Exhibit 10.42
LETTER OF CREDIT AGREEMENT
dated as of
October 14, 2005
between
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
BANK OF AMERICA, N.A.
as Issuing Bank
___________________________
TABLE OF CONTENTS
Page
1. Definitions............................................................1
1.01 Defined Terms....................................................1
1.02 Terms Generally..................................................7
2. Letters of Credit......................................................8
2.01 Issuance of Letters of Credit....................................8
2.02 Reimbursement of Drawings........................................8
2.03 Notice of Drawings...............................................8
2.04 Interest on Overdue Amounts......................................8
2.05 Procedures for Issuance..........................................9
2.06 Unconditional Obligations........................................9
2.07 Letter of Credit Fees...........................................10
2.08 Nature of Fees..................................................10
2.09 Termination or Reduction of Commitment..........................11
2.10 Maintenance of Loan Account; Statements of Account..............11
2.11 Increased Costs.................................................11
2.12 Payments........................................................12
2.13 Taxes...........................................................12
3. Representations and Warranties........................................13
3.01 Organization; Powers............................................13
3.02 Authorization; Enforceability...................................14
3.03 Governmental Approvals; No Conflicts............................14
3.04 Litigation......................................................14
3.05 Compliance with Loans and Agreement; No Default.................14
3.06 Security Documents..............................................14
3.07 Federal Reserve Regulations.....................................15
3.08 Solvency........................................................15
3.09 Taxes...........................................................15
3.10 Disclosure......................................................15
4. Conditions............................................................16
4.01 Closing Date....................................................16
4.02 Conditions Precedent to Each Letter of Credit...................17
5. Affirmative Covenants.................................................17
5.01 Financial Statements and Other Information......................17
5.02 Existence; Conduct of Business..................................18
5.03 Compliance with Laws............................................18
5.04 Use of Letters of Credit........................................18
5.05 Cash Collateralization of Letter of Credit Outstandings.........19
5.06 Taxes and Indebtedness..........................................19
(i)
5.07 Further Assurances..............................................19
6. Covenants.............................................................19
6.01 Liens, Collateral Dispositions..................................19
6.02 Fundamental Changes.............................................19
7. Events of Default.....................................................20
7.01 Events of Default...............................................20
7.02 Remedies on Default.............................................22
8. Miscellaneous.........................................................22
8.01 Notices.........................................................22
8.02 Waivers; Amendments.............................................22
8.03 Expenses; Indemnity; Damage Waiver..............................23
8.04 Successors and Assigns..........................................24
8.05 Survival........................................................25
8.06 Counterparts; Integration.......................................25
8.07 Severability....................................................25
8.08 Right of Setoff.................................................26
8.09 Governing Law; Jurisdiction; Consent to Service of Process......26
8.10 WAIVER OF JURY TRIAL............................................26
8.11 Headings........................................................27
8.12 Interest Rate Limitation........................................27
8.13 Waivers.........................................................27
(ii)
LETTER OF CREDIT AGREEMENT (this "Agreement"), dated as of October 14, 2005
by and between:
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC., a Maryland corporation
("the Company"), having a place of business at 0 Xxxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxxxx 00000; and
BANK OF AMERICA, N.A., as Issuing Bank, a national banking association
having a place of business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000;
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
1. DEFINITIONS.
1.01 Defined Terms.
As used in this Agreement, the following terms have the meanings specified
below:
"Account" means each of the Cash Collateral Account and the Additional
Collateral Account.
"Additional Collateral" means those investments specified on Schedule 1
hereto.
"Additional Collateral Account" means that certain account now or hereafter
established by the Company with Bank of America, N.A. or any of its Affiliates
under the sole and exclusive dominion and control of the Issuing Bank designated
as the "A&P Letter of Credit Additional Collateral Account" containing
investments constituting Additional Collateral, and in which account the Issuing
Bank has been granted a Lien pursuant to the Pledge and Security Agreement.
"Affiliate" means with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified or is a
director or officer of such Person; provided, that Metro Inc. and the
Subsidiaries and stakeholders (other than the Company and its Affiliates) of
Metro Inc. shall not be deemed to be Affiliates of the Company and its
Subsidiaries.
"Agreement" means this Letter of Credit Agreement, as modified, amended,
supplemented or restated, and in effect from time to time.
"Applicable Advance Rate" means as to each investment constituting
Additional Collateral, the percentage specified on Schedule 1 hereto.
"Applicable Law" means as to any Person: (i) all laws, statutes, rules,
regulations, orders, or other requirements having the force of law and (ii) all
court orders and injunctions, and/or similar rulings, in each instance ((i) and
(ii)) of or by any Governmental Authority, or court, or tribunal which has
jurisdiction over such Person, or any property of such Person, or of any other
Person for whose conduct such Person would be responsible.
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"Availability" means, at any time of determination, the lesser of (i)
$200,000,000, and (ii) an amount equal to the difference between (a) the sum of
(1) 100% of the Cash and Cash Equivalents on deposit in the Cash Collateral
Account and (2) as to each item of Additional Collateral on deposit in the
Additional Collateral Account, the amount of such Additional Collateral
multiplied by the Applicable Advance Rate and (b) the aggregate Letter of Credit
Outstandings.
"Bank of America" means Bank of America, N.A.
"Board" means the Board of Governors of the Federal Reserve System of the
United States of America.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts, Charlotte, North Carolina, or
New York, New York are authorized or required by law to remain closed.
"Cash and Cash Equivalents" means (i) cash, (ii) investments in money
market funds maintained by Bank of America, N.A. or any of its Affiliates, (iii)
investments in certificates of deposit maturing within one year from the date of
acquisition, banker's acceptances, and overnight bank deposits, in each case
issued by or created by, or with, Bank of America, N.A. or any of its
Affiliates, (iv) investments in deposit accounts in the ordinary course of
business with Bank of America, N.A. or any of its Affiliates and (v) investments
in any mutual fund that invests solely in United States treasury obligations and
which is quoted in the Wall Street Journal.
"Cash Collateral Account" means that certain account numbered 00000000
established by the Company with Banc of America Securities LLC under the sole
and exclusive dominion and control of the Issuing Bank designated as the "A&P
Letter of Credit Cash Collateral Account" containing investments constituting
Cash and Cash Equivalents, in which account the Issuing Bank has been granted a
Lien pursuant to the Pledge and Security Agreement.
"Change in Control" means, at any time, (a) the board of directors of the
Company shall cease to consist of a majority of the Continuing Directors, (b)
any person or group (within the meaning of Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended) other than a Permitted Holder
shall acquire a majority of the voting power represented by the Company's
outstanding capital stock entitled to vote in the election of directors of the
Company.
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by the Issuing Bank (or by the
Issuing Bank's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Charges" has the meaning provided therefor in Section 8.12.
"Closing Date" means the date on which the conditions specified in Section
4.02 are satisfied or waived.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means any and all "Collateral" as defined in the Pledge and
Security Agreement.
"Commercial Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by the Company or any Subsidiary
Credit Party in the ordinary course of business of the Company or such
Subsidiary Credit Party.
"Commitment" means $200,000,000 or such lesser amount on account of a
reduction thereof in accordance with the provisions of Section 2.09 hereof.
"Continuing Directors" means directors of the Company who are in office on
the Closing Date and each other director, who's nomination for election to the
Board of Directors of the Company is recommended by a majority of the then
Continuing Directors or a Permitted Holder.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Documents" means this Agreement, the Letters of Credit, each letter
of credit application, and the Pledge and Security Agreement, and any other
instrument or agreement now or hereafter executed and delivered in connection
herewith or therewith, each as amended and in effect from time to time.
"Credit Request" means a request by the Company for the issuance of a
Letter of Credit in accordance with Section 2.05.
"Default" means any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both would, unless cured or waived, become
an Event of Default.
"dollars" or "$" refers to lawful money of the United States of America.
"Event of Default" has the meaning assigned to such term in Section 7.01.
An "Event of Default" shall be deemed to have occurred and to be continuing
unless and until the Event of Default has been duly waived in writing by the
Issuing Bank.
"Excluded Taxes" means, with respect to the Issuing Bank or any other
recipient of any payment to be made by or on account of any obligation of the
Company or any Subsidiary Credit Party hereunder, (a) income or franchise Taxes
imposed on (or measured by) its gross or net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located, and (b) any branch
profits Taxes imposed by the United States of America or any similar Tax imposed
by any other jurisdiction in which the Company or such Subsidiary Credit Party
is located.
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"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by Bank of America from three Federal funds brokers of
recognized standing selected by it.
"GAAP" means generally accepted accounting principles of the United States
of America, consistently applied.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning provided therefor in Section 0(b).
"Issuing Bank" means Bank of America or its Affiliates, in their capacities
as the issuers of Letters of Credit hereunder.
"L/C Disbursement" means a payment made by the Issuing Bank pursuant to a
Letter of Credit.
"Letter of Credit" shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account of the Company or any Subsidiary
Credit Party, (ii) a Standby Letter of Credit or Commercial Letter of Credit,
(iii) issued for purposes for which the Company or any Subsidiary Credit Party
has historically obtained letters of credit, or for any other purpose that is
reasonably acceptable to the Issuing Bank, and (iv) in form reasonably
satisfactory to the Issuing Bank.
"Letter of Credit Fees" shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.07.
"Letter of Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit outstanding at such time, the aggregate
maximum amount that then is or at any time thereafter may become available for
drawing or payment thereunder plus (b) all amounts theretofore drawn or paid
under Letters of Credit for which the Issuing Bank has not then been reimbursed.
"Lien" means, with respect to any asset, any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of
such asset.
"Margin Stock" has the meaning assigned to such term in Regulation U.
4
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, liabilities (actual or contingent), operations or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
(b) the ability of the Company or any Subsidiary Credit Party to perform any
material obligation or to pay any Obligations under this Agreement or any of the
other Credit Documents, or (c) the validity or enforceability of this Agreement
or any of the other Credit Documents or any of the material rights or remedies
of the Issuing Bank hereunder or thereunder.
"Material Indebtedness" means indebtedness of any one or more of the
Company and its Subsidiaries in an aggregate principal amount exceeding
$10,000,000.
"Maximum Rate" has the meaning provided therefor in Section 8.12.
"Obligations" means the due and punctual payment by the Company and each
Subsidiary Credit Party of (i) each payment required to be made by the Company
or any Subsidiary Credit Party under this Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements and interest thereon (including all interest that accrues after
the commencement of any case or proceeding by or against the Company or any
Subsidiary Credit Party under any federal or state bankruptcy, insolvency,
receivership or similar law, whether or not allowed in such case or proceeding)
and (ii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise,
of the Company or any Subsidiary Credit Party to the Issuing Bank under this
Agreement and the other Credit Documents.
"Organizational Document" means, relative to any Person, its limited
partnership agreement, its certificate of incorporation, formation or limited
partnership, its operating agreement, its by-laws and all shareholder or equity
holder agreements, voting trusts and similar arrangements to which such Person
is a party or which is applicable to its capital stock or its limited
partnership agreement.
"Other Taxes" means any and all current or future stamp or documentary
Taxes or any other excise or property Taxes, charges or similar levies arising
from any payment made under any Credit Document or from the execution, delivery
or enforcement of, or otherwise with respect to, any Credit Document.
"Permitted Holder" means (i) Tengelmann Warenhandelsgesellschaft or (ii)
any Affiliate of Tengelmann Warenhandelsgesellschaft.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Pledge and Security Agreement" means the Pledge and Security Agreement,
dated the date hereof, between the Company and the Issuing Bank, as amended and
in effect from time to time.
"Prime Rate" shall mean, for any day, the higher of (a) the variable annual
rate of interest then most recently announced by Bank of America at its head
office in Charlotte, North Carolina
5
as its "Prime Rate" and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1% (0.50%) per annum. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate being charged to any
customer. If for any reason any Issuing Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of any Issuing Bank to obtain sufficient quotations thereof
in accordance with the terms hereof, the Prime Rate shall be determined without
regard to clause (b) of the first sentence of this definition, until the
circumstances giving rise to such inability no longer exist. Any change in the
Prime Rate due to a change in Bank of America's Prime Rate or the Federal Funds
Effective Rate shall be effective on the effective date of such change in Bank
of America's Prime Rate or the Federal Funds Effective Rate, respectively.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Responsible Officer" means the Company's Chief Executive Officer, Chief
Financial Officer or Treasurer.
"Security Documents" means the Pledge and Security Agreement and any and
all other financing statements, control agreements or other documents delivered,
in connection therewith.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair saleable value of the properties and assets
of such Person is not less than the amount that would be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in a business or a transaction, and is not about to engage in a business or
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged.
"Specified Default" means the occurrence of any Event of Default specified
in Sections 7.01(a), (b), (f), (g) or (h) hereof.
"Standby Letter of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
6
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's Consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, Controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary Credit Party" means each Subsidiary of the Company for whose
account a Letter of Credit is issued by the Issuing Bank.
"Taxes" means any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"Termination Date" shall mean the earliest to occur of (i) October 14, 2006
or (ii) the date of the occurrence of any Event of Default pursuant to Section
7.01(f), 7.01(g) or 7.01(h), or (iii) the date on which the Commitment of the
Issuing Bank is terminated pursuant to clause (i) of the final paragraph of
Section 7.01 or Section 2.09 hereof.
"Transfer Notice" has the meaning set forth in Section 2.16 hereof.
1.02 Terms Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (ii) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (iii) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (iv) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.
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2. LETTERS OF CREDIT.
2.01 Issuance of Letters of Credit.
(a) Upon the terms and subject to the conditions herein set forth, the
Company may request the Issuing Bank, at any time and from time to time after
the date hereof and prior to the Termination Date, to issue, and subject to the
terms and conditions contained herein, the Issuing Bank shall issue, for the
account of the Company or any of the Subsidiary Credit Parties one or more
Letters of Credit; provided that no Letter of Credit shall be issued if after
giving effect to such issuance (i) the aggregate Letter of Credit Outstandings
shall exceed the Commitment, or (ii) Availability would be less than zero.
(b) Each Letter of Credit shall expire at or prior to the close of business
on the earlier of (i) the date one (1) year after the date of the issuance of
such Letter of Credit (or, in the case of any renewal or extension thereof, one
(1) year after such renewal or extension) and (ii) unless cash collateralized or
otherwise credit supported to the reasonable satisfaction of the Issuing Bank,
the date that is one (1) Business Days prior to October 14, 2006. Each Letter of
Credit may, upon the request of the Company include a provision whereby such
Letter of Credit shall be renewed automatically for additional consecutive
periods of twelve (12) months or less unless the Issuing Bank notifies the
beneficiary thereof at least thirty (30) days prior to the then-applicable
expiration date that such Letter of Credit will not be renewed; provided,
however, that no Letter of Credit shall be renewed or extended on or after the
occurrence of the Termination Date.
2.02 Reimbursement of Drawings. Drafts drawn under each Letter of Credit
shall be reimbursed by the Company or the applicable Subsidiary Credit Party in
dollars by paying to the Issuing Bank an amount equal to such drawing prior to
the close of business, Boston time, on the Business Day immediately following
the day that the Issuing Bank delivers notice of such drawing, provided such
notice is delivered to the Company before 11:00 a.m., Boston time. In the event
notice of a drawing is delivered by the Issuing Bank to the Company after 11:00
a.m., Boston time, such drafts shall be reimbursed by the Company or the
applicable Subsidiary Credit Party prior to the close of business, Boston time,
on the second Business Day immediately following the day on which the Issuing
Bank delivers notice of such drawing to the Company.
2.03 Notice of Drawings. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Company by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make payment thereunder, provided that
any failure to give or delay in giving such notice shall not relieve the Company
of its obligation to reimburse the Issuing Bank with respect to any such
payment.
2.04 Interest on Overdue Amounts. If the Issuing Bank shall make any L/C
Disbursement, then, unless the Company or a Subsidiary Credit Party shall
reimburse the Issuing Bank in full on the date such payment is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such payment is made to and including the date that the
8
Company or a Subsidiary Credit Party reimburses the Issuing Bank therefor, at
the rate per annum equal to the Prime Rate plus fifteen basis points (0.15%)
through the date upon which the Company or the applicable Subsidiary Credit
Party is obligated to reimburse such drawing pursuant to Section 2.02 hereof,
and thereafter at the rate per annum equal to the Prime Rate plus two percent
(2.00%). Interest shall be calculated on the basis of a 360 day year and actual
days elapsed.
2.05 Procedures for Issuance. Whenever the Company or a Subsidiary Credit
Party desires that the Issuing Bank issue a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit), the Company, through a
Responsible Officer, shall give to the Issuing Bank at least two (2) Business
Days' prior written notice (which may be by electronic means), or such shorter
period as may be agreed upon in writing by the Issuing Bank and the Company,
specifying the date on which the proposed Letter of Credit is to be issued,
amended, renewed or extended (which shall be a Business Day), the stated amount
of the Letter of Credit so requested, the expiration date of such Letter of
Credit, the name and address of the beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank, the Company and the applicable
Subsidiary Credit Party shall also submit a letter of credit application on the
Issuing Bank's standard form in connection with any request for the issuance,
amendment, renewal or extension of a Letter of Credit (which application may be
delivered electronically). In the event of an inconsistency between any such
letter of credit application and this Agreement, the terms of this Agreement
shall control.
2.06 Unconditional Obligations. The obligations of the Company and the
Subsidiary Credit Parties to reimburse the Issuing Bank for any L/C Disbursement
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances, including, without
limitation: (i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff, defense or other right which the
Company or any Subsidiary Credit Party may have at any time against a
beneficiary of any Letter of Credit or against the Issuing Bank, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by the Issuing Bank of any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; (v) any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Company's or the Subsidiary Credit Parties' obligations hereunder; or (vi) the
fact that any Event of Default shall have occurred and be continuing. Neither
the Issuing Bank nor any of its Affiliates shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank, provided that the foregoing
provisions of this Section 2.06 shall not be construed to excuse the
9
Issuing Bank from liability to the Company or any Subsidiary Credit Party to the
extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Company and the Subsidiary Credit
Parties to the extent permitted by Applicable Law) suffered by the Company that
are caused by the Issuing Bank's failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each such determination. In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their face to be in
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
2.07 Letter of Credit Fees.
(a) The Company and the Subsidiary Credit Parties shall pay the Issuing
Bank on the first day of each calendar quarter, in arrears, a fee (each, a
"Letter of Credit Fee") equal to the 0.15% per annum (on the basis of actual
number of days elapsed in a year of 360 days) of the average daily face amount
of the Letters of Credit outstanding during the immediately preceding calendar
quarter.
(b) Upon the occurrence of a Specified Default the Letter of Credit Fees
shall be increased by an amount equal to two percent (2.00%) per annum.
(c) The Company and the Subsidiary Credit Parties shall pay to the Issuing
Bank, in addition to all Letter of Credit Fees otherwise provided for hereunder,
such other reasonable fees and charges in connection with the issuance,
negotiation, settlement, extension, amendment and processing of each Letter of
Credit issued by the Issuing Bank as are customarily imposed by the Issuing Bank
from time to time in connection with letter of credit transactions.
2.08 Nature of Fees
All fees shall be paid on the dates due, in immediately available funds, to
the Issuing Bank as provided herein. All fees shall be fully earned on the date
when due (or on the Closing Date if specifically indicated as such) and shall
not be refundable under any circumstances.
2.09 Termination or Reduction of Commitment.
Upon at least three (3) Business Days' prior written notice to the Issuing
Bank the Company may, at any time, in whole permanently terminate, or from time
to time in part permanently reduce, the Commitment. Each such reduction shall be
in the principal amount of $5,000,000 or any integral multiple of $1,000,000 in
excess thereof. Each such reduction or
10
termination shall be irrevocable when given. No reduction in the Commitment
shall result in the Commitment being less than the then Letter of Credit
Outstandings.
2.10 Maintenance of Loan Account; Statements of Account.
(a) The Issuing Bank shall maintain an account on its books in the name of
the Company (the "Loan Account") which will reflect all Letter of Credit
Outstandings, L/C Disbursements, fees and interest that have become payable as
herein set forth.
(b) After the end of each calendar month, the Issuing Bank shall send to
the Company a statement accounting for the transactions occurring among and
between the Issuing Bank and the Company during that month. The monthly
statements shall, absent manifest error, be final, conclusive and binding on the
Company and each Subsidiary Credit Party, unless otherwise objected to in
writing by the Company within fifteen (15) days after receipt of the monthly
statement.
2.11 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, the Issuing Bank; or
(ii) impose on the Issuing Bank any other condition affecting this
Agreement or any Letter of Credit;
and the result of any of the foregoing shall be to increase the cost to the
Issuing Bank of issuing or maintaining any Letter of Credit by an amount deemed
material by the Issuing Bank or to reduce the amount of any sum received or
receivable by the Issuing Bank hereunder by an amount deemed material by the
Issuing Bank, then the Company and the Subsidiary Credit Parties will pay to the
Issuing Bank, such additional amount or amounts as will compensate the Issuing
Bank for such additional costs incurred or reduction suffered.
(b) If the Issuing Bank reasonably determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on the Issuing Bank's capital or on the capital of the Issuing Bank's
holding company, if any, as a consequence of this Agreement or the Letters of
Credit issued by the Issuing Bank, to a level below that which the Issuing Bank
or the Issuing Bank's holding company could have achieved but for such Change in
Law (taking into consideration the Issuing Bank's policies and the policies of
the Issuing Bank's holding company with respect to capital adequacy), then from
time to time the Company and the Subsidiary Credit Parties will pay to the
Issuing Bank such additional amount or amounts as will compensate the Issuing
Bank or the Issuing Bank's holding company for any such reduction suffered
deemed to be material by the Issuing Bank.
(c) A certificate of the Issuing Bank setting forth the amount or amounts
necessary to compensate the Issuing Bank or its holding company, as the case may
be, as
11
specified in paragraph (a) or (b) of this Section and setting forth in
reasonable detail the manner in which such amount or amounts were determined
shall be delivered to the Company and shall be conclusive absent manifest error.
The Company and the Subsidiary Credit Parties shall pay the Issuing Bank the
amount shown as due on any such certificate within ten (10) Business Days after
receipt thereof.
(d) Delay on the part of the Issuing Bank to demand compensation pursuant
to this Section shall not constitute a waiver of the Issuing Bank's right to
demand such compensation.
2.12 Payments
The Company and each Subsidiary Credit Party shall make each payment
required to be made by it hereunder or under any other Credit Document (whether
of interest, fees or reimbursement of drawings under Letters of Credit, or of
amounts payable under Sections 2.10 or 2.13, or otherwise) prior to the close of
business, Boston time, on the date when due, in immediately available funds,
without setoff or counterclaim. Any amounts received after such time on any date
may, in the discretion of the Issuing Bank, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to the Issuing Bank at its offices at 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx. If any payment under any Credit Document
shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension. All payments under each Credit Document shall be made in dollars.
Upon the occurrence of an Event of Default, the Issuing Bank, without the
request of the Company or any Subsidiary Credit Party, may apply any amounts in
any Account towards any payment due under this Agreement.
2.13 Taxes
(a) Any and all payments by or on account of any obligation of the Company
or the Subsidiary Credit Parties hereunder or under any other Credit Document
shall be made free and clear of and without deduction for any Indemnified Taxes,
provided that if the Company or a Subsidiary Credit Party shall be required to
deduct any Indemnified Taxes from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions for
Indemnified Taxes (including deductions for Indemnified Taxes applicable to
additional sums payable under this Section) the Issuing Bank receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Company and the Subsidiary Credit Parties shall make such deductions, and
(iii) the Company and the Subsidiary Credit Parties shall pay the full amount
deducted to the relevant Governmental Authority in accordance with Applicable
Law.
(b) In addition, the Company and the Subsidiary Credit Parties shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
Applicable Law.
(c) The Company and the Subsidiary Credit Parties shall indemnify the
Issuing Bank, within ten (10) Business Days after written demand therefor, for
the full amount of
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any Indemnified Taxes or Other Taxes paid by the Issuing Bank on or with respect
to any payment by or on account of any obligation of the Company or any
Subsidiary Credit Party hereunder or under any other Credit Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto. A certificate as to the
amount of such payment or liability delivered to the Company by the Issuing Bank
setting forth in reasonable detail the manner in which such amount was
determined, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Company or a Subsidiary Credit Party to a Governmental Authority,
the Company shall deliver to the Issuing Bank the original or a certified copy
of a receipt issued by such Governmental Authority evidencing such payment, a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Issuing Bank.
(e) The Issuing Bank agrees that upon the occurrence of any circumstances
entitling such party to indemnification or additional amounts pursuant hereto,
such party shall use reasonable efforts to take any action (including
designating a new lending office and signing any prescribed forms or other
documentation appropriate in the circumstances) if such action would reduce or
eliminate any Tax (including penalties or interest, as applicable) with respect
to which such indemnification or additional amounts may thereafter accrue.
(f) If the Issuing Bank reasonably determines that it has actually
realized, by reason of a refund, deduction or credit of any Taxes paid or
reimbursed by the Company or any Subsidiary Credit Party pursuant to subsection
(a) or (c) above in respect of payments under the Credit Documents, a current
monetary benefit that it would otherwise not have obtained and that would result
in the total payments under this Section 2.13 exceeding the amount needed to
make the Issuing Bank whole, the Issuing Bank shall pay to the Company, with
reasonable promptness following the date upon which it actually realizes such
benefit, an amount equal to the lesser of the amount of such benefit or the
amount of such excess, in each case net of all out-of-pocket expenses incurred
in securing such refund, deduction or credit.
3. REPRESENTATIONS AND WARRANTIES
The Company and each Subsidiary Credit Party represents and warrants to the
Issuing Bank that:
3.01 Organization; Powers. The Company and each Subsidiary Credit Party is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority to
carry on its business as now conducted.
3.02 Authorization; Enforceability. The transactions contemplated hereby
and by the other Credit Documents to be entered into by the Company and each
Subsidiary Credit Party are within the Company's and such Subsidiary Credit
Party's corporate limited partnership, limited liability company and other
powers and have been duly authorized by all necessary action. This Agreement has
been duly executed and delivered by the Company and constitutes, and each
13
other Credit Document to which the Company or any Subsidiary Credit Party is a
party, when executed and delivered by the Company or such Subsidiary Credit
Party will constitute, a legal, valid and binding obligation of the Company and
each such Subsidiary Credit Party (as the case may be), enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.
3.03 Governmental Approvals; No Conflicts. The transactions to be entered
into and contemplated by the Credit Documents (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except for such as have been obtained or made and are in
full force and effect, (b) will not violate any Applicable Law or the
Organizational Documents of the Company or any Subsidiary Credit Party or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon the Company or
any Subsidiary Credit Party or its assets, or give rise to a right thereunder to
require any payment to be made by the Company or any Subsidiary Credit Party,
and (d) will not result in the creation or imposition of any Lien on any asset
of any the Company or any Subsidiary Credit Party, except Liens created under
the Credit Documents.
3.04 Litigation. (a) There are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary Credit Party (i) that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect, or (ii) that involve the Collateral or any of the Credit Documents.
3.05 Compliance with Laws and Agreements; No Default. The Company and each
Subsidiary Credit Party is in compliance with all Applicable Laws and the terms
of all Material Indebtedness and all material agreements, except where failure
to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
3.06 Security Documents. The Security Documents shall create in favor of
the Issuing Bank a legal, valid and enforceable security interest in the
Collateral, and the Security Documents, if properly filed, or upon other action
required for perfection, shall constitute the creation of a fully perfected
first priority Lien on, and security interest in, all right, title and interest
of the Company thereunder in such Collateral prior and superior in right to any
other Person.
3.07 Federal Reserve Regulations(a) Neither the Company nor any Subsidiary
Credit Party is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin
Stock.
(b) No part of the proceeds of any Letter of Credit will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to buy or carry Margin Stock or to extend credit to others for the purpose of
buying or carrying Margin Stock or to refund indebtedness originally incurred
for such purpose or (ii) for any purpose that entails a
14
violation of, or that is inconsistent with, the provisions of the Regulations of
the Board, including Regulation U or X.
3.08 Solvency. To the best of the knowledge of the Company, as of the
Closing Date, after giving effect to the transactions contemplated hereby, the
Company and each Subsidiary Credit Party is, and will be, Solvent.
3.09 Taxes. The Company and each Subsidiary Credit Party has timely filed,
or caused to be filed, all federal and state Tax returns and reports required to
have been filed and has paid, or caused to be paid, all Taxes required to have
been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings, for which such Person has set aside on its books
adequate reserves, or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
3.10 Disclosure. The Company has disclosed to the Issuing Bank all
agreements, instruments and corporate or other restrictions to which the Company
or any Subsidiary Credit Party is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of any of the reports, financial statements,
certificates or other information furnished by or on behalf of any the Company
or any Subsidiary Credit Party to the Issuing Bank in connection with the
negotiation of this Agreement or any other Credit Document or delivered
hereunder or thereunder (as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Company represents and warrants
only that such information was prepared in good faith based on assumptions
believed by the Company to be reasonable at the time such projections were
prepared.
4. CONDITIONS
4.01 Closing Date. The obligation of the Issuing Bank to issue each Letter
of Credit, on and after the Closing Date, is subject to the following conditions
precedent:
(a) The Issuing Bank (or its counsel) shall have received from each
party hereto either (i) a counterpart of this Agreement and all other
Credit Documents (including, without limitation, the Pledge and Security
Agreement) signed on behalf of such party or (ii) written evidence
satisfactory to the Issuing Bank (which may include telecopy transmission
of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement and all other Credit Documents.
(b) The Issuing Bank shall have received a favorable written opinion
of counsel to the Company covering such matters relating to the Company and
the Subsidiary Credit Parties, the Credit Documents or the transactions
contemplated thereby as the Issuing Bank shall reasonably request.
(c) The Issuing Bank shall have received such documents and
certificates as the Issuing Bank or its counsel may reasonably request
relating to the organization,
15
existence and good standing of the Company and each Subsidiary Credit
Party, the authorization of the transactions contemplated by the Credit
Documents and any other legal matters relating to the Company and the
Subsidiary Credit Partys, the Credit Documents or the transactions
contemplated thereby, all in form and substance reasonably satisfactory to
the Issuing Bank and its counsel.
(d) All necessary consents and approvals to the transactions
contemplated hereby shall have been obtained and shall be satisfactory to
the Issuing Bank.
(e) The Issuing Bank shall be reasonably satisfied that any financial
statements delivered to them fairly present the business and financial
condition of the Company and its Subsidiaries, and since the date of the
end of the Company's most recently ended fiscal year, except as disclosed
in the Company's publicly available reports filed on or before the date
hereof pursuant to the Securities Exchange Act of 1934, as amended, no
change, occurrence or development has occurred that, in the Issuing Bank's
reasonable opinion, has a Material Adverse Effect.
(f) There shall not be any action, suit, investigation, litigation, or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that in the Issuing Bank's reasonable judgment
could reasonably be expected to have a Material Adverse Effect.
(g) All fees due at or immediately after the Closing Date and all
costs and expenses incurred by the Issuing Bank in connection with the
establishment of the credit facility contemplated hereby (including the
fees and expenses of counsel to the Issuing Bank) shall have been paid in
full.
(h) The consummation of the transactions contemplated hereby shall not
violate any Applicable Law.
(i) The Company shall have established the Accounts with the Issuing
Bank and the Issuing Bank shall have a perfected first priority security
interest in such Accounts and all Cash and Cash Equivalents and Additional
Collateral on deposit therein.
(j) There shall have been delivered to the Issuing Bank such
additional instruments and documents as the Issuing Bank or counsel to the
Issuing Bank reasonably may require or request.
4.02 Conditions Precedent to Each Letter of Credit.
In addition to those conditions described in Section 4.01, the obligation
of the Issuing Bank to issue each Letter of Credit, is subject to the following
conditions precedent:
(a) Notice. The Issuing Bank shall have received a notice with respect
to such issuance as required by Section 2.05.
16
(b) Representations and Warranties. All representations and warranties
contained in this Agreement and the other Credit Documents or otherwise
made in writing in connection herewith or therewith shall be true and
correct in all material respects on and as of the date of each issuance of
each Letter of Credit hereunder with the same effect as if made on and as
of such date, other than representations and warranties that relate solely
to an earlier date.
(c) No Default. On the date of each issuance of each Letter of Credit,
and after giving effect thereto, (i) no Default or Event of Default shall
have occurred and be continuing, and (ii) Availability shall not be less
than zero.
The request by the Company for, and the acceptance by the Company and each
Subsidiary Credit Party of, each Letter of Credit hereunder shall be deemed to
be a representation and warranty by the Company and each Subsidiary Credit Party
that the conditions specified in this Section 4.02 have been satisfied at that
time.
5. AFFIRMATIVE COVENANTS
Until (i) the Commitment has expired or been terminated, and (ii) all
Obligations payable hereunder shall have been paid in full, and (iii) all
Letters of Credit shall have expired or terminated, the Company and each
Subsidiary Credit Party covenants and agrees with the Issuing Bank that:
5.01 Financial Statements and Other Information. The Company will furnish
to the Issuing Bank:
(a) Within one hundred twenty (120) days after the end of each fiscal
year of the Company, the consolidated balance sheet and related statements
of operations, and consolidated statements of cash flows as of the end of
and for such year for the Company and its Subsidiaries, setting forth in
each case, in comparative form, the consolidated figures for the previous
fiscal year, audited and reported on by independent public accountants of
recognized national standing (without a "going concern" or like
qualification or exception and without a qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Company and its Subsidiaries on a
consolidated basis in accordance with GAAP;
(b) Within forty-five (45) days after the end of each of the first
three fiscal quarters of the Company, the consolidated balance sheet and
related statements of operations, and cash flows the consolidated balance
sheet and related statements of operations, and consolidated statements of
cash flows for the Company and its Subsidiaries, as of the end of and for
such fiscal quarter and the elapsed portion of the fiscal year, setting
forth in each case, in comparative form the consolidated figures for the
previous fiscal year, certified by the Company's Chief Financial Officer as
presenting in all material respects the financial condition and results of
operations of the Company and
17
its Subsidiaries on a consolidated basis in accordance with GAAP, subject
to year end audit adjustments and the absence of footnotes;
(c) at least ten (10) days prior written notice of any change (i) in
any the Company's or any Subsidiary Credit Party's corporate name, (ii) in
the Company's or any Subsidiary Credit Party's corporate structure or
jurisdiction of incorporation or formation, or (iii) in the Company's or
any Subsidiary Credit Party's Federal Taxpayer Identification Number or
organizational identification number assigned to it by its state of
organization.
5.02 Existence; Conduct of Business. The Company will, and will cause each
Subsidiary Credit Party to, do or cause to be done all things necessary to
comply with its respective Organizational Documents and to preserve, renew and
keep in full force and effect its legal existence and the rights, licenses,
permits, and privileges material to the conduct of its business, provided that
the foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.02.
5.03 Compliance with Laws. The Company will, and will cause each Subsidiary
Credit Party to, comply with all Applicable Laws, except where the failure to do
so, individually or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect.
5.04 Use of Letters of Credit. The Letters of Credit issued hereunder will
be used only (a) to finance the acquisition of working capital assets of the
Company and the Subsidiary Credit Parties in the ordinary course of business,
and (b) for general corporate purposes. No part of any Letter of Credit will be
used, whether directly or indirectly, for any purpose that entails a violation
of any of the Regulations of the Board, including Regulations U and X.
5.05 Cash Collateralization of Letter of Credit Outstandings. The Company
shall cause the sum of (i) 100% of the Cash and Cash Equivalents on deposit in
the Cash Collateral Account and (ii) as to each item of Additional Collateral on
deposit in the Additional Collateral Account, the amount of such Additional
Collateral multiplied by the Applicable Advance Rate, to be at least equal to
the Letter of Credit Outstandings.
5.06 Taxes and Indebtedness. The Company will, and will cause each
Subsidiary Credit Party to, pay its Indebtedness and other obligations,
including Tax liabilities, before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Person has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, and (c)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
5.07 Further Assurances. The Company will , and will cause each Subsidiary
Credit Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions that may be
required under any Applicable Law, or which the Issuing Bank may reasonably
request, to effectuate the transactions contemplated by the Credit Documents or
to grant, preserve, protect or perfect the Liens created or intended to be
18
created by the Pledge and Security Agreement or the validity or priority of any
such Lien, all at the expense of the Company and the Subsidiary Credit Parties.
6. COVENANTS
Until (i) the Commitment has expired or been terminated, and (ii) all
Obligations payable hereunder shall have been paid in full, and (iii) all
Letters of Credit shall have expired or terminated, the Company and each
Subsidiary Credit Party covenants and agrees with the Issuing Bank that:
6.01 Liens, Collateral Dispositions. The Company and the Subsidiary Credit
Parties will not create, incur, assume or permit to exist any Lien on any
Collateral or, except as expressly permitted by the Pledge and Security
Agreement, sell, transfer, assign or otherwise dispose of any Collateral.
6.02 Fundamental Changes. The Company will not , and will not permit any
Subsidiary Credit Party to, merge into or consolidate with any other Person, or
permit any other Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing, (i) any Subsidiary Credit Party may merge into any other Subsidiary
Credit Party or into the Company, and (ii) any Subsidiary Credit Party may
liquidate or dissolve voluntarily into the Company.
7. EVENTS OF DEFAULT
7.01 Events of Default. If any of the following events ("Events of
Default") shall occur:
(a) the Company or any Subsidiary Credit Party shall fail to pay any
reimbursement obligation in respect of any L/C Disbursement when and as the
same shall become due and payable;
(b) the Company or any Subsidiary Credit Party shall fail to pay any
fee or any other amount (other than an amount referred to in Section
7.01(a)) payable under this Agreement or any other Credit Document, when
and as the same shall become due and payable, and such failure shall
continue for three Business Days;
(c) any representation or warranty made or deemed made by or on behalf
of the Company or any Subsidiary Credit Party in or in connection with any
Credit Document or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Credit Document
shall prove to have been incorrect in any material respect when made or
deemed made;
(d) the Company or any Subsidiary Credit Party shall fail to observe
or perform any covenant, condition or agreement contained in Sections 5.04,
5.05, 6.01 or 6.02;
19
(e) the Company or any Subsidiary Credit Party shall fail to observe
or perform any covenant, condition or agreement contained in this Agreement
(other than those specified in Sections 7.01(a), 7.01(b), 7.01(c), or
7.01(d)), and such failure shall continue unremedied for a period of thirty
(30) days after notice thereof from the Issuing Bank to the Company;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Company or any Subsidiary Credit Party, their
respective debts, or of a substantial part of their respective assets,
under any federal or state bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Company or any Subsidiary Credit Party or for a substantial part of their
respective assets, and, in any such case, such proceeding or petition shall
continue undismissed for sixty (60) days or an order or decree approving or
ordering any of the foregoing shall be entered;
(g) the Company or any Subsidiary Credit Party shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any federal or state bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (g) of
this Section 7.01, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Company or any Subsidiary Credit Party or for a substantial part of
their respective assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;
(h) the Company or any Subsidiary Credit Party shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(i) the Company shall fail to observe or perform any covenant,
condition or agreement contained in the Pledge and Security Agreement;
(j) The occurrence of an event of default on the part of the Company
or any Subsidiary Credit Party under any Material Indebtedness to which the
Company or any Subsidiary Credit Party is a party or any indenture or other
agreement relating to any Material Indebtedness of the Company or any
Subsidiary Credit Party;
(k) (i) any challenge by or on behalf of the Company, any Subsidiary
Credit Party or any other Person to the validity of any Credit Document or
the applicability or enforceability of any Credit Document strictly in
accordance with the subject Credit Document's terms or which seeks to void,
avoid, limit, or otherwise adversely affect any security interest created
by or in any Credit Document or any payment made pursuant thereto;
20
(ii) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by the Company or any other Person
not to be, a valid and perfected Lien on any Collateral, with the priority
required by the applicable Security Document;
(l) the determination by the Company or any Subsidiary Credit Party,
to suspend the operation of their business in the ordinary course,
liquidate all or substantially all of the Company's or such Subsidiary
Credit Party's assets or employ an agent or other third party to conduct a
program of closings, liquidations or "Going-Out-Of-Business" sales of all
or substantially all of the business; or
(m) Any Change in Control.
then, and in every such event (other than an event with respect to any the
Company described in clause (f), (g) or (h) of this Section 7.01), and at any
time thereafter during the continuance of such event, the Issuing Bank may by
written notice to the Company, take either or both of the following actions, at
the same or different times: (i) terminate all or any portion of the Commitment,
and thereupon all or such portion of the Commitment shall terminate immediately,
and (ii) declare all Obligations then outstanding to be due and payable in whole
and thereupon the Obligations so declared to be due and payable shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company and the Subsidiary
Credit Parties; and in case of any event with respect to the Company or a
Subsidiary Credit Party described in clause (f), (g) or (h) of this Article, the
Commitment shall automatically terminate and the Obligations then outstanding,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Company and
the Subsidiary Credit Parties.
7.02 Remedies on Default
In case any one or more of the Events of Default shall have occurred and be
continuing, the Issuing Bank may proceed to protect and enforce its rights and
remedies under this Agreement or any of the other Credit Documents by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Agreement and the
other Credit Documents or any instrument pursuant to which the Obligations are
evidenced, and proceed to enforce the payment thereof or any other legal or
equitable right of the Issuing Bank. No remedy herein is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
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8. MISCELLANEOUS
8.01 Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
(a) if to the Company or any Subsidiary Credit Party to it at 0
Xxxxxxx Xxxxx Xxxxxxxx, Xxx Xxxxxx 00000, Attention: Treasurer (Telecopy
No. (000)000-0000), with a copy to General Counsel (Telecopy No. (201)
571-8106);
(b) if to the Issuing Bank, to Bank of America, N.A., 00 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx XxxXxxxxxx (Telecopy No.
(000) 000-0000), with a copy to Xxxxxx & Xxxxxxxxxx, LLP, Xxxxx Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Esquire
(Telecopy No. (000) 000-0000);
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
8.02 Waivers; Amendments. (a) No failure or delay by the Issuing Bank in
exercising any right or power hereunder or under any other Credit Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Issuing
Bank hereunder and under the other Credit Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of any Credit Document or consent to any departure by any the
Company or any Subsidiary Credit Party therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. Without limiting the generality of the foregoing,
the issuance of a Letter of Credit shall not be construed as a waiver of any
Default or Event of Default, regardless of whether the Issuing Bank may have had
notice or knowledge of such Default or Event of Default at the time.
(b) Neither this Agreement nor any other Credit Document nor any provision
hereof or thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Company and the Issuing
Bank.
8.03 Expenses; Indemnity; Damage Waiver.
(a) The Company and the Subsidiary Credit Parties, jointly and severally,
shall pay (i) all actual reasonable out-of-pocket expenses incurred by the
Issuing Bank and its Affiliates, including the actual reasonable fees, charges
and disbursements of counsel for the Issuing Bank, for the preparation and
administration of the Credit Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions
22
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, and (iii) all reasonable out-of-pocket expenses incurred
by the Issuing Bank, including the reasonable fees, charges and disbursements of
any counsel for the Issuing Bank in connection with the enforcement or
protection of its rights in connection with the Credit Documents, including its
rights under this Section, or in connection with the Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Letters of Credit.
(b) The Company and the Subsidiary Credit Parties, jointly and severally,
shall indemnify the Issuing Bank and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee"), against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of any Credit Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Credit Documents of
their respective obligations thereunder or the consummation of the transactions
contemplated by the Credit Documents or any other transactions contemplated
hereby, (ii) any Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), or (iii) any
actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence, willful misconduct or bad faith of such Indemnitee. In connection
with any indemnified claim hereunder, the Indemnitees shall be entitled to
select a single counsel for themselves (absent conflicts of interest) and the
Company and the Subsidiary Credit Parties shall promptly pay the reasonable fees
and expenses of such counsel.
(c) To the extent permitted by Applicable Law, neither the Company nor any
Subsidiary Credit Party shall assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or
instrument contemplated hereby, the transactions contemplated by the Credit
Documents, any Letter of Credit or the use of the proceeds thereof. The Company
and the Subsidiary Credit Parties further agree that no Indemnitee shall have
any liability to the Company or any Subsidiary Credit Party, any Person
asserting claims by or on behalf of the Company, any Subsidiary Credit Party or
any other Person in connection with this Agreement or the other Credit Documents
except (i) for breach of the Indemnitee's obligations under this Agreement and
the other Credit Documents, or (ii) the Indemnitee's gross negligence, willful
misconduct or bad faith.
23
(d) All amounts due under this Section shall be payable promptly after
written demand therefor.
8.04 Successors and Assigns(a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), except that neither the Company nor any
the Subsidiary Credit Party may assign or otherwise transfer any of their rights
or obligations hereunder without the prior written consent of the Issuing Bank
(and any such attempted assignment or transfer without such consent shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of the Issuing Bank) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) The Issuing bank may at any time assign to one or more banks or
financial institutions (each, an "Assignee") all, or a portion of, its rights
and obligations under this Agreement and the other Loan Documents; provided that
the Company has provided its prior written consent of the Assignee (which
consent shall not be unreasonably withheld or delayed) unless an Event of
Default has occurred and is continuing (in which case no consent shall be
required). Any such assignment and assumption shall be made pursuant to an
Assignment and Assumption Agreement in substantially the form of Exhibit A
hereto. Upon the execution and delivery of an Assignment and Assumption
Agreement, the Assignee shall be a party to this Agreement and shall have all
the rights and obligations of the Issuing Bank hereunder to the extent of such
assignment with no further consent or action by any party.
(c) The Issuing Bank may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement to secure obligations
of the Issuing Bank, including any pledge or assignment to secure obligations to
any of the twelve Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341, and this Section shall not apply to any such
pledge or assignment of a security interest, provided that no such pledge or
assignment of a security interest shall release the Issuing Bank from any of its
obligations hereunder or substitute any such pledgee or assignee for the Issuing
Bank as a party hereto.
8.05 Survival. All covenants, agreements, representations and warranties
made by the Company and the Subsidiary Credit Parties in the Credit Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Credit Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Credit Documents and the issuance of any Letters
of Credit, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that the Issuing Bank may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect
24
as long as any Obligations are outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitment has not expired or terminated. The
provisions of Sections 2.13, 2.15 and 8.03 shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated
hereby, the repayment of the Obligations, the expiration or termination of the
Letters of Credit and the Commitment or the termination of this Agreement or any
provision hereof.
8.06 Counterparts; Integration. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement and the other Credit
Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all contemporaneous or previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Issuing Bank and the Company
and when the Issuing Bank shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
8.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
8.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Issuing Bank and each of its Affiliates is hereby authorized at
any time and from time to time, 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 and other obligations at any time owing
by the Issuing Bank or Affiliate or for the credit or the account of the Company
and the Subsidiary Credit Parties against any of and all the obligations of the
Company and the Subsidiary Credit Parties now or hereafter existing under this
Agreement held by the Issuing Bank, irrespective of whether or not the Issuing
Bank shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of the Issuing Bank under this Section
are in addition to other rights and remedies (including other rights of setoff)
that the Issuing Bank may have under the Security Documents or otherwise.
8.09 Governing Law; Jurisdiction; Consent to Service of Process
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
(b) The Company and the Subsidiary Credit Parties agree that any suit for
the enforcement of this Agreement or any other Credit Document may be brought in
any New York state or federal court sitting in the County of New York as the
Issuing Bank may elect in its sole discretion and consent to the non-exclusive
jurisdiction of such courts. The Company and the Subsidiary Credit Parties
hereby waive any objection which they may now or hereafter have to
25
the venue of any such suit or any such court or that such suit is brought in an
inconvenient forum. The Company and the Subsidiary Credit Parties agree that any
action commenced by any of them asserting any claim or counterclaim arising
under or in connection with this Agreement or any other Credit Document shall be
brought solely in any New York state or federal court sitting in the County of
New York as the Issuing Bank may elect in its sole discretion and consent to the
exclusive jurisdiction of such courts with respect to any such action.
(c) Each party to this Agreement irrevocably consents to service of process
in the manner provided for notices in Section 8.01. Nothing in this Agreement or
any other Credit Document will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
26
8.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A JURY IN ANY TRIAL OF ANY CASE
OR CONTROVERSY IN WHICH THE COMPANY, ANY SUBSIDIARY CREDIT PARTY, OR THE ISSUING
BANK, IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR
AGAINST THE COMPANY, ANY SUBSIDIARY CREDIT PARTY OR THE ISSUING BANK, OR IN
WHICH THE COMPANY, ANY SUBSIDIARY CREDIT PARTY OR THE ISSUING BANK IS JOINED AS
A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF OR IS IN RESPECT OF,
ANY RELATIONSHIP AMONGST OR BETWEEN THE COMPANY, ANY SUBSIDIARY CREDIT PARTY OR
ANY OTHER PERSON AND THE ISSUING BANK. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
8.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and
shall not affect the construction of, or be taken into consideration in
interpreting, this Agreement.
8.12 Interest Rate Limitation. Notwithstanding anything herein to the
contrary, if at any time the interest rate, together with all fees, charges and
other amounts that are treated as interest on such Letter of Credit or L/C
Disbursement under Applicable Law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") that may be contracted for, charged,
taken, received or reserved by the Issuing Bank in accordance with Applicable
Law, the rate of interest payable, together with all Charges payable, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable but were not payable as a result of the operation
of this Section shall be cumulated and the interest and Charges payable to the
Issuing Bank in respect of other periods shall be increased (but not above the
Maximum Rate therefor) until such cumulated amount, together with interest
thereon at the Prime Rate to the date of repayment, shall have been received by
the Issuing Bank.
8.13 Waivers.
(a) The Obligations are the joint and several obligations of the Company
and each Subsidiary Credit Party. The Company and each Subsidiary Credit Party
hereby assumes, guarantees, and agrees to discharge all Obligations of all other
obligors. In that regard, any Subsidiary Credit Party for whose account a Letter
of Credit is to be issued shall, prior to the date of issuance, execute and
deliver to the Issuing Banks a joinder to, and assumption of obligations under,
this Agreement (in addition to any letter of credit application or other
documents required by the Issuing Banks).
27
(b) To the fullest extent permitted by Applicable Law, the obligations of
the Company and the Subsidiary Credit Parties hereunder shall not be affected by
(i) the failure of the Issuing Bank to assert any claim or demand or to enforce
or exercise any right or remedy against any other obligor under the provisions
of this Agreement, any other Credit Document or otherwise, (ii) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of, this Agreement, any other Credit Document, or any other
agreement, including with respect to any other obligor, or (iii) the failure to
perfect any security interest in, or the release of, any of the security held by
or on behalf of the Issuing Bank.
(c) To the fullest extent permitted by Applicable Law, the obligations of
the Company and the Subsidiary Credit Parties hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Obligations), including any
claim of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each obligor hereunder shall not
be discharged or impaired or otherwise affected by any default, failure or
delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any obligor or that would otherwise operate as a discharge of any
obligor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations).
(d) To the fullest extent permitted by Applicable Law, the Company and the
Subsidiary Credit Parties waive any defense based on or arising out of any
defense of any other obligor under any Credit Document or the unenforceability
of the Obligations or any part thereof from any cause, or the cessation from any
cause of the liability of any other obligor under any Credit Document, other
than the indefeasible payment in full in cash of all the Obligations. The
Issuing Bank may, at its election, foreclose on any security held by it by one
or more judicial or nonjudicial sales, accept an assignment of any such security
in lieu of foreclosure, compromise or adjust any part of the Obligations, make
any other accommodation with any other obligor under any Credit Document, or
exercise any other right or remedy available to them against any other obligor,
without affecting or impairing in any way the liability of any obligor hereunder
except to the extent that all the Obligations have been indefeasibly paid in
full in cash. Pursuant to Applicable Law, each obligor waives any defense
arising out of any such election even though such election operates, pursuant to
Applicable Law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such obligor against any other obligor,
as the case may be, or any security.
[SIGNATURE PAGES FOLLOW]
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as a sealed instrument as
of the day and year first above written.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:_________________________
Name:
Title:
BANK OF AMERICA, N.A. as Issuing Bank
By:________________________
Name:
Title:
Address:
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx XxxXxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
29
Schedule 1
Advance
-------
Additional Collateral Rate*
--------------------- -----
Mutual Funds (Quoted in WSJ or Xxxxxx'x)
-- U.S. Government Obligations up to 90%
-- Corporate/Municipal Bonds up to 80%
U.S. Government Obligations up to 90%
U.S. Agency Bonds up to 80%
State/Municipal Bonds (A or higher) up to 80%
Corporate Bonds (BAA or higher) up to 80%
Commercial Paper with Agency Ratings of:
--A1/P1 up to 90%
--A2/P2 up to 85%
Repurchase Agreements up to 80%
Collateralized Mortgage Obligations up to 80%
Asset Backed Securities up to 80%
Auction Rate Securities up to 80%
* Based on current market value.
30
