Table of Contents

 

Section			Page
	ARTICLE I - Definitions
Section 1.1	Certain Defined Terms		1
Section 1.2	Accounting Terms and Determinations		20
	ARTICLE II — LOANS; ETC.
Section 2.1	Loans		21
Section 2.2	Commitment Fees; Termination and Reductions		22
Section 2.3	Mandatory Prepayments; Commitment Reduction		23
Section 2.4	Payments		23
Section 2.5	Prepayments of Loans		24
Section 2.6	Application of Payments and Prepayments		25
Section 2.7	Pro Rata Treatment		25
Section 2.8	Payment Dates on the Loans		25
Section 2.9	Interest Options for Loans		26
Section 2.10	Special Provisions Applicable to LIBOR Rate Borrowings		27
Section 2.11	Payment Dates		29
Section 2.12	Sharing of Payments, Etc		29
Section 2.13	Use of Proceeds		29
Section 2.14	Evidence of Debt		29
Section 2.15	Letters of Credit		30
Section 2.16	Increase of Commitments		33
	ARTICLE III — Conditions
Section 3.1	All Loans		35
Section 3.2	First Loan		36
Section 3.3	Determinations Under Section 32		38
	ARTICLE IV — Representations and Warranties
Section 4.1	Organization		38
Section 4.2	Financial Statements		38
Section 4.3	Enforceable Obligations; Authorization		38
Section 4.4	Other Debt		38
Section 4.5	Litigation		39
Section 4.6	Title		39
Section 4.7	Taxes		39
Section 4.8	Subsidiaries		39
Section 4.9	Representations by Others		39
Section 4.10	Permits, Licenses, Etc		39
Section 4.11	ERISA		39
Section 4.12	Condition of Property		40
Section 4.13	Assumed Names		40
Section 4.14	Investment Company Act		40
Section 4.15	Margin Stock		40
Section 4.16	Agreements		40
Section 4.17	Environmental Matters		40
Section 4.18	Solvency		41
Section 4.19	Target Representations		41

 

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	ARTICLE V — Affirmative Covenants
Section 5.1	Taxes, Existence, Regulations, Property, Etc		41
Section 5.2	Financial Statements and Information		41
Section 5.3	Financial Tests		42
Section 5.4	Inspection		42
Section 5.5	Further Assurances		42
Section 5.6	Books and Records		42
Section 5.7	Insurance		42
Section 5.8	ERISA		42
Section 5.9	Use of Proceeds		43
Section 5.10	Additional Guaranties		43
Section 5.11	Notice of Events		43
Section 5.12	Environmental Matters		44
Section 5.13	End of Fiscal Year		44
Section 5.14	Consummation of Merger		44
Section 5.15	Maintenance of Ratings		44
	ARTICLE VI — Negative Covenants
Section 6.1	Indebtedness		46
Section 6.2	Liens		47
Section 6.3	Contingent Obligations		48
Section 6.4	Mergers, Consolidations and Dispositions and Acquisitions of Assets		48
Section 6.5	Nature of Business		50
Section 6.6	Transactions with Related Parties		50
Section 6.7	Loans and Investments		50
Section 6.8	ERISA Compliance		50
Section 6.9	Credit Extensions		51
Section 6.10	Change in Accounting Method		51
Section 6.11	Redemption, Dividends and Distributions		51
	ARTICLE VII — Events of Default and Remedies
Section 7.1	Events of Default		51
Section 7.2	Remedies Cumulative		54
	ARTICLE VIII — The Agent and the Issuers
Section 8.1	Authorization and Action		54
Section 8.2	Agent’s and Issuers’ Reliance, Etc		54
Section 8.3	JPMorgan and Affiliates		55
Section 8.4	Lender Credit Decision		55
Section 8.5	Indemnification		55
Section 8.6	Successor Agents		56
Section 8.7	Other Agents; Arrangers and Managers		56
	ARTICLE IX — Miscellaneous
Section 9.1	No Waiver		56
Section 9.2	Notices		57
Section 9.3	Jurisdiction; Governing Law; Etc		58
Section 9.4	Survival; Parties Bound		59
Section 9.5	Counterparts		59
Section 9.6	Survival		59

 

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Section 9.7	Captions		59
Section 9.8	Expenses, Etc		59
Section 9.9	Indemnification		60
Section 9.10	Amendments, Etc		61
Section 9.11	Successors and Assigns		61
Section 9.12	Entire Agreement		63
Section 9.13	Severability		63
Section 9.14	Disclosures		64
Section 9.15	Capital Adequacy		64
Section 9.16	Withholding Tax		64
Section 9.17	Waiver of Claims		64
Section 9.18	Right of Setoff		65
Section 9.19	USA PATRIOT Act		65
Section 9.20	Non-Consenting Lenders; Other Lenders		66
Section 9.21	Confidentiality		66

 

EXHIBITS

 

A		—		Form of Note
B		—		Notice of Assumption
C		—		Officer’s Certificate
D		—		Request for Extension of Credit and Certificate of No Default
E		—		Rate Selection Notice
F		—		Form of Assignment and Acceptance
G-A		—		Form of Security Agreement A
G-B		—		Form of Security Agreement B
H				Form of Guaranty Agreement

 

SCHEDULES

1.1(a)	Disclosed Divestitures
1.1(b)	EBIT/EBITDA
1.1(c)	Guarantors
1.1(d)	Existing Letters of Credit
2.1(a)	Commitments
4.8	Subsidiaries
4.13	Assumed Names
4.16	Agreements
6.2(a)	Liens

 

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REVOLVING CREDIT AGREEMENT (this “ Agreement ”) dated as of August 28, 2007 among WHOLE FOODS MARKET, INC., a Texas corporation (the “ Company ”), JPMorgan Chase Bank, N.A. (“ JPMorgan ”), as administrative agent (together with any successor administrative agent appointed pursuant to Article VII, the “ Agent ”) and collateral agent (together with any successor collateral agent appointed pursuant to Security Agreement A or Security Agreement B, as applicable, the “ Collateral Agent ”) for the lenders from time to time parties hereto (the “ Lenders ”), Royal Bank of Canada, as syndication agent, Wells Fargo Bank, N A, Wachovia Bank, N.A. and LaSalle Bank Midwest, N.A. as co-documentation agents, and J. P. Morgan Securities Inc. and RBC Capital Markets, as joint lead arrangers and joint bookrunners (in such capacities, the “ Joint Lead Arrangers ”).

 

PRELIMINARY STATEMENTS:

 

(1)           Pursuant to the agreement and plan of merger dated as of February 21, 2007 (as amended, supplemented or otherwise modified in accordance with its terms, to the extent permitted hereunder, the “ Merger Agreement ”) among the Company, its wholly-owned subsidiary, WFMI Merger Co., a Delaware corporation (“ Merger Sub ”) and Wild Oats Markets, Inc., a Delaware corporation (the “ Target ”), the Company, through Merger Sub, has commenced an offer to purchase all the outstanding shares of the Target (the “ Tender Offer ”).  Following the successful consummation of the Tender Offer,  the Company, through Merger Sub, will acquire 100% of the outstanding shares of the Target and will merge with and into the Target (the “ Merger ”).

 

(2)           The Company has requested that the Lenders provide a $250,000,000 revolving line of credit to the Company to (i) finance the Tender Offer and the Merger Transactions and to pay related fees and expenses, and (ii) support new store development, other acquisitions, the issuance of standby letters of credit and other general corporate purposes, including but not limited to, the repurchase of stock and refinancing of existing Indebtedness of the Target, subject to the terms and conditions set forth herein.

 

(3)           The Lenders have indicated their willingness to lend such amount on the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows:

 

ARTICLE I - DEFINITIONS

 

Section 1.1  Certain Defined Terms .  Unless a particular word or phrase is otherwise defined or the context otherwise requires, capitalized words and phrases used in the Loan Documents have the meanings provided below.

 

“ Additional Collateral ” has the meaning specified in the Security Agreement B attached hereto as Exhibit G-B.

 

“ Additional Collateral Trigger ” shall mean the date on which (a) the Borrower’s corporate credit rating shall be (i) with respect to S&P’s corporate credit rating, equal to or lower than BB-, and (ii) with respect to Moody’s corporate rating system, equal to or lower than Ba3; or

 

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(b) the Borrower’s corporate credit rating shall be less than (i) with respect to S&P’s corporate credit rating, BB-, or (ii) with respect to Moody’s corporate rating system, a rating of Ba3.

 

“ Additional Security Period ” shall mean the period, if any, beginning with the occurrence of the Additional Collateral Trigger until the Maturity Date.

 

“ Affiliate ” shall mean any Person controlling, controlled by or under common control with any other Person; and with respect to an individual, “Affiliate” shall also mean any other individual related to such individual by blood or marriage.  For purposes of this definition, “control” (including “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of securities, partnership or other ownership interests, by contract or otherwise.

 

“ Agent ” shall have the meaning ascribed to it in the recital of parties hereto.

 

“ Agent’s Account ” means the Agent’s account specified by the Agent in writing to the Company and the Lenders from time to time.

 

“ Aggregate Commitment ” shall mean, on any day, the aggregate of all of the Commitments of the Lenders on such day.

 

“ Agreement ” shall have the meaning ascribed to it in the recital of parties hereto.

 

“ Agreement Value ” means, for each Hedging Agreement, on any date of determination, an amount determined by the Agent equal to the amount, if any, (a) that would be payable by any Loan Party or any of its Subsidiaries to its counterparty to such Hedging Agreement as if (i) such Hedging Agreement was being terminated early on such date of determination, (ii) such Loan Party or Subsidiary was the sole “Affected Party” and (iii) the Agent was the sole party determining such payment amount (with the Agent making such determination pursuant to the terms of the governing documentation); (b) in the case of a Hedge Agreement traded on an exchange, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or any of its Subsidiaries party to such Hedge Agreement based on the settlement price of such Hedge Agreement on such date of determination; or (c) in all other cases, the mark-to-market value of such Hedge Agreement, which will be the unrealized loss on such Hedge Agreement to the Loan Party or Subsidiary of a Loan Party to such Hedge Agreement as the amount, if any, by which (i) the present value of the future cash flows to be paid by such Loan Party or Subsidiary exceeds (ii) the present value of the future cash flows to be received by such Loan Party or Subsidiary pursuant to such Hedge Agreement.

 

“ Alternate Base Rate ” shall mean for any day (a) the greater of (i) the Prime Rate, and (ii) the Federal Funds Rate plus 0.50% per annum, plus (b) the Applicable Margin in effect on such day.  For purposes of this Agreement any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or Federal Funds Rate, respectively.  If for any reason the Agent shall have determined (which determination shall be conclusive and binding, absent manifest error) that it is unable to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be the Prime Rate plus the Applicable Margin.

 

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“ Alternate Base Rate Borrowing ” shall mean that portion of the principal balance of the Loans at any time bearing interest at the Alternate Base Rate.

 

“ Annual Audited Financial Statements ” shall mean, with respect to each fiscal year of the Company, the Company’s 10-K Report filed with the Securities Exchange Commission for such fiscal year, prepared in conformity with Generally Accepted Accounting Principles and accompanied by a report and opinion of independent certified public accountants with an accounting firm of national standing and reputation, which shall state that such financial statements, in the opinion of such accountants, present fairly, in all material respects, the financial position of the Company and its Subsidiaries, on a consolidated basis, as of the date thereof and the results of its operations and cash flows for the period covered thereby in conformity with Generally Accepted Accounting Principles.

 

“ Applicable Commitment Fee Percentage ” shall mean with respect to any Loan on any date of determination, the applicable rate per annum for the corresponding rating of the Company’s corporate family ratings, and determined in accordance with the following grid:

 

Moody’s and S&P		Percentage (Per Annum)
BBB+ or Baa1		0.09	%
BBB or Baa2		0.125	%
BBB- and Baa3		0.15	%
BBB- or Baa3		0.175	%
BB+ and Ba1		0.20	%
BB+ or Ba1		0.225	%
BB and Ba2		0.25	%
BB or Ba2		0.30	%
Otherwise		0.35	%

 

For purposes of determining the Applicable Commitment Fee Percentage in the case of split ratings, where applicable, (i) in the event of a single category split in ratings, the higher of the two ratings shall apply, (ii) in the event of a two-category split in ratings, the rating that is in the middle of the two ratings shall apply and (iii) in the event that there is more than a two-category split in ratings, the rating that is one category above the lower rating will apply.

 

“ Applicable Margin ” shall mean with respect to any Loan on any date of determination, the applicable rate per annum for the corresponding rating of the Company’s corporate family ratings, and determined in accordance with the following grid:

 

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Moody’s and S&P		LIBOR Margin (Per Annum)		ABR Margin (Per Annum)
BBB+ or Baa1		0.375	%	0.00	%
BBB or Baa2		0.500	%	0.00	%
BBB- and Baa3		0.625	%	0.00	%
BBB- or Baa3		0.875	%	0.00	%
BB+ and Ba1		1.00	%	0.00	%
BB+ or Ba1		1.25	%	0.25	%
BB and Ba2		1.375	%	0.375	%
BB or Ba2		1.50	%	0.50	%
Otherwise		1.75	%	0.75	%

 

For purposes of determining the Applicable Margin in the case of split ratings, where applicable, (i) in the event of a single category split in ratings, the higher of the two ratings shall apply, (ii) in the event of a two-category split in ratings, the rating that is in the middle of the two ratings shall apply and (iii) in the event that there is more than a two-category split in ratings, the rating that is one category above the lower rating will apply.

 

“ Applications ” shall mean all applications and agreements for Letters of Credit, or similar instruments or agreements, in Proper Form, now or hereafter executed by any Person in connection with any Letter of Credit now or hereafter issued or to be issued under the terms hereof at the request of any Person.

 

“ Approved Fund ” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“ Borrowing ” shall mean an Alternate Base Rate Borrowing or a LIBOR Rate Borrowing.

 

“ Business Day ” shall mean a day when the main office of the Agent is open for business and banks in New York, New York are generally open for business.

 

“ Business Entity ” shall mean corporations, partnerships, joint ventures, joint stock associations, business trusts and other business entities.

 

“ Capital Lease Obligations ” shall mean the obligations of the Company and its Subsidiaries on a consolidated basis to pay rent or other amounts under a lease of (or other

 

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agreement conveying the right to use) real and/or personal Property which obligations are required to be classified and accounted for as a capital lease on a consolidated balance sheet of the Company and its Subsidiaries under Generally Accepted Accounting Principles (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board, as amended) and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with Generally Accepted Accounting Principles (including such Statement No. 13).

 

“ Change of Control ” shall mean any change so that any Unrelated Person (or any Unrelated Persons acting together which would constitute a Group) together with any Affiliate or Related Persons of such Unrelated Person or Unrelated Persons (in each case also constituting Unrelated Persons) shall at any time after the date hereof either (i) Beneficially Own more than fifty percent (50%) of the aggregate voting power of all classes of Voting Stock of the Company, or (ii) succeed in having enough of its or their nominees elected by the stockholders to the Board of Directors of the Company so as to constitute a majority of the Board of Directors of the Company.  As used herein, (a) “Beneficially Own” shall mean “beneficially own” as defined in Rule 13d-3 of the Securities and Exchange Act of 1934, as amended (the “ 34 Act ”) or any successor provision thereto; (b) “Group” shall mean a “group” for purposes of Section 13(d) of the 34 Act or any successor provision; (c) “Unrelated Person” shall mean any Person other than any trust for any employee stock ownership plan of the Company or any Subsidiary of the Company; (d) “Related Person” shall mean as to any Person, any other Person owning (1) five percent (5%) or more of the outstanding common stock of such Person or (2) five percent (5%) or more of the Voting Stock of such Person, and (e) “Voting Stock” shall mean as to any Person, the Stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, as now or hereafter in effect, together with all regulations, rulings and interpretations thereof or thereunder by the Internal Revenue Service.

 

“ Collateral ”  has the meaning specified in the Security Agreement A attached hereto as Exhibit G-A.

 

“ Collateral Agent ” shall have the meaning ascribed to it in the recital of parties hereto.

 

“ Commitment ” shall mean, as to any Lender, the obligation of such Lender to make Loans and incur liability for the Letters of Credit Exposure Amount in an aggregate principal amount at any one time outstanding up to, but not exceeding, the amount set forth opposite such Lender’s name on Schedule 2.1(a) hereto under the caption “Commitment”, or as to any Lender that becomes a Party hereto by executing an Assignment and Acceptance, the amount set forth in such Assignment and Acceptance (in each case, as the same may be reduced from time to time pursuant to Section 2.2 hereof and increased from time to time pursuant to Section 2.16 hereof).

 

“ Commitment Fee ”, with respect to any Lender, shall have the meaning assigned to it in Section 2.2.

 

“ Commitment Increase Agreement ” shall have the meaning assigned to it in Section 2.16(c).

 

“ Commitment Increase Notice ” shall have the meaning assigned to it in Section 2.16(a).

 

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“ Commitment Percentage ” shall mean, with respect to any Lender, the ratio, expressed as a percentage, of (a) such Lender’s Commitment to (b) the Aggregate Commitment.

 

“ Confidential Information ” means non-public information that any Loan Party furnishes to the Agent or any Lender, unless such information is or becomes (a) generally available to the public (other than as a result of a breach by the Agent or any Lender of its obligations hereunder) or that is or becomes available to the Agent or such Lender from a source other than the Loan Parties that is not, to the best of the Agent’s or such Lender’s knowledge, acting in violation of a confidentiality agreement with a Loan Party or (b) designated in writing by any Loan Party as non-confidential.

 

“ Consequential Loss ” shall mean, with respect to (a) the Company’s payment of principal of a LIBOR Rate Borrowing on a day other than the last day of the applicable LIBOR Interest Period, (b) the Company’s failure to borrow a LIBOR Rate Borrowing on the date specified by the Company for any reason, (c) the Company’s failure to make any prepayment of the Loans (other than Alternate Base Rate Borrowings) on the date specified by the Company, or (d) any cessation of the LIBOR Rate to apply to the Loans or any part thereof pursuant to Section 2.10 hereof, in each case whether voluntary or involuntary, any loss, expense, penalty, premium or liability incurred by any of the Lenders or the Agent, including any interest paid by any of the Lenders to lenders of funds borrowed by them to make or carry the Loans; a “ Consequential Loss ” shall mean, with respect to the termination or cancellation of any LIBOR Rate Borrowing pursuant to Section 2.10 hereof, in each case whether voluntary or involuntary, any loss, expense, penalty, premium or liability incurred by any of the Lenders or the Agent on account of any reduction resulting from such premature termination or cancellation of such borrowing in such Person’s margins or spreads between its cost of funds and the interest earned on the principal of the borrowing so terminated or canceled, including an amount equal to the excess (if any) of (x) interest that would have accrued on any such borrowing during the remainder of the applicable LIBOR Interest Period had such borrowing not been terminated or canceled early, over (y) the interest actually accrued on the principal amount of that terminated or canceled borrowing for such remainder of such LIBOR Interest Period.

 

“ Consolidated Net Worth ” shall mean, at any time, shareholder’s equity of the Company as set forth in the most recent consolidated Annual Audited Financial Statements of the Company and its Subsidiaries, determined in accordance with Generally Accepted Accounting Principles, consistently applied.

 

“ Contingent Obligations ” shall mean, as to any Person, without duplication, any obligation of such Person guaranteeing or intended to guarantee the payment or performance of any Indebtedness, leases, dividends or other obligations (collectively “primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including without limitation, any obligation of the Person for whom Contingent Obligations is being determined, whether or not contingent, (a) to purchase any such primary obligation or other property constituting direct or indirect security therefor, (b) assume or contingently agree to become or be secondarily liable in respect of any such primary obligation, (c) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital for the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (d) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (e) otherwise to assure or hold harmless the owner of such primary obligation against loss in respect thereof; provided, however, that the term “Contingent Obligations” shall not include (x) endorsements of checks or other negotiable

 

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instruments in the ordinary course of business, (y) performance or payment guarantees by the Company of any Indebtedness of any of its Subsidiaries of the type permitted in Section 6.1(f) hereof, and (z) the obligations and liabilities of each Guarantor to the Agent and the Lenders under the Guaranties.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum anticipated liability in respect thereof (assuming the Person for whom Contingent Obligations is being determined is required to perform thereunder) as determined by the Agent in good faith.

 

“ Contribution Agreement ” shall mean that certain Contribution Agreement of even effective date herewith, by and among the Company and the Guarantors, as the same may have been or may hereafter be amended, modified, supplemented, restated and joined in pursuant to a Joinder Agreement, from time to time.

 

“ Convertible Senior Debentures ” shall mean those certain the 3.25% Convertible Senior Debentures due 2034 which are governed by that certain Indenture dated June 1, 2004, by and between Target and U.S. Bank National Association as trustee.

 

“ Credit Facility Hedging Agreements ” shall mean any Hedging Agreement now existing or hereafter entered into between the Company and any Lender and/or any of their respective Affiliates in connection with all or any portion of the Loans and/or any of the loans under the Term Loan Facility for purposes of hedging the risk of variable interest rate volatility or fluctuations of interest rates, as any such Hedging Agreement may be modified, supplemented and in effect from time to time.

 

“ Current Sum ” shall mean on any day, as to a particular Lender, the sum of (a) the then outstanding principal balance of such Lender’s Loans on such day plus (b) the product of (i) such Lender’s Commitment Percentage times (ii) the Letter of Credit Exposure Amount on such day.

 

“ Current Sum Percentage ” shall mean, with respect to any Lender, the ratio, expressed as a percentage of (a) such Lender’s Current Sum to (b) the aggregate Current Sum of all Lenders.

 

“ Default ” means any Event of Default or any other event or circumstance that with the passing of time or the giving of notice, or both, would constitute an Event of Default.

 

“ Disclosed Divestitures ” shall mean the proposed divestitures of the Company and its Subsidiaries set forth in Schedule 1.1(a) hereto.

 

“ Discontinued Operations ” shall mean, as of any day, operations of the Company or its Subsidiaries which have been discontinued, as reflected on the most recent Form 10-K or 10-Q for the Company filed with the Security and Exchange Commission, and which, as of such day, have been fully disposed of or liquidated.

 

“ EBIT ” shall mean for any period for which EBIT is calculated, Net Income of the Company and its Subsidiaries on a consolidated basis for such period plus, without duplication, (a) non-recurring, non-cash charges of the Company and its Subsidiaries on a consolidated basis for such period, (b) non-cash pre-opening rent expenses of the Company and its Subsidiaries on a consolidated basis for such period, (c) taxes of the Company and its Subsidiaries on a consolidated basis for such period, (d) interest expense of the Company and its Subsidiaries on a consolidated basis for such period and (e) non-cash stock compensation expense of the Company

 

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and its Subsidiaries on a consolidated basis for such period; provided that EBIT for the three quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b).  All components of EBIT shall be determined in accordance with Generally Accepted Accounting Principles, consistently applied.

 

“ EBITDA ” shall mean for any period for which EBITDA is calculated, Net Income of the Company and its Subsidiaries on a consolidated basis for such period plus, without duplication, (a) taxes of the Company and its Subsidiaries on a consolidated basis for such period (calculated after excluding any gain or loss attributable to Discontinued Operations as of such day), (b) depreciation, depletion, obsolescence and amortization of Property of the Company and its Subsidiaries on a consolidated basis for such period (calculated after excluding any depreciation, depletion, obsolescence and amortization applicable to Discontinued Operations as of such day), (c) interest expense of the Company and its Subsidiaries on a consolidated basis for such period (calculated after excluding any interest expense paid in connection with Discontinued Operations as of such day), (d) non-recurring, non-cash charges of the Company and its Subsidiaries on a consolidated basis for such period, (e) non-cash pre-opening rent expenses of the Company and its Subsidiaries on a consolidated basis for such period and (f) non-cash stock compensation expense of the Company and its Subsidiaries on a consolidated basis for such period; provided that EBITDA for the three quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b).  All components of EBITDA shall be determined in accordance with Generally Accepted Accounting Principles, consistently applied.

 

“ Effective Date ” has the meaning ascribed thereto in Section 3.2.

 

“ Eligible Assignee ” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund or (d) any other Person (other than an individual) approved by the Agent and, except during the continuance of an Event of Default, the Company (each such consent not to be unreasonably withheld or delayed); it being understood that none of the Company nor any of its Affiliates shall, in any event, be an Eligible Assignee.

 

“ Environmental Claim ” shall mean any third party (including any Governmental Authority) action, lawsuit, claim or proceeding (including claims or proceedings at common law) which seeks to impose or alleges liability for (i) preservation, protection, conservation, pollution, contamination of, or releases or threatened releases of Hazardous Substances into the air, surface water, ground water or land or the clean-up, abatement, removal, remediation or monitoring of such pollution, contamination or Hazardous Substances; (ii) generation, recycling, reclamation, handling, treatment, storage, disposal or transportation of Hazardous Substances or solid waste (as defined under the Resource Conservation and Recovery Act and its regulations, as amended from time to time); (iii) exposure to Hazardous Substances; (iv) the safety or health of employees or other Persons in connection with any of the activities specified in any other subclause of this definition; or (v) the manufacture, processing, distribution in commerce, presence or use of Hazardous Substances.  An “Environmental Claim” includes a common law action, as well as a proceeding to issue, modify or terminate an Environmental Permit, or to adopt or amend a regulation to the extent that such a proceeding attempts to redress violations of the applicable permit, license, or regulation as alleged by any Governmental Authority.

 

“ Environmental Liabilities ” shall mean all liabilities arising from any Environmental Claim, Environmental Permit or Requirement of Environmental Law under any theory of recovery, at law or in equity, and whether based on negligence, strict liability or otherwise, including:  remedial, removal, response, abatement, restoration (including natural resources) investigative, or monitoring liabilities, personal injury and damage to property, natural resources

 

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or injuries to persons, and any other related costs, expenses, losses, damages, penalties, fines, liabilities and obligations, and all costs and expenses necessary to cause the issuance, reissuance or renewal of any Environmental Permit including attorney’s fees and court costs.  Environmental Liability shall mean any one of them.

 

“ Environmental Permit ” shall mean any permit, license, approval or other authorization under any applicable law, regulation and other requirement of the United States or of any state, municipality or other subdivision thereof relating to pollution or protection of health or the environment, including laws, regulations or other requirements relating to emissions, discharges, releases or threatened releases of pollutants, contaminants or Hazardous Substances or toxic materials or wastes into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, recycling, presence, use, treatment, storage, disposal, transport, or handling of, wastes, pollutants, contaminants or Hazardous Substances.

 

“ Equipment ” shall have the meaning assigned to it in the Texas Business and Commerce Code in force on the date the document using such term was executed.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and all rules, regulations, rulings and interpretations adopted by the Internal Revenue Service or the Department of Labor thereunder.

 

“ Eurocurrency Liabilities ” has the meaning specified in Regulation D.

 

“ Event of Default ” shall mean any of the events specified in Section 7.1 hereof or otherwise specified as an Event of Default in any other Loan Document, provided there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and Default shall mean any of such events, whether or not any such requirement has been satisfied.

 

“ Extraordinary Receipt ” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including, without limitation, tax refunds (provided that, for greater clarity and without limiting the foregoing, ordinary tax refunds on account of cash taxes actually paid would be considered ordinary course), pension plan reversions, proceeds of insurance (including, without limitation, any key man life insurance but excluding proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustment received in connection with any purchase agreement; provided , however, that an Extraordinary Receipt shall not include cash receipts received from proceeds of insurance, condemnation awards (or payments in lieu thereof) or indemnity payments to the extent that such proceeds, awards or payments are received by any Person in respect of any third party claim against such Person and applied to pay (or to reimburse such Person for its prior payment of) such claim and the costs and expenses of such Person with respect thereto.

 

“ Federal Funds Rate ” means, 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 Business Day, for the next preceding 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 of the quotations for such day for such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.

 

9

 

“ Fee Letter ” shall mean that certain fee letter dated as of March 16, 2007 among JPMorgan, J. P. Morgan Securities Inc., Royal Bank of Canada, and the Company.

 

“ Fixed Charge Coverage Ratio ” shall mean as of any day that the Fixed Charge Coverage Ratio is being calculated, the ratio of (a) EBIT plus Operating Lease Expense to (b) interest expense plus Operating Lease Expense.  All components of the Fixed Charge Coverage Ratio shall be computed for the Rolling Four Quarters as of such day and determined for the Company and its Subsidiaries on a consolidated basis in accordance with Generally Accepted Accounting Principles, consistently applied; provided , that for purposes of determining interest expense and Operating Lease Expense in the Fixed Charge Coverage Ratio for the (a) fiscal quarter ended September 30, 2007, such interest expense and Operating Lease Expense for the measurement period then ended shall equal such items for such fiscal quarter multiplied by 52/13, (b) fiscal quarter ended January 20, 2008, such interest expense and Operating Lease Expense for the measuring period then ended shall equal such items for the two fiscal quarters then ended multiplied by 52/29, and (c) fiscal quarter ended April 30, 2008, such interest expense and Operating Lease Expense for the measuring period then ended shall equal such items for the three fiscal quarters then ended multiplied by 52/41; provided also that EBIT for the three quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b).

 

“ Funded Indebtedness ” shall mean (a) all Indebtedness of the Company and its Subsidiaries on a consolidated basis which by its terms matures more than one year after the applicable date of calculation of Funded Indebtedness (including without limitation, current maturities or scheduled principal payments of Funded Indebtedness for the applicable period for which Funded Indebtedness is being calculated), and any Indebtedness of the Company and its Subsidiaries on a consolidated basis maturing within one year from such date and (b) without duplication, Capital Lease Obligations of the Company and its Subsidiaries on a consolidated basis.  All components of Funded Indebtedness shall be determined in accordance with Generally Accepted Accounting Principles, consistently applied.

 

“ Generally Accepted Accounting Principles ” shall mean, as to a particular Person, those principles and practices (a) which are recognized as such by the Financial Accounting Standards Board or successor organization, (b) which are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the most recent audited financial statements of the relevant Person furnished to the Agent and the Lenders, and (c) which are consistently applied for all periods after the date hereof so as to reflect properly the financial condition, and results of operations and changes in financial position, of such Person.

 

“ Governmental Authority ” shall mean any foreign governmental authority, the United States of America, any state of the United States and any political subdivision of any of the foregoing, and any agency, instrumentality, department, commission, board, bureau, central bank, authority, court or other tribunal, in each case whether executive, legislative, judicial, regulatory or administrative, having jurisdiction over the Agent, any of the Lenders or the Company, any of the Company’s Subsidiaries or their respective Property.

 

“ Guaranties ” shall mean that certain Guaranty, substantially in the form of Exhibit H hereto, by the Guarantors party thereto in favor of the Agent dated as of the date hereof, as the same may be amended, supplemented, modified, joined in pursuant to a Joinder Agreement and restated from time to time, and each and every other guaranty executed by any or all of the Guarantors from time to time; each a “Guaranty” .

 

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“ Guarantors ” shall mean the Persons listed on Schedule 1.1(c) hereto, each Subsidiary that shall hereafter be required to execute and deliver a Guaranty pursuant to the terms of this Agreement and each and every other Person executing a guaranty from time to time guaranteeing the Indebtedness of the Company owing from time to time to the Lenders pursuant to this Agreement or the Notes.

 

“ Hazardous Substance ” shall mean any hazardous or toxic waste, substance or product or material defined or regulated from time to time by any applicable law, rule, regulation or order described in the definition of “Requirements of Environmental Law,” including solid waste (as defined under RCRA or its regulations, as amended from time to time), petroleum and any fraction thereof, any radioactive materials and waste.

 

“ Hedging Agreements ” shall mean any transaction (including an agreement with respect thereto) now or hereafter existing which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

 

“ Incidental Liens ” shall mean (i) Liens for taxes, assessments, levies or other governmental charges (but not Liens for clean up expenses arising pursuant to Requirements of Environmental Law) not yet due (subject to applicable grace periods) or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company in accordance with Generally Accepted Accounting Principles; (ii) carriers’, warehousemen’s, mechanics’, landlords’, vendors’, materialmen’s, repairmen’s, sureties’ or other like Liens (other than Liens for clean up expenses arising pursuant to Requirements of Environmental Law) arising in the ordinary course of business (or deposits to obtain the release of any such Lien) and securing amounts not yet due or which are being contested in good faith and by appropriate proceedings if, in the case of such contested Liens, adequate reserves with respect thereto are maintained on the books of the Company in accordance with Generally Accepted Accounting Principles; (iii) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation; (iv) deposits not in excess at any time of $25,000,000 in the aggregate to secure insurance in the ordinary course of business, the performance of bids, tenders, contracts (other than contracts for the payment of money), leases, licenses, franchises, statutory obligations, surety and appeal bonds and performance bonds and other obligations of a like nature incurred in the ordinary course of business and Liens to secure progress or partial payments made to the Company or any Subsidiary and other Liens of like nature made in the ordinary course of business; (v) easements, rights-of-way, covenants, reservations, exceptions, encroachments, zoning and similar restrictions and other similar encumbrances or title defects incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case singly or in the aggregate materially detract from the value or usefulness of the property subject thereto or materially interfere with the ordinary conduct of the business of the Company and its Subsidiaries, taken as a whole; (vi) bankers’ liens arising by operation of law; (vii) Liens arising pursuant to any order of attachment, distraint or similar legal process arising in connection with any court proceeding the payment of which is covered in full (subject to customary deductibles) by insurance; (viii) inchoate Liens arising under ERISA to secure contingent liabilities of the Company; and (ix) rights of lessees and sublessees in assets leased by the Company or any Subsidiary not prohibited elsewhere herein.

 

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“ Indebtedness ” shall mean, as to any Person, without duplication:  (a) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of Property or services; (b) any other indebtedness which is evidenced by a promissory note, bond, debenture or similar instrument; (c) any obligation under or in respect of outstanding letters of credit (including without limitation, the Letters of Credit), acceptances and similar obligations created for the account of such Person; (d) all Capital Lease Obligations of such Person; (e) all indebtedness, liabilities, and obligations secured by any Lien on any Property owned by such Person even though such Person has not assumed or has not otherwise become liable for the payment of any such indebtedness, liabilities or obligations secured by such Lien; (f) net liabilities of such Person under Hedging Agreements (determined by reference to the Agreement Value thereof) and (g) all Contingent Obligations and Synthetic Indebtedness of such Person; provided, that such term shall not mean or include any Indebtedness in respect of which monies sufficient to pay and discharge the same in full (either on the expressed date of maturity thereof or on such earlier date as such Indebtedness may be duly called for redemption and payment) shall be deposited with a depository, agency or trustee acceptable to the Agent in trust for the payment thereof.

 

“ Interest Option ” shall have the meaning ascribed to it in Section 2.9(a) hereof.

 

“ Interest Payment Dates ” shall mean (a) for Alternate Base Rate Borrowings, (1) at all times while the Notes are outstanding, the last Business Day of each March, June, September and December, and (2) the Maturity Date; and (b) for LIBOR Rate Borrowings, (1) if the LIBOR Interest Period applicable to such LIBOR Rate Borrowing is equal to or less than three (3) months, the end of such LIBOR Interest Period, and (2) in all other cases, on that day which is three (3) calendar months following the first day of the applicable LIBOR Interest Period (or, if such day is not a Business Day, on the next succeeding day that is a Business Day) and at the end of such LIBOR Interest Period.

 

“ Investment ” shall mean the purchase or other acquisition of any securities or Indebtedness of, or the making of any loan, advance, transfer of Property or capital contribution to, or the incurring of any liability, contingently or otherwise, in respect of the Indebtedness of, any Person.

 

“ Investment Grade ” shall mean with respect to the Moody’s corporate credit rating system a rating of Baa3 or higher and with respect to the S&P corporate credit rating system a rating of BBB- or higher.

 

“ Issuer ” shall mean any Lender which is an issuer of a Letter of Credit. The initial Issuers will be JPMorgan and Bank of America, N.A; provided that Bank of America, N.A. shall only be an Issuer with respect to any outstanding Letters of Credit described in Schedule 1.1(d) issued by Bank of America, N.A., and as such Letters of Credit issued by Bank of America, N.A. expire and are required to be renewed or replaced, then subject to the applicable terms of this Agreement, such Letters of Credit will be replaced with Letters of Credit issued by JPMorgan.

 

“ Joinder Agreement ” shall mean any agreement, in Proper Form, executed by a Subsidiary of the Company from time to time, pursuant to which such Subsidiary joins in the execution and delivery of a Guaranty and the Contribution Agreement.

 

“ Joint Lead Arrangers ” shall have the meaning ascribed to such term in the recitals hereto.

 

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“ JPMorgan ” shall have the meaning ascribed to it in the recital of parties hereto.

 

“ Legal Requirement ” shall mean any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority.

 

“ Lenders ” shall have the meaning ascribed to it in the recital of parties hereto.

 

“ Letter of Credit Advances ” shall mean all sums which may from time to time be paid by any and all of the Lenders pursuant to the Letters of Credit, or any of them, together with all other sums, fees, reimbursements or other obligations which may be due to any or all of the Lenders pursuant to the Letters of Credit, or any of them.

 

“ Letter of Credit Exposure Amount ” shall mean at any time the sum of (i) the aggregate undrawn amount of all Letters of Credit outstanding at such time plus (ii) the aggregate amount of all Letter of Credit Advances for which the Lenders have not been reimbursed and which remain unpaid at such time.

 

“ Letter of Credit Fee Payment Date ” shall mean, with respect to any Letter of Credit, the date of issuance thereof and the last Business Day of each March, June, September and December which occurs after the date of issuance, but prior to the expiry date of said Letter of Credit.

 

“ Letter of Credit Termination Date ” shall mean a date which is three (3) months prior to the Maturity Date.

 

“ Letters of Credit ” shall mean (a) all irrevocable standby letters of credit and all commercial letters of credit issued by any Issuer pursuant to the terms set forth in this Agreement and (b) all outstanding letters of credit issued by JPMorgan or Bank of America, N.A. prior to the date hereof for the account of the Company or any of its Subsidiaries (including the Target) described as “Revolving Credit Facility Letters of Credits” on Schedule 1.1(d).

 

“ Leverage Ratio ” shall mean as of any day that the Leverage Ratio is calculated, the ratio of Funded Indebtedness of the Company and its Subsidiaries on a consolidated basis as of such day to EBITDA of the Company and its Subsidiaries on a consolidated basis for the Rolling Four Quarters as of such day; provided that EBITDA for the three quarters immediately prior to the Effective Date shall be as set forth in Schedule 1.1(b).

 

“ LIBOR Business Day ” shall mean a Business Day on which transactions in United States Dollar deposits between banks may be carried on in the London, England interbank market.

 

“ LIBOR Interest Period ” shall mean, for each LIBOR Rate Borrowing, a period commencing:

 

(a)                                   on the date of such LIBOR Rate Borrowing, or

 

(b)                                  on the last day of the immediately preceding LIBOR Interest Period in the case of a rollover to a successive LIBOR Interest Period, and ending on the numerically corresponding day one, two, three or (as available) six months thereafter, as the Company shall elect in accordance herewith; provided, (w) any LIBOR Interest Period which would otherwise end on a day which is not a LIBOR Business Day shall be extended to the next succeeding LIBOR

 

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Business Day, unless such LIBOR Business Day falls in another calendar month, in which case such LIBOR Interest Period shall end on the next preceding LIBOR Business Day; (x) any LIBOR Interest Period which begins on the last LIBOR 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 LIBOR Interest Period) shall end on the last LIBOR Business Day of the appropriate calendar month; (y) no LIBOR Interest Period shall ever extend beyond the Maturity Date; and (z) LIBOR Interest Periods shall be selected by the Company in such a manner that the LIBOR Interest Period with respect to any portion of the Loans which shall become due shall not extend beyond such due date.

 

“ LIBOR Rate ” means, for any LIBOR Interest Period for all LIBOR Rate Borrowings comprising part of the same Borrowing, (a) an interest rate per annum equal to the rate per annum obtained by dividing (i) the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on the Reuters Screen LIBOR 01 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at 11:00 A.M. (London time) two Business Days before the first day of such LIBOR Interest Period for a period equal to such LIBOR Interest Period ( provided that, if for any reason such rate is not available, the term “LIBOR” shall mean, for any LIBOR Interest Period for all LIBOR Rate Borrowings comprising part of the same Borrowing, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR 01 as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such LIBOR Interest Period for a term comparable to such LIBOR Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBOR 01, the applicable rate shall be the arithmetic mean of all such rates) by (ii) a percentage equal to 100% minus the LIBOR Reserve Percentage for such LIBOR Interest Period plus (b) the Applicable Margin from time to time in effect during such term.

 

“ LIBOR Rate Borrowing ” shall mean each portion of the principal balance of the Loans at any time bearing interest at the LIBOR Rate.

 

“ Lien ” shall mean any mortgage, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind, whether based on common law, constitutional provision, statute or contract, and shall include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions.

 

“ Loan Documents ” shall mean this Agreement, the Notes, the Guaranties, the Contribution Agreement, the Joinder Agreements, Letters of Credit, the Applications, the Fee Letter, Security Agreement A, Security Agreement B, the Credit Facility Hedging Agreement, all instruments, certificates and agreements now or hereafter executed or delivered to the Agent and/or the Lenders pursuant to any of the foregoing, and all amendments, modifications, renewals, extensions, increases and rearrangements of, and substitutions for, any of the foregoing.

 

“ Loan Party ” means the Company or any Guarantor.

 

“ Loans ” shall mean the advances of funds described in Section 2.1 hereof.  Loan shall mean any one of the Loans.

 

“ Margin Stock ” has the meaning specified in Regulation U.

 

“ Material Adverse Effect ” means a material adverse effect on the validity or

 

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enforceability of any material provision of the Loan Documents, on the ability of the Company to consummate the Transactions, on the financial condition of the Company (either individually or taken as a whole with its Subsidiaries), or on the property, business, operations or liabilities of the Company (either individually or taken as a whole with its Subsidiaries).

 

“ Maturity Date ” shall mean the earlier of (a) August 28, 2012 and (b) the date specified by the Agent pursuant to Section 7.1 hereof.

 

“ Merger ” shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“ Merger Agreement ” shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“ Moody’s ” shall mean Moody’s Investors Service, Inc.

 

“ Net Income ” shall mean gross revenues and other proper income credits, less all proper income charges, including taxes on income, all determined in accordance with Generally Accepted Accounting Principles; provided, that there shall not be included in such revenues (i) any income representing the excess of equity in any Subsidiary at the date of acquisition over the investment in such Subsidiary, (ii) any equity in the undistributed earnings of any Person which is not a Subsidiary, (iii) any earnings of any Subsidiary for any period prior to the date such Subsidiary was acquired, except as may be permitted under Generally Accepted Accounting Principles in connection with the pooling of interest method of accounting, and (iv) any gains resulting from the write-up of assets.  Net Income shall be determined on a consolidated basis.

 

“ Net Proceeds ” shall mean:

 

(a)                                   with respect to any sale, lease, transfer or other disposition of any asset of the Company or any of its Subsidiaries (except in the case of Disclosed Divestitures listed in part A of Schedule 1.1(a)), the excess, if any, of (i) the sum of cash and Permitted Investment Securities received in connection with such sale, lease, transfer or other disposition (including any cash or Permitted Investment Securities received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) less (ii) the sum of (A) the principal amount of any Indebtedness (other than Indebtedness under the Loan Documents) that is required to be repaid in connection with such sale, lease, transfer or other disposition thereof, (B) the reasonable and customary out-of-pocket costs, fees, commissions, premiums and expenses incurred by the Company or its Subsidiaries, (C) federal, state, provincial, foreign and local taxes reasonably estimated (on a consolidated basis) to be actually payable within the current or the immediately succeeding tax year as a result of any gain recognized in connection therewith and (D) a reasonable reserve for any purchase price adjustment or any indemnification payments (fixed and contingent) attributable to the seller’s obligations to the purchaser undertaken by the Company or any of its Subsidiaries in connection with such sale, lease, transfer or other disposition; provided , however , that Net Proceeds shall not include any such amounts to the extent such amounts are reinvested or contracted to be so reinvested in capital assets used or useful in the business of the Company and its Subsidiaries within 270 days after the date of receipt thereof or the date such contact is entered into; and

 

(b)                                  with respect to any Extraordinary Receipt that is not otherwise included in clause (a) above, the sum of the cash and Permitted Investment Securities received in

 

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connection therewith (including any cash or Permitted Investment Securities received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) less fees, costs, out of pocket expenses and commissions incurred in connection with the receipt thereof; provided , however , that Net Proceeds shall not include any such amounts from Extraordinary Receipts (other than in respect of Customer Penalties) to the extent such amounts are reinvested or contracted to be so reinvested in capital assets used or useful in the business of the Company and its Subsidiaries within 270 days after the date of receipt thereof or the date such contract is entered into.

 

“ New Lender ” shall have the meaning assigned to it in Section 2.16(b).

 

“ New Lender Agreement ” shall have the meaning assigned to it in Section 2.16(b).

 

“ Non-Consenting Lender ” means, in the event that the Required Lenders have agreed to any consent, waiver or amendment pursuant to Section 9.10 that requires the consent of one or more Lenders in addition to the Required Lenders, any Lender who is entitled to agree to such consent, waiver or amendment but who does not so agree.

 

“ Non-Guarantor Subsidiaries ” means (a) Subsidiaries of the Company organized under the laws of a jurisdiction located outside of the United States, (b) prior to consummation of the Merger, the Target and its Subsidiaries, and (c) any one or more Subsidiaries of the Company designated by the Company in writing to the Agent from time to time that do not represent, in the aggregate, (i) five percent (5%) or more of the consolidated EBITDA of the Company and its Subsidiaries or (ii) five percent (5%) or more of the consolidated tangible assets of the Company and its Subsidiaries; provided, that no Subsidiary of the Company shall be a Non-Guarantor Subsidiary to the extent that such Subsidiary guaranties any other Indebtedness of the Company.

 

“ Notes ” shall mean the promissory notes, each substantially in the form of Exhibit A attached hereto, of the Company evidencing the Loans, payable to the order of the respective Lenders in the amount of the sum of said Lender’s Unused Commitment and the Current Sum owing to said Lender, and all renewals, extensions, modifications, rearrangements and replacements thereof and substitutions therefor.  Note shall mean any one of them.

 

“ Notice of Assumption ” shall mean a Notice of Assumption in favor of the Agent, substantially in the form of Exhibit B attached hereto and otherwise in Proper Form.

 

“ Officer’s Certificate ” shall mean a certificate substantially in the form of Exhibit C attached hereto.

 

“ Operating Lease Expense ” shall mean for any period for which Operating Lease Expense is calculated, the aggregate amount of fixed and contingent rentals (exclusive of payments of Capital Lease Obligations) payable by the Company and its Subsidiaries for such period with respect to leases of Property.  Operating Lease Expense shall be determined for the Company and its Subsidiaries on a consolidated basis in accordance with Generally Accepted Accounting Principles, consistently applied.

 

“ Organizational Documents ” shall mean, with respect to a corporation, the certificate of incorporation, articles of incorporation and bylaws of such corporation; with respect to a partnership, the partnership agreement establishing such partnership; with respect to a joint venture, the joint venture agreement establishing such joint venture, and with respect to a trust,

 

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the instrument establishing such trust; in each case including any and all modifications thereof as of the date of the Loan Document referring to such Organizational Document and any and all future modifications thereof which are consented to by the Agent.

 

“ Parties ” shall mean all Persons, other than the Agent, any Lender or any Issuer, executing any Loan Document.

 

“ Past Due Rate ” shall mean, on any day, the Alternate Base Rate plus two percent (2%).

 

“ Permitted Asset Dispositions ” shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

“ Permitted Investment Securities ” shall mean:  (1) readily marketable securities issued or fully guaranteed by the United States of America or any agency or wholly owned corporation thereof; (2) commercial paper rated “Prime 1” by Moody’s Investors Service, Inc.  or A-1 by Standard and Poor’s Corporation with maturities of not more than one hundred eighty (180) days and short term notes payable of any Business Entity where said notes are rated at least “Prime 1” by Moody’s Investors Service, Inc.  or “A-1” by Standard & Poor’s Corporation with maturities of not more than ninety (90) days; (3) certificates of deposit or repurchase certificates issued by any Lender or any other financial institution acceptable to the Agent, all of the foregoing not having a maturity of more than one (1) year from the date of issuance thereof; (4) securities issued by municipalities rated AA or better by Standard & Poor’s Corporation not having a maturity of more than one (1) year from the date of issuance thereof; and (5) money market mutual funds having capital surplus of at least $1,000,000,000 and deemed acceptable by the Agent, substantially all of the assets of which are comprised of securities, commercial paper, certificates of deposit or repurchase certificates of the type described in subclauses (1) through (4) above.

 

“ Permitted Stock Dispositions ” shall have the meaning attributed to such terms in Section 6.4(z) hereof.

 

“ Person ” shall mean any individual, corporation, trust, unincorporated organization, Governmental Authority or any other form of entity.

 

“ Plan ” shall mean any plan subject to Title IV of ERISA and maintained for employees of the Company or of any member of a “controlled group of corporations”, as such term is defined in the Code, of which the Company or any of its Subsidiaries it may acquire from time to time is a part, or any such plan to which the Company or any of its Subsidiaries it may acquire from time to time is required to contribute on behalf of its employees.

 

“ Prime Rate ” shall mean, for any day, the prime rate as determined from time to time by JPMorgan as being its prime rate for that day.  Without notice to the Company or any other Person, the Prime Rate shall automatically fluctuate upward and downward as and in the amount by which said Prime Rate fluctuates, with each change to be effective as of the date of each change in said Prime Rate.  The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer, and JPMorgan disclaims any statement, representation, or warranty to the contrary.  JPMorgan may make commercial loans or other loans at rates of interest at, above, or below the Prime Rate.

 

“ Proper Form ” shall mean in form and substance satisfactory to the Agent and, in the case of any Application, the applicable Issuer.

 

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“ Property ” shall mean any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

 

“ Quarterly Unaudited Financial Statements ” shall mean, with respect to each fiscal quarter of the Company (except for the last fiscal quarter), the Company’s 10-Q Report filed with the Securities Exchange Commission for such fiscal quarter.  All of the Quarterly Unaudited Financial Statements of the Company are to be prepared in accordance with Generally Accepted Accounting Principles and certified as true and correct by a Responsible Officer of the Company.

 

“ Rate Selection Date ” shall mean that Business Day which is (a) in the case of Alternate Base Rate Borrowings, the Business Day of such borrowing or (b) in the case of LIBOR Rate Borrowings, the date three (3) Business Days preceding the first day of any proposed LIBOR Interest Period.

 

“ Rate Selection Notice ” shall have the meaning ascribed to it in Section 2.9(b)(i) hereof.

 

“ Re-Allocation Date ” shall have the meaning assigned to it in Section 2.16(e).

 

“ Register ” shall have the meaning assigned to such term in Section 9.11(e).

 

“ Regulation D ” shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System.

 

“ Regulatory Change ” shall mean, with respect to any Lender, any change on or after the date of this Agreement in any Legal Requirement (including Regulation D) or the adoption or making on or after such date of any interpretation, directive or request applying to a class of banks including such Lender under any Legal Requirement (whether or not having the force of law) by any Governmental Authority charged with the interpretation or administration thereof.

 

“ Request for Extension of Credit and Certificate of No Default ” shall mean a written request for extension of credit substantially in the form of Exhibit D attached hereto.

 

“ Required Lenders ” shall mean two (2) or more Lenders having a majority or greater of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, the aggregate Current Sum for all Lenders.

 

“ Requirements of Environmental Law ” shall mean all requirements imposed by any law (including The Resource Conservation and Recovery Act, The Comprehensive Environmental Response, Compensation, and Liability Act, the Clean Water Act, the Clean Air Act, and any state analogues of any of the foregoing), rule, regulation, or order of any Governmental Authority now or hereafter in effect which relate to (i) noise; (ii) pollution, protection or clean-up of the air, surface water, ground water or land; (iii) solid, gaseous or liquid waste or Hazard Substance generation, recycling, reclamation, release, threatened release, treatment, storage, disposal or transportation; (iv) exposure of Persons or property to Hazardous Substances; (v) the safety or health of employees or other Persons or (vi) the manufacture, presence, processing, distribution in commerce, use, discharge, releases, threatened releases, emissions or storage of Hazardous Substances into the environment.  Requirement of Environmental Law shall mean any one of them.

 

“ Responsible Officer ” shall mean the chief executive officer, chief financial officer,

 

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president of a Loan Party and the general counsel of the Company.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

“ Rolling Four Quarters ” shall mean the then most recently ended four (4) consecutive fiscal quarters of the Company for which, as of such day, financial statements are required to have been given to the Agent and Lenders pursuant to this Agreement.

 

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

 

“ Security Agreement  A ”  means a security and pledge agreement substantially in the form of Exhibit G-A hereto.

 

“ Security Agreement B ”  means a security and pledge agreement substantially in the form of Exhibit G-B hereto.

 

“ Solvent ” and “ Solvency ” shall mean, with respect to any Person on a particular date, that on such date (a) the fair value (taken on a going concern basis) of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of such Person, (b) the present fair salable value (taken on a going concern basis) 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, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) 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 capital.  The amount of contingent liabilities at any time shall be computed as the amount that, in the 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.  In determining the Solvency of any Loan Party the contribution rights that such Loan Party will have against the other Loan Parties and the subrogation rights that each Guarantor will have against the Company shall be taken into account.

 

“ Stock ” shall mean as to a Business Entity, all capital stock or other indicia of equity rights issued by such Business Entity from time to time.

 

“ Subsidiary ” of any Person shall mean any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than fifty percent (50%) of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

 

“ Synthetic Indebtedness ” shall mean the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person (excluding operating leases) but which upon the insolvency or bankruptcy of such Person, to the

 

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extent functioning as debt for borrowed money, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

 

“ Target ” shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“ Target Representations ” shall mean the representations and warranties made by or on behalf of the Target and its Subsidiaries and contained in the Merger Agreement and the representations and warranties of the Company with respect to the Target and its Subsidiaries set forth in Sections 4.1, 4.3, 4.14, 4.15, 4.18 and 4.19

 

“ Target Representation Limitations ” means that, on the date of the initial Borrowing hereunder until the earlier of the date of consummation of the Merger and the Commitment Termination Date (as defined in the Term Loan Facility), the representations and warranties of the Company set forth in Article IV in respect of the Target and its Subsidiaries shall be limited to the Target Representations.

 

“ Taxes ” shall have the meaning ascribed to it in Section 2.10(b) hereof.

 

“ Tender Offer ” shall have the meaning ascribed to it in the Preliminary Statements hereto.

 

“ Term Loan Facility ” shall mean the senior term loan facility of the Company dated as of the date hereof among the Company, the financial institutions from time to time parties thereto, and Royal Bank of Canada, as administrative agent, as the same may be amended from time to time in accordance with the terms of this Agreement.

 

“ Transactions ” means the consummation of the Merger and the entering into and borrowings under this Agreement.

 

“ Uncommitted Money Market Borrowings ” shall mean any Indebtedness for borrowed funds advanced by any lender to the Company under any “discretionary guidance,” “bid line” or other type of uncommitted money market loan facility.

 

“ Unsecured Borrowed Debt ” shall mean all Indebtedness resulting from borrowings of the Company (exclusive of intercompany borrowings) from time to time owing to Persons which is not secured by any Liens (other than borrowings from trade creditors in the ordinary course of business).

 

“ Unused Commitment ” shall mean, as to a particular Lender, the difference of such Lender’s Commitment on such day less the Current Sum applicable to such Lender on such day.

 

Section 1.2  Accounting Terms and Determinations .

 

Except where specifically otherwise provided:

 

(a)           The symbol “$” and the word “dollars” shall mean lawful money of the United States of America.

 

(b)           Any accounting term not otherwise defined shall have the meaning ascribed to it under Generally Accepted Accounting Principles.

 

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(c)           Unless otherwise expressly provided, any accounting concept and all financial covenants shall be determined on a consolidated basis, and financial measurements shall be computed without duplication.

 

(d)           Wherever the term “including” or any of its correlatives appears in the Loan Documents, it shall be read as if it were written “including (by way of example and without limiting the generality of the subject or concept referred to)”.

 

(e)           Wherever the word “herein” or “hereof” is used in any Loan Document, it is a reference to that entire Loan Document and not just to the subdivision of it in which the word is used.

 

(f)            References in any Loan Document to Section numbers are references to the Sections of such Loan Document.

 

(g)           References in any Loan Document to Exhibits, Schedules, Annexes and Appendices are to the Exhibits, Schedules, Annexes and Appendices to such Loan Document, and they shall be deemed incorporated into such Loan Document by reference.

 

(h)           Any term defined in the Loan Documents which refers to a particular agreement, instrument or document shall also mean, refer to and include all modifications, amendments, supplements, restatements, renewals, extensions and substitutions of the same; provided that nothing in this subsection shall be construed to authorize any such modification, amendment, supplement, restatement, renewal, extension or substitution except as may be permitted by other provisions of the Loan Documents.

 

(i)            All times of day used in the Loan Documents mean local time in New York, New York.

 

(j)            Defined terms may be used in the singular or plural, as the context requires.

 

ARTICLE II - — LOANS; ETC.

 

Section 2.1  Loans .

 

(a)           Subject to the terms and conditions hereof, each Lender severally agrees to make  Loans to the Company from time to time prior to the Maturity Date, in an aggregate principal amount at any one time outstanding (including its liability for the Letter of Credit Exposure Amount at such time) up to but not exceeding such Lender’s Commitment on such date.  Loans repaid prior to the Maturity Date may be reborrowed pursuant to the terms of this Agreement.  Each Loan which is not made to repay a Letter of Credit Advance pursuant to Section 2.4 hereof shall be in an amount of at least (i) $5,000,000 or (ii) the Unused Commitment of the Lenders, whichever is less.  Each repayment of the Loans shall be in an amount of at least $5,000,000 or, if less, the Current Sum.

 

(b)           The Company shall give the Agent notice of a request for a Loan in accordance with Section 3.1 hereof.  Upon receipt of each such notice, the Agent shall promptly give each of the Lenders notice of receipt thereof, which notice may be by telephone or facsimile.  Not later than 1:30 P.M. (New York Time) on the date specified for the making of such Loan, each Lender shall make available to the Agent, at the Agent’s Account, such Lender’s Commitment Percentage of such Loan in immediately available funds for the account of the Company.  The amount so received by the Agent shall, subject to the terms and conditions of this Agreement, be made available to the Company by depositing same, in immediately available funds, in an account designated by the Company maintained with the Agent or with another financial institution reasonably acceptable to the Agent.  If a requested Loan shall

 

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not occur on any date specified by the Company as set forth in the applicable Request for Extension of Credit and Certificate of No Default because all of the conditions for such Loan set forth herein or in any of the other Loan Documents shall have not been met, the Agent shall return the amounts so received from the Lenders in respect of such requested Loan to the applicable Lenders as soon as practicable; provided, however, if and to the extent that the Agent fails to return any such amounts to any applicable Lender by the Business Day following the date that the requested Loan was to have been made, the Agent shall pay interest on such unreturned amounts for each date from such date that the requested Loan was to have been made, to the date that such unreturned amounts are returned to such Lender, such interest to accrue at the Federal Funds Rate and to be payable upon written request from such Lender.

 

(c)           Unless the Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Agent such Lender’s ratable portions of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (b) of this Section 2.1 and the Agent may, in reliance upon such assumption, make available to the Company on such date a corresponding amount.  If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Company severally agree to repay or pay to the Agent forthwith on demand such corresponding amount and to pay interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid or paid to the Agent, at (i) in the case of the Company, the interest rate applicable at such time under Section 2.9 to Loans comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate.  If such Lender shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Lender’s Loan as part of such Borrowing for all purposes.

 

(d)           The obligations of the Lenders hereunder are several and not joint; therefore, notwithstanding anything herein to the contrary, (i) no Lender shall be required to make Loans at any one time outstanding in excess of such Lender’s Commitment, (ii) if a Lender fails to make a Loan as and when required hereunder and the Company subsequently makes a repayment on the Loans, such repayment shall be split among the non-defaulting Lenders in accordance with their respective Current Sum Percentages until each Lender has its Commitment Percentage of all of the outstanding Loans, then the balance of such repayment shall be divided among all of the Lenders in accordance with their respective Commitment Percentages (it being understood that any such repayment to a defaulting Lender shall not be deemed to relieve such defaulting Lender from any liability to the Company resulting from such defaulting Lender’s failure to make a Loan as and when required hereunder) and (iii) the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (provided, that no Lender shall be responsible for the failure of any other Lender to make a Loan such other Lender is obligated to make hereunder).

 

(e)           Notwithstanding anything to the contrary contained in this Section 2.1 or any other provision of this Agreement, the Company covenants and agrees that in no event shall the aggregate amount of the Loans and the Letter of Credit Exposure Amount outstanding on any day ever exceed the amount of the Aggregate Commitment then in effect as of such day less the aggregate amount of Uncommitted Money Market Borrowings then outstanding as of such day.

 

Section 2.2  Commitment Fees; Termination and Reductions .  In consideration of each Lender’s Unused Commitment, the Company agrees to pay to the Agent for the account of each Lender a commitment fee (each a “ Commitment Fee ”) (computed on the basis of the actual number of days elapsed in a year composed of 360 days) in an amount equal to the product of (A) the Applicable Commitment Fee Percentage in effect for the period for which the Commitment Fee is being computed times (B) such Lender’s Unused Commitment.  The Commitment Fee shall be due and payable in arrears on the last Business Day of each March, June, September and December prior to the Maturity Date and on

 

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the Maturity Date, with each Commitment Fee to commence as of the date hereof and to be effective as to any reduction in the Commitment or change in the Applicable Commitment Fee Percentage as of the date of any such decrease or change, and each Commitment Fee shall cease to accrue (except with respect to past due interest on any unpaid portion thereof) on the Maturity Date.  All past due Commitment Fees shall bear interest at the Past Due Rate and shall be payable upon demand by the Agent.  The Aggregate Commitment may be permanently terminated or reduced as follows, which such reductions shall be applied pro rata:

 

(a)           the Company may, upon three (3) Business Days’ prior written notice to the Agent, permanently terminate or reduce the Aggregate Commitment in an amount of at least $10,000,000 or the amount of the Aggregate Commitment at such time, whichever is less; and

 

(b)           any prepayment of the Loans and Letter of Credit Advances in accordance with the provisions of Section 2.3 hereof shall permanently and automatically reduce the Aggregate Commitment in an amount equal to any such prepayment.

 

Section 2.3  Mandatory Prepayments; Commitment Reduction .

 

(a)           If the Current Sum applicable to a Lender at any time exceeds such Lender’s Commitment, the Agent shall notify the Company in writing of the deficiency by overnight priority delivery service provided by a nationally recognized delivery service or, if the officer of the Agent providing such notice to the Company is located in Austin, Texas, by hand delivery confirmed by written receipt. Within three Business Days after the actual receipt of such notice, the Company shall make a prepayment on such Lender’s Note or otherwise reimburse the Agent for Letter of Credit Advances or cause the one or more Letters of Credit to be canceled and surrendered in an amount sufficient to reduce such Current Sum to an amount no greater than such Commitment.

 

(b)           The Company shall, not later than five Business Days following the date of receipt of any Net Proceeds by any Loan Party or any of its Subsidiaries, by notice to the Agent, prepay the Indebtedness outstanding under the Term Loan Facility and the Loans in an amount equal to the amount of such Net Proceeds, to be applied in the following order:  (i)  first , to be applied against the Indebtedness outstanding under the Term Loan Facility; and (ii) second, the balance of such Net Proceeds, if any, shall be applied against the aggregate principal amount of the Loans, such prepayment to be applied to the Loans on a pro rata basis; provided that this subsection shall not apply to the first $10,000,000 of Net Proceeds received by the Company and its Subsidiaries in any fiscal year of the Company.

 

(c)           The Company shall, on the date that is 90 days following the Effective Date, prepay an aggregate principal amount of the Indebtedness outstanding under the Term Loan Facility in an amount equal to the excess above $10,000,000 of the aggregate principal amount of the Target’s Convertible Senior Debentures outstanding on such date.

 

Section 2.4  Payments .  All sums payable by the Company to the Agent hereunder or pursuant to Notes for its own account or the account of the Lenders shall be payable in United States dollars in immediately available funds not later than 12:00 noon on the date such payment or prepayment is due and shall be made without set-off, counterclaim or deduction of any kind.  Any such payment received and accepted by the Agent or any Issuer after such time shall be considered for all purposes (including the payment of interest, to the extent permitted by law) as having been made on the next succeeding Business Day.  All such payments shall be made to the Agent at the Agent’s Account.  If any payment or prepayment becomes due and payable on a day which is not a Business Day, then the date for

 

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the payment thereof shall be extended to the next succeeding Business Day and interest shall be payable thereon at the then applicable rate per annum during such extension.

 

Section 2.5  Prepayments of Loans .

 

(a)           In addition to the mandatory prepayments required by Section 2.3 hereof, the Company shall have the right, at its option, to prepay the Loans in whole at any time or in part from time to time, without premium or penalty, except as provided in this Section or subsections (a), (b) or (c) of Section 2.10 hereof.  Each partial prepayment under this subsection shall be a principal amount of not less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof.  Each prepayment under this subsection shall be applied to the prepayment of the aggregate unpaid principal amount of the Notes.  Prepayments under this Agreement shall be subject to the following additional conditions:

 

i.              In giving notice of prepayment as hereinafter provided, the Company shall specify, for the purpose of paragraphs (ii) and (iii) immediately following, the manner of application of such prepayment as between any outstanding Alternate Base Rate Borrowings and LIBOR Rate Borrowings; provided, that in no event shall any LIBOR Rate Borrowing be partially prepaid.

 

ii.             Prepayments applied to any LIBOR Rate Borrowing may be made on any LIBOR Business Day, provided, that (A) the Company shall have given the Agent at least two (2) LIBOR Business Days’ prior irrevocable written or facsimile notice of such prepayment, specifying the principal amount of the LIBOR Rate Borrowing to be prepaid, the particular LIBOR Rate Borrowing to which such prepayment is to be applied and the prepayment date; and (ii) if such prepayment is made on any day other than the last day of the LIBOR Interest Period corresponding to the LIBOR Rate Borrowing to be prepaid, the Company shall pay directly to the Agent for the account of the Lenders, on the last day of such LIBOR Interest Period, the Consequential Loss as a result of such prepayment.

 

iii.            Prepayments applied to any Alternate Base Rate Borrowing may be made on any Business Day, provided that the Company shall have given the Agent at least five (5) Business Days prior irrevocable written notice or notice by telephone or facsimile (which is to be promptly confirmed in writing) of such prepayment, specifying the principal amount of the Alternate Base Rate Borrowing to be prepaid and the prepayment date.

 

(b)           Notice of any prepayment having been given, the principal amount specified in such notice, together with (in the case of any prepayment of a LIBOR Rate Borrowing) interest thereon to the date of prepayment, shall be due and payable on such prepayment date.

 

(c)           Any Lender may, if it so elects, fulfill its obligation as to any LIBOR Rate Borrowing by causing a branch, foreign or otherwise, or Affiliate of such Lender to make such Loans and may transfer and carry such Loans at, to or for the account of any branch office or Affiliate of such Lender; provided, that in such event for the purposes of this Agreement such Loans shall be deemed to have been made by such Lender and the obligation of the Company to repay such Loans shall nevertheless be to such Lender and shall be deemed held by it, to the extent of such portions of the Loan, for the account of such branch or affiliate.

 

(d)           Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of the Loans hereunder in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained its portion of each LIBOR

 

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Rate Borrowing during each LIBOR Interest Period for the Loans through the purchase of deposits having a maturity corresponding to such LIBOR Interest Period and bearing an interest rate equal to the London Interbank Rate for such LIBOR Interest Period.

 

(e)           The Company’s obligation to pay increased costs and Consequential Loss with regard to each LIBOR Rate Borrowing as specified in this Section 2.5 hereof shall survive termination of this Agreement.

 

Section 2.6  Application of Payments and Prepayments .  Prepayments of the Loans shall be applied first to the principal amount thereof, with the balance to accrued interest.  Regularly scheduled  payments of the Loans shall be applied first to accrued interest, the balance to the principal.  If the Agent receives funds on a date when payments of the Loans are due and such funds are not sufficient to pay all of the obligations of the Company hereunder then due, or if the Agent receives any payments or other amounts owing to Agent or any Lender under any Loan Document, including without limitation, proceeds obtained from the enforcement of the Guaranties, then such funds shall be applied (a) first, to fees or expenses of the Agent then due hereunder or any other Loan Document which are to be paid by the Company or the applicable Guarantor, (b) second, to fees or expenses of the Lenders then due hereunder or any other Loan Document (other than fees or expenses owing under Credit Facility Hedging Agreements) which are to be paid by the Company or the applicable Guarantor, including without limitation, Commitment Fees to the extent then due, (c) third, to the accrued interest on and, to the extent then due, principal of the Loans and any Letter of Credit Advances then outstanding, and (d) fourth, to amounts owing under Credit Facility Hedge Agreements.  Each payment received by the Agent hereunder or under any Note for the account of a Lender shall be paid promptly to such Lender, in immediately available funds.  If the Agent fails to send to any Lender the product of such Lender’s Current Sum Percentage times the aggregate amount of any such payment timely received by the Agent for the account of all the Lenders by the close of business on the Business Day following the date such payment was received by the Agent, the Agent shall pay to such Lender interest on such Lender’s pro-rata portion of such payment timely received by the Agent from such date of receipt by the Agent to the date that such Lender receives its pro-rata portion of such payment, such interest to accrue at the Federal Funds Rate and to be payable upon written request from such Lender.

 

Section 2.7  Pro Rata Treatment .  Except to the extent otherwise provided herein:  (a) each borrowing from the Lenders under Section 2.1 hereof shall be made, each payment of commitment fees shall be made and applied for the account of the Lenders, and each termination or reduction of the Unused Commitments of the Lenders under Section 2.2 hereof shall be applied, pro rata, according to each Lender’s Commitment Percentage; (b) each payment by the Company of principal of or interest on Loans shall be made to the Agent for the account of the Lenders pro rata in accordance with the respective Current Sum Percentage of the Lenders; (c) each Letter of Credit will be issued for the account of the Lenders severally and ratably among the Lenders in accordance with their respective Commitment Percentages, and (d) the Lenders (other than the applicable Issuer) shall purchase from any Issuer participations in the Letters of Credit issued by such Issuer, to the extent of their respective Commitment Percentages.

 

Section 2.8  Payment Dates on the Loans .  Accrued interest on the unpaid balance of the Loans shall be payable on the Interest Payment Dates and at the Maturity Date, commencing with the first of such dates to occur after the date hereof.  After the Maturity Date, accrued interest on the Loans shall be payable on demand.  On the Maturity Date, the outstanding principal balance of the Loans shall be fully due and payable.

 

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Section 2.9  Interest Options for Loans .

 

(a)           Options Available .  The Loans shall bear interest at the Alternate Base Rate; provided, that (1) all past due principal and interest shall bear interest at the Past Due Rate which shall be payable on demand, and (2) subject to the provisions hereof, the Company shall have the option of having all or any portion of the outstanding principal amount of the Loans bear interest until their respective maturities at a rate per annum equal to the LIBOR Rate (together with the Alternate Base Rate, individually herein called an “ Interest Option ” and collectively called “ Interest Options ”).  The records of the Agent with respect to Interest Options, LIBOR Interest Periods and the amounts of Loans to which they are applicable shall be binding and conclusive, absent manifest error.  Interest on the Loans shall be calculated at the Alternate Base Rate except where it is expressly provided pursuant to this Agreement that the LIBOR Rate is to apply.

 

(b)           Designation and Conversion .  The Company shall have the right to designate or convert its Interest Options in accordance with the provisions hereof.  Provided no Event of Default has occurred and is continuing and subject to the provisions of the last sentence of Subsection 2.09(a) hereinabove and of Section 2.10 hereof, the Company may elect to have the LIBOR Rate apply or continue to apply to all or any portion of the outstanding principal balance of the Loans.  Each change in Interest Options shall be a conversion of the rate of interest applicable to the specified portion of the Loans, but such conversion alone shall not change the outstanding principal amount of the Loans.  The Interest Options shall be designated or converted in the manner provided below:

 

i.              The Company shall give the Agent notice by telephone or facsimile promptly confirmed by written notice (the “ Rate Selection Notice ”) substantially in the form of Exhibit E hereto.  Each such telephone or facsimile and written notice shall specify the amount and type of borrowings which are the subject of the designation, if any; the amount and type of borrowings into which such borrowings are to be converted or for which an Interest Option is designated; the proposed date for the designation or conversion (which, in the case of conversion of LIBOR Rate Borrowings, shall be the last day of the LIBOR Interest Period applicable thereto) and the LIBOR Interest Period or Periods, if any, selected by the Company.  Such notice by telephone or facsimile shall be irrevocable and shall be given to the Agent no later than the applicable Rate Selection Date.  If (a) a new Loan is to be a LIBOR Rate Borrowing, (b) an existing LIBOR Rate Borrowing is maturing at the time that a new Loan is being requested and the Company is electing to have such existing portion of the outstanding principal balance of the Loans going forward bear interest at the same Interest Option and for the same LIBOR Interest Period as the new Loan, or (c) a portion of an Alternate Base Rate Borrowing is to be converted so as to bear interest at the same Interest Option and for the same LIBOR Interest Period as the new Loan, then the Rate Selection Notice shall be included in the Request for Extension of Credit and Certificate of No Default applicable to the new Loan, which shall be given to the Agent no later than the applicable Rate Selection Date.

 

ii.             No more than five (5) LIBOR Interest Periods shall be in effect at any one time.  Each LIBOR Rate Borrowing shall be in the amount of at least $5,000,000.

 

iii.            Principal included in any borrowing shall not be included in any other borrowing which exists at the same time.

 

iv.            Each designation or conversion shall occur on a Business Day (and, for LIBOR Rate Borrowings, on a LIBOR Business Day).

 

v.             Except as provided in Section 2.10 hereof, no LIBOR Rate Borrowing shall be converted on any day other than the last day of the applicable LIBOR Interest Period.

 

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(c)           Computations .  Interest based on the Alternate Base Rate, to the extent determined by reference to the Prime Rate, will be computed on the basis of 365 (or 366) days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.  All other interest and fees shall be computed on the basis of a year of 360 days and actual days elapsed (including the first day but excluding the last day) occurring in the period for which payable.

 

Section 2.10  Special Provisions Applicable to LIBOR Rate Borrowings .

 

(a)           Options Unlawful .  If, after the date of this Agreement, the adoption of any applicable Legal Requirement or any change in any applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive (whether or not having the force of law) of any Governmental Authority shall at any time make it unlawful or impossible for any Lender to permit the establishment of or to maintain any LIBOR Rate Borrowing, the commitment of the Lenders to establish or maintain the LIBOR Rate affected by such adoption or change shall forthwith be canceled and the Company shall forthwith, upon demand by the Agent to the Company, (1) convert the LIBOR Rate with respect to which such demand was made to the Alternate Base Rate; (2) pay all accrued and unpaid interest to date on the amount so converted; and (3) pay any amounts required to compensate the Agent and the Lenders for any additional cost or expense which the Agent or any Lender may incur as a result of such adoption of or change in such Legal Requirement or in the interpretation or administration thereof and any Consequential Loss which the Agent or any Lender may incur as a result of such conversion to the Alternate Base Rate.  If, when the Agent so notifies the Company, the Company has given a Rate Selection Notice specifying one or more borrowings of the type with respect to which such demand was made but the selected LIBOR Interest Period or LIBOR Interest Periods has not yet begun, such Rate Selection Notice shall be deemed to be of no force and effect, as if never made, and the balance of the Loans specified in such Rate Selection Notice shall bear interest at the Alternate Base Rate until a different available Interest Option shall be designated in accordance herewith.

 

(b)           Increased Cost of Borrowings .  If the adoption of any applicable Legal Requirement or any change in any applicable Legal Requirement or in the interpretation or administration thereof by any Governmental Authority or compliance by the Agent or any Lender with any request or directive (whether or not having the force of law) from any Governmental Authority shall at any time as a result of any portion of the principal balance of the Loans being maintained on the basis of the LIBOR Rate:

 

i.              subject any Lender (or make it apparent that any Lender is subject) to any tax (including any United States interest equalization tax), levy, impost, duty, charge, fee (collectively, “ Taxes ”), or any deduction or withholding for any Taxes on or from the payment due under any LIBOR Rate Borrowing or other amounts due hereunder, other than income and franchise taxes of the United States and its political subdivisions; or

 

ii.             change the basis of taxation of payments due from the Company to the Agent or any Lender under any LIBOR Rate Borrowing (otherwise than by a change in the rate of taxation of the overall net income of the Agent or any Lender); or

 

iii.            impose, modify, increase or deem applicable any reserve requirement (excluding that portion of any reserve requirement included in the calculation of the Eurocurrency Reserve Requirement, special deposit requirement or similar requirement (including state law requirements and Regulation D) imposed, modified, increased or deemed applicable by any Governmental Authority against assets held by the Agent or any Lender, or against deposits or accounts in or for the account of the Agent or

 

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any Lender, or against loans made by the Agent or any Lender, or against any other funds, obligations or other Property owned or held by the Agent or any Lender; or

 

iv.            impose on the Agent or any Lender any other condition regarding any LIBOR Rate Borrowing;

 

and the result of any of the foregoing is to increase the cost to any Lender of agreeing to make or of making, renewing or maintaining such borrowing on the basis of the LIBOR Rate, or reduce the amount of principal or interest received by any Lender, then, upon demand by the Agent, the Company shall pay to the Agent, from time to time as specified by the Agent, additional amounts which shall compensate such Lender for such increased cost or reduced amount.  The Agent will promptly notify the Company in writing of any event, upon becoming actually aware of it, which will entitle any Lender to additional amounts pursuant to this paragraph.  The Agent’s determination of the amount of any such increased cost, increased reserve requirement or reduced amount shall be conclusive and binding, absent manifest error, provided that the calculation thereof is set forth in reasonable detail in such notice.

 

The Company shall have the right, if it receives from the Agent any notice referred to in the preceding paragraph, upon three (3) Business Days’ notice to the Agent, either (i) to repay in full (but not in part) any borrowing with respect to which such notice was given, together with any accrued interest thereon, or (ii) to convert the LIBOR Rate in effect with respect to such borrowing to the Alternate Base Rate; provided, that any such repayment or conversion shall be accompanied by payment of (x) the amount required to compensate the appropriate Lender or Lenders for the increased cost or reduced amount referred to in the preceding paragraph; (y) all accrued and unpaid interest to date on the amount so repaid or converted, and (z) any Consequential Loss which may be incurred as a result of such repayment or conversion.

 

(c)           Inadequacy of Pricing and Rate Determination .  If for any reason with respect to any LIBOR Interest Period the Agent shall have determined (which determination shall be conclusive and binding upon the Company, and, in the case of clause (2) below, shall be presumed to be made upon notice from such Lender) that:  (1) the Agent is unable through its customary general practices to determine a rate at which the Agent is offered deposits in United States dollars by prime banks in the interbank market in London, England in the appropriate amount for the appropriate period, or by reason of circumstances affecting the interbank market in London, England, generally, prime banks are not being offered deposits in United States dollars in the interbank market in London, England, for the applicable LIBOR Interest Period and in an amount equal to the amount of the LIBOR Rate Borrowing requested by the Company, or (2) the LIBOR Rate will not adequately and fairly reflect the cost to any Lender of making and maintaining any LIBOR Rate Borrowing hereunder for any proposed LIBOR Interest Period, then the Agent shall give the Company notice thereof and thereupon, (A) any Rate Selection Notice previously given by the Company designating a LIBOR Rate which has not commenced as of the date of such notice from the Agent shall be deemed for all purposes hereof to be of no force and effect, as if never given, and (B) until the Agent shall notify the Company that the circumstances giving rise to such notice from the Agent no longer exist, each Rate Selection Notice requesting a LIBOR Rate Borrowing shall be deemed a request for an Alternate Base Rate Borrowing, and each outstanding LIBOR Rate Borrowing then in effect shall be converted, without any notice to or from the Company, upon the termination of the LIBOR Interest Period then in effect, to an Alternate Base Rate Borrowing.

 

(d)           Indemnification .  The Company shall indemnify the Agent and each of the Lenders against and hold each of them harmless from any loss or expense which they may incur or sustain as a consequence of any untimely payment (mandatory or optional) or default by the Company in the payment of any principal amount of or interest on the Loans, or any failure by the Company to convert or to borrow any LIBOR Rate Borrowing on the date specified by the Company, in each case including any

 

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interest payable by any Lender to the lenders of the funds obtained by it in order to make or maintain any LIBOR Rate Borrowing (or any portion thereof), and, to the extent not covered above, any Consequential Loss.  This agreement shall survive the payment of the Loans.  A certificate as to any additional amounts payable pursuant to this paragraph submitted by the Agent or any Lender to the Company shall be conclusive and binding upon the Company, absent manifest error, provided the calculation thereof is set forth in reasonable detail in such notice.

 

Section 2.11  Payment Dates .  Whenever any payment to be made hereunder in respect of the Loans shall be stated to be due on a day which is neither a Business Day nor a LIBOR Business Day, such payment may be made on the next succeeding Business Day, or, subject to the definition of LIBOR Interest Period in the case of any payment of the Loans to which the LIBOR Rate applies, on the next succeeding LIBOR Business Day, and such extension of time shall in each such case be included in computing interest and commitment fees in connection with such payment.

 

Section 2.12  Sharing of Payments, Etc .  The Company agrees that, in addition to (and without limitation of) any right of set-off, bankers’ lien or counterclaim a Lender may otherwise have, upon the occurrence and during the continuance of any Event of Default, each Lender shall be entitled, at its option, to offset balances held by it for the account of the Company at any of its offices against any principal of or interest on any of such Lender’s Loans to the Company hereunder, such Lender’s Commitment Percentage of the Letter of Credit Exposure Amount or any other obligation of the Company hereunder, which is not paid (regardless of whether such balances are then due to the Company), in which case it shall promptly notify the Company and the Agent thereof, provided that such Lender’s failure to give such notice shall not affect the validity thereof.  If a Lender shall obtain payment of any principal of or interest on any Loan made by it under this Agreement, any Letter of Credit Exposure Amount or other obligation then due to such Lender hereunder, through the exercise of any right of set-off (including, without limitation, any right of setoff or lien granted under Section 9.18 hereof), banker’s lien, counterclaim or similar right, or otherwise, it shall promptly purchase from the other Lenders participations in the Loans made by, the Letter of Credit Exposure Amount of, or the other obligations of the Company hereunder of, the other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable to the end that all the Lenders shall share the benefit of such payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such benefit) pro rata in accordance with their respective Commitment Percentages.  To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored.  The Company agrees, to the fullest extent it may effectively do so under applicable law, that any Lender so purchasing a participation in the Loans made by, Letter of Credit Exposure Amount of, or other obligations hereunder of, the other Lenders may exercise, upon the occurrence and during the continuance of any Event of Default, all rights of set-off, bankers’ lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of said Loans, Letter of Credit Exposure Amount or other obligations in the amount of such participation.  Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Company.

 

Section 2.13  Use of Proceeds .  The proceeds of the Loans shall be used solely (i) to finance the Transactions, (ii) to refinance certain existing Indebtedness of the Target, (c) to pay costs and expenses relating to the Transactions, and (d) to support new store development, other acquisitions, the issuance of standby Letters of Credit and other general corporate purposes, including but not limited to, the repurchase of Stock.

 

Section 2.14  Evidence of Debt .  (a)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Lender

 

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resulting from each Loan owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.  The Company agrees that upon notice by any Lender to the Company (with a copy of such notice to the Agent) to the effect that a Note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for purposes of enforcement or otherwise) the Loans owing to, or to be made by, such Lender, the Company shall promptly execute and deliver to such Lender Party, with a copy to the Agent, a Note, in substantially the form of Exhibit A hereto, payable to the order of such Lender in a principal amount equal to the Commitment of such Lender.  All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder.

 

(b)           The Register maintained by the Agent pursuant to Section 9.11(e) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Loans comprising such Borrowing and, if appropriate, the LIBOR Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender’s share thereof.

 

(c)           Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Company to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided , however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

 

Section 2.15  Letters of Credit .

 

(a)           Subject to the terms and conditions contained herein, the Company shall have the right to utilize the Aggregate Commitment from time to time prior to the Letter of Credit Termination Date, by obtaining from any Issuer one or more Letters of Credit for the account of the Company or any of its Subsidiaries (with the Company being jointly and severally liable under the terms of the applicable Application for any Letter of Credit issued for the account of any of the Company’s Subsidiaries) in such amounts and in favor of such beneficiaries as the Company from time to time shall request; provided, that in no event shall any Issuer have any obligation to issue any Letter of Credit if (i) the face amount of such Letter of Credit plus the Letter of Credit Exposure Amount at such time would exceed $200,000,000, (ii) the face amount of such Letter of Credit plus the aggregate of each Lender’s Current Sum at such time, would exceed the Aggregate Commitment, (iii) such Letter of Credit would have an expiry date later than the Maturity Date, (iv) either such Letter of Credit is not in such form and does not contain such terms as shall be satisfactory to the Agent in its sole and absolute discretion or the Company has not executed and delivered such Applications and other instruments and agreements relating to such Letter of Credit as the Agent shall have requested or (v) an event has occurred and is continuing which constitutes a Default as provided in Section 7 of this Agreement.  The Company promises to pay to the order of an Issuer the amount of all Letter of Credit Advances made by such Issuer, together with accrued interest thereon (if any).  Each Letter of Credit Advance shall be considered for all purposes as a demand obligation owing by the Company to the applicable Issuer of the Letter of Credit to which it relates, and each Letter of Credit Advance shall bear interest from the date thereof at the Past Due Rate, without notice of presentment, demand, protest or other formalities of any kind (said past due interest on such Letter of Credit Advance being payable on demand).  To effect repayment of any such Letter of Credit Advance and any interest accrued thereon, the Agent may, but shall not be obligated to, at any time deem that the

 

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Company has requested an additional Loan as an Alternate Base Rate Borrowing under this Agreement to be made to satisfy such Letter of Credit Advance and any interest accrued thereon (if any), and if the Agent deems that the Company has requested an additional Loan as an Alternate Base Rate Borrowing to be made under this Agreement to satisfy such Letter of Credit Advance and any interest accrued thereon (if any), the Lenders shall satisfy such Letter of Credit Advance and any interest accrued thereon (if any) by (subject to the terms and conditions of Section 2.1 hereof) making an additional Loan as an Alternate Base Rate Borrowing  under this Agreement, if such Letter of Credit Advance is (and such Loan is to be) made prior to the Maturity Date.  Each Issuer will pay to each Lender such Lender’s Commitment Percentage of all amounts received from the Company by such Issuer, if any, for application, in whole or in part, against the Letter of Credit Advances or Loans made by such Lender in respect to any Letter of Credit, but only to the extent such Lender has made its full pro rata payment of each drawing under the Letter of Credit to which such Letter of Credit Advance relates.  All rights, powers, benefits and privileges of this Agreement with respect to the Loans, all security therefor and guaranties thereof (including the Guaranties) and all restrictions, provisions for repayment or acceleration and all other covenants, warranties, representations and agreements of the Company contained in this Agreement with respect to the Loans shall apply to each such Letter of Credit Advance.

 

(b)           In consideration of the issuance of each Letter of Credit pursuant to the provisions of this Section 2.15, the Company agrees to pay to the applicable Issuer a letter of credit fee in arrears on each Letter of Credit Fee Payment Date equal to the product of (A) the Applicable Margin then in effect for LIBOR Rate Borrowings times (B) the amount available for drawings under such Letter of Credit issued by such Issuer on such Letter of Credit Fee Payment Date times (C) the number of days from, but not including, such Letter of Credit Fee Payment Date through and including the next to occur Letter of Credit Fee Payment Date (or expiry date, if sooner) applicable to such Letter of Credit divided by 360; provided, that in no event shall the fee to be paid on any Letter of Credit Fee Payment Date for any such Letter of Credit ever be less than $500.  In addition, with respect to each Letter of Credit, the Company shall pay to the applicable Issuer, for the benefit of such Issuer only, a fronting fee, in advance, on such Letter of Credit, which shall be due and payable on each Letter of Credit Fee Payment Date.  The fronting fee amount so payable shall be equal to the product of (A) one-eighth of one percent (1/8%) times (B) the amount available for drawings under such Letter of Credit on such Letter of Credit Fee Payment Date times (C) the number of days from, but not including, such Letter of Credit Fee Payment Date through and including the next to occur Letter of Credit Fee Payment Date (or expiry date, if sooner) applicable to such Letter of Credit divided by 360.

 

(c)           Each Issuer will pay to each Lender, as soon as practicable after receiving any payment of letter of credit fees (other than any fronting fee payable only for the benefit of such Issuer), an amount equal to the product of (A) such Lender’s Commitment Percentage times (B) the amount of such fees received (other than any fronting fee payable only for the benefit of such Issuer).  If any Issuer fails to send to any Lender such Lender’s pro-rata portion of any payment of letter of credit fees timely received by such Issuer hereunder by the close of business on the Business Day such payment was received by such Issuer, such Issuer shall pay to such Lender interest on such Lender’s pro-rata portion of the letter of credit fees timely received by such Issuer from such date of receipt by such Issuer to the date that such Lender receives its pro-rata portion of such payment, such interest to accrue at the Federal Funds Rate and to be payable upon written request from such Lender.  The obligations of the Company under this Agreement in respect of the Letters of Credit and Letter of Credit Advances shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including the following circumstances:

 

(1)           any lack of validity or enforceability of this Agreement, any Letter of Credit or any Loan Document;

 

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(2)           any amendment or waiver of default under or any consent to departure from the terms of this Agreement or any Letter of Credit without the express prior written consent of the Agent and the Issuer of such Letter of Credit;

 

(3)           the existence of any claim, set-off, defense or other right which any beneficiary or any transferee of any Letter of Credit (or any entities for whom any such beneficiary or any such transferee may be acting), or any Person (other than the Agent or the Lenders) may have, whether in connection with this Agreement, the Letters of Credit, the transactions contemplated hereby or any unrelated transaction;

 

(4)           any statement, draft, certificate, or any 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 whatsoever; provided that each Issuer will examine each document presented under each Letter of Credit issued by such Issuer to ascertain that such document appears on its face to comply with the terms thereof; and

 

(5)           any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

 

In the event that any restriction or limitation is imposed upon or determined or held to be applicable to the Agent, any Lender, any Issuer or the Company by, under or pursuant to any Legal Requirement now or hereafter in effect or by reason of any interpretation thereof by any Governmental Authority, which in the respective sole judgment of the Agent, any Lender or any Issuer would prevent any Lender or Issuer from legally incurring liability under a Letter of Credit issued or proposed to be issued hereunder, then the Agent shall give prompt written notice thereof to the Company, whereupon the Lenders and the Issuers shall have no obligation to issue any additional Letters of Credit then or at any time thereafter.  In addition, if as a result of any Regulatory Change which imposes, modifies or deems applicable (x) any tax, reserve, special deposit or similar requirement against letters of credit issued by any Issuer or participated in by any Lender; (y) any fee, expense or assessment against Letters of Credit issued by any Issuer, the Agent or any Lender for deposit insurance, or (z) any other charge, expense or condition which increases the actual cost to any Issuer, the Agent or any Lender of issuing or maintaining the Letters of Credit, or reduces any amount receivable by the Agent, any Lender or any Issuer hereunder in respect of any Letter of Credit or any participation therein (which increase in cost, or reduction in amount receivable, shall be the result of such Issuer’s, the Agent’s or such Lender’s reasonable allocation of the aggregate of such increases or reductions resulting from such event), then the Company shall pay to such Issuer, the Agent or such Lender, upon demand and from time to time, amounts sufficient to compensate such Person for each such increase from the effective date of such increase to the date of demand therefor.  Each such demand shall be accompanied by a certificate setting forth in reasonable detail the calculation of the amount then being demanded in accordance with the preceding sentence and each such certificate shall be conclusive absent manifest error.

 

(d)           THE COMPANY HEREBY INDEMNIFIES AND HOLDS HARMLESS EACH ISSUER, EACH LENDER AND THE AGENT FROM AND AGAINST ANY AND ALL CLAIMS AND DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH SUCH ISSUER, SUCH LENDER OR THE AGENT MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST SUCH ISSUER, SUCH LENDER OR THE AGENT BY ANY PERSON WHATSOEVER) IN CONNECTION WITH THE EXECUTION AND DELIVERY OR TRANSFER OF OR PAYMENT OR FAILURE TO PAY UNDER ANY LETTER OF CREDIT, INCLUDING ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES WHICH SUCH ISSUER, THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, MAY INCUR (WHETHER INCURRED AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) BY REASON OF OR IN CONNECTION WITH THE FAILURE OF

 

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ANY OTHER LENDER (WHETHER AS A RESULT OF ITS OWN NEGLIGENCE OR OTHERWISE) TO FULFILL OR COMPLY WITH ITS OBLIGATIONS TO SUCH ISSUER, THE AGENT OR SUCH LENDER, AS THE CASE MAY BE, HEREUNDER (BUT NOTHING HEREIN CONTAINED SHALL AFFECT ANY RIGHTS THE COMPANY MAY HAVE AGAINST SUCH DEFAULTING LENDER); PROVIDED, THAT THE COMPANY SHALL NOT BE REQUIRED TO INDEMNIFY ANY ISSUER, ANY LENDER OR THE AGENT FOR ANY CLAIMS, DAMAGES, LOSSES, LIABILITIES, COSTS OR EXPENSES TO THE EXTENT, BUT ONLY TO THE EXTENT, CAUSED BY (I) THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION OR (II) SUCH ISSUER’S, SUCH LENDER’S OR THE AGENT’S (AS THE CASE MAY BE) FAILURE TO PAY UNDER ANY LETTER OF CREDIT AFTER THE PRESENTATION TO IT OF A REQUEST REQUIRED TO BE PAID UNDER APPLICABLE LAW.  NOTHING IN THIS SECTION 2.4(C) IS INTENDED TO LIMIT THE OBLIGATIONS OF THE COMPANY UNDER ANY OTHER PROVISION OF THIS AGREEMENT.

 

(e)           The Company shall give the Agent the Application for a Letter of Credit in accordance with the terms of Section 3.1 hereof.  Upon receipt of any such Application (which such Application, when so received by the Agent, shall be deemed received by JPMorgan in its capacity as an Issuer if JPMorgan will be the Issuer of the applicable Letter of Credit), the Agent shall promptly notify each Lender that a Letter of Credit has been requested in the amount reflected in such Application and inform such Lender of the amount of its pro-rata portion of such proposed Letter of Credit (based upon such Lender’s Commitment Percentage).

 

(f)            If at any time any Issuer shall have made a payment to a beneficiary of a Letter of Credit in respect of a drawing or in respect of an acceptance created in connection with a drawing under any Letter of Credit issued by such Issuer, each other Lender will pay to such Issuer immediately upon demand by the Issuer at any time during the period commencing after such payment until reimbursement thereof in full by the Company, an amount equal to the product of (A) such Lender’s Commitment Percentage times (B) the amount of such payment made by such Issuer to a beneficiary under such Letter of Credit, together with interest on such amount for each day from the date of demand by such Issuer for such payment (or, if such demand is made after 11:00 a.m. on such date, from the next succeeding Business Day) to the date of payment by such Lender to such Issuer of such amount at a rate of interest per annum equal to the Federal Funds Rate for such period.  Nothing herein shall be deemed to require any Lender to pay to any Issuer any amount as reimbursement for any payment made by any Issuer to acquire (discount) for its own account prior to maturity thereof any acceptance created under a Letter of Credit.

 

(g)           Simultaneously with any Issuer’s issuance and delivery of any Letter of Credit, such Issuer shall be deemed, without further action, to have sold to each other Lender, and such other Lender shall be deemed, without further action by any party hereto, to have purchased from such Issuer, a participation interest equal to such other Lender’s Commitment Percentage at such time in such Letter of Credit and all of the Letter of Credit Exposure Amount related to such Letter of Credit; provided, that no such Lender shall be obligated to participate in a particular Letter of Credit if such Letter of Credit was issued or honored solely as a result of such Issuer’s gross negligence or willful misconduct.

 

Section 2.16  Increase of Commitments .

 

(a)           At any time, provided that no Event of Default shall have occurred and be continuing, the Company may request from time to time one or more increases of the Aggregate Commitment by notice to the Agent in writing of the amount of each such proposed increase (each such notice, a “Commitment Increase Notice”).  Any such Commitment Increase Notice must offer each Lender the opportunity to subscribe for its pro rata share of the requested increase in the Aggregate

 

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Commitment, and the Agent shall promptly provide to each Lender a copy of any Commitment Increase Notice received by the Agent. Within 10 days after receipt by the Agent of the applicable Commitment Increase Notice, each Lender wishing to subscribe for its pro rata share of the requested increase in the Aggregate Commitment must deliver written notice of such fact to the Agent.  If any portion of the requested increase in the Aggregate Commitment is not subscribed for by the Lenders within such 10-day period, the Company may, in its sole discretion, but with the consent of the Agent as to any Person that is not at such time a Lender (which consent shall not be unreasonably withheld or delayed so long as such Person is an Eligible Assignee), offer to any existing Lender or to one or more additional banks or financial institutions the opportunity to participate in all or a portion of such unsubscribed portion of the requested increase in the Aggregate Commitment pursuant to Section 2.16 (b) or (c) below, as applicable;

 

(b)           Any additional bank or financial institution that the Company selects to offer a participation in the unsubscribed portion of the increased Aggregate Commitment, and that elects to become a party to this Agreement and obtain a Commitment, shall execute an agreement (a “New Lender Agreement”), in Proper Form, with the Company and the Agent, whereupon such bank or financial institution (a “New Lender”) shall become a Lender for all purposes hereunder to the same extent as if originally a party hereto and shall be bound by and entitled to the benefits of this Agreement, and the signature pages hereof shall be deemed to add the name of such New Lender and Schedule 2.1(a)  attached hereto shall be deemed amended to add the name and Commitment of such New Lender, provided that the Commitment of any such New Lender shall be in an amount not less than $5,000,000;

 

(c)           Any Lender that accepts an offer by the Company to increase its Commitment pursuant to this Section 2.16 shall, in each case, execute a commitment increase agreement (a “Commitment Increase Agreement”), in Proper Form, with the Company and the Agent, whereupon such Lender shall be bound by and entitled to the benefits of this Agreement with respect to the full amount of its Commitment as so increased, and Schedule 2.1(a) attached hereto shall be deemed to be amended to reflect such increase in the Commitment of such Lender;

 

(d)           The effectiveness of any New Lender Agreement or Commitment Increase Agreement shall be contingent upon receipt by the Agent of such corporate resolutions of the Company and legal opinions of counsel to the Company, if any, as the Agent shall reasonably request with respect thereto, in each case in Proper Form;

 

(e)           If any bank or financial institution becomes a New Lender pursuant to Section 2.16(b) or if any Lender’s Commitment is increased pursuant to Section 2.16(c), additional Loans and additional liability for the Letter of Credit Exposure Amount made or incurred on or after the effectiveness thereof (the “Re-Allocation Date”) shall be made pro rata based on each Lender’s (including each New Lender’s) respective Commitment Percentage in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings or incurring of liability would result in any Lender making an aggregate principal amount of Loans and incurring liability for the Letter of Credit Exposure Amount in excess of its Commitment, in which case such excess amount will be allocated to, and made or incurred by, such New Lender and/or Lenders with such increased Commitments to the extent of, and pro rata based on, their respective Commitment Percentages), and continuations of LIBOR Rate Borrowings outstanding on such Re-Allocation Date shall be effected by repayment of such LIBOR Rate Borrowings on the last day of the LIBOR Interest Period applicable thereto and the extension of new LIBOR Rate Borrowings pro rata based on the Lenders’ respective Commitment Percentages in effect on and after such Re-Allocation Date.  In the event that on any such Re-Allocation Date there are Alternate Base Rate Borrowings outstanding, the Company shall make prepayments thereof and borrow new Alternate Base Rate Borrowings so that, after giving effect thereto, the Alternate Base Rate Borrowings outstanding are held pro rata based on the Lenders’ respective Commitment Percentages in effect on and after such Re-Allocation Date.  In the event that on any such Re-Allocation Date there are LIBOR Rate Borrowings

 

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outstanding, such LIBOR Rate Borrowings shall remain outstanding with the respective holders thereof until the expiration of their respective LIBOR Interest Periods (unless the Company elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and interest on and repayments of such LIBOR Rate Borrowings will be paid thereon to the respective Lenders holding such LIBOR Rate Borrowings pro rata based on the respective principal amounts thereof outstanding;

 

(f)            Notwithstanding anything to the contrary in this Section 2.16, (i) no Lender shall have any obligation to increase its Commitment under this Section 2.16 unless it agrees in writing to do so in its sole discretion, (ii) no Lender shall have any right to decrease the amount of its Commitment as a result of any requested increase of the Aggregate Commitment pursuant to this Section 2.16, (iii) neither the Agent nor any Lender shall have any obligation to find or locate any New Lender to participate in any unsubscribed portion of any increase in the Aggregate Commitment requested by the Company, (iv) each increase in the Aggregate Commitment requested by the Company shall not be less than $10,000,000, (v) after giving effect to any increase in the Aggregate Commitment pursuant to this Section 2.16, the Aggregate Commitment shall not exceed $350,000,000, and (vi) in the event of any reduction in the Aggregate Commitment pursuant to Section 2.2 or any other provision of this Agreement, the ability of the Company to request increases in the Aggregate Commitment pursuant to this Section 2.16 shall automatically terminate; and

 

(g)           The Company shall execute and deliver to the Agent (for delivery by the Agent to each applicable Lender) a new Note payable to each applicable Lender (including each New Lender) participating in any increase of the Aggregate Commitment in the original principal amount of such Lender’s Commitment after giving effect to any increase of the Aggregate Commitment.

 

ARTICLE III -  — CONDITIONS

 

Section 3.1  All Loans .  The obligation of each Lender to make any Loan or of any Issuer to issue any Letter of Credit (including without limitation, any extension of the expiry date of any Letter of Credit or increase in the face amount of any Letter of Credit) is subject to the accuracy of all representations and warranties of the Company on the date of such Loan or issuance of such Letter of Credit, to the performance by the Company of its obligations under the Loan Documents and to the satisfaction of the following further conditions:

 

(a)           the Agent shall have received the following, all of which shall be duly executed and in Proper Form: (1) in the case of a Loan, other than a Loan to be made to repay a Letter of Credit Advance pursuant to Section 2.4 hereof,:

 

i.              by no later than 12:00 noon (New York City time) on the applicable Rate Selection Date, notice by telephone or facsimile from the Company of the proposed date and amount of such Loan, and

 

ii.             no later than 2:00 p.m. (New York City time) on the applicable Rate Selection Date, a Request for Extension of Credit and Certificate of No Default, signed by a Responsible Officer;

 

or, in the case of issuance of a Letter of Credit, a completed Application (as may be required by the Agent or the applicable Issuer) signed by a Responsible Officer of the Company by 10:00 a.m. five (5) Business Days prior to the proposed date of issuance of such Letter of Credit and payment of the first quarterly letter of credit fee as and by the time required in Section 2.15(b) of this Agreement, along with, in each case, such financial information as the Agent may reasonably require to substantiate compliance with all financial covenants contained herein by the Company;

 

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and (2) such other Applications, certificates and other documents as the Agent may reasonably require;

 

(b)           no Default shall have occurred and be continuing, or would result therefrom;

 

(c)           the representations and warranties contained in the Loan Documents are true and correct on and as of such date (except any representation and warranty that expressly indicates that it is being made as of a specific date, and then as of such date);

 

(d)           the making of such Loan or the issuance of such Letter of Credit, shall not be prohibited by, or subject the Agent, the applicable Issuer or any Lender to any penalty or onerous condition under, any Legal Requirement; and

 

(e)           the Company shall have paid all legal fees and expenses of the type described in Section 9.8 hereof through the date of such Loan or the issuance of such Letter of Credit.

 

Section 3.2  First Loan .  In addition to the matters described in Section 3.1 hereof, the obligation of any Lender to make the initial Loan or of any Issuer to issue the first Letter of Credit on the date thereof (the “ Effective Date ”) is subject to the satisfaction of the following conditions precedent:

 

(a)           The Agent shall have received on or before the Effective Date the following, each dated such day (unless otherwise specified), in Proper Form and (except for the Notes) in sufficient copies for each Lender:

 

i.              Counterparts to this Agreement executed by the Company and each Lender;

 

ii.             The Notes payable to the order of the Lenders to the extent requested by the Lenders pursuant to the terms hereof;

 

iii.            The Guaranty and the Contribution Agreement duly executed and delivered by each Guarantor as of the Effective Date;

 

iv.            Certified copies of the resolutions of the board of directors (or equivalent body) of each Loan Party approving the Transaction and each Loan Document to which it is or is to be a party.

 

v.             A security agreement in substantially the form of Exhibit G-A authorized and executed by the parties thereto.

 

vi.            Copies of proper financing statements in respect of all the Loan Parties, together with evidence that such financing statements have been presented for filing on or before the Effective Date in all jurisdictions that the Agent may deem necessary or desirable in order to perfect and protect the first priority liens and security interests created under the Security Agreement A, covering the Collateral described therein.

 

vii.           A copy of a certificate of the Secretary of State of the jurisdiction of incorporation of each Loan Party, dated reasonably near the Effective Date certifying (A) as to a true and correct copy of the charter of such Loan Party and each amendment thereto on file in such Secretary’s office and (B) that (1) such amendments are the only amendments to such Loan Party’s charter on file in such Secretary’s office, (2) such Loan Party has paid all franchise taxes

 

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to the date of such certificate and (3) such Loan Party is duly incorporated and in good standing or presently subsisting under the laws of the State of the jurisdiction of its incorporation.

 

viii.          A certificate of each Loan Party signed on behalf of such Loan Party by its secretary or any assistant secretary, dated the Effective Date (the statements made in which certificate shall be true on and as of the Effective Date), certifying as to (A) the absence of any amendments to the charter of such Loan Party since the date of the Secretary of State’s certificate referred to in Section 3.2(a)(v), (B) a true and correct copy of the bylaws of such Loan Party as in effect on the date on which the resolutions referred to in Section 3.2(a)(iv) were adopted and on the Effective Date, (C) the absence of any proceeding for the dissolution or liquidation of such Loan Party, (D) the truth in all material respects of the representations and warranties contained in the Loan Documents as though made on and as of the Effective Date, (E) the absence of any event occurring and continuing, or resulting from the initial Borrowing hereunder, that constitutes a Default, and (F) certifying the names and true signatures of the officers of such Loan Party authorized to sign each Loan Document to which it is or is to be a party and the other documents to be delivered hereunder and thereunder.

 

ix.            A certificate, in form and substance reasonably satisfactory to the Lenders, attesting to the Solvency of the Company and its Subsidiaries, on a consolidated basis, both before and after giving effect to the Transactions, from its chief financial officer.

 

x.             Audited annual financial statements of the Company and the Target for the three fiscal years most recently ended and interim financial statements for the fiscal quarters ended thereafter and prior to the Effective Date and for the most recent quarter for which financial statements are available, pro forma financial statements as to the Company and its Subsidiaries giving effect to the Transactions, and forecasts prepared by management of the Company, each in form and substance reasonably satisfactory to the Lenders, of balance sheets, income statements and cash flow statements on an annual basis for each year following the Effective Date until the Termination Date.

 

xi.            A favorable opinion of counsel for the Loan Parties, in form and substance reasonably satisfactory to the Lenders.

 

(b)           The Tender Offer shall have been consummated, or shall be consummated substantially concurrently with the initial Borrowing hereunder, on substantially the terms and conditions set forth in the Merger Agreement, without any amendment or waiver of any material term thereof that is adverse, in any material respect, to the interests of the Lenders, and the Company shall have acquired not less than a majority of the capital stock of the Target.

 

(c)           The Target’s existing credit and letter of credit facilities with Bank of America, N.A. shall have been terminated and all loans, if any, outstanding thereunder, as well as all accrued interest and fees thereunder, if any, shall have been paid in full.

 

(d)           There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party or any of its Subsidiaries pending or, to the knowledge of the Loan Parties or any of their Subsidiaries, threatened before any Governmental Authority that has had or could reasonably be expected to have a Material Adverse Effect on the legality, validity or enforceability of any Loan Document or the consummation of the Transactions.

 

(e)           All governmental authorizations and third-party consents and approvals required to be obtained under the Merger Agreement in connection with the Transactions shall have been obtained

 

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(without the imposition of any conditions that materially and adversely impair the rights and remedies of the Lenders under the Loan Documents) and shall remain in effect.

 

(f)            The Company shall have paid all accrued fees and expenses of the Agent that are due and payable in accordance herewith (including the accrued fees and expenses of counsel to the Agent and fees due and payable to the Joint Lead Arrangers pursuant to the Fee Letter).

 

Section 3.3  Determinations Under Section 3.2 .  For purposes of determining compliance with the conditions specified in Section 3.2, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the initial Borrowing hereunder specifying its objection thereto and shall not have made available to the Agent such Lender’s ratable portion of such Borrowing.

 

ARTICLE IV — REPRESENTATIONS AND WARRANTIES

 

To induce the Agent and the Lenders to enter into this Agreement, subject to the Target Representation Limitations, the Company represents and warrants to the Agent and the Lenders as follows:

 

Section 4.1  Organization .  Each of the Company and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the state of its incorporation; has all power and authority to conduct its business as presently conducted; and is duly qualified to do business and in good standing in each and every state in the United States of America where its business requires such qualification, except where failure to qualify could not reasonably be expected to have a Material Adverse Effect.

 

Section 4.2  Financial Statements .  The financial statements of the Company and its Subsidiaries on a consolidated basis delivered to the Agent and the Lenders in connection with this Agreement fairly present, in accordance with Generally Accepted Accounting Principles, the financial condition and the results of operations of the Company and its Subsidiaries as of the dates and for the periods indicated.  Since the date of the last audited financial statements of the Company, no event, development or circumstance has occurred or exists that could reasonably be expected to have a Material Adverse Effect.

 

Section 4.3  Enforceable Obligations; Authorization .  The Loan Documents are legal, valid and binding obligations of the Company and the Guarantors, enforceable in accordance with their respective terms, except as may be limited by bankruptcy, insolvency and other similar laws affecting creditors rights generally and by general equitable principles.  The execution, delivery and performance of the Loan Documents have all been duly authorized by all necessary action; are within the power and authority of the Company and the Guarantors; do not and will not contravene or violate any Legal Requirement or the Organizational Documents of the Company or any Guarantors; do not and will not result in the breach of, or constitute a default under, any agreement or instrument by which the Company or any Guarantors or any of their respective Property may be bound or affected; and do not and will not result in the creation of any Lien upon any Property of the Company or any Guarantors except as expressly contemplated therein.  All necessary permits, registrations and consents for the execution, delivery and performance by the Company and its Subsidiaries of the Loan Documents have been obtained.

 

Section 4.4  Other Debt .  Neither the Company nor any of its Subsidiaries is in default in the payment of any other Indebtedness or under any agreement, mortgage, deed of trust, security

 

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agreement or lease to which it is a party, the result of which has, would or could reasonably be expected to have a Material Adverse Effect.

 

Section 4.5  Litigation .  There is no litigation or administrative proceeding pending or, to the knowledge of the Company, threatened against, nor any outstanding judgment, order or decree affecting, the Company or any of its Subsidiaries before or by any Governmental Authority or arbitral body which in the aggregate have, or if adversely determined, could reasonably be expected to have a Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is in default with respect to any material judgment, order or decree of any Governmental Authority.

 

Section 4.6  Title .  Each of the Company and its Subsidiaries has good and marketable title to its Property (other than negligible assets not material to the operations of the Company or any of its Subsidiaries), free and clear of all Liens except for Incidental Liens.

 

Section 4.7  Taxes .  Each of the Company and its Subsidiaries has filed all tax returns required to have been filed and paid all taxes shown thereon to be due, except those for which extensions have been obtained and except for those which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained in accordance with Generally Accepted Accounting Principles.

 

Section 4.8  Subsidiaries .  As of the date hereof, the Company has no Subsidiaries other than as listed on Schedule 4.8 attached hereto.  Except as expressly indicated on Schedule 4.8 attached hereto, each of the Company’s Subsidiaries is wholly owned by the Company.

 

Section 4.9  Representations by Others .  All representations and warranties made by or on behalf of the Company or any of its Subsidiaries in any Loan Document shall constitute representations and warranties of the Company hereunder.

 

Section 4.10  Permits, Licenses, Etc.   The Company and each of its Subsidiaries possess all permits, licenses, patents, patent rights or licenses, trademarks, trademark rights, trade names, trade name rights and copyrights which are required to conduct its business, and which the failure of the Company or any of its Subsidiaries to so possess would or could reasonably be expected to have a material adverse affect on the financial condition or operations of the Company and its Subsidiaries on a consolidated basis.

 

Section 4.11  ERISA .  No Reportable Event (as defined in Section 4043(b) of ERISA but excluding those events as to which the 30-day notice period is waived by applicable regulations) has occurred with respect to any Plan.  Each Plan complies in all material respects with all applicable provisions of ERISA, and the Company and each of its Subsidiaries have filed all reports required by ERISA and the Code to be filed with respect to each Plan.  The Company has no knowledge of any event which could result in a liability of the Company or any of its Subsidiaries to the Pension Benefit Guaranty Corporation other than for applicable premiums.  No accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any Plan.  No event has occurred and no condition exists that might reasonably be expected to constitute grounds for a Plan to be terminated under circumstances which would cause the lien provided under Section 4068 of ERISA to attach to any Property of the Company or any of its Subsidiaries.  No event has occurred and no condition exists that might reasonably be expected to cause the lien provided under Section 302 of ERISA or Section 412 of the Code to attach to any Property of the Company or any of its Subsidiaries.

 

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Section 4.12  Condition of Property .  The Property used or to be used in the continuing operations of the Company and its Subsidiaries, when taken as a whole, is in good repair, working order and condition.

 

Section 4.13  Assumed Names .  Neither the Company nor any of its Subsidiaries is currently conducting its business under any assumed name or names, except as set forth on Schedule 4.13 attached hereto.

 

Section 4.14  Investment Company Act .  Neither the Company nor any of its Subsidiaries is an investment company within the meaning of the Investment Company Act of 1940, as amended, or, directly or indirectly, controlled by or acting on behalf of any Person which is an investment company, within the meaning of said Act.

 

Section 4.15  Margin Stock .  The Company is not engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock, and no proceeds of any Loan will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, other than in respect of the Transaction.

 

Section 4.16  Agreements .  Schedule 4.16 attached hereto is a complete and correct list of (i) all credit agreements for borrowed money (other than the indebtedness governed hereby), indentures and capitalized leases and all Property subject to any Lien securing such Indebtedness or lease obligation, (ii) each letter of credit and guaranty for which the liability or potential liability of the Company and its Subsidiaries on a consolidated basis is in excess of $250,000, (iii) all other material instruments in effect as of the date hereof providing for, evidencing, securing or otherwise relating to any indebtedness for borrowed money of the Company or any of its Subsidiaries (other than the Indebtedness hereunder and Indebtedness secured by Incidental Liens), and (iv) all obligations of the Company or any of its Subsidiaries to issuers of appeal bonds issued for account of the Company or any of its Subsidiaries.  The Company shall, upon request by the Agent, deliver to the Agent and the Lenders a complete and correct copy of all such credit agreements, indentures, capitalized leases, letters of credit, guarantees and other instruments or leases described in Schedule 4.16 or arising after the date hereof, including any modifications or supplements thereto, as in effect on the date hereof.

 

Section 4.17  Environmental Matters .  No activity of the Company or any of its Subsidiaries requires any Environmental Permit which has not been obtained and which is not now in full force and effect, except to the extent failure to have any such Environmental Permit could not reasonably be expected to have a Material Adverse Effect.  The Company and its Subsidiaries are in compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Requirement of Environmental Law or Environmental Permit, except where failure to be in such compliance could not reasonably be expected to have a Material Adverse Effect.  The Company and its Subsidiaries (and, to the best knowledge of the Company, each of the prior owners or operators and predecessors in interest with respect to any of its or its Subsidiaries’ Property) (i) have obtained and maintained in effect all Environmental Permits, the failure to obtain which could reasonably be expected to have a Material Adverse Effect, (ii) along with their respective Property have been and are in compliance with all applicable Requirements of Environmental Law and Environmental Permits where such failure to comply therewith could reasonably be expected to have a Material Adverse Effect, (iii) along with their Property are not subject to any (A) Environmental Claims or (B) Environmental Liabilities, in either case direct or contingent, and whether known or unknown, arising from or based upon any act, omission, event, condition or circumstance occurring or existing on or prior to the date hereof which could reasonably be expected to have a Material Adverse Effect, and (iv) have not received individually or collectively any notice of any violation or alleged violation of any Requirements of Environmental Law or Environmental Permit or any Environmental Claim in connection

 

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with their respective Property which could reasonably be expected to have a Material Adverse Effect.  The present and future liability (including any Environmental Liability and any other damage to Persons or Property), if any, of the Company and with respect to the Property of any of the Company or any of its Subsidiaries which is reasonably expected to arise in connection with Requirements of Environmental Law, Environmental Permits and other environmental matters will not have a Material Adverse Effect on the Company and its Subsidiaries on a consolidated basis.

 

Section 4.18  Solvency .  The Company and its Subsidiaries are, on a consolidated basis, Solvent.

 

Section 4.19  Target Representations .  As to any date of determination prior to the consummation of the Merger, the Company makes the Target Representations, except where the failure of any Target Representation to be true and correct on such date would not be material and adverse to the interests of the Lenders.

 

ARTICLE V — AFFIRMATIVE COVENANTS

 

The Company covenants and agrees with the Agent and the Lenders that prior to the termination of this Agreement it will do, cause each of its Subsidiaries to do, and if necessary cause to be done, each and all of the following:

 

Section 5.1  Taxes, Existence, Regulations, Property, Etc .  At all times (a) pay when due all taxes and governmental charges of every kind upon it or against its income, profits or property, unless and only to the extent that the same shall be contested in good faith and reserves deemed adequate by the Agent have been established therefor; (b) do all things necessary to preserve its corporate existence, qualifications, rights and franchises in all States where such qualification is necessary or desirable; (c) comply in all material respects with all applicable Legal Requirements (including all applicable Requirements of Environmental Laws) in respect of the conduct of its business and the ownership of its Property; and (d) cause its Property to be protected, maintained and kept in good repair and make all replacements and additions to its Property as may be reasonably necessary to conduct its business properly and efficiently.

 

Section 5.2  Financial Statements and Information .  Furnish to the Agent and each Lender copies of each of the following:  (a) as soon as available and in any event within ninety (90) days after the end of each fiscal year of the Company, Annual Audited Financial Statements of the Company and its Subsidiaries, prepared on a consolidated basis; (b) as soon as available and in any event within forty-five (45) days after the end of each quarter (excluding the fourth quarter) of each fiscal year of the Company, Quarterly Unaudited Financial Statements of the Company and its Subsidiaries, prepared on a consolidated basis; (c) concurrently with the financial statements provided for in clauses (a) and (b) hereof, an Officer’s Certificate which shall include such schedules, computations and other information, in reasonable detail, as may be reasonably required by the Agent or any Lender to demonstrate compliance with the covenants set forth herein or reflecting any non-compliance therewith as of the applicable date, all certified as true, correct and complete by a Responsible Officer of the Company; (d) promptly upon their becoming available, all financial statements (other than the Annual Audited Financial Statements and Quarterly Unaudited Financial Statements), registration statements, reports and proxy statements which the Company or any of its Subsidiaries may file with the Securities and Exchange Commission, and (e) such other information relating to the financial condition and affairs of the Company and any of its Subsidiaries as from time to time may be reasonably requested by the Agent or any Lender.  In addition to the financial information and reports to be delivered in accordance with the prior sentence, if the most recent Annual Audited Financial Statements or Quarterly Unaudited Financial Statements of

 

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the Company, as applicable, demonstrate that the financial condition of the Company and its Subsidiaries, on a consolidated basis, has been negatively impacted as at the end of the immediately preceding fiscal quarter or fiscal year represented by such Annual Audited Financial Statements or Quarterly Unaudited Financial Statements, as applicable, for one or more reasons (said determination of negative impact to be made by the Agent in its reasonable discretion), upon the periodic request of the Agent (until the conditions attributable to such negative impact have been addressed and rectified to the reasonable satisfaction of the Agent), the Company agrees that it shall promptly provide the Agent and the Lenders with additional information relating to the financial condition and affairs of the Company and its Subsidiaries as may be reasonably requested by the Agent, including, but not limited to, reports setting out in sufficient detail the financial performance of each retail location for any and all stores and operations maintained by the Company and/or any of its Subsidiaries.

 

Notwithstanding the foregoing, information required to be delivered pursuant to clauses (a), (b) and (d) of this Section 5.2 shall be deemed to have been delivered if such information shall be available on the website of the Securities and Exchange Commission at http://www.sec.gov and the Company shall have notified the Agent of the availability of all such financial information; provided , that the Company shall deliver paper copies of such information to the Agent or any Lender that reasonably requests such delivery.  Information required to be delivered pursuant to this Section 5.2 (other than a Notice of Default) may also be delivered by electronic means pursuant to Section 9.2(b).

 

Section 5.3  Financial Tests .  (a) Have at all times a FIXED CHARGE COVERAGE RATIO of not less than 1.50 to 1.00; and (b) have at all times a LEVERAGE RATIO of not more than 3.00 to 1.00.

 

Section 5.4  Inspection .  Permit the Agent and the Lenders to inspect its Property, to examine its files, books and records and make and take away copies thereof, and to discuss its affairs with its officers and accountants, all at such times and intervals and to such extent as the Agent or any Lender may reasonably desire; provided that, in the absence of an Event of Default, no more than one such visit shall be permitted at the expense of the Company in any fiscal year.

 

Section 5.5  Further Assurances .  Promptly execute and deliver any and all other and further instruments which may be requested by the Agent or any Lender to cure any defect in the execution and delivery of any Loan Document or more fully to describe particular aspects of the Company’s agreements set forth in the Loan Documents or so intended to be.

 

Section 5.6  Books and Records .  Maintain books of record and account in accordance with Generally Accepted Accounting Principles.

 

Section 5.7  Insurance .  Maintain at all times insurance with such insurers, on such of its Property, officers, directors and employees, in such amounts and against such risks as is customarily maintained by other Persons of similar size and engaged in businesses substantially similar to its businesses, and furnish the Agent satisfactory evidence thereof promptly upon request.

 

Section 5.8  ERISA .  At all times:  (a) make contributions to each Plan in a timely manner and in an amount sufficient to comply with the minimum funding standards requirements of ERISA; (b) immediately upon acquiring knowledge of (i) any Reportable Event in connection with any Plan for which no administrative or statutory exemption exists or (ii) any “prohibited transaction”, as such term is defined in Section 4975 of the Code, in connection with any Plan, that could result in the imposition of material damages or a material excise tax on the Company, furnish the Agent a statement executed by a Responsible Officer of the Company setting forth the details thereof and the action which the Company or any such Subsidiary proposes to take with respect thereto and, when known, any action

 

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taken by the Internal Revenue Service with respect thereto; (c) notify the Agent promptly upon receipt by the Company or any of its Subsidiaries of any notice of the institution of any proceedings or other actions which may result in the termination of any Plan by the Pension Benefit Guaranty Corporation and furnish the Agent with copies of such notice; (d) pay when due all required premium payments to the Pension Benefit Guaranty Corporation; (e) furnish the Agent with copies of the annual report for each Plan filed with the Internal Revenue Service not later than ten (10) days after the Agent requests such report; (f) furnish the Agent with copies of any request for waiver of the funding standards or extension of the amortization periods required by Sections 303 and 304 of ERISA or Section 412 of the Code promptly after the request is submitted to the Secretary of the Treasury, the Department of Labor or the Internal Revenue Service, as the case may be; and (g) pay when due all installment contributions required under Section 302 of ERISA or Section 412 of the Code or within 10 days of a failure to make any such required contributions furnish the Agent with written notice of such failure.

 

Section 5.9  Use of Proceeds .  Subject to the terms and conditions contained herein, use the proceeds of the Loans (a) to finance the Tender Offer and the Merger, (b) to refinance certain existing Indebtedness of the Target, (c) to pay costs and expenses relating to the Transactions, and (d) support new store development, other acquisitions, the issuance of standby Letters of Credit and other general corporate purposes, including but not limited to, dividend payments and the repurchase of Stock.  No proceeds of the Loans shall be used in violation of Regulation U of the Board of Governors of the Federal Reserve System or any successor regulation thereof or of any other rule, statute or regulation governing Margin Stock from time to time.

 

Section 5.10    Additional Guaranties .  Notify the Agent promptly upon creation or acquisition by the Company or any of its Subsidiaries of any additional Subsidiary of the Company after the date hereof, and in connection therewith, furnish the Agent with the Organizational Documents of such newly acquired or created Subsidiary and sufficient information to disclose to the Agent in reasonable detail the ownership structure and capitalization of such Subsidiary, and, except with respect to a Non-Guarantor Subsidiary, promptly cause such newly created or acquired Subsidiary of the Company to execute and deliver to the Agent, for the ratable benefit of the Lenders and the lenders under the Term Loan Facility, a Joinder Agreement, together with such related certificates, opinions, and documents as the Agent or any Lender may reasonably require.

 

Section 5.11  Notice of Events .  Notify the Agent immediately upon acquiring knowledge of the occurrence of, or if the Company or any of its Subsidiaries causes or intends to cause, as the case may be:  (1) the institution of any lawsuit or administrative proceeding affecting the Company or any of its Subsidiaries, the adverse determination under which could reasonably be expected to have a Material Adverse Effect; (2) the occurrence of any Material Adverse Effect; (3) any Event of Default or any Default, together with a detailed statement by an appropriate officer or other responsible party acceptable to the Agent on behalf of the Company of the steps being taken to cure the effect of such Event of Default or Default; (4) the occurrence of a default or event of default by the Company or any of its Subsidiaries under any agreement or series of related agreements to which it is a party, which default or event of default could reasonably be expected to have a Material Adverse Effect; and (5) any material change in the accuracy of the representations and warranties of the Company or any of its Subsidiaries in this Agreement or any other Loan Document.  The Company will notify, or cause each Guarantor to notify, the Agent in writing within 30 days prior to the date that the Company or any Guarantor changes its name or the location of its chief executive office or principal place of business or the place where it keeps its books and records.  Any notice of a name change delivered to the Agent shall be accompanied by such certificates of Governmental Authorities as the Agent or any Lender may require substantiating such name change.

 

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Section 5.12  Environmental Matters .  Without limiting the generality of Section 5.1(c) hereof, (a) comply in all material respects with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Requirement of Environmental Law or Environmental Permit; (b) obtain and maintain in effect all Environmental Permits, the failure to obtain which could reasonably be expected to have a Material Adverse Effect; and (c) keep its Property free of any Environmental Claims or Environmental Liabilities which could reasonably be expected to have a Material Adverse Effect.

 

Section 5.13  End of Fiscal Year .  The Company shall cause each of its fiscal years and each of its Subsidiaries’ fiscal years to end on the last Sunday of each September.

 

Section 5.14  Consummation of Merger .  The Company shall use commercially reasonable efforts to consummate the Merger within 90 days following the Effective Date.

 

Section 5.15  Maintenance of Ratings .  The Company shall use commercially reasonable efforts to maintain corporate family (or equivalent) ratings from each of Moody’s and S&P.

 

Section 5.16  Covenant to Guarantee Obligations and Give Security .i.       Except in connection with the Disclosed Divestitures listed in part A of Schedule 1.1(a), the Loan Parties will upon (x) the request of the Agent, (y) the formation or acquisition of any new direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of any material property by any Loan Party, in each case at the Loan Parties’ expense:

 

 (a)          grant to the Collateral Agent, for the ratable benefit of the Lenders and the lenders under the Term Loan Facility, and upon the terms and conditions set forth in the Security Agreement A, a security interest in, each Loan Party’s right, title and interest in and to the Collateral pursuant to the terms of the Security Agreement A.

 

(b)           within 15 days after such request, formation or acquisition, (i) cause each such Subsidiary to duly execute and deliver to the Agent such guaranties or guaranty supplements so as to cause each such Subsidiary to guarantee all Guaranteed Obligations, as defined in the Guaranties, (ii) duly execute and deliver, and cause each such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver, to the Collateral Agent, pledges, assignments, security agreement supplements and other security agreements, covering the Collateral and as specified by and in form and substance reasonably satisfactory to the Agent, securing payment of all the obligations of the applicable Loan Party or such Subsidiary, as the case may be, under the Loan Documents and the Term Loan Facility and constituting Liens on all Collateral, or (iii) take whatever action, including to file Uniform Commercial Code financing statements, as may be necessary or advisable in the opinion of the Agent, to vest in the Collateral Agent (or its designee), valid and subsisting Liens in the Collateral as provided in this Section 5.16(b).

 

(c)           within 60 days after such request, formation or acquisition, deliver to the Agent, upon the request of the Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Collateral Agent and the Lenders, of counsel for the Loan Parties reasonably acceptable to the Agent as to the matters contained in clause (b) above, as to such guaranties, guaranty supplements, pledges, assignments, security agreement supplements and security agreements being legal, valid and binding obligations of each Loan Party party thereto enforceable in accordance with their terms, as to the matters contained in clause (b)(iii) above, as to such recordings, filings, notices, endorsements and other actions being sufficient to create valid perfected Liens on such Collateral to the extent a Lien can be created by filing under the Uniform Commercial Code, and as to such other matters as the Agent may reasonably request, in each case to the extent that such Collateral has a value in excess of $10,000,000.

 

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(d)           The Loan Parties will, upon the incurrence of inter-company debt not included in Part II of Schedule I to Security Agreement A on the Effective Date, promptly cause each Subsidiary payee under such inter-company debt to execute and deliver to the Collateral Agent, pledges, assignments, and security agreement supplements and other security agreements covering such Collateral and as specified by and in form and substance reasonably satisfactory to the Agent, securing payment of all the obligations of the applicable Loan Party or such Subsidiary, as the case may be, under the Loan Documents and the Term Loan Facility and constituting Liens on all such Collateral.

 

(e)           at any time and from time to time, promptly execute and deliver any and all further instruments and documents and take all such other action as the Agent may reasonably deem necessary or desirable in obtaining the full benefits of, or in perfecting and preserving the Liens of, such guaranties, pledges, assignments, security agreement supplements and security agreements in the Collateral.

 

Section 5.17  Covenant to Give Additional Security .  At any time during the Additional Security Period, the Loan Parties will upon (x) the request of the Agent, (y) the formation or acquisition of any new direct or indirect Subsidiaries by any Loan Party or (z) the acquisition of any material property by any Loan Party, then the Loan Parties shall, in each case at the Loan Parties’ expense:

 

(a)           grant to the Collateral Agent for the ratable benefit of the Lenders and the lenders under the Term Loan Facility, and upon the terms and conditions set forth in the Security Agreement B, a security interest in, each Loan Party’s right, title and interest in and to the Additional Collateral pursuant to the terms of the Security Agreement B.

 

(b)           within 15 days after such request, formation or acquisition, (i)  duly execute and deliver, and cause each such Subsidiary and each direct and indirect parent of such Subsidiary (if it has not already done so) to duly execute and deliver, to the Collateral Agent, a supplement to Security Agreement B, securing payment of all the obligations of the applicable Loan Party or such Subsidiary, as the case may be, under the Loan Documents and the Term Loan Facility and constituting Liens on all such properties, provided that no real property (or any interest therein) shall be subjected to a security interest in favor of the Agent for the benefit of the Lenders,