Exhibit 10.42
LETTER OF CREDIT AGREEMENT
dated as of
October 14, 2005
between
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
BANK OF AMERICA, N.A.
as Issuing Bank
___________________________
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TABLE OF CONTENTS
Page
1.
Definitions............................................................1
1.01 Defined
Terms....................................................1
1.02 Terms
Generally..................................................7
2. Letters of
Credit......................................................8
2.01 Issuance of
Letters of Credit....................................8
2.02 Reimbursement of
Drawings........................................8
2.03 Notice of
Drawings...............................................8
2.04 Interest on
Overdue Amounts......................................8
2.05 Procedures for
Issuance..........................................9
2.06 Unconditional
Obligations........................................9
2.07 Letter of Credit
Fees...........................................10
2.08 Nature of
Fees..................................................10
2.09 Termination or
Reduction of Commitment..........................11
2.10 Maintenance of
Loan Account; Statements of Account..............11
2.11 Increased
Costs.................................................11
2.12
Payments........................................................12
2.13
Taxes...........................................................12
3. Representations and
Warranties........................................13
3.01 Organization;
Powers............................................13
3.02 Authorization;
Enforceability...................................14
3.03 Governmental
Approvals; No Conflicts............................14
3.04
Litigation......................................................14
3.05 Compliance with
Loans and Agreement; No Default.................14
3.06 Security
Documents..............................................14
3.07 Federal Reserve
Regulations.....................................15
3.08
Solvency........................................................15
3.09
Taxes...........................................................15
3.10
Disclosure......................................................15
4.
Conditions............................................................16
4.01 Closing
Date....................................................16
4.02 Conditions
Precedent to Each Letter of Credit...................17
5. Affirmative
Covenants.................................................17
5.01 Financial
Statements and Other Information......................17
5.02 Existence;
Conduct of Business..................................18
5.03 Compliance with
Laws............................................18
5.04 Use of Letters
of Credit........................................18
5.05 Cash
Collateralization of Letter of Credit Outstandings.........19
5.06 Taxes and
Indebtedness..........................................19
(i)
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5.07 Further
Assurances..............................................19
6.
Covenants.............................................................19
6.01 Liens,
Collateral Dispositions..................................19
6.02 Fundamental
Changes.............................................19
7. Events of
Default.....................................................20
7.01 Events of
Default...............................................20
7.02 Remedies on
Default.............................................22
8.
Miscellaneous.........................................................22
8.01
Notices.........................................................22
8.02 Waivers;
Amendments.............................................22
8.03 Expenses;
Indemnity; Damage Waiver..............................23
8.04 Successors and
Assigns..........................................24
8.05
Survival........................................................25
8.06 Counterparts;
Integration.......................................25
8.07
Severability....................................................25
8.08 Right of
Setoff.................................................26
8.09 Governing Law;
Jurisdiction; Consent to Service of Process......26
8.10 WAIVER OF JURY
TRIAL............................................26
8.11
Headings........................................................27
8.12 Interest Rate
Limitation........................................27
8.13
Waivers.........................................................27
(ii)
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LETTER OF CREDIT
AGREEMENT (this "Agreement"), dated as of October 14, 2005
by and between:
THE GREAT
ATLANTIC & PACIFIC TEA COMPANY, INC., a Maryland
corporation
("the Company"),
having a place of business at 2 Paragon Drive, Montvale,
New Jersey
07645; and
BANK OF AMERICA,
N.A., as Issuing Bank, a national banking association
having a place
of business at 100 Federal Street, Boston, Massachusetts
02110;
in consideration of the mutual covenants
herein contained and benefits to be
derived herefrom.
1.
DEFINITIONS.
1.01 Defined
Terms.
As used in this
Agreement, the following terms have the meanings specified
below:
"Account" means
each of the Cash Collateral Account and the Additional
Collateral Account.
"Additional
Collateral" means those investments specified on Schedule 1
hereto.
"Additional
Collateral Account" means that certain account now or hereafter
established by the Company with Bank of
America, N.A. or any of its Affiliates
under the sole and exclusive dominion and
control of the Issuing Bank designated
as the "A&P Letter of Credit Additional
Collateral Account" containing
investments constituting Additional
Collateral, and in which account the Issuing
Bank has been granted a Lien pursuant to
the Pledge and Security Agreement.
"Affiliate"
means with respect to a specified Person, another Person that
directly, or indirectly through one or more
intermediaries, Controls or is
Controlled by or is under common Control
with the Person specified or is a
director or officer of such Person;
provided, that Metro Inc. and the
Subsidiaries and stakeholders (other than
the Company and its Affiliates) of
Metro Inc. shall not be deemed to be
Affiliates of the Company and its
Subsidiaries.
"Agreement"
means this Letter of Credit Agreement, as modified, amended,
supplemented or restated, and in effect
from time to time.
"Applicable
Advance Rate" means as to each investment constituting
Additional Collateral, the percentage
specified on Schedule 1 hereto.
"Applicable Law"
means as to any Person: (i) all laws, statutes, rules,
regulations, orders, or other requirements
having the force of law and (ii) all
court orders and injunctions, and/or
similar rulings, in each instance ((i) and
(ii)) of or by any Governmental Authority,
or court, or tribunal which has
jurisdiction over such Person, or any
property of such Person, or of any other
Person for whose conduct such Person would
be responsible.
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"Availability"
means, at any time of determination, the lesser of (i)
$200,000,000, and (ii) an amount equal to
the difference between (a) the sum of
(1) 100% of the Cash and Cash Equivalents
on deposit in the Cash Collateral
Account and (2) as to each item of
Additional Collateral on deposit in the
Additional Collateral Account, the amount
of such Additional Collateral
multiplied by the Applicable Advance Rate
and (b) the aggregate Letter of Credit
Outstandings.
"Bank of
America" means Bank of America, N.A.
"Board" means
the Board of Governors of the Federal Reserve System of the
United States of America.
"Business Day"
means any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston,
Massachusetts, Charlotte, North Carolina, or
New York, New York are authorized or
required by law to remain closed.
"Cash and Cash
Equivalents" means (i) cash, (ii) investments in money
market funds maintained by Bank of America,
N.A. or any of its Affiliates, (iii)
investments in certificates of deposit
maturing within one year from the date of
acquisition, banker's acceptances, and
overnight bank deposits, in each case
issued by or created by, or with, Bank of
America, N.A. or any of its
Affiliates, (iv) investments in deposit
accounts in the ordinary course of
business with Bank of America, N.A. or any
of its Affiliates and (v) investments
in any mutual fund that invests solely in
United States treasury obligations and
which is quoted in the Wall Street
Journal.
"Cash Collateral
Account" means that certain account numbered 24900531
established by the Company with Banc of
America Securities LLC under the sole
and exclusive dominion and control of the
Issuing Bank designated as the "A&P
Letter of Credit Cash Collateral Account"
containing investments constituting
Cash and Cash Equivalents, in which account
the Issuing Bank has been granted a
Lien pursuant to the Pledge and Security
Agreement.
"Change in
Control" means, at any time, (a) the board of directors of the
Company shall cease to consist of a
majority of the Continuing Directors, (b)
any person or group (within the meaning of
Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as
amended) other than a Permitted Holder
shall acquire a majority of the voting
power represented by the Company's
outstanding capital stock entitled to vote
in the election of directors of the
Company.
"Change in Law"
means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change
in any law, rule or regulation or in
the interpretation or application thereof
by any Governmental Authority after
the date of this Agreement or (c)
compliance by the Issuing Bank (or by the
Issuing Bank's holding company, if any)
with any request, guideline or directive
(whether or not having the force of law) of
any Governmental Authority made or
issued after the date of this
Agreement.
"Charges" has
the meaning provided therefor in Section 8.12.
"Closing Date"
means the date on which the conditions specified in Section
4.02 are satisfied or waived.
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"Code" means the
Internal Revenue Code of 1986, as amended from time to
time.
"Collateral"
means any and all "Collateral" as defined in the Pledge and
Security Agreement.
"Commercial
Letter of Credit" means any Letter of Credit issued for the
purpose of providing the primary payment
mechanism in connection with the
purchase of any materials, goods or
services by the Company or any Subsidiary
Credit Party in the ordinary course of
business of the Company or such
Subsidiary Credit Party.
"Commitment"
means $200,000,000 or such lesser amount on account of a
reduction thereof in accordance with the
provisions of Section 2.09 hereof.
"Continuing
Directors" means directors of the Company who are in office on
the Closing Date and each other director,
who's nomination for election to the
Board of Directors of the Company is
recommended by a majority of the then
Continuing Directors or a Permitted
Holder.
"Control" means
the possession, directly or indirectly, of the power to
direct or cause the direction of the
management or policies of a Person, whether
through the ability to exercise voting
power, by contract or otherwise. The
terms "Controlling" and "Controlled" have
meanings correlative thereto.
"Credit
Documents" means this Agreement, the Letters of Credit, each
letter
of credit application, and the Pledge and
Security Agreement, and any other
instrument or agreement now or hereafter
executed and delivered in connection
herewith or therewith, each as amended and
in effect from time to time.
"Credit Request"
means a request by the Company for the issuance of a
Letter of Credit in accordance with Section
2.05.
"Default" means
any event or condition that constitutes an Event of Default
or that upon notice, lapse of time or both
would, unless cured or waived, become
an Event of Default.
"dollars" or "$"
refers to lawful money of the United States of America.
"Event of
Default" has the meaning assigned to such term in Section 7.01.
An "Event of Default" shall be deemed to
have occurred and to be continuing
unless and until the Event of Default has
been duly waived in writing by the
Issuing Bank.
"Excluded Taxes"
means, with respect to the Issuing Bank or any other
recipient of any payment to be made by or
on account of any obligation of the
Company or any Subsidiary Credit Party
hereunder, (a) income or franchise Taxes
imposed on (or measured by) its gross or
net income by the United States of
America, or by the jurisdiction under the
laws of which such recipient is
organized or in which its principal office
is located, and (b) any branch
profits Taxes imposed by the United States
of America or any similar Tax imposed
by any other jurisdiction in which the
Company or such Subsidiary Credit Party
is located.
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"Federal Funds
Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on
overnight Federal funds transactions with
members of the Federal Reserve System
arranged by Federal funds brokers, as
published on the next succeeding Business
Day by the Federal Reserve Bank of New
York, or, if such rate is not so
published for any day that is a Business
Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the
quotations for such day for such
transactions received by Bank of America
from three Federal funds brokers of
recognized standing selected by it.
"GAAP" means
generally accepted accounting principles of the United States
of America, consistently applied.
"Governmental
Authority" means the government of the United States of
America, any other nation or any political
subdivision thereof, whether state or
local, and any agency, authority,
instrumentality, regulatory body, court,
central bank or other entity exercising
executive, legislative, judicial,
taxing, regulatory or administrative powers
or functions of or pertaining to
government.
"Indemnified
Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has
the meaning provided therefor in Section 0(b).
"Issuing Bank"
means Bank of America or its Affiliates, in their capacities
as the issuers of Letters of Credit
hereunder.
"L/C
Disbursement" means a payment made by the Issuing Bank pursuant to
a
Letter of Credit.
"Letter of
Credit" shall mean a letter of credit that is (i) issued
pursuant to this Agreement for the account
of the Company or any Subsidiary
Credit Party, (ii) a Standby Letter of
Credit or Commercial Letter of Credit,
(iii) issued for purposes for which the
Company or any Subsidiary Credit Party
has historically obtained letters of
credit, or for any other purpose that is
reasonably acceptable to the Issuing Bank,
and (iv) in form reasonably
satisfactory to the Issuing Bank.
"Letter of
Credit Fees" shall mean the fees payable in respect of Letters
of Credit pursuant to Section 2.07.
"Letter of
Credit Outstandings" shall mean, at any time, the sum of (a)
with respect to Letters of Credit
outstanding at such time, the aggregate
maximum amount that then is or at any time
thereafter may become available for
drawing or payment thereunder plus (b) all
amounts theretofore drawn or paid
under Letters of Credit for which the
Issuing Bank has not then been reimbursed.
"Lien" means,
with respect to any asset, any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge
or security interest in, on or of
such asset.
"Margin Stock"
has the meaning assigned to such term in Regulation U.
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"Material
Adverse Effect" means a material adverse effect on (a) the
business, assets, liabilities (actual or
contingent), operations or condition
(financial or otherwise) of the Company and
its Subsidiaries, taken as a whole,
(b) the ability of the Company or any
Subsidiary Credit Party to perform any
material obligation or to pay any
Obligations under this Agreement or any of the
other Credit Documents, or (c) the validity
or enforceability of this Agreement
or any of the other Credit Documents or any
of the material rights or remedies
of the Issuing Bank hereunder or
thereunder.
"Material
Indebtedness" means indebtedness of any one or more of the
Company and its Subsidiaries in an
aggregate principal amount exceeding
$10,000,000.
"Maximum Rate"
has the meaning provided therefor in Section 8.12.
"Obligations"
means the due and punctual payment by the Company and each
Subsidiary Credit Party of (i) each payment
required to be made by the Company
or any Subsidiary Credit Party under this
Agreement in respect of any Letter of
Credit, when and as due, including payments
in respect of reimbursement of
disbursements and interest thereon
(including all interest that accrues after
the commencement of any case or proceeding
by or against the Company or any
Subsidiary Credit Party under any federal
or state bankruptcy, insolvency,
receivership or similar law, whether or not
allowed in such case or proceeding)
and (ii) all other monetary obligations,
including fees, costs, expenses and
indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise,
of the Company or any Subsidiary Credit
Party to the Issuing Bank under this
Agreement and the other Credit
Documents.
"Organizational
Document" means, relative to any Person, its limited
partnership agreement, its certificate of
incorporation, formation or limited
partnership, its operating agreement, its
by-laws and all shareholder or equity
holder agreements, voting trusts and
similar arrangements to which such Person
is a party or which is applicable to its
capital stock or its limited
partnership agreement.
"Other Taxes"
means any and all current or future stamp or documentary
Taxes or any other excise or property
Taxes, charges or similar levies arising
from any payment made under any Credit
Document or from the execution, delivery
or enforcement of, or otherwise with
respect to, any Credit Document.
"Permitted
Holder" means (i) Tengelmann Warenhandelsgesellschaft or (ii)
any Affiliate of Tengelmann
Warenhandelsgesellschaft.
"Person" means
any natural person, corporation, limited liability company,
trust, joint venture, association, company,
partnership, Governmental Authority
or other entity.
"Pledge and
Security Agreement" means the Pledge and Security Agreement,
dated the date hereof, between the Company
and the Issuing Bank, as amended and
in effect from time to time.
"Prime Rate"
shall mean, for any day, the higher of (a) the variable annual
rate of interest then most recently
announced by Bank of America at its head
office in Charlotte, North Carolina
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as its "Prime Rate" and (b) the Federal
Funds Effective Rate in effect on such
day plus 1/2 of 1% (0.50%) per annum. The
Prime Rate is a reference rate and
does not necessarily represent the lowest
or best rate being charged to any
customer. If for any reason any Issuing
Bank shall have determined (which
determination shall be conclusive absent
manifest error) that it is unable to
ascertain the Federal Funds Effective Rate
for any reason, including the
inability or failure of any Issuing Bank to
obtain sufficient quotations thereof
in accordance with the terms hereof, the
Prime Rate shall be determined without
regard to clause (b) of the first sentence
of this definition, until the
circumstances giving rise to such inability
no longer exist. Any change in the
Prime Rate due to a change in Bank of
America's Prime Rate or the Federal Funds
Effective Rate shall be effective on the
effective date of such change in Bank
of America's Prime Rate or the Federal
Funds Effective Rate, respectively.
"Regulation U"
means Regulation U of the Board as from time to time in
effect and all official rulings and
interpretations thereunder or thereof.
"Regulation X"
means Regulation X of the Board as from time to time in
effect and all official rulings and
interpretations thereunder or thereof.
"Related
Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective
directors, officers, employees, agents
and advisors of such Person and such
Person's Affiliates.
"Responsible
Officer" means the Company's Chief Executive Officer, Chief
Financial Officer or Treasurer.
"Security
Documents" means the Pledge and Security Agreement and any and
all other financing statements, control
agreements or other documents delivered,
in connection therewith.
"Solvent" means,
with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of
the properties and assets of such
Person are greater than the sum of the
debts, including contingent liabilities,
of such Person, (b) the present fair
saleable value of the properties and assets
of such Person is not less than the amount
that would be required to pay the
probable liability of such Person on its
debts as they become absolute and
matured, (c) such Person is able to realize
upon its properties and assets and
pay its debts and other liabilities,
contingent obligations and other
commitments as they mature in the normal
course of business, (d) such Person
does not intend to, and does not believe
that it will, incur debts beyond such
Person's ability to pay as such debts
mature, and (e) such Person is not engaged
in a business or a transaction, and is not
about to engage in a business or
transaction, for which such Person's
properties and assets would constitute
unreasonably small capital after giving due
consideration to the prevailing
practices in the industry in which such
Person is engaged.
"Specified
Default" means the occurrence of any Event of Default specified
in Sections 7.01(a), (b), (f), (g) or (h)
hereof.
"Standby Letter
of Credit" means any Letter of Credit other than a
Commercial Letter of Credit.
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"Subsidiary"
means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company,
partnership, association or other
entity the accounts of which would be
consolidated with those of the parent in
the parent's Consolidated financial
statements if such financial statements were
prepared in accordance with GAAP as of such
date, as well as any other
corporation, limited liability company,
partnership, association or other entity
(a) of which securities or other ownership
interests representing more than 50%
of the equity or more than 50% of the
ordinary voting power or, in the case of a
partnership, more than 50% of the general
partnership interests are, as of such
date, owned, Controlled or held, or (b)
that is, as of such date, otherwise
Controlled, by the parent or one or more
subsidiaries of the parent or by the
parent and one or more subsidiaries of the
parent.
"Subsidiary
Credit Party" means each Subsidiary of the Company for whose
account a Letter of Credit is issued by the
Issuing Bank.
"Taxes" means
any and all current or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed
by any Governmental Authority.
"Termination
Date" shall mean the earliest to occur of (i) October 14, 2006
or (ii) the date of the occurrence of any
Event of Default pursuant to Section
7.01(f), 7.01(g) or 7.01(h), or (iii) the
date on which the Commitment of the
Issuing Bank is terminated pursuant to
clause (i) of the final paragraph of
Section 7.01 or Section 2.09 hereof.
"Transfer
Notice" has the meaning set forth in Section 2.16 hereof.
1.02 Terms
Generally. The definitions of terms herein shall apply equally
to the singular and plural forms of the
terms defined. Whenever the context may
require, any pronoun shall include the
corresponding masculine, feminine and
neuter forms. The words "include",
"includes" and "including" shall be deemed to
be followed by the phrase "without
limitation". The word "will" shall be
construed to have the same meaning and
effect as the word "shall". Unless the
context requires otherwise (i) any
definition of or reference to any agreement,
instrument or other document herein shall
be construed as referring to such
agreement, instrument or other document as
from time to time amended,
supplemented or otherwise modified (subject
to any restrictions on such
amendments, supplements or modifications
set forth herein), (ii) any reference
herein to any Person shall be construed to
include such Person's successors and
assigns, (iii) the words "herein", "hereof"
and "hereunder", and words of
similar import, shall be construed to refer
to this Agreement in its entirety
and not to any particular provision hereof,
and (iv) all references herein to
Articles, Sections, Exhibits and Schedules
shall be construed to refer to
Articles and Sections of, and Exhibits and
Schedules to, this Agreement.
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2. LETTERS OF
CREDIT.
2.01 Issuance of
Letters of Credit.
(a) Upon the
terms and subject to the conditions herein set forth, the
Company may request the Issuing Bank, at
any time and from time to time after
the date hereof and prior to the
Termination Date, to issue, and subject to the
terms and conditions contained herein, the
Issuing Bank shall issue, for the
account of the Company or any of the
Subsidiary Credit Parties one or more
Letters of Credit; provided that no Letter
of Credit shall be issued if after
giving effect to such issuance (i) the
aggregate Letter of Credit Outstandings
shall exceed the Commitment, or (ii)
Availability would be less than zero.
(b) Each Letter
of Credit shall expire at or prior to the close of business
on the earlier of (i) the date one (1) year
after the date of the issuance of
such Letter of Credit (or, in the case of
any renewal or extension thereof, one
(1) year after such renewal or extension)
and (ii) unless cash collateralized or
otherwise credit supported to the
reasonable satisfaction of the Issuing Bank,
the date that is one (1) Business Days
prior to October 14, 2006. Each Letter of
Credit may, upon the request of the Company
include a provision whereby such
Letter of Credit shall be renewed
automatically for additional consecutive
periods of twelve (12) months or less
unless the Issuing Bank notifies the
beneficiary thereof at least thirty (30)
days prior to the then-applicable
expiration date that such Letter of Credit
will not be renewed; provided,
however, that no Letter of Credit shall be
renewed or extended on or after the
occurrence of the Termination Date.
2.02
Reimbursement of Drawings. Drafts drawn under each Letter of
Credit
shall be reimbursed by the Company or the
applicable Subsidiary Credit Party in
dollars by paying to the Issuing Bank an
amount equal to such drawing prior to
the close of business, Boston time, on the
Business Day immediately following
the day that the Issuing Bank delivers
notice of such drawing, provided such
notice is delivered to the Company before
11:00 a.m., Boston time. In the event
notice of a drawing is delivered by the
Issuing Bank to the Company after 11:00
a.m., Boston time, such drafts shall be
reimbursed by the Company or the
applicable Subsidiary Credit Party prior to
the close of business, Boston time,
on the second Business Day immediately
following the day on which the Issuing
Bank delivers notice of such drawing to the
Company.
2.03 Notice of
Drawings. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents
purporting to represent a demand for
payment under a Letter of Credit. The
Issuing Bank shall promptly notify the
Company by telephone (confirmed by
telecopy) of such demand for payment and
whether the Issuing Bank has made or will
make payment thereunder, provided that
any failure to give or delay in giving such
notice shall not relieve the Company
of its obligation to reimburse the Issuing
Bank with respect to any such
payment.
2.04 Interest on
Overdue Amounts. If the Issuing Bank shall make any L/C
Disbursement, then, unless the Company or a
Subsidiary Credit Party shall
reimburse the Issuing Bank in full on the
date such payment is made, the unpaid
amount thereof shall bear interest, for
each day from and including the date
such payment is made to and including the
date that the
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Company or a Subsidiary Credit Party
reimburses the Issuing Bank therefor, at
the rate per annum equal to the Prime Rate
plus fifteen basis points (0.15%)
through the date upon which the Company or
the applicable Subsidiary Credit
Party is obligated to reimburse such
drawing pursuant to Section 2.02 hereof,
and thereafter at the rate per annum equal
to the Prime Rate plus two percent
(2.00%). Interest shall be calculated on
the basis of a 360 day year and actual
days elapsed.
2.05 Procedures
for Issuance. Whenever the Company or a Subsidiary Credit
Party desires that the Issuing Bank issue a
Letter of Credit (or the amendment,
renewal or extension of an outstanding
Letter of Credit), the Company, through a
Responsible Officer, shall give to the
Issuing Bank at least two (2) Business
Days' prior written notice (which may be by
electronic means), or such shorter
period as may be agreed upon in writing by
the Issuing Bank and the Company,
specifying the date on which the proposed
Letter of Credit is to be issued,
amended, renewed or extended (which shall
be a Business Day), the stated amount
of the Letter of Credit so requested, the
expiration date of such Letter of
Credit, the name and address of the
beneficiary thereof, and the provisions
thereof. If requested by the Issuing Bank,
the Company and the applicable
Subsidiary Credit Party shall also submit a
letter of credit application on the
Issuing Bank's standard form in connection
with any request for the issuance,
amendment, renewal or extension of a Letter
of Credit (which application may be
delivered electronically). In the event of
an inconsistency between any such
letter of credit application and this
Agreement, the terms of this Agreement
shall control.
2.06
Unconditional Obligations. The obligations of the Company and
the
Subsidiary Credit Parties to reimburse the
Issuing Bank for any L/C Disbursement
shall be unconditional and irrevocable and
shall be paid strictly in accordance
with the terms of this Agreement under all
circumstances, including, without
limitation: (i) any lack of validity or
enforceability of any Letter of Credit;
(ii) the existence of any claim, setoff,
defense or other right which the
Company or any Subsidiary Credit Party may
have at any time against a
beneficiary of any Letter of Credit or
against the Issuing Bank, whether in
connection with this Agreement, the
transactions contemplated herein or any
unrelated transaction; (iii) any draft,
demand, certificate or other document
presented under any Letter of Credit
proving to be forged, fraudulent, invalid
or insufficient in any respect or any
statement therein being untrue or
inaccurate in any respect; (iv) payment by
the Issuing Bank of any Letter of
Credit against presentation of a demand,
draft or certificate or other document
which does not comply with the terms of
such Letter of Credit; (v) any other
circumstance or happening whatsoever,
whether or not similar to any of the
foregoing, that might, but for the
provisions of this Section, constitute a
legal or equitable discharge of, or provide
a right of setoff against, the
Company's or the Subsidiary Credit Parties'
obligations hereunder; or (vi) the
fact that any Event of Default shall have
occurred and be continuing. Neither
the Issuing Bank nor any of its Affiliates
shall have any liability or
responsibility by reason of or in
connection with the issuance or transfer of
any Letter of Credit or any payment or
failure to make any payment thereunder
(irrespective of any of the circumstances
referred to in the preceding
sentence), or any error, omission,
interruption, loss or delay in transmission
or delivery of any draft, notice or other
communication under or relating to any
Letter of Credit (including any document
required to make a drawing thereunder),
any error in interpretation of technical
terms or any consequence arising from
causes beyond the control of the Issuing
Bank, provided that the foregoing
provisions of this Section 2.06 shall not
be construed to excuse the
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Issuing Bank from liability to the Company
or any Subsidiary Credit Party to the
extent of any direct damages (as opposed to
consequential damages, claims in
respect of which are hereby waived by the
Company and the Subsidiary Credit
Parties to the extent permitted by
Applicable Law) suffered by the Company that
are caused by the Issuing Bank's failure to
exercise care when determining
whether drafts and other documents
presented under a Letter of Credit comply
with the terms thereof. The parties hereto
expressly agree that, in the absence
of gross negligence or willful misconduct
on the part of the Issuing Bank (as
finally determined by a court of competent
jurisdiction), the Issuing Bank shall
be deemed to have exercised care in each
such determination. In furtherance of
the foregoing and without limiting the
generality thereof, the parties agree
that, with respect to documents presented
that appear on their face to be in
compliance with the terms of a Letter of
Credit, the Issuing Bank may, in its
sole discretion, either accept and make
payment upon such documents without
responsibility for further investigation,
regardless of any notice or
information to the contrary, or refuse to
accept and make payment upon such
documents if such documents are not in
strict compliance with the terms of such
Letter of Credit.
2.07 Letter of
Credit Fees.
(a) The Company
and the Subsidiary Credit Parties shall pay the Issuing
Bank on the first day of each calendar
quarter, in arrears, a fee (each, a
"Letter of Credit Fee") equal to the 0.15%
per annum (on the basis of actual
number of days elapsed in a year of 360
days) of the average daily face amount
of the Letters of Credit outstanding during
the immediately preceding calendar
quarter.
(b) Upon the
occurrence of a Specified Default the Letter of Credit Fees
shall be increased by an amount equal to
two percent (2.00%) per annum.
(c) The Company
and the Subsidiary Credit Parties shall pay to the Issuing
Bank, in addition to all Letter of Credit
Fees otherwise provided for hereunder,
such other reasonable fees and charges in
connection with the issuance,
negotiation, settlement, extension,
amendment and processing of each Letter of
Credit issued by the Issuing Bank as are
customarily imposed by the Issuing Bank
from time to time in connection with letter
of credit transactions.
2.08 Nature of
Fees
All fees shall
be paid on the dates due, in immediately available funds, to
the Issuing Bank as provided herein. All
fees shall be fully earned on the date
when due (or on the Closing Date if
specifically indicated as such) and shall
not be refundable under any
circumstances.
2.09 Termination
or Reduction of Commitment.
Upon at least three
(3) Business Days' prior written notice to the Issuing
Bank the Company may, at any time, in whole
permanently terminate, or from time
to time in part permanently reduce, the
Commitment. Each such reduction shall be
in the principal amount of $5,000,000 or
any integral multiple of $1,000,000 in
excess thereof. Each such reduction or
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termination shall be irrevocable when
given. No reduction in the Commitment
shall result in the Commitment being less
than the then Letter of Credit
Outstandings.
2.10 Maintenance
of Loan Account; Statements of Account.
(a) The Issuing
Bank shall maintain an account on its books in the name of
the Company (the "Loan Account") which will
reflect all Letter of Credit
Outstandings, L/C Disbursements, fees and
interest that have become payable as
herein set forth.
(b) After the
end of each calendar month, the Issuing Bank shall send to
the Company a statement accounting for the
transactions occurring among and
between the Issuing Bank and the Company
during that month. The monthly
statements shall, absent manifest error, be
final, conclusive and binding on the
Company and each Subsidiary Credit Party,
unless otherwise objected to in
writing by the Company within fifteen (15)
days after receipt of the monthly
statement.
2.11 Increased
Costs.
(a) If any
Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit
or
similar
requirement
