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KMART CORPORATION
-------------------------------------------------
$1,100,000,000
THREE YEAR CREDIT AGREEMENT
December 6, 1999
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CHASE SECURITIES INC.,
as Lead Arranger and Book Manager
THE CHASE MANHATTAN BANK,
as Administrative Agent
BANK OF AMERICA, NATIONAL ASSOCIATION,
as Syndication Agent
BANKBOSTON, N.A.,
as Co-Documentation Agent
BANK OF NEW YORK,
as Co-Documentation Agent
================================================================================
THREE YEAR REVOLVING CREDIT AND
COMPETITIVE ADVANCE FACILITY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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SECTION 1. DEFINITIONS............................................................. 1
1.1 Defined Terms......................................................... 1
1.2 Other Definitional Provisions.........................................20
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS........................20
2.1 Revolving Credit Commitments..........................................20
2.2 Procedure for Revolving Credit Borrowing..............................21
2.3 Commitment Fee........................................................21
2.4 Termination or Reduction of Commitments...............................21
2.5 Repayment of Revolving Credit Loans...................................22
2.6 L/C Commitment........................................................22
2.7 Procedure for Issuance of Letters of Credit...........................23
2.8 Letter of Credit Fees, Commissions and Other Charges..................23
2.9 L/C Participations....................................................24
2.10 Letter of Credit Reimbursement Obligations...........................25
2.11 Obligations Absolute.................................................25
2.12 Letter of Credit Payments............................................26
2.13 Letter of Credit Applications........................................26
2.14 CAF Advances.........................................................26
2.15 Procedure for CAF Advance Borrowing..................................26
2.16 CAF Advance Payments.................................................29
2.17 Certain Restrictions With Respect to CAF Advances....................29
2.18 Swing Line Commitment................................................29
2.19 Procedure for Swing Line Borrowing...................................29
2.20 Quarterly Swing Line Loans Clean-Down................................31
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT............31
3.1 Optional Prepayments..................................................31
3.2 Conversion and Continuation Options...................................31
3.3 Minimum Amounts and Maximum Number of Tranches........................32
3.4 Interest Rates and Payment Dates......................................32
3.5 Computation of Interest and Fees......................................32
3.6 Inability to Determine Interest Rate..................................33
3.7 Pro Rata Treatment and Payments.......................................33
3.8 Illegality............................................................34
3.9 Requirements of Law...................................................34
3.10 Indemnification for Taxes............................................35
3.11 Indemnity............................................................37
3.12 Change of Lending Office.............................................38
3.13 Evidence of Debt.....................................................38
SECTION 4. REPRESENTATIONS AND WARRANTIES..........................................39
4.1 Financial Condition...................................................39
4.2 No Change.............................................................40
4.3 Corporate Existence; Compliance with Law..............................40
</TABLE>
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<TABLE>
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4.4 Corporate Power; Authorization; Enforceable Obligations...............40
4.5 No Legal Bar..........................................................41
4.6 No Material Litigation................................................41
4.7 No Default............................................................41
4.8 No Burdensome Restrictions............................................41
4.9 Taxes.................................................................41
4.10 Federal Regulations..................................................41
4.11 ERISA................................................................41
4.12 Investment Company Act; Other Regulations............................42
4.13 Subsidiaries.........................................................42
4.14 Environmental Matters................................................42
4.15 Ownership of Property; Liens.........................................43
4.16 Intellectual Property................................................43
4.17 Continuing Letters of Credit.........................................43
4.18 Solvency.............................................................44
4.19 Purpose of Loans.....................................................44
4.20 Accuracy of Information..............................................44
4.21 Year 2000 Matters....................................................44
SECTION 5. CONDITIONS..............................................................44
5.1 Conditions to Effectiveness...........................................44
5.2 Conditions to Each Extension of Credit................................46
SECTION 6. AFFIRMATIVE COVENANTS...................................................46
6.1 Financial Statements..................................................46
6.2 Certificates; Other Information.......................................47
6.3 Payment of Obligations................................................47
6.4 Conduct of Business and Maintenance of Existence......................48
6.5 Maintenance of Property; Insurance....................................48
6.6 Inspection of Property; Books and Records; Discussions................48
6.7 Notices...............................................................48
6.8 Environmental Laws....................................................49
6.9 Additional Subsidiaries...............................................49
SECTION 7. NEGATIVE COVENANTS......................................................49
7.1 Financial Condition Covenants.........................................49
7.2 Limitation on Liens...................................................49
7.3 Limitation on Fundamental Changes.....................................51
7.4 Limitation on Sale of Assets..........................................51
7.5 Limitation on Dividends...............................................52
7.6 Limitation on Capital Expenditures and "Property held for Resale".....53
7.7 Limitation on Transactions with Affiliates............................53
7.8 Limitation on Sales and Leasebacks....................................53
7.9 Negative Pledge Clauses...............................................54
SECTION 8. EVENTS OF DEFAULT.......................................................54
SECTION 9. THE ADMINISTRATIVE AGENT................................................57
</TABLE>
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<S> <C> <C>
9.1 Appointment...........................................................57
9.2 Delegation of Duties..................................................57
9.3 Exculpatory Provisions................................................57
9.4 Reliance by Administrative Agent......................................57
9.5 Notice of Default.....................................................58
9.6 Non-Reliance on Administrative Agent and Other Lenders................58
9.7 Indemnification.......................................................58
9.8 Administrative Agent in Its Individual Capacity.......................59
9.9 Successor Administrative Agent........................................59
SECTION 10. MISCELLANEOUS..........................................................59
10.1 Amendments and Waivers...............................................59
10.2 Notices..............................................................60
10.3 No Waiver; Cumulative Remedies.......................................62
10.4 Survival of Representations and Warranties...........................62
10.5 Payment of Expenses and Taxes; Indemnity.............................62
10.6 Successors and Assigns; Participations and Assignments...............63
10.7 Replacement of Lenders under Certain Circumstances...................65
10.8 Adjustments; Set-off.................................................66
10.9 Counterparts.........................................................66
10.10 Severability........................................................67
10.11 Integration.........................................................67
10.12 Termination.........................................................67
10.13 GOVERNING LAW.......................................................67
10.14 Submission To Jurisdiction; Waivers.................................67
10.15 Acknowledgements....................................................67
10.16 WAIVERS OF JURY TRIAL...............................................68
10.17 Confidentiality.....................................................68
10.18 Judgment Currency...................................................68
10.19 Section Headings....................................................69
</TABLE>
-iii-
<PAGE> 5
ANNEXES
Annex A Pricing Grid
SCHEDULES
Schedule 1.1(a) Revolving Credit Commitments
Schedule 4.1 Charges and Changes
Schedule 4.4 Consents
Schedule 4.13 Subsidiaries
Schedule 4.16 Intellectual Property Matters
Schedule 4.17 Continuing Letters of Credit
Schedule 7.2(f) Existing Liens
Schedule 7.4(f) Scheduled Asset Sales
Schedule 7.9 Transactions with Affiliates
Schedule 10.2 Addresses
EXHIBITS
Exhibit A Form of Addendum
Exhibit B Form of CAF Advance Confirmation
Exhibit C Form of CAF Advance Offer
Exhibit D Form of CAF Advance Request
Exhibit E Form of Subsidiaries Guarantee
Exhibit F Form of Revolving Credit Note
Exhibit G Form of CAF Advance Note
Exhibit H Form of Borrower Closing Certificate
Exhibit I-1 Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
Exhibit I-2 Form of Opinion of General Counsel to Borrower
Exhibit I-3 Form of Opinion of Simpson Thacher & Bartlett
Exhibit J Form of Assignment and Acceptance
Exhibit K Form of Swing Line Participation Certificate
-iv-
<PAGE> 6
CREDIT AGREEMENT, dated as of December 6, 1999, among KMART
CORPORATION, a Michigan corporation (the "Borrower"), the several banks,
financial institutions and other entities from time to time parties to this
Agreement (collectively, the "Lenders"; individually, a "Lender") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as Administrative Agent (as
hereinafter defined) for the Lenders hereunder.
W I T N E S S E T H :
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time by
the Administrative Agent as its prime rate in effect at its principal
office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by the Administrative Agent in
connection with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month Secondary CD
Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the CD Reserve Percentage and (b)
the CD Assessment Rate; "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
of Governors through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current
practices of the Board of Governors, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in
New York City received at approximately 10:00 A.M., New York City
time, on such day (or, if such day shall not be a Business Day, on the
next preceding Business Day) by the Administrative Agent from three
New York City negotiable certificate of deposit dealers of recognized
standing selected by it; "CD Assessment Rate" shall mean, for any day,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the FDIC classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. ss 327.4 (or any successor provision) to the FDIC for the
FDIC's insuring time deposits at offices of such institution in the
United States; "CD Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors, for determining the maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board of Governors or any successor provisions) in
respect of new non-personal time deposits in Dollars having a maturity
of 30 days or more; and "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published 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 which is a Business Day, the average of the
quotations for the day of such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a change in the
Prime Rate, the Three-
<PAGE> 7
2
Month Secondary CD Rate, the CD Assessment Rate, the CD Reserve
Percentage or the Federal Funds Effective Rate shall be effective as of
the opening of business on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate, the CD Assessment Rate,
the CD Reserve Percentage or the Federal Funds Effective Rate,
respectively.
"ABR Loans": Revolving Credit Loans the rate of interest
applicable to which is based upon the ABR.
"Acquisition": as to any Person, the acquisition by such
Person of (a) all the Capital Stock of any other Person, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units of any other Person.
"Addendum": an instrument, substantially in the form of
Exhibit A, by which a Lender becomes a party to this Agreement.
"Additional Permitted Capital Expenditure Amount": with
respect to any Fiscal Year, an amount equal to 50% of the amount (if
any) by which EBITDA for the immediately preceding Fiscal Year exceeds
$2,100,000,000.
"Adjustment Date": the second Business Day following receipt
by the Administrative Agent of both (i) the financial statements (other
than copies of the Form 10-K or Form 10-Q for the relevant fiscal
period) required to be delivered pursuant to subsection 6.1(a) or
6.1(b), as the case may be, for the most recently completed fiscal
period and (ii) the certificate required to be delivered pursuant to
subsection 6.2(b) with respect to such fiscal period.
"Administrative Agent": Chase, together with its affiliates,
as the arranger of the Revolving Credit Commitments and as the agent
for the Lenders under this Agreement and the other Loan Documents.
"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power
for the election of directors of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by
contract or otherwise. For the purposes of this Agreement, the Borrower
and its Restricted Subsidiaries shall not be deemed to be Affiliates of
each other.
"Aggregate Revolving Credit Outstandings": at any time, an
amount equal to the sum of (a) the Committed Revolving Credit
Extensions of Credit of all the Lenders at such time and (b) the
aggregate outstanding principal amount of CAF Advances of all the
Lenders at such time.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Agreement Currency": as defined in subsection 10.18.
"Applicable Commitment Fee Rate": 0.25%, provided that the
Applicable Commitment Fee Rate will be adjusted, on each Adjustment
Date (commencing with the first Adjustment Date occurring after October
31, 2000), to the Commitment Fee Rate set forth on Annex A opposite the
Margin Level Status of the Borrower in effect on such Adjustment Date,
and, provided,
<PAGE> 8
3
further, that, in the event the financial statements (other than copies
of the Form 10-K or 10-Q for the relevant fiscal period) required to be
delivered pursuant to subsection 6.1(a) or 6.1(b), as applicable, and
the related certificate required pursuant to subsection 6.2(b) are not
delivered when due, then, during the period from the date on which such
financial statements were required to be delivered until two Business
Days following the date upon which they actually are delivered, the
Applicable Commitment Fee Rate shall be 0.30%.
"Applicable Margin": for each Type of Revolving Credit Loan,
the rate per annum set forth under the relevant column heading below:
<TABLE>
<CAPTION>
ABR Loans Eurodollar Loans
--------- ----------------
<S> <C>
0.00% 1.00%
</TABLE>
provided that the Applicable Margin for all Types of Revolving Credit
Loans will be adjusted, on each Adjustment Date (commencing with the
first Adjustment Date occurring after October 31, 2000), to the
Applicable Margin set forth on Annex A opposite the Margin Level Status
of the Borrower in effect on such Adjustment Date, and provided,
further, that, in the event that the financial statements (other than
the copies of the Form 10-K or 10-Q for the relevant fiscal period)
required to be delivered pursuant to subsection 6.1(a) or 6.1(b), as
applicable, and the related certificate required pursuant to subsection
6.2(b), are not delivered when due, then, during the period from the
date upon which such financial statements were required to be delivered
until two Business Days following the date upon which they actually are
delivered, the Applicable Margin for ABR Loans shall be .25% and the
Applicable Margin for Eurodollar Loans will be 1.25%.
"Applicant": with respect to any Letter of Credit, the
Borrower or any of its Subsidiaries.
"Application": an application or request, in such form as an
Issuing Bank may specify from time to time, requesting such Issuing
Bank to open a Letter of Credit.
"Asset Sale": any sale, transfer or other disposition
(including any sales, transfers or other dispositions in connection
with Sale-Leasebacks or Securitization Transactions) by the Borrower or
any of its Restricted Subsidiaries of any property of the Borrower or
any such Restricted Subsidiary.
"Assignee": as defined in subsection 10.6(c).
"Available Revolving Credit Commitment Available Revolving
Credit Commitment": as to any Lender, at any time, an amount equal to
the excess, if any, of (a) such Lender's Revolving Credit Commitment
over (b) such Lender's Committed Revolving Credit Extensions of Credit
at such time; collectively, as to all the Lenders, the "Available
Revolving Credit Commitments".
"Board of Governors": the Board of Governors of the Federal
Reserve System and any Governmental Authority which succeeds to the
powers and functions thereof.
"Borrowing Date": any Business Day specified in a notice
pursuant to subsection 2.2, 2.15(a) or 2.19 as a date on which the
Borrower requests the Lenders to make Loans hereunder.
<PAGE> 9
4
"Business": as defined in subsection 4.14(b).
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close; provided, that when such term is used to
describe a day on which a borrowing, payment or interest rate
determination is to be made in respect of a Eurodollar Loan or a LIBO
Rate CAF Advance, such day shall also be a day on which dealings in
foreign currencies and exchange between banks may be carried on in
London, England.
"CAF Advance": as defined in subsection 2.14.
"CAF Advance Availability Period": the period from and
including the Effective Date to and including the date which is seven
days prior to the Revolving Credit Termination Date.
"CAF Advance Confirmation": each confirmation by the Borrower
of its acceptance of CAF Advance Offers, which confirmation shall be
substantially in the form of Exhibit B and shall be delivered to the
Administrative Agent by facsimile transmission.
"CAF Advance Interest Payment Date": as to each CAF Advance,
each interest payment date specified by the Borrower for such CAF
Advance in the related CAF Advance Request.
"CAF Advance Maturity Date": as to any CAF Advance, the date
specified by the Borrower in the related CAF Advance Request and
confirmed pursuant to subsection 2.15(d)(ii) in its acceptance of the
related CAF Advance Offer.
"CAF Advance Note": as defined in subsection 3.13(f).
"CAF Advance Offer": each offer by a Lender to make CAF
Advances pursuant to a CAF Advance Request, which offer shall contain
the information specified in Exhibit C and shall be delivered to the
Administrative Agent by telephone, immediately confirmed by facsimile
transmission.
"CAF Advance Request": each request by the Borrower for
Lenders to submit bids to make CAF Advances, which request shall
contain the information in respect of such requested CAF Advances
specified in Exhibit D and shall be delivered to the Administrative
Agent in writing, by facsimile transmission, or by telephone,
immediately confirmed by facsimile transmission.
"Capital Funds": of any Person, as of the date of
determination thereof, the sum of Consolidated Net Worth of such Person
at such date of determination and Consolidated Total Debt of such
Person at such date of determination.
"Capital Stock": any and all shares, interests, participations
or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing, provided that the Convertible Debentures
shall not constitute Capital Stock of the Borrower.
"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the
<PAGE> 10
5
full faith and credit of the United States, in each case maturing
within one year from the date of acquisition; (b) certificates of
deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized
under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c)
commercial paper of an issuer rated at least A-1 by S&P or P-1 by
Moody's, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease
publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not
more than 30 days, with respect to securities issued or fully
guaranteed or insured by the United States government; (e) securities
with maturities of one year or less from the date of acquisition issued
or fully guaranteed by any state, commonwealth or territory of the
United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may
be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g)
shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (f) of
this definition.
"Cash Interest Expense": of any Person for any period,
Consolidated Interest Expense of such Person for such period (a) minus,
in each case to the extent included in determining such Consolidated
Interest Expense for such period, the sum of the following: (i)
non-cash expenses for interest payable in kind and non-cash interest
expense related to closed stores and (ii) amortization of debt discount
and fees and (b) plus the sum of the following in each case to the
extent previously subtracted pursuant to clause (a) of this definition:
cash payments made by such Person or any Consolidated Subsidiary of
such Person during such period in respect of the items referred to in
such clause (a), provided that Cash Interest Expense shall in no event
include any fees or amortization of debt discount associated with the
transactions contemplated hereby or the Convertible Preferred
Securities.
"Chase": The Chase Manhattan Bank, a New York banking
corporation, and its successors.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commercial L/C Fee Rate": at any time, the rate per annum
equal to 50% of the Applicable Margin then in effect for Eurodollar
Loans.
"Commercial Letter of Credit": as defined in subsection
2.6(b)(i).
"Committed Loan": any Revolving Credit Loan or Swing Line
Loan, as the case may be.
"Committed Revolving Credit Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender then
outstanding and (b) such Lender's Revolving Credit Commitment
Percentage of the sum of (i) the aggregate principal amount of Swing
Line Loans then outstanding and (ii) the L/C Obligations then
outstanding.
<PAGE> 11
6
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Confidential Information": as defined in subsection 10.17.
"Consolidated": when used in connection with any defined term,
and not otherwise defined, means such term as it applies to any Person
and its Subsidiaries on a consolidated basis, after eliminating all
intercompany items.
"Continuing Directors": as defined in Section 8(j).
"Continuing Letter of Credit": each letter of credit
outstanding on the date hereof that was issued pursuant to the Existing
Credit Agreement by an Issuing Bank which is a Lender.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or any
of its property is bound.
"Convertible Debentures": the Convertible Junior Subordinated
Debentures issued by the Borrower to the Convertible Trust pursuant to
the Convertible Debenture Indenture, including any Convertible Junior
Subordinated Debentures issued in connection with the exercise of the
underwriters' over-allotment option, and any debentures (with the same
terms) issued in exchange therefor pursuant to the Convertible
Debenture Indenture as in effect on June 17, 1996.
"Convertible Debenture Indenture": the Indenture, dated as of
June 6, 1996, between the Borrower and The Bank of New York, as
Trustee, as amended, supplemented or otherwise modified from time to
time in accordance with this Agreement.
"Convertible Preferred Securities": the Trust Convertible
Preferred Securities issued by the Convertible Trust on June 17, 1996
and any Trust Convertible Preferred Securities issued by the
Convertible Trust in connection with the exercise of the underwriters'
over-allotment option.
"Convertible Trust": Kmart Financing I, a Delaware statutory
business trust.
"Debt": as to any Person at the date of any determination
thereof, the sum of the following to the extent such items should be
reflected on the consolidated balance sheet of such Person (excluding
any such items which appear only in the notes to such consolidated
balance sheet) at such date (without duplication): (a) all indebtedness
for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations under Financing
Leases, (d) all obligations in respect of acceptances issued or created
for the account of such Person, and (e) all liabilities of a kind
described above secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof, provided that the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such Person with respect thereto) on the consolidated balance
<PAGE> 12
7
sheet of such Person at such date of determination shall in no event
constitute Debt of such Person.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Designated Lenders": as defined in subsection 5.1(a).
"Dollar Equivalent": at any date of determination thereof with
respect to the face amount of any Letter of Credit issued in any
currency other than Dollars or any Reimbursement Obligations in respect
of any such Letter of Credit, an amount in Dollars equivalent to such
face amount calculated at the rate of exchange quoted by the
Administrative Agent on such date of determination (at the hour on such
date of determination at which it customarily makes such determination)
to prime banks in the interbank market where its foreign currency
exchange operations in respect of the currency in which such Letter of
Credit is issued are then being conducted for the spot purchase of such
currency with Dollars.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction (including territories)
within the United States of America, excluding the Convertible Trust,
Securitization Entities, Inactive Subsidiaries, Special Purpose
Subsidiaries and Foreign Holding Companies.
"EBITDA": with respect to any period, EBITDAR for such period
minus, to the extent included in EBITDAR for such period, the
Consolidated Rental Expense of the Borrower for such period.
"EBITDAR": with respect to any period, Consolidated Net Income
of the Borrower for such period (a) plus, in each case (other than
clause (vi) below) to the extent deducted in determining such
Consolidated Net Income for such period, the sum of the following: (i)
Consolidated Interest Expense of the Borrower, (ii) consolidated income
tax expense of the Borrower and its Consolidated Subsidiaries, (iii)
consolidated depreciation and amortization expense of the Borrower and
its Consolidated Subsidiaries, (iv) Consolidated Rental Expense of the
Borrower, (v) other consolidated non-recurring non-cash charges of the
Borrower and its Consolidated Subsidiaries and non-cash losses realized
by the Borrower and its Consolidated Subsidiaries upon the sale,
disposition or refinancing of real property owned by the Borrower or
its Consolidated Subsidiaries as of the Effective Date and (vi) cash
payments received by the Borrower or any Consolidated Subsidiary during
such period in respect of non-recurring non-cash gains of the Borrower
taken subsequent to October 28, 1999, and (b) minus the sum of the
following: (i) cash payments made by the Borrower or any Consolidated
Subsidiary during such period in respect of non-recurring non-cash
charges taken subsequent to October 28, 1999 and (ii) to the extent
included in determining such Consolidated Net Income for such period,
consolidated non-recurring non-cash gains of the Borrower and its
Consolidated Subsidiaries during such period.
"Effective Date": the date on which the conditions set forth
in subsection 5.1 are satisfied.
<PAGE> 13
8
"Environmental Laws": any and all foreign, federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as are now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to
a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors or
other Governmental Authority having jurisdiction with respect thereto)
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board of Governors)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate for deposits in Dollars for the period commencing on
the first day of such Interest Period and ending on the last day of
such Interest Period which appears on Telerate Page 3750 as of 10:00
A.M., New York City time, two Business Days prior to the beginning of
such Interest Period. If at least two rates appear on such Telerate
Page for such Interest Period, the "Eurodollar Base Rate" shall be the
arithmetic mean of such rates. If the "Eurodollar Base Rate" cannot be
determined in accordance with the immediately preceding sentences with
respect to any Interest Period, the "Eurodollar Base Rate" with respect
to each day during such Interest Period shall be the rate per annum
equal to the average (rounded upward to the nearest 1/100th of 1%) of
the respective rates notified to the Administrative Agent by each of
the Reference Lenders as the rate at which such Reference Lender is
offered Dollar deposits at or about 10:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency
and exchange operations in respect of its Eurodollar Loans are then
being conducted for delivery on the first day of such Interest Period
for the number of days comprised therein and in an amount comparable to
the amount of its Eurodollar Loan to be outstanding during such
Interest Period.
"Eurodollar Loans": Revolving Credit Loans the rate of
interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------
1.00 - Eurocurrency Reserve Requirements
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
<PAGE> 14
9
"Existing Credit Agreement": the Amended and Restated Credit
Agreement, dated as of May 6, 1997, among the Borrower, the several
banks, financial institutions and other entities from time to time
parties thereto and Chase, as administrative agent for the lenders
thereunder, as amended.
"Existing Issuing Bank": each Person that has issued one or
more Continuing Letters of Credit.
"Existing Receivables Transactions": collectively, the
transactions contemplated under various store programs pursuant to
which receivables generated in connection with the sale of inventory
are sold to various financing companies, in each case as such
agreements and programs may be amended, replaced, supplemented or
otherwise modified from time to time.
"Extension of Credit": with respect to any Lender, (a) the
making of a Loan by such Lender and (b) the issuance or extension of a
Letter of Credit; collectively, as to all the Lenders, the "Extensions
of Credit".
"FDIC": the Federal Deposit Insurance Corporation and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Federal Funds Effective Rate": as defined in the definition
of "ABR" contained in this subsection 1.1.
"Financing Lease": any lease of property, real or personal,
the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of such
lessee.
"Fiscal Year": each fiscal year of the Borrower. Fiscal Years
are referred to herein by reference to the calendar year in which the
first day of such Fiscal Year falls.
"Fixed Charge Coverage Ratio": as of the last day of any
fiscal quarter of the Borrower, the ratio of (A) EBITDAR for the period
of four fiscal quarters ending on the last day of such quarter to (B)
the sum of (i) Consolidated Cash Interest Expense of the Borrower plus
(ii) Consolidated Rental Expense of the Borrower, in each case for such
period.
"Fixed Rate CAF Advance": any CAF Advance made pursuant to a
Fixed Rate CAF Advance Request.
"Fixed Rate CAF Advance Request": any CAF Advance Request
requesting the Lenders to offer to make CAF Advances at an absolute
rate which is not determined by reference to an external source.
"Foreign Holding Company": any Subsidiary organized under the
laws of any jurisdiction (including territories) within the United
States of America whose sole assets (exclusive of assets with an
aggregate book value not exceeding $10,000,000 and assets consisting of
advances or loans to the Borrower or any of its Subsidiaries) consist
of the Capital Stock of one or more Foreign Subsidiaries or other
Foreign Holding Companies.
"Foreign L/C Commitment Sublimit": $200,000,000.
<PAGE> 15
10
"Foreign Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction outside the United States of
America, excluding Securitization Entities, Inactive Subsidiaries and
Special Purpose Subsidiaries, but including in any event Foreign
Holding Companies.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time, provided that, solely
for purposes of determining compliance with subsection 7.1, "GAAP"
shall mean generally accepted accounting principles in the United
States of America as in effect on the date hereof.
"GNB Credit Agreement": the Credit Agreement among the
Borrower, the several banks, financial institutions and other entities
from time to time parties thereto, Gateway National Bank, as
Administrative Agent and First Independence National Bank of Detroit,
as Documentation Agent (such Credit Agreement shall only be treated as
the "AGNB Credit Agreement" for purposes of Section 7.9 so long as
loans and extensions of credit thereunder and commitments in respect
thereof do not, without duplication, exceed $125,000,000).
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Granting Lender": as defined in subsection 10.6(c).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a guarantee, reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness (collectively, the "primary obligations") of any other
third Person (the "primary obligor"), in any manner, whether directly
or indirectly, or which guarantee, reimbursement, counterindemnity or
similar obligation should be reflected in a consolidated balance sheet
of the guaranteeing person (or in the notes thereto); provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"Inactive Subsidiary": any Subsidiary of the Borrower which
(and only for so long as such Subsidiary) (a) does not own assets with
an aggregate book value in excess of $10,000,000 and (b) is not then
engaged in any business.
"Indebtedness": of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities and current accounts payable incurred in the ordinary
course of business and payable in accordance with customary practices),
(b) any other indebtedness of such Person
<PAGE> 16
11
which is evidenced by a note, bond, debenture or similar instrument,
(c) all obligations (to the extent capitalized for accounting purposes)
of such Person under Financing Leases, (d) all obligations of such
Person in respect of acceptances issued or created for the account of
such Person, (e) all obligations of the types described in the other
clauses of this definition secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof and (f) all obligations of such Person
in respect of interest rate and currency hedging agreements. For
purposes of this Agreement, the amount of any Indebtedness referred to
in clause (f) of the preceding sentence shall be the net amounts,
including any net termination payments, required to be paid to a
counterparty rather than any notional amount with regard to which
payments may be calculated.
"Indemnified Liabilities": as defined in subsection 10.5.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Intellectual Property": as defined in subsection 4.16.
"Interest Coverage Ratio": as of the last day of any fiscal
quarter of the Borrower, the ratio of (A) EBITDA for the period of four
fiscal quarters ending on the last day of such period to (B)
Consolidated Cash Interest Expense for such period.
"Interest Expense": of any Person for any period, (a) the
amount of interest expense, both expensed and capitalized, of such
Person and its Consolidated Subsidiaries determined on a consolidated
basis in accordance with GAAP for such period minus (b) the amount of
interest income of such Person and its Consolidated Subsidiaries
determined on a consolidated basis in accordance with GAAP for such
period provided that in no event shall Interest Expense include any
distributions in respect of the Convertible Preferred Securities or
interest payments on the Convertible Debentures or any fees or
amortization of debt discount associated with the transactions
contemplated hereby, by the Existing Credit Agreement or by the
Convertible Preferred Securities.
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each April, July, October and January, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day which is three months, or a
whole multiple thereof, after the first day of such Interest Period and
the last day of such Interest Period and (d) as to any Swing Line Loan,
the fifth Business Day following the day on which such Swing Line Loan
is made.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one week (if, at the time of the
relevant borrowing, all Lenders participating therein agree to
make an interest period of such duration available) or one,
two, three or six months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion,
as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one week (if, at the time
<PAGE> 17
12
of the relevant borrowing, all Lenders participating therein
agree to make an interest period of such duration available)
or one, two, three or six months thereafter, as selected by
the Borrower by irrevocable notice to the Administrative Agent
not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period would otherwise
end on a day that is not a Business Day, such
Interest Period shall be extended to the next
succeeding Business Day unless the result of such
extension would be to carry such Interest Period into
another calendar month in which event such Interest
Period shall end on the immediately preceding
Business Day;
(2) any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date
shall end on the Revolving Credit Termination Date;
and
(3) any Interest Period that begins on the
last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a
calendar month.
"Issuing Banks": initially, (a) each Lender specified on
Schedule 1.1(a) as an Issuing Bank and (b) each Existing Issuing Bank
listed on Schedule 4.17, in each case in its capacity as issuer of a
Letter of Credit. Additional Lenders may from time to time be
designated as "Issuing Banks" by the Borrower (with the consent of such
Lender and with the consent (which shall not be unreasonably withheld)
of the Administrative Agent) by written notice to such effect from the
Borrower to the Administrative Agent.
"Judgment Currency": as defined in subsection 10.18.
"L/C Commitment": at any time, the lesser of (a)
$1,000,000,000, and (b) the Revolving Credit Commitments then in
effect.
"L/C Fee Payment Date": the last day of each April, July,
October and January and the Revolving Credit Termination Date.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit issued in Dollars, (b) the Dollar
Equivalent of the aggregate then undrawn and unexpired amount of the
then outstanding Letters of Credit issued in currencies other than
Dollars (such Dollar Equivalent to be calculated as of the date of
issuance of such Letters of Credit), (c) the aggregate amount of
Reimbursement Obligations in respect of Letters of Credit issued in
Dollars which have not then been paid pursuant to subsection 2.10(a)
and (d) the Dollar Equivalent of the aggregate amount of Reimbursement
Obligations in respect of Letters of Credit issued in currencies other
than Dollars which have not then been paid pursuant to subsection
2.10(a) (such Dollar Equivalent to be calculated as of the date such
Reimbursement Obligation becomes due and payable).
<PAGE> 18
13
"L/C Participants": the collective reference to all the
Lenders.
"Lenders": as defined in the preamble to this Agreement.
"Letters of Credit": as defined in subsection 2.6(a).
"Leverage Ratio": as of any date of determination thereof, the
quotient of (a) Consolidated Total Debt of the Borrower as of such date
of determination divided by (b) Consolidated Capital Funds of the
Borrower as of such date of determination.
"LIBO Rate": in respect of any LIBO Rate CAF Advance, the
London interbank offered rate for deposits in Dollars for the period
commencing on the date of such CAF Advance and ending on the CAF
Advance Maturity Date with respect thereto which appears on Telerate
Page 3750 as of 11:00 A.M., London time, two Business Days prior to the
beginning of such period.
"LIBO Rate CAF Advance": any CAF Advance made pursuant to a
LIBO Rate CAF Advance Request.
"LIBO Rate CAF Advance Request": any CAF Advance Request
requesting the Lenders to offer to make CAF Advances at an interest
rate equal to the LIBO Rate plus (or minus) a margin.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).
"Loan": any Revolving Credit Loan, Swing Line Loan or CAF
Advance, as the case may be.
"Loan Documents": this Agreement, any Notes, the Subsidiaries
Guarantee and any Applications.
"Loan Parties": the collective reference to the Borrower, the
Subsidiary Guarantors and any other Subsidiary from time to time party
to any Loan Document.
"Majority Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Margin Level Status": as to the Borrower, the existence of
Margin Level I Status, Margin Level II Status, Margin Level III Status
or Margin Level IV Status, as the case may be.
"Margin Level I Status": as to the Borrower, shall exist on an
Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is less than or equal to 7.00 to 1.00.
"Margin Level II Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements
<PAGE> 19
14
relating to such Adjustment Date is greater than 7.00 to 1.00 but less
than or equal to 8.00 to 1.00.
"Margin Level III Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is greater than 8.00 to 1.00 but less than or equal to
9.50 to 1.00.
"Margin Level IV Status": as to the Borrower, shall exist on
an Adjustment Date if the Interest Coverage Ratio as of the last day of
the period covered by the financial statements relating to such
Adjustment Date is greater than 9.50 to 1.00.
"Material Adverse Effect": a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole or
(b) the validity or enforceability of this Agreement or any of the
other Loan Documents or the material rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder; it being
understood that any past or future reduction in the Borrower's or any
Subsidiary's credit rating or decline in the market price of the
Borrower's or any Subsidiary's equity securities shall not in and of
themselves be deemed to constitute a Material Adverse Effect.
"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
"Moody's": Moody's Investors Service, Inc.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Income": of any Person for any period, net income of such
Person and its Consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP for such period.
"Net Revenue": of any Person for any period, net revenue of
such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Net Worth": of any Person, as of the date of determination
thereof, the sum of (without duplication) (a) Shareholders' Equity of
such Person as of such date of determination, and (b) the excess, if
any, of (i) the aggregate amount of net after-tax, non-recurring,
non-cash charges that have the effect of reducing the amount set forth
in clause (a) above, taken after the fiscal quarter ended October 27,
1999 over (ii) any reversal of any of the foregoing charges.
"Non-Excluded Taxes": as defined in subsection 3.10.
"Non-Executing Persons": as defined in subsection 5.1(a).
<PAGE> 20
15
"Notes": the collective reference to any Revolving Credit
Notes, any Swing Line Notes and any CAF Advance Notes.
"Participant": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA, or any Governmental
Authority which succeeds to the powers and functions thereof.
"Permitted Sale-Leaseback": as defined in subsection 7.8.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other
entity of whatever nature.
"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Reference Lenders": Chase, Bank of America, National
Association, The Bank of New York and BankBoston, N.A.
"Register": as defined in subsection 10.6(d).
"Regulation U": Regulation U of the Board of Governors as in
effect from time to time.
"Reimbursement Obligation": the obligation of the Borrower
pursuant to subsection 2.10(a) to reimburse each Issuing Bank for
amounts drawn under any Letter of Credit issued by such Issuing Bank.
"Rental Expense": of any Person for any period, the aggregate
amount of fixed and contingent rentals payable by such Person for such
period in accordance with GAAP with respect to leases of real property
minus the aggregate amount of rental income (including licensee related
income from licensees operating on the store premises of the Borrower
and its Subsidiaries) payable to such Person for such period in
accordance with GAAP with respect to leases of real and personal
property.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. ss 2615.
"Required Lenders": at any time, Lenders the Voting
Percentages of which aggregate more than 50%.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, statute, ordinance,
<PAGE> 21
16
code, decree, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject (including, without
limitation, laws, ordinances and regulations pertaining to the zoning,
occupancy and subdivision of real property).
"Responsible Officer": the chief executive officer, the
president, any executive vice president, the chief financial officer or
the treasurer of the Borrower or, with respect to financial matters,
the chief executive officer, the president, the executive vice
president-finance, the chief financial officer or treasurer of the
Borrower, provided that, for purposes of Section 8(d) only, a
"Responsible Officer" shall also include any other senior executive
officer of the Borrower, as well as the general counsel, vice president
- real estate finance, vice president - real estate and any assistant
treasurer of the Borrower.
"Restricted Payments": as defined in subsection 7.5.
"Restricted Subsidiaries": collectively, the Domestic
Subsidiaries and Significant Foreign Subsidiaries.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Revolving Credit Loans to and/or
participate in Swing Line Loans to and/or issue or participate in
Letters of Credit issued on behalf of the Borrower hereunder in an
aggregate principal and/or face amount at any one time outstanding not
to exceed the amount set forth opposite such Lender's name on Schedule
1.1(a) under the heading "Revolving Credit Commitment", as such amount
may be reduced from time to time pursuant to this Agreement or as such
amount may be adjusted from time to time pursuant to subsection 10.6;
collectively, as to all such Lenders, the "Revolving Credit
Commitments".
"Revolving Credit Commitment Percentage": as to any Lender (a)
at any time prior to the termination of the Revolving Credit
Commitments, the percentage of the Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment and (b) at any
time after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) such Lender's Revolving Credit
Loans then outstanding plus (y) the product of such Lender's Revolving
Credit Commitment Percentage immediately prior to the termination of
the Revolving Credit Commitments (after giving effect to any permitted
assignment pursuant to subsection 10.6) times the sum of (1) the
aggregate principal amount of Swing Line Loans then outstanding plus
(2) the L/C Obligations then outstanding then constitutes of (ii) the
sum of (x) the aggregate principal amount of Revolving Credit Loans of
all the Lenders then outstanding plus (y) the aggregate principal
amount of all Swing Line Loans then outstanding plus (z) the aggregate
L/C Obligations then outstanding.
"Revolving Credit Commitment Period": the period from and
including the Effective Date to but not including the Revolving Credit
Termination Date or such earlier date on which the Revolving Credit
Commitments shall terminate as provided herein.
"Revolving Credit Loans": as defined in subsection 2.1.
"Revolving Credit Note": as defined in subsection 3.13(d).
"Revolving Credit Termination Date": December 6, 2002.
<PAGE> 22
17
"Sale-Leaseback": as defined in subsection 7.8.
"S&P": Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Scheduled Asset Sales": as defined in subsection 7.4(f).
"SEC": the Securities and Exchange Commission and any
Governmental Authority which succeeds to the powers and functions
thereof.
"Securitization Entity": with respect to the Borrower or any
Subsidiary, a corporation, partnership, trust, limited liability
company or other entity that is formed by the Borrower or such
Subsidiary for the purpose of effecting or facilitating a
Securitization Transaction and which engages in no business and incurs
no Indebtedness or other liabilities other than those related to or
incidental to a Securitization Transaction.
"Securitization Transactions": a transaction or series of
related transactions pursuant to which a corporation, partnership,
trust, limited liability company or other entity incurs obligations or
issues interests, the proceeds of which are used to finance a discrete
pool (which may be fixed or revolving) of receivables, leases or other
financial assets, or a discrete portfolio of real property or
equipment.
"Shareholders' Equity": of any Person, as of the date of
determination thereof, the sum of (a) all items which in conformity
with GAAP would be included under shareholders' equity on a
consolidated balance sheet of such Person and its Consolidated
Subsidiaries at such date of determination and (b) the item which in
conformity with GAAP would reflect the amount of Convertible Preferred
Securities and/or the Convertible Debentures (and the obligations of
such Person with respect thereto) on the consolidated balance sheet of
such Person and its Consolidated Subsidiaries at such date of
determination.
"Significant Foreign Subsidiary": any Foreign Subsidiary which
is a Significant Subsidiary.
"Significant Subsidiary": any Subsidiary (a) the Total Assets
of which exceed 10% of the Total Assets of the Borrower and its
Consolidated Subsidiaries as of the end of the most recently completed
Fiscal Year or (b) the Net Revenue of which exceeds 10% of the Net
Revenue of the Borrower and its Consolidated Subsidiaries as of the end
of the most recently completed Fiscal Year.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person and its Subsidiaries,
taken as a whole, will, as of such date, exceed the amount that will be
required to pay all "liabilities of such Person and its Subsidiaries,
taken as a whole, contingent or otherwise", as of such date (as such
quoted terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person and its
Subsidiaries, taken as a whole, will not have, as of such date, an
unreasonably small amount of capital with which to conduct their
<PAGE> 23
18
businesses, and (c) such Person and its Subsidiaries, taken as a whole,
will be able to pay their debts as they mature, taking into account the
timing of and amounts of cash to be received by such Person and its
Subsidiaries, taken as a whole, and the timing of and amounts of cash
to be payable on or in respect of indebtedness of such Person and its
Subsidiaries, taken as a whole; in each case after giving effect to (A)
as of the Effective Date the making of the extensions of credit to be
made on the Effective Date and to the application of the proceeds of
such extensions of credit and (B) on any date after the Effective Date,
the making of any extension of credit to be made on such date, and to
the application of the proceeds of such extension of credit. For
purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal or
equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured. For purposes of representations and
warranties made pursuant to subsection 4.18 on any date after the
Effective Date on which an Extension of Credit is made hereunder, the
Borrower may, in making such representation, assume that the Aggregate
Revolving Credit Outstandings will be refinanced at the maturity
thereof.
"SPC": as defined in subsection 10.6(c).
"Special Purpose Subsidiary": any Subsidiary of the Borrower
organized solely for the purpose of (a) holding a license or permit
issued by any Governmental Authority and used in connection with the
business of the Borrower and/or its Subsidiaries or (b) providing
employee services for use in the foreign operations of the Borrower or
any of its Subsidiaries, provided that such Subsidiary shall only be a
"Special Purpose Subsidiary" for so long as such Subsidiary does not
own any assets (other than any such license or permit and other than
other assets with a book value not exceeding $10,000,000 in the
aggregate) and does not engage in any business (other than holding such
license or permit and activities directly related thereto).
"Standby L/C Fee Rate": at any time, the rate per annum equal
to the Applicable Margin then in effect for Eurodollar Loans.
"Standby Letter of Credit": as defined in subsection
2.6(b)(i).
"Subsidiaries Guarantee": the Guarantee, dated as of December
6, 1999, executed and delivered by each Subsidiary Guarantor,
substantially in the form of Exhibit E, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
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"Subsidiary Guarantor": each Subsidiary set forth on Schedule
4.13 under the heading "Initial Subsidiary Guarantors", together with
each other Subsidiary that becomes a party to the Subsidiaries
Guarantee in compliance with subsection 6.9.
"Swing Line Commitment": the lesser of (a) $100,000,000 and
(b) the Revolving Credit Commitments then in effect.
"Swing Line Lender": Chase, in its capacity as provider of the
Swing Line Loans.
"Swing Line Loans": as defined in subsection 2.18.
"Swing Line Loan Participation Certificate": a certificate,
substantially the form of Exhibit K.
"Swing Line Note": as defined in subsection 3.13(e).
"Swing Line Rate": with respect to any Swing Line Loan, an
interest rate equal to the sum of (a) the rate of interest determined
by the Swing Line Lender in respect thereof (which determination shall
be conclusive absent manifest error) to be the cost to the Swing Line
Lender of funding such Swing Line Loan, (b) the Applicable Margin then
in effect for Eurodollar Loans and (c) 0.75%.
"Telerate Page 3750": the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace
that service for the purpose of displaying comparable rates or prices).
"364-Day Credit Facility": the 364-Day Credit Agreement, dated
as of December 6, 1999, among the Borrower, the several banks,
financial institutions and other entities from time to time parties
thereto and the Administrative Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"Total Assets": of any Person for any period, the total assets
of such Person and its Consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP for such period.
"Total Debt": as to any Person at the date of any
determination thereof, all Debt of such Person; provided, however, that
for the purposes of any determination of the Leverage Ratio hereunder
the amount of Total Debt attributable to the Revolving Credit Loans,
the Swing Line Loans, the CAF Advances and Debt outstanding under the
Existing Credit Agreement, the 364-Day Credit Agreement and the GNB
Credit Agreement shall be the average daily outstanding amounts thereof
for the period of four fiscal quarters ending on or immediately
preceding such date of determination.
"Tranche": the collective reference to Eurodollar Loans the
then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such
Eurodollar Loans shall originally have been made on the same day).
"Transferee": as defined in subsection 10.6(f).
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"Type": as to any Revolving Credit Loan, its nature as an ABR
Loan or a Eurodollar Loan.
"UCC": the Uniform Commercial Code as in effect in the State
of New York from time to time.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended or revised from time to
time.
"Voting Percentage": as to any Lender (a) at any time prior to
the termination of the Revolving Credit Commitments, the percentage
which such Lender's Revolving Credit Commitment then constitutes of the
Revolving Credit Commitments of all the Lenders, and (b) at any time
after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) the principal amount of such
Lender's Revolving Credit Loans then outstanding plus (y) the product
of such Lender's Revolving Credit Commitment Percentage times the sum
of (A) the aggregate principal amount of Swing Line Loans then
outstanding plus (B) the L/C Obligations then outstanding then
constitutes of (ii) the sum of (x) the aggregate principal amount of
Committed Loans of all the Lenders then outstanding plus (y) the
aggregate L/C Obligations of all the Lenders then outstanding.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in any Loan Document or
any certificate or other document made or delivered pursuant hereto or thereto.
(b) As used herein and in any other Loan Document, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
subsection 1.1 and accounting terms partly defined in subsection 1.1, to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(e) The definitions of "Debt" and "Indebtedness" in subsection
1.1 shall be independent in construction, interpretation and application.
SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to make revolving credit
loans ("Revolving Credit Loans") to the Borrower from time to time during the
Revolving Credit Commitment Period in an aggregate principal amount at any one
time outstanding which, when added to such Lender's Revolving Credit Commitment
Percentage of an amount equal to the sum of (i) the aggregate principal amount
of Swing Line Loans then outstanding plus (ii) the then outstanding L/C
Obligations plus (iii) the aggregate principal amount of all
<PAGE> 26
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CAF Advances then outstanding (after giving effect to the use of proceeds of
such Revolving Credit Loans), does not exceed the amount of such Lender's
Revolving Credit Commitment. During the Revolving Credit Commitment Period, the
Borrower may use the Revolving Credit Commitments by borrowing, prepaying and
reborrowing the Revolving Credit Loans in whole or in part, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) ABR Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance with
subsections 2.2 and 3.2, provided that no Revolving Credit Loan shall be made as
a Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
2.2 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be initially Eurodollar Loans or (b) on the
requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
Eurodollar Loans, ABR Loans or a combination thereof and (iv) if the borrowing
is to be entirely or partly of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Periods
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to (x) in the case of ABR Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof (or, if the excess of the then Available Revolving
Credit Commitments over the aggregate principal amount of all CAF Advances then
outstanding is less than $5,000,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $10,000,000 or a whole multiple of $1,000,000 in excess
thereof. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Lender thereof. Each Lender will make the
amount of its pro rata share of each borrowing available to the Administrative
Agent for the account of the Borrower at the office of the Administrative Agent
specified in subsection 10.2 prior to 1:00 P.M., New York City time, on the
Borrowing Date requested by the Borrower in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing will be made available to
the Borrower on or prior to 2:00 P.M., New York City time, by the Administrative
Agent crediting the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
2.3 Commitment Fee. The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee for the
period from and including the first day of the Revolving Credit Commitment
Period to but not including the Revolving Credit Termination Date, computed at a
rate per annum equal to the Applicable Commitment Fee Rate then in effect on the
average daily amount of the Available Revolving Credit Commitment of such Lender
during the period (calculated as if no Swing Line Loans were outstanding during
such period) for which payment is made, payable quarterly in arrears on the last
day of each April, July, October and January and on the Revolving Credit
Termination Date or such earlier date as the Revolving Credit Commitments shall
terminate as provided herein, commencing on the first of such dates to occur
after the date hereof.
2.4 Termination or Reduction of Commitments. The Borrower
shall have the right, upon not less than two Business Days' notice to the
Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments, provided
that no such termination or reduction shall be permitted if, after giving effect
thereto and to any
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prepayments of the Revolving Credit Loans made on the effective date thereof,
the aggregate principal amount of the Revolving Credit Loans then outstanding,
when added to the then outstanding L/C Obligations, Swing Line Loans and CAF
Advances, would exceed the Revolving Credit Commitments then in effect. Any such
reduction shall be in an amount equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof and shall reduce permanently the Revolving Credit
Commitments then in effect. Upon receipt of any notice pursuant to this
subsection 2.4, the Administrative Agent shall promptly notify each Lender
thereof.
2.5 Repayment of Revolving Credit Loans. The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Revolving Credit Loan of
such Lender on the Revolving Credit Termination Date (or such earlier date on
which the Revolving Credit Loans become due and payable pursuant to Section 8).
The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Revolving Credit Loans from time to time outstanding from the date
hereof until payment in full thereof at the rates per annum, and on the dates,
set forth in subsection 3.4.
2.6 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Bank, in reliance on the agreements of the other Lenders
set forth in subsection 2.9(a), agrees to issue letters of credit ("Letters of
Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by such Issuing Bank; provided that no Issuing Bank shall have any
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations at such time would exceed the L/C Commitment,
(ii) the Aggregate Revolving Credit Outstandings at such time would exceed the
aggregate amount of the Revolving Credit Commitments at such time or (iii) in
the case of Letters of Credit issued in currencies other than Dollars only, the
L/C Obligations in respect of Letters of Credit issued in currencies other than
Dollars would exceed the Foreign L/C Commitment Sublimit at such time. Each
Continuing Letter of Credit shall be deemed to be issued under this Agreement on
the Effective Date (to the extent such Continuing Letter of Credit has not been
fully drawn or has not expired or been terminated as of the Effective Date) and
shall be (x) a Letter of Credit for all purposes hereof (other than subsection
2.7) and the other Loan Documents and (y) a Commercial Letter of Credit or a
Standby Letter of Credit, as applicable, for purposes of subsections 2.8(b) and
2.8(c), respectively.
(b) Each Letter of Credit shall:
(i) be denominated in Dollars or such other currency that
as of the date of issuance thereof is in the reasonable judgment of the
relevant Issuing Bank (which shall be binding on the L/C Participants)
freely convertible or exchangeable into Dollars as the Borrower, the
relevant Issuing Bank and the Administrative Agent may from time to
time agree, and shall be either (A) a standby letter of credit issued
to support obligations of the Borrower or a Subsidiary, contingent or
otherwise (a "Standby Letter of Credit"), or (B) a commercial letter of
credit issued in respect of the purchase of inventory or other goods or
services by the Borrower and its Subsidiaries in the ordinary course of
business (a "Commercial Letter of Credit"), and
(ii) expire no later than the earlier of (A) five Business
Days prior to the Revolving Credit Termination Date and (B) one year
after the date of issuance thereof, provided that, subject to clause
(A) above, any Letter of Credit may, at the request of the Applicant as
set forth in the applicable Application, be automatically renewed on
each anniversary of the issuance thereof for an additional period of
one year unless the Issuing Bank which issued such Letter of Credit
shall have given prior written notice to the Borrower and the
beneficiary of such Letter of Credit that such Letter of Credit will
not be renewed.
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(c) Each Letter of Credit shall be subject to the Uniform
Customs (except to the extent that any Continuing Letter of Credit continues to
be subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500, in accordance
with its terms), and, to the extent not inconsistent therewith, the laws of the
State of New York.
(d) No Issuing Bank shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Bank or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
2.7 Procedure for Issuance of Letters of Credit. An Applicant
may from time to time request that an Issuing Bank issue a Letter of Credit by
delivering (a) to such Issuing Bank at its address for notices specified herein
in such manner as may be agreed by or be acceptable to such Issuing Bank
(including by electronic transmission) an Application therefor, completed to the
satisfaction of such Issuing Bank, and such other certificates, documents and
other papers and information as such Issuing Bank may request and (b) a notice
to the Administrative Agent that such Letter of Credit has been requested. Upon
receipt of any Application, each Issuing Bank agrees to process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
such Issuing Bank be required to issue any Letter of Credit earlier than two
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by such Issuing Bank and the Borrower. Each Issuing Bank
shall furnish a copy of each Letter of Credit issued by such Issuing Bank to the
Borrower and the Administrative Agent promptly following the issuance thereof.
2.8 Letter of Credit Fees, Commissions and Other Charges. (a)
The Borrower shall pay to the relevant Issuing Bank with respect to each Letter
of Credit issued by such Issuing Bank under this Agreement, for the account of
such Issuing Bank, a fronting fee with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination date of such
Letter of Credit, computed at a rate per annum to be agreed upon by the Borrower
and such Issuing Bank on the average aggregate amount available to be drawn
under such Letter of Credit during the period for which such fee is calculated.
Such fronting fee shall be payable in arrears on each L/C Fee Payment Date to
occur after the issuance of such Letter of Credit and on the Revolving Credit
Termination Date (or on such earlier date as the Revolving Credit Commitments
shall terminate as provided herein) and shall be nonrefundable.
(b) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Commercial Letter of Credit issued under this Agreement with respect to
the period from the date of issuance of such Commercial Letter of Credit to the
expiration or termination date of such Letter of Credit, computed at a rate per
annum equal to the Commercial L/C Fee Rate on the average aggregate amount
available to be drawn under such Commercial Letter of Credit during the period
for which such fee is calculated. Such commission shall be shared ratably among
the L/C Participants in accordance with their respective Revolving Credit
Commitment Percentages. Such commission shall be payable in arrears on each L/C
Fee Payment Date to occur after the issuance of such Letter of Credit and on the
Revolving Credit Termination Date (or on such earlier date as the Revolving
Credit Commitments shall terminate as provided herein) and shall be
nonrefundable.
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(c) The Borrower shall pay to the Administrative Agent, for
the account of the L/C Participants, a letter of credit commission with respect
to each Standby Letter of Credit with respect to the period from the date of
issuance of such Standby Letter of Credit to the expiration or termination date
of such Letter of Credit, computed at a rate per annum equal to the Standby L/C
Fee Rate of the average aggregate amount available to be drawn under such
Standby Letter of Credit during the period for which such fee is calculated.
Such commission shall be shared ratably among the L/C Participants in accordance
with their respective Revolving Credit Commitment Percentages. Such commission
shall be payable in arrears on each L/C Fee Payment Date to occur after the
issuance of such Letter of Credit and on the Revolving Credit Termination Date
(or on such earlier date as the Revolving Credit Commitments shall terminate as
provided herein) and shall be nonrefundable.
(d) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse each Issuing Bank for such normal and customary
costs and expenses as may be agreed upon by the Borrower and such Issuing Bank
in connection with issuing, effecting payment under, amending or otherwise
administering any Letter of Credit issued by such Issuing Bank.
(e) The Administrative Agent shall, promptly following its
receipt thereof, distribute to each Issuing Bank and the L/C Participants all
fees and commissions received by the Administrative Agent for their respective
accounts pursuant to this subsection.
2.9 L/C Participations. (a) Each Issuing Bank irrevocably
agrees to grant and hereby grants to each L/C Participant (other than such
Issuing Bank), and, to induce such Issuing Bank to issue Letters of Credit
hereunder, each such L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from such Issuing Bank, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in such Issuing Bank's obligations and rights under each
Letter of Credit issued by such Issuing Bank hereunder and the amount of each
draft paid by such Issuing Bank thereunder. Each such L/C Participant
unconditionally and irrevocably agrees with each Issuing Bank that, if a draft
is paid under any Letter of Credit issued by such Issuing Bank for which such
Issuing Bank is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Administrative
Agent for the account of such Issuing Bank upon demand an amount equal to such
L/C Participant's Revolving Credit Commitment Percentage of the amount of such
draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant
to any Issuing Bank pursuant to subsection 2.9(a) in respect of any unreimbursed
portion of any payment made by such Issuing Bank under any Letter of Credit
issued by such Issuing Bank is paid to such Issuing Bank within three Business
Days after the date such payment is due, such L/C Participant shall pay to such
Issuing Bank on demand an amount equal to the product of (i) such amount, times
(ii) the daily average Federal Funds Effective Rate, during the period from and
including the date such payment is required to the date on which such payment is
immediately available to such Issuing Bank, times (iii) a fraction the numerator
of which is the number of days that elapse during such period and the
denominator of which is 360. If any such amount required to be paid by any L/C
Participant pursuant to subsection 2.9(a) is not in fact made available to any
Issuing Bank by such L/C Participant within three Business Days after the date
such payment is due, such Issuing Bank shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to ABR Loans hereunder. A
certificate of any Issuing Bank submitted to any L/C Participant with respect to
any amounts owing under this subsection shall be conclusive in the absence of
manifest error.
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(c) Whenever, at any time after any Issuing Bank has made
payment under any Letter of Credit issued by such Issuing Bank and has received
from any L/C Participant its pro rata share of such payment in accordance with
subsection 2.9(a), such Issuing Bank receives any payment related to such Letter
of Credit (whether directly from the Borrower or otherwise, including proceeds
of collateral applied thereto by such Issuing Bank), or any payment of interest
on account thereof, such Issuing Bank will distribute to such L/C Participant
its pro rata share thereof.
(d) If any payment received by any Issuing Bank pursuant to
subsection 2.10 with respect to any Letter of Credit issued by it shall be
required to be returned by such Issuing Bank, each L/C Participant shall pay to
such Issuing Bank its pro rata share thereof.
2.10 Letter of Credit Reimbursement Obligations. (a) The
Borrower agrees to reimburse each Issuing Bank for the amount of (i) any draft
paid by such Issuing Bank under any Letter of Credit issued by such Issuing Bank
and (ii) any taxes, fees, charges or other costs or expenses incurred by such
Issuing Bank in connection with such payment. Each such payment shall be made to
the relevant Issuing Bank at its address for notices specified herein in the
currency in which the relevant Letter of Credit was issued and in immediately
available funds in such currency.
(b) If any draft shall be presented for payment under any
Letter of Credit issued by any Issuing Bank, such Issuing Bank shall promptly
notify the Borrower of the date and amount thereof. The Borrower shall reimburse
each Issuing Bank pursuant to subsection 2.10(a) with respect to any drawing
under any Letter of Credit issued by such Issuing Bank on the next Business Day
following the date of such drawing and interest shall be payable on the amount
of such drawing for such period at the rate then applicable to ABR Loans
hereunder. If any amount payable under this subsection is not paid when due,
interest shall be payable on such amount from the date such amount becomes
payable under this subsection until payment in full thereof at the rate which
would be payable on any outstanding ABR Loans which were then overdue.
2.11 Obligations Absolute. (a) The Borrower's obligations
under this Section 2 in respect of Letters of Credit shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower or any Applicant may have
or have had against any Issuing Bank or any beneficiary of any Letter of Credit.
(b) The Borrower also agrees with each Issuing Bank that such
Issuing Bank shall not be responsible for, and the Borrower's Reimbursement
Obligations shall not be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or (ii) any
dispute between or among the Borrower, any Applicant and any beneficiary of any
Letter of Credit or any other party to which such Letter of Credit may be
transferred or (iii) any claims whatsoever of the Borrower or any Applicant
against any beneficiary of such Letter of Credit or any such transferee.
(c) No Issuing Bank shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit issued by
such Issuing Bank, except for errors or omissions caused by such Issuing Bank's
gross negligence or willful misconduct.
(d) The Borrower agrees that any action taken or omitted by
any Issuing Bank under or in connection with any Letter of Credit issued by such
Issuing Bank or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of
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care specified in the UCC, shall be binding on the Borrower and shall not result
in any liability of such Issuing Bank to the Borrower.
2.12 Letter of Credit Payments. The responsibility of each
Issuing Bank to the Borrower in connection with any draft presented for payment
under any Letter of Credit issued by such Issuing Bank shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.
2.13 Letter of Credit Applications. To the extent that any
provision of any Application related to any Letter of Credit is inconsistent
with the provisions of this Section 2 or any other terms of this Agreement or
any other Loan Document, the provisions of this Section 2 shall apply.
2.14 CAF Advances. Subject to the terms and conditions of this
Agreement, the Borrower may request advances ("CAF Advances") from time to time
on any Business Day during the CAF Advance Availability Period. CAF Advances may
be requested and made in amounts such that, after giving effect to the making of
such CAF Advance and the application of proceeds thereof, the Aggregate
Revolving Credit Outstandings at any time do not exceed the aggregate amount of
the Revolving Credit Commitments at such time. Within the limits and on the
conditions hereinafter set forth with respect to CAF Advances, the Borrower from
time to time may borrow, repay and reborrow CAF Advances.
2.15 Procedure for CAF Advance Borrowing. (a) The Borrower
shall request CAF Advances by delivering a CAF Advance Request to the
Administrative Agent, not later than 12:00 Noon (New York City time) four
Business Days prior to the proposed Borrowing Date (in the case of a LIBO Rate
CAF Advance Request), and not later than 11:00 A.M. (New York City time) one
Business Day prior to the proposed Borrowing Date (in the case of a Fixed Rate
CAF Advance Request). The Borrower shall pay to the Administrative Agent a fee
of $2,000 in connection with each CAF Advance Request delivered by the Borrower
to the Administrative Agent. Each CAF Advance Request in respect of any
Borrowing Date may solicit bids for CAF Advances on such Borrowing Date in an
aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000
in excess thereof and having not more than three alternative CAF Advance
Maturity Dates. The CAF Advance Maturity Date for each CAF Advance shall be the
date set forth therefor in the relevant CAF Advance Request, which date shall be
(i) not less than seven days nor more than 180 days after the Borrowing Date
therefor, in the case of a Fixed Rate CAF Advance, (ii) one, two, three or six
months after the Borrowing Date therefor, in the case of a LIBO Rate CAF Advance
and (iii) not later than the Revolving Credit Termination Date, in the case of
any CAF Advance. The Administrative Agent shall notify each Lender promptly by
facsimile transmission of the contents of each CAF Advance Request received by
the Administrative Agent.
(b) In the case of a LIBO Rate CAF Advance Request, upon
receipt of notice from the Administrative Agent of the contents of such CAF
Advance Request, each Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at the applicable LIBO Rate plus
(or minus) a margin determined by such Lender in its sole discretion for each
such CAF Advance. Any such irrevocable offer shall be made by delivering a CAF
Advance Offer to the Administrative Agent, before 10:30 A.M. (New York City
time) on the day that is three Business Days before the proposed Borrowing Date,
setting forth:
(i) the maximum amount of CAF Advances for each CAF
Advance Maturity Date and the aggregate maximum amount of CAF Advances
for all CAF Advance Maturity Dates
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which such Lender would be willing to make (which amounts may, subject
to subsection 3.14, exceed such Lender's Revolving Credit Commitments);
and
(ii) the margin above or below the applicable LIBO Rate at
which such Lender is willing to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 11:00 A.M. (New York
City time) on the date which is three Business Days before the proposed
Borrowing Date of the contents of each such CAF Advance Offer received by it. If
the Administrative Agent, in its capacity as a Lender, shall elect, in its sole
discretion, to make any such CAF Advance Offer, it shall advise the Borrower of
the contents of its CAF Advance Offer before 10:15 A.M. (New York City time) on
the date which is three Business Days before the proposed Borrowing Date.
(c) In the case of a Fixed Rate CAF Advance Request, upon
receipt of notice from the Administrative Agent of the contents of such CAF
Advance Request, each Lender may elect, in its sole discretion, to offer
irrevocably to make one or more CAF Advances at a rate of interest determined by
such Lender in its sole discretion for each such CAF Advance. Any such
irrevocable offer shall be made by delivering a CAF Advance Offer to the
Administrative Agent before 9:30 A.M. (New York City time) on the proposed
Borrowing Date, setting forth:
(i) the maximum amount of CAF Advances for each CAF
Advance Maturity Date, and the aggregate maximum amount for all CAF
Advance Maturity Dates, which such Lender would be willing to make
(which amounts may, subject to subsection 3.14, exceed such Lender's
Revolving Credit Commitments); and
(ii) the rate of interest at which such Lender is willing
to make each such CAF Advance.
The Administrative Agent shall advise the Borrower before 10:00 A.M. (New York
City time) on the proposed Borrowing Date of the contents of each such CAF
Advance Offer received by it. If the Administrative Agent, in its capacity as a
Lender, shall elect, in its sole discretion, to make any such CAF Advance Offer,
it shall advise the Borrower of the contents of its CAF Advance Offer before
9:15 A.M. (New York City time) on the proposed Borrowing Date.
(d) Before 11:30 A.M. (New York City time) three Business Days
before the proposed Borrowing Date (in the case of CAF Advances requested by a
LIBO Rate CAF Advance Request) and before 10:30 A.M. (New York City time) on the
proposed Borrowing Date (in the case of CAF Advances requested by a Fixed Rate
CAF Advance Request), the Borrower, in its absolute discretion, shall:
(i) cancel the relevant CAF Advance Request by giving the
Administrative Agent telephonic notice to that effect, or
(ii) by giving telephonic notice to the Administrative
Agent (immediately confirmed by delivery to the Administrative Agent of
a CAF Advance Confirmation by facsimile transmission) (A) subject to
the provisions of subsection 2.15(e), accept one or more of the offers
made by any Lender or Lenders pursuant to subsection 2.15(b) or
subsection 2.15(c), as the case may be, and (B) reject any remaining
offers made by Lenders pursuant to subsection 2.15(b) or subsection
2.15(c), as the case may be.
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(e) The Borrower's acceptance of CAF Advances in response to
any CAF Advance Offers shall be subject to the following limitations:
(i) the amount of CAF Advances accepted for each CAF
Advance Maturity Date specified by any Lender in its CAF Advance Offer
shall not exceed the maximum amount for such CAF Advance Maturity Date
specified in such CAF Advance Offer;
(ii) the aggregate amount of CAF Advances accepted for all
CAF Advance Maturity Dates specified by any Lender in its CAF Advance
Offer shall not exceed the aggregate maximum amount specified in such
CAF Advance Offer for all such CAF Advance Maturity Dates;
(iii) the Borrower may not accept offers for CAF Advances
for any CAF Advance Maturity Date in an aggregate principal amount in
excess of the maximum principal amount of CAF Advances requested for
such CAF Advance Maturity Date in the related CAF Advance Request; and
(iv) if the Borrower accepts any of such CAF Advance
Offers, it must accept offers based solely upon pricing for each
relevant CAF Advance Maturity Date and upon no other criteria
whatsoever, and if two or more Lenders submit CAF Advance Offers for
any CAF Advance Maturity Date at identical pricing and the Borrower
accepts any of such CAF Advance Offers but does not wish to (or, by
reason of the limitations set forth in subsection 2.14 or this
subsection 2.15, cannot) borrow the total amount offered by such
Lenders with such identical pricing, the Borrower shall accept CAF
Advance Offers from all of such Lenders in amounts allocated among them
pro rata according to the amounts offered by such Lenders (with
appropriate rounding, in the sole discretion of the Borrower, to assure
that each accepted CAF Advance is an integral multiple of $1,000,000);
provided that if the number of Lenders that submit CAF Advance Offers
for any CAF Advance Maturity Date with identical pricing is such that,
after the Borrower accepts such offers pro rata in accordance with the
foregoing provisions of this paragraph, the CAF Advance to be made by
any such Lender would be less than $5,000,000 principal amount, the
number of such Lenders shall be reduced by the Administrative Agent by
lot until the CAF Advances to be made by each such remaining Lender
would be in a principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof.
(f) If the Borrower notifies the Administrative Agent that a
CAF Advance Request is cancelled pursuant to subsection 2.15(d)(i), the
Administrative Agent shall give prompt telephonic notice thereof to the Lenders.
(g) If the Borrower accepts pursuant to subsection 2.15(d)(ii)
one or more of the CAF Advance Offers made by any Lender or Lenders, the
Administrative Agent promptly shall notify each Lender which has made such a CAF
Advance Offer of (i) the aggregate amount of such CAF Advances to be made on the
relevant Borrowing Date and the CAF Advance Maturity Date for each such CAF
Advance and (ii) the acceptance or rejection of any CAF Advance Offers to make
such CAF Advances made by such Lender. Before 12:00 Noon (New York City time) on
the Borrowing Date specified in the applicable CAF Advance Request, each Lender
whose CAF Advance Offer has been accepted shall make available to the
Administrative Agent at its office set forth in subsection 10.2 the amount of
CAF Advances to be made by such Lender, in Dollars and in immediately available
funds. The Administrative Agent will make such funds available to the Borrower
as soon as practicable on such date at such office of the Administrative Agent
in like funds. As soon as practicable after each Borrowing Date, the
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Administrative Agent shall notify each Lender of the aggregate amount of CAF
Advances advanced on such Borrowing Date and the respective CAF Advance Maturity
Dates thereof.
2.16 CAF Advance Payments. (a) The Borrower shall pay to the
Administrative Agent, for the account of each Lender which has made a CAF
Advance, on the CAF Advance Maturity Date of such CAF Advance (or on such
earlier date on which such CAF Advance becomes due and payable pursuant to
Section 8) the principal amount of such CAF Advance. The Borrower shall not have
the right to prepay any principal amount of any CAF Advance without the consent
of the Lender to which such CAF Advance is owed.
(b) The Borrower shall pay to the Administrative Agent for the
account of each Lender which has made a CAF Advance interest on the unpaid
principal amount of such CAF Advance from the Borrowing Date with respect
thereto to the CAF Advance Maturity Date of such CAF Advance at the rate of
interest specified in the CAF Advance Offer accepted by the Borrower in
connection with such CAF Advance (calculated on the basis of a