Exhibit 4.18
AMENDMENT NO. 1 TO GUARANTY
AMENDMENT NO. 1 TO GUARANTY ("Amendment No. 1"), dated as of
October 25, 1999, from RITE AID CORPORATION, a Delaware corporation (the
"Guarantor"), to SUMITOMO BANK LEASING AND FINANCE, INC., a Delaware
corporation (the "Lessor").
WHEREAS, the Lessor and Rite Aid Realty Corp. (the "Lessee")
entered into a Master Lease and Security Agreement dated as of May 30,
1997, as amended by Amendment No. 1, dated as of March 11, 1998, and as
further amended by Amendment No. 2, dated as of June 22, 1998, and as
further amended by Amendment No. 3, dated as of May 26, 1999, and as
further amended by Amendment No. 4, dated as of the date hereof (as so
amended, the "Lease"); and
WHEREAS, the Guarantor and the Lessor entered into a Guaranty,
dated as of May 30, 1997 (the "Guaranty"); and
WHEREAS, the Lessor has pledged and assigned its rights in the
Guaranty pursuant to the Intercreditor and Security Agreement, dated as of
May 30, 1998, as amended by Amendment No. 1, dated as of May 26, 1997,
among the Lessor, the Guarantor, the Lessee, The Sumitomo Bank, Limited,
New York Branch, as Collateral Agent and the other parties thereto; and
WHEREAS, the obligations of the Guarantor under the Guaranty have
been secured under the PCS Pledge Agreement and the xxxxxxxxx.xxx Pledge
Agreement (as such terms are defined in the Amended and Restated Credit
Agreement dated as of October 25, 1999 among the Guarantor, the banks
parties thereto and Xxxxxx Guaranty Trust Company of New York, as agent);
and
WHEREAS, the Guarantor and the Lessor now desire to amend the
Guaranty; and
WHEREAS, capitalized terms used but not defined herein shall have
the respective meanings given to such terms in Appendix I to the Lease.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment to Guaranty. Section 11(a) of the
Guaranty is hereby amended to read in its entirety as follows:
(a) The covenants set forth in Annex A hereto are
hereby incorporated herein in their entirety with the same force and
effect as if such covenants were set forth expressly herein. The
Guarantor further covenants and agrees that it shall not cause or
permit any increase in the principal amount secured under the PCS
Pledge Agreement (as defined in Annex A) or the xxxxxxxxx.xxx Pledge
Agreement (as defined in Annex A and together with the PCS Pledge
Agreement, the "Pledge Agreements") or cause or permit any amendment
or waiver to either Pledge Agreement that by its terms materially
adversely affects the rights of the holders of the Synthetic Lease
Obligations (as defined in the Pledge Agreements) in a manner
different from its effect on the rights of holders of any other
Secured Obligations (as defined in the Pledge Agreements) without the
prior written consent of the Required Participants."
SECTION 2. Pledge Agreements. The Lessor hereby accepts the
benefits of and agrees to be bound by the terms of the PCS Pledge Agreement
and the xxxxxxxxx.xxx Pledge Agreement and confirms its appointment of
Xxxxxx Guaranty Trust Company of New York as its agent thereunder in
accordance with the terms thereof.
SECTION 3. Secretary's Certificate. The Guarantor hereby
agrees to deliver to the Collateral Agent on the date hereof a certificate
dated the date of this Amendment No. 1, from the Secretary or Assistant
Secretary of the Guarantor certifying (i) as to the incumbency and
signature of each officer of the Guarantor authorized to execute and
deliver this Amendment No. 1, (ii) that attached thereto are true and
complete copies of the Certificate of Incorporation and By-Laws of the
Guarantor as in full force and effect on the date of this Amendment No. 1
and (iii) that attached thereto is a true and complete copy of the
resolutions of the Board of Directors of the Guarantor authorizing the
execution, delivery and performance of this Amendment No. 1 and the
transactions contemplated hereby, together with a certificate of another
officer of the Guarantor as to the incumbency and signature of such
Secretary or Assistant Secretary.
SECTION 4. Representations and Warranties. The Guarantor
hereby represents and warrants that (a) each of the representations and
warranties made in Section 4 of the Guaranty are true and correct with the
same force and effect as though made on and as of the date of this
Amendment No. 1, except (i) to the extent that any such representations or
warranties expressly relate to an earlier date, such representations and
warranties were true and correct on and as of such earlier date, (ii) with
respect to the representation set forth in Section 4(d) and (e) of the
Guaranty, such representation is true and correct on and as of the date
hereof as if made on and as of the date hereof except to the extent set
forth in the Information (as defined in Annex A hereto) and (iii) with
respect to the representation set forth in Section 4(f) of the Guaranty,
such representation is true and correct on and as of the date hereof as if
made on and as of the date hereof except to the extent set forth in the
Guarantor's 1999 Annual Report on Form 10-K for the fiscal year ended
February 27, 1999, and (b) no Default or Event of Default has occurred and
is continuing.
SECTION 5. Continuing Effect. Except as expressly modified
and amended hereby, the Guaranty remains unchanged and in full force and
effect in all respects. As expressly modified and amended hereby, the
Guarantor hereby ratifies and affirms the Guaranty.
SECTION 6. Governing Law. THIS AMENDMENT NO. 1 SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 7. Counterparts. This Amendment No. 1 may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Amendment No. 1.
[Remainder of this page left intentionally blank. Signatures begin on next
page.]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be executed by their officers thereunto duly authorized
as of the date first above written.
RITE AID CORPORATION,
as Guarantor
By: ____________________________
Name:
Title:
ANNEX A TO GUARANTY
DEFINITIONS
Definitions. Unless otherwise defined in the text of this Annex
A, the following terms, as used in this Annex A, have the following
meanings (capitalized terms used in this Annex A but not otherwise defined
in this Annex A shall have their respective meanings as set forth in the
Guaranty; unless otherwise specified in this Annex A, references to section
numbers in this Annex A refer to the numbered sections of this Annex A):
"ATTRIBUTABLE DEBT" means, as to any particular Sale and
Leaseback Transaction under which the Guarantor or any Subsidiary is at the
time liable, at any date as of which the amount thereof is to be determined
(i) in the case of any such transaction involving a Capital Lease, the
amount on such date of the Capital Lease Obligation thereunder, or (ii) in
the case of any other Sale and Leaseback Transaction, the then present
value of the minimum rental obligations under such Sale and Leaseback
Transaction during the remaining term thereof (after giving effect to any
extensions at the option of the lessor) computed by discounting the
respective rental payments at the actual interest factor included in such
payments or, if such interest factor cannot be readily determined, at the
rate of 14% per annum. The amount of any rental payment required to be made
under any such Sale and Leaseback Transaction not involving a Capital Lease
may exclude amounts required to be paid by the lessee on account of
maintenance and repairs, insurance, taxes, assessments, utilities,
operating and labor costs and similar charges.
"BANK" means each bank listed on the signature pages of the
Credit Agreement, each Assignee (as defined in the Credit Agreement) which
becomes a Bank pursuant to Section 9.06(c) of the Credit Agreement, and
their respective successors.
"BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by
any member of the ERISA Group.
"BORROWING" means the aggregation of Loans of the same Class to
be made to the Guarantor by the Banks pursuant to Article 2 of the Credit
Agreement on a single date and for a single Interest Period.
"BUSINESS ACQUISITION" means (i) an Investment by the Guarantor
or any of its Subsidiaries in any other Person (including an Investment by
way of acquisition of securities of any other Person) pursuant to which
such Person shall become a Subsidiary or shall be merged into or
consolidated with the Guarantor or any of its Subsidiaries or (ii) an
acquisition by the Guarantor or any of its Subsidiaries of the property and
assets of any Person (other than the Guarantor or any of its Subsidiaries)
that constitute substantially all the assets of such Person or any division
or other business unit of such Person.
"CAPITAL LEASE" means any lease of property which, in accordance
with generally accepted accounting principles, should be capitalized on the
lessee's balance sheet; and
"CAPITAL LEASE OBLIGATION" means the amount of the liability so
capitalized in respect of a Capital Lease.
"CLASS" has the meaning set forth in Section 1.03 of the Credit
Agreement.
"COLLATERAL" means collateral subject to the Collateral
Documents.
"COLLATERAL DOCUMENTS" means the Pledge Agreements, any
additional pledge agreements required to be delivered pursuant to the Loan
Documents and any other instruments or agreements executed pursuant to the
foregoing.
"COMMITMENT" means a Tranche A Commitment or a Tranche B
Commitment, and
"COMMITMENTS" means any two or more of the foregoing, as the
context may require.
"COMMITMENT SCHEDULE" means the Schedule attached to the Credit
Agreement and identified as such.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
aggregate amount of expenditures by the Guarantor and its Consolidated
Subsidiaries for plant, property and equipment during such period
(including any such expenditure by way of acquisition of a Person or by way
of assumption of indebtedness or other obligations of a Person, to the
extent reflected as plant, property and equipment), but excluding any such
expenditures made (i) for the replacement or restoration of assets to the
extent financed by condemnation awards or proceeds of insurance received
with respect to the loss or taking of or damage to the asset or assets
being replaced or restored and (ii) for assets acquired to the extent
financed by a Sale and Leaseback Transaction permitted by Section 1.08.
"CONSOLIDATED DEBT" means at any date the Debt of the Guarantor
and its Consolidated Subsidiaries, determined on a consolidated basis as of
such date.
"CONSOLIDATED EBITDA" for any period, Consolidated Net Income for
such period plus, to the extent deducted in determining Consolidated Net
Income for such period, the aggregate amount of (i) Consolidated Interest
Charges, (ii) provision for income taxes, (iii) depreciation and
amortization and (iv) charges incurred in connection with store closings
not in excess of $48,000,000 and $20,000,000 during the fiscal years ending
on or closest to February 28, 2000 and February 28, 2001, respectively;
provided that if there shall have been an acquisition or disposition of
operations during such period, Consolidated EBITDA shall be calculated on a
pro forma basis giving effect thereto as if such acquisition or disposition
had occurred on the first day of such period.
"CONSOLIDATED INTEREST CHARGES" means, for any period, the
aggregate amount of interest charges, whether expensed or capitalized,
incurred or accrued by the Guarantor and its Consolidated Subsidiaries
during such period.
"CONSOLIDATED NET INCOME" means, for any period, the net income
(or loss) of the Guarantor and its Consolidated Subsidiaries (exclusive of
(a) any non-cash loss on account of a sale of any drugstore and (b)
extraordinary items of gain or loss and other non-recurring items of gain
or loss, but only to the extent that such non-recurring items of loss do
not (i) involve any cash expenditure by the Guarantor during such period or
any future period or (ii) exceed $50,000,000 in any fiscal year),
determined on a consolidated basis for such period.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of
assets (less applicable reserves and other properly deductible items) which
under generally accepted accounting principles would be included on a
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries after deducting therefrom (i) all liabilities and liability
items, including amounts in respect of obligations or guarantees of
obligations under leases, which under generally accepted accounting
principles would be included on such balance sheet, except Funded Debt,
capital stock and surplus, surplus reserves and provisions for deferred
income taxes, and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, which in
each case under generally accepted accounting principles would be included
on such consolidated balance sheet.
"CONSOLIDATED NET WORTH" means at any date the consolidated
stockholders' equity of the Guarantor and its Consolidated Subsidiaries
determined as of such date.
"CONSOLIDATED RENT" means, for any period, the consolidated
rental expense of the Guarantor and its Consolidated Subsidiaries for such
period.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Guarantor in its consolidated financial statements if such statements were
prepared as of such date.
"CREDIT AGREEMENT" means the Amended and Restated Credit
Agreement dated as of October 25, 1999 among Rite Aid Corporation, the
banks from time to time parties thereto and Xxxxxx Guaranty Trust Company
of New York, as Agent, without giving effect to any amendments or waivers
thereof made by the requisite parties thereunder after October 25, 1999
unless expressly consented to by the Required Participants.
"DEBT" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all non-contingent obligations (and,
for purposes of Section 1.10 and the definition of Material Financial
Obligations, all contingent obligations) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (vi) all Debt secured by a Lien on any asset of such
Person, whether or not such Debt is otherwise an obligation of such Person,
and (vii) all Debt of others Guaranteed by such Person.
"DEFAULT" means any condition or event which constitutes an Event
of Default under the Credit Agreement or which with the giving of notice or
lapse of time or both would, unless cured or waived, become an Event of
Default under the Credit Agreement.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized by
law to close.
"XXXXXXXXX.XXX" means xxxxxxxxx.xxx, inc., a Delaware
corporation, and its successors.
"XXXXXXXXX.XXX PLEDGE AGREEMENT" means the xxxxxxxxx.xxx Pledge
Agreement dated as of October 25, 1999 between the Guarantor and Xxxxxx
Guaranty Trust Company of New York, as agent thereunder.
"ENVIRONMENTAL LAWS" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to
emissions, discharges or releases of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances
or wastes into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes
or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA GROUP" means the Guarantor, any Subsidiary and all members
of a controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control which, together with the
Guarantor or any Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.01 of
the Credit Agreement.
"FIXED CHARGE COVERAGE RATIO" means at any date, the ratio of (i)
Consolidated EBITDA plus Consolidated Rent to (ii) Consolidated Interest
Charges plus Consolidated Rent, in each case for the period of four
consecutive fiscal quarters most recently ended on or prior to such date.
"FUNDED DEBT" means any Debt maturing more than one year after
the date of determination thereof and any Debt, regardless of its term,
renewable pursuant to the terms thereof or of a revolving credit or similar
agreement effective for more than one year after the date of the creation
of such Debt, which would, in accordance with generally accepted accounting
practice, be classified as funded debt but shall not include:
(a) any Debt for the payment, redemption or satisfaction of
which money (or evidences of indebtedness, if permitted under the
instrument creating such indebtedness) in the necessary amount shall
have been deposited in trust with a trustee or proper depository
either at or before maturity or redemption date thereof; or
(b) guarantees arising in connection with the sale,
discount, guarantee or pledge of notes, chattel mortgages, leases,
accounts receivable, trade acceptances and other paper arising, in the
ordinary course of business, out of installment or conditional sales
to or by, or transactions involving title retention with,
distributors, dealers or other customers of merchandise, equipment or
services or guarantees other than guarantees of indebtedness for
borrowed money.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of
any other Person; provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "GUARANTEE" used as a verb has a corresponding meaning.
"INDENTURES" means (i) the Indenture dated as of December 21,
1998 between the Guarantor and Xxxxxx Trust and Savings Bank, as trustee,
(ii) the Indenture dated as of September 22, 1998 between the Guarantor and
Xxxxxx Trust and Savings Bank, as trustee and (iii) the Indenture dated as
of August 1, 1993, between the Guarantor and First Trust of New York,
National Association, as successor trustee.
"INFORMATION" means, collectively, (i) the information provided
to the Banks in connection with the waiver dated as of September 29, 1999
to the Existing Credit Agreement and (ii) the information presented to the
Banks at meetings in New York City on October 4, 1999 and October 18, 1999
among the Borrower and certain financial institutions.
"INTEREST PERIOD" shall have the meaning set forth in Section
1.01 of the Credit Agreement.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"INVESTMENT" means any investment in any Person, whether by means
of share purchase, capital contribution, loan, time deposit or otherwise.
Any repurchase by the Guarantor of its own capital stock shall not
constitute an Investment for purposes of this Annex A. The amount of any
Investment shall be the original principal or capital amount thereof less
all returns of principal or equity thereon (and without adjustment by
reason of the financial condition of such other Person) and shall, if made
by the transfer or exchange of property other than cash, be deemed to have
been made in an original principal or capital amount equal, to the fair
market value of such property at the time of such transfer or exchange.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Annex A, the Guarantor or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset.
"LOAN" means a Tranche A Loan or a Tranche B Loan and "LOANS"
means Tranche A Loans or Tranche B Loans or any combination of the
foregoing.
"LOAN DOCUMENTS" means the Credit Agreement, the Notes and the
Collateral Documents.
"MATERIAL FINANCIAL OBLIGATIONS" means (i) a principal or face
amount of Debt (except Debt outstanding hereunder) and/or (ii) payment or
collateralization obligations in respect of Derivatives Obligations and/or
(iii) payment or collateralization obligations in respect of leases (other
than Capital Leases, which are Debt) of the Guarantor and/or one or more of
its Subsidiaries, arising in one or more related or unrelated transactions,
exceeding in the aggregate $25,000,000.
"MULTIEMPLOYER PLAN" means at any time an employee pension
benefit plan within the meaning of Section 4001 (a) (3) of ERISA to which
any member of the ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a
member of the ERISA Group during such five year period.
"1999 FACILITY" means the $1,300,000,000 Term Loan Agreement
dated as of the date of this Amended Agreement among Rite Aid Corporation,
the banks listed therein and Xxxxxx Guaranty Trust Company of New York, as
administrative agent thereunder, without giving effect to any amendments or
waivers thereof made by the requisite parties thereunder after October 25,
1999 unless expressly consented to by the Required Participants.
"1999 EXPOSURES" mans the undrawn commitments and/or the
outstanding loans under the 1999 Facility.
"1999 LOAN DOCUMENTS" means the "Loan Documents" as defined in
the 1999 Facility.
"NOTES" means promissory notes of the Guarantor, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Guarantor to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"PCS" means PCS Holding Corporation, a Delaware corporation, and
its successors.
"PCS PLEDGE AGREEMENT" means the PCS Pledge Agreement dated as
October 25, 1999 between the Guarantor and Xxxxxx Guaranty Trust Company of
New York, as agent thereunder.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"PLAN" means at any time an employee pension benefit plan (other
than a Multiemployer Plan) which is covered by Title IV of ERISA or subject
to the minimum funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any member of the
ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
"PLEDGE AGREEMENTS" means the xxxxxxxxx.xxx Pledge Agreement and
the PCS Pledge Agreement.
"REFUNDING BANK" shall have the meaning set forth in Section 1.01
of the Credit Agreement.
"REGULATION T, U OR X" means Regulation T, U or X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"RESTRICTED PAYMENT" means (i) any dividend or other distribution
on any shares of the Guarantor's capital stock (except dividends payable
solely in shares of its capital stock) or (ii) any payment on account of
the purchase, redemption, retirement or acquisition of (a) any shares of
the Guarantor's capital stock or (b) any option, warrant or other right to
acquire shares of the Guarantor's capital stock (other than such payment in
connection with employee benefit plans in the ordinary course of business).
"SALE AND LEASEBACK TRANSACTION" has the meaning set forth in
Section 1.09.
"SEC" means the Securities and Exchange Commission, or any Person
succeeding to its functions under the Securities Exchange Act of 1934, as
amended.
"SECURED DEBT" means Debt which is secured by a Lien on property
of the Guarantor or any Subsidiary, but shall not include guarantees
arising in connection with the sale, discount, guarantee or pledge of
notes, chattel mortgages, leases, accounts receivable, trade acceptances
and other papers arising, in the ordinary course of business, out of
installment or conditional sales to or by, or transactions involving title
retention with, distributors, dealers or other customers, of merchandise,
equipment or services.
"SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary or any
group of Subsidiaries having consolidated assets, individually or in the
aggregate, equal to or greater than 8% of the consolidated assets of the
Guarantor and its Consolidated Subsidiaries at such time.
"SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the
Guarantor.
"TEMPORARY CASH INVESTMENT" means any Investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial
paper rated at least A-I by S&P and P- I by Moody's, (iii) time deposits
with, including certificates of deposit issued by, any office located in
the United States of any bank or trust company which is organized or
licensed under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000,
(iv) repurchase agreements with respect to securities described in clause
(i) above entered into with an office of a bank or trust company meeting
the criteria specified in clause (iii) above, provided in each case that
such Investment matures within one year from the date of acquisition
thereof by the Guarantor or a Subsidiary or (v) money market mutual funds
at least 90% the assets of which are held in Investments referred to in
clauses (i) through (iv) above (except that the maturities of certain
Investments held by any such money market funds may exceed one year so long
as the dollar-weighted average life of the Investments of such money market
mutual fund is less than one year).
"TERMINATION DATE" means July 19, 2001, or, if such day is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in
which case the Termination Date shall be the next preceding Euro-Dollar
Business Day.
"TOTAL CAPITAL" means, at any date, the sum of Consolidated Debt
and Consolidated Net Worth, each determined as of such date.
"TRANCHE A COMMITMENT" means (i) with respect to each Bank listed
in the Commitment Schedule, the amount set forth opposite the name of such
Bank in the Commitment Schedule as its Tranche A Commitment and (ii) with
respect to each Assignee which becomes a Bank pursuant to Section 9.06(c)
of the Credit Agreement, the amount of the Tranche A Commitment thereby
assumed by it, in each case as such amount may be changed from time to time
pursuant to Sections 2.08, 2.10 and 9.06(c) of the Credit Agreement.
"TRANCHE A EXPOSURE" means, with respect to each Bank, the amount
of its Tranche A Commitment, if still in existence, or the aggregate
outstanding principal amount of its Tranche A Loans, if its Tranche A
Commitment is no longer in existence.
"TRANCHE A LOAN" means a loan made by a Bank pursuant to Section
2. 01(a) of the Credit Agreement.
"TRANCHE B COMMITMENT" means (i) with respect to each Bank listed
in the Commitment Schedule, the amount set forth opposite the name of such
Bank in the Commitment Schedule as its Tranche B Commitment and (ii) with
respect to each Assignee which becomes a Bank pursuant to Section 9.06(c)
of the Credit Agreement, the amount of the Tranche B Commitment thereby
assumed by it, in each case as such amount may be changed from time to time
pursuant to Sections 2.08, 2. 10 and 9.06(c) of the Credit Agreement.
"TRANCHE B EXPOSURE" means, with respect to each Bank, the amount
of its Tranche B Commitment, if still in existence, or the aggregate
outstanding principal amount of its Tranche B Loans, if its Tranche B
Commitment is no longer in existence.
"TRANCHE B LOAN" means a loan made by a Bank pursuant to Section
2.01(b) of the Credit Agreement.
"UNFUNDED LIABILITIES" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the
assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA,
exceeds (ii) the fair market value of all Plan assets allocable to such
liabilities under Title IV of ERISA (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a
potential liability of a member of the ERISA Group to the PBGC or any other
Person under Title IV of ERISA.
"UNITED STATES" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Guarantor.
Accounting Terms and Determinations. (a) Unless otherwise
specified herein, all accounting terms used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from
time to time, applied on a basis consistent (except for changes concurred
in by the Guarantor's independent public accountants) with the most recent
audited consolidated financial statements of the Guarantor and its
Consolidated Subsidiaries delivered accordance with such timetable.
COVENANTS
The Guarantor agrees that, until the Commitments (as defined in
the Committed Loan Agreement) of the all of the Lenders have been
terminated and all of the Secured Obligations (as defined in the
Intercreditor Agreement) have been paid or performed in full:
SECTION 1. Information. The Guarantor will deliver to each of
the Liquidity Providers:
(a) as soon as available and in any event within 90
days (or within such longer period of time, not greater than 120 days,
to which the SEC may extend the filing deadline for the Guarantor's
Annual Report on Form 10-K) after the end of each fiscal year of the
Guarantor, a consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of the end of such fiscal year and the
related consolidated statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on in a manner
acceptable to the SEC by KPMG Peat Marwick LLP or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 45
days (or (x) in the case of the fiscal quarter most recently ended
prior to October 25, 1999, within 65 days or (y) in the case of any
subsequent fiscal quarter, within such longer period of time, not
greater than 60 days, to which the SEC may extend the filing deadline
for the Guarantor's Quarterly Report on Form 10-Q) after the end of
each of the first three quarters of each fiscal year of the Guarantor,
a consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter and
for the portion of the Guarantor's fiscal year ended at the end of
such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of
the Guarantor's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, generally
accepted accounting principles and consistency by the chief financial
officer or the chief accounting officer of the Guarantor;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief accounting
officer of the Guarantor (i) setting forth in reasonable detail the
calculations required to establish whether the Guarantor was in
compliance with the requirements of Sections 1.08 to 1.15, inclusive,
on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which
the Guarantor is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of
financial statements referred to in clause (a) above, a statement of
the firm of independent public accountants which reported on such
statements (i) whether anything has come to their attention to cause
them to believe that any Default existed on the date of such
statements and (ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously therewith pursuant to
clause (c) above;
(e) within five days after any officer of the
Guarantor obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the chief
accounting officer of the Guarantor setting forth the details thereof
and the action which the Guarantor is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Guarantor generally, copies of all financial
statements, reports and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Guarantor
shall have filed with the SEC;
(h) if and when any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan under
Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such reportable event,
a copy of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any
Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer, any Plan, a copy of such notice;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to make
any payment or contribution to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement or makes any amendment to any Plan
or Benefit Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Guarantor setting forth details as to such occurrence
and action, if any, which the Guarantor or applicable member of the
ERISA Group is required or proposes to take; and
(i) from time to time such additional information
regarding the financial position or business of the Guarantor and its
Subsidiaries as the Liquidity Agent, at the request of any Liquidity
Provider, may reasonably request.
Information required to be delivered pursuant to Section 1.01
(a), 1.01 (b), 1.01 (f) or 1.01 (g) above shall be deemed to have been
delivered on the date on which the Guarantor provides notice to the
Liquidity Providers that such information has been posted on the
Guarantor's website on the Internet at the website address listed on the
signature pages hereof, at xxx.xxx/xxxxx/xxxxxxxx.xxx or at another website
identified in such notice and accessible by the Liquidity Providers without
charge; provided that (i) such notice may be included in a certificate
delivered pursuant to Section 1.01(c) and (ii) the Guarantor shall deliver
paper copies of the information referred to in Section 1.01(a), 1.01(b),
1.01(f) or 1.01(g) to any Liquidity Provider which requests such delivery.
SECTION 2. Payment of Obligations. The Guarantor will, and
will cause each of its Subsidiaries to, pay and discharge, as the same
shall become due and payable, (i) all material claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons prior to the time such claims or demands give rise to a Lien upon
any of its property or assets, and (ii) all material taxes, assessments and
governmental charges or levies upon it or its property or assets, except
where any of the items in clause (i) or (ii) above may be contested in good
faith by appropriate proceedings, and the Guarantor or such Subsidiary, as
the case may be, shall have set aside on its books, in accordance with
generally accepted accounting principles, appropriate reserves, if any, for
the accrual of any such items.
SECTION 3. Maintenance of Property; Insurance.
(a) The Guarantor will keep, and will cause each Subsidiary
to keep, all property useful and necessary in its business in good working
order and condition, ordinary wear and tear excepted.
(b) The Guarantor will, and will cause each of its
Subsidiaries to, maintain (either in the name of the Guarantor or in such
Subsidiary's own name) with financially sound and responsible insurance
companies, insurance on all their respective properties in at least such
amounts and against at least such risks (and with such risk retention) as
are usually insured against in the same general area by companies of
established repute engaged in the same or a similar business; and will
furnish to the Liquidity Providers, upon request from the Liquidity Agent,
information presented in reasonable detail as to the insurance so carried.
SECTION 4. Conduct of Business and Maintenance of Existence.
Except as otherwise permitted in the covenants set forth in this Annex A,
the Guarantor will continue, and will cause each Significant Subsidiary to
continue, to engage in business of the same general type as now conducted
by the Guarantor and its Significant Subsidiaries, and will preserve, renew
and keep in full force and effect, and will cause each Significant
Subsidiary (except where such Significant Subsidiary merges into the
Guarantor or any other Subsidiary) to preserve, renew and keep in full
force and effect their respective legal existences and their respective
rights, privileges and franchises necessary or desirable in the normal
conduct of business.
SECTION 5. Compliance with Laws. The Guarantor will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply would not have a material
adverse effect on the business, financial position or results of operations
of the Guarantor and its Consolidated Subsidiaries, considered as a whole.
SECTION 6. Inspection of Property, Books and Records. The
Guarantor will keep, and will cause each Subsidiary to keep, proper books
of record and account in which full, true and correct entries shall be made
of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of any Liquidity Provider at such Liquidity Provider's
expense to visit and inspect any of their respective properties, to examine
and make abstracts from any of their respective books and records and to
discuss their respective affairs, finances and accounts with their
respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 7. Restriction on Other Agreements. The Guarantor
will not, and will not permit any Subsidiary to, enter into any agreement
(other than the Loan Documents and the 1999 Loan Documents) which imposes a
limitation on incurrence by the Guarantor and its Subsidiaries of Liens
that is more restrictive than the limitation on Liens set forth in the
Indentures (other than agreements with respect to Debt secured by Liens
permitted by Section 1.10(a) containing restrictions on the ability to
transfer or grant Liens on the assets securing such Debt and other than
customary restrictions contained in purchase and sale agreements limiting
the transfer of the subject assets pending closing and customary
non-assignment provisions in leases and other contracts entered into in the
ordinary course of business) or which imposes other covenants more
restrictive than those set forth in this Annex A.
SECTION 8. Restriction on Debt of Subsidiaries. The Guarantor
will not permit any Subsidiary to create, issue, incur, assume, or in any
other way become liable for any unsecured Debt unless immediately prior
thereto the Guarantor would be entitled under Section 1.10(e) to create
Secured Debt not specifically permitted under Section 1.10 but for
subsection (e) thereof in an amount equal to such Debt; provided that the
foregoing restriction shall not prevent (i) any Subsidiary from becoming
liable to the Guarantor or to a Wholly-Owned Consolidated Subsidiary for
Debt or (ii) the extension, renewal or refunding of any Debt of any
Subsidiary so long as Consolidated Debt is not thereby increased.
SECTION 9. Restriction on Sales with Leases Back. Except for
a sale or transfer by a Subsidiary to the Guarantor or a Wholly-Owned
Consolidated Subsidiary, the Guarantor will not, and will not permit any
Subsidiary to, sell or transfer any manufacturing plant, warehouse, retail
store or equipment now or hereafter owned and operated by the Guarantor or
a Subsidiary, with the intention that the Guarantor or any Subsidiary take
back a lease thereof, except a lease for a period, including renewals, not
exceeding 24 months, by the end of which period it is intended that the use
of such property or equipment by the lessee will be discontinued (any such
transaction being herein referred to as a "SALE AND LEASEBACK
TRANSACTION"); provided that, notwithstanding the foregoing, the Guarantor
or any Subsidiary may enter into a Sale and Leaseback Transaction if the
Guarantor or a Subsidiary would be entitled under Section 1.10(e) to create
Secured Debt not specifically permitted under Section 1. 10 but for Section
1.10(e) in an amount equal to the Attributable Debt respecting such Sale
and Leaseback Transaction; provided further that, notwithstanding the
foregoing, the Guarantor or any Subsidiary may enter into a Sale and
Leaseback Transaction if entered into in respect of property acquired by
the Guarantor or a Subsidiary if such Sale and Leaseback Transaction is
entered into within 24 months from the date of such acquisition; and
provided still further that, notwithstanding the foregoing, the Guarantor
or any Subsidiary may enter into a Sale and Leaseback Transaction so long
as the Net Cash Proceeds thereof are applied as contemplated by Section
2.10 of the Credit Agreement.
SECTION 10. Restriction on Liens. The Guarantor will not,
and will not permit any Subsidiary to, create, issue, incur, assume or
guarantee any Secured Debt; provided that the foregoing covenant shall not
apply to the following:
(a) (i) Any Lien on any property acquired or
constructed by the Guarantor or a Subsidiary and created
contemporaneously with, or within 24 months after, such acquisition or
the completion of such construction and commencement of full operation
of such property, whichever is later, to secure or provide for the
payment of any part of the purchase or construction price of such
property, or (ii) the acquisition by the Guarantor or a Subsidiary of
property subject to any Lien upon such property existing at the time
of acquisition thereof, whether or not assumed by the Guarantor or
such Subsidiary, or (iii) any conditional sales agreement or other
title retention agreement with respect to any property hereafter
acquired; provided that the Lien does not spread to other property
except unimproved real property previously owned upon which any new
construction has taken place and subsequent additions to such acquired
or constructed property;
(b) Any Lien created for the sole purpose of
extending, renewing or refunding, in whole or part, any Lien permitted
by this Section 1.10 or any Lien securing the Debt of the Guarantor or
of any Subsidiary on October 25, 1999 or of a corporation at the time
such corporation becomes a Subsidiary, or any extensions, renewals or
refundings of any such Lien; provided that the principal amount of
Debt secured thereby shall not exceed the principal amount of Debt so
secured at the time of such extension, renewal or refunding and that
such extension, renewal or refunding Lien shall be limited to all or
that part of the same property which secured the Debt so extended,
renewed or refunded;
(c) Any Secured Debt of a Subsidiary owing to the
Guarantor or a Wholly-Owned Consolidated Subsidiary;
(d) Any Lien created by the Loan Documents or the 1999
Loan Documents; and
(e) Secured Debt of the Guarantor and its Subsidiaries
which would otherwise be prohibited by the foregoing restrictions (not
including Secured Debt permitted to be secured under subsections (a)
through (d) above) so long as the sum of any such Secured Debt
hereafter incurred and outstanding at the time plus Attributable Debt
of the Guarantor and any Subsidiaries in respect of Sale and Leaseback
Transactions hereafter entered into and outstanding at the time
(excluding Attributable Debt incurred in respect of any Sale and
Leaseback Transaction (i) entered into in respect of property acquired
by the Guarantor or a Subsidiary not more than 24 months prior to the
date such Sale and Leaseback Transaction is entered into or (ii) if
the Guarantor, within 120 days before or after such Sale and Leaseback
Transaction is entered into applies an amount equal to the greater of
(A) the net proceeds of the sale of the property so sold and leased
back or (B) the fair market value of such property at the date such
arrangement is entered into to the retirement of Secured Debt (other
than at maturity or pursuant to any mandatory payment provision) or to
reduction of the Commitments) plus unsecured Debt of any Subsidiary
hereafter incurred and outstanding at the time (excluding unsecured
Debt incurred through the extension, renewal or refunding of Debt of
such Subsidiary where Consolidated Debt was not thereby increased and
excluding any Debt owed to the Guarantor or a Wholly-Owned
Consolidated Subsidiary) does not at the time exceed 5% of
Consolidated Net Tangible Assets.
SECTION 11. Capital Expenditures. The aggregate amount of
Consolidated Capital Expenditures for any period set forth below shall not
exceed the amount set forth below opposite such period:
FISCAL YEAR ENDING ON AMOUNT
OR CLOSEST TO
February 29, 2000 $620,000,000
February 28, 2001 $295,000,000
SECTION 12. Capitalization Leverage Ratio. At no time during
any period set forth below shall the ratio of (i) Consolidated Debt at
such time to (ii) Total Capital at such time, exceed the ratio set forth
below opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 0.635
February 29, 2000 0.635
May 31, 2000 and thereafter 0.62
SECTION 13. Cash Flow Leverage Ratio. At no time during any
period set forth below shall the ratio of (i) Consolidated Debt at such
time to (ii) Consolidated EBITDA for the four consecutive fiscal quarters
then most recently ended at or prior to such time, exceed the ratio set
forth below opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 6.30
February 29, 2000 6.00
May 31, 2000 5.75
August 31, 2000 4.75
November 30, 2000 4.50
February 28, 2001 and thereafter 4.00
SECTION 14. Fixed Charge Coverage. At no time during any
period set forth below shall the Fixed Charge Coverage Ratio be less than
the ratio set forth below opposite such period:
FISCAL QUARTER ENDING RATIO
ON OR CLOSEST TO
November 30, 1999 1.35
February 29, 2000 1.35
May 31, 2000 1.35
August 31, 2000 1.45
November 30, 2000 1.55
February 28, 2001 and thereafter 1.60
SECTION 15. Limitation on Investments and Acquisitions.
(a) Neither the Guarantor nor any Consolidated Subsidiary
will make or acquire any Investment in any Person other than:
(i) Investments in Consolidated Subsidiaries;
provided, that Investments (exclusive of inter-company payables
owing to the Guarantor or a Subsidiary arising from cash
management transactions in the ordinary course of business) in
PCS, whether existing on the date hereof or hereafter made, may
be made only by the Guarantor and only in the form of a
contribution to the capital of PCS and without issuance of
additional shares of capital stock therefor, and provided further
that no such Investment may be made in any Subsidiary of PCS
except by PCS or another Subsidiary of PCS;
(ii) Temporary Cash Investments;
(iii) Investments received as consideration
for sale or other disposition of the capital stock of PCS or
xxxxxxxxx.xxx permitted by Section 1.16;
(iv) Investments in xxxxxxxxx.xxx existing on the
date hereof; and
(v) Any Investment not otherwise permitted by the
foregoing clauses of this Section if, immediately after such
Investment is made or acquired, the aggregate net book value of
all Investments permitted by this clause (c) does not exceed 10%
of Consolidated Net Worth.
(b) The Guarantor will not, and will not permit any
Subsidiary to, consummate any Business Acquisition to the extent that the
aggregate consideration paid or payable by the Guarantor or any Subsidiary
in connection with all such Business Acquisitions on or after the Closing
Date would exceed $15,000,000.
SECTION 16. Consolidations, Mergers and Sales of Assets. The
Guarantor will not (i) consolidate or merge with or into any other Person,
(ii) sell, lease or otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Guarantor and its Subsidiaries, taken
as a whole, to any other Person or (iii) sell, lease or otherwise transfer
any Collateral to any other Person; provided that (x) the Guarantor may
merge with another Person if (A) the Guarantor is the corporation surviving
such merger and (B) immediately after giving effect to such merger, no
Default shall have occurred and be continuing and (y) the Guarantor may
sell or otherwise dispose of the capital stock of PCS or xxxxxxxxx.xxx, in
whole but not in part, so long as the consideration therefor is not less
than the fair market value of such capital stock and shall consist solely
of a combination of cash and publicly traded securities payable and
deliverable at the closing of such sale.
SECTION 17. Use of Proceeds. The proceeds of the Tranche A
Loans made under the Credit Agreement will be used by the Guarantor
exclusively to repay commercial paper (or to refund borrowings the proceeds
of which were used solely to repay commercial paper), which commercial
paper provided funds for the payment of the purchase price of the capital
stock of PCS. The proceeds of the Tranche B Loans made under the Credit
Agreement will be used by the Guarantor for the Guarantor's general
corporate purposes; provided that no Tranche B Loans may be borrowed for a
purpose for which Tranche A Loans may be borrowed unless the Tranche A
Commitments are at the time fully drawn. No such use of the proceeds will
be for the purpose of prepaying commercial paper prior to the maturity
thereof and no such use of proceeds will be, directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of buying or
carrying any "MARGIN STOCK" within the meaning of Regulation U, other than
publicly traded securities issued to the Guarantor in connection with the
sale of the capital stock of PCS. The Guarantor will ensure that no such
use of proceeds violates Regulation T, U or X.
SECTION 18. Restricted Payments. After the date hereof,
neither the Guarantor nor any Subsidiary will declare or make any
Restricted Payment.
SECTION 19. Synthetic Leases. Neither the Guarantor nor any
Subsidiary will enter into any Synthetic Lease if, after giving effect
thereof, the aggregate amount financed under all Synthetic Leases entered
into in any period of twelve consecutive calendar months commencing after
October 25, 1999 would exceed $35,000,000.
SECTION 20. Tranche A Limitations.
(a) No Tranche A Loans may be borrowed under the Credit
Agreement unless the commitments under the 1999 Facility are fully drawn.
(b) The Guarantor will not for so long as the Tranche B
Commitments remain in existence use any source of funds other than
additional Tranche A Loans to repay or prepay Tranche A Loans prior to the
Termination Date, except as expressly contemplated by Section 2.10 of the
Credit Agreement.
(c) If the capital stock of PCS is sold for consideration
consisting in whole or in part of "margin stock" within the meaning of
Regulation U, then for so long as such margin stock is held as substitute
collateral under the PCS Pledge Agreement, the Guarantor may not make any
Tranche A Borrowing other than a from a Refunding Bank unless it shall have
delivered to the Liquidity Agent an opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, LLP, satisfactory in form and substance to the Liquidity
Agent, to the effect that such Borrowing does not result in a violation of
Regulation T, U or X.
SECTION 21. Mandatory Payments. The Guarantor agrees to use
all Net Cash Proceeds, if any, from the sale of the Collateral (or any part
thereof) that are remaining after the application of such Net Cash Proceeds
in accordance with all mandatory prepayment provisions set forth in each
Debt agreement to which the Guarantor is a party on October 25, 1999, and
any refinancings, renewals or extensions thereof, and which is in effect at
the time of such sale, to reduce the Lease Balance under the Lease.
