BRIDGE CREDIT AGREEMENT

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Exhibit 10.1

$1,151,500,000

BRIDGE CREDIT AGREEMENT

by and among

CVS CAREMARK CORPORATION,

THE LENDERS PARTY HERETO,

LEHMAN COMMERCIAL PAPER INC.,

as Administrative Agent,

DEUTSCHE BANK SECURITIES INC.,

as Syndication Agent,

and

BANK OF AMERICA, N.A., MORGAN STANLEY BANK, and WACHOVIA BANK,

NATIONAL ASSOCIATION,

as Co-Documentation Agents

 

Dated as of September 12, 2008

 

LEHMAN BROTHERS INC.,

and DEUTSCHE BANK SECURITIES INC.,

as Joint Lead Arrangers and Joint Bookrunners,

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EXHIBITS

 

 

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BRIDGE CREDIT AGREEMENT , dated as of September 12, 2008, by and among CVS CAREMARK CORPORATION , a Delaware corporation (the “ Borrower ”), the banks and other financial institutions party hereto from time to time (each a “ Lender ” and, collectively, the “ Lenders ”), LEHMAN BROTHERS INC . and DEUTSCHE BANK SECURITIES INC. , as joint lead arrangers and joint bookrunners (in such capacity, the “ Arrangers ”), LEHMAN COMMERCIAL PAPER INC. , as administrative agent for the Lenders (in such capacity, the “ Administrative Agent ”), DEUTSCHE BANK SECURITIES INC. , as syndication agent (in such capacity, the “ Syndication Agent ”), and BANK OF AMERICA, N.A. , MORGAN STANLEY BANK , and WACHOVIA BANK, NATIONAL ASSOCIATION , as co-documentation agents (in such capacity, the “ Co-Documentation Agents ”).

ARTICLE 1

DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

SECTION 1.1 Definitions

When used in any Loan Document (as defined below), each of the following terms shall have the meaning ascribed thereto unless the context otherwise specifically requires:

“ ABR Advances ”: the Loans (or any portions thereof) at such time as they (or such portions) are made or are being maintained at a rate of interest based upon the Alternate Base Rate.

“ Accumulated Funding Deficiency ”: as defined in Section 302 of ERISA.

“ Acquisition ”: with respect to any Person, the purchase or other acquisition by such Person, by any means whatsoever (including by devise, bequest, gift, through a dividend or otherwise), of (a) stock of, or other equity securities of, any other Person if, immediately thereafter, such other Person would be either a consolidated subsidiary of such Person or otherwise under the control of such Person, (b) any business, going concern or division or segment thereof, or (c) the Property of any other Person other than in the ordinary course of business, provided that (i) no acquisition of substantially all of the assets, or any division or segment, of such other Person shall be deemed to be in the ordinary course of business and (ii) no redemption, retirement, purchase or acquisition by any Person of the stock or other equity securities of such Person shall be deemed to constitute an Acquisition.

“ Administrative Agent ”: as defined in the preamble.

“ Administrative Questionnaire ”: an Administrative Questionnaire in a form supplied by the Administrative Agent.

“ Affected Advance ”: as defined in Section 3.8(b).

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“ Affiliate ”: with respect to any Person at any time and from time to time, any other Person (other than a wholly-owned subsidiary of such Person) which, at such time (a) controls such Person, (b) is controlled by such Person or (c) is under common control with such Person. The term “control”, as used in this definition with respect to any Person, means the power, whether direct or indirect through one or more intermediaries, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise.

“ Agents ”: the collective reference to the Co-Documentation Agents, the Syndication Agent and the Administrative Agent.

“ Aggregate Available Commitments ”: at any time, the sum of the Available Commitments of the Lenders at such time under this Agreement.

“ Aggregate Commitment Amount ”: at any time, the sum of the Commitment Amounts of the Lenders at such time under this Agreement.

“ Aggregate Credit Exposure ”: at any time, the sum at such time of the aggregate Credit Exposure of the Lenders at such time under this Agreement.

“ Agreement ”: this Bridge Credit Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

“ Alternate Base Rate ”: for any day, a rate per annum (rounded, if necessary, to the nearest l/100th of 1% or, if there is no nearest 1/100 of 1%, then to the next higher 1/100 of 1%) equal to the greater of (a) the Prime Rate in effect on such day, and (b)   ¹ / 2 of 1% plus the Federal Funds Effective Rate in effect on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate 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 or the Federal Funds Effective Rate, respectively.

“ Applicable Margin ”: (i) with respect to the unpaid principal balance of ABR Advances, the applicable percentage set forth below in the column entitled “ABR Advances”, (ii) with respect to the unpaid principal balance of Eurodollar Advances, the applicable percentage set forth below in the column entitled “Eurodollar Advances” and (iii) with respect to the Unused Fee, the applicable percentage set forth below in the column entitled “Unused Fee Rate”:

 

 

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Decreases in the Applicable Margin resulting from a change in Pricing Level shall become effective upon the delivery by the Borrower to the Administrative Agent of a notice pursuant to Section 7.7(d). Increases in the Applicable Margin resulting from a change in Pricing Level shall become effective on the effective date of any downgrade or withdrawal in the rating by Moody’s or S&P of the senior unsecured long term debt rating of the Borrower. Notwithstanding each definition of Pricing Level set forth above, if at any time the senior unsecured long term debt ratings of the Borrower by S&P and Moody’s differ by more than one equivalent rating level, then the applicable Pricing Level shall be determined based upon the higher such rating adjusted downwards to the next lower rating level.

“ Approved Fund ”: with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“ Arrangers ”: as defined in the preamble.

“ Assignment and Acceptance Agreement ”: an assignment and acceptance agreement executed by an assignor and an assignee pursuant to which, subject to the terms and conditions hereof and thereof, the assignor assigns to the assignee all or any portion of such assignor’s Loans, Notes and Commitment, substantially in the form of Exhibit E.

“ Available Commitment ”: with respect to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender’s Commitment then in effect over (b) such Lender’s Credit Exposure at such time.

“ Benefited Lender ”: as defined in Section 11.9(b).

“ BMC ”: Blue MergerSub Corp., a Maryland corporation.

“ Borrower ”: as defined in the preamble.

“ Borrowing Date ”: each Domestic Business Day or Eurodollar Business Day, as the case may be, during the Commitment Period on which the Lenders shall make Loans pursuant to Section 2.1(a) and a Borrowing Request; provided, however , that for avoidance of doubt, there shall be no more than three Borrowing Dates.

“ Borrowing Request ”: a request for Loans in the form of Exhibit C.

“ Change of Control ”: any of the following:

(i) any Person or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), (a) shall have or acquire

 

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beneficial ownership of securities having 30% or more of the ordinary voting power of the Borrower or (b) shall possess, directly or indirectly, the power to direct or cause the direction of the management and policies of the Borrower, whether through the ownership of voting securities, by contract or otherwise; or

(ii) the Continuing Directors shall cease for any reason to constitute a majority of the board of directors of the Borrower then in office.

“ Co-Documentation Agents ”: as defined in the preamble.

“ Commitment ”: in respect of any Lender, such Lender’s obligation, if any, to make a Loan to the Borrower on each Borrowing Date, subject to the terms and conditions hereof, in an aggregate outstanding principal amount not to exceed the Commitment Amount of such Lender.

“ Commitment Amount ”: at any time and with respect to any Lender, the amount set forth adjacent to such Lender’s name under the heading “Commitment Amount” in Exhibit A at such time or, in the event that such Lender is not listed on Exhibit A, the “Commitment Amount” which such Lender shall have assumed from another Lender in accordance with Section 11.7 on or prior to such time, as the same may be adjusted from time to time pursuant to Section 2.5 and Section 11.7(c). The aggregate amount of the Lenders’ Commitment Amounts on the Effective Date is $1,151,500,000.

“ Commitment Percentage ”: at any time and with respect to any Lender, a fraction the numerator of which is such Lender’s Commitment Amount at such time, and the denominator of which is the Aggregate Commitment Amount at such time.

“ Commitment Period ”: the period from and including the Effective Date to the Commitment Termination Date.

“ Commitment Termination Date ”: the date that is 90 Domestic Business Days after the first Borrowing Date, or on such earlier date as all of the Commitments shall have been terminated in accordance with the terms hereof.

“ Compensatory Interest Payment ”: as defined in Section 3.4(c).

“ Consolidated ”: the Borrower and the Subsidiaries on a consolidated basis in accordance with GAAP.

“ Contingent Obligation ”: as to any Person (the “ secondary obligor ”), any obligation of such secondary obligor (a) guaranteeing or in effect guaranteeing any return on any investment made by another Person, or (b) guaranteeing or in effect guaranteeing any Indebtedness, lease, dividend or other obligation (“ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such secondary obligor, whether or not contingent, (i) to purchase any such primary obligation or any Property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working

 

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capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the beneficiary of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, (iv) otherwise to assure or hold harmless the beneficiary of such primary obligation against loss in respect thereof, and (v) in respect of the Indebtedness of any partnership in which such secondary obligor is a general partner, except to the extent that such Indebtedness of such partnership is nonrecourse to such secondary obligor and its separate Property, provided that the term “Contingent Obligation” shall not include the endorsement of instruments for deposit or collection in the ordinary course of business.

“ Continuing Director ”: any member of the board of directors of the Borrower who (i) is a member of that board of directors on the Effective Date or (ii) was nominated for election by the board of directors a majority of whom were directors on the Effective Date or whose election or nomination for election was previously approved by one or more of such directors.

“ Control Person ”: as defined in Section 3.6.

“ Convert ”, “ Conversion ” and “ Converted ”: each, a reference to a conversion pursuant to Section 3.3 of one Type of Loan into another Type of Loan.

“ Costs ”: as defined in Section 3.6.

“ Credit Exposure ”: with respect to any Lender at any time, the outstanding principal balance of all Loans of such Lender at such time under this Agreement.

“ Credit Parties ”: a collective reference to the Agents, the Arrangers and the Lenders.

“ Default ”: any of the events specified in Section 9.1, whether any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

“ Disposition ”: with respect to any Person, any sale, assignment, transfer or other disposition by such Person by any means, of:

(a) the Stock of, or other equity interests of, any other Person,

(b) any business, operating entity, division or segment thereof, or

(c) any other Property of such Person, other than (i) the sale of inventory (other than in connection with bulk transfers), (ii) the disposition of equipment and (iii) the sale of cash investments.

“ Dividend Restrictions ”: as defined in Section 8.7.

“ Dollar ” or “ $ ”: lawful currency of the United States of America.

 

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“ Domestic Business Day ”: any day (other than a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City.

“ Duration Fee ”: as defined in Section 3.12.

“ Effective Date ”: as defined in Section 11.20.

“ Eligible Assignee ”: (i) any commercial bank, investment bank, trust company, banking association, financial institution, mutual fund, pension fund or any Approved Fund or (ii) any Lender or any Affiliate or any Approved Fund of such Lender.

“ Eligible SPC ”: a special purpose corporation that (i) is organized under the laws of the United States or any state thereof, (ii) is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and (iii) issues (or the parent of which issues) commercial paper rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s.

“ Employee Benefit Plan ”: an employee benefit plan, within the meaning of Section 3(3) of ERISA, maintained, sponsored or contributed to by the Borrower, any Subsidiary or any ERISA Affiliate.

“ Environmental Laws ”: all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“ Environmental Liability ”: as to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person directly or indirectly resulting from or based upon (i) violation of any Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (iii) exposure to any Hazardous Materials, (iv) the release or threatened release of any Hazardous Materials into the environment or (v) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ ERISA ”: the Employee Retirement Income Security Act of 1974, as amended from time to time, or any successor thereto, and the rules and regulations issued thereunder, as from time to time in effect.

“ ERISA Affiliate ”: when used with respect to an Employee Benefit Plan, ERISA, the PBGC or a provision of the Internal Revenue Code pertaining to employee benefit plans, any Person that is a member of any group of organizations within the meaning of Sections 414(b) or (c) of the Internal Revenue Code or, solely with respect to the applicable provisions of the Internal Revenue Code, Sections 414(m) or (o) of the Internal Revenue Code, of which the Borrower or any Subsidiary is a member.

 

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“ ESOP Guaranty ”: the guaranty of the 8.52% ESOP Note maturing 2008 in the aggregate unpaid principal amount, as of December 29, 2007, of $44,500,000.

“ Eurodollar Advance ”: a portion of the Loans selected by the Borrower to bear interest during a Eurodollar Interest Period selected by the Borrower at a rate per annum based upon a Eurodollar Rate determined with reference to such Eurodollar Interest Period, all pursuant to and in accordance with Section 2.2 or Section 3.3.

“ Eurodollar Base Rate ”: with respect to each day during each Eurodollar Interest Period in effect for each Eurodollar Advance and as determined by the Administrative Agent, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Eurodollar Interest Period commencing on the first day of such Eurodollar Interest Period appearing the Reuters Screen LIBORO1 Page as of 11:00 A.M., London time, two Eurodollar Business Days prior to the beginning of such Eurodollar Interest Period. In the event that such rate does not appear on the Reuters Screen LIBORO1 Page (or otherwise on such screen), the “Eurodollar Base Rate” for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent.

“ Eurodollar Business Day ”: any Domestic Business Day, other than a Domestic Business Day on which banks are not open for dealings in Dollar deposits in the interbank eurodollar market.

“ Eurodollar Interest Period ”: the period commencing on any Eurodollar Business Day selected by the Borrower in accordance with Section 2.2 or Section 3.3 and ending (A) one, two, three or six months or (B) a certain number of days (such number of days referred to in this clause (B) referred to herein as the “ Shorter Period ”) in each case thereafter, as selected by the Borrower in accordance with either such Sections, subject to the following:

(i) if any Eurodollar Interest Period would otherwise end on a day which is not a Eurodollar Business Day, such Eurodollar Interest Period shall be extended to the immediately succeeding Eurodollar Business Day unless the result of such extension would be to carry the end of such Eurodollar Interest Period into another calendar month, in which event such Eurodollar Interest Period shall end on the Eurodollar Business Day immediately preceding such day;

(ii) if any Eurodollar Interest Period shall begin on the last Eurodollar 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 Eurodollar Interest Period), such Eurodollar Interest Period shall end on the last Eurodollar Business Day of such latter calendar month, except as otherwise provided in clause (iii) below; and

(iii) notwithstanding anything contained in the foregoing to the contrary, in the case of clause (B) above in this definition only, the number of days selected may only be that number of days to (and including) the Maturity Date; provided that the number of days selected shall not exceed 30 days, and to

 

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the extent that the Borrower has selected a Eurodollar Interest Period under such clause (B) in accordance with the provisions of this definition, then such Eurodollar Interest Period shall end on the Maturity Date.

“ Eurodollar Rate ”: with respect to each day during each Eurodollar Interest Period in effect for each Eurodollar Advance and as determined by the Administrative Agent, a rate per annum determined for such day in accordance with the following formula (rounded, if necessary, to the nearest l/100 of 1% or, if there is no nearest 1/100 of 1%, then to the next higher 1/100 of 1%):

Eurodollar Base Rate

1.00 minus Eurocurrency Reserve Requirements

“ Eurocurrency Reserve Requirements ”: for any day, the aggregate (without duplication) of the maximum rates (expressed as a decimal or a fraction) 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 of the Federal Reserve System, or other Governmental Authority having jurisdiction with respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board of Governors of the Federal Reserve System, as amended) maintained by a member bank of the Federal Reserve System with deposits exceeding $1,000,000,000 with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Eurodollar Interest Period.

“ Event of Default ”: any of the events specified in Section 9.1, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition has been satisfied.

“ Excluded Debt ”: any Indebtedness of the Borrower under (x) the Existing Credit Agreements and (y) any indebtedness under any bank credit facility of the Borrower to the extent the proceeds thereof are used to repay Indebtedness under (i) any bank credit facility of the Borrower existing on the Effective Date or (ii) the Existing Credit Agreements.

“ Existing 2004 Five Year Credit Agreement ”: the Five Year Credit Agreement, dated as of June 11, 2004, by and among the Borrower, the lenders party thereto, Bank of America, N.A., Credit Suisse First Boston, and Wachovia Securities, Inc., as co-syndication agents, ABN AMRO Bank N.V., as documentation agent, and The Bank of New York, as administrative agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time.

“ Existing 2005 Five Year Credit Agreement ”: the Five Year Credit Agreement, dated as of June 3, 2005, by and among the Borrower, the lenders party thereto, Bank of America, N.A., Credit Suisse First Boston, and Wachovia Bank, National Association, as co-syndication agents, SunTrust Bank, as documentation agent, and The Bank of New York, as administrative agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time.

 

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“ Existing 2006 Five Year Credit Agreement ”: the Five Year Credit Agreement, dated as of May 12, 2006, by and among the Borrower, the lenders party thereto, Bank of America, N.A., Lehman Brothers Inc. and Wachovia Bank, National Association, as co-syndication agents, KeyBank National Association, as documentation agent, and The Bank of New York, as administrative agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time.

“ Existing 2007 Five Year Credit Agreement ”: the Five Year Credit Agreement, dated as of March 12, 2007, by and among the Borrower, the lenders party thereto, Lehman Commercial Paper Inc. and Wachovia Bank, National Association, as co-syndication agents, Morgan Stanley Senior Funding, Inc., as documentation agent, and The Bank of New York, as administrative agent, as the same may be amended, supplemented, replaced or otherwise modified from time to time.

“ Existing Credit Agreements ”: collectively, the Existing 2004 Five Year Credit Agreement, the Existing 2005 Five Year Credit Agreement, the Existing 2006 Five Year Credit Agreement and the Existing 2007 Five Year Credit Agreement.

“ Expiration Date ”: the earlier of (a) the Maturity Date and (b) the date on which the Loans shall become due and payable, whether by acceleration, notice of intention to prepay or otherwise.

“ Federal Funds Effective Rate ”: for any period, a fluctuating interest rate per annum equal for each day during such period to 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 for such day (or, if such day is not a Domestic Business Day, for the next preceding Domestic Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Domestic Business Day, the average (rounded, if necessary, to the nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, then to the next higher 1/100 of 1%) of the quotations for such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by the Administrative Agent.

“ Fees ”: as defined in Section 3.2(a).

“ Financial Statements ”: as defined in Section 4.13.

“ Foreign Lender ”: any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

“ GAAP ”: generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the date of determination, consistently applied.

 

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“ Governmental Authority ”: any foreign, federal, state, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court or arbitrator.

“ Granting Lender ”: as defined in Section 11.7(h).

“ Hazardous Materials ”: all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“ Highest Lawful Rate ”: as to any Lender, the maximum rate of interest, if any, which at any time or from time to time may be contracted for, taken, charged or received on the Loans or the Notes or which may be owing to such Lender pursuant to this Agreement under the laws applicable to such Lender and this Agreement.

“ Indebtedness ”: as to any Person at a particular time, all items of such Person which constitute, without duplication, (a) indebtedness for borrowed money or the deferred purchase price of Property (other than trade payables and accrued expenses incurred in the ordinary course of business), (b) indebtedness evidenced by notes, bonds, debentures or similar instruments, (c) indebtedness with respect to any conditional sale or other title retention agreement, (d) indebtedness arising under acceptance facilities and the amount available to be drawn under all letters of credit (excluding for purposes of Section 8.1 and Section 8.9 letters of credit obtained in the ordinary course of business by the Borrower or any Subsidiary) issued for the account of such Person and, without duplication, all drafts drawn thereunder to the extent such Person shall not have reimbursed the issuer in respect of the issuer’s payment of such drafts, (e) that portion of any obligation of such Person, as lessee, which in accordance with GAAP is required to be capitalized on a balance sheet of such Person, (f) all indebtedness described in clauses (a) through and including (e) above secured by any Lien on any Property owned by such Person even though such Person shall not have assumed or otherwise become liable for the payment thereof (other than carriers’, warehousemen’s, mechanics’, repairmen’s or other like non-consensual Liens arising in the ordinary course of business), and (g) Contingent Obligations in respect of any indebtedness described in clauses (a) through and including (f) above; provided that, for purposes of this definition, Indebtedness shall not include Intercompany Debt and obligations in respect of interest rate caps, collars, exchanges, swaps or other, similar agreements.

“ Indemnified Liabilities ”: as defined in Section 11.5.

“ Indemnified Person ”: as defined in Section 11.10.

“ Intercompany Debt ”: (i) Indebtedness of the Borrower to one or more of the Subsidiaries of the Borrower and (ii) Indebtedness of one or more of the Subsidiaries of the Borrower to the Borrower or any one or more of the other Subsidiaries of the Borrower.

 

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“ Intercompany Disposition ”: a Disposition by the Borrower or any of the Subsidiaries of the Borrower to the Borrower or to any of the other Subsidiaries of the Borrower.

“ Interest Payment Date ”: (i) as to any ABR Advance, the last day of each March, June, September and December, commencing on the first of such days to occur after such ABR Advance is made or any Eurodollar Advance is Converted to an ABR Advance, (ii) as to any Eurodollar Advance in respect of which the Borrower has selected a Eurodollar Interest Period of the Shorter Period, the last day of such Eurodollar Interest Period, (iii) as to any Eurodollar Advance in respect of which the Borrower has selected a Eurodollar Interest Period of one, two or three months, the last day of such Eurodollar Interest Period, and (iv) as to any Eurodollar Advance in respect of which the Borrower has selected a Eurodollar Interest Period greater than three months, the last day of the third month of such Eurodollar Interest Period and the last day of such Eurodollar Interest Period.

“ Internal Revenue Code ”: the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the rules and regulations issued thereunder, as from time to time in effect.

“ LCPI ”: Lehman Commercial Paper Inc.

“ Lender ”: as defined in the preamble.

“ Lien ”: any mortgage, pledge, hypothecation, assignment, lien, deposit arrangement, charge, encumbrance or other security arrangement or security interest of any kind, or the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement.

“ Loan ” or “ Loans ”: as defined in Section 2.1(a).

“ Loan Documents ”: this Agreement and, upon the execution and delivery thereof, the Notes, if any.

“ Longs ”: Longs Drug Store Corporation, a Maryland corporation.

“ Longs Acquisition ”: the acquisition by BMC of all outstanding capital stock of Longs (including pursuant to the Tender Offer) and merger of BMC with and into Longs as described in the Longs Merger Agreement.

“ Longs Merger Agreement ”: the Agreement and Plan of Merger, dated as of August 12, 2008, among the Borrower, Longs and BMC (as amended, supplemented or otherwise modified from time to time in accordance with Section 8.10).

“ Margin Stock ”: any “margin stock”, as said term is defined in Regulation U of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time.

 

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“ Material Adverse ”: with respect to any change or effect, a material adverse change in, or effect on, as the case may be, (i) the financial condition, operations, business, or Property of the Borrower and the Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform its obligations under the Loan Documents, or (iii) the ability of the Administrative Agent or any Lender to enforce the Loan Documents.

“ Maturity Date ”: the date that is 364 days after the first Borrowing Date.

“ Moody’s ”: Moody’s Investors Service, Inc.

“ Multiemployer Plan ”: a Pension Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“ Net Proceeds ” : with respect to any Prepayment Event, an amount equal to the cash proceeds of such Prepayment Event, less (at the option of the Borrower) the sum of (i) all fees, costs, discounts, commissions and out-of-pocket expenses paid by the Borrower or its Subsidiaries in connection with such Prepayment Event, and (ii) with respect to any sale leaseback transaction, the amount of all taxes paid (or reasonably estimated to be payable) by the Borrower or its Subsidiaries in connection with such Prepayment Event.

“ Net Worth ”: at any date of determination, the sum of all amounts which would be included under shareholders’ equity on a Consolidated balance sheet of the Borrower and the Subsidiaries determined in accordance with GAAP as at such date.

“ Note ”: with respect to each Lender that has requested one, a promissory note evidencing such Lender’s Loans payable to the order of such Lender (or, if required by such Lender, to such Lender and its registered assigns), substantially in the form of Exhibit B.

“ Participant ”: as defined in Section 11.7(e).

“ PATRIOT Act ”: as defined in Section 11.21.

“ PBGC ”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any Governmental Authority succeeding to the functions thereof.

“ Pension Plan ”: at any time, any Employee Benefit Plan (including a Multiemployer Plan) subject to Section 302 of ERISA or Section 412 of the Internal Revenue Code, the funding requirements of which are, or at any time within the six years immediately preceding the time in question, were in whole or in part, the responsibility of the Borrower, any Subsidiary or an ERISA Affiliate.

“ Person ”: any individual, firm, partnership, limited liability company, joint venture, corporation, association, business trust, joint stock company, unincorporated association, trust, Governmental Authority or any other entity, whether acting in an individual, fiduciary, or other capacity, and for the purpose of the definition of “ERISA Affiliate”, a trade or business.

 

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“ Prepayment Event ”: (a) the issuance of any equity securities or hybrid securities by the Borrower or any of its Subsidiaries in a registered public offering or private placement, (b) the issuance of long-term Indebtedness by the Borrower or any of its Subsidiaries in a registered public offering or a private placement or under any new bank credit facility (excluding any Excluded Debt), (c) any sale leaseback transaction, including any pass-through certificate transaction, and/or (d) the issuance of any other Indebtedness for borrowed money (other than Excluded Debt and commercial paper) the proceeds of which are used to acquire all or substantially all of the stock or assets of Longs prior to the first Borrowing Date.

“ Pricing Level ”: Pricing Level I, Pricing Level II, Pricing Level III or Pricing Level IV, as the case may be.

“ Pricing Level I ”: any time when the senior unsecured long term debt rating of the Borrower by (x) S&P is A- or higher or (y) Moody’s is A3 or higher.

“ Pricing Level II ”: any time when (i) the senior unsecured long term debt rating of the Borrower by (x) S&P is BBB+ or higher or (y) Moody’s is Baa1 or higher and (ii) Pricing Level I does not apply.

“ Pricing Level III ”: any time when (i) the senior unsecured long term debt rating of the Borrower by (x) S&P is BBB or higher or (y) Moody’s is Baa2 or higher and (ii) neither Pricing Level I nor II applies.

“ Pricing Level IV ”: any time when none of Pricing Level I, II or III applies.

“ Prime Rate ”: the prime lending rate as set forth on the British Banking Association Reuters Screen RTRTSY1 page (or such other comparable page as may, in the opinion of the Administrative Agent, replace such page for the purpose of displaying such rate), as in effect from time to time.

“ Pro Rata Percentage ”: with respect to any Lender, at any time of determination (a) at any time prior to the earlier of (x) the third Borrowing Date or (y) the last day of the Commitment Period, such Lender’s Commitment Percentage, and (b) at any time thereafter, a fraction (expressed as a percentage), the numerator of which shall be the amount of such Lender’s Credit Exposure at such time and the denominator of which shall be the Aggregate Credit Exposure of all Lenders.

“ Prohibited Transaction ”: a transaction that is prohibited under Section 4975 of the Internal Revenue Code or Section 406 of ERISA and not exempt under Section 4975 of the Internal Revenue Code or Section 408 of ERISA.

“ Property ”: in respect of any Person, all types of real, personal or mixed property and all types of tangible or intangible property owned or leased by such Person.

“ Regulatory Change ”: (a) the introduction or phasing in of any law, rule or regulation after the date hereof, (b) the issuance or promulgation after the date hereof of any directive, guideline or request from any central bank or United States or foreign Governmental

 

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Authority (whether or not having the force of law), or (c) any change after the date hereof in the interpretation of any existing law, rule, regulation, directive, guideline or request by any central bank or United States or foreign Governmental Authority charged with the administration thereof, in each case applicable to the transactions contemplated by this Agreement.

“ Related Parties ”: 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.

“ Replaced Lender ”: as defined in Section 3.13.

“ Replacement Lender ”: as defined in Section 3.13.

“ Reportable Event ”: with respect to any Pension Plan, (a) any event set forth in Sections 4043(c) (other than a Reportable Event as to which the 30 day notice requirement is waived by the PBGC under applicable regulations), 4062(e) or 4063(a) of ERISA, or the regulations thereunder, (b) an event requiring the Borrower, any Subsidiary or any ERISA Affiliate to provide security to a Pension Plan under Section 401(a)(29) of the Internal Revenue Code, or (c) the failure to make any payment required by Section 412(m) of the Internal Revenue Code.

“ Required Lenders ”: (a) at any time during the Commitment Period, Lenders having Commitments and Credit Exposure equal to or more than 51% of the Aggregate Available Commitments plus the Aggregate Credit Exposure, and (b) at all other times, Lenders having Credit Exposure equal to or more than 51% of the Aggregate Credit Exposure.

“ Restricted Payment ”: with respect to any Person, any of the following, whether direct or indirect: (a) the declaration or payment by such Person of any dividend or distribution on any class of Stock of such Person, other than a dividend payable solely in shares of that class of Stock to the holders of such class, (b) the declaration or payment by such Person of any distribution on any other type or class of equity interest or equity investment in such Person, and (c) any redemption, retirement, purchase or acquisition of, or sinking fund or other similar payment in respect of, any class of Stock of, or other type or class of equity interest or equity investment in, such Person.

“ Restrictive Agreement ”: as defined in Section 8.7.

“ S&P ”: Standard & Poor’s, a division of The McGraw-Hill Companies.

“ Shorter Period ”: as defined in the definition of Eurodollar Interest Period.

“ Solvent ”: with respect to any Person on a particular date, the condition that on such date, (i) the fair value of the Property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (ii) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such

 

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Person’s ability to pay as such debts and liabilities mature, and (iv) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s Property would constitute an unreasonably small amount of capital. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability after taking into account probable payments by co-obligors.

“ Special Counsel ”: such counsel as the Administrative Agent may engage from time to time.

“ Specified Representations ”: the representations and warranties set forth in Section 4.1 (as it relates to the existence of the Borrower), Section 4.2, Section 4.3, Section 4.5, Section 4.8 and Section 4.9.

“ 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, rights or options to purchase any of the foregoing.

“ Subsidiary ”: at any time and from time to time, any corporation, association, partnership, limited liability company, joint venture or other business entity of which the Borrower and/or any Subsidiary of the Borrower, directly or indirectly at such time, either (a) in respect of a corporation, owns or controls more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors or similar managing body, irrespective of whether a class or classes shall or might have voting power by reason of the happening of any contingency, or (b) in respect of an association, partnership, limited liability company, joint venture or other business entity, is entitled to share in more than 50% of the profits and losses, however determined.

“ Tangible Net Worth ”: at any date of determination, Net Worth less all assets of the Borrower and its Subsidiaries included in such Net Worth, determined on a Consolidated basis at such date, that would be classified as intangible assets in accordance with GAAP.

“ Tender Offer ”: the tender offer by BMC for all the outstanding shares of capital stock of Longs as described in the Longs Merger Agreement.

“ Termination Event ”: with respect to any Pension Plan, (a) a Reportable Event, (b) the termination of a Pension Plan under Section 4041(c) of ERISA, or the filing of a notice of intent to terminate a Pension Plan under Section 4041(c) of ERISA, or the treatment of a Pension Plan amendment as a termination under Section 4041(e) of ERISA (except an amendment made after such Pension Plan satisfies the requirement for a standard termination under Section 4041(b) of ERISA), (c) the institution of proceedings by the PBGC to terminate a Pension Plan under Section 4042 of ERISA, or (d) the appointment of a trustee to administer any Pension Plan under Section 4042 of ERISA.

 

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“ Total Capitalization ”: at any date, the sum of the Borrower’s Consolidated Indebtedness and shareholders’ equity on such date, determined in accordance with GAAP.

“ Type ”: with respect to any Loan, the characteristic of such Loan as an ABR Advance or a Eurodollar Advance, each of which constitutes a Type of Loan.

“ Unqualified Amount ”: as defined in Section 3.4(c).

“ Upstream Dividends ”: as defined in Section 8.7.

“ Unused Fee ”: as defined in Section 3.11.

Section 1.2 Principles of Construction

(a) All capitalized terms defined in this Agreement shall have the meanings given such capitalized terms herein when used in the other Loan Documents or in any certificate, opinion or other document made or delivered pursuant hereto or thereto, unless otherwise expressly provided therein.

(b) Unless otherwise expressly provided herein, the word “ fiscal ” when used herein shall refer to the relevant fiscal period of the Borrower. As used in the Loan Documents and in any certificate, opinion or other document made or delivered pursuant thereto, accounting terms not defined in Section 1.1, and accounting terms partly defined in Section 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP.

(c) The words “ hereof ”, “ herein ”, “ hereto ” and “ hereunder ” and similar words when used in each Loan Document shall refer to such Loan Document as a whole and not to any particular provision of such Loan Document, and Section, schedule and exhibit references contained therein shall refer to Sections thereof or schedules or exhibits thereto unless otherwise expressly provided therein.

(d) All references herein to a time of day shall mean the then applicable time in New York, New York, unless otherwise expressly provided herein.

(e) Section headings have been inserted in the Loan Documents for convenience only and shall not be construed to be a part thereof. Unless the context otherwise requires, words in the singular number include the plural, and words in the plural include the singular.

(f) Whenever in any Loan Document or in any certificate or other document made or delivered pursuant thereto, the terms thereof require that a Person sign or execute the same or refer to the same as having been so signed or executed, such terms shall mean that the same shall be, or was, duly signed or executed by (i) in respect of any Person that is a corporation, any duly authorized officer thereof, and (ii) in respect of any other Person (other than an individual), any analogous counterpart thereof.

 

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(g) The words “ include ” and “ including ”, when used in each Loan Document, shall mean that the same shall be included “without limitation”, unless otherwise specifically provided.

ARTICLE 2

AMOUNT AND TERMS OF LOANS

SECTION 2.1 Loans

(a) Subject to the terms and conditions hereof (including the satisfaction of the conditions set forth in Article 5 and Article 6), each Lender severally (and not jointly) agrees to make loans under this Agreement (each a “ Loan ” and, collectively with each other Loan of such Lender and/or with each Loan of each other Lender, the “ Loans ”) at any time and from time to time during the Commitment Period to the Borrower in an aggregate amount which does not exceed the amount of such Lender’s Commitment, provided that any remaining Commitment that is not borrowed shall automatically expire on the date that is the earlier of (x) the third Borrowing Date and (y) the Commitment Termination Date. Once repaid, no Loan may be reborrowed. At the option of the Borrower, indicated in a Borrowing Request, Loans may be made as ABR Advances or Eurodollar Advances.

(b) The aggregate outstanding principal balance of all Loans shall be due and payable on the Expiration Date.

(c) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender holding a Loan or Loans the then unpaid principal amount of such Loan or Loans on the Expiration Date, together with all accrued and unpaid interest, if any, and any and all amounts due and payable hereunder.

SECTION 2.2 Notice of Borrowing Loans

The Borrower agrees to notify the Administrative Agent in writing, which notification shall be irrevocable, no later than (a) 10:00 A.M. on the proposed Borrowing Date if the Loans made on such Borrowing Date will consist of ABR Advances and (b) 10:00 A.M. at least two Eurodollar Business Days prior to the proposed Borrowing Date if the Loans made on such Borrowing Date will consist of Eurodollar Advances. Each such notice shall specify (i) the aggregate amount requested to be borrowed under the Commitments, (ii) the proposed Borrowing Date, (iii) whether the borrowing of Loans is to be of ABR Advances or Eurodollar Advances, and the amount of each thereof and (iv) if applicable, the Eurodollar Interest Period for such Eurodollar Advances. Each such notice shall be made by delivery to the Administrative Agent of a Borrowing Request. Any Eurodollar Advance made on a Borrowing Date shall equal no less than $10,000,000, or an integral multiple of $1,000,000 in excess thereof. Any ABR Advance made on a Borrowing Date shall equal no less than $1,000,000 or an integral multiple of $500,000 in excess thereof. The Administrative Agent shall promptly notify each Lender (by fax or other writing) of such Borrowing Request. Subject to its receipt of each such notice from the Administrative Agent and subject to the terms and conditions hereof, each Lender shall make

 

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immediately available funds available to the Administrative Agent at the address therefor set forth in Section 11.2 not later than 1:00 P.M. on each Borrowing Date in an amount equal to such Lender’s Commitment Percentage of Loans requested by the Borrower on such Borrowing Date.

SECTION 2.3 [Intentionally Omitted]

SECTION 2.4 Use of Proceeds

The Borrower agrees that the proceeds of the Loans shall be used solely to (i) pay the share consideration payable by BMC in respect of shares of Longs accepted for payment pursuant to the Tender Offer (including following any “Subsequent Offering Period” as defined in the Longs Merger Agreement), (ii) pay the merger consideration payable in the merger of BMC with and into Longs as described in the Longs Merger Agreement, (iii) refinance senior secured credit facilities of Longs, and (iv) pay the transaction costs related to the Longs Acquisition. Notwithstanding anything to the contrary contained in any Loan Document, the Borrower further agrees that no part of the proceeds of any Loan will be used, directly or indirectly, and whether immediately, incidentally or ultimately (i) for a purpose which violates any law, rule or regulation of any Governmental Authority, including the provisions of Regulations U or X of the Board of Governors of the Federal Reserve System, as amended, or any provision of this Agreement, including, without limitation, the provisions of Section 4.9 or (ii)  to make a loan to any director or executive officer of the Borrower or any Subsidiary.

SECTION 2.5 Termination or Reduction of Commitments

(a) Voluntary Termination or Reductions . At the Borrower’s option and upon at least three Domestic Business Days’ prior irrevocable notice to the Administrative Agent, the Borrower may (i) terminate the Commitments at any time, or (ii) permanently reduce the Aggregate Commitment Amount in part at any time and from time to time, provided that each such partial reduction shall be in an amount equal to at least $10,000,000 or an integral multiple of $1,000,000 in excess thereof, and provided further that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of the issuance of long term Indebtedness, equity securities or hybrid securities (such notice to specify the proposed effective date), in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to such specified effective date) if such condition is not satisfied, and the Borrower shall indemnify the Lenders in accordance with Section 3.5.

(b) Scheduled Reductions . The Aggregate Commitment Amount shall be automatically and permanently reduced to (i) $900,000,000 on November 28, 2008, and (ii) $500,000,000 on December 31, 2008 (in each case unless reduced to or below such amounts prior to such dates as otherwise provided herein).

(c) Mandatory Reductions . The Aggregate Commitment Amount shall be automatically and permanently reduced by an amount equal to the Net Proceeds (if any) received by or on behalf of the Borrower or any Subsidiary; and such reduction shall be effective upon receipt by the Borrower or any Subsidiary of such Net Proceeds.

 

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(d) In General . Each reduction of the Aggregate Commitment Amount shall be made by reducing each Lender’s Commitment Amount by a sum equal to such Lender’s Commitment Percentage of the amount of such reduction.

(e) Termination . In addition to any termination or reduction of the Commitments as otherwise provided herein, the Commitments shall terminate immediately on the date that is the earlier of (x) the third Borrowing Date and (y) the Commitment Termination Date.

SECTION 2.6 Prepayments of Loans

(a) Voluntary Prepayments . The Borrower may prepay Loans, in whole or in part, without premium or penalty, but subject to Section 3.5, at any time and from time to time, by notifying the Administrative Agent, which notification shall be irrevocable, at least two Eurodollar Business Days, in the case of a prepayment of Eurodollar Advances, or one Domestic Business Day, in the case of a prepayment of ABR Advances, prior to the proposed prepayment date specifying (i) the Loans to be prepaid, (ii) the amount to be prepaid, and (iii) the date of prepayment. Upon receipt of each such notice, the Administrative Agent shall promptly notify each Lender thereof. Each such notice given by the Borrower pursuant to this Section shall be irrevocable; provided that, a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or the consummation of the issuance of long term Indebtedness, equity securities or hybrid securities (such notice to specify the proposed effective date), in which case such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to such specified effective date) if such condition is not satisfied, and the Borrower shall indemnify the Lenders in accordance with Section 3.5. Each partial prepayment under this Section shall be in a minimum amount of $1,000,000 ($500,000 in the case of ABR Advances) or an integral multiple of $1,000,000 ($100,000 in the case of ABR Advances) in excess thereof.

(b) Mandatory Prepayments. Not later than three Domestic Business Days following any reduction in the Aggregate Commitment Amount pursuant to Section 2.5(b) or (c), the Borrower shall prepay the Loans in an aggregate amount equal to the amount (if any) by which the amount of such reduction in the Aggregate Commitment Amount exceeds the Aggregate Available Commitments immediately before such reduction.

(c) [Intentionally Omitted] .

(d) In General. Simultaneously with each prepayment hereunder, the Borrower shall prepay all accrued interest on the amount prepaid through the date of prepayment and indemnify the Lenders in accordance with Section 3.5.

SECTION 2.7 Notes

Any Lender may request that the Loans made by it be evidenced by a Note . In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to the order of such Person or, if requested by such Person, such Person and its registered assigns . Thereafter, all Loans evidenced by such Note and interest thereon shall at all times (including

 

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after assignment pursuant to Section 11.7) be represented by a Note in like form payable to the order of the payee named therein and its registered assigns.

ARTICLE 3

PROCEEDS, PAYMENTS, CONVERSIONS,

INTEREST, YIELD PROTECTION AND FEES

SECTION 3.1 Disbursement of the Proceeds of Loans

The Administrative Agent shall disburse the proceeds of Loans by wire transfer of the funds received from each Lender to the account of the Borrower designated by the Borrower in writing to the Administrative Agent. Unless the Administrative Agent shall have received prior notice from a Lender (by fax or other writing) that such Lender will not make available to the Administrative Agent such Lender’s Commitment Percentage of the Loan to be made by it on a Borrowing Date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such Borrowing Date in accordance with this Section, provided that such Lender received notice thereof from the Administrative Agent in accordance with the terms hereof, and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such Borrowing Date a corresponding amount . If and to the extent such Lender shall not have so made such amount available to the Administrative Agent, such Lender and the Borrower severally agree to pay to the Administrative Agent, forthwith on demand, such corresponding amount (to the extent not previously paid by the other), together with interest thereon for each day from the date such amount is made available to the Borrower until the date such amount is paid to the Administrative Agent, at a rate per annum equal to, in the case of the Borrower, the applicable interest rate set forth in Section 3.4(a) and, in the case of such Lender, the Federal Funds Effective Rate from the date such payment is due until the third day after such date and, thereafter, at the Federal Funds Effective Rate plus 2% . Any such payment by the Borrower shall be without prejudice to its rights against such Lender . If such Lender shall pay to the Administrative Agent such corresponding amount, such amount so paid shall constitute such Lender’s Loan as part of such Loans for purposes of this Agreement, which Loan shall be deemed to have been made by such Lender on the Borrowing Date applicable to such Loans.

SECTION 3.2 Payments

(a) Each payment, including each prepayment, of principal and interest on the Loans and of the Unused Fee and the Duration Fee (collectively, together with all of the other fees to be paid to the Administrative Agent and the Lenders in connection with the Loan Documents, the “ Fees ”), and of all of the other amounts to be paid to the Administrative Agent and the Lenders in connection with the Loan Documents shall be made by the Borrower to the Administrative Agent at its office specified in Section 11.2 without setoff, deduction or counterclaim in funds immediately available in New York by 3:00 P.M. on the due date for such payment. The failure of the Borrower to make any such payment by such time shall not constitute a default hereunder, provided that such payment is made on such due date, but any such payment made after 3:00 P.M. on such due date shall be deemed to have been made on the

 

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next Domestic Business Day or Eurodollar Business Day, as the case may be, for the purpose of calculating interest on amounts outstanding on the Loans. If the Borrower has not made any such payment prior to 3:00 P.M., the Borrower hereby authorizes the Administrative Agent to deduct the amount of any such payment from such account(s) as the Borrower may from time to time designate in writing to the Administrative Agent, upon which the Administrative Agent shall apply the amount of such deduction to such payment . Promptly upon receipt thereof by the Administrative Agent, each payment of principal and interest on the Loans shall be remitted by the Administrative Agent in like funds as received to each Lender (a)  first , pro rata according to the amount of interest which is then due and payable to the Lenders, and (b)  second , pro rata according to the amount of principal which is then due and payable to the Lenders. Each payment of the Fees payable to the Lenders shall be promptly transmitted by the Administrative Agent in like funds as received to each Lender pro rata according to such Lender’s Commitment Amount or, if the Commitments shall have terminated or been terminated, according to the outstanding principal amount of such Lender’s Loans.

(b) If any payment hereunder or under the Loans shall be due and payable on a day which is not a Domestic Business Day or Eurodollar Business Day, as the case may be, the due date thereof (except as otherwise provided in the definition of Eurodollar Interest Period) shall be extended to the next Domestic Business Day or Eurodollar Business Day, as the case may be, and (except with respect to payments of the Unused Fee and the Duration Fee) interest shall be payable at the applicable rate specified herein during such extension.

SECTION 3.3 Conversions; Other Matters

(a) The Borrower may elect at any time and from time to time to Convert one or more Eurodollar Advances to an ABR Advance by giving the Administrative Agent at least one Domestic Business Day’s prior irrevocable notice of such election, specifying the amount to be so Converted . In addition, the Borrower may elect at any time and from time to time to Convert an ABR Advance to any one or more new Eurodollar Advances or to Convert any one or more existing Eurodollar Advances to any one or more new Eurodollar Advances by giving the Administrative Agent no later than 10:00 A.M. at least two Eurodollar Business Days’ prior irrevocable notice, in the case of a Conversion to Eurodollar Advances, of such election, specifying the amount to be so Converted and the initial Eurodollar Interest Period relating thereto, provided that any Conversion of an ABR Advance to Eurodollar Advances shall only be made on a Eurodollar Business Day. The Administrative Agent shall promptly provide the Lenders with notice of each such election. Each Conversion of Loans from one Type to another shall be made pro rata according to the outstanding principal amount of the Loans of each Lender. ABR Advances and Eurodollar Advances may be Converted pursuant to this Section in whole or in part, provided that the amount to be Converted to each Eurodollar Advance, when aggregated with any Eurodollar Advance to be made on such date in accordance with Section 2.1 and having the same Eurodollar Interest Period as such first Eurodollar Advance, shall equal no less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof.

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Convert any existing Eurodollar Advance to a new Eurodollar Advance . In such event, such ABR Advance shall be automatically continued as an ABR Advance or such Eurodollar Advance shall be automatically Converted to an ABR Advance on the last day of the Eurodollar Interest Period applicable to such Eurodollar Advance . The foregoing shall not affect any other rights or remedies that the Administrative Agent or any Lender may have under this Agreement or any other Loan Document.

(c) Each Conversion shall be effected by each Lender by applying the proceeds of each new ABR Advance or Eurodollar Advance, as the case may be, to the existing Advance (or portion thereof) being Converted (it being understood that such Conversion shall not constitute a borrowing for purposes of Article 4, Article 5 or Article 6).

(d) Notwithstanding any other provision of any Loan Document:

(i) if the Borrower shall have failed to elect a Eurodollar Advance under Section 2.2 or this Section 3.3, as the case may be, in connection with any borrowing of new Loans or expiration of an Eurodollar Interest Period with respect to any existing Eurodollar Advance, the amount of the Loans subject to such borrowing or such existing Eurodollar Advance shall thereafter be an ABR Advance until such time, if any, as the Borrower shall elect a new Eurodollar Advance pursuant to this Section 3.3,

(ii) the Borrower shall not be permitted to select a Eurodollar Advance the Eurodollar Interest Period in respect of which ends later than the Maturity Date, and

(iii) the Borrower shall not be permitted to have more than ten Eurodollar Advances outstanding at any one time, it being understood and agreed that each borrowing of Eurodollar Advances pursuant to a single Borrowing Request shall constitute the making of one Eurodollar Advance for the purpose of calculating such limitation.

SECTION 3.4 Interest Rates and Payment Dates

(a) Prior to Maturity. Except as otherwise provided in Section 3.4(b) and Section 3.4(c), the Loans shall bear interest on the unpaid principal balance thereof at the applicable interest rate or rates per annum set forth below:

 

 

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(b) After Maturity, Late Payment Rate. After maturity, whether by acceleration, notice of intention to prepay or otherwise, the outstanding principal balance of the Loans shall bear interest at the Alternate Base Rate plus 2% per annum until paid (whether before or after the entry of any judgment thereon) . Any payment of principal, interest or any Fees not paid on the date when due and payable shall bear interest at the Alternate Base Rate plus 2% per annum from the due date thereof until the date such payment is made (whether before or after the entry of any judgment thereon).

(c) Highest Lawful Rate. Notwithstanding anything to the contrary contained in this Agreement, at no time shall the interest rate payable to any Lender on any of its Loans, together with any Fees and all other amounts payable hereunder to such Lender to the extent the same constitute or are deemed to constitute interest, exceed the Highest Lawful Rate . If in respect of any period during the term of this Agreement, any amount paid to any Lender hereunder, to the extent the same shall (but for the provisions of this Section 3.4) constitute or be deemed to constitute interest, would exceed the maximum amount of interest permitted by the Highest Lawful Rate during such period (such amount being hereinafter referred to as an “ Unqualified Amount ”), then (i) such Unqualified Amount shall be applied or shall be deemed to have been applied as a prepayment of the Loans of such Lender, and (ii) if, in any subsequent period during the term of this Agreement, all amounts payable hereunder to such Lender in respect of such period which constitute or shall be deemed to constitute interest shall be less than the maximum amount of interest permitted by the Highest Lawful Rate during such period, then the Borrower shall pay to such Lender in respect of such period an amount (each a “ Compensatory Interest Payment ”) equal to the lesser of (x) a sum which, when added to all such amounts, would equal the maximum amount of interest permitted by the Highest Lawful Rate during such period, and (y) an amount equal to the aggregate sum of all Unqualified Amounts less all other Compensatory Interest Payments.

(d) General. Interest shall be payable in arrears on each Interest Payment Date, on the Expiration Date and, to the extent provided pursuant to Section 2.6(d), upon each prepayment of the Loans. Any change in the interest rate on the Loans resulting from an increase or a decrease in the Alternate Base Rate or any reserve requirement shall become effective as of the opening of business on the day on which such change shall become effective . The Administrative Agent shall (i) in accordance with its customary practice, provide notice to the Borrower when interest payments are due, and (ii) as soon as practicable, notify the Borrower and the Lenders of the effective date and the amount of each change in the Prime Rate, but any failure to so notify shall not in any manner affect the obligation of the Borrower to pay interest on the Loans in the amounts and on the dates set forth herein. Each determination by the Administrative Agent of the Alternate Base Rate and the Eurodollar Rate pursuant to this Agreement shall be conclusive and binding on the Borrower absent manifest error . The Borrower acknowledges that to the extent interest payable on the Loans is based on the Alternate Base Rate, such rate is only one of the bases for computing interest on loans made by the Lenders, and by basing interest payable on ABR Advances on the Alternate Base Rate, the Lenders have not committed to charge, and the Borrower has not in any way bargained for, interest based on a lower or the lowest rate at which the Lenders may now or in the future make extensions of credit to other Persons . All interest (other than interest calculated with reference to the Prime Rate) shall be calculated on the basis of a 360-day year for the actual number of days

 

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elapsed, and all interest determined with reference to the Prime Rate shall be calculated on the basis of a 365/366-day year for the actual number of days elapsed.

SECTION 3.5 Indemnification for Loss

Notwithstanding anything contained herein to the contrary, if: (i) the Borrower shall fail to borrow a Eurodollar Advance or if the Borrower shall fail to Convert a Eurodollar Advance after it shall have given notice to do so in which it shall have requested a Eurodollar Advance pursuant to Section 2.2 or Section 3.3, as the case may be, (ii) a Eurodollar Advance shall be terminated for any reason prior to the last day of the Eurodollar Interest Period applicable thereto, (iii) any repayment or prepayment of the principal amount of a Eurodollar Advance is made for any reason on a date which is prior to the last day of the Eurodollar Interest Period applicable thereto, or (iv) the Borrower shall have revoked a notice of prepayment or notice of termination of the Commitments that was conditioned upon the effectiveness of other credit facilities or the consummation of the issuance of long term Indebtedness or equity securities pursuant to Section 2.5 or Section 2.6, the Borrower agrees to indemnify each Lender against, and to pay on demand directly to such Lender the amount (calculated by such Lender using any method chosen by such Lender which is customarily used by such Lender for such purpose) equal to any loss or expense suffered by such Lender as a result of such failure to borrow or Convert, or such termination, repayment, prepayment or revocation, including any loss, cost or expense suffered by such Lender in liquidating or employing deposits acquired to fund or maintain the funding of such Eurodollar Advance or redeploying funds prepaid or repaid, in amounts which correspond to such Eurodollar Advance and any reasonable internal processing charge customarily charged by such Lender in connection therewith.

SECTION 3.6 Reimbursement for Costs, Etc.

If at any time or from time to time there shall occur a Regulatory Change and any Lender shall have reasonably determined that such Regulatory Change (i) shall have had or will thereafter have the effect of reducing (A) the rate of return on such Lender’s capital or the capital of any Person directly or indirectly owning or controlling such Lender (each a “ Control Person ”), or (B) the asset value (for capital purposes) to such Lender or such Control Person, as applicable, of the Loans, or any participation therein, in any case to a level below that which such Lender or such Control Person could have achieved or would thereafter be able to achieve but for such Regulatory Change (after taking into account such Lender’s or such Control Person’s policies regarding capital), (ii) will impose, modify or deem applicable any reserve, asset, special deposit or special assessment requirements on deposits obtained in the interbank eurodollar market in connection with the Loan Documents (excluding, with respect to any Eurodollar Advance, any such requirement which is included in the determination of the rate applicable thereto), (iii) will subject such Lender or such Control Person, as applicable, to any tax (documentary, stamp or otherwise) with respect to this Agreement or any Note, or (iv) will change the basis of taxation of payments to such Lender or such Control Person, as applicable, of principal, interest or fees payable under