 31, 2002 $1,340,000,000
September 30, 2002 $1,520,000,000
October 31, 2002 $1,670,000,000
November 30, 2002 $1,815,000,000
December 31, 2002 $1,975,000,000
January 31, 2003 $1,965,000,000
February 28, 2003 $1,955,000,000
March 31, 2003 $1,945,000,000
April 30, 2003 $1,930,000,000
May 31, 2003 $1,920,000,000
June 30, 2003 $1,910,000,000
July 31, 2003 $1,900,000,000
August 31, 2003 $1,890,000,000
September 30, 2003 $1,875,000,000
October 31, 2003 $1,870,000,000
November 30, 2003 $1,865,000,000
December 31, 2003 $1,860,000,000
January 31, 2004 $1,850,000,000
February 29, 2004 $1,840,000,000
March 31, 2004 $1,830,000,000
April 30, 2004 $1,820,000,000
May 31, 2004 $1,805,000,000
June 30, 2004 $1,795,000,000
The minimum consolidated gross sales for each fiscal month of 2002, beginning
with March 2002, shall be calculated on a cumulative basis from January 1, 2002.
The minimum consolidated gross sales for each fiscal month beginning after
fiscal year 2002 shall be calculated on a prior rolling 12-month basis.
The provisions of this Section shall be subject to change, upon the sale of the
Paint Business (if sold prior to June 30, 2003) or other asset sales not
presently disclosed to the Lenders, upon the mutual agreement of the Company and
the Required Lenders.
7.16 Capital Expenditures. The Company will not permit Capital
Expenditures to be greater than the following amounts in the following fiscal
periods of the Company:
51
First day of applicable fiscal year through fiscal Cumulative Amount
quarter ending on or about
March 31, 2002 $6,400,000
June 30, 2002 $11,200,000
September 30, 2002 $13,600,000
December 31, 2002 $16,000,000
March 31, 2003 $6,400,000
June 30, 2003 $11,200,000
September 30, 2003 $13,600,000
December 31, 2003 $16,000,000
March 31, 2004 $6,400,000
June 30, 2004 $11,200,000
The provisions of this Section shall be subject to change, upon the sale of the
Paint Business (if sold prior to June 30, 2003) or other asset sales not
presently disclosed to the Lenders, upon the mutual agreement of the Company and
the Required Lenders.
7.17 Minimum Adjusted EBITDA. The Company will not permit Adjusted EBITDA
to be less than the following amounts in the following fiscal periods:
Fiscal period ending on or about Amount
-------------------------------- ------
March 31, 2002 $ 20,000,000
April 30, 2002 $ 25,000,000
May 31, 2002 $ 35,000,000
June 30, 2002 $ 50,000,000
July 31, 2002 $ 60,000,000
August 31, 2002 $ 65,000,000
September 30, 2002 $ 80,000,000
October 31, 2002 $ 90,000,000
November 30, 2002 $ 95,000,000
December 31, 2002 $100,000,000
January 31, 2003 $100,000,000
February 28, 2003 $100,000,000
March 31, 2003 $100,000,000
April 30, 2003 $ 95,000,000
May 31, 2003 $ 95,000,000
June 30, 2003 $ 95,000,000
July 31, 2003 $ 90,000,000
August 31, 2003 $ 90,000,000
September 30, 2003 $ 80,000,000
October 31, 2003 $ 80,000,000
November 30, 2003 $ 80,000,000
December 31, 2003 $ 80,000,000
January 31, 2004 $ 75,000,000
52
February 29, 2004 $ 75,000,000
March 31, 2004 $ 70,000,000
April 30, 2004 $ 70,000,000
May 31, 2004 $ 65,000,000
June 30, 2004 $ 60,000,000
The minimum Adjusted EBITDA for each fiscal month of 2002, beginning with March
2002, shall be calculated on a cumulative basis from January 1, 2002. The
minimum Adjusted EBITDA for each fiscal month beginning after fiscal year 2002
shall be calculated on a prior rolling 12-month basis. The provisions of this
Section shall be subject to change, upon the sale of the Paint Business (if sold
prior to June 30, 2003) or other asset sales not presently disclosed to the
Lenders, upon the mutual agreement of the Company and the Required Lenders.
7.18 Inactive Subsidiaries. The Company will not at any time permit its
Inactive Subsidiaries, taken as a whole, to have more than $200,000 of assets
(based on fair market value) or to generate more than $5,000 of revenues in any
fiscal quarter.
7.19 Amendments to Financing Agreements; Prepayment of Certain
Indebtedness. The Company will not, and will not permit any Subsidiary to,
amend, modify, supplement or restate any Financing Agreement (as defined in the
Intercreditor Agreement). The Company will not, and will not permit any
Subsidiary to, (a) amend, alter or otherwise change any provision of any of the
notes or other instruments evidencing any Subordinated Debt now or hereafter
issued by the Company or take any other action (or refrain from taking any
action) which would have the effect of eliminating or altering in any way the
effect of the subordination language appearing in such notes or other
instruments or any agreement relating thereto or the rights of the holders of
such notes or instruments arising as a result thereof, except to the extent of
Hardship Case Payments, (b) make any optional or voluntary prepayment, in whole
or in part, of any Subordinated Debt or (c) make any optional or voluntary
prepayment, in whole or in part, of any Benefited Obligations, other than (i)
optional or voluntary prepayments, in whole or in part, of the Loans and (ii)
optional or voluntary prepayments, in whole or in part, of the Shelf
Obligations, the Synthetic Lease Obligations and the Senior Note Obligations
(each as defined in the Intercreditor Agreement) pursuant to the terms of the
Shelf Agreement, the Operative Documents or the Senior Note Agreements, as
applicable (each as defined in the Intercreditor Agreement). All such optional
and voluntary prepayments described in clause (c) above shall be made in
accordance with the terms of the Intercreditor Agreement and, in the absence
thereof, in conformance with all of the other terms hereof.
7.20 Subordinated Notes. The Company will discontinue the Variable
Denomination Subordinated Floating Rate Demand Notes program on or before July
31, 2002, and no new TIP Notes will be issued after the date hereof without the
approval of the Agent.
7.21 Chief Executive Officer. Any appointment by the Company of a chief
executive officer will be subject to the consent of the Required Lenders.
7.22 Sale of Hagerstown Facility. The Hagerstown Facility shall not be
sold unless (a) the requisite Synthetic Lease Lenders (as defined in the
Intercreditor Agreement) approve such
53
sale in writing and (b) the Net Disposition Proceeds of such sale are applied to
reduce the balance of the Synthetic Lease Obligations (as defined in the
Intercreditor Agreement) to the extent permitted by the Intercreditor Agreement.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following events which occur and are
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise) shall constitute an "Event of Default":
(a) The Company defaults in the payment of any principal of any
Loan when the same shall become due.
(b) The Company defaults in the payment of any interest, fee or
other amount payable hereunder or under any other Loan Document for more than
three (3) Business Days after the date due.
(c) The Company or any Subsidiary defaults (whether as primary
obligor or as guarantor or other surety) in any payment of principal of or
interest on any other obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or the Company or any
Subsidiary fails to perform or observe any other agreement, term or condition
contained in any agreement under which any obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due (or to be repurchased
by the Company or any Subsidiary) prior to any stated maturity, provided that
the aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing or permitting
acceleration (or resale to the Company or any Subsidiary) shall occur and be
continuing exceeds $5,000,000.
(d) Any representation or warranty made by the Company or any
Subsidiary herein or in any other Loan Document or by the Company or any
Subsidiary or any of their respective officers in any writing furnished in
connection with or pursuant to this Agreement or any other Loan Document shall
be false in any material respect on the date as of which made.
(e) The Company fails to perform or observe any agreement
contained in Article VII.
(f) The Company fails to perform or observe any other agreement,
term or condition contained herein and such failure shall not be remedied within
15 days after any Responsible Officer obtains actual knowledge of such failure.
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(g) The Company or any Subsidiary (other than an Inactive
Subsidiary or a Canadian Subsidiary) makes an assignment for the benefit of
creditors or is generally not paying its debts as such debts become due.
(h) Any decree or order for relief in respect of the Company or
any Subsidiary (other than an Inactive Subsidiary or a Canadian Subsidiary) is
entered under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law,
whether now or hereafter in effect (herein called a "Bankruptcy Law"), of any
jurisdiction.
(i) The Company or any Subsidiary (other than an Inactive
Subsidiary or a Canadian Subsidiary) petitions or applies to any tribunal for,
or consents to, the appointment of, or taking possession by, a trustee,
receiver, custodian, liquidator or similar official of the Company or such
Subsidiary, or of any substantial part of the assets of the Company or such
Subsidiary, or commences a voluntary case under the Bankruptcy Law of the United
States or any proceedings (other than proceedings for the voluntary liquidation
and dissolution of a Subsidiary) relating to the Company or such Subsidiary
under the Bankruptcy Law of any other jurisdiction.
(j) Any such petition or application is filed, or any such
proceedings are commenced, against the Company or any Subsidiary (other than an
Inactive Subsidiary or a Canadian Subsidiary) and the Company or such Subsidiary
by any act indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the petition
in any such proceedings, and such order, judgment or decree remains unstayed and
in effect for more than 30 days.
(k) Any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such order,
judgment or decree remains unstayed and in effect for more than 60 days.
(l) Any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary decreeing a split-up of the Company or
such Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of the Company and its
Subsidiaries (determined in accordance with GAAP) or which requires the
divestiture of assets, or stock of a Subsidiary, which shall have contributed a
substantial part of the consolidated net income of the Company and its
Subsidiaries (determined in accordance with GAAP) for any of the three fiscal
years then most recently ended, and such order, judgment or decree remains
unstayed and in effect for more than 60 days.
(m) A final judgment in an amount in excess of $5,000,000 is
rendered against the Company or any Subsidiary and, within 60 days after entry
thereof, such judgment is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such stay, such judgment
is not discharged.
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(n) An Event of Default exists under and as defined in the
Intercreditor Agreement.
(o) The Guaranty shall cease to be in full force and effect with
respect to any Guarantor (other than as a result of a transaction permitted
hereunder), any Guarantor shall fail (subject to any applicable grace period) to
comply with or to perform any applicable provision of the Guaranty, or any
Guarantor (or any Person by, through or on behalf of such Guarantor) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty with respect to such Guarantor.
(p) Any Collateral Document shall cease to be in full force and
effect with respect to the Company or any Guarantor (other than as a result of a
transaction permitted hereunder), the Company or any Guarantor shall fail
(subject to any applicable grace period) to comply with or to perform any
applicable provision of any Collateral Document to which such entity is a party,
or the Company or any Guarantor (or any Person by, through or on behalf of the
Company or such Guarantor) shall contest in any manner the validity, binding
nature or enforceability of any Collateral Document.
(q) The Company fails retain on the Board of Directors of the
Company (i) at least two outside directors prior to May 31, 2002, (ii) at least
four such directors prior to September 1, 2002 and (iii) at least five such
directors prior to November 1, 2002 in accordance with the internal policy of
the Company designated the "Corporate Governance Policy".
(r) The Company shall pay any principal amount of Subordinated
Debt (other than, so long as no Event of Default exists or would result
therefrom and the Company has met or exceeded its Minimum Adjusted EBITDA
covenant set forth in Section 7.17 as of the most recent period for which such
covenant is applicable, (i) payments of principal of the Company's variable
denomination floating rate subordinated notes in an aggregate amount not greater
than $2,800,000 after the date hereof and (ii) payments of principal of other
Subordinated Debt in an aggregate amount not greater than (x) $24,000,000 for
the period from January 1, 2002 to December 31, 2002 and (y) $14,000,000 for the
period from January 1, 2003 to December 31, 2003).
(s) The Intercreditor Agreement shall cease to be in full force
and effect.
8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Required Lenders, do any or all of
the following:
(a) declare the Commitment of each Lender to make Committed Loans
and the obligation of the Swing Line Lender to make Swing Line Loans to be
terminated, whereupon such Commitments and obligations shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
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(c) exercise on behalf of itself and the Lenders all rights and
remedies available to it and the Lenders under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(g), (h), (i) or (j) of Section 8.1, the obligation of each Lender to make Loans
shall automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically become
due and payable.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
The Company, the Agent and the Lenders shall retain all rights arising under
federal law.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization; "Agent". (a) Each Lender hereby
irrevocably (subject to Section 9.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the Agent
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or
express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
(b) The Swing Line Lender shall have all of the benefits and
immunities (i) provided to the Agent in this Article IX with respect to any acts
taken or omissions suffered by the Swing Line Lender in connection with Swing
Line Loans made or proposed to be made by it as fully as if the term "Agent", as
used in this Article IX, included the Swing Line Lender with respect to such
acts or omissions and (ii) as additionally provided in this Agreement with
respect to the Swing Line Lender.
9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
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9.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Company or any Subsidiary or
Affiliate of the Company, or any officer thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Lender to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any of the Company's
Subsidiaries or Affiliates.
9.4 Reliance by Agent. (a) The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if expressly
required hereunder, all Lenders) as it deems appropriate and, if it so requests,
it shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to the Lender.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default, except with respect to defaults in the payment of principal, interest
and fees required to be paid to the Agent for the account of the Lenders, unless
the Agent shall have received written notice from a Lender or the Company
referring to this Agreement, describing such Event of Default or Unmatured Event
of Default and stating that such notice is a "notice of default". The Agent will
notify the Lenders of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default or Unmatured Event of Default as
may be requested by the Required Lenders in accordance with Article VIII;
provided, however, that unless and until the Agent has received
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any such request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default or Unmatured Event of Default as it shall deem advisable or in the best
interest of the Lenders.
9.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any representation
or warranty by any Agent-Related Person to any Lender. Each Lender represents to
the Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Company hereunder. Each Lender also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of the Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse the Agent upon demand for its ratable share of any costs
or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.8 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent and the Swing Line
Lender hereunder, in each case without notice to or consent of the Lenders. The
Lenders
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acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans, BofA
and any Affiliate thereof shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though BofA were not
the Agent or the Swing Line Lender.
9.9 Successor Agent. The Agent may, and at the request of the Required
Lenders shall, resign as Agent upon 30 days' notice to the Lenders and the
Company. If the Agent resigns under this Agreement, the Required Lenders (with,
if no Event of Default and Unmatured Event of Default then exists, the consent
of the Company, not to be unreasonably withheld) shall appoint from among the
Lenders a successor agent for the Lenders. If no successor agent is appointed
prior to the effective date of the resignation of the Agent, the Agent may
appoint, after consulting with the Lenders and the Company, a successor agent
from among the Lenders. Upon the acceptance of its appointment as successor
agent hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above. Notwithstanding the foregoing, however, BofA may not be removed as
the Agent at the request of the Required Lenders unless BofA or any Affiliate of
BofA shall also simultaneously be replaced as "Swing Line Lender" hereunder
pursuant to documentation in form and substance reasonably satisfactory to BofA
and, if applicable, such Affiliate.
9.10 Withholding Tax. (a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Lender claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver
to the Agent:
(i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, properly
completed IRS Form W-8BEN before the payment of any interest in the
first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement, and IRS Form W-9; and
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(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Each such Lender agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to such Lender. To the
extent of such percentage amount, the Agent will treat such Lender's IRS Form
W-8BEN as no longer valid.
(c) If any Lender claiming exemption from United States withholding
tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Lender, such Lender agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Lender
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or was not properly executed, or because such
Lender failed to notify the Agent of a change in circumstances which rendered
the exemption from, or reduction of, withholding tax ineffective, or for any
other reason) such Lender shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise, including penalties
and interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Lenders under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Agent.
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or any applicable Subsidiary therefrom, shall be
effective unless the same shall be in
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writing and signed by the Required Lenders (or by the Agent at the written
request of the Required Lenders) and the Company and acknowledged by the Agent,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided that no such
waiver, amendment, or consent shall, unless in writing and signed by all the
Lenders and the Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender (or reinstate
any Commitment terminated pursuant to Section 8.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on, any Loan, or (subject to clause (iii) below) reduce any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Obligations which is required for the Lenders or
any of them to take any action hereunder;
(e) amend this Section, the definition of "Required Lenders",
Section 2.8 or any provision herein providing for consent or other action by all
Lenders;
(f) release any Guarantor under the Guaranty, except pursuant to
Section 10.21; or
(g) release all or any Substantial Portion of the Collateral
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Required Lenders or all the
Lenders, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Swing Line Lender in addition to the
Required Lenders or all Lenders, as the case may be, affect the rights or duties
of the Swing Line Lender under this Agreement or any other Loan Document, and
(iii) the Fee Letter may be amended, or rights or privileges thereunder waived,
in a writing executed by the parties thereto. As used herein, "Substantial
Portion" means, at any time, any Collateral consisting of assets which generated
10% or more of the consolidated revenues of the Company and its Subsidiaries in
the prior fiscal year.
10.2 Notices. (a) All notices, requests and other communications shall
be in writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Company by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.2, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on Schedule
10.2; or, as directed to the Company or the Agent, to such other address as
shall be designated by such party in a written
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notice to the other parties, and as directed to any other party, at such other
address as shall be designated by such party in a written notice to the Company
and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the U.S. mail,
certified mail, return receipt requested; except that notices pursuant to
Article II or IX to the Agent or the Swing Line Lender shall not be effective
until actually received by the Agent, as the case may be.
(c) Any agreement of the Agent and the Lenders herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agent and the Lenders shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agent and the Lenders shall not have any
liability to the Company or any other Person on account of any action taken or
not taken by the Agent or the Lenders in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Obligations shall
not be affected in any way or to any extent by any failure by the Agent and the
Lenders to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Agent and the Lenders of a confirmation which is at variance
with the terms understood by the Agent and the Lenders to be contained in the
telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.4 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agent and the Swing Line Lender within five
Business Days after demand (subject to subsection 4.1(e)) for all reasonable
costs and expenses incurred by the Agent and the Swing Line Lender in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any other Loan Document and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby, including (i) reasonable
Attorney Costs incurred by the Agent and the Swing Line Lender with respect
thereto and (ii) the reasonable fees and charges of any financial advisor
retained by the Agent or by counsel to the Agent (but without duplication of
fees and charges of any financial advisor retained by the Collateral Agent or
its counsel); and
(b) pay or reimburse the Agent and each Lender within five Business
Days after demand (subject to subsection 4.1(e)) for all reasonable costs and
expenses (including Attorney Costs) incurred by them in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies
under this Agreement or any other Loan Document during
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the existence of an Event of Default or after acceleration of the Loans and
other Obligations (including in connection with any "workout" or restructuring
regarding the Loans and other Obligations, and including in any Insolvency
Proceeding or appellate proceeding); provided that the Company shall not be
obligated to pay or reimburse the Agent or any Lender in respect of any suit or
proceeding in which the Company is adverse to the Agent or such Lender and final
nonappealable judgment is rendered by a court of competent jurisdiction in favor
of the Company on all counts.
10.5 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold the
Agent-Related Persons, and each Lender and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Obligations and the termination, resignation or replacement of
the Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby or thereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided that the Company shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities resulting solely
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations and
the termination of this Agreement.
10.6 Payments Set Aside. To the extent that the Company makes a payment
to the Agent or any Lender, or the Agent or any Lender exercises its right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent or such Lender in its discretion) to be repaid to a trustee, receiver, or
any other party, in connection with any Insolvency Proceeding or otherwise, then
(a) to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred and (b)
each Lender severally agrees to pay to the Agent upon demand its pro rata share
of any amount so recovered from or repaid by the Agent or any Lender.
10.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Lender.
10.8 Assignments, Participations, etc. (a) Any Lender may, with the
written consent of the Swing Line Lender and the Agent, which consents shall not
be unreasonably withheld, at any time assign and delegate to one or more Persons
(provided that no written consent of the Swing
64
Line Lender or the Agent shall be required in connection with any assignment and
delegation by a Lender to an Affiliate of such Lender) (each an "Assignee") all,
or any ratable part of all, of the Loans, the Commitment and the other rights
and obligations of such Lender hereunder, in a minimum amount of $10,000,000
(or, if less, all of such Lender's remaining rights and obligations hereunder);
provided, however, that (x) no assignment and delegation may be made to any
Person if, at the time of such assignment and delegation, (i) the Company would
be obligated to pay any greater amount under Article III to the Assignee than
the Company is then obligated to pay to the assigning Lender under such Article
(and if any assignment is made in violation of the foregoing, the Company will
not be required to pay the incremental amounts) and (ii) the Assignee has not
presented evidence reasonably satisfactory to the Agent and the Company that the
Assignee is exempt from withholding taxes and (y) the Company, the Swing Line
Lender and the Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Company and the Agent an Assignment and
Acceptance in the form of Exhibit G ("Assignment and Acceptance") together with
any Note or Notes subject to such assignment and (iii) the assignor Lender or
Assignee has paid to the Agent a processing fee in the amount of $5,000.
(b) From and after the date that the Agent notifies the assignor
Lender that it has received and provided its consent (and received the consent
of the Swing Line Lender) with respect to an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) 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, shall have
the rights and obligations of a Lender under the Loan Documents, and (ii) the
assignor Lender shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Any Lender may at any time sell to one or more Persons not
Affiliates of the Company (a "Participant") participating interests in any
Loans, the Commitment of such Lender and the other interests of such Lender (the
"originating Lender") hereunder and under the other Loan Documents; provided,
however, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Company, the
Agent and the Swing Line Lender shall continue to deal solely and directly with
the originating Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment, consent or waiver would require unanimous consent of the Lenders
as described in the first proviso to Section 10.1. In the case of any such
participation, the Participant shall be entitled to the benefit of Sections 3.1,
3.2 and 10.5 as though it were also a Lender hereunder (provided that no
Participant shall receive any greater amount pursuant to Article III than would
have been paid to the participating Lender if no participation had been sold),
and if amounts outstanding under this Agreement are due and unpaid, or shall
have been declared or shall have become due and
65
payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. Notwithstanding any other provision of this Section, sales of
participations required under the Intercreditor Agreement shall be permitted.
(d) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and any Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
10.9 Confidentiality. Each Lender agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information provided to it by the Company or
any Subsidiary, or by the Agent on the Company's or such Subsidiary's behalf,
under this Agreement or any other Loan Document, and neither such Lender nor any
of its Affiliates shall use any such information other than in connection with
or in enforcement of this Agreement and the other Loan Documents or in
connection with other business now or hereafter existing or contemplated with
the Company or any Subsidiary; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by such Lender, or (ii) was or becomes available on a non-confidential basis
from a source other than the Company, provided that such source is not bound by
a confidentiality agreement with the Company or any Subsidiary known to such
Lender; provided, however, that any Lender may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which such Lender is subject or in connection with an examination of such Lender
by any such authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; (D) to the extent reasonably required in connection with any
litigation or proceeding to which the Agent or any Lender or any of their
respective Affiliates may be party; (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Lender's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Lenders hereunder; (H) as to any Lender or its Affiliate,
as expressly permitted under the terms of any other document or agreement
regarding confidentiality to which the Company or any Subsidiary is party or is
deemed party with such Lender or such Affiliate; and (I) to its Affiliates. Each
Lender shall, to the extent permitted by applicable law, use reasonable efforts
to give the Company timely notice of any event described in clause (B) or (C) of
the preceding sentence which may require disclosure of confidential information
so that the Company will have an opportunity to seek a protective order.
10.10 Set-off. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, or the Obligations have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Company, any such notice being waived by the Company
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other
66
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Company against any and all Obligations owing to such Lender, now
or hereafter existing, irrespective of whether or not the Agent or such Lender
shall have made demand under this Agreement or any other Loan Document and
although such Obligations may be contingent or unmatured. Each Lender agrees
promptly to notify the Company and the Agent after any such set-off and
application made by such Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
10.11 Automatic Debits of Fees. With respect to any non-use fee,
arrangement fee or other fee, or any other cost or expense (including Attorney
Costs) due and payable to the Agent, the Swing Line Lender or BofA under the
Loan Documents, the Company hereby irrevocably authorizes BofA to debit any
deposit account of the Company with BofA in an amount such that the aggregate
amount debited from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit accounts to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section shall be
deemed a set-off.
10.12 Notification of Addresses, Lending Offices, Etc. Each Lender
shall notify the Agent in writing of any change in the address to which notices
to such Lender should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request.
10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of which taken together shall be deemed to constitute but one
and the same instrument.
10.14 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or such instrument or agreement.
10.15 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders, the
Agent, the Agent-Related Persons and the Indemnified Persons, and their
respective permitted successors and assigns, and no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any other Loan Document.
10.16 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND ANY NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
ILLINOIS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION
AND DELIVERY OF THIS
67
AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURTS. EACH OF THE COMPANY, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE LENDERS
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
10.17 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON OR INDEMNIFIED PERSON, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE COMPANY, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE
OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENT, RENEWAL,
SUPPLEMENT OR MODIFICATION TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.18 Judgment. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan Document
in one currency into another currency, the rate of exchange used shall be that
at which in accordance with normal banking procedures the Agent could purchase
the first currency with such other currency on the Business Day preceding that
on which final judgment is given. The obligation of the Company in respect of
any such sum due from it to the Agent hereunder or under any other Loan Document
shall, notwithstanding any judgment in a currency (the "Judgment Currency")
other than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the "Agreement Currency"), be
discharged only to the extent that on the Business Day following receipt by the
Agent of any sum adjudged to be so due in the Judgment Currency, the Agent may
in accordance with normal banking procedures purchase the Agreement Currency
with the Judgment Currency. If the amount of the Agreement Currency so purchased
is less than the sum originally due to the Agent in the Agreement Currency, the
Company agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Agent or the Person to whom such obligation was owing against
such loss. If the amount of the Agreement Currency so
68
purchased is greater than the sum originally due to the Agent in such currency,
the Agent agrees to return the amount of any excess to the Company (or to any
other Person who may be entitled thereto under applicable law).
10.19 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Lenders and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
10.20 Amendment and Restatement. This Agreement amends and restates the
Original Agreement in its entirety and, after the Effective Date the Original
Agreement shall be of no further force or effect (except for any provision
thereof which by its terms survives termination thereof).
10.21 Collateral Matters. The Lenders irrevocably authorize the
Collateral Agent, at its option and in its discretion, (i) to release any Lien
on any property granted to or held by the Collateral Agent under any Collateral
Document (x) upon termination of the Commitments and payment in full of all
Loans and all other obligations of the Company hereunder; (y) which is sold or
to be sold or disposed of as part of or in connection with any disposition
permitted hereunder or (z) if approved, authorized or ratified in writing by the
Required Lenders; (ii) to subordinate any Lien on any property granted to or
held by the Collateral Agent under any Collateral Document to the holder of any
Lien on such property which is permitted by Section 7.2 hereof; and (iii) to
release any Guarantor from its obligations under the Guaranty if such entity
ceases to be a Subsidiary as a result of a transaction permitted hereunder. Upon
request by the Collateral Agent at any time, the Required Lenders will confirm
in writing the Collateral Agent' s authority to release or subordinate its
interest in particular types or items of property, or to release any Guarantor
from its obligations under the Guaranty, pursuant to this Section 10.21.
69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
TRUSERV CORPORATION
By /s/ XXXXXXX X. XXXXXX
--------------------------
Title: Vice President
--------------------------
1
BANK OF AMERICA, N.A., as Agent
By: /s/ XXXXXX XXXXXX
--------------------------
Title: Senior Vice President
--------------------------
BANK OF AMERICA, N.A., as a Lender
By: /s/ XXXXXX XXXXXX
--------------------------
Title: Senior Vice President
--------------------------
2
BANK OF MONTREAL, as a Lender
By: /s/ XXXXXXX X. TURF
--------------------------
Title: Director
--------------------------
3
BANK ONE, NA (Main Office Chicago), as
a Lender
By: /s/ XXXXXXX XXXXXXX
--------------------------
Title: First Vice President
--------------------------
4
PNC BANK, NATIONAL ASSOCIATION, as
a Lender
By: /s/ J. XXXXXXX XXXXX
--------------------------
Title: Vice President
--------------------------
5
WACHOVIA BANK, N.A., as a Lender
By: /s/ XXXXX XXXXXX
--------------------------
Title: Director
--------------------------
6
THE NORTHERN TRUST COMPANY, as a
Lender
By: /s/ XXXX XXXXXXXX
--------------------------
Title: Vice President
--------------------------
7
ABN AMRO BANK N.V., as a Lender
By: /s/ XXXXXXX X. XXXXXXX, XX.
--------------------------
Title: Group Vice President
--------------------------
By: /s/ XXXX X. XXXXXX
--------------------------
Title: Group Vice President
--------------------------
8
NATIONAL CONSUMER COOPERATIVE BANK,
as a Lender
By: /s/ XXXX X. XXXXX
--------------------------
Title: Managing Director
--------------------------
9
UMB BANK, N.A.
By: /s/ XXXXX XXXXXX
--------------------------
Title: Senior Vice President
--------------------------
10
EXHIBIT A
FORM OF
NOTICE OF BORROWING
Date:______
To: Bank of America, N.A., as Agent under the Second Amended and Restated
Credit Agreement dated as of April 11, 2002 (as renewed, amended,
restated, supplemented or otherwise modified from time to time, the
"Credit Agreement") among TruServ Corporation, various financial
institutions and Bank of America, N.A., as Agent.
Ladies and Gentlemen:
The undersigned, TruServ Corporation (the "Company"), refers to the
Credit Agreement (terms defined therein being used herein as therein defined)
and hereby gives you notice irrevocably, pursuant to Section [2.3/2.14] of the
Credit Agreement, of the [Borrowing of Committed Loans/Swing Line Loans]
specified below:
(a) The Business Day of the proposed [Borrowing/Swing Line
Loans] is __________, ____ .
(b) The aggregate amount of the proposed [Borrowing/Swing Line
Loans] is $___________.
The Company certifies that the following statements are true on the
date hereof, and will be true on the date of the proposed [Borrowing/Swing Line
Loans], before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties contained in Article V
of the Credit Agreement are true and correct in all material respects
as though made on and as of such date (except to the extent such
representations and warranties expressly relate to an earlier date, in
which case they are true and correct as of such date);
(b) no Event of Default or Unmatured Event of Default has
occurred and is continuing or will result from such proposed
[Borrowing/Swing Line Loans]; and
(c) the proposed [Borrowing/Swing Line Loans] will not cause
the Total Outstandings to exceed the combined Commitments of all
Lenders.
TRUSERV CORPORATION
By:
--------------------------
Title:
--------------------------
1
EXHIBIT C
FORM OF CONSENT
CONSENT
Each of the undersigned hereby consents to the Second Amended and
Restated Credit Agreement dated as of April 11, 2002 (as renewed, amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") among TruServ Corporation, various financial institutions and Bank
of America, N.A., as Agent. All capitalized terms used in this Consent will have
the respective meanings set forth in the Credit Agreement unless otherwise
defined or the context otherwise requires.
Each of the undersigned agrees that all Loan Documents delivered by it
pursuant to the Existing Credit Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Consent this
11th day of April, 2002.
TRUSERV CORPORATION
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
TRUSERV ACCEPTANCE COMPANY
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
TRUSERV LOGISTICS COMPANY
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
1
GENERAL PAINT & MANUFACTURING COMPANY
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
XXXX XXXXX, LLC
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
TRUE XXXXX.XXX CORPORATION
By:
----------------------------------
Name Printed:
------------------------
Title:
-------------------------------
2
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
To: Bank of America, N.A., as Agent,
and the Lenders which are parties
to the Credit Agreement referred to below
Reference is made to the Second Amended and Restated Credit Agreement
dated as of April 11, 2002 (as renewed, amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among TruServ
Corporation (the "Company"), various financial institutions and Bank of America,
N.A., as Agent. Terms used but not otherwise defined herein are used herein as
defined in the Credit Agreement.
1. Report. Enclosed herewith is a copy of the [annual audit/quarterly]
report of the Company as at ____________, ____ (the "Computation
Date"), which report fairly presents the consolidated financial
position of the Company and its Subsidiaries, as of the Computation
Date.
2. Financial Tests. The Company hereby certifies and warrants to you that
the attached is a true and correct computation as at the Computation
Date of the ratios and/or financial restrictions contained in the
Credit Agreement.
3. Defaults. The Company hereby further certifies and warrants to you that
no Event of Default or Unmatured Event of Default has occurred and is
continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer this _________________ day
of _____________, ____.
TRUSERV CORPORATION
By:
----------------------------------
Title:
-------------------------------
3
FINANCIAL COVENANTS
For Period Ended ______________
I. Fixed Charge Coverage Ratio
(Section 7.1)
1. Consolidated Net Earnings for the period of four $________________________
consecutive fiscal quarters ending __________
2. Interest expense (including rent expense with respect to Synthetic $________________________
Leases), taxes, depreciation and amortization (to the extent deducted
in determining Consolidated Net Earnings for such period)
3. Restructuring Charges to the extent taken in such period $________________________
4. Gains from Asset Sales realized during such period (to the extent $________________________
included in determining Consolidated Net Earnings for such period)
5. Losses from Asset Sales realized during such period (to the extent $________________________
deducted in determining Consolidated Net Earnings for such period)
6. Line I-1 plus Line I-2 plus Line I-3 minus Line I-4 plus Line I-5(1) $________________________
7. Scheduled payments of principal with respect to the Senior Notes and $________________________
Shelf Notes during such period
8. Interest expense during such period (including rent expense with $________________________
respect to Synthetic Leases but excluding interest with respect to
Make-Whole Obligations and new Make-Whole obligations of principal
arising in such period)
9. Capital expenditures during such period $________________________
10. Line I-7 plus Line I-8 plus Line I-9(1) $________________________
11. Ratio of Line I-6 to Line I-10 ________________________
12. Applicable Ratio(2) ________________________
---------
(1) To be calculated for the period ending (x) March 31, 2002 based upon such
period and then multiplied by four, (y) June 30, 2002 based upon the period of
two consecutive fiscal quarters ending on such date and then multiplied by two
and (z) September 30, 2002 based upon the period of three consecutive fiscal
quarters ending on such date and then multiplied by one and one-third.
(2) This calculation is subject to change, upon the sale of the Paint Business
(if sold prior to June 30, 2003) or other asset sales not presently disclosed to
the Lenders, upon the mutual agreement of the Company and the Required Lenders.
1
II. Interest Coverage Ratio (Section 7.14)(3)
1. Line I-6 from Section I $________________________
2. Interest Expense for such period (including rent expense with respect $________________________
to Synthetic Leases but excluding interest expense with
respect to Make-Whole Obligations and Make-Whole Obligations
of principal arising in such period)4
3. Ratio of Line II-1 to Line II-2 _______________
4. Applicable Ratio _______________
III. Sales (Section 7.15)(4)
1. Sales for the period of four consecutive fiscal quarters ending __________ $________________________
2. Minimum Sales required $________________________
IV. Capital Expenditures (Section 7.16)4
1. Capital Expenditures made in current fiscal year $________________________
2. Maximum Capital Expenditures permitted $________________________
V. Adjusted EBITDA (Section 7.17)4
1. Adjusted EBITDA for fiscal period ending _____________ $________________________
2. Minimum Adjusted EBITDA required $________________________
-----------
(3) To be calculated for the period ending (x) March 31, 2002 based upon such
period and then multiplied by four, (y) June 30, 2002 based upon the period of
two consecutive fiscal quarters ending on such date and then multiplied by two
and (z) September 30, 2002 based upon the period of three consecutive fiscal
quarters ending on such date and then multiplied by one and one-third.
(4) This calculation is subject to change, upon the sale of the Paint Business
(if sold prior to June 30, 2003) or other asset sales not presently disclosed to
the Lenders, upon the mutual agreement of the Company and the Required Lenders.
2
EXHIBIT F
April 11, 2002
To Each Addressee
Listed on Schedule I hereto
Re: TruServ Corporation
Ladies and Gentlemen:
We have acted as special counsel to TruServ Corporation, a
Delaware corporation (the "COMPANY"), and each subsidiary of the Company listed
on Schedule II hereto (the "SUBSIDIARY OPINION PARTIES", and together with the
Company, the "OPINION PARTIES"), in connection with the preparation, execution
and delivery of the Second Amended and Restated Credit Agreement, dated as of
April 11, 2002 (the "CREDIT AGREEMENT"), among the Company, the financial
institutions from time to time party thereto (the "LENDERS") and Bank of
America, N.A., as agent for the Lenders (in such capacity, the "AGENT"), and
certain other agreements, instruments and documents related to the Credit
Agreement. This opinion is being delivered pursuant to Section 4.1(d) of the
Credit Agreement.
In our examination we have assumed the genuineness of all
signatures including endorsements, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as facsimile, electronic,
certified or photostatic copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which we did not independently
establish or verify, we have relied upon statements and representations of the
Company and its officers and other representatives and of public officials,
including the facts and conclusions set forth therein.
In rendering the opinions set forth herein, we have examined
and relied on originals or copies of the following:
(a) the Credit Agreement;
(b) each of the promissory notes listed on Schedule III hereto
(collectively, the "NOTES");
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 2
(c) the First Amendment, dated as of April 11, 2002, by the
Company, each of the Subsidiary Opinion Parties and certain other Subsidiaries
of the Company named therein (collectively, the "DEBTORS"), in favor of Bank of
America, N.A. (the "COLLATERAL AGENT"), as Collateral Agent (the "SECURITY
AGREEMENT AMENDMENT"), which amends the Security Agreement, dated as of April
14, 2000, by and among the Debtors and the Collateral Agent;
(d) the First Amended and Restated Intercreditor Agreement,
dated as of April 11, 2002, by and among the Agent, the Lenders, The Prudential
Insurance Company of America ("PRUDENTIAL") and certain of its affiliates, the
Company, each of the Subsidiary Opinion Parties, the holders of certain notes
issued by the Company named therein, Wilmington Trust Company, in its individual
capacity and as owner trustee (the "OWNER TRUSTEE"), BMO Global Capital
Solutions, Inc., a Delaware corporation formerly known as BMO Leasing (U.S.),
Inc. ("BMO GLOBAL"), Bank of Montreal, a Canadian banking organization ("BMO"),
in its capacity as administrative agent, and the Collateral Agent (the "AMENDED
AND RESTATED INTERCREDITOR AGREEMENT");
(e) the certificate of Xxxxxxx X. Xxxxxx, Vice President &
Treasurer of each of the Opinion Parties, dated the date hereof, a copy of which
is attached as Exhibit A hereto (the "COMPANY'S CERTIFICATE"); and
(f) such other documents as we have deemed necessary or
appropriate as a basis for the opinions set forth below.
We express no opinion as to the laws of any jurisdiction other
than (i) the Applicable Laws of the State of Illinois and (ii) the Applicable
Laws of the United States of America.
Capitalized terms used herein and not otherwise defined herein
shall have the same meanings as ascribed thereto in the Credit Agreement. The
Credit Agreement, the Notes, the Security Agreement Amendment and the Amended
and Restated Intercreditor Agreement shall hereinafter be referred to
collectively as the "Transaction Agreements." "Applicable Laws" shall mean those
laws, rules and regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Transaction Agreements, without our
having made any special
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 3
investigation as to the applicability of any specific law, rule or regulation,
and which are not the subject of a specific opinion herein referring expressly
to a particular law or laws. "Governmental Approval" means any consent,
approval, license, authorization or validation of, or filing, recording or
registration with, any governmental authority pursuant to the Applicable Laws of
the State of Illinois or the Applicable Laws of the United States of America.
Based upon the foregoing and subject to the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. Each of the Transaction Agreements constitutes the valid
and binding obligation of each Opinion Party party thereto enforceable against
each such Opinion Party in accordance with its terms under the Applicable Laws
of the State of Illinois.
2. Neither the execution, delivery or performance by each
Opinion Party of the Transaction Agreements to which it is a party nor the
compliance by each such Opinion Party with the terms and provisions thereof will
contravene any provision of any Applicable Law of the State of Illinois or any
Applicable Law of the United States of America.
3. No Governmental Approval, which has not been obtained or
taken and is not in full force and effect, is required to authorize, or is
required in connection with, the execution or delivery of any of the Transaction
Agreements by any Opinion Party party thereto or the enforceability of any of
the Transaction Agreements against any Opinion Party party thereto.
Our opinions are subject to the following assumptions and
qualifications:
(a) enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law);
(b) we have assumed that each of the Transaction Agreements
(other than the Amended and Restated Intercreditor Agreement) constitutes the
valid and binding obligation of each party to such Transaction Agreement (other
than the Opinion Parties) enforceable against such other party in accordance
with its terms;
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 4
(c) we have assumed that the Amended and Restated
Intercreditor Agreement constitutes the valid and binding obligation of each
Benefited Party (as defined in the Amended and Restated Intercreditor Agreement)
signatory to the Amended and Restated Intercreditor Agreement enforceable
against such Benefited Party in accordance with its terms;
(d) we express no opinion as to the effect on the opinions
expressed herein of (i) the compliance or non-compliance of any party (other
than the Opinion Parties to the extent expressly set forth herein) to the
Transaction Agreements with any state, federal or other laws or regulations
applicable to them or (ii) the legal or regulatory status or the nature of the
business of any such party (other than the Opinion Parties to the extent
expressly set forth herein);
(e) we express no opinion as to the enforceability of any
rights to contribution or indemnification provided for in the Transaction
Agreements which are violative of the public policy underlying any law, rule or
regulation (including any federal or state securities law, rule or regulation);
(f) we express no opinion as to the applicability or effect of
any fraudulent transfer or similar law on the Transaction Agreements or any
transactions contemplated thereby;
(g) we express no opinion as to the applicability or effect of
any preference or similar law on the Transaction Agreements or any transaction
contemplated thereby;
(h) we express no opinion with respect to the enforceability
of any provision of any Transaction Agreement to the extent it provides for
interest on interest;
(i) we express no opinion on the enforceability of any
provision in any Transaction Agreement purporting to prohibit, restrict or
condition the assignment of such Transaction Agreement to the extent such
restriction on assignability is governed by sections 9-406 through 9-409 of the
Uniform Commercial Code;
(j) our opinion with respect to the enforceability of the
choice of Illinois law and choice of Illinois forum provisions of the
Transaction Agreements is rendered in reliance upon Section 735 ILCS 105/5-5
(the "ACT") and is subject to the qualifica-
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 5
tions that such enforceability may be limited by public policy considerations of
any jurisdiction, other than the courts of the State of Illinois, in which
enforcement of such provisions, or of a judgment upon an agreement containing
such provisions, is sought;
(k) with respect to any portion of the Transaction Agreements
subject to the Uniform Commercial Code, we express no opinion with respect to
the enforceability of any provision that purports to select a governing law in
conflict with mandatory choice of law rules set forth in the Uniform Commercial
Code;
(l) we express no opinion as to the enforceability of any
provision of any Transaction Agreement to the extent that (a) it provides that
provisions of the Transaction Agreements may only be waived in writing, (b) any
recovery of attorneys' fees is not limited to reasonable attorneys' fees or (c)
it purports to waive any objection a person may have that a suit, action or
proceeding has been brought in an inconvenient forum;
(m) we express no opinion with respect to any provision of the
Credit Agreement to the extent it authorizes or permits any purchaser of a
participation interest to set-off or apply any deposit, property or indebtedness
with respect to any participation interest
(n) we express no opinion as to whether the consent of 100% of
each of the parties to that certain Intercreditor Agreement (as amended,
restated, supplemented or otherwise modified prior to the date hereof, the
"ORIGINAL INTERCREDITOR AGREEMENT"), dated April 14, 2000, by and among the
Agent, the financial institutions then party thereto, Prudential and certain of
its affiliates, the Owner Trustee, BMO Global, BMO, in its capacity as
administrative agent, and the Collateral Agent is required for the amendment and
restatement of the Original Intercreditor Agreement; and
(o) in rendering this opinion, we call to your attention that
the termination of the Amended and Restated Intercreditor Agreement requires the
consent of the Company, which consent we assume will not be given prior to the
indefeasible payment in full of all Benefited Obligations (as defined in the
Amended and Restated Intercreditor Agreement), and we assume that at all times
prior to the indefeasible payment in full of all Benefited Obligations, there
will be a Collateral Agent under the Amended and Restated Intercreditor
Agreement.
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 6
In rendering the foregoing opinions, we have assumed, with
your consent, that:
(a) each of the Opinion Parties is validly existing and in
good standing as a corporation or limited liability company under the laws of
its jurisdiction of organization;
(b) each of the Opinion Parties has the power and authority to
execute, deliver and perform all of its obligations under each of the
Transaction Agreements to which it is a party and the execution and delivery of
each such Transaction Agreement and the consummation by each such Opinion Party
of the transactions contemplated thereby have been duly authorized by all
requisite action on the part of each such Opinion Party. Each of the Transaction
Agreements has been duly authorized, executed and delivered by each Opinion
Party party thereto;
(c) the execution, delivery and performance by each Opinion
Party of any of its obligations under the Transaction Agreements to which it is
a party does not and will not conflict with, contravene, violate or constitute a
default under (i) the articles or certificate of incorporation, certificate of
formation, by-laws or operating agreement (or similar organizational or
governing documents) of such Opinion Party; (ii) any lease, indenture,
instrument or other agreement to which such Opinion Party or its property is
subject, (iii) any rule, law or regulation to which such Opinion Party is
subject (other than Applicable Laws of the State of Illinois and Applicable Laws
of the United States of America as to which we express our opinion in paragraph
2 herein) or (iv) any judicial or administrative order or decree of any
governmental authority; and
(d) no authorization, consent or other approval of, notice to
or filing with any court, governmental authority or regulatory body (other than
Governmental Approvals as to which we express our opinion in paragraph 3 herein)
is required to authorize or is required in connection with the execution,
delivery or performance by any Opinion Party of any Transaction Agreement to
which it is a party or the transactions contemplated thereby.
We understand that you are separately receiving an opinion,
with respect to certain of the foregoing assumptions from Xxxxx X. Xxxxx,
Assistant General Counsel to the Company, and we are advised that such opinion
contains qualifications. Our opinions herein stated are based on the assumptions
specified above and we express no
Each Addressee Listed on
Schedule I hereto
April 11, 2002
Page 7
opinion as to the effect on the opinions herein stated of the qualifications
contained in such other opinion.
This opinion is being furnished only to you in connection with
the Transaction Agreements and is solely for your benefit and is not to be used,
circulated, quoted or otherwise referred to for any other purpose or relied upon
by any other person or entity for any purpose without our prior written consent,
except that any person who becomes party as a Lender to the Credit Agreement
pursuant to Section 10.8 of the Credit Agreement may rely on this opinion as
though it had been addressed to such person and delivered to such person on the
date hereof.
Very truly yours,
Schedule I to
SASM&F (Illinois) Opinion (Credit Agreement)
Addressees of SASM&F (Illinois) Opinion
Bank of America, N.A.
Bank of Montreal
Bank One, NA
PNC Bank, National Association
Wachovia Bank, N.A.
The Northern Trust Company
ABN AMRO Bank N.V.
National Consumer Cooperative Bank
UMB Bank
Schedule I - 1
Schedule II to
SASM&F (Illinois) Opinion (Credit Agreement)
Subsidiary Opinion Parties
General Paint and Manufacturing Company, an Illinois corporation
MaryGreen, LLC, a Delaware limited liability company
TruServ Acceptance Company, an Illinois corporation
TruServ Logistics Company, an Illinois corporation
XxxxXxxxx.xxx Corporation, a Delaware corporation
Schedule II - 1
Schedule III to
SASM&F (Illinois) Opinion (Credit Agreement)
Notes
1. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of Bank of America, N.A. for its Pro Rata Share of the original maximum
principal amount of $169,130,000.
2. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of Bank of America, N.A. for its Pro Rata Share of the original maximum
principal amount of $30,870,000.
3. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of Bank of Montreal for its Pro Rata Share of the original maximum
principal amount of $169,130,000.
4. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of Bank of Montreal for its Pro Rata Share of the original maximum
principal amount of $30,870,000.
5. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of Bank One, NA for its Pro Rata Share of the original maximum principal
amount of $169,130,000.
6. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of Bank One, NA for its Pro Rata Share of the original maximum principal
amount of $30,870,000.
7. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of PNC Bank, National Association for its Pro Rata Share of the original
maximum principal amount of $169,130,000.
8. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of PNC Bank, National Association for its Pro Rata Share of the original
maximum principal amount of $30,870,000.
9. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of Wachovia Bank, N.A. for its Pro Rata Share of the original maximum
principal amount of $169,130,000.
Schedule III- 1
10. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of Wachovia Bank, N.A. for its Pro Rata Share of the original maximum
principal amount of $30,870,000.
11. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of The Northern Trust Company for its Pro Rata Share of the original
maximum principal amount of $169,130,000.
12. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of The Northern Trust Company for its Pro Rata Share of the original
maximum principal amount of $30,870,000.
13. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of ABN AMRO Bank N.V. for its Pro Rata Share of the original maximum
principal amount of $169,130,000.
14. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of ABN AMRO Bank N.V. for its Pro Rata Share of the original maximum
principal amount of $30,870,000.
15. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of National Consumer Cooperative Bank for its Pro Rata Share of the
original maximum principal amount of $169,130,000.
16. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of National Consumer Cooperative Bank for its Pro Rata Share of the
original maximum principal amount of $30,870,000.
17. That certain Series A Note dated April 11, 2002 and issued by the Company in
favor of UMB Bank for its Pro Rata Share of the original maximum principal
amount of $169,130,000.
18. That certain Series B Note dated April 11, 2002 and issued by the Company in
favor of UMB Bank for its Pro Rata Share of the original maximum principal
amount of $30,870,000.
Schedule III-2
Exhibit A to
SASM&F (Illinois) Opinion (Credit Agreement)
Officer's Certificate
I, Xxxxxxx X. Xxxxxx, am the duly elected, qualified and
acting Vice President & Treasurer of TruServ Corporation, a Delaware corporation
(the "Borrower") and am the duly elected, qualified and acting Vice President &
Treasurer of each of General Paint and Manufacturing Company, an Illinois
corporation, MaryGreen, LLC, a Delaware limited liability company, TruServ
Acceptance Company, an Illinois corporation, TruServ Logistics Company, an
Illinois corporation and XxxXxxxx.xxx Corporation, a Delaware corporation
(collectively, with the Borrower, the "Opinion Parties" and each of the
foregoing and the Borrower, individually, an "Opinion Party"). I understand that
pursuant to Section 4.1(d) of the Second Amended and Restated Credit Agreement,
dated as of April 11, 2002 (the "Credit Agreement"), among the Borrower, the
financial institutions from time to time party thereto (the "Lenders") and Bank
of America, N.A., as agent for the Lenders, Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois) ("SASM&F") is rendering an opinion (the "Opinion") to the addressees
listed on Schedule I thereto. Capitalized terms used herein but not otherwise
defined herein shall have the meanings assigned to such terms as set forth in
the Opinion. I further understand that SASM&F is relying on this officer's
certificate and the statements made herein in rendering such Opinion.
With regard to the foregoing, on behalf of the Opinion
Parties, I hereby certify that:
1. I am familiar with the business of each of the Opinion
Parties and its respective subsidiaries, and due inquiry has been made of all
persons deemed necessary or appropriate to verify or confirm the statements
contained herein.
1. SASM&F may rely on the respective representations and
warranties that the Opinion Parties have made in the Credit Agreement, each of
the other Transaction Agreements and each of the certificates delivered pursuant
thereto. I have made a careful review of each of such representations and
warranties and hereby confirm, to the best of my knowledge and belief, that such
representations and warranties are true, correct and complete on and as of the
date of this certificate.
2. Less than twenty-five percent (25%) of the assets of each
of the Opinion Parties and its respective subsidiaries on a consolidated basis
and on an unconsolidated basis consist of Margin Stock.
Exhibit A-1
3. Each of the Opinion Parties is primarily engaged directly,
or indirectly through Majority-Owned Subsidiaries, in the business of wholesale
distribution of hardware and related merchandise, manufacturing of paint and
paint applicators and/or providing additional services to the Borrower's
cooperative members; and each of the Opinion Parties (i) is not and does not
hold itself out as being engaged primarily, nor does it propose to engage
primarily, in the business of investing, reinvesting or trading in Securities,
(ii) has not and is not engaged in, and does not propose to engage in, the
business of issuing Face-Amount Certificates of the Installment Type and has no
such certificate outstanding and (iii) does not own or propose to acquire
Investment Securities having a Value exceeding forty percent (40%) of the Value
of the total assets of the respective Opinion Party (exclusive of Government
Securities and cash items) on an unconsolidated basis.
4. None of the Opinion Parties owns or operates facilities
used for the generation, transmission, or distribution of electric energy for
sale ("Electric Utility Facilities").
5. None of the Opinion Parties owns or operates facilities
used for the distribution of natural or manufactured gas for heat, light, or
power ("Gas Utility Facilities").
6. None of the Opinion Parties nor any of their respective
subsidiaries, directly or indirectly, or through one or more intermediary
Companies, owns, controls, or holds with power to vote (a) ten percent (10%) or
more of the outstanding Voting Securities of any Company that owns or operates
any Electric Utility Facilities or Gas Utility Facilities, or (b) any other
interest, directly or indirectly, or through one or more intermediary entities,
in (i) any Company that owns or operates any Electric Utility Facilities or Gas
Utility Facilities, or (ii) any of the foregoing types of entities that have
received notice of the sort described in paragraph 8 below.
7. None of the Opinion Parties nor any of their respective
subsidiaries has received notice that the Securities and Exchange Commission has
determined, or may determine, that such Opinion Party or any of its subsidiaries
exercises a controlling influence over the management or direction of the
policies of a gas utility company or an electric utility company as to make it
subject to the obligations, duties and liabilities imposed on holding companies
by the Public Utility Holding Company Act of 1935, as amended ("PUHCA").
8. To the best of my knowledge, no Company that has registered
with the Securities and Exchange Commission as a public utility holding company
under PUHCA owns, directly or indirectly, through one or more intermediary
entities, ten
Exhibit A-2
percent (10%) or more of the outstanding Voting Securities (as defined below) of
any of the Opinion Parties.
9. All of the outstanding Securities of TruServ Acceptance
Corporation, an Illinois corporation, are owned, directly or indirectly, by the
Borrower.
10. As used in paragraph 3 of this certificate, the following
term shall have the following meaning:
"Margin Stock" means: (i) any equity security registered or
having unlisted trading privileges on a national securities exchange; (ii) any
OTC security designated as qualified for trading in the National Market System
under a designation plan approved by the Securities and Exchange Commission;
(iii) any debt security convertible into a margin stock or carrying a warrant or
right to subscribe to or purchase a margin stock; (iv) any warrant or right to
subscribe to or purchase a margin stock; or (v) any security issued by an
investment company registered under Section 8 of the Investment Company Act of
1940.
11. As used in paragraphs 4, 10 and 12 of this certificate,
the following terms shall have the following meanings:
"Exempt Fund" means a company that is excluded from treatment
as an investment company solely by section 3(c)(1) or 3(c)(7) of the Investment
Company Act of 1940 (applicable to certain privately offered investment funds).
"Face-Amount Certificate of the Installment Type" means any
certificate, investment contract, or other Security that represents an
obligation on the part of its issuer to pay a stated or determinable sum or sums
at a fixed or determinable date or dates more than 24 months after the date of
issuance, in consideration of the payment of periodic installments of a stated
or determinable amount.
"Government Securities" means all Securities issued or
guaranteed as to principal or interest by the United States, or by a person
controlled or supervised by and acting as an instrumentality of the government
of the United States pursuant to authority granted by the Congress of the United
States; or any certificate of deposit for any of the foregoing.
"Investment Securities" includes all Securities except (A)
Government Securities, (B) Securities issued by companies the only shareholders
in which are employees and former employees of a company and its subsidiaries,
members of the families of such persons and the company and its subsidiaries and
(C) Securities issued by Majority-Owned Subsidiaries of the Borrower which are
not engaged and do not
Exhibit A-3
propose to be engaged in activities within the scope of clause (i), (ii) or
(iii) of paragraph 4 of this Certificate or which are exempted or excepted from
treatment as an investment company by statute, rule or governmental order (other
than Exempt Funds).
"Majority-Owned Subsidiary" of a person means a company fifty
percent (50%) or more of the outstanding Voting Securities of which are owned by
such person, or by a company which, within the meaning of this paragraph, is a
Majority-Owned Subsidiary of such person.
"Security" means any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit-sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security (including a certificate of
deposit) or on any group or index of securities (including any interest therein
or based on the value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign currency, or,
in general, any interest or instrument commonly known as a "security," or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase,
any of the foregoing.
"Value" means (i) with respect to Securities owned at the end
of the last preceding fiscal quarter for which market quotations are readily
available, the market value at the end of such quarter; (ii) with respect to
other Securities and assets owned at the end of the last preceding fiscal
quarter, fair value at the end of such quarter, as determined in good faith by
or under the direction of the board of directors; and (iii) with respect to
securities and other assets acquired after the end of the last preceding fiscal
quarter, the cost thereof.
"Voting Security" means any security presently entitling the
owner or holder thereof to vote for the election of directors of a company (or
its equivalent, e.g., general partner or manager of a limited liability
company).
12. As used in paragraphs 7, 9 and 13 of this certificate, the
following terms shall have the following meanings:
"Company" means a corporation, limited liability company,
partnership, association, joint-stock company, joint venture, trust, or any
receiver, trustee, or other liquidating agent of any of the foregoing in its
capacity as such.
"Security" or "Securities" means any note, draft, stock,
treasury stock, bond, debenture, limited liability company interest, certificate
of interest or participation
Exhibit A-4
in any profit-sharing agreement or in any oil, gas, other mineral royalty or
lease, any collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, receiver's or trustee's certificate, or,
in general, any instrument commonly known as a "security"; or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guaranty of, assumption of liability on, or warrant or right to subscribe to or
purchase, any of the foregoing.
"Voting Security" or "Voting Securities" means any Security
presently entitling the owner or holder thereof to vote in the direction or
management of the affairs of a Company, or any Security issued under or pursuant
to any trust, agreement, or arrangement whereby a trustee or trustees or agent
or agents for the owner or holder of such Security are presently entitled to
vote in the direction or management of the affairs of a Company; and a specified
per centum of the outstanding Voting Securities of a Company means such amount
of the outstanding Voting Securities of such Company as entitles the holder or
holders thereof to cast said specified per centum of the aggregate votes which
the holders of all the outstanding Voting Securities of such Company are
entitled to cast in the direction or management of the affairs of such Company.
[Signature Page Follows]
Exhibit A-5
Credit Agreement Opinion Certificate
IN WITNESS WHEREOF, I have executed this certificate this ___
day of April, 2002.
TRUSERV CORPORATION
GENERAL PAINT AND MANUFACTURING COMPANY
MARYGREEN, LLC
TRUSERV ACCEPTANCE COMPANY
TRUSERV LOGISTICS COMPANY
XXXXXXXXX.XXX CORPORATION
By: __________________________________
Xxxxxxx X. Xxxxxx
Vice President & Treasurer
Exhibit A-6
EXHIBIT G
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, ____ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
The Assignor is party to the Second Amended and Restated Credit
Agreement dated as of April 11, 2002 (as renewed, amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
among TruServ Corporation (the "Company"), various financial institutions
(including the Assignor, the "Lenders") and Bank of America, N.A., as Agent.
Terms defined in the Credit Agreement and not defined in this Assignment and
Acceptance are used herein as defined in the Credit Agreement.
The Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit Agreement in respect of
the Assignor's Commitment, the Loans, the obligations to participate in Swing
Line Loans and the other rights and obligations of the Assignor thereunder, and
the Assignee wishes to accept assignment of such rights and to assume such
obligations from the Assignor, in each case on the terms and subject to the
conditions of this Assignment and Acceptance.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance (and effective on the Effective Date (as defined below), (i) the
Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the
Assignee hereby purchases, assumes and undertakes from the Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance),
(i) ___% of the Assignor's Commitment, together with a
corresponding portion of the Assignor's outstanding Loans and of the
Assignor's obligations to participate in Swing Line Loans, as set forth
on Annex I; and
(ii) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit
Agreement and the other Loan Documents
(all of the foregoing being herein called the "Assigned Rights and
Obligations").
1
(b) With effect on and after the Effective Date, the Assignee shall be
a party to the Credit Agreement and succeed to all of the rights and be
obligated to perform all of the obligations of a Lender under the Credit
Agreement, including the requirements concerning confidentiality and the payment
of indemnification, with a Pro Rata Share equal to _______%. The Assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement are required to be performed by it as a
Lender. It is the intent of the parties hereto that (i) as of the Effective
Date, the Pro Rata Share of the Assignor shall be reduced to _______%, and (ii)
the Assignor shall relinquish its rights and be released from its obligations
under the Credit Agreement to the extent such obligations have been assumed by
the Assignee; provided, however, that the Assignor shall not relinquish its
rights under Article III or Sections 10.4 or 10.5 of the Credit Agreement in
respect of the Assigned Rights and Obligations to the extent such rights relate
to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's Commitment and the Assignor's
Commitment will be as set forth on Annex I.
2. Payments.
(a) As consideration for the sale, assignment and transfer contemplated
in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective
Date in immediately available funds an amount equal to $__________, representing
the principal amount of all outstanding and funded Loans included within the
Assigned Rights and Obligations.
(b) The [Assignor] [Assignee] further agrees to pay to the Agent a
processing fee in the amount specified in Section 10.8(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Assigned Rights and Obligations shall be for the account of
the Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Rights and Obligations shall be for
the account of the Assignee. Each of the Assignor and the Assignee agrees that
it will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the
preceding two sentences and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements referred to in Section 6.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; and (b) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
2
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be ______________ (the "Effective Date");
provided that the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and delivered
by the Assignor and the Assignee;
(ii) the consent of the Company, the Swing Line Lender and the
Agent, if required for an effective assignment of the Assigned Rights and
Obligations by the Assignor to the Assignee under Section 10.8(a) of the
Credit Agreement, shall have been duly obtained and shall be in full
force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
(iv) the Assignee has presented evidence reasonably satisfactory
to the Agent and the Company that the Assignee is exempt from withholding
taxes; and
(v) the processing fee referred to in Section 2(b) hereof shall
have been paid to the Agent.
(b) Promptly following the execution of this Assignment and Acceptance,
the Assignor shall deliver to the Company, the Swing Line Lender and the Agent,
for acknowledgment by the Company, the Swing Line Lender and the Agent, a Notice
of Assignment substantially in the form attached hereto as Schedule 1.
[INCLUDE ONLY IF ASSIGNOR IS THE AGENT]
(c) The Assignee hereby appoints and authorizes the Assignor to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Lenders pursuant to the terms of
the Credit Agreement.
(d) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Agent under the Credit Agreement.]
6. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit
3
Agreement, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; and (iv) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial condition or statements
of the Company or the performance or observance by the Company of any of its
obligations under the Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any
other documents required or permitted to be executed or delivered by it in
connection with this Assignment and Acceptance, and to fulfill its obligations
hereunder; (ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance; and apart
from any agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; and (iii) this Assignment and
Acceptance has been duly executed and delivered by it and constitutes the legal,
valid and binding obligation of the Assignee, enforceable against the Assignee
in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable principles.
7. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company, the Swing Line Lender or the Agent
which may be required in connection with the assignment and assumption
contemplated hereby.
8. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
4
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor and the
Assignee irrevocably submit to the non-exclusive jurisdiction of any State or
Federal court sitting in the State of Illinois over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such Illinois State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENT OR
AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENT (WHETHER ORAL
OR WRITTEN).
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
----------------------------------
Title:
-------------------------------
Address:
[ASSIGNEE]
By:
----------------------------------
Title:
-------------------------------
Address:
5
ANNEX I
IMMEDIATELY BEFORE
EFFECTIVE DATE: COMMITMENT PRO RATA SHARE
---------- --------------
Assignor: $________ _______%
Assignee: $________ _______%
On and after
Effective Date:
Assignor: $________ _______%
Assignee: $________ _______%
The Assigned Rights and Obligations include:
Amount Loan
------ ----
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, ____
Bank of America, N.A., as Agent
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: ___________________
TruServ Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn:_________________
Ladies and Gentlemen:
We refer to the Second Amended and Restated Credit Agreement dated as
of April 11, 2002 (as renewed, amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement") among TruServ Corporation
(the "Company"), various financial institutions and Bank of America, N.A., as
Agent. Terms defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") pursuant to the Assignment and Acceptance Agreement attached hereto
(the "Assignment and Acceptance") of:
(i) ___% of the Assignor's Commitment, together with a
corresponding portion of the Assignor's outstanding Loans and the
Assignor's obligation to participate in Swing Line Loans, and
(ii) all related rights, benefits, obligations, liabilities
and indemnities of the Assignor under and in connection with the Credit
Agreement and the other Loan Documents.
After giving effect to such assignment, the Assignee shall have a Pro
Rata Share equal to _______%, and the Pro Rata Share of the Assignor shall be
reduced to _______%.
2. The Assignee agrees that, upon receiving the consent, if applicable,
of the Agent, the Swing Line Lender and the Company to such assignment, the
Assignee will (effective on the Effective Date) be bound by the terms of the
Credit Agreement as fully and to the same extent as if the Assignee were the
Lender originally holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name:
Address: _________________________________
_________________________________
_________________________________
Attention: _________________________________
Telephone: (___)____________________________
Telecopier: (___)____________________________
Telex (Answerback): _________________________
(B) Payment Instructions:
Account No.:_________________________________
At: _________________________________
_________________________________
_________________________________
Reference: _________________________________
Attention: _________________________________
4. You are entitled to rely upon the representations, warranties and
covenants of each of the Assignor and the Assignee contained in the Assignment
and Acceptance.
2
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By: ___________________________________
Title:___________________________________
By: ___________________________________
Title:___________________________________
[NAME OF ASSIGNEE]
By: ________________________
Title:________________________
By: ________________________
Title:________________________
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
TRUSERV CORPORATION
By: __________________________
Its:__________________________
BANK OF AMERICA, N.A.,
as Swing Line Lender and Agent
By: __________________________
Its:__________________________
3
EXHIBIT H-1
FORM OF SERIES A NOTE
_____________, 200_
FOR VALUE RECEIVED, the undersigned, TruServ Corporation, a
Delaware corporation (the "Company"), hereby promises to pay to the order of
_____________ (the "Lender") such Lender's Pro Rata Share of $169,130,000 (or,
if less, such Lender's Pro Rata Share of the aggregate unpaid principal amount
of all Loans evidenced by Series A Notes) on the dates and in the amounts
provided in the Second Amended and Restated Credit Agreement dated as of April
11, 2002 (as renewed, amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among the Company, various financial
institutions (including the Lender) and Bank of America, N.A., as Agent. The
Company further promises to pay interest on the unpaid principal amount of the
Loans evidenced hereby from time to time at the rates, on the dates, and
otherwise as provided in the Credit Agreement.
The Lender is authorized to endorse the amount and the date on
which each Loan is made and each payment of principal with respect thereto on
the schedules annexed hereto and made a part hereof, or on continuations thereof
which shall be attached hereto and made a part hereof; provided that any failure
to endorse such information on such schedule or continuation thereof shall not
in any manner affect any obligation of the Company under the Credit Agreement
and this Note.
The Loans evidenced by this Note may only be assigned as
provided in the Credit Agreement.
This Note is one of the Series A Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, which Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
Terms defined in the Credit Agreement are used herein with
their defined meanings therein unless otherwise defined herein. THIS NOTE SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF ILLINOIS.
TRUSERV CORPORATION
By:______________________________________
Title:___________________________________
Schedule to Series A Note
LOANS AND REPAYMENTS OF LOANS
Date Amount of Loan Amount of Loan Repaid Notation Made By
---- -------------- --------------------- ----------------
EXHIBIT H-2
FORM OF SERIES B NOTE
_____________, 200_
FOR VALUE RECEIVED, the undersigned, TruServ Corporation, a
Delaware corporation (the "Company"), hereby promises to pay to the order of
_____________ (the "Lender") such Lender's Pro Rata Share of $30,870,000 (or, if
less, such Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Loans evidenced by Series B Notes) on the dates and in the amounts provided
in the Second Amended and Restated Credit Agreement dated as of April 11, 2002
(as renewed, amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among the Company, various financial institutions
(including the Lender) and Bank of America, N.A., as Agent. The Company further
promises to pay interest on the unpaid principal amount of the Loans evidenced
hereby from time to time at the rates, on the dates, and otherwise as provided
in the Credit Agreement.
The Lender is authorized to endorse the amount and the date on
which each Loan is made and each payment of principal with respect thereto on
the schedules annexed hereto and made a part hereof, or on continuations thereof
which shall be attached hereto and made a part hereof; provided that any failure
to endorse such information on such schedule or continuation thereof shall not
in any manner affect any obligation of the Company under the Credit Agreement
and this Note.
The Loans evidenced by this Note may only be assigned as
provided in the Credit Agreement.
This Note is one of the Series B Notes referred to in, and is
entitled to the benefits of, the Credit Agreement, which Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
Terms defined in the Credit Agreement are used herein with
their defined meanings therein unless otherwise defined herein. THIS NOTE SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF ILLINOIS.
TRUSERV CORPORATION
By:______________________________________
Title:___________________________________
Schedule to Series B Note
LOANS AND REPAYMENTS OF LOANS
Date Amount of Loan Amount of Loan Repaid Notation Made By
---- -------------- --------------------- ----------------
EXHIBIT J
TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT dated as of April 14, 2000 (this
"Agreement") is between TRUSERV CORPORATION, a Delaware corporation (the
"Company"), and BANK OF AMERICA, N.A. ("Bank of America"), as Collateral Agent
(as defined below) for the Benefited Parties (as defined in the Intercreditor
Agreement referred to below).
W I T N E S S E T H :
WHEREAS, pursuant to an Intercreditor Agreement dated as of the date
hereof (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"), certain creditors of the Company and Bank of
America, as Collateral Agent (in such capacity, together with any successor in
such capacity, the "Collateral Agent"), have agreed that (i) the Benefited
Obligations (as defined in the Intercreditor Agreement) shall be secured and
guaranteed as set forth in the Intercreditor Agreement and (ii) Bank of America
shall act as collateral agent for the Benefited Parties; and
WHEREAS, the Company has entered into a security agreement dated as of
the date hereof with the Collateral Agent for the benefit of itself and the
other Benefited Parties (as the same may be amended, supplemented, restated or
replaced from time to time, the "Security Agreement");
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided in the Intercreditor Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
to secure payment of all of the Benefited Obligations, the Company hereby
mortgages, pledges and hypothecates to the Collateral Agent, and grants to the
Collateral Agent a security interest in, for its benefit and the benefit of each
other Benefited Party, all of the following property (the "Trademark
Collateral"), whether now owned or hereafter acquired or existing:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing
anywhere in the world or hereafter adopted or acquired, whether
currently in use or not, all registrations and recordings thereof and
all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any
office or agency of the United States of America or any State thereof
or any foreign country, including those referred to in Attachment 1
hereto;
(b) all Trademark licenses, including each Trademark license
referred to in Attachment 2 hereto;
(c) all reissues, extensions or renewals of any of the items
described in clauses (a) and (b);
(d) all of the goodwill of the business connected with the use
of, and symbolized by the items described in, clauses (a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Company against third parties for
past, present, or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Attachment 1
or 2 hereto, or for any injury to the goodwill associated with the use
of any Trademark or for breach or enforcement of any Trademark license.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Company for the purpose of registering the security interest of
the Collateral Agent in the Trademark Collateral with the United States Patent
and Trademark Office and corresponding offices in other countries of the world.
The security interest granted hereby has been granted as a supplement to, and
not in limitation of, the security interest granted to the Collateral Agent for
its benefit and the benefit of each other Benefited Party. The Security
Agreement (and all rights and remedies of the Collateral Agent and each other
Benefited Party thereunder) shall remain in full force and effect in accordance
with its terms.
SECTION 4. Release of Security Interest. Upon payment in full of all
Benefited Obligations and the termination of all commitments to create Benefited
Obligations, the Collateral Agent shall, at the Company"s expense, execute and
deliver to the Company all instruments and other documents as may be necessary
or proper to release the lien on and security interest in the Trademark
Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Company hereby further acknowledges and
affirms that the rights and remedies of the Collateral Agent with respect to the
security interest in the Trademark Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
2
SECTION 6. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
TRUSERV CORPORATION
Address: By:
________________________________
0000 Xxxx Xxxx Xxxx Xxxxxx Name Printed:_________________________
Xxxxxxx, Xxxxxxxx 00000-0000 Title:________________________________
Attention: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
BANK OF AMERICA, N.A.,
as Collateral Agent
Address: By:
_________________________________
000 Xxxxx XxXxxxx Xxxxxx Name Printed:_________________________
Xxxxxxx, Xxxxxxxx 00000 Title:________________________________
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
S-1
ATTACHMENT 1
to Trademark Security Agreement
Registered Trademarks
---------------------
Country Trademark Registration No. Registration Date
------- --------- ---------------- -----------------
SEE SCHEDULE A ATTACHED HERETO
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
------- --------- ---------- -----------
SEE SCHEDULE B ATTACHED HERETO
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Country Trademark Docket No. Filing Date Services
------- --------- ---------- ----------- --------
NONE
ATTACHMENT 2
to Trademark Security Agreement
Trademark Licenses
Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
----------- --------- -------- -------- ---- ----
US Prestige TruServ Corporation Trio Industries, Ltd. 1/11/00 30 days' notice
by either party
US True Value TruServ Corporation Network Food Services 4/11/00 4/11/01
Coffee Stop Incorporated
S-3
EXHIBIT K
GUARANTY
THIS GUARANTY dated as of April 14, 2000 is executed in favor of BANK
OF AMERICA, N.A. ("Bank of America"), individually as a Benefited Party (as
defined in the Intercreditor Agreement referred to below) and as Collateral
Agent (as defined below), and the other Benefited Parties.
W I T N E S S E T H:
WHEREAS, various parties have made loans to, purchased notes from,
issued letters of credit for the account of or made other financial
accommodations to TruServ Corporation (the "Company");
WHEREAS, pursuant to an Intercreditor Agreement dated as of the date
hereof (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms used but not defined herein have
the respective meanings given thereto in the Intercreditor Agreement), certain
creditors of the Company and Bank of America, as Collateral Agent (in such
capacity, together with any successor in such capacity, the "Collateral Agent"),
have agreed that (i) the Benefited Obligations shall be secured and guaranteed
as set forth in the Intercreditor Agreement and (ii) Bank of America shall act
as collateral agent for the holders of the Benefited Obligations; and
WHEREAS, each of the undersigned has agreed to guaranty the Liabilities
(as defined below) as hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned agrees as
follows:
Each of the undersigned hereby jointly and severally, unconditionally
and irrevocably, as primary obligor and not merely as surety, guarantees the
full and prompt payment when due, whether by acceleration or otherwise, and at
all times thereafter, of (a) all obligations of the Company to the Collateral
Agent and each other Benefited Party under or in connection with each Financing
Agreement, in each case howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, now or hereafter existing, or due or to
become due, in each case as the same may be amended, modified, extended or
renewed from time to time, plus (b) all costs and expenses paid or incurred by
the Collateral Agent or any other Benefited Party in enforcing this Guaranty
against such undersigned (all such obligations being herein collectively called
the "Liabilities"); provided, however, that the liability of each of the
undersigned hereunder shall be limited to the maximum amount of the Liabilities
which such undersigned may guaranty without violating any fraudulent conveyance
or fraudulent transfer law.
Each of the undersigned agrees that, in the event of the occurrence of
any Event of Default under Sections 8.1(g) through (j) of the Credit Agreement,
Sections 7A(vii) through (x) of any of the Senior Note Agreements, Sections
7A(vii) through (x) of the Shelf Agreement, or the comparable provision of any
other Financing Agreement, and if such event shall occur at a time when any of
the Liabilities may not then be due and payable, such undersigned will pay to
the Collateral Agent for the account of the Benefited Parties forthwith the full
amount which would be payable hereunder by such undersigned if all Liabilities
were then due and payable.
To secure all obligations of each of the undersigned hereunder, the
Collateral Agent and each Benefited Party shall have a lien on and security
interest in (and may, without demand or notice of any kind, at any time and from
time to time when any amount shall be due and payable by such undersigned
hereunder, appropriate and apply toward the payment of such amount) any and all
balances, credits, deposits, accounts or moneys of or in the name of such
undersigned now or hereafter with the Collateral Agent or such Benefited Party
and any and all property of every kind or description of or in the name of such
undersigned now or hereafter, for any reason or purpose whatsoever, in the
possession or control of, or in transit to, the Collateral Agent or such
Benefited Party or any agent or bailee for the Collateral Agent or such
Benefited Party.
This Guaranty shall in all respects be a continuing, irrevocable,
absolute and unconditional guaranty of payment and performance and not only
collectibility, and shall remain in full force and effect (notwithstanding,
without limitation, the dissolution of any of the undersigned, that at any time
or from time to time no Liabilities are outstanding or any other circumstance)
until all Liabilities have been paid in full and all commitments to create
Liabilities have been terminated.
The undersigned further agree that if at any time all or any part of
any payment theretofore applied by the Collateral Agent or any other Benefited
Party to any of the Liabilities is or must be rescinded or returned by the
Collateral Agent or such Benefited Party for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy or reorganization of the Company
or any of the undersigned), such Liabilities shall, for the purposes of this
Guaranty, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application by
the Collateral Agent or such Benefited Party, and this Guaranty shall continue
to be effective or be reinstated, as the case may be, as to such Liabilities,
all as though such application by the Collateral Agent or such Benefited Party
had not been made.
The obligations of each of the undersigned shall be unconditional and
absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(1) any event referred to in the immediately succeeding paragraph;
2
(i) any extension, renewal, settlement, compromise, waiver or release
in respect of any obligation of the Company under any Financing Agreement, by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to any Financing
Agreement;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Company under any Financing
Agreement;
(iv) any change in the corporate existence, structure or ownership of
the Company, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Company or its assets or any resulting release or
discharge of any obligation of the Company contained in any Financing Agreement;
(v) the existence of any claim, set-off or other right which any of the
undersigned may have at any time against the Company, any Benefited Party or any
other Person, whether in connection herewith or any unrelated transaction,
provided that nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against the
Company for any reason of any Financing Agreement, or any provision of
applicable law or regulation purporting to prohibit the payment by the Company
of the principal of or any interest on any Benefited Obligation or any other
amount payable by the Company under any Financing Agreement; or
(vii) any other act or omission to act or delay of any kind by the
Company, the Collateral Agent, any other Benefited Party or any other Person or
any other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of any of the obligations
of such undersigned under this Guaranty.
The Collateral Agent or any Benefited Party may, from time to time, at
its sole discretion and without notice to the undersigned (or any of them), take
any or all of the following actions: (a) retain or obtain a security interest in
any property to secure any of the Liabilities or any obligation hereunder, (b)
retain or obtain the primary or secondary obligation of any obligor or obligors,
in addition to the undersigned, with respect to any of the Liabilities, (c)
extend or renew any of the Liabilities for one or more periods (whether or not
longer than the original period), amend, modify, release, compromise, alter or
exchange any of the Liabilities, or amend, modify, release, compromise, alter or
exchange any obligation of any of the undersigned hereunder or any obligation of
any nature of any other obligor with respect to any of the Liabilities, (d)
release its security interest in, or surrender, release or permit any
substitution or exchange for, all or any part of any property securing any of
the Liabilities or any obligation hereunder, or extend or renew for one or more
periods (whether or not longer than the original period) or amend, modify,
release, compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such property, and (e) resort to the undersigned (or
any of them) for payment of any of the
3
Liabilities when due, whether or not the Collateral Agent or any other Benefited
Party shall have resorted to any property securing any of the Liabilities or any
obligation hereunder or shall have proceeded against any other of the
undersigned or any other obligor primarily or secondarily obligated with respect
to any of the Liabilities.
Notwithstanding any payment made by or for the account of any of the
undersigned pursuant to this Guaranty, the undersigned shall not be subrogated
to any rights of the Collateral Agent or any other Benefited Party until such
time as this Guaranty shall have been discontinued as to all of the undersigned
and the Collateral Agent and the other Benefited Parties shall have received
payment of the full amount of all Liabilities.
The undersigned hereby expressly waive: (a) notice of the acceptance by
the Collateral Agent or any other Benefited Party of this Guaranty, (b) notice
of the existence or creation or non-payment of all or any of the Liabilities,
(c) presentment, demand, notice of dishonor, protest, and all other notices
whatsoever, and (d) all diligence in collection or protection of or realization
upon any Liabilities or any security for or guaranty of any Liabilities.
Each of the undersigned hereby represents, warrants and covenants as to
itself that:
(i) It is a corporation or limited liability company duly organized and
existing in good standing under the laws of the state of its formation and has
the power to own its property and to carry on its business as now being
conducted. It does not have outstanding any shares of stock of a class which has
priority over any other class as to dividends or in liquidation.
(ii) It has the power to own its properties and to carry on its
businesses as now being conducted. It has the power and authority to execute and
deliver this Guaranty and all other Financing Agreements to which it is a party
and to perform the provisions hereof and thereof.
(iii) This Guaranty and all other Financing Agreements to which it is a
party have been duly authorized by all necessary action on its part and this
Guaranty and all other Financing Agreements to which it is a party constitute a
legal, valid and binding obligation of the undersigned enforceable against it in
accordance with its terms, except as such enforceability may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors" rights generally and (B) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(iv) There is no action, suit, investigation or proceeding pending or,
to its knowledge, threatened against the Company or any of the undersigned, or
any of the properties or rights of the Company or any of the undersigned, by or
before any court, arbitrator or administrative or governmental body which could
be reasonably expected to result in any material adverse change in the business,
property or assets, condition (financial or otherwise) or operations of the
4
Company and the undersigned taken as a whole or the ability of the undersigned
to perform its obligations under this Guaranty or any other Financing Agreement
to which it is a party.
(v) It is not party to any contract or agreement or subject to any
charter or other corporate restriction which materially and adversely affects
its business, property or assets, condition (financial or otherwise) or
operations. None of the execution and delivery of this Guaranty or any other
Financing Agreement will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of, or result in the creation of any Lien (other than the Liens
created by the Collateral Documents) upon any of the properties or assets of the
Company or any of the undersigned pursuant to, the charter or by-laws of the
Company or any of the undersigned, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the Company or any of the
undersigned is subject.
(vi) Neither the nature of the undersigned, nor any of its businesses
or properties, nor any relationship between the undersigned and any other
Person, is such as to require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or administrative or
governmental body in connection with the execution and delivery of this Guaranty
or any other Financing Agreement to which it is a party or the fulfillment of or
compliance with the terms and provisions hereof or thereof.
(vii) It is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. It is not a "holding company" or a
"subsidiary" or an "affiliate" or a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Each of the undersigned further agrees to pay all expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the
Collateral Agent or any other Benefited Party in endeavoring to collect the
Liabilities of such undersigned, or any part thereof, and in enforcing this
Guaranty against such undersigned.
The creation or existence from time to time of additional Liabilities
to the Collateral Agent or any Benefited Party or any of them is hereby
authorized, without notice to the undersigned (or any of them), and shall in no
way affect or impair the rights of the Collateral Agent or any Benefited Party
or the obligations of the undersigned under this Guaranty.
This Guaranty shall inure to the benefit of the Collateral Agent and
each other Benefited Party and their respective successors and assigns. The
Collateral Agent and any other Benefited Party may from time to time, without
notice to the undersigned (or any of them), assign or transfer any or all of the
Liabilities or any interest therein; and, notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Liabilities
shall be and remain Liabilities for the purposes of this Guaranty, and each and
every immediate and successive assignee or transferee of any of the Liabilities
or of any interest therein shall, to the
5
extent of the interest of such assignee or transferee in the Liabilities, be
entitled to the benefits of this Guaranty to the same extent as if such assignee
or transferee were a Benefited Party.
No delay on the part of the Collateral Agent or any other Benefited
Party in the exercise of any right or remedy shall operate as a waiver thereof,
and no single or partial exercise by the Collateral Agent or any other Benefited
Party of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy; nor shall any modification or waiver
of any provision of this Guaranty be binding upon the Collateral Agent or any
other Benefited Party except as expressly set forth in a writing duly signed and
delivered on behalf of the Collateral Agent (or, if at any time there is no
Collateral Agent, the Required Benefited Parties). No action of the Collateral
Agent or any other Benefited Party permitted hereunder shall in any way affect
or impair the rights of the Collateral Agent or any other Benefited Party or the
obligations of the undersigned under this Guaranty. For purposes of this
Guaranty, Liabilities shall include all obligations of the Company to the
Collateral Agent or any other Benefited Party arising under or in connection
with any Financing Agreement, notwithstanding any right or power of the Company
or anyone else to assert any claim or defense as to the invalidity or
unenforceability of any obligation, and no such claim or defense shall affect or
impair the obligations of the undersigned hereunder.
Pursuant to the Intercreditor Agreement, (a) this Guaranty has been
delivered to the Collateral Agent and (b) the Collateral Agent has been
authorized to enforce this Guaranty on behalf of itself and each of the other
Benefited Parties. All payments by the undersigned pursuant to this Guaranty
shall be made to the Collateral Agent for application as set forth in the
Intercreditor Agreement or, if there is no Collateral Agent, to the Benefited
Parties for their ratable benefit.
This Guaranty shall be binding upon the undersigned and the successors
and assigns of the undersigned, provided that none of the undersigned may assign
its obligations hereunder without the prior written consent of the Collateral
Agent. To the extent that the Company or any of the undersigned is either a
partnership, corporation, limited liability company or other entity, all
references herein to the Company and to the undersigned, respectively, shall be
deemed to include any successor or successors, whether immediate or remote, to
such entity. The term "undersigned" as used herein shall mean all parties
executing this Guaranty and each of them, and all such parties shall be jointly
and severally obligated hereunder.
This Guaranty has been delivered at Chicago, Illinois, and shall be
construed in accordance with and governed by the internal laws of the State of
Illinois. Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty.
6
This Guaranty may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original but all such counterparts shall together
constitute one and the same Guaranty. At any time after the date of this
Guaranty, one or more additional Persons may become parties hereto by executing
and delivering to the Collateral Agent a counterpart of this Guaranty.
Immediately upon such execution and delivery (and without any further action),
each such additional Person will become a party to, and will be bound by all of
the terms of, this Guaranty.
This Guaranty is secured pursuant to a Security Agreement dated as of
even date herewith (as amended or otherwise modified from time to time) and may
be secured by one or more other agreements (including, without limitation, one
or more pledge agreements, mortgages, deeds of trust or other similar
documents).
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS GUARANTY SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF
THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH OF THE UNDERSIGNED FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE
ADDRESS SET FORTH UNDER ITS NAME ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS
IT SHALL HAVE SPECIFIED IN WRITING TO THE COLLATERAL AGENT AS ITS ADDRESS FOR
NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF
THE COLLATERAL AGENT AND EACH OTHER BENEFITED PARTY, HEREBY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS GUARANTY, OR ANY OTHER FINANCING AGREEMENT AND ANY AMENDMENT,
7
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered
as of the day and year first above written.
TRUSERV ACCEPTANCE COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
TRUSERV LOGISTICS COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
GENERAL PAINT & MANUFACTURING COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
MARYGREEN, LLC
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
TRUE XXXXX.XXX CORPORATION
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
S-1
XXXXXX CANADA HARDWARE & VARIETY COMPANY,
INC.
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
S-2
Signature page for the Guaranty dated as of
April 14, 2000 issued by various
subsidiaries of TruServ Corporation.
Each of the undersigned is executing a
counterpart hereof for purposes of becoming
a party hereto:
TRUSERV REAL ESTATE AGENCY, INC.
ADVOCATE SERVICES INCORPORATED
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
S-3
Signature page for the Guaranty dated as of
April 14, 2000 issued by various
subsidiaries of TruServ Corporation.
The undersigned is executing a counterpart
hereof for purposes of becoming a party
hereto:
[NAME OF SUBSIDIARY]
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
S-4
SCHEDULE I
TO GUARANTY
ADDRESSES
Truserv Acceptance Company
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Truserv Logistics Company
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
General Paint & Manufacturing Company
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
MaryGreen, LLC
00000 Xxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
True Xxxxx.xxx Corporation
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx Canada Hardware and Variety Company Inc.
EXHIBIT L
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") dated as of April 14, 2000 is
among TRUSERV CORPORATION, a Delaware corporation (the "Company"), any
subsidiary of the Company which from time to time becomes party hereto
(collectively, including the Company, the "Pledgors" and each individually a
"Pledgor") and BANK OF AMERICA, N.A. ("Bank of America"), as Collateral Agent
(as defined below) for the Benefited Parties (as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to an Intercreditor Agreement dated as of the date
hereof (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms used but not defined herein have
the respective meanings given thereto in the Intercreditor Agreement), certain
creditors of the Company and Bank of America, as Collateral Agent (in such
capacity, together with any successor in such capacity, the "Collateral Agent"),
have agreed that (i) the Benefited Obligations shall be secured and guaranteed
as set forth in the Intercreditor Agreement and (ii) Bank of America shall act
as collateral agent for the Benefited Parties;
WHEREAS, each of the other Pledgors has guarantied all obligations of
the Company under each Financing Agreement; and
WHEREAS, the Benefited Obligations of each Pledgor are to be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) the terms Benefited Obligations,
Benefited Parties, Event of Default, Financing Agreement and Person shall have
the respective meanings assigned thereto in the Intercreditor Agreement, and (b)
the following terms have the following meanings (such meanings to be applicable
to both the singular and plural forms of such terms):
Agreement - see the introductory paragraph.
Bank of America - see the introductory paragraph.
Collateral - see Section 2.
Collateral Agent - see the recitals.
1
Company - see the introductory paragraph.
Default means the occurrence of any of the following events:
(i) any Event of Default or (ii) any warranty of any Pledgor herein is
untrue or misleading in any material respect and, as a result thereof,
the Collateral Agent's security interest for the benefit of the
Benefited Parties in any material portion of the Collateral is not
perfected or the Collateral Agent's rights and remedies with respect to
any material portion of the Collateral are materially impaired or
otherwise materially adversely affected.
Foreign Issuer means each Issuer designated as a "Foreign
Issuer" on Schedule I hereto.
Intercreditor Agreement - see the recitals.
Issuer means the issuer of any of the shares of stock or other
securities representing all or any of the Collateral.
Liabilities means, as to each Pledgor, all Benefited
Obligations of such Pledgor.
2. Pledge. As security for the payment of all Liabilities,
each Pledgor hereby pledges to the Collateral Agent for the benefit of
the Benefited Parties, and grants to the Collateral Agent for the
benefit of the Benefited Parties a continuing security interest in, all
of the following:
A. All of the shares of stock and other securities
set forth under such Pledgor's name on Schedule I hereto, all
of the certificates and/or instruments representing such
shares of stock and other securities, and all cash,
securities, dividends, rights and other property at any time
and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of
such shares or other securities;
B. All additional shares of stock of any of the
Issuers listed in Schedule I hereto at any time and from time
to time acquired by such Pledgor in any manner, all of the
certificates representing such additional shares, and all
cash, securities, dividends, rights and other property at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of
such shares; provided, however, that in the case of any
Foreign Issuer (other than Xxxxxx Canada Hardware and Variety
Company, Inc.), the Collateral Agent's security interest
hereunder shall not at any time extend to more than 65% of the
outstanding shares of any class of stock of such Foreign
Issuer;
C. All other property hereafter delivered to the
Collateral Agent in substitution for or in addition to any of
the foregoing, all certificates and instruments
2
representing or evidencing such property, and all cash,
securities, interest, dividends, rights and other property at
any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or
all thereof; and
D. All products and proceeds of all of the foregoing.
For purposes of this Agreement, all of the foregoing are herein
collectively called the "Collateral".
Each Pledgor agrees to deliver to the Collateral Agent,
promptly upon receipt and in due form for transfer (i.e., endorsed in
blank or accompanied by stock or bond powers executed in blank), any
Collateral (other than dividends which such Pledgor is entitled to
receive and retain pursuant to Section 5 hereof) which may at any time
or from time to time be in or come into the possession or control of
such Pledgor; and prior to the delivery thereof to the Collateral
Agent, such Collateral shall be held by such Pledgor separate and apart
from its other property and in express trust for the Collateral Agent
for the benefit of the Benefited Parties.
The security interests granted hereby are granted as security
only and shall not subject the Collateral Agent or any other Benefited
Party to, or transfer or in any way affect or modify, any obligation of
any Pledgor with respect to the Collateral or any transaction in
connection therewith.
3. Warranties; Further Assurances. Each Pledgor warrants to
the Collateral Agent for the benefit of each Benefited Party that: (a)
such Pledgor is (or at the time of any future delivery, pledge,
assignment or transfer thereof will be) the legal and equitable owner
of such Pledgor's Collateral free and clear of all liens, security
interests and encumbrances of every description whatsoever other than
the security interest created hereunder; (b) the pledge and delivery of
the Collateral pursuant to this Agreement, together with stock or bond
powers executed in blank, will create a valid perfected security
interest in the Collateral in favor of the Collateral Agent, subject to
no prior lien or encumbrance; (c) all shares of stock referred to in
Schedule I hereto are duly authorized, validly issued, fully paid and
non-assessable, and none of such shares is subject to any option to
purchase or similar right of any Person; (d) as to each Issuer whose
name appears in Schedule I hereto, such Pledgor's Collateral represents
on the date hereof not less than the applicable percent (as shown in
Schedule I hereto) of the total shares of capital stock issued and
outstanding of such Issuer; (e) the information contained in Schedule I
hereto with respect to such Pledgor is true and accurate in all
respects; (f) such Pledgor has not performed any acts which might
prevent the Collateral Agent from enforcing any of the terms and
conditions of this Agreement or would limit the Collateral Agent in any
such enforcement; and (g) such Pledgor is not a party to or otherwise
bound by any agreement, other than this Agreement, which restricts in
any manner the rights of any present or future holder of any of the
Collateral with respect thereto.
3
So long as any of the Liabilities shall be outstanding or any
commitment shall exist on the part of any Benefited Party with respect
to the creation of any Liabilities, each Pledgor (i) shall not, except
as permitted by each of the Financing Agreements or with the express
prior written consent of the Collateral Agent, sell, assign, exchange,
pledge or otherwise transfer, encumber, or grant any option, warrant or
other right to purchase the stock of any Issuer which is pledged
hereunder, or otherwise diminish or impair any of its rights in, to or
under any of the Collateral; (ii) shall not perform any acts which
would prevent the Collateral Agent from enforcing any of the terms and
conditions of this Agreement or would limit the Collateral Agent in any
such enforcement; (iii) shall not become a party to or otherwise bound
by any agreement, other than this Agreement, which restricts in any
manner the rights of any present or future holder of any of the
Collateral with respect thereto; (iv) shall execute such Uniform
Commercial Code financing statements and other documents (and pay the
costs of filing and recording the same in all public offices reasonably
deemed necessary or appropriate by the Collateral Agent) and do such
other acts and things, all as the Collateral Agent may from time to
time reasonably request, to establish and maintain a valid, perfected
security interest in the Collateral (free of all other liens, claims
and rights of third parties whatsoever, other than the security
interest hereunder and liens and claims permitted by each of the
Financing Agreements) to secure the performance and payment of the
Liabilities; (v) will execute and deliver to the Collateral Agent such
stock powers and similar documents relating to such Pledgor's
Collateral, satisfactory in form and substance to the Collateral Agent,
as the Collateral Agent may reasonably request; and (vi) will furnish
the Collateral Agent or any other Benefited Party such information
concerning such Pledgor's Collateral as the Collateral Agent or such
other Benefited Party may from time to time reasonably request, and
will permit the Collateral Agent or any other Benefited Party or any
designee of the Collateral Agent or such Benefited Party, from time to
time at reasonable times and on reasonable notice (or at any time
without notice during the existence of a Default), to inspect, audit
and make copies of and extracts from all records and all other papers
in the possession of such Pledgor which pertain to such Pledgor's
Collateral, and will, upon request of the Collateral Agent during the
existence of a Default, deliver to the Collateral Agent all of such
records and papers.
4. Holding in Name of Collateral Agent, etc. The Collateral
Agent may from time to time during the existence of a Default, without
notice to any Pledgor, take all or any of the following actions: (a)
transfer all or any part of the Collateral into the name of the
Collateral Agent or any nominee or sub-agent for the Collateral Agent,
with or without disclosing that such Collateral is subject to the lien
and security interest hereunder, (b) appoint one or more sub-agents or
nominees for the purpose of retaining physical possession of the
Collateral, (c) notify the parties obligated on any of the Collateral
to make payment to the Collateral Agent of any amounts due or to become
due thereunder, (d) endorse any checks, drafts or other writings in the
name of the applicable Pledgor to allow collection of the Collateral,
(e) enforce collection of any of the Collateral by suit or otherwise,
and surrender, release or exchange all or any part thereof, or
compromise or renew for any period
4
(whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (f) take control of any
proceeds of the Collateral.
5. Voting Rights, Dividends, etc. (a) Notwithstanding certain
provisions of Section 4 hereof, so long as the Collateral Agent has not
given the notice referred to in paragraph (b) below:
A. The Pledgors shall be entitled to exercise any and
all voting or consensual rights and powers and stock purchase
or subscription rights (but any such exercise by any Pledgor
of stock purchase or subscription rights may be made only from
funds of such Pledgor not comprising part of the Collateral)
relating or pertaining to the Collateral or any part thereof
for any purpose; provided that each Pledgor agrees that it
will not exercise any such right or power in any manner which
would have a material adverse effect on the value of the
Collateral or any part thereof.
B. The Pledgors shall be entitled to receive and
retain any and all lawful dividends payable in respect of the
Collateral which are paid in cash by any Issuer if such
dividends are permitted by the Financing Agreements, but all
dividends and distributions in respect of the Collateral or
any part thereof made in shares of stock or securities or
other property or representing any return of capital, whether
resulting from a subdivision, combination or reclassification
of Collateral or any part thereof or received in exchange for
Collateral or any part thereof or as a result of any merger,
consolidation, acquisition or other exchange of assets to
which any Issuer may be a party or otherwise or as a result of
any exercise of any stock purchase or subscription right,
shall be and become part of the Collateral hereunder and, if
received by any Pledgor, shall be forthwith delivered to the
Collateral Agent in due form for transfer (i.e., endorsed in
blank or accompanied by stock or bond powers executed in
blank) to be held for the purposes of this Agreement.
C. The Collateral Agent shall execute and deliver, or
cause to be executed and delivered, to the applicable Pledgor,
all such proxies, powers of attorney, dividend orders and
other instruments as such Pledgor may request for the purpose
of enabling such Pledgor to exercise the rights and powers
which it is entitled to exercise pursuant to clause (A) above
and to receive the dividends which it is authorized to retain
pursuant to clause (B) above.
(b) Upon notice from the Collateral Agent during the existence
of a Default, and so long as the same shall be continuing, all rights
and powers which the Pledgors are entitled to exercise pursuant to
Section 5(a)(A) hereof, and all rights of the Pledgors to receive and
retain dividends pursuant to Section 5(a)(B) hereof, shall forthwith
cease, and all such rights and powers shall thereupon become vested in
the Collateral Agent which shall have, during the existence of such
Default, the sole and exclusive authority to exercise such rights and
powers and to receive such dividends. Any and all money and other
property paid over to
5
or received by the Collateral Agent pursuant to this paragraph (b)
shall be retained by the Collateral Agent as additional Collateral
hereunder and applied in accordance with the provisions hereof and the
Intercreditor Agreement.
6. Remedies. Whenever a Default exists, the Collateral Agent
may exercise from time to time any rights and remedies available to it
under the Uniform Commercial Code as in effect in Illinois or otherwise
available to it. Without limiting the foregoing, whenever a Default
exists the Collateral Agent (a) may, to the fullest extent permitted by
applicable law, without notice, advertisement, hearing or process of
law of any kind, (i) sell any or all of the Collateral, free of all
rights and claims of the Pledgors therein and thereto, at any public or
private sale or brokers" board and (ii) bid for and purchase any or all
of the Collateral at any such public sale and (b) shall have the right,
for and in the name, place and stead of the applicable Pledgor, to
execute endorsements, assignments, stock powers and other instruments
of conveyance or transfer with respect to all or any of the Collateral.
Each Pledgor hereby expressly waives, to the fullest extent permitted
by applicable law, any and all notices, advertisements, hearings or
process of law in connection with the exercise by the Collateral Agent
of any of its rights and remedies during the existence of a Default.
Any notification of intended disposition of any of the Collateral shall
be deemed reasonably and properly given if given at least ten (10) days
before such disposition. Any proceeds of any of the Collateral may be
applied by the Collateral Agent to the payment of expenses in
connection with the Collateral, including, without limitation,
reasonable attorneys" fees and legal expenses, and any balance of such
proceeds shall be applied by the Collateral Agent in accordance with
the terms of the Intercreditor Agreement.
The Collateral Agent is hereby authorized to comply with, and
each Pledgor shall execute and delivery any such documents and take any
such actions as the Collateral Agent shall request to enable it to
comply with, any limitation or restriction in connection with any sale
of Collateral as it may be advised by counsel is necessary in order to
(a) avoid any violation of applicable law (including, without
limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers and/or further restrict such
prospective bidders or purchasers to persons or entities who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral) or (b) obtain any required approval of the sale or of the
purchase by any governmental regulatory authority or official, and each
Pledgor agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable
manner and that the Collateral Agent shall not be liable or accountable
to any Pledgor for any discount allowed by reason of the fact that such
Collateral is sold in compliance with any such limitation or
restriction.
7. General. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral if it takes such action for that purpose as the applicable
Pledgor shall request in writing, but failure of the Collateral Agent
to comply with any such request shall not of itself be deemed a failure
to exercise reasonable care, and no
6
failure of the Collateral Agent to preserve or protect any rights with
respect to the Collateral against prior parties, or to do any act with
respect to preservation of the Collateral not so requested by any
Pledgor, shall be deemed a failure to exercise reasonable care in the
custody or preservation of any Collateral.
No delay on the part of the Collateral Agent in exercising any
right, power or remedy shall operate as a waiver thereof, and no single
or partial exercise of any such right, power or remedy shall preclude
any other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement shall be
effective unless the same shall be in writing and signed and delivered
by the Collateral Agent, and then such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.
All obligations of the Pledgors and all rights, powers and
remedies of the Collateral Agent and the other Benefited Parties
expressed herein are in addition to all other rights, powers and
remedies possessed by them, including, without limitation, those
provided by applicable law or in any other written instrument or
agreement relating to any of the Liabilities or any security therefor.
This Agreement has been delivered at Chicago, Illinois, and
shall be construed in accordance with and governed by the internal laws
of the State of Illinois. Wherever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
All notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address
shown opposite its signature hereto or at such other address as such
party may, by written notice to the other party, have designated as its
address for such purpose. Notices sent by facsimile transmission shall
be deemed to have been given when sent with confirmation of receipt;
notices sent by mail shall be deemed to have been given five Business
Days after the date when sent by registered or certified mail, postage
prepaid; and notices sent by hand delivery or overnight courier shall
be deemed to have been given when received.
This Agreement shall be binding upon the Pledgors and the
Collateral Agent and their respective successors and assigns (provided
that no Pledgor may assign its obligations hereunder without the prior
written consent of the Collateral Agent) and shall inure to the benefit
of each Pledgor and the Collateral Agent and the successors and assigns
of the Collateral Agent.
7
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, and each
such counterpart shall be deemed an original but all such counterparts
shall together constitute but one and the same Agreement. At any time
after the date of this Agreement, one or more additional persons or
entities may become parties hereto by executing and delivering to the
Collateral Agent a counterpart of this Agreement (together with a
supplement Schedule I hereto). Immediately upon such execution and
delivery (and without any further action), each such additional person
or entity will become a party to, and will be bound by all of the terms
of, this Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY
BE FOUND. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH PLEDGOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, TO THE ADDRESS OF SUCH PLEDGOR SET ACROSS FROM ITS
SIGNATURE HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN
WRITING TO THE COLLATERAL AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER)
OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH
PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
EACH PLEDGOR, THE COLLATERAL AGENT AND (BY ACCEPTING THE
BENEFITS HEREOF) EACH OTHER BENEFITED PARTY HEREBY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT OR ANY OTHER FINANCING AGREEMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY FINANCING RELATIONSHIP
8
EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first written above.
TRUSERV CORPORATION
Address: By: _______________________________
0000 Xxxx Xxxx Xxxx Xxxxxx Name Printed: _____________________
Xxxxxxx, Xxxxxxxx 00000-0000 Title: ____________________________
Attention: Xxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
BANK OF AMERICA, N.A.,
as Collateral Agent
Address: By: _______________________________
000 Xxxxx XxXxxxx Xxxxxx Name Printed: _____________________
Xxxxxxx, Xxxxxxxx 00000 Title: ____________________________
Attention: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
S-1
Signature page for the Pledge Agreement dated as of
April 14, 2000 issued by TruServ Corporation (the
"Company") and various subsidiaries of the Company.
The undersigned is executing a counterpart hereof for
purposes of becoming a party hereto:
[NAME OF SUBSIDIARY]
By: __________________________________________________
Name: ________________________________________________
Title: _______________________________________________
S-2
SCHEDULE I
TO PLEDGE AGREEMENT
STOCK
Certificate No.
---------------
Pledgor Issuer No. of Pledged Shares
------- ------ ---------------------
------------------------------------------------------------------------------------------------------------------------
TruServ Corporation Advocate Services, Inc. 5 200
TruServ Corporation Servistar Paint Company 4 10
TruServ Corporation TruServ Real Estate Agency, Inc. 3 25,000
TruServ Corporation Xxxxxx Canada Hardware and Variety C3 7,500,000
Company Inc.
TruServ Corporation True Xxxxx.xxx Corporation 1 1,500
TruServ Corporation TruServ Logistics Company 6 1,000
TruServ Corporation General Paint & Manufacturing 1 25,000
Company
TruServ Corporation General Paint & Manufacturing 6 25,000
Company
TruServ Corporation TruServ Acceptance Company 5 8,000
Pledged Shares as % of
Total Shares Issued and Total Shares of Issuer
Pledgor Issuer Outstanding Outstanding
------- ------ ----------- -----------
------------------------------------------------------------------------------------------------------------------------
TruServ Corporation Advocate Services, Inc. 100% 200
TruServ Corporation Servistar Paint Company 100% 10
TruServ Corporation TruServ Real Estate Agency, Inc. 100% 25,000
TruServ Corporation Xxxxxx Canada Hardware and Variety 100% 7,500,000
TruServ Corporation True Xxxxx.xxx Corporation 100% 1,500
TruServ Corporation TruServ Logistics Company 100% 1,000
TruServ Corporation General Paint & Manufacturing 50% 50,000
Company
TruServ Corporation General Paint & Manufacturing 50% 50,000
Company
TruServ Corporation TruServ Acceptance Company 100% 8,000
*Denotes Foreign Issuer
EXHIBIT M
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of April 14, 2000
is among TRUSERV CORPORATION (the "Company"), each subsidiary of the Company
listed on the signature pages hereof, each other person or entity which from
time to time becomes a party hereto (collectively, including the Company, the
"Debtors" and individually each a "Debtor") and BANK OF AMERICA, N.A. ("Bank of
America"), as Collateral Agent (as defined below) for the Benefited Parties (as
defined in the Intercreditor Agreement referred to below).
W I T N E S S E T H:
WHEREAS, pursuant to an Intercreditor Agreement dated as of the date
hereof (as amended, restated or otherwise modified from time to time, the
"Intercreditor Agreement"; capitalized terms used but not defined herein have
the respective meanings given thereto in the Intercreditor Agreement), certain
creditors of the Company and Bank of America, as Collateral Agent (in such
capacity, together with any successor in such capacity, the "Collateral Agent"),
have agreed that (i) the Benefited Obligations shall be secured and guaranteed
as set forth in the Intercreditor Agreement and (ii) Bank of America shall act
as collateral agent for the Benefited Parties;
WHEREAS, each of the other Debtors has guaranteed all obligations of
the Company under each Financing Agreement; and
WHEREAS, the Benefited Obligations of each Debtor are to be secured
pursuant to this Agreement;
NOW, THEREFORE, for and in consideration of the premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. When used herein, (a) the terms Account, Account
Debtor, Certificated Security, Chattel Paper, Commodity Account, Commodity
Contract, Investment Property, Security Entitlement, Securities Account, Deposit
Account, Document, Equipment, Fixture, Goods, Inventory, Instrument, Security
and Uncertificated Security shall have the respective meanings assigned to such
terms in the UCC (as defined below), (b) capitalized terms used but not defined
have the meanings assigned to such terms in the Intercreditor Agreement and (c)
the following terms have the following meanings (such definitions to be
applicable to both the singular and plural forms of such terms):
Agreement - see the introductory paragraph.
Assignee Deposit Account - see Section 4.
Bank of America - see the introductory paragraph.
Business Day means any day on which Bank of America is open for
commercial banking business in Chicago and Charlotte.
Collateral means, with respect to any Debtor, all property and rights
of such Debtor in which a security interest is granted hereunder.
Collateral Agent - see the recitals.
Company - see the introductory paragraph.
Computer Hardware and Software means, with respect to any Debtor, (i)
all computer and other electronic data processing hardware, whether now or
hereafter owned, licensed or leased by such Debtor, including, without
limitation, all integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card readers,
tape drives, hard and soft disk drives, cables, electrical supply hardware,
generators, power equalizers, accessories and all peripheral devices and other
related computer hardware; (ii) all software programs, whether now or hereafter
owned, licensed or leased by such Debtor, designed for use on the computers and
electronic data processing hardware described in clause (i) above, including,
without limitation, all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) all firmware
associated therewith, whether now or hereafter owned, licensed or leased by such
Debtor; and (iv) all documentation for such hardware, software and firmware
described in the preceding clauses (i), (ii) and (iii), whether now or hereafter
owned, licensed or leased by such Debtor, including, without limitation, flow
charts, logic diagrams, manuals, specifications, training materials, charts and
pseudo codes.
Debtor - see the introductory paragraph.
Default means the occurrence of any of the following events: (i) any
Event of Default or (ii) any warranty of any Debtor herein is untrue or
misleading in any material respect and, as a result thereof, the Collateral
Agent's security interest for the benefit of the Benefited Parties in any
material portion of the Collateral is not perfected or the Collateral Agent's
rights and remedies with respect to any material portion of the Collateral are
materially impaired or otherwise materially adversely affected.
2
General Intangibles means, with respect to any Debtor, all of such
Debtor's "general intangibles" as defined in the UCC and, in any event, includes
(without limitation) all of such Debtor's licenses, franchises, tax refund
claims, guarantee claims, security interests and rights to indemnification, and
all of such Debtor's interests in any partnership, limited liability company or
similar entity.
Intellectual Property means all past, present and future: trade secrets
and other proprietary information; customer lists; trademarks, service marks,
business names, trade names; designs, logos, indicia, and/or other source and/or
business identifiers and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including,
without limitation, copyrights for computer programs) and copyright
registrations or applications for registrations which have heretofore been or
may hereafter be issued throughout the world and all tangible property embodying
the copyrights; inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; mask works; books, records, writings, computer tapes or disks,
flow diagrams, specification sheets, source codes, object codes and other
physical manifestations, embodiments or incorporations of any of the foregoing;
the right to xxx for all past, present and future infringements of any of the
foregoing; and all common law and other rights in and to all of the foregoing.
Intercreditor Agreement - see the recitals.
Liabilities means, as to each Debtor, all Benefited Obligations of such
Debtor.
Non-Tangible Collateral means, with respect to any Debtor,
collectively, such Debtor's Accounts and General Intangibles.
Permitted Liens - see Section 3.
UCC means the Uniform Commercial Code as in effect from time to time in
the State of Illinois.
2. Grant of Security Interest. As security for the payment of all
Liabilities, each Debtor hereby assigns to the Collateral Agent for the benefit
of the Benefited Parties, and grants to the Collateral Agent for the benefit of
the Benefited Parties a continuing security interest in, the following, whether
now or hereafter existing or acquired:
All of such Debtor's:
(1) Accounts;
3
(2) Chattel Paper;
(3) Computer Hardware and Software and all rights with respect
thereto, including, without limitation, any and all licenses,
options, warranties, service contracts, program services, test
rights, maintenance rights, support rights, improvement
rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of
any of the foregoing;
(4) Deposit Accounts;
(5) Documents;
(6) General Intangibles;
(7) Goods (including, without limitation, all its Equipment,
Fixtures and Inventory), together with all accessions,
additions, attachments, improvements, substitutions and
replacements thereto and therefor;
(8) Instruments;
(9) Intellectual Property;
(10) money (of every jurisdiction whatsoever);
(11) Investment Property (including Commodity Accounts, Commodity
Contracts, Securities (whether Certificated Securities or
Uncertificated Securities), Security Entitlements and
Securities Accounts; and
(12) to the extent not included in the foregoing, other personal
property of any kind or description;
together with all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to any of the
foregoing, all claims and/or insurance proceeds arising out of the
loss, nonconformity or any interference with the use of, or any defects
or infringements of rights in, or damage to, any of the foregoing, and
all proceeds, products, offspring, rents, issues, profits and returns
of and from, and all distributions on and rights arising out of, any of
the foregoing.
3. Warranties. Each Debtor warrants, as to itself and its own
Collateral, that: (i) no financing statement (other than any which may have been
filed on behalf of the Collateral Agent or in connection with Permitted Liens
(as defined below)) covering any of the Collateral is on file
4
in any public office; (ii) such Debtor is and will be the lawful owner of all
Collateral, free of all liens and claims whatsoever, other than the security
interest hereunder and liens and claims expressly permitted by each of the
Financing Agreements ("Permitted Liens"), with full power and authority to
execute and deliver this Agreement, to perform such Debtor's obligations
hereunder and to subject the Collateral to the security interest hereunder;
(iii) all information with respect to the Collateral and Account Debtors set
forth in any schedule, certificate or other writing at any time heretofore or
hereafter furnished by such Debtor to the Collateral Agent or any other
Benefited Party and all other written information heretofore or hereafter
furnished by such Debtor to the Collateral Agent or any other Benefited Party in
connection with any Financing Agreement will be true and correct in all material
respects as of the date furnished; (iv) such Debtor's true legal name as
registered in the jurisdiction in which such Debtor is organized or
incorporated, jurisdiction of organization or incorporation, federal employer
identification number, organizational identification number, if any, as
designated by the state of its organization or incorporation, chief executive
office and principal place of business are as set forth on Schedule I hereto
(and such Debtor has not maintained its chief executive office and principal
place of business at any other location at any time after November 1, 1999); (v)
each other location where such Debtor maintains a place of business or has any
Goods is set forth on Schedule II hereto; (vi) except as disclosed on Schedule
III, such Debtor is not now known and during the five years preceding the date
hereof has not previously been known by any trade name; (vii) except as
disclosed on Schedule III, during the five years preceding the date hereof such
Debtor has not been known by any legal name different from the one set forth on
the signature page of this Agreement nor has such Debtor been the subject of any
merger or other corporate reorganization; (viii) Schedule IV hereto contains a
complete listing of all of such Debtor's Intellectual Property which has been
registered under any registration statute; (ix) such Debtor is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation; (x) the execution and delivery of this Agreement and
the performance by such Debtor of its obligations hereunder are within such
Debtor's corporate powers, have been duly authorized by all necessary corporate
action, have received all necessary governmental approval (if any shall be
required), and do not and will not contravene or conflict with any provision of
law or of the charter or by-laws of such Debtor or of any material agreement,
indenture, instrument or other document, or any material judgment, order or
decree, which is binding upon such Debtor; (xi) this Agreement is a legal,
valid, binding and enforceable obligation of such Debtor, except that the
enforceability of this Agreement may be limited by bankruptcy, insolvency,
fraudulent conveyance, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law); (xii) such Debtor has not performed any
acts which might prevent the Collateral Agent from enforcing any of the terms of
this Agreement or which could limit the Collateral Agent in any such
enforcement; (xiii) no Collateral is in the possession of any Person (other than
such Debtor) asserting any claim thereto or security interest therein, except
that the Collateral Agent or its designee may have possession of Collateral as
contemplated hereby; and (xiv) such Debtor is in compliance with the
requirements of all applicable laws (including, without limitation, the
provisions of the Fair Labor Standards Act), rules, regulations and orders of
every governmental
5
authority, the non-compliance with which would materially adversely affect the
business, properties, assets, operations, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or the value of
the Collateral or the worth of the Collateral as collateral security.
4. Collections, etc. Until such time during the existence of a Default
as the Collateral Agent shall notify such Debtor of the revocation of such power
and authority, each Debtor (a) may, in the ordinary course of its business, at
its own expense, sell, lease or furnish under contracts of service any of the
Inventory normally held by such Debtor for such purpose, use and consume, in the
ordinary course of its business, any raw materials, work in process or materials
normally held by such Debtor for such purpose, and use, in the ordinary course
of its business (but subject to the terms of the Financing Agreements), the cash
proceeds of Collateral and other money which constitutes Collateral, (b) will,
at its own expense, endeavor to collect, as and when due, all amounts due under
any of the Non-Tangible Collateral, including the taking of such action with
respect to such collection as the Collateral Agent may reasonably request or, in
the absence of such request, as such Debtor may deem advisable, and (c) may
grant, in the ordinary course of business, to any party obligated on any of the
Non-Tangible Collateral, any rebate, refund or allowance to which such party may
be lawfully entitled, and may accept, in connection therewith, the return of
Goods, the sale or lease of which shall have given rise to such Non-Tangible
Collateral. The Collateral Agent, however, may, at any time that a Default
exists, whether before or after any revocation of such power and authority or
the maturity of any of the Liabilities, notify any parties obligated on any of
the Non-Tangible Collateral to make payment to the Collateral Agent of any
amounts due or to become due thereunder and enforce collection of any of the
Non-Tangible Collateral by suit or otherwise and surrender, release or exchange
all or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness thereunder or
evidenced thereby. Upon request of the Collateral Agent during the existence of
a Default, each Debtor will, at its own expense, notify any parties obligated on
any of the Non-Tangible Collateral to make payment to the Collateral Agent of
any amounts due or to become due thereunder.
Upon request by the Collateral Agent during the existence of a Default,
each Debtor will forthwith, upon receipt, transmit and deliver to the Collateral
Agent, in the form received, all cash, checks, drafts and other instruments or
writings for the payment of money (properly endorsed, where required, so that
such items may be collected by the Collateral Agent) which may be received by
such Debtor at any time in full or partial payment or otherwise as proceeds of
any of the Collateral. Except as the Collateral Agent may otherwise consent in
writing, any such items which may be so received by any Debtor during the
existence of a Default will not be commingled with any other of its funds or
property, but will be held separate and apart from its own funds or property and
upon express trust for the Collateral Agent for the benefit of the Benefited
Parties until delivery is made to the Collateral Agent. Each Debtor will comply
with the terms and conditions of any consent given by the Collateral Agent
pursuant to the foregoing sentence.
6
During the existence of a Default, all items or amounts which are
delivered by any Debtor to the Collateral Agent on account of partial or full
payment or otherwise as proceeds of any of the Collateral shall be deposited to
the credit of a deposit account (each an "Assignee Deposit Account") of such
Debtor with the Collateral Agent, as security for payment of the Liabilities. No
Debtor shall have any right to withdraw any funds deposited in the applicable
Assignee Deposit Account. The Collateral Agent may, from time to time, in its
discretion, and shall upon request of the applicable Debtor made not more than
once in any week or upon the request of the Required Benefited Parties in
accordance with the Intercreditor Agreement, apply all or any of the then
balance, representing collected funds, in the Assignee Deposit Account, toward
payment of the Liabilities (whether or not then due if such request is made by
the applicable Debtor, but only to amounts then due if such request is made by
the Required Benefited Parties) in the order of application set forth in the
Intercreditor Agreement, and the Collateral Agent may, from time to time,
release all or any of such balance to the applicable Debtor so long as such
release is permitted by the Intercreditor Agreement.
During the existence of a Default, the Collateral Agent is authorized
to endorse, in the name of the applicable Debtor, any item, howsoever received
by the Collateral Agent, representing any payment on or other proceeds of any of
the Collateral.
From and after July 1, 2001, no Debtor shall maintain any Deposit
Account or deposit any item or amount in any Deposit Account, except (i) Deposit
Accounts maintained with the Collateral Agent and (ii) Deposit Accounts as to
which such Debtor, the Collateral Agent and the depository bank have entered
into an agreement that the depositary bank will comply with instructions
originated by the Collateral Agent directing disposition of the funds in the
account without further consent by such Debtor.
5. Certificates, Schedules and Reports. Each Debtor will from time to
time deliver to the Collateral Agent such schedules, certificates and reports
respecting all or any of the Collateral at the time subject to the security
interest hereunder, and the items or amounts received by such Debtor in full or
partial payment of any of the Collateral, as the Collateral Agent may reasonably
request. Any such schedule, certificate or report shall be executed by a duly
authorized officer of such Debtor and shall be in such form and detail as the
Collateral Agent may specify. Each Debtor shall immediately notify the
Collateral Agent of the occurrence of any event causing any loss or depreciation
in the value of its Inventory or other Goods which is material to the Company
and its Subsidiaries taken as a whole, and such notice shall specify the amount
of such loss or depreciation.
6. Agreements of the Debtors. Each Debtor (a) will, upon request of the
Collateral Agent, execute such financing statements and other documents (and pay
the cost of filing or recording the same in all public offices reasonably deemed
appropriate by the Collateral Agent) and do such other acts and things
(including, without limitation, delivery to the Collateral Agent of any
Instruments or Certificated Securities which constitute Collateral), all as the
Collateral
7
Agent may from time to time reasonably request, to establish and maintain a
valid security interest in the Collateral (free of all other liens, claims and
rights of third parties whatsoever, other than Permitted Liens) to secure the
payment of the Liabilities (and each Debtor hereby authorizes the Collateral
Agent to file any financing statement without its signature, to the extent
permitted by applicable law, and/or to file a copy of this Agreement as a
financing statement in any jurisdiction, it being understood that the Collateral
Agent will use reasonable efforts to notify the applicable Debtor of any such
filing and the details thereof, but failure to do so shall not affect the
effectiveness thereof or impose any liability on the Collateral Agent); (b) will
keep all its Inventory at, and will not maintain any place of business at any
location other than, its address(es) shown on Schedules I and II hereto or at
such other addresses of which such Debtor shall have given the Collateral Agent
not less than 10 days' prior written notice; (c) will not change its state of
organization or incorporation or its name, identity or corporate structure such
that any financing statement filed to perfect the Collateral Agent's interests
under this Agreement would become seriously misleading, unless such Debtor shall
have given the Collateral Agent not less than 30 days' prior notice of such
change (provided that this Section 6(c) shall not be deemed to authorize any
change or transaction prohibited under any Financing Agreement); (d) will keep
its records concerning the Non-Tangible Collateral in such a manner as will
enable the Collateral Agent or its designees to determine at any time the status
of the Non-Tangible Collateral; (e) will furnish the Collateral Agent such
information concerning such Debtor, the Collateral and the Account Debtors as
the Collateral Agent may from time to time reasonably request; (f) will permit
the Collateral Agent and its designees, from time to time, on reasonable notice
and at reasonable times and intervals during normal business hours (or at any
time without notice during the existence of a Default) to inspect such Debtor's
Inventory and other Goods, and to inspect, audit and make copies of and extracts
from all records and all other papers in the possession of such Debtor
pertaining to the Collateral and the Account Debtors, and will, upon request of
the Collateral Agent during the existence of a Default, deliver to the
Collateral Agent all of such records and papers; (g) will, upon request of the
Collateral Agent, stamp on its records concerning the Collateral and add on all
Chattel Paper constituting a portion of the Collateral, a notation, in form
satisfactory to the Collateral Agent, of the security interest of the Collateral
Agent hereunder; (h) except as permitted by each of the Financing Agreements,
will not sell, lease, assign or create or permit to exist any lien on or
security interest in any Collateral other than Permitted Liens and liens and
security interests in favor of the Collateral Agent; (i) will at all times keep
all its Inventory and other Goods insured under policies maintained with
reputable, financially sound insurance companies against loss, damage, theft and
other risks to such extent as is customarily maintained by companies similarly
situated, and cause all such policies to provide that loss thereunder shall be
payable to the Collateral Agent as its interest may appear (it being understood
that (A) so long as no Default exists, the Collateral Agent shall deliver any
proceeds of such insurance which may be received by it to such Debtor and (B)
whenever a Default exists, the Collateral Agent shall apply any proceeds of such
insurance which may be received by it toward payment of the Liabilities, whether
or not due, in the order of application set forth in the Intercreditor
Agreement) and such policies or certificates thereof shall, if the Collateral
Agent so requests, be deposited with or furnished to the Collateral Agent; (j)
will take such actions as are reasonably necessary to keep its Inventory in good
repair
8
and condition, ordinary wear and tear excepted; (k) will take such actions as
are reasonably necessary to keep its Equipment (other than obsolete Equipment)
in good repair and condition and in good working or running order, ordinary wear
and tear excepted; (l) will promptly pay when due all license fees, registration
fees, taxes, assessments and other charges which may be levied upon or assessed
against the ownership, operation, possession, maintenance or use of its
Equipment and other Goods (as applicable); provided, however, that such Debtor
shall not be required to pay any such fee, tax, assessment or other charge if
the validity, accuracy or applicability thereof is being contested by such
Debtor in good faith by appropriate proceedings, so long as forfeiture of any
substantial part of its Equipment or other Goods will not result from the
failure of such Debtor to pay any such fee, tax, assessment or other charge
during the period of such contest; (m) will, upon request of the Collateral
Agent, (A) cause to be noted on the applicable certificate, in the event any of
its Equipment is covered by a certificate of title, the security interest of the
Collateral Agent in the Equipment covered thereby and (B) deliver all such
certificates to the Collateral Agent or its designees; (n) will take all steps
reasonably necessary to protect, preserve and maintain all of its rights in the
Collateral; (o) will keep all of the tangible Collateral in the United States;
and (p) will reimburse the Collateral Agent for all expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Collateral Agent
in seeking to collect or enforce any rights in respect of such Debtor's
Collateral.
Any expenses incurred in protecting, preserving and maintaining any
Collateral shall be borne by the applicable Debtor. Whenever a Default exists,
the Collateral Agent shall have the right to bring suit to enforce any or all of
the Intellectual Property or licenses thereunder, in which event the applicable
Debtor shall at the request of the Collateral Agent do any and all lawful acts
and execute any and all proper documents required by the Collateral Agent in aid
of such enforcement and such Debtor shall promptly, upon demand, reimburse and
indemnify the Collateral Agent for all reasonable costs and expenses incurred by
the Collateral Agent in the exercise of its rights under this Section 6, except
to the extent any of the foregoing result from the gross negligence or willful
misconduct of the Collateral Agent. Notwithstanding the foregoing, neither the
Collateral Agent nor any other Benefited Party shall have any obligations or
liabilities regarding any of the Collateral by reason of, or arising out of,
this Agreement, except the duties to exercise reasonable care and not to commit
waste.
7. Default. (a) Whenever a Default exists, the Collateral Agent may
exercise from time to time any rights and remedies available to it under
applicable law.
(b) Each Debtor agrees, at the request of the Collateral Agent during
the existence of a Default, (i) to assemble, at its expense, all its Inventory
and other Goods (other than Fixtures) at a convenient place or places acceptable
to the Collateral Agent, and (ii) to execute all such documents and do all such
other things which may be necessary or desirable in order to enable the
Collateral Agent or its nominee to be registered as owner of the Intellectual
Property with any competent registration authority.
9
(c) Notice of the intended disposition of any Collateral may be given
by first-class mail, hand-delivery (through a delivery service or otherwise),
facsimile or E-mail, and shall be deemed to have been "sent" upon deposit in the
U.S. mails with adequate postage properly affixed, upon delivery to an express
delivery service or upon the electronic submission through telephonic or
Internet services (receipt confirmed), as applicable. Each Debtor hereby agrees
and acknowledges that (i) with respect to Collateral that is: (A) perishable or
threatens to decline speedily in value or (B) is of a type customarily sold on a
recognized market (including Investment Property), no notice of disposition need
be given; and (ii) with respect to Collateral not described in clause (i) above,
notification sent after default and ten days before any proposed disposition
provides notice with a reasonable time before disposition.
(d) Each Debtor hereby agrees and acknowledges that a commercially
reasonable disposition of Inventory, Equipment, Computer Hardware and Software
or Intellectual Property may be by lease or license of, in addition to the sale
of, such Collateral. Each Debtor further agrees and acknowledges that a
disposition (i) made in the usual manner on any recognized market, (ii) at the
price current in any recognized market at the time of disposition or (iii) in
conformity with reasonable commercial practices among dealers in the type of
property subject to the disposition shall, in each case, be deemed commercially
reasonable.
(e) Any cash proceeds of any disposition by the Collateral Agent of any
of the Collateral shall be applied by the Collateral Agent to payment of
expenses in connection with the Collateral, including reasonable attorneys' fees
and legal expenses, and thereafter to the payment of any and all of the
Liabilities in the order of application set forth in the Intercreditor
Agreement, and thereafter any surplus will be paid to the applicable Debtor or
as a court of competent jurisdiction shall direct. The Collateral Agent need not
apply or pay over for application noncash proceeds of collection and enforcement
unless (i) the failure to do so would be commercially unreasonable and (ii) the
applicable Debtor has provided the Collateral Agent with a written demand to
apply or pay over such noncash proceeds on such basis.
8. General. The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as any applicable Debtor
requests in writing, but failure of the Collateral Agent to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure of the Collateral Agent to preserve or protect any rights with
respect to such Collateral against prior parties, or to do any act with respect
to the preservation of such Collateral not so requested by any Debtor, shall be
deemed a failure to exercise reasonable care in the custody or preservation of
such Collateral.
All notices and requests hereunder shall be in writing (including
facsimile transmission) and shall be sent (i) if to the Collateral Agent, to its
address underneath its signature hereto or such other address as it may, by
written notice to the Company, have designated as its address for such purpose
and (ii) if to any Debtor, to its address shown on Schedule I hereto or to such
other address as such Debtor may, by written notice to the Collateral Agent,
have designated as its
10
address for such purpose. Notices sent by facsimile transmission shall be deemed
to have been given when sent (receipt confirmed); notices sent by mail shall be
deemed to have been given five Business Days after the date when sent by
registered or certified mail, postage prepaid; and notices sent by hand delivery
or overnight courier shall be deemed to have been given when received.
Each of the Debtors agrees to pay all expenses (including reasonable
attorney's fees and legal expenses) paid or incurred by the Collateral Agent or
any other Benefited Party in endeavoring to collect the Liabilities of such
Debtor, or any part thereof, and in enforcing this Agreement against such
Debtor, and such obligations will themselves be Liabilities.
No delay on the part of the Collateral Agent in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by the Collateral Agent of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy.
Unless released in writing by the Collateral Agent, this Security
Agreement shall remain in full force and effect until all Liabilities have been
paid in full and all commitments to create Liabilities have terminated. If at
any time all or any part of any payment theretofore applied by the Collateral
Agent or any other Benefited Party to any of the Liabilities is or must be
rescinded or returned by the Collateral Agent or any other Benefited Party for
any reason whatsoever (including, without limitation, the insolvency, bankruptcy
or reorganization of any Debtor), such Liabilities shall, for the purposes of
this Agreement, to the extent that such payment is or must be rescinded or
returned, be deemed to have continued in existence, notwithstanding such
application by the Collateral Agent or such other Benefited Party, and this
Agreement shall continue to be effective or be reinstated, as the case may be,
as to such Liabilities, all as though such application by the Collateral Agent
or such other Benefited Party had not been made.
This Agreement shall be construed in accordance with and governed by
the internal laws of the State of Illinois, subject, however, to the
applicability of the Uniform Commercial Code of any jurisdiction in which any
Goods of any Debtor may be located at any given time. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
The rights and privileges of the Collateral Agent hereunder shall inure
to the benefit of its successors and assigns.
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same Agreement. At any
11
time after the date of this Agreement, one or more additional persons or
entities may become parties hereto by executing and delivering to the Collateral
Agent a counterpart of this Agreement (including supplements to the Schedules
hereto). Immediately upon such execution and delivery (and without any further
action), each such additional person or entity will become a party to, and will
be bound by all the terms of, this Agreement.
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. EACH DEBTOR FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET FORTH
ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN
WRITING TO THE COLLATERAL AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH DEBTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH OF EACH DEBTOR, THE COLLATERAL AGENT AND (BY ACCEPTING THE
BENEFITS HEREOF) EACH OTHER BENEFITED PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT OR ANY OTHER FINANCING AGREEMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP
EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
12
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
TRUSERV CORPORATION
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
TRUSERV ACCEPTANCE COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
TRUSERV LOGISTICS COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
GENERAL PAINT & MANUFACTURING COMPANY
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
MARYGREEN, LLC
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
S-1
TRUE XXXXX.XXX CORPORATION
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
BANK OF AMERICA, N.A., as Collateral Agent
By:
-----------------------------------------
Name Printed:
-------------------------------
Title:
--------------------------------------
S-2
Signature page for the Security Agreement
dated as of April 14, 2000 issued by TruServ
Corporation (the "Company") and various
subsidiaries of the Company in favor of Bank
of America, N.A., as Collateral Agent.
Each of the undersigned is executing a
counterpart hereof for purposes of becoming
a party hereto:
TRUSERV REAL ESTATE AGENCY, INC.
ADVOCATE SERVICES INCORPORATED
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
S-3
Signature page for the Security Agreement
dated as of April 14, 2000 issued by TruServ
Corporation (the "Company") and various
subsidiaries of the Company in favor of Bank
of America, N.A., as Collateral Agent.
The undersigned is executing a counterpart
hereof for purposes of becoming a party
hereto:
[NAME OF SUBSIDIARY]
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
S-4
SCHEDULE I
TO SECURITY AGREEMENT
ORGANIZATIONAL INFORMATION
Debtor's federal employment identification number:
Debtor's state employment identification number:
Debtor's state of incorporation/organization
Debtor's true and correct name as registered in its state of
incorporation/organization:
Chief Executive Office of All Debtors
Principal Place of Business
SCHEDULE II
TO SECURITY AGREEMENT
ADDRESSES OF OTHER LOCATIONS
SCHEDULE III
TO SECURITY AGREEMENT
TRADE NAMES
SCHEDULE IV
TO SECURITY AGREEMENT
LIST OF INTELLECTUAL PROPERTY
EXHIBIT O
FORM OF BORROWING BASE CERTIFICATE
Bank of America, N.A., as Agent
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: _______________
Re: Second Amended and Restated Credit Agreement, dated as of
April 11, 2002 (as renewed, amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"),
among TruServ Corporation, various financial institutions (the
"Lenders") and Bank of America, N.A., as Agent.
Ladies/Gentlemen:
Terms to which meanings are ascribed in the Credit Agreement are used
in this Borrowing Base Certificate with such meanings.
The Company hereby certifies that the Outstanding Obligations (as set
forth in item VII-5 on Schedule I hereto) on _______________ did not exceed the
Borrowing Base. The related computations are set forth in Schedule 1 hereto.
IN WITNESS WHEREOF, the Company has caused this Borrowing Base
Certificate to be executed and delivered by its Responsible Officer on the ____
day of _______________, _______.
TRUSERV CORPORATION
By:______________________________________
Title:___________________________________
SCHEDULE I
I. NET ACCOUNTS RECEIVABLE
1. Total Accounts Receivable $______________
2. Accounts Receivable described on Annex 1 (ineligible Accounts $______________
Receivable)
3. Eligible Accounts Receivable to be included $______________
in the Borrowing Base ((line I-1 minus line I-2) multiplied by 85%)
II. INVENTORY
1. Total Inventory $______________
2. Inventory described on Annex 2 (ineligible Inventory) $______________
3. Eligible Inventory to be included in total margined assets ((line II-1 $______________
minus line II-2) multiplied by 50%)
III. REAL ESTATE
1. Total Real Estate $______________
2. Real Estate described on Annex 3 (ineligible Real Estate) $______________
3. Eligible Real Estate to be included in the Borrowing Base ((line III-1 $______________
minus line III-2) multiplied by 60%)
IV. MACHINERY AND EQUIPMENT
1. Total Machinery and Equipment $______________
2. Machinery and Equipment described on Annex 4 (ineligible Machinery and
Equipment) $______________
3. Eligible Machinery and Equipment to be included in the Borrowing Base $______________
((line IV-1 minus line IV-2) multiplied by 50%)
V. TOTAL MARGINED ASSETS
1. (line I-3 plus line II-3 plus line III-3 plus line IV-3) $______________
VI. TOTAL BORROWING BASE
1. Line V-1 $______________
2. Overadvance Amount $______________
3. Aggregate amount of Reserves $______________
4. Total Borrowing Base (line VI-1 plus line VI-2 minus line VI-3) $______________
1
VII. OUTSTANDING OBLIGATIONS
1. Total Outstandings $______________
2. Shelf Obligations minus all Make-Whole Obligations (each as defined in $______________
the Intercreditor Agreement)
3. Senior Note Obligations minus all Make-Whole Obligations (each as $______________
defined in the Intercreditor Agreement)
4. Synthetic Maximum Shortfall (as defined in the Intercreditor Agreement)1 $______________
5. Line VII-1 plus line VII-2 plus line VII-3 plus (if applicable) line $______________
VII-4
VIII. Net Availability/Deficiency (line VI-4 minus line VII-5) $______________
--------
(1) To be included following the sale of the Hagerstown Facility
2
EXHIBIT P
FORM OF LUMBER NOTE NOTICE
[Date]
[Purchaser of Lumber Business]
Re: TruServ Corporation
Ladies/Gentlemen:
Please refer to the [Promissory Note] dated _________, 200__ (as
amended or otherwise modified from time to time, the "Lumber Note") issued by
you to TruServ Corporation ("TruServ") in connection with your purchase of
various assets relating to TruServ's lumber business.
The undersigned hereby directs you, until such time as the undersigned
otherwise notifies you in writing, to make all payments under the Lumber Note to
Bank of America, N.A., as Collateral Agent, pursuant to the wire instructions
set forth on Annex 1.
Very truly yours,
BANK OF AMERICA, N.A., as Agent
By:______________________________
Name:____________________________
Title:___________________________
3
ANNEX 1
WIRE INSTRUCTIONS
4
EXHIBIT Q
EXCESS CASH FLOW CALCULATION
1. Adjusted Cash Flow $_______________
2. Negative Adjusted Working Capital Change $_______________
3. Positive Adjusted Working Capital Change $_______________
4. Excess Cash Flow ((line 1 + line 2 minus line 3) multiplied by 80%) $_______________
5
