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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
AMONG
PETsMART, INC.,
CERTAIN LENDERS
AND
NATIONSBANK OF TEXAS, N.A.
as Administrative Lender
DATED AS OF APRIL 18, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS......................................... 1
Section 1.2. ACCOUNTING AND OTHER TERMS.......................... 16
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
Section 2.1. ADVANCES............................................ 16
Section 2.2. MAKING ADVANCES..................................... 17
Section 2.3. FEES................................................ 18
Section 2.4. REDUCTION OF COMMITMENT............................. 20
Section 2.5. Intentionally Omitted............................... 20
Section 2.6. PREPAYMENT AND REPAYMENT OF ADVANCES................ 20
Section 2.7. INTEREST ON ADVANCES................................ 21
Section 2.8. COMPUTATIONS AND MANNER OF PAYMENTS................. 22
Section 2.9. YIELD PROTECTION.................................... 23
Section 2.10. REIMBURSEMENT....................................... 23
Section 2.11. LIBOR LENDING OFFICES............................... 24
Section 2.12. CALCULATION OF LIBOR RATE........................... 24
ARTICLE III
LETTERS OF CREDIT
Section 3.1. LETTER OF CREDIT COMMITMENT; REIMBURSEMENT.......... 24
Section 3.2. STANDARD OF CARE.................................... 25
Section 3.3. EXPENSES OF THE ISSUING BANK........................ 26
Section 3.4. OBLIGATIONS OF THE COMPANY ABSOLUTE................. 26
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1. CONDITIONS PRECEDENT TO EFFECTIVENESS............... 27
Section 4.2. CONDITIONS PRECEDENT TO ALL ADVANCES................ 29
Section 4.3. CONDITIONS PRECEDENT TO ISSUANCE OF
LETTERS OF CREDIT.................................. 29
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1. ORGANIZATION AND QUALIFICATION...................... 30
Section 5.2. DUE AUTHORIZATION; VALIDITY......................... 30
Section 5.3. CONFLICTING AGREEMENTS AND OTHER MATTERS............ 30
Section 5.4. FINANCIAL STATEMENTS................................ 31
Section 5.5. LITIGATION.......................................... 31
Section 5.6. COMPLIANCE WITH APPLICABLE LAWS REGULATING THE
INCURRENCE OF INDEBTEDNESS......................... 31
Section 5.7. LICENSES, TITLE TO PROPERTIES, AND RELATED MATTERS.. 32
Section 5.8. OUTSTANDING INDEBTEDNESS............................ 32
Section 5.9. TAXES............................................... 32
Section 5.10. ERISA............................................... 32
Section 5.11. ENVIRONMENTAL LAWS.................................. 32
Section 5.12. DISCLOSURE.......................................... 33
ARTICLE VI
COVENANTS
Section 6.1. FINANCIAL COVENANTS................................. 33
Section 6.2. INDEBTEDNESS........................................ 34
Section 6.3. LIENS............................................... 34
Section 6.4. LICENSES AND MATERIAL AGREEMENTS.................... 35
Section 6.5. LIQUIDATION, DISPOSITIONS OF ASSETS, MERGER,
CONSOLIDATION...................................... 35
Section 6.6. DIVIDENDS........................................... 35
Section 6.7. INVESTMENTS......................................... 35
Section 6.8. ACQUISITIONS........................................ 36
Section 6.9. BUSINESS............................................ 37
Section 6.10. COMPLIANCE WITH APPLICABLE LAWS..................... 37
Section 6.11. INSURANCE........................................... 37
Section 6.12. INSPECTION RIGHTS................................... 37
Section 6.13. RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP....... 37
Section 6.14. REPORTING REQUIREMENTS.............................. 38
Section 6.15. USE OF PROCEEDS..................................... 39
Section 6.16. TRANSACTIONS WITH AFFILIATES........................ 39
Section 6.17. ENVIRONMENTAL LAW COMPLIANCE........................ 40
Section 6.18. INDIRECT FOREIGN SUBSIDIARIES....................... 40
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ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. EVENTS OF DEFAULT.................................. 41
Section 7.2. REMEDIES UPON DEFAULT.............................. 43
Section 7.3. CUMULATIVE RIGHTS.................................. 44
Section 7.4. WAIVERS............................................ 44
Section 7.5. Intentionally Omitted.............................. 45
Section 7.6. EXPENDITURES....................................... 45
Section 7.7. CONTROL............................................ 45
ARTICLE VIII
THE ADMINISTRATIVE LENDER
Section 8.1. AUTHORIZATION AND ACTION.......................... 45
Section 8.2. ADMINISTRATIVE LENDER'S RELIANCE, ETC............. 46
Section 8.3. NATIONSBANK OF TEXAS, N.A. AND AFFILIATES......... 46
Section 8.4. LENDER CREDIT DECISION............................ 46
Section 8.5. INDEMNIFICATION BY LENDERS........................ 46
Section 8.6. SUCCESSOR ADMINISTRATIVE LENDER................... 47
ARTICLE IX
CHANGES IN CIRCUMSTANCES
Section 9.1. LIBOR BASIS DETERMINATION INADEQUATE.............. 48
Section 9.2. ILLEGALITY........................................ 48
Section 9.3. INCREASED COSTS................................... 48
Section 9.4. BASE RATE ADVANCES RATHER THAN LIBOR ADVANCES..... 50
ARTICLE X
MISCELLANEOUS
Section 10.1. AMENDMENTS AND WAIVERS............................ 50
Section 10.2. NOTICES........................................... 50
Section 10.3. PARTIES IN INTEREST............................... 52
Section 10.4. ASSIGNMENTS AND PARTICIPATIONS.................... 52
Section 10.5. SHARING OF PAYMENTS............................... 53
Section 10.6. RIGHT OF SET-OFF.................................. 53
Section 10.7. COSTS, EXPENSES, AND TAXES........................ 54
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Section 10.8. INDEMNIFICATION BY COMPANY........................ 56
Section 10.9. RATE PROVISION.................................... 56
Section 10.10. SEVERABILITY................................. 57
Section 10.11. EXCEPTIONS TO COVENANTS...................... 57
Section 10.12. COUNTERPARTS................................. 57
Section 10.13. NO NOVATION.................................. 57
Section 10.14. PURCHASE BY LENDERS.......................... 58
Section 10.15. GOVERNING LAW; WAIVER OF JURY TRIAL.......... 58
SECTION 10.16. ENTIRE AGREEMENT............................. 58
SCHEDULES AND EXHIBITS:
Schedule I - Subsidiaries
Schedule II - Existing Indebtedness, Contingent Liabilities and Liens
Schedule III - Litigation
Schedule IV - Existing Investments
Schedule V - Environmental Matters
Exhibit A - Promissory Note
Exhibit B - Quarterly Compliance Certificate
Exhibit C - Investment Policy
Exhibit D - Subsidiary Guaranty
Exhibit E - Pledge Agreement
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THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is dated as of April 18,
1997, among PETsMART, Inc., a Delaware corporation (the "Company"), the
Lenders from time to time party hereto, and NationsBank of Texas, N.A., a
national banking association, individually and as Administrative Lender (in
such latter capacity, the "Administrative Lender").
WITNESSETH:
The Company, certain of the Lenders (the "Prior Lenders") and the
Administrative Lender are parties to that certain Second Amended and Restated
Credit Agreement, dated as of September 15, 1995, as amended by that certain
First Amendment to Amended and Restated Credit Agreement, dated effective as
of November 10, 1995, that certain Second Amendment to Amended and Restated
Credit Agreement, dated as of June 14, 1996, that certain Third Amendment to
Amended and Restated Credit Agreement, dated as of August 29, 1996, and that
certain Fourth Amendment to Amended and Restated Credit Agreement, dated as
of December 18, 1996 (said Amended and Restated Credit Agreement, as amended,
the "Prior Credit Agreement").
The Company and the Lenders desire to amend and restate the Prior Credit
Agreement in its entirety to, among other things, amend certain covenants
therein and extend the maturity of the Commitment.
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
parties hereto agree that the Prior Credit Agreement shall be amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of such terms):
"ACQUISITION" shall mean any transaction pursuant to which the Company or
any Subsidiary, (i) whether by means of purchase or other acquisition of
stock or other securities or other equity participation or interest, (A)
acquires more than 50% of the equity interest in any Person pursuant to a
solicitation by the Company or such Subsidiary of tenders of equity
securities of such Person, or through one or more negotiated block, market,
private or other
transactions not involving a tender offer, or a combination of any of the
foregoing, (B) makes any corporation a Subsidiary, or causes any corporation,
other than a Subsidiary, to be merged into the Company or any Subsidiary, or
agrees to purchase all or substantially all of the assets of any corporation,
pursuant to a merger, purchase of assets or other reorganization providing
for the delivery or issuance to the holders of such corporation's then
outstanding securities, in exchange for such securities, of cash or
securities of the Company or any Subsidiary, or any combination thereof, or
(ii) purchases all or substantially all of the business or assets of any
Person or of any operating division of any Person.
"ACQUISITION CONSIDERATION" shall mean the consideration given by the
Company or any Subsidiary for an Acquisition, including but not limited to
the fair market value of any cash, property, stock or services given, and the
amount of any Indebtedness assumed.
"ACQUISITION SUBSIDIARY" shall mean any Subsidiary (i) formed solely for
the purpose of consummating an Acquisition, (ii) capitalized with the minimum
requirements of Law, and (iii) which is merged out of existence immediately
upon the consummation of the applicable Acquisition.
"ADVANCE" means an advance made by a Lender to the Company pursuant to
Section 2.1 hereof, including, without limitation any Refinancing Advance.
"AFFILIATE" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with another Person.
"ADMINISTRATIVE LENDER" means NationsBank of Texas, N.A., a national
banking association, in its capacity as Administrative Lender hereunder, or
any successor Administrative Lender appointed pursuant to Section 8.6 hereof.
"ADMINISTRATIVE LENDER FEE LETTER" shall have the meaning given to such
term in Section 2.3(b) hereof.
"AGREEMENT" means this Third Amended and Restated Credit Agreement, as
hereafter amended, modified, or supplemented in accordance with its terms.
"APPLICABLE LAW" means (i) in respect of any Person, all provisions of
constitutions, statutes, laws, ordinances, rules, regulations and orders of
governmental bodies, or regulatory agencies applicable to such Person, and
all orders and decrees of all courts and arbitrators in proceedings or
actions to which the Person in question is a party and (ii) in respect of
contracts made or performed in the State of Texas, "Applicable Law" shall
also mean the laws of the United States of America, including, without
limiting the foregoing, 12 USC Sections 85 and 86, as amended to the date
hereof and as the same may be amended at any time and from time to time
hereafter, and any other statute of the United States of America now or at
any time hereafter prescribing the maximum rates of interest on loans and
extensions of credit, and the laws of the
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State of Texas, including, without limitations, Articles 5069-1.04 and
5069-1.07(a), Title 79, Revised Civil Statutes of Texas, 1925, as amended
("Art. 1.04"), and any other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and extensions of
credit, provided however, that pursuant to Article 5069-15.10(b), Title 79,
Revised Civil Statutes of Texas, 1925, as amended, the Company agrees that
the provisions of Chapter 15, Title 79, Revised Civil Statutes of Texas,
1925, as amended, shall not apply to the Advances hereunder.
"APPLICABLE MARGIN" shall mean the following per annum percentages,
applicable in the following situations:
Non-Investment Grade Investment Grade
APPLICABILITY LIBOR MARGIN LIBOR MARGIN
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(i) If the Fixed Charges Coverage Ratio 0.375% 0.375%
is equal to or greater than 2.5 to 1
(ii) If the Fixed Charges Coverage Ratio 0.500% 0.500%
is less than 2.5 to 1 but is equal to or
greater than 2.0 to 1
(iii) If the Fixed Charges Coverage Ratio 0.625% 0.500%
is less than 2.0 to 1
The Applicable Margin payable by the Company on the Advances outstanding
hereunder shall be subject to reduction or increase, as applicable and as set
forth in the table above, on a quarterly basis according to the Fixed Charges
Coverage Ratio; PROVIDED, that each adjustment in the Applicable Margin shall
be effective as of the fifth day following the date of receipt by the
Administrative Lender of the financial statements required pursuant to
Section 6.14(a) or 6.14(b) hereof, as appropriate. If financial statements
of the Company (and corresponding Quarterly Compliance Certificate setting
forth the Fixed Charges Coverage Ratio) are not received by the
Administrative Lender by the fifth day following the date required pursuant
to Section 6.14(a) or 6.14(b) hereof, as appropriate, the Applicable Margin
shall be determined as if the Fixed Charges Coverage Ratio is less than 2.0
to 1 until such time as such financial statements and Quarterly Compliance
Certificate are received. The Applicable Margin from and including the date
hereof to the date of the initial adjustment to be made therein as provided
above shall be 0.625%. During any period in which the Company has a rating
of BBB- or better from S&P or Baa3 or better from ▇▇▇▇▇'▇, the Applicable
Margin shall be equal to the applicable LIBOR Margin set forth above in the
column designated Investment Grade LIBOR Margin. At all other times the
Applicable Margin shall be equal to the applicable LIBOR Margin set forth
above in the column designated Non-Investment Grade LIBOR Margin. Any
decrease or increase in the LIBOR Margins based on a change in the Company's
rating by S&P or ▇▇▇▇▇'▇ shall be effective as of the fifth day following any
such change in the rating which requires a change in the LIBOR Margin used to
calculate the Applicable Margin.
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"ART. 1.04" shall have the meaning given to such term in the definition
herein of "Applicable Law".
"AUDITOR" means Price Waterhouse, or other independent certified public
accountants selected by the Company and reasonably acceptable to the
Administrative Lender.
"BASE RATE" means, for any day, a per annum interest rate equal to the
lesser of (a) the Highest Lawful Rate on such day, or (b) the higher of (i)
the sum of (x) 0.50% plus (y) the Federal Funds Rate on such day or (ii) the
Prime Rate on such day. The Base Rate shall be adjusted automatically
without notice to the Company as of the opening of business on the effective
date of each change in the Prime Rate or Federal Funds Rate, as the case may
be, to account for such change.
"BASE RATE ADVANCE" means any Advance bearing interest based upon the
Base Rate.
"BUSINESS DAY" means a day of the year, other than a Saturday or Sunday,
on which banks are (a) open for the transaction of business in Dallas, Texas,
New York, New York, and Los Angeles, California, and, (b) with respect to any
LIBOR Advance, for the transaction of international business (including
dealings in U.S. Dollar deposits) in London, England.
"CAPITAL EXPENDITURES" means the aggregate amount of all purchases or
acquisitions of items considered to be capital items under GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of
the foregoing.
"CAPITAL LEASES" means capital leases and subleases, as defined in
accordance with GAAP.
"CASH COLLATERAL" means cash or time deposits with, and certificates of
deposit and banker's acceptances issued by, the Administrative Lender which
is subject to a fully perfected, first priority Lien in favor of the
Administrative Lender.
"CASH EQUIVALENTS" means investments (directly or through a money market
fund) in (a) certificates of deposit, repurchase agreements, and other
interest bearing deposits or accounts with United States commercial banks
having a combined capital and surplus of at least $100,000,000, or with
insurance companies whose debt obligations have one of the three highest
ratings obtainable from S&P or ▇▇▇▇▇'▇, which certificates, repurchase
agreements, deposits, and accounts mature within one year from the date of
investment, (b) obligations issued or unconditionally guaranteed by the
United States government, or issued by an agency thereof and backed by the
full faith and credit of the United States government, which obligations
mature within one year from the date of investment, (c) direct obligations
issued by any state or political
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subdivision of the United States, which mature within one year from the date
of investment and have the highest rating obtainable from S&P or ▇▇▇▇▇'▇ on
the date of investment, and (d) commercial paper which has one of the three
highest ratings obtainable from S&P or ▇▇▇▇▇'▇.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease or transfer of all or substantially all of the Company's
assets to any Person or group (as such term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended), (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) of a direct or indirect
majority in interest (more than 50%) of the voting power of the voting stock
of the Company by way of merger or consolidation or otherwise, or (iv) the
first day on which a majority of the members of the board of directors of the
Company are not Continuing Directors.
"COMMITMENT" means, as to the Lenders, $125,000,000, and, as to each
initial Lender, the amount set forth opposite the name of such Lender on the
signature pages hereof, as reduced from time to time pursuant to Section 2.4
hereof or pursuant to an assignment pursuant to Section 10.4 hereof.
"COMPANY" means PETsMART, Inc., a Delaware corporation.
"CONTINGENT LIABILITY" means, as to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic
effect of guaranteeing any Indebtedness or obligation of any other Person in
any manner, whether directly or indirectly, including without limitation any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness, (b) to purchase Property or services
for the purpose of assuring the owner of such Indebtedness of its payment, or
(c) to maintain the solvency, working capital, equity, cash flow, fixed
charge or other coverage ratio, or any other financial condition of the
primary obligor so as to enable the primary obligor to pay any Indebtedness
or to comply with any agreement relating to any Indebtedness or obligation.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the board of directors of the Company who (i) was a member of such board
of directors on the date hereof or (ii) was nominated for election or elected
to such board of directors with the affirmative vote of a majority of the
Continuing Directors who were members of such board of directors at the time
of such nomination or election.
"DEBT RATIO" means, as of any date of determination, for the Company and
its Subsidiaries, on a consolidated basis, the ratio of (a) Total Debt as of
the date of determination plus the sum of lease expense pursuant to Operating
Leases (such lease expense to be in an
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amount equal to the product of lease expense pursuant to Operating Leases for
the four fiscal quarters immediately preceding the date of determination
multiplied by eight) to (b) EBITDA for the four fiscal quarters immediately
preceding the date of determination plus lease expense pursuant to Operating
Leases for the four fiscal quarters immediately preceding the date of
determination.
"DEBT TO WORTH RATIO" means a ratio of Total Liabilities to Tangible Net
Worth.
"DEFAULT" means any event specified in Section 7.1 hereof, whether or not
any requirement in connection with such event for the giving of notice, lapse
of time, or happening of any further condition has been satisfied.
"DIVIDEND" means, as to any Person, (a) any declaration or payment of any
dividend (other than a stock dividend) on, or the making of any pro rata
distribution, loan, advance, or investment to or in any holder (in its
capacity as a shareholder) of, any shares of capital stock of such Person, or
(b) any purchase, redemption, or other acquisition or retirement for value of
any shares of capital stock of such Person; provided, however, "Dividend"
shall not mean (y) purchases of common stock of the Company by the Company
from employees, consultants or directors of the Company in connection with
the termination of their employment or other relationship with the Company or
(z) purchases of preferred stock of the Company by the Company as a result of
the exercise by the Company of its right of first refusal not to exceed
$100,000 in the aggregate during any fiscal year.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Company other than a
Foreign Subsidiary.
"EBITDA" means, for the Company and its Subsidiaries, calculated on a
consolidated basis in accordance with GAAP, the sum of (a) net profit before
Taxes (but excluding from the calculation thereof the effect of one-time
charges to operating income with respect to the costs related to Pooling
Acquisitions by the Company; provided that such costs shall not, together
with the aggregate Acquisition Consideration (other than capital stock of the
Company) and Capital Expenditures paid or incurred in connection with
Acquisitions during each fiscal year, exceed 15% of Tangible Net Worth during
each fiscal year), plus (b) depreciation and amortization expense, and other
non-cash items deducted in the calculation of net operating income, plus (c)
interest expense (including interest expense pursuant to Capital Leases), net
of interest and other investment income, plus (d) any net extraordinary
losses included in the calculation of net operating income, minus (e) any net
extraordinary gains included in the calculation of net operating income.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws
of the United States, or any state thereof, and having total assets in excess
of $1,000,000,000; (b) a savings and loan association or savings bank
organized under the laws of the United States, or any state thereof, having
total assets in excess of $500,000,000, and not in receivership or
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conservatorship; (c) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through
a branch or agency located in the country in which it is organized or another
country which is described in this clause; and (d) the central bank of any
country which is a member of the Organization for Economic Cooperation and
Development.
"ENVIRONMENTAL LAW" means any Law, permit, consent, approval, license,
award, or other authorization or requirement of any Tribunal relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, publicly owned treatment works, septic system,
or land, or otherwise relating to pollution or to the protection of health or
the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder, as from time to
time in effect.
"ERISA AFFILIATE" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of the Company or any of its
Subsidiaries, or is under common control with the Company or any of its
Subsidiaries, within the meaning of Section 414(b) or (c) of the Internal
Revenue Code of 1986, as amended, and the regulations and rulings issued
thereunder.
"ERISA EVENT" means (a) a reportable event, within the meaning of Section
4043 of ERISA, unless the 30-day notice requirement with respect thereto has
been waived by the PBGC, (b) the provision by the administrator of any Plan
of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2)
of ERISA (including any such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA), (c) the cessation of operations at a
facility in the circumstances described in Section 4068(f) of ERISA, (d) the
withdrawal by the Company, any Subsidiary, or an ERISA Affiliate from a
Multiple Employer Plan during a Plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA, (e) the failure by the
Company, any Subsidiary, or any ERISA Affiliate to make a payment to a Plan
required under Section 302 of ERISA, (f) the adoption of an amendment to a
Plan requiring the provision of security to such Plan, pursuant to Section
307 of ERISA, or (g) the institution by the PBGC of proceedings to terminate
a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition that constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, a Plan.
"EVENT OF DEFAULT" means any of the events specified in Section 7.1 of
this Agreement, provided there has been satisfied any requirement in
connection therewith for the giving of notice, lapse of time, or happening of
any further condition.
"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
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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 which is a Business Day, the average of
the quotations for such date on such transactions received by the
Administrative Lender from three federal funds brokers of recognized standing
selected by it.
"FIXED CHARGES COVERAGE RATIO" means, for the Company and its
Subsidiaries determined on a consolidated basis and calculated for the four
fiscal quarters ending on the date of calculation, the ratio of (a) EBITDA
plus lease payments payable pursuant to Operating Leases, to (b) lease
payments payable pursuant to Operating Leases, plus all principal, interest,
and other amounts payable with respect to Total Debt.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Company which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"GAAP" means generally accepted accounting principles applied on a
consistent basis. Application on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period, except for new
developments or statements promulgated by the Financial Accounting Standards
Board.
"HAZARDOUS MATERIALS" means all materials subject to any Environmental
Law, including without limitation materials listed in 49 C.F.R. Section
172.101, Hazardous Substances, explosive or radioactive materials, hazardous
or toxic wastes or substances, petroleum or petroleum distillates, asbestos,
or material containing asbestos.
"HAZARDOUS SUBSTANCES" means hazardous waste as defined in the Clean
Water Act, 33 U.S.C. Section 1251 ET SEQ., the Comprehensive Environmental
Response Compensation and Liability Act as amended by the Superfund
Amendments and Reauthorization Act, 42 U.S.C. Section 9601 ET SEQ.
("CERCLA"), the Resource Conservation Recovery Act, 42 U.S.C. Section 6901
ET SEQ., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET
SEQ. ("RCRA")
"HIGHEST LAWFUL RATE" means at the particular time in question the
maximum rate of interest which, under Applicable Law, any Lender is then
permitted to charge on the Obligation. If the maximum rate of interest
which, under Applicable Law, any Lender is permitted to charge on the
Obligation shall change after the date hereof, the Highest Lawful Rate shall
be automatically increased or decreased, as the case may be, from time to
time as of the effective time of each change in the Highest Lawful Rate
without notice to the Company. For purposes of determining the Highest
Lawful Rate under Applicable Law, the applicable rate ceiling shall be (i)
the indicated rate ceiling described in and computed in accordance with the
provisions of Section (a)(1) of Art. 1.04; or (ii) provided notice is given
as required in Section (h)(1) of said Art. 1.04, either the annualized
ceiling or quarterly ceiling computed pursuant to Section (d) of said Art.
1.04; provided, however, that at any time the indicated rate ceiling, the
annualized ceiling or the quarterly ceiling, as applicable, shall be less
than 18% per annum or more than
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24% per annum, the provisions of Sections (b)(1) and (2) of said Art. 1.04
shall control for purposes of such determination, as applicable.
"INDEBTEDNESS" means (a) all obligations, contingent or otherwise, which
in accordance with GAAP are required to be classified on the balance sheet as
liabilities, and in any event including Capital Leases, Contingent
Liabilities that are required to be disclosed and quantified in notes to
consolidated financial statements in accordance with GAAP, and liabilities
secured by any Lien on any Property, regardless of whether such secured
liability is with or without recourse, (b) to the extent not otherwise
included in the foregoing subsection (a), all obligations under Interest
Hedge Agreements, all indebtedness for borrowed money, and all reimbursement
obligations with respect to outstanding letters of credit, and (c) to the
extent not otherwise included in the foregoing subsections (a) or (b), all
obligations as lessee under any lease constituting part of a sale and
leaseback arrangement or under any "tax retention operating lease" or similar
lease pursuant to which the lessee has an obligation upon termination or
expiration of the lease to purchase the property covered thereby in an amount
equal to the lessor's Indebtedness related to such real property.
"INSUFFICIENCY" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of
ERISA.
"INTEREST HEDGE AGREEMENTS" shall mean any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts
and warrants, as the same may be amended or modified and in effect from time
to time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"INTEREST PERIOD" means, for any LIBOR Advance, the period beginning on
the date the Advance is made and ending one, two, three or six months
thereafter (as the Company shall select).
"INVESTMENT" means any acquisition of all or substantially all assets of
any Person, or any direct or indirect purchase or other acquisition of, or a
beneficial interest in, capital stock or other securities of any other
Person, or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts, and similar
expenditures in the ordinary course of business), or capital contribution to
or investment in any other Person, including without limitation the
incurrence or sufferance of Indebtedness or accounts receivable of any other
Person that are not current assets or do not arise from sales to that other
Person in the ordinary course of business, which is not an Acquisition.
-9-
"INVESTMENT POLICY" means the investment policy of the Company adopted by
the board of directors of the Company and in effect on the date of this
Agreement as set forth on EXHIBIT C, and any amendments and modifications
thereto that are approved in writing by the Majority Lenders.
"ISSUING BANK" means NationsBank, or any other Lender or national banking
association designated by the Administrative Lender and acceptable to the
Company, as issuer of any Letter of Credit.
"LENDERS" means the Lenders listed on the signature pages hereof, and
each Eligible Assignee that hereafter becomes a party hereto pursuant to
Section 9.4 hereof.
"LETTER OF CREDIT" means any Trade Letter of Credit or Standby Letter of
Credit issued pursuant to ARTICLE III hereof.
"LETTER OF CREDIT COMMITMENT" means $15,000,000, as reduced from time to
time pursuant to Section 2.4 hereof.
"LIBOR ADVANCE" means an Advance which the Company requests to be made as
a LIBOR Advance or which is reborrowed as a LIBOR Advance, in accordance with
the provisions of Section 2.2 hereof.
"LIBOR BASIS" means a simple per annum interest rate equal to the lesser
of (a) the Highest Lawful Rate, or (b) the sum of the LIBOR Rate plus the
Applicable Margin. The LIBOR Basis shall, with respect to LIBOR Advances
subject to reserve or deposit requirements, be subject to premiums therefor
assessed by each Lender, which are payable directly to each Lender. Once
determined, the LIBOR Basis shall remain unchanged during the applicable
Interest Period.
"LIBOR LENDING OFFICE" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on SCHEDULE I attached hereto, and
such other office of the Lender or any of its affiliates hereafter designated
by notice to the Company and the Administrative Lender.
"LIBOR RATE" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) 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 Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR RATE" shall mean, for any LIBOR
Advance for any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page 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 Interest Period for a term comparable to such Interest
Period; PROVIDED, HOWEVER, if more
-10-
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
"LICENSE" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or
grant of rights by any Tribunal or third person necessary or appropriate for
such Person to own, maintain, or operate its business or Property, unless the
failure to obtain, retain, or comply with same would not constitute a
Material Adverse Change.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien,
or charge of any kind, including without limitation any agreement to give or
not to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement or other similar form of public
notice under the Applicable Laws of any jurisdiction (except for the filing
of a financing statement or notice in connection with an operating lease).
"LITIGATION" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under
or pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Applicable Law, or under or
pursuant to any contract, agreement, or other instrument.
"LOAN PAPERS" means this Agreement, the Notes, Letters of Credit, any
Subsidiary Guaranty, the Pledge Agreement, applications and agreements for
Letters of Credit, any Interest Hedge Agreement with any Lender, any fee
letters, and all other documents, instruments, agreements, or certificates
executed or delivered by any Person in connection with this Agreement or as
security for the Obligation hereunder.
"MAJORITY LENDERS" means any combination of Lenders having at least
66-2/3% of the aggregate amount of outstanding Advances plus liabilities with
respect to outstanding Letters of Credit; provided, however, that if no
Advances and Letters of Credit are outstanding, such term means any
combination of Lenders having Specified Percentages equal to at least 66-2/3%.
"MATERIAL ADVERSE CHANGE" means any circumstance or event that is or
would reasonably be expected to (a) be material and adverse to the financial
condition, business operations, prospects, or Properties of the Company and
its Subsidiaries as a whole or (b) materially and adversely affect the
validity or enforceability of any of the Loan Papers.
"MATURITY DATE" means April 17, 2000, or such earlier date that the
Commitment is terminated.
"MAXIMUM AMOUNT" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
-11-
"MONTHLY DATE" means the first day of each month during the term of this
Agreement.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Company, any Subsidiary, or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions, such plan being maintained pursuant to one or more
collective bargaining agreements.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Company, any Subsidiary, or any ERISA Affiliate and at least one Person other
than the Company, any Subsidiary, and any ERISA Affiliate, or (b) was so
maintained and in respect of which the Company, any Subsidiary, or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in the
event such plan has been or were to be terminated.
"NATIONSBANK" means NationsBank of Texas, N.A., a national banking
association.
"NEGATIVE PLEDGE" means any agreement, contract or arrangement whereby
any Person is prohibited from, or would otherwise be in default as a result
of, creating, assuming, incurring or suffering to exist, directly or
indirectly, any Lien on any of its assets.
"NET INCOME" means net profit (or loss) after taxes of the Company and
its Subsidiaries, on a consolidated basis, determined in accordance with GAAP.
"NET ISSUANCE PROCEEDS" means the gross proceeds received by the Company
in connection with or as a result of any issuance or sale of any capital
stock, minus the sum of reasonable out-of-pocket costs and expenses
(including underwriting fees) incurred by the Company in connection with such
issuance and sale.
"NET WORTH" means, for the Company and its Subsidiaries on a consolidated
basis, determined in accordance with GAAP, the sum of (a) capital stock taken
at stated or par value, plus (b) capital surplus, plus (c) retained earnings
less treasury stock.
"NOTE" means each promissory note of the Company evidencing Advances and
obligations owing hereunder to a Lender, in substantially the form of EXHIBIT
A attached hereto, payable to the order of such Lender and in a maximum
principal amount equal to such Lender's Specified Percentage of the
Commitment.
"OBLIGATION" means all present and future obligations, indebtedness
(including the Reimbursement Obligations) and liabilities, and all renewals
and extensions of all or any part
-12-
thereof, of the Company and its Subsidiaries to Lenders arising from, by
virtue of, or pursuant to this Agreement, any of the other Loan Papers and
any and all renewals and extensions thereof or any part thereof, or future
amendments thereto, all interest accruing on all or any part thereof and
attorneys' fees incurred by each Lender for the administration, execution of
waivers, amendments and consents, and in connection with any restructuring,
workouts or in the enforcement or the collection of all or any part thereof,
whether such obligations, indebtedness and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several.
"OPERATING LEASES" mean operating leases, as defined in accordance with
GAAP.
"PAYMENT DATE" means the last day of the Interest Period for any Advance
and the Maturity Date.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"PERSON" means an individual, partnership, joint venture, corporation,
trust, Tribunal, unincorporated organization, and government, or any
department, agency, or political subdivision thereof.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLEDGE AGREEMENT" means one or more pledge agreements, executed by the
Company or any Domestic Subsidiary of the Company, granting a first priority
lien on 65% of the issued and outstanding equity interests of any direct
Foreign Subsidiary of the Company or such Domestic Subsidiary, substantially
in the form of EXHIBIT E hereto, as any such agreement may be amended,
modified, restated or extended from time to time.
"POOLING ACQUISITION" means any business combination constituting an
Acquisition which is accounted for on a pooling of interests basis under GAAP.
"PRIME RATE" means a fluctuating rate per annum as shall be in effect
from time to time equal to the rate of interest announced or published by
NationsBank as its prime rate, and which may not necessarily be the lowest
interest rate charged by NationsBank.
"PROHIBITED TRANSACTION" has the meaning specified therefor in Section
4975 of the Internal Revenue Code of 1986, as amended, or Section 406 of
Title I of ERISA.
"PROPERTY" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"QUARTERLY COMPLIANCE CERTIFICATE" means a certificate of an officer of
the Company acceptable to the Administrative Lender, in the form of EXHIBIT B
hereto, (a) certifying that such
-13-
individual has no knowledge that a Default or Event of Default has occurred
and is continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action being taken
or proposed to be taken with respect thereto, and (b) setting forth detailed
calculations with respect to the covenants described in Section 6.1 hereof.
"QUARTERLY DATE" means the first day of each February, May, August and
November during the term of this Agreement, commencing August 1, 1997.
"REFINANCING ADVANCE" means any Advance which is used to pay the
principal amount (or any portion thereof) of an Advance at the end of its
Interest Period and which, after giving effect to such application, does not
result in an increase in the aggregate amount of outstanding Advances.
"REIMBURSEMENT OBLIGATIONS" means, at any date of determination, the sum
of (a) the maximum aggregate amount which is then available to be drawn under
all Letters of Credit plus (b) the aggregate amount of all drawings under
Letters of Credit which have not been reimbursed by the Company or refinanced
by Advances.
"RELATED BUSINESS" means the business of providing pet food, pet supplies
and accessories and related pet services, and activities incidental thereto.
"RELEASE DATE" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitment has been terminated.
"RIGHTS" means rights, remedies, powers, and privileges.
"S&P" means Standard & Poor's Ratings Group, a Division of ▇▇▇▇▇▇-▇▇▇▇,
Inc., a New York corporation.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, other than a Multiple Employer Plan.
"SOLVENT" means, with respect to any Person, that on such date (a) the
fair value of the Property of such Person is greater than the total amount of
liabilities, including without limitation Contingent Liabilities of such
Person, (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured, (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 as such debts and liabilities
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.
-14-
"SPECIFIED PERCENTAGE" means, as to any Lender, the percentage indicated
beside its name on the signature pages hereof, or specified in a notice by
the Administrative Lender to the Company in connection with an assignment
pursuant to Section 10.4 hereof.
"STANDBY LETTER OF CREDIT" means any Letter of Credit issued under the
Letter of Credit Commitment other than a Trade Letter of Credit.
"SUBORDINATED DEBT" means any Indebtedness of the Company or its
Subsidiaries which shall have been and continues to be validly and
effectively subordinated to the prior payment in full of the Obligation on
terms and documentation approved in writing by the Majority Lenders.
"SUBSIDIARY" of any Person means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of:
(a) the outstanding capital stock having 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 or
joint venture, or
(c) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such Person
and one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"SUBSIDIARY GUARANTY" means any guaranty executed by one or more
Subsidiaries, guaranteeing payment and performance of the Obligation,
substantially in the form of EXHIBIT D hereto, as such agreement may be
amended, modified, renewed or extended from time to time.
"TANGIBLE NET WORTH" means with respect to the Company and its
Subsidiaries on a consolidated basis, as of any date of determination, the
excess of (a) Net Worth over (b) the sum, without duplication, of unamortized
debt discount and expense, goodwill, trademarks, trade names, patents,
deferred charges and other intangible assets and any write-up of the value of
assets after July 6, 1995; all determined in accordance with GAAP, including
the making of appropriate deductions for minority interest (if any) in
Subsidiaries.
"TAXES" means all taxes, assessments, imposts, fees, or other charges at
any time imposed by any Applicable Laws or Tribunal.
"TOTAL DEBT" means, as of the date of determination, determined for the
Company and its Subsidiaries on a consolidated basis, the sum (without
duplication) of (a) all principal and interest owing under the Loan Papers,
(b) all Indebtedness evidenced by a promissory note, bond,
-15-
debenture or otherwise representing borrowed money, (c) all Capital Leases,
and (d) all Contingent Liabilities; PROVIDED, HOWEVER, "TOTAL DEBT" shall not
include any of the Company's obligations as lessee under (i) that certain
Amended and Restated Lease Agreement dated as of April 18, 1997, between the
Company and Arizona Funding Corporation, or any documents related thereto,
(ii) that certain Lease Agreement dated as of November 27, 1995, between the
Company and Pet Stores Funding Corporation, or any documents related thereto,
(iii) that certain Lease Agreement dated as of July 6, 1995, between the
Company and First Security Bank of Utah, N.A., not individually, but solely
as Owner Trustee under the Pet Stores Trust 1995-1, or any documents related
thereto, (iv) that certain Lease Agreement dated as of September 5, 1996,
between the Company and First Security Bank, N.A., not individually, but
solely as Owner Trustee under the Pet Stores Trust 1996-1, or any documents
related thereto, and (v) that certain Lease Agreement dated as of April 18,
1997, between the Company and First Security Bank, N.A., not individually,
but solely as Owner Trustee under the Pet Stores Trust 1997-1, or any
documents related thereto.
"TOTAL LIABILITIES" means the amount of total liabilities of the Company
and its Subsidiaries which would be shown in accordance with GAAP
consistently applied on a consolidated balance sheet and which in any event
shall include (without duplication):
(i) all guaranties and all debt, obligations and liabilities secured
by any Lien upon any property owned by Company or any Subsidiary even
though it has not assumed or became liable for the payment of same; and
(ii) Capital Leases.
"TRADE LETTER OF CREDIT" means any Letter of Credit issued under the
Letter of Credit Commitment in support of obligations incurred in the
ordinary course of business for the purchase of goods and services.
"TRIBUNAL" means any state, commonwealth, federal, foreign, territorial,
or other court or government body, subdivision, agency, department,
commission, board, bureau, or instrumentality of a governmental body.
"UCC" means the Uniform Commercial Code of Texas, as amended.
"WITHDRAWAL LIABILITY" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
1.2 ACCOUNTING AND OTHER TERMS. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP consistently applied on a consolidated basis for the
Company and its Subsidiaries, unless otherwise expressly stated herein.
References herein to one gender shall be deemed to include all other genders.
-16-
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
2.1. ADVANCES.
(a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Advances to the Company until the Maturity
Date in an aggregate outstanding amount not to exceed such Lender's Specified
Percentage of the Commitment less its Specified Percentage of the aggregate
amount of all Reimbursement Obligations then outstanding (assuming compliance
with all conditions to drawing). Subject to Section 2.10 hereof, the Company
may borrow, repay, and reborrow in accordance with this Agreement.
Notwithstanding any provision of any Loan Papers to the contrary, in no event
shall the aggregate Advances outstanding plus all outstanding Reimbursement
Obligations exceed the Commitment. Any Advance shall, at the option of the
Company as provided in Section 2.2 hereof (and, in the case of LIBOR
Advances, subject to availability and to the provisions of ARTICLE IX
hereof), be a Base Rate Advance or a LIBOR Advance; provided that there shall
not be outstanding to any Lender, at any one time, more than five LIBOR
Advances. On the Maturity Date unless sooner paid as provided herein, the
outstanding Advances shall be repaid in full.
2.2. MAKING ADVANCES.
(a) In the case of Base Rate Advances, the Company shall give the
Administrative Lender at least one Business Day's irrevocable written notice,
or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Company's failure to confirm any telephonic
notice in writing shall not invalidate any notice so given), of its intention
to borrow or reborrow a Base Rate Advance hereunder. Notice shall be given
to the Administrative Lender prior to 1:00 p.m. Dallas, Texas time, in order
for such Business Day to count toward the minimum number of Business Days
required. Such notice of borrowing shall specify the requested funding date,
which shall be a Business Day, and the amount of the proposed aggregate Base
Rate Advances to be made by Lenders.
(b) In the case of LIBOR Advances, the Company shall give the
Administrative Lender at least three Business Days' irrevocable written notice,
or irrevocable telephonic notice followed immediately by written notice
(provided, however, that the Company's failure to confirm any telephonic notice
in writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Lender prior to 1:00 p.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
LIBOR Advances shall in all cases be subject to availability and to ARTICLE IX
hereof. For LIBOR Advances, the notice of borrowing shall specify the requested
funding date, which shall be a Business Day, the amount of the proposed
aggregate LIBOR Advances to be made by Lenders and the Interest Period
-17-
selected by the Company, provided that no such Interest Period shall extend
past the Maturity Date, or prohibit or impair the Company's ability to comply
with Section 2.6 hereof.
(c) Subject to Sections 2.1 and 2.10 hereof, at least three Business
Days prior to each Payment Date for a LIBOR Advance, the Company shall give
the Administrative Lender irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice (provided, however,
that the Company's failure to confirm any telephonic notice in writing shall
not invalidate any notice so given), specifying whether all or a portion of
such LIBOR Advance outstanding on the Payment Date (i) is to be repaid and
then reborrowed in whole or in part as a LIBOR Advance, (ii) is to be repaid
and then reborrowed in whole or in part as a Base Rate Advance, or (iii) is
to be repaid and not reborrowed; provided, however, notwithstanding anything
in this Agreement to the contrary, if on any Payment Date a Default shall
exist, such LIBOR Advance may only be reborrowed as a Base Rate Advance.
Upon such Payment Date, such LIBOR Advance shall, subject to the provisions
hereof, be so repaid and, as applicable, reborrowed.
(d) The aggregate amount of Base Rate Advances to be made by the Lenders
on any day shall be in a principal amount which is at least $300,000 and
which is an integral multiple of $100,000; provided, however, that such
amount may equal the unused amount of the Commitment. The aggregate amount
of LIBOR Advances having the same Interest Period and to be made by the
Lenders on any day shall be in a principal amount which is at least $700,000
and which is an integral multiple of $100,000.
(e) The Administrative Lender shall promptly notify the Lenders of each
notice received from the Company pursuant to this Section. Failure of the
Company to give any notice in accordance with Sections 2.2(c) hereof shall
result in a repayment of any such existing Advance on the applicable Payment
Date by a Refinancing Advance which is a Base Rate Advance. Each Lender
shall, not later than 1:00 p.m., Dallas, Texas time, on the date of any
Advance that is not a Refinancing Advance, deliver to the Administrative
Lender, at its address set forth herein, such Lender's Specified Percentage
of such Advance in immediately available funds in accordance with the
Administrative Lender's instructions. On the date of any Advance hereunder,
the Administrative Lender shall, subject to satisfaction of the conditions
set forth in ARTICLE IV, promptly disburse the amounts made available to the
Administrative Lender by the Lenders by (i) transferring such amounts by wire
transfer pursuant to the Company's instructions, or (ii) in the absence of
such instructions, crediting such amounts to the account of the Company
maintained with the Administrative Lender. All Advances shall be made by
each Lender according to its Specified Percentage.
(f) Unless a Lender shall have notified the Administrative Lender prior
to the date of any Advance that it will not make available its Specified
Percentage of the Advance, the Administrative Lender may assume that such
Lender has made the appropriate amount available in accordance with
subsection (a) above, and the Administrative Lender may, in reliance upon
such assumption, make available to the Company a corresponding amount. If
and to the extent
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any Lender shall not have made such amount available to the Administrative
Lender, the Lender and Company severally agree to repay to the Administrative
Lender forthwith on demand such corresponding amount together with interest
thereon, from the date such amount is made available to the Company until the
date such amount is repaid to the Administrative Lender, at (i) in the case
of the Company, the Base Rate, and (ii) in the case of such Lender, the
Federal Funds Rate.
(g) The failure by any Lender to make available its Specified Percentage
of an Advance hereunder shall not relieve any other Lender of its obligation,
if any, to make available its Specified Percentage of any Advance. In no
event, however, shall any Lender be responsible for the failure of any other
Lender to make available any portion of an Advance.
2.3. FEES.
(a) COMMITMENT FEE. Subject to Section 10.9 hereof, the Company agrees
to pay to the Administrative Lender, for the ratable account of the Lenders,
a commitment fee (which shall be payable quarterly in arrears on each
Quarterly Date and on the Maturity Date) based on the daily average unused
portion of the Commitment (subject to Section 10.9 hereof, computed on the
basis of a year of 360-day year for the actual number of days elapsed) at the
following per annum percentages, applicable in the following situations:
APPLICABILITY PERCENTAGE
--------------- ----------
(A) If the Fixed Charges Coverage Ratio 0.175%
is greater than or equal to 2.5 to 1
(B) If the Fixed Charges Coverage Ratio 0.200%
is less than 2.5 to 1 but is equal to
or greater than 2.0 to 1
(C) If the Fixed Charges Coverage Ratio 0.250%
is less than 2.0 to 1
-19-
For purposes of calculation of the commitment fee, Letters of Credit
outstanding from time to time will reduce the unused portion of the
Commitment. The commitment fee shall be subject to reduction or increase, as
applicable and as set forth above, on a quarterly basis according to the
performance of the Company as tested by the Fixed Charges Coverage Ratio.
Any such increase or decrease in such fee shall be effective on the fifth day
following the date of receipt by the Administrative Lender of the financial
statements required pursuant to Section 6.14(a) or 6.14(b) hereof, as
appropriate. If such financial statements are not received by the fifth day
following the date required, the commitment fee shall be determined as if the
Fixed Charges Coverage Ratio is less than 2.0 to 1 until such time as such
financial statements are received. From and including the date hereof to the
date of the initial adjustment of the commitment fee to be made as provided
above, the percentage shall be 0.250%.
(b) The Company agrees to pay to the Administrative Lender for its
account and for the ratable account of the Lenders, the fees provided for in
the letter agreement dated as of the Agreement Date, between the Company and
the Administrative Lender on the date and in the amounts specified therein.
(c) The Company agrees to pay to the Administrative Lender, for the
ratable account of the Lenders, a letter of credit fee on the average daily
amount for drawing under all outstanding Trade Letters of Credit, from the
date of issuance of the initial Trade Letter of Credit through the date of
termination of the final Trade Letter of Credit, at the rate of 0.625% per
annum, payable in arrears on each Quarterly Date and on the later of the
Maturity Date or the date of termination of the final Trade Letter of Credit.
(d) The Company agrees to pay to the Administrative Lender, for the
ratable account of the Lenders, a per annum letter of credit fee on the
average daily amount for drawing under all outstanding Standby Letters of
Credit, from the date of issuance of the initial Standby Letter of Credit
through the date of termination of the final Standby Letter of Credit, at a
rate equal to the then applicable LIBOR Margin in effect from time to time,
payable in arrears on each Quarterly Date and on the later of the Maturity
Date or the date of termination of the final Standby Letter of Credit.
(e) The Company agrees to pay to the Administrative Lender, for the sole
account of the Issuing Bank, an issuance fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date) equal
to 0.125% per annum of the average daily amount available for drawing under
all outstanding Letters of Credit.
2.4. REDUCTION OF COMMITMENT.
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(a) The Company shall have the right from time to time, upon notice to
the Administrative Lender not later than 1:00 p.m. (Dallas time), three
Business Days in advance, to reduce the Commitment (and the Letter of Credit
Commitment, if applicable), in whole or in part; provided, however, that (i)
the Company shall pay the accrued commitment fee on the amount of such
reduction, (ii) any partial reduction (A) that results in a repayment of Base
Rate Advances shall be in an aggregate amount which is at least $300,000 and
which is an integral multiple of $100,000 and (B) that results in a repayment
of LIBOR Advances shall be in an aggregate amount which is at least $700,000
and which is in an integral multiple of $100,000 and (iii) no voluntary
reduction in the Commitment shall cause any LIBOR Advance to be repaid prior
to the last day of its Interest Period.
(b) Upon any reduction of the Commitment pursuant to this Section, the
Company shall immediately make a repayment of Advances in accordance with
Section 2.6 hereof. The Company shall reimburse each Lender for any loss or
out-of-pocket expense incurred by each Lender in connection with any such
payment, as set forth in Section 2.10 hereof, to the extent applicable. The
Company shall not have any right to rescind any termination or reduction.
Once reduced or terminated, the Commitment may not be increased or reinstated.
(c) On the Maturity Date, the Commitment shall automatically reduce to
zero.
2.5. Intentionally Omitted.
2.6. PREPAYMENT AND REPAYMENT OF ADVANCES.
(a) The principal amount of any Base Rate Advance may be prepaid in full
or in part at any time, without penalty, upon telephonic notice (to be
promptly followed by written notice) to the Administrative Lender not later
than 11:00 a.m., Dallas, Texas time on the date of prepayment. LIBOR
Advances may be voluntarily prepaid upon three Business Days' prior
telephonic notice (to be promptly followed by written notice) to the
Administrative Lender, but only so long as the Company concurrently
reimburses the Lenders in accordance with Section 2.10 hereof. Any notice of
prepayment shall be irrevocable.
(b) On or before the date of any reduction of the Commitment, the
Company shall prepay outstanding Advances in an amount necessary to reduce
the sum of outstanding Advances and Reimbursement Obligations to an amount
not greater than the Commitment as so reduced pursuant to Section 2.4 hereof.
The Company shall first prepay all Base Rate Advances and shall thereafter
prepay LIBOR Advances. To the extent that any prepayment requires that a
LIBOR Advance be repaid on a date other than the last day of its Interest
Period, the Company shall reimburse each Lender in accordance with Section
2.10 hereof.
(c) Any prepayment of a LIBOR Advance shall be (i) in an aggregate
amount of at least $700,000 and which is an integral multiple of $100,000 and
(ii) accompanied by (A) interest accrued on the principal amount being
prepaid and (B) amounts due in accordance
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with Section 2.10 hereof. Any voluntary partial prepayment of a Base Rate
Advance shall be in a principal amount of $100,000 or an integral multiple
thereof.
(d) The unpaid principal amount of the Base Rate Advances shall be due
and payable on the Maturity Date.
(e) The principal amount of each LIBOR Advance hereunder shall be due
and payable on its Payment Date, which principal payment may be made by means
of a Refinancing Advance.
(f) On the date of any reduction of the Commitment pursuant to Section
2.4 hereof, including the Maturity Date, the (i) aggregate amount of the
Advances outstanding on such date of reduction in excess of the Commitment
(as then reduced) minus (ii) all outstanding Reimbursement Obligations shall
be due and payable, which principal payment may not be made by means of
Refinancing Advances.
(g) All telephonic notices under ARTICLE III hereof shall be made to
NationsBank of Texas, N.A., Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇, or such other person as the
Administrative Lender may from time to time specify.
2.7. INTEREST ON ADVANCES.
(a) Subject to Section 10.9 hereof, Base Rate Advances shall bear
interest at the lesser of (a) the Highest Lawful Rate and (b) the Base Rate
as in effect from time to time. Accrued interest on each Base Rate Advance
shall be computed on the basis of a year of 365 or 366 days, as applicable,
for the number of days actually elapsed, and shall be due and payable in
arrears on each Monthly Date. If the amount of interest payable for the
account of any Lender on any interest payment date in respect of any Base
Rate Advance would exceed the Maximum Amount, the amount of interest payable
on such interest payment date shall be automatically reduced to the Maximum
Amount. If the amount of interest payable for the account of any Lender in
respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be
less than the Maximum Amount, then the amount of interest payable for its
account in respect of such subsequent interest computation period shall be
automatically increased to such Maximum Amount; provided that at no time
shall the aggregate amount by which interest paid for the account of any
Lender has been increased pursuant to this sentence exceed the aggregate
amount by which interest paid for its account has theretofore been reduced
pursuant to the immediately preceding sentence.
(b) Subject to Section 10.9 hereof, each LIBOR Advance shall bear
interest at a rate per annum equal to the LIBOR Basis for such Advance. The
Administrative Lender, whose determination shall be conclusive, shall
determine the LIBOR Basis on the second Business Day
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prior to the applicable funding date and shall notify the Company and the
Lenders of such LIBOR Basis. Interest on each LIBOR Advance shall be
computed on the basis of a 360-day year for the actual number of days
elapsed, and shall be payable in arrears on the applicable Payment Date and
on the Maturity Date; provided, however, that if the Interest Period for such
Advance exceeds three months, interest shall also be due and payable in
arrears on each Quarterly Date during such Interest Period.
(c) If the Company fails to give the Administrative Lender timely notice
of its selection of a LIBOR Basis or an Interest Period for a LIBOR Advance,
or if for any reason a determination of a LIBOR Basis for any Advance is not
timely concluded due to the fault of the Company, the Base Rate shall apply
to the applicable Advance.
(d) All past due principal and interest shall, upon notice by the
Administrative Lender to the Company, bear interest at the lesser of (i) the
Base Rate as in effect from time to time, plus 3% or (ii) the Highest Lawful
Rate, and shall be due and payable on demand.
2.8. COMPUTATIONS AND MANNER OF PAYMENTS.
(a) The Company shall make each payment hereunder and under the other
Loan Papers not later than 1:00 p.m. (Dallas time) on the day when due in
same day funds to the Administrative Lender, for the ratable account of the
Lenders unless otherwise specifically provided herein, at the Administrative
Lender's office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for credit to
commercial loan FTA #0180019828, reference: PETsMART, Inc. No later than
the end of each day when each payment hereunder is made, the Company shall
notify ▇▇▇▇▇▇ ▇▇▇▇▇▇, or such other person as the Administrative Lender may
from time to time specify.
(b) Unless the Administrative Lender shall have received notice from the
Company prior to the date on which any payment is due hereunder that the
Company will not make payment in full, the Administrative Lender may assume
that such payment is so made on such date and may, in reliance upon such
assumption, make distributions to the Lenders. If and to the extent the
Company shall not have made such payment in full, each Lender shall repay to
the Administrative Lender forthwith on demand the applicable amount
distributed, together with interest thereon at the Federal Funds Rate, from
the date of distribution until the date of repayment. The Company hereby
authorizes each Lender, if and to the extent payment is not made when due
hereunder, to charge the amount so due against any account of the Company
with such Lender.
(c) Subject to Section 10.9 hereof, all computations of fees hereunder
shall be made on the basis of a year of 360 days, for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such fee is payable. All payments under the Loan Papers
shall be made in United States dollars, and without setoff, counterclaim, or
other defense.
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(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case payment shall be
made on the preceding Business Day. Any extension of time shall be included
in the computation of interest or fees, if applicable.
2.9. YIELD PROTECTION.
(a) If any Lender determines that compliance with any Applicable Law
(including without limitation existing and future Applicable Laws), or any
guideline or request from any central bank or other Tribunal (whether or not
having the force of Applicable Law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or any of its
Affiliates, and that the amount of such capital is increased by or based upon
the existence of any Commitment, Advance, or Letter of Credit (or similar
commitments, loans or letters of credit), then, upon demand by such Lender,
the Company shall immediately pay to such Lender, from time to time as
specified, additional amounts sufficient to compensate it or any of its
Affiliates for the reduction in rate of return on such Lender's or
Affiliate's capital below that which such Lender or Affiliate could have
achieved but for such compliance, guideline or request, to the extent that
such Lender or Affiliate reasonably determines such increase in capital to be
allocable to the existence or maintenance of or any participation in any
Commitment, Advance, or Letter of Credit.
(b) Provided that notice shall have been given to the Company of the
reasons therefor and in reasonable detail, determinations by any Lender for
purposes of this Section shall be conclusive, absent manifest error.
2.10. REIMBURSEMENT. Whenever any Lender shall sustain or incur any
losses or reasonable out-of-pocket expenses in connection with (a) failure by
the Company to borrow any LIBOR Advance after having given notice of its
intention to borrow in accordance with Section 2.2 hereof (whether by reason
of the Company's election not to proceed or the non-fulfillment of any of the
conditions set forth in ARTICLE IV hereof), (b) failure by the Company to
prepay any LIBOR Advance after having given notice of its intention to prepay
in accordance with Section 2.6 hereof, or (c) any prepayment for any reason
of any LIBOR Advance in whole or in part (including a prepayment pursuant to
Sections 2.6, 7.2 and 9.3(b) hereof), the Company agrees to pay to any such
Lender, upon its demand, an amount sufficient to compensate such Lender for
all such losses, costs and out-of-pocket expenses, subject to Section 10.9
hereof. Such Lender's good faith determination of the amount of such losses,
costs or out-of-pocket expenses, calculated in its usual fashion, absent
manifest error, shall be binding and conclusive. Such losses shall include,
without limiting the generality of the foregoing, lost profits and reasonable
expenses incurred by such Lender in connection with the re-employment of
funds prepaid, repaid, converted or not borrowed, converted or paid, as the
case may be. Upon request of the Company, such Lender shall provide a
certificate setting forth the amount to be paid to it by the Company
hereunder and calculations therefor.
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2.11. LIBOR LENDING OFFICES. Each Lender's initial LIBOR Lending Office
is set forth opposite its name on the signature pages hereto. Each Lender
shall have the right at any time and from time to time to designate a
different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Company for increased costs or expenses resulting solely from
such designation or transfer (except any such transfer which is made by a
Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of
complying with Applicable Law). Increased costs for expenses resulting from
a change in law occurring subsequent to any such designation or transfer
shall be deemed not to result solely from such designation or transfer.
2.12. CALCULATION OF LIBOR RATE. The provisions of this Agreement
relating to calculation of the LIBOR Rate are included only for the purpose
of determining the rate of interest or other amounts to be paid hereunder
that are based upon such rate, it being understood that each Lender shall be
entitled to fund and maintain its funding of all or any part of a LIBOR
Advance as it sees fit.
ARTICLE III
LETTERS OF CREDIT
3.1. LETTER OF CREDIT COMMITMENT; REIMBURSEMENT.
(a) Subject to the terms and conditions hereof, and in reliance upon
subsection (b) below, the Issuing Bank agrees, from time to time until the
Maturity Date, to issue one or more Letters of Credit for the account of the
Company. The aggregate amount of outstanding Letters of Credit shall not
exceed at any time outstanding, the lesser of (i) the Letter of Credit
Commitment and (ii) an amount equal to the sum of the Commitment MINUS the
aggregate principal amount of Advances then outstanding. Letters of Credit
may be issued for activities and payments relating to the ordinary course of
business of the Company and its Subsidiaries. No Letter of Credit shall be
issued if issuance, in the Administrative Lender's or the Issuing Bank's sole
judgment, would violate any Applicable Law or any internal policy or standard
of the Issuing Bank.
(b) No Letter of Credit shall have an expiration date (including all
rights of renewal) later than the earlier of (i) the Maturity Date or (ii)
the date which is eighteen months after the issuance thereof. The Company
shall be liable for the repayment of any Reimbursement Obligations. If on
the Maturity Date there are any Letters of Credit outstanding, the Company
shall deposit with the Administrative Lender on the Maturity Date Cash
Collateral in an amount not less than the maximum amount then available to be
drawn under such outstanding Letters of Credit.
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(c) Promptly upon issuance of a Letter of Credit, the Issuing Bank shall
notify the Administrative Lender and each Lender of the date of issuance,
amount, and expiration date of such Letter of Credit, and shall deliver a
copy to any Lender upon request. Upon issuance, each Lender shall thereupon
have purchased and received from the Issuing Bank a participation in such
Letter of Credit and the Company's reimbursement obligations relating thereto
under the applicable letter of credit application and agreement, to the
extent of such Lender's Specified Percentage of the maximum amount available
to be drawn under such Letter of Credit (assuming compliance with all
conditions to drawing).
(d) The payment by the Issuing Bank of a draft drawn under any Letter of
Credit shall constitute for all purposes of this Agreement the making by the
Issuing Bank of an Advance, which shall bear interest at the Base Rate, in
the amount of such draft (but without any requirement for compliance with the
conditions set forth in ARTICLE 4 hereof). In the event that a payment under
any Letter of Credit is not reimbursed by the Company by 11:00 a.m. (Dallas
time) on the first Business Day after notice of such drawing has been given
by the Issuing Bank to the Company, the Issuing Bank shall promptly notify
Administrative Lender and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make an Advance, which shall
bear interest at the Base Rate, and shall be used to repay the applicable
portion of the Issuing Bank's Advance with respect to such Letter of Credit,
in an amount equal to the amount of its participation in such drawing for
application to reimburse the Issuing Bank (but without any requirement for
compliance with the applicable conditions set forth in ARTICLE 4 hereof) and
shall make available to the Administrative Lender for the account of the
Issuing Bank, by deposit at the Administrative Lender's office, in same day
funds, the amount of such Advance. In the event that any Lender fails to
make available to the Administrative Lender for the account of the Issuing
Bank the amount of such Advance on the date specified in the notice from the
Issuing Bank to such Lender, the Issuing Bank shall be entitled to recover
such amount on demand from such Lender together with interest thereon from
such date until paid at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Federal Funds Rate.
3.2. STANDARD OF CARE.
(a) The Issuing Bank agrees that it shall give the same care and
attention to each Letter of Credit as it gives to its other letters of
credit. The Lenders and the Company agree that, in paying any draw under any
Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft or other document required by
the Letter of Credit), or to ascertain or inquire as to the validity or
accuracy of any document or the authority of the Person delivering any
document.
(b) None of the Issuing Bank and its representatives, directors,
officers, employees, or agents shall be liable to any Lender, the Company, or
any other Person for (i) any action taken or omitted in connection with this
Article or any Letters of Credit at the request or with the approval of
Majority Lenders, (ii) any action taken or omitted in the absence of gross
negligence
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and willful misconduct, (iii) any recitals, statements, representations, or
warranties contained in any document distributed to any Lender, (iv) the
creditworthiness of the Company or any of its Subsidiaries, (v) the
execution, effectiveness, genuineness, validity, or enforceability of any
Loan Papers, (vi) the value, sufficiency, perfection, or priority of any
security for any obligations under the Loan Papers, or (vii) any
circumstances beyond the control of the Issuing Bank with respect to any
Letter of Credit. The Issuing Bank shall not incur any liability by acting
in reasonable reliance upon any advice of counsel, or any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telecopy,
telex, or similar writing) believed in good faith by it to be genuine or to
be signed by the proper parties.
3.3. EXPENSES OF THE ISSUING BANK. In order to induce the Issuing Bank
to maintain Letters of Credit and to induce the Lenders to participate
therein, the Company agrees to reimburse the Issuing Bank, Administrative
Lender, and Lenders, upon demand, for any Taxes, (other than Taxes on the
overall net income of the Administrative Lender, the Issuing Bank or any
Lender), fees, charges, or other costs or expenses whatsoever, including
attorneys' fees, incurred by the Issuing Bank, the Administrative Lender, or
any Lender in connection with issuance of, maintenance of, participation in,
or payment under any Letter of Credit.
3.4. OBLIGATIONS OF THE COMPANY ABSOLUTE. The obligations of the Company
under this Article shall be absolute and unconditional under all
circumstances and irrespective of any set-off, counterclaim, or defense to
payment which the Company may have or have had against the Issuing Bank, the
Administrative Lender, any Lender, or the beneficiary of any Letter of
Credit. The Company agrees with the Administrative Lender, Issuing Bank, and
Lenders that they shall not be responsible for, and the Company's obligations
shall not be affected by, any matter or event whatsoever pertaining to any
Letter of Credit, including without limitation the validity or genuineness of
documents or of any endorsements thereof, even if such documents should in
fact prove to be in any respect invalid, fraudulent, or forged, or any claims
or disputes by or among the Company, beneficiary of any Letter of Credit, or
any other Person, including any Person to whom any Letter of Credit may be
transferred. The Company agrees to indemnify and hold harmless the Issuing
Bank, the Lenders and their representatives, directors, officers, employees,
and agents from and against all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, and/or disbursements
of any kind or nature whatsoever that may be imposed on, asserted against, or
incurred by the Issuing Bank or any Lender in any way with respect to any
Letter of Credit issued for the account of the Company, or any action taken
or omitted by the Issuing Bank with respect to any such Letter of Credit,
including any negligence of the Issuing Bank; provided, however, that the
Issuing Bank shall not be so indemnified and held harmless for, and shall be
liable to the Company only to the extent of, any direct (as opposed to
consequential) damages suffered by the Company which the Company proves were
caused by the Issuing Bank's willful misconduct or gross negligence. The
Issuing Bank shall not be liable for error, omission, interruption, or delay
in transmission, dispatch, or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Company agrees
that any action taken or omitted by the Issuing Bank, the Administrative
Lender, or any Lender with respect to any Letter of Credit or related draws,
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drafts, or documents, if done in good faith and in accordance with the
standards of care specified in applicable state Laws or the Uniform Customs
and Practices for Documentary Credits as most recently published by the
International Chamber of Commerce (which publication shall control in the
event of any conflict between such publication and any such Applicable Law)
shall be binding on the Company and shall not put the Issuing Bank, the
Administrative Lender, or any Lender under any liability to the Company.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to fulfillment of the following conditions precedent:
(a) The making of the Commitment, the making of the initial Advance and
issuance of the initial Letter of Credit shall not contravene any Applicable
Law applicable to the Administrative Lender, any Lender, or the Issuing Bank.
(b) No Material Adverse Change, as determined by the Administrative
Lender, shall have occurred and be continuing since February 2, 1997.
(c) The Company shall have delivered to the Administrative Lender a
Certificate, dated the effective date, executed by a duly authorized officer,
certifying that (i) no Default or Event of Default has occurred and is
continuing, (ii) the representations and warranties set forth in ARTICLE V
hereof are true and correct, and (iii) it has complied with all agreements
and conditions to be complied with by it under the Loan Papers by such date.
(d) The Company shall have delivered to the Administrative Lender a
Secretary's Certificate, dated the effective date, certifying (i) that copies
of its certificate of incorporation and bylaws previously delivered to the
Administrative Lender are true and complete, and in full force and effect,
without amendment except as shown, (ii) that a copy of its resolutions
authorizing execution and delivery of this Agreement and any other Loan
Papers attached thereto is true and complete, and that such resolutions are
in full force and effect, were duly adopted, have not been amended, modified,
or revoked, and constitute all resolutions adopted with respect to this loan
transaction, and (iii) to the incumbency, name, and signature of each officer
authorized to sign this Agreement and any other Loan Papers on its behalf.
The Administrative Lender, Lenders, and Issuing Bank may conclusively rely on
the certificate delivered pursuant to this subsection until they receive
notice in writing to the contrary.
(e) Each Domestic Subsidiary shall have delivered to the Administrative
Lender a Secretary's Certificate, dated the effective date, certifying (i)
that copies of its certificate of incorporation and bylaws previously
delivered to the Administrative Lender are true and
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complete, and in full force and effect, without amendment except as shown,
(ii) that a copy of its resolutions authorizing execution and delivery of the
Loan Papers to which it is party are true and complete, and that such
resolutions are in full force and effect, were duly adopted, have not been
amended, modified, or revoked, and constitute all resolutions adopted with
respect to this loan transaction, and (iii) to the incumbency, name, and
signature of each officer authorized to sign the Loan Papers to which it is
party. The Administrative Lender, Lenders, and Issuing Bank may conclusively
rely on the certificate delivered pursuant to this subsection until they
receive notice in writing to the contrary.
(f) The Administrative Lender shall have received opinions of counsel to
the Company, dated the effective date, which counsel shall be acceptable to
the Administrative Lender, (i) to the effect that the Company has full power
and authority to execute, deliver, and perform this Agreement and all other
Loan Papers to be executed and delivered by it; (ii) to the effect that all
such Loan Papers constitute the legal, valid, and binding obligations of the
Company, enforceable in accordance with their respective terms (subject as to
enforcement of remedies to any applicable bankruptcy, reorganization,
moratorium, fraudulent conveyance, or similar Applicable Laws or principles
of equity affecting the enforcement of creditors' rights generally); and
(iii) as to such other matters, and otherwise in form and substance,
satisfactory to the Administrative Lender.
(g) The Administrative Lender shall have received, in form and substance
satisfactory to it, (i) certificates from the Secretary of State and other
appropriate officials of the state of organization certifying that the
Company is a corporation duly organized, validly existing, and in good
standing in said state as of the respective dates thereof, and (ii)
certificates of appropriate authorities in Texas and Arizona, to the effect
that it is in good standing and duly qualified to transact business in such
jurisdictions.
(h) The Administrative Lender shall have received, in form and substance
satisfactory to it, certificates from the Secretary of State and other
appropriate officials of the states of organization of each Domestic
Subsidiary, certifying that such Domestic Subsidiary is a corporation duly
organized, validly existing and in good standing in said state as of the
respective date thereof.
(i) The Administrative Lender shall have received the fees required
pursuant to Section 2.3(b) hereof.
(j) Each Lender shall have received its Note, duly executed by the
Company, in the amount of such Lender's Commitment.
(k) The Administrative Lender shall have received a Subsidiary Guaranty,
duly executed by each Domestic Subsidiary of the Company.
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(l) The Administrative Lender shall have received a Subsidiary Guaranty,
duly executed by 3003300 Nova Scotia Company.
(m) The Administrative Lender shall have received a Pledge Agreement,
duly executed by the Company or any Domestic Subsidiary which has a direct
Foreign Subsidiary, together with the pledged stock covered thereby and
appropriate UCC-1 financing statements and undated blank stock powers related
thereto.
(n) The Administrative Lender shall have received an opinion of counsel
from the state of organization of each Person executing a Subsidiary Guaranty
or a Pledge Agreement, addressed to the Lenders, in form and substance
satisfactory to the Lenders.
(o) All proceedings of the Company and its Subsidiaries taken in
connection with the transactions contemplated hereby, and all documents
incidental thereto, shall be satisfactory in form and substance to the
Administrative Lender. The Administrative Lender shall have received copies
of all documents or other evidence that it may reasonably request in
connection with such transactions.
4.2. CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of each Lender
to make each Advance (including the initial Advance) shall be subject to the
further conditions precedent that on the date of such Advance (a) the
following statements shall be true (and each request for an Advance under
Section 2.2(a) hereof shall constitute a representation that on the
disbursement date they are true):
(i) with respect to each Advance (other than a Refinancing Advance),
the representations and warranties contained in ARTICLE V hereof are true
and correct on such date, as though made on and as of such date, and
(ii) With respect to each Advance (other than a Refinancing Advance),
there shall not exist a Default, and with respect to a Refinancing Advance,
there shall not exist an Event of Default;
and (b) the Administrative Lender shall have received, in form and substance
acceptable to it, such other approvals, documents, certificates, opinions,
and information as it may deem necessary or appropriate.
4.3. CONDITIONS PRECEDENT TO ISSUANCE OF LETTERS OF CREDIT. The
obligation of the Issuing Bank to issue any Letter of Credit shall be subject
to the further conditions precedent that (a) the Issuing Bank shall have
received, in form and substance satisfactory to it, an application and
agreement for such Letter of Credit executed by the Company, on or before
1:00 p.m. (Dallas time) at least five Business Days prior to the date of
issuance, setting forth (among other matters) the purpose of the Letter of
Credit; (b) on the date of issuance the following statements
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shall be true (and the delivery of such application and agreement shall
constitute a representation that on the date of issuance such statements are
true):
(i) The representations and warranties contained in ARTICLE V hereof
are true and correct on such date, as though made on and as of such date,
and
(ii) No event has occurred and is continuing, or would result from
issuance of such Letter of Credit, that does or could constitute a Default
or Event of Default;
and (c) the Issuing Bank shall have received, in form and substance
acceptable to it, such other approvals (including internal approvals),
documents, certificates, opinions, and information as it may deem necessary
or appropriate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that the following are true and
correct:
5.1. ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing, and in good
standing under the Applicable Laws of its state of organization. Each of the
Company and its Subsidiaries is qualified to do business in all jurisdictions
where the nature of its business or Properties require such qualification.
Set forth on SCHEDULE I attached hereto is a complete and accurate listing of
each Subsidiary of the Company, showing (a) the jurisdiction of its
organization and its mailing address, which is the principal place of
business and executive offices of such Subsidiary unless otherwise indicated,
(b) the classes of capital stock, and the numbers of shares authorized and
outstanding, and (c) each owner of outstanding shares on the date hereof,
indicating the ownership percentage. All outstanding shares of capital stock
of the Company and its Subsidiaries are validly issued, fully paid, and
nonassessable and, to the extent owned by the Company or its Subsidiaries,
are owned free and clear of all Liens, including any restrictions on
hypothecation or transfer.
5.2. DUE AUTHORIZATION; VALIDITY. The Boards of Directors of the Company
and its Subsidiaries have duly authorized the execution, delivery, and
performance of the Loan Papers to be executed by each. No consent of the
stockholders of the Company and its Subsidiaries (except any consent already
obtained) is required as a prerequisite to the validity and enforceability of
any Loan Papers or any other document contemplated hereby. Each of the
Company and its Subsidiaries has full legal right, power, and authority to
execute, deliver, and perform under the Loan Papers to be executed and
delivered by it. The Loan Papers have been duly executed and delivered by the
Company and each Subsidiary and constitute the legal, valid, and binding
respective obligations of the Company and its Subsidiaries, enforceable in
accordance with their respective terms (subject as to enforcement of remedies
to any applicable
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bankruptcy, reorganization, moratorium, or similar Applicable Laws or
principles of equity affecting the enforcement of creditors' rights
generally).
5.3. CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution and
delivery of any Loan Papers, and performance thereunder, does not conflict
with, or result in a breach of the terms, conditions, or provisions of, or
constitute a default under, or result in any violation of, or result in the
creation of any Lien upon any Properties of the Company or its Subsidiaries
under, or require any consent (other than consents already obtained),
approval, or other action by, notice to, or filing with any Tribunal or
Person pursuant to, the articles of incorporation or bylaws of the Company or
any of its Subsidiaries, any award of any arbitrator, or any agreement,
instrument, or Applicable Law to which the Company, any Subsidiary, or any of
their Properties is subject.
5.4. FINANCIAL STATEMENTS. The financial statements of the Company and
its Subsidiaries delivered to the Administrative Lender and Lenders fairly
present their financial condition and the results of operations as of the
dates and for the periods shown, all in accordance with GAAP. The latest of
such financial statements reflects all material liabilities, direct and
contingent, of the Company and its Subsidiaries that are required to be
disclosed in accordance with GAAP. As of the date of the latest of such
financial statements, there were no Contingent Liabilities, liabilities for
Taxes, forward or long-term commitments, or unrealized or anticipated losses
from any unfavorable commitments that are substantial in amount and that are
not reflected on such financial statements or otherwise disclosed in writing
to the Administrative Lender. Since February 2, 1997, there has been no
Material Adverse Change. The Company and each of its Subsidiaries is Solvent.
5.5. LITIGATION. Shown on SCHEDULE III attached hereto is all Litigation
that is pending or, to the best of the Company's knowledge, threatened
against the Company or its Subsidiaries on the date hereof, and that involves
a claim for damages or reasonably expected potential liability of $500,000 or
more. There is no pending or, to the best of the Company's knowledge,
threatened Litigation against the Company or its Subsidiaries that could
constitute a Material Adverse Change.
5.6. COMPLIANCE WITH APPLICABLE LAWS REGULATING THE INCURRENCE OF
INDEBTEDNESS. No proceeds of any Advance will be used directly or indirectly
to acquire any security in any transaction which is subject to Sections 12,
13 and 14 of the Securities Exchange Act of 1934, as amended. The Company
and its Subsidiaries are not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance 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. Following the Company's intended use of the proceeds of
each Advance, not more than 25% of the value of the assets of the Company,
both individually and on a consolidated basis with its Subsidiaries, will be
"margin stock" within the meaning of Regulation U. The Company and its
Subsidiaries are not subject to regulation
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under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Investment Company Act of 1940, the Interstate Commerce Act (as any of
the preceding acts have been amended), or any other Applicable Law that the
incurring of Indebtedness by the Company or its Subsidiaries would violate in
any material respect, including without limitation Applicable Laws relating
to common or contract carriers or the sale of electricity, gas, steam, water,
or other public utility services.
5.7. LICENSES, TITLE TO PROPERTIES, AND RELATED MATTERS. The Company and
its Subsidiaries possess all material Licenses and are not in violation
thereof in any material respect. The Company and each of its Subsidiaries
has full power, authority, and legal right to own and operate its Properties,
and to conduct its business. Each has good and indefeasible title (fee or
leasehold, as applicable) to its Properties, subject to no Lien of any kind,
except as permitted hereunder. None of the Company and its Subsidiaries is
in violation of its respective articles of incorporation or bylaws (other
than immaterial violations of the bylaws of such Subsidiaries), or any
Applicable Law, or material agreement or instrument binding on or affecting
it or any of its Properties. No business or Properties of the Company and
its Subsidiaries is affected by any strike, lock-out, or other labor dispute,
drought, storm, earthquake, embargo, act of God or public enemy, or other
casualty that could constitute a Material Adverse Change.
5.8. OUTSTANDING INDEBTEDNESS. The Company and its Subsidiaries have no
outstanding Indebtedness, Contingent Liabilities, or Liens, except as shown
on SCHEDULE II attached hereto.
5.9. TAXES. The Company and its Subsidiaries have filed all federal,
state, and other Tax returns (or extensions related thereto) which are
required to be filed, and have paid all Taxes as shown on said returns, as
well as all other Taxes, to the extent due and payable. All Tax liabilities
of the Company and its Subsidiaries are adequately provided for on their
books, including interest and penalties, and adequate reserves have been
established therefor in accordance with GAAP. No income Tax liability of a
material nature has been asserted by taxing authorities for Taxes in excess
of those already paid, and no taxing authority has notified the Company or
any of its Subsidiaries of any material deficiency in any Tax return.
5.10. ERISA. Each Plan has satisfied the minimum funding standards under
all Applicable Laws applicable thereto, and no Plan has an accumulated
funding deficiency thereunder. The Company and its Subsidiaries have not
incurred any material liability to the PBGC with respect to any Plan. No
ERISA Event has occurred with respect to any Plan. The Company has not
participated in any Prohibited Transaction with respect to any Plan or trust
created thereunder, and the consummation of the transactions contemplated
hereby will not involve any Prohibited Transaction. None of the Company, its
Subsidiaries, or any ERISA Affiliate has incurred any Withdrawal Liability to
any Multiemployer Plan. None of the Company, its Subsidiaries, or any ERISA
Affiliate has been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA.
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5.11. ENVIRONMENTAL LAWS. Except as set forth on SCHEDULE V hereto, the
real Properties (whether leased or owned) of the Company or any of its
Subsidiaries, and the operations conducted thereon by any of them or, to the
best of the Company's knowledge, any current or prior owner or operator
thereof, (a) do not violate and have not violated any applicable
Environmental Law, the violation of which would constitute a Material Adverse
Change or result in penalties, fines, or damages in an aggregate amount of
$100,000 or more, and (b) are not subject to any pending or threatened
investigation or proceeding by any Tribunal or to any remedial obligations
under any Environmental Law. All Licenses have been obtained or filed that
are required under any Environmental Law in connection with the use of such
Property and assets (including without limitation past or present treatment,
storage, disposal, or release of any Hazardous Materials into the
environment), except where the failure to obtain any such License would not
constitute a Material Adverse Change. No Hazardous Materials are generated
or produced at or in connection with the Properties and operations of the
Company and its Subsidiaries, except in compliance with Environmental Laws.
The Company and its Subsidiaries have no material potential liability with
respect to any release of any Hazardous Materials into the environment. The
use which the Company and its Subsidiaries make or intend to make of the real
Property (whether leased or owned) on which any of their operations is
conducted will not result in the unlawful or unauthorized disposal or other
release of any Hazardous Materials, except in compliance with applicable
Environmental Laws.
5.12. DISCLOSURE. None of the Company and its Subsidiaries has made a
material misstatement of fact, or failed to disclose any fact necessary to
make the facts disclosed not misleading, to the Administrative Lender, any
Lender, or the Issuing Bank during the course of application for and
negotiation of any Loan Papers or otherwise in connection with any Advances
or Letters of Credit. There is no fact known to the Company that materially
adversely affects any of the Company's and its Subsidiaries' Properties or
businesses, or that would constitute a Material Adverse Change, and that has
not been set forth in the Loan Papers or in other documents furnished to the
Administrative Lender, Lenders, and Issuing Bank.
ARTICLE VI
COVENANTS
So long as the Commitment, any Advance, or any Letter of Credit is
outstanding, or the Company owes any other amount hereunder:
6.1. FINANCIAL COVENANTS. The Company and its Subsidiaries shall comply
with the following covenants, calculated on a consolidated basis:
(a) NET WORTH. Net Worth shall at no time be less than the sum of (i)
$290,000,000 plus (ii) 50% of Net Income (without deduction for any fiscal
quarter in which Net Income is a
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negative number) accrued from February 2, 1997, plus (iii) 75% of any Net
Issuance Proceeds received after the date hereof.
(b) FIXED CHARGES COVERAGE RATIO. The Fixed Charges Coverage Ratio
shall not be less than 1.75 to 1 at the end of any fiscal quarter of the
Company.
(c) DEBT TO WORTH RATIO. The Debt to Worth Ratio shall at no time
exceed 1.25 to 1.
(d) CAPITAL EXPENDITURES. Capital Expenditures (excluding any Capital
Expenditures in respect of any (i) Capital Leases and (ii) Acquisitions,
permitted pursuant to Section 6.8 hereof) paid or incurred during any fiscal
year of the Company set forth below shall not exceed the amount set forth
opposite such fiscal year:
Fiscal Year ending 1/31/1998 $75,000,000
Fiscal Year ending 1/31/1999 $75,000,000
Fiscal Year ending 1/31/2000 $85,000,000
Fiscal Year ending 1/31/2001 $95,000,000
(e) DEBT RATIO. The Debt Ratio shall not be more than 6.00 to 1 at the
end of any fiscal quarter of the Company ending during the term hereof.
6.2. INDEBTEDNESS. The Company shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume, become or be liable in any manner
in respect of, or suffer to exist, any Indebtedness, except (a) Indebtedness
under the Loan Papers, (b) Indebtedness shown on SCHEDULE II attached hereto,
(c) trade payables incurred and paid in the ordinary course of business, (d)
Capital Lease obligations, (e) Indebtedness with respect to surety, appeal,
indemnity, performance or other similar bonds in the ordinary course of
business, (f) Subordinated Debt owing by the Company to any of its
Subsidiaries, (g) Indebtedness owing by any of the Company's Subsidiaries to
the Company or any of the Company's Domestic Subsidiaries to the extent the
Investment giving rise to such Indebtedness is permitted by Section 6.7
hereof, (h) Contingent Liabilities resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business, (i)
other Indebtedness not to exceed, together with the Investments permitted
under Sections 6.7(d) and 6.7(e), $25,000,000 in aggregate principal amount.
6.3. LIENS. The Company shall not, and shall not permit any of its
Subsidiaries to, create or suffer to exist any Lien upon any of their
Properties, except (a) Liens shown on SCHEDULE II attached hereto, (b) Liens
securing Indebtedness permitted under Sections 6.2(d) and 6.2(i) hereof,
encumbering only the assets purchased or financed with such Indebtedness, and
(c) Tax, mechanics', materialmen's, and landlord Liens relating to amounts
that are not yet due and payable, or that are being contested in good faith
by appropriate proceedings, for which adequate reserves have been
established. It is specifically acknowledged and agreed that the
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Company shall not, and shall not permit its Subsidiaries to, hereafter agree
with any Person (other than the Lenders) not to ▇▇▇▇▇ ▇ ▇▇▇▇ on any of their
assets or not to pledge any of their capital stock. The Company shall not,
and shall not permit any Subsidiary to, enter into, or be subject to, a
Negative Pledge (other than a Negative Pledge in favor of (i) Arizona Funding
Corporation, (ii) Winthrop Resources pursuant to the Company's guaranty of
the obligations of Medical Management International, Inc. under an equipment
financing lease, and (iii) the lenders under that certain Credit Agreement
dated May 5, 1995, among Medical Management International, Inc., NationsBank,
as Administrative Lender, and the Lenders party thereto).
6.4. LICENSES AND MATERIAL AGREEMENTS. The Company shall, and shall
cause its Subsidiaries to, obtain and comply in all material respects with
all Licenses. The Company shall, and shall cause all its Subsidiaries to,
maintain and comply in all material respects with all agreements necessary or
appropriate for any of them to own, maintain, or operate any of their
businesses or Properties.
6.5. LIQUIDATION, DISPOSITIONS OF ASSETS, MERGER, CONSOLIDATION. The
Company shall not, and shall not permit any of its Subsidiaries to, at any
time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up; or sell, lease, abandon, assign, or
otherwise dispose of all or any part of its assets, properties or business,
except (i) immaterial sales or dispositions of assets in the ordinary course
of business, including dispositions of obsolete or useless assets or (ii)
sale-leaseback transactions in which the consideration received is at least
equal to the fair market value of the asset sold. Notwithstanding the
foregoing, a wholly owned Subsidiary of the Company may be dissolved or
liquidated, so long as such Subsidiary owns no assets and conducts no
business; or
(b) enter into any merger or consolidation, except that (i) any of the
Company's Subsidiaries may merge with the Company provided that the Company
is the continuing or surviving entity, (ii) any of the Company's Domestic
Subsidiaries may merge with another of the Company's Domestic Subsidiaries,
(iii) any of the Company's Foreign Subsidiaries may merge with any of the
Company's Domestic Subsidiaries provided that the Domestic Subsidiary is the
continuing or surviving entity, (iv) any of the Company's Foreign
Subsidiaries may merge with any of the Company's other Foreign Subsidiaries,
provided that the surviving entity is a direct Foreign Subsidiary of the
Company or of a Domestic Subsidiary, and (v) the Company or any of its
Subsidiaries may enter into any merger or consolidation constituting an
Acquisition permitted under Section 6.8 hereof.
6.6. DIVIDENDS. The Company shall not, and shall not permit any of its
Subsidiaries to, declare or pay Dividends, except the declaration and payment
of a Dividend by a wholly owned Subsidiary of the Company to the Company or
any of its Domestic Subsidiaries.
6.7. INVESTMENTS. The Company shall not, and shall not permit any of its
Subsidiaries to, make any Investments except for: (a) Investments shown on
SCHEDULE IV hereto,
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(b) Investments in Cash Equivalents, (c) Investments pursuant to the
Investment Policy, (d) provided no Default or Event of Default exists
immediately prior to or after giving effect to any such Investment, working
capital advances to veterinarians who are tenants of Properties owned by or
leased by the Company which amounts do not exceed, together with Indebtedness
permitted under Section 6.2(i) and Investments permitted under Section
6.7(e), $25,000,000 in aggregate amount, (e) provided no Default or Event of
Default exists immediately prior to or after giving effect to any such
Investment, loans to, or guarantees of obligations of, officers of the
Company to exercise incentive stock options of the Company and to pay
alternative minimum tax obligations of such officers not to exceed, together
with Indebtedness permitted under Section 6.2(i) and Investments permitted
under Section 6.7(d), $25,000,000 in aggregate amount, (f) provided no
Default or Event of Default exists immediately prior to or after giving
effect to any such Investment, Investments in one or more Domestic
Subsidiaries (i) that are subject to the provisions hereof, (ii) that
concurrently with the initial Investment, execute a Subsidiary Guaranty and
deliver corporate resolutions, articles of incorporation, by-laws, a
certificate of incumbency and, if requested by the Administrative Lender, an
attorneys' opinion, each in form and substance satisfactory to the
Administrative Lender, and (iii) to the extent such Investment is a loan or
advance, the obligation to repay such loan or advance is recorded on the
books and records of such Subsidiary, (g) Investments in Foreign Subsidiaries
which have not executed a Subsidiary Guaranty not to exceed $18,500,000 in
aggregate amount provided that (A) no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect thereto and (B)
the Administrative Lender has been granted a first priority security interest
in 65% of the capital stock of such Foreign Subsidiary pursuant to a Pledge
Agreement, and (h) provided no Default or Event of Default shall have
occurred and be continuing or would occur after giving effect to such
Investment, Investments in Foreign Subsidiaries which have, concurrently with
such Investment, executed a Subsidiary Guaranty and delivered to the
Administrative Lender corporate resolutions, articles of incorporation,
bylaws, certificate of incumbency and an attorney's opinion, each in form and
substance satisfactory to the Administrative Lender.
6.8. ACQUISITIONS. The Company shall not, and shall not permit any of
its Subsidiaries to, make, in one or more transactions:
(a) any Acquisition of Domestic Subsidiaries unless (i) no Default or
Event of Default shall have occurred and be continuing or would occur after
giving effect to such Acquisition, (ii) the sum of (A) the aggregate
Acquisition Consideration (other than capital stock of the Company)
(including, without limitation, costs associated with Pooling Acquisitions)
for such Acquisitions, plus (B) the Capital Expenditures paid or incurred in
connection with such Acquisitions, shall not exceed in aggregate amount
during each fiscal year, 15% of Tangible Net Worth of the Company immediately
prior to any such Acquisition, and (iii) such Domestic Subsidiary (other than
Acquisition Subsidiaries), concurrently with its being acquired, executes a
Subsidiary Guaranty and delivers to the Administrative Lender corporate
resolutions, articles of incorporation, bylaws, a certificate of incumbency
and, if requested by the Administrative
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Lender, an attorney's opinion, each in form and substance satisfactory to the
Administrative Lender; and
(b) any Acquisitions of Foreign Subsidiaries (i) which do not
concurrently with such Acquisition execute a Subsidiary Guaranty provided
that (A) no Default or Event of Default shall have occurred and be continuing
or would occur after giving effect to such Acquisition, (B) the aggregate
Acquisition Consideration (other than capital stock of the Company) for such
Acquisitions shall not exceed, in aggregate amount during the term hereof,
together with Investments in Foreign Subsidiaries permitted under Section
6.7(g), $18,500,000, and (C) concurrently with such Acquisition, the Company
causes the Administrative Lender to be granted a first and prior security
interest in 65% of the capital stock of such Foreign Subsidiary pursuant to a
Pledge Agreement, or (ii) which concurrently therewith execute a Subsidiary
Guaranty provided that (A) no Default or Event of Default shall have occurred
and be continuing or would occur after giving effect to such Acquisition, and
(B) concurrently with such Acquisition, the Company delivers to the
Administrative Lender corporate resolutions, articles of incorporation,
bylaws, a certificate of incumbency, and an attorney's opinion, each in form
and substance satisfactory to the Administrative Lender.
6.9. BUSINESS. The Company shall not, and shall not permit any of its
Subsidiaries to, change the nature of its business as now conducted. The
Company and each of its Subsidiaries shall not conduct any business except a
Related Business.
6.10. COMPLIANCE WITH APPLICABLE LAWS. The Company shall, and shall cause
its Subsidiaries to, comply in all material respects with all Applicable
Laws, including without limitation compliance with ERISA and payment of all
Taxes before they become delinquent.
6.11. INSURANCE. The Company shall, and shall cause its Subsidiaries to,
(a) keep its insurable Properties adequately insured at all times by
financially sound and reputable insurers to such extent and against such
risks, including fire and other risks insured against by extended coverage,
as is customary with companies similarly situated and in the same or similar
businesses, (b) maintain in full force and effect public liability and
workers compensation insurance (except that the Company shall not be required
to maintain workers compensation in the State of Texas where it is permitted
to be a non-subscriber), in amounts customary for such similar companies to
cover normal risks, by insurers satisfactory to the Administrative Lender,
and (c) maintain such other insurance as may be required by Applicable Law or
requested by the Administrative Lender. The Company shall deliver evidence of
renewal of each insurance policy on or before the date of its expiration, and
from time to time shall deliver to the Administrative Lender, upon demand,
evidence of the maintenance of such insurance.
6.12. INSPECTION RIGHTS. The Company shall, and shall cause its
Subsidiaries to, permit the Administrative Lender or any Lender, upon
reasonable notice and during normal business hours, to examine and make
copies of and abstracts from their records and books of account, to visit and
inspect their Properties and to discuss their affairs, finances, and accounts
with any of
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their directors, officers, or accountants, all as the Administrative Lender
or any Lender may reasonably request.
6.13. RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP. The Company shall,
and shall cause its Subsidiaries to, keep adequate records and books of
account in conformity with GAAP. The Company and its Subsidiaries shall not
change their fiscal year, nor change their method of financial accounting
except in accordance with GAAP. In connection with any such change in GAAP
after the date hereof, the Company and Lenders shall negotiate in good faith
to make appropriate alterations to the covenants set forth in Section 6.1
hereof, reflecting such change.
6.14. REPORTING REQUIREMENTS. The Company shall furnish to each Lender
and the Administrative Lender:
(a) As soon as available and in any event within 45 days after the end
of each of the Company's fiscal quarters which is not the last fiscal quarter
in a fiscal year, consolidated and consolidating balance sheets of the
Company and its Subsidiaries as of the end of such quarter, and consolidated
and consolidating statements of income, and a consolidated statement of
changes in cash flow of the Company and its Subsidiaries for such quarter and
for the portion of the fiscal year ending with such quarter, setting forth,
in comparative form, results for the corresponding periods in the previous
fiscal year, all in reasonable detail, and certified by an officer of the
Company acceptable to the Administrative Lender as prepared in accordance
with GAAP, and fairly presenting the financial condition and results of
operations of the Company and its Subsidiaries;
(b) As soon as available and in any event within 90 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, and
consolidated statements of income and changes in cash flow of the Company and
its Subsidiaries for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the
Auditor, which opinion shall state that said financial statements were
prepared in accordance with GAAP, that the examination by the Auditor in
connection with such financial statements was made in accordance with
generally accepted auditing standards, and that said financial statements
present fairly the financial condition and results of operations of the
Company and its Subsidiaries;
(c) Promptly upon receipt thereof, copies of all material reports or
letters submitted to the Company or any of its Subsidiaries by the Auditor or
any other accountants in connection with any annual, interim, or special
audit, including without limitation the comment letter submitted to
management in connection with any such audit;
(d) Together with each set of financial statements delivered pursuant to
subsections (a) and (b) above, a Quarterly Compliance Certificate;
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(e) As soon as available and in any event prior to the beginning of each
fiscal year of the Company, the annual operating budget and cash flow
statement of the Company and its Subsidiaries for such year;
(f) As soon as possible and in any event within five days after
knowledge by a corporate officer of the Company of the occurrence of any
Default or Event of Default, a notice from an officer of the Company
acceptable to the Administrative Lender, setting forth the details of such
Default or Event of Default, and the action being taken or proposed to be
taken with respect thereto;
(g) As soon possible and in any event within five days after knowledge
thereof by a corporate officer of the Company, notice of any Litigation
pending or threatened against the Company or any of its Subsidiaries which,
if determined adversely, would be reasonably likely to result in judgment,
penalties, or damages in excess of $500,000, together with a statement of an
officer of the Company acceptable to the Administrative Lender, describing
the allegations of such Litigation, and the action being taken or proposed to
be taken with respect thereto;
(h) Promptly following notice or knowledge thereof by a corporate
officer of the Company, notice of any actual or threatened loss or
termination of any material License of the Company or any of its
Subsidiaries, together with a statement of an officer of the Company
acceptable to the Administrative Lender, describing the circumstances
surrounding the same, and the action being taken or proposed to be taken with
respect thereto;
(i) Promptly after filing or receipt thereof by a corporate officer of
the Company, copies of all reports and notices that the Company or any of its
Subsidiaries (i) files or receives in respect of any Plan with or from the
Internal Revenue Service, the PBGC, or the United States Department of Labor,
or (ii) furnishes to or receives from any holders of any Indebtedness or
Contingent Liability, if in the case of clauses (i) and (ii), any information
or dispute referred to therein could result in a Default or an Event of
Default;
(j) Within 30 days after renewal or issuance of any hazard, public
liability, or other insurance policy maintained by the Company, a summary of
such policy in form and substance satisfactory to the Administrative Lender;
(k) As soon as possible and in any event within five days after
knowledge thereof by a corporate officer of the Company, notice of any act,
event or circumstance which is reasonably likely to cause or result in a
Material Adverse Change, together with a statement of an officer of the
Company acceptable to the Administrative Lender, describing the circumstances
surrounding the same, and the action being taken or proposed to be taken with
respect thereto; and
(l) Promptly upon written request, such other information concerning the
condition or operations of any of the Company, its Subsidiaries, and its
Affiliates, financial or otherwise,
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as the Administrative Lender, any Lender, or the Issuing Bank may from time
to time reasonably request.
6.15. USE OF PROCEEDS. The Company shall use the proceeds of Advances for
(a) working capital needs and other general corporate purposes, (b) to repay
draws under Letters of Credit, and (c) to repay certain expenses and costs
incurred in connection with Acquisitions.
6.16. TRANSACTIONS WITH AFFILIATES. Except as permitted herein, the
Company shall not, and shall not permit any of its Subsidiaries to, enter
into or be party to a transaction with any Affiliate, except on terms no less
favorable than could be obtained on an arm's-length basis with a Person that
is not an Affiliate.
6.17. ENVIRONMENTAL LAW COMPLIANCE. The use which the Company or any
Subsidiary intends to make of any real property owned by it will not result
in the disposal or other release of any Hazardous Substance or solid waste on
or to such real property in any manner or quantities which would be deemed a
violation of the any Environmental Laws. As used herein, the term "release"
as used in this Section shall have the meaning specified in CERCLA (as
defined in the definition of Hazardous Substances), and the terms "solid
waste" and "disposal" shall have the meanings specified in RCRA (as defined
in the definition of Hazardous Substances); provided, however, that if CERCLA
or RCRA is amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date of such
amendment; and provided further, to the extent that any other law applicable
to the Company, any Subsidiary or any of their properties establishes a
meaning for "release," "solid waste," or "disposal" which is broader than
that specified in either CERCLA or RCRA, such broader meaning shall apply.
The Company agrees to indemnify and hold the Administrative Lender and each
Lender harmless from and against, and to reimburse them with respect to, any
and all claims, demands, causes of action, loss, damage, liabilities, costs
and expenses (including attorneys' fees and courts costs) of any kind or
character, known or unknown, fixed or contingent, asserted against or
incurred by any of them at any time and from time to time by reason of or
arising out of (a) the failure of the Company or any Subsidiary to perform
any obligation hereunder regarding asbestos or Environmental Laws, (b) any
violation on or before the Release Date of any Environmental Law in effect on
or before the Release Date, and (c) any act, omission, event or circumstance
existing or occurring on or prior to the Release Date (including without
limitation the presence on such real property or release from such real
property of hazardous substances or solid wastes disposed of or otherwise
released on or prior to the Release Date), resulting from or in connection
with the ownership of the real property, regardless of whether the act,
omission, event or circumstance constituted a violation of any Environmental
Law at the time of its existence or occurrence, or whether the act, omission,
event or circumstance is caused by or relates to the negligence of any
indemnified Person; provided that, the Company shall not be under any
obligation to indemnify the Administrative Lender or any Lender to the extent
that any such liability arises as the result of the gross negligence or
willful misconduct of such Person, as finally judicially determined by a
court of
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competent jurisdiction. The provisions of this paragraph shall survive the
Release Date and shall continue thereafter in full force and effect.
6.18. INDIRECT FOREIGN SUBSIDIARIES. Notwithstanding the foregoing
Sections 6.7 and 6.8, in no event shall the aggregate Investments (including
Acquisition Consideration) in any single Foreign Subsidiary of a Foreign
Subsidiary exceed $50,000.
ARTICLE VII
EVENTS OF DEFAULT
7.1. EVENTS OF DEFAULT. Any one or more of the following shall be an
"Event of Default" hereunder, if the same shall occur for any reason
whatsoever, whether voluntary or involuntary, by operation of Applicable Law,
or otherwise:
(a) The Company shall fail to pay any principal, interest, fees, or
other amounts payable under any Loan Papers when due;
(b) Any representation or warranty made or deemed made by the Company or
any of its Subsidiaries (or any of their officers or representatives) under
or in connection with any Loan Papers shall prove to have been incorrect or
misleading in any material respect when made or deemed made;
(c) The Company shall fail to perform or observe any term or covenant
contained in Section 6.1, 6.2, 6.3, 6.5, 6.6, 6.7, 6.8, 6.9, 6.15, 6.16, or
6.18 hereof;
(d) The Company or any of its Subsidiaries shall fail to perform or
observe any other term or covenant contained in any Loan Papers, other than
those described in subsections (a) and (c) above, and such failure shall not
be remedied within 30 Business Days following the earlier of knowledge
thereof by an officer of the Company or Subsidiary, or of written notice by
the Administrative Lender to the Company;
(e) Any Loan Papers or material provision thereof shall, for any reason,
not be valid and binding on the Company or any of its Subsidiaries signatory
thereto, or not be in full force and effect, or shall be declared to be null
and void; the validity or enforceability of any Loan Papers shall be
contested by the Company or any Subsidiary; the Company or any Subsidiary
shall deny that it has any or further liability or obligation under its
respective Loan Papers; or any default or breach under any provision of any
Loan Papers shall continue after the applicable grace period, if any,
specified in such Loan Paper;
(f) Any of the following shall occur: (i) the Company or any of its
Subsidiaries shall make an assignment for the benefit of creditors or be
unable to pay its debts generally as they
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become due; (ii) the Company or any of its Subsidiaries shall petition or
apply to any Tribunal for the appointment of a trustee, receiver, or
liquidator of it, or of any substantial part of its assets, or shall commence
any proceedings relating to the Company or any of its Subsidiaries under any
bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment
of debts, conservatorship, moratorium, dissolution, liquidation, or other
debtor relief Laws of any jurisdiction, whether now or hereafter in effect;
(iii) any such petition or application shall be filed, or any such
proceedings shall be commenced, against the Company or any of its
Subsidiaries and the same is not dismissed or otherwise discharged within 60
days, or an order, judgment or decree shall be entered appointing any such
trustee, receiver, or liquidator, or approving the petition in any such
proceedings; (iv) any final order, judgment, or decree shall be entered in
any proceedings against the Company or any of its Subsidiaries decreeing its
dissolution; or (v) any final order, judgment, or decree shall be entered in
any proceedings against the Company or any of its Subsidiaries decreeing its
split-up which requires the divestiture of a substantial part of its assets;
(g) The Company or any of its Subsidiaries shall fail to pay any
Indebtedness or Contingent Liability of $500,000 or more when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise),
and such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness or
Contingent Liability; the Company or any of its Subsidiaries shall fail to
perform or observe any term or covenant contained in any agreement or
instrument relating to any such Indebtedness or Contingent Liability, when
required to be performed or observed, and such failure shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, and can result in acceleration of the maturity of such
Indebtedness or Contingent Liability; or any such Indebtedness or Contingent
Liability shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof;
(h) The Company or any of its Subsidiaries shall have any final
judgment(s) outstanding against any of them for the payment of $500,000 or
more, and such judgment(s) shall remain unstayed, in effect, and unpaid for
more than 30 days;
(i) Any License of the Company or any of its Subsidiaries shall lapse,
terminate, or be suspended;
(j) Any ERISA Event shall have occurred with respect to a Plan, and the
sum of the Insufficiency of such Plan and liabilities relating thereto, added
to the Insufficiency of and liabilities relating to all other Plans with
respect to which an ERISA Event has occurred, is equal to or greater than
$1,000,000; or the Company, any of its Subsidiaries, or any ERISA Affiliate
shall have committed a failure described in Section 302(f)(l) of ERISA, and
the amount determined under Section 302(f)(3) of ERISA is equal to or greater
than $50,000;
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(k) The Company, any of its Subsidiaries, or any ERISA Affiliate shall
have been notified by the sponsor of a Multiemployer Plan that (i) it has
incurred Withdrawal Liability to such Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities, exceeds $50,000 or requires payments
exceeding $10,000 per annum, or (ii) such Plan is in reorganization or is
being terminated, within the meaning of Title IV of ERISA, if as a result
thereof the aggregate annual contributions to all Multiemployer Plans in
reorganization or being terminated is increased over the amounts contributed
to such Plans for the preceding Plan year by an amount exceeding $10,000;
(l) The Company or any of its Subsidiaries shall be required under any
Environmental Law (i) to implement any remedial, neutralization, or
stabilization process or program, the cost of which would constitute a
Material Adverse Change, or (ii) to pay any penalty, fine, or damages in an
aggregate amount of $500,000 or more;
(m) Any Property (whether leased or owned) of the Company or any of its
Subsidiaries, or the operations conducted thereon by any of them or any
current or prior owner or operator thereof (in the case of real Property),
shall violate or have violated any applicable Environmental Law, if such
violation would constitute a Material Adverse Change; or the Company or any
of its Subsidiaries shall not obtain or maintain any License required to be
obtained or filed under any Environmental Law in connection with the use of
such Property and assets, including without limitation past or present
treatment, storage, disposal, or release of Hazardous Materials into the
environment, if the failure to obtain or maintain the same would constitute a
Material Adverse Change;
(n) A Change of Control shall have occurred;
(o) A Lease Event of Default shall occur under that certain Lease
Agreement (Tax Retention Operating Lease), dated as of July 6, 1995, between
First Security Bank of Utah, N.A., not individually, but solely as Owner
Trustee under the Pet Stores Trust 1995-1, as Lessor, and the Company, as
Lessee;
(p) A Lease Event of Default shall occur under that certain Lease
Agreement (Tax Retention Operating Lease), dated as of September 5, 1996,
between First Security Bank of Utah, N.A., not individually, but solely as
Owner Trustee under the Pet Stores Trust 1996-1, as Lessor, and the Company,
as Lessee;
(q) A Lease Event of Default shall occur under that certain Lease
Agreement (Tax Retention Operating Lease), dated as of April 18, 1997,
between First Security Bank of Utah, N.A., not individually, but solely as
Owner Trustee under the Pet Stores Trust 1997-1, as Lessor, and the Company,
as Lessee;
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(r) A Lease Event of Default shall occur under that certain Amended and
Restated Lease, dated as of April 18, 1997, between Arizona Funding
Corporation, as Landlord, and the Company, as Tenant; or
(s) An Event of Default shall occur under that certain Lease, dated as
of November 27, 1995, between Pet Stores Funding Corporation, as Landlord,
and the Company, as Tenant.
7.2. REMEDIES UPON DEFAULT. If an Event of Default shall have occurred
and be continuing:
(a) With the exception of an Event of Default specified in Section
7.1(f) hereof, the Administrative Lender may at its election, and shall upon
the request of the Majority Lenders, declare the entire unpaid balance of all
Advances immediately due and payable and terminate the Commitment, whereupon
it shall be due and payable without diligence, presentment, demand, protest,
notice of protest or intent to accelerate, or notice of any other kind
(except notices specifically provided for under Section 7.1 hereof), all of
which are hereby expressly waived (except to the extent waiver of the
foregoing is not permitted by Applicable Law);
(b) Upon the occurrence of an Event of Default described in Section
7.1(f) hereof, the aggregate unpaid principal balance of and accrued interest
on all Advances shall thereupon become due and payable concurrently therewith
and the Commitment shall terminate, all without any action by the
Administrative Lender or any Lender, and without diligence, presentment,
demand, protest, notice of protest or intent to accelerate, or notice of any
other kind, all of which are hereby expressly waived;
(c) The Administrative Lender may, and shall upon the request of the
Majority Lenders, demand payment of an amount equal to the maximum amount
available to be drawn under all Letters of Credit; demand presentation of
draws on the Letters of Credit by the beneficiaries thereof, to the extent
permitted thereunder; require the Company to deposit with the Administrative
Lender cash or Cash Equivalents in an amount equal to the maximum amount
available to be drawn under all Letters of Credit; and/or retain, as
collateral for the reimbursement obligations of the Company with respect
thereto, any amounts received upon foreclosure, or in lieu of foreclosure,
through offset, as proceeds of any collateral or otherwise; and
(d) The Administrative Lender and the Lenders may exercise any Rights
afforded them under any Loan Papers, by Applicable Law, including but not
limited to the UCC, at equity, or otherwise.
7.3. CUMULATIVE RIGHTS. All Rights available to the Administrative
Lender, Lenders, and Issuing Bank under the Loan Papers shall be cumulative
of and in addition to all other Rights granted thereto at Applicable Law or
in equity, whether or not amounts owing thereunder shall
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be due and payable, and whether or not the Administrative Lender, any Lender,
or the Issuing Bank shall have instituted any suit for collection or other
action in connection with the Loan Papers.
7.4. WAIVERS. The acceptance by the Administrative Lender, any Lender,
or the Issuing Bank at any time and from time to time of partial payment of
any amount owing under any Loan Papers shall not be deemed to be a waiver of
any Event of Default then existing. No waiver by the Administrative Lender,
any Lender, or the Issuing Bank of any Event of Default shall be deemed to be
a waiver of any Event of Default other than such Event of Default. No delay
or omission by the Administrative Lender, any Lender, or the Issuing Bank in
exercising any Right under the Loan Papers shall impair such Right or be
construed as a waiver thereof or an acquiescence therein, nor shall any
single or partial exercise of any such Right preclude other or further
exercise thereof, or the exercise of any other Right under the Loan Papers or
otherwise.
7.5. Intentionally Omitted.
7.6. EXPENDITURES. The Company agrees to reimburse the Administrative
Lender, Lenders, and Issuing Bank for any sums spent by any of them in
connection with the exercise of any Right provided herein. Such sums shall
bear interest at the (i) lesser of the Base Rate in effect from time to time,
plus 3.0% or (ii) the Highest Lawful Rate, from the date spent until the date
of repayment by the Company.
7.7. CONTROL. None of the covenants or other provisions contained in
this Agreement shall, or shall be deemed to, give the Administrative Lender,
Lenders, or Issuing Bank any Rights to exercise control over the affairs
and/or management of the Company or any of its Subsidiaries, the power of the
Administrative Lender, Lenders, and Issuing Bank being limited to the Rights
to exercise the remedies provided in this Article; provided, however, that if
the Administrative Lender, any Lender, or the Issuing Bank becomes the owner
of any stock or other equity interest in any Person, whether through
foreclosure or otherwise, it shall be entitled to exercise such legal Rights
as it may have by being an owner of such stock or other equity interest in
such Person.
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ARTICLE VIII
THE ADMINISTRATIVE LENDER
8.1. AUTHORIZATION AND ACTION. Each of the Lenders and Issuing Bank
hereby appoints and authorizes the Administrative Lender to take such action
as agent on its behalf and to exercise such powers under this Agreement and
the other Loan Papers as are delegated to the Administrative Lender by the
terms hereof, together with such powers as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement and the other
Loan Papers (including without limitation enforcement or collection of the
Notes), the Administrative Lender shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Lenders (or all Lenders, if
required under Section 9.1 hereof), and such instructions shall be binding
upon all Lenders; provided, however, that the Administrative Lender shall not
be required to take any action which exposes the Administrative Lender to
personal liability or which is contrary to any Loan Papers or Applicable Law.
The Administrative Lender agrees to give to each Lender prompt notice of
each notice given to it by the Company pursuant to the terms of this
Agreement, and to distribute promptly to each applicable Lender in like funds
all amounts delivered to the Administrative Lender by the Company for the
ratable or individual account of any Lender.
8.2. ADMINISTRATIVE LENDER'S RELIANCE, ETC. Neither the Administrative
Lender, nor any of its directors, officers, agents, employees, or
representatives shall be liable for any action taken or omitted to be taken
by it or them under or in connection with this Agreement or any other Loan
Papers, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Administrative
Lender (a) may treat the payee of any Note as the holder thereof until the
Administrative Lender receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Administrative
Lender; (b) may consult with legal counsel (including counsel for the Company
or any of its Subsidiaries), independent public accountants, and other
experts selected by it, and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants, or experts; (c) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements,
warranties, or representations made in or in connection with this Agreement
or any other Loan Papers; (d) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants,
or conditions of this Agreement or any other Loan Papers on the part of the
Company or its Subsidiaries or to inspect the Property (including the books
and records) of the Company or its Subsidiaries; (e) shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement, any other Loan Papers,
or any other instrument or document furnished pursuant hereto; and (f) shall
incur no liability under or in respect of this Agreement or any other Loan
Papers by acting upon any notice, consent, certificate, or other instrument
or writing (which may be by telegram, cable, telex, or telecopy) believed by
it to be genuine and signed or sent by the proper party or parties.
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8.3. NATIONSBANK OF TEXAS, N.A. AND AFFILIATES. With respect to its
Commitment, its Advances, and any Loan Papers, NationsBank of Texas, N.A.
shall have the same Rights under this Agreement as any other Lender and may
exercise the same as though it were not the Administrative Lender.
NationsBank of Texas, N.A., and its Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Company, any Affiliate thereof, and any Person who
may do business therewith, all as if NationsBank of Texas, N.A. were not the
Administrative Lender and without any duty to account therefor to any Lender.
8.4. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Lender or any
other Lender, and based on the financial statements referred to in Sections
5.4 and 6.14 hereof and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Administrative Lender or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Papers.
8.5. INDEMNIFICATION BY LENDERS. Lenders agree to indemnify the
Administrative Lender, pro rata according to their Specified Percentages from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
the Administrative Lender in any way relating to or arising out of any Loan
Papers or any action taken or omitted by the Administrative Lender
thereunder, including any negligence of the Administrative Lender; provided,
however, that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements resulting from the Administrative Lender's gross
negligence or willful misconduct. Without limitation of the foregoing,
Lenders agree to reimburse the Administrative Lender, pro rata according to
their Specified Percentages, promptly upon demand for any out-of-pocket
expenses (including attorneys' fees) incurred by the Administrative Lender in
connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiation, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, the Loan Papers.
8.6. SUCCESSOR ADMINISTRATIVE LENDER. The Administrative Lender may
resign at any time by giving written notice thereof to the Lenders and
Company, and may be removed at any time with or without cause by the action
of all Lenders (other than the Administrative Lender, if it is a Lender), or
by the Company upon thirty (30) days prior written notice from the Company to
the Administrative Lender if, at any time, the Administrative Lender's
Specified Percentage is less than eight percent (8.0%); provided, however,
that if a successor Administrative Lender is appointed without the consent of
the Majority Lenders pursuant to the third sentence of this Section, such
successor Administrative Lender may be removed by the Majority Lenders and
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Company. Upon any such resignation or removal, the Majority Lenders shall
have the right to appoint a successor Administrative Lender, with the consent
of the Company (which shall not be unreasonably withheld). If no successor
Administrative Lender shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Administrative Lender's
giving of notice of resignation or the Lenders' removal of the retiring
Administrative Lender, then the retiring Administrative Lender may, on behalf
of the Lenders, appoint a successor Administrative Lender, which shall be a
commercial bank organized under the Applicable Laws of the United States of
America or of any State thereof and having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as the
Administrative Lender hereunder by a successor Administrative Lender, such
successor Administrative Lender shall thereupon succeed to and become vested
with all the Rights and duties of the retiring Administrative Lender, and the
retiring Administrative Lender shall be discharged from its duties and
obligations under the Loan Papers. Notwithstanding any Administrative
Lender's resignation or removal hereunder, the provisions of this Article
shall continue to inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Administrative Lender under this Agreement.
ARTICLE IX
CHANGES IN CIRCUMSTANCES
9.1. LIBOR BASIS DETERMINATION INADEQUATE. If with respect to any
proposed LIBOR Advance for any Interest Period, any Lender determines that
(i) deposits in dollars (in the applicable amount) are not being offered to
that Lender in the relevant market for such Interest Period or (ii) the LIBOR
Basis for such proposed LIBOR Advance does not adequately cover the cost to
such Lender of making and maintaining such proposed LIBOR Advance for such
Interest Period, such Lender shall forthwith give notice thereof to the
Company, whereupon until such Lender notifies the Company that the
circumstances giving rise to such situation no longer exist, the obligation
of such Lender to make LIBOR Advances shall be suspended.
9.2. ILLEGALITY. If any applicable law, rule or regulation, or any
change therein or adoption thereof, or interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
any Lender (or its LIBOR Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank
or comparable agency, shall make it unlawful or impossible for such Lender
(or its LIBOR Lending Office) to make, maintain or fund its LIBOR Advances,
such Lender shall so notify the Company and the Administrative Lender.
Before giving any notice to the Company pursuant to this Section, the
notifying Lender shall designate a different LIBOR Lending Office or other
lending office if such designation will avoid the need for giving such notice
and will not, in the sole judgment of the Lender, be materially
disadvantageous to the Lender. Upon receipt of such notice, notwithstanding
anything contained in ARTICLE II hereof, the Company shall repay in full the
then
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outstanding principal amount of each LIBOR Advance owing to the notifying
Lender, together with accrued interest thereon, on either (a) the last day of
the Interest Period applicable to such Advance, if the Lender may lawfully
continue to maintain and fund such Advance to such day, or (b) immediately,
if the Lender may not lawfully continue to fund and maintain such Advance to
such day. Concurrently with repaying each affected LIBOR Advance owing to
such Lender, notwithstanding anything contained in ARTICLE II hereof, the
Company shall borrow a Base Rate Advance from such Lender, and such Lender
shall make such Base Rate Advance, in an amount such that the outstanding
principal amount of the Advances owing to such Lender shall equal the
outstanding principal amount of the Advances owing immediately prior to such
repayment, and such Base Rate Advance shall be payable on the same date or
dates as the affected LIBOR Advances of such Lender would have otherwise been
due and payable but for this Section 9.2.
9.3. INCREASED COSTS.
(a) If any applicable law, rule or regulation, or any change in or
adoption of any law, rule or regulation, or any interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof
or compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office) to any tax
(net of any tax benefit engendered thereby) with respect to its LIBOR
Advances or its obligation to make such Advances, or shall change the basis
of taxation of payments to a Lender (or to its LIBOR Lending Office) of the
principal of or interest on its LIBOR Advances or in respect of any other
amounts due under this Agreement, as the case may be, or its obligation to
make such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes, doing
business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal
Reserve System), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, a Lender's
LIBOR Lending Office or shall impose on the Lender (or its LIBOR Lending
Office) or on the United States market for certificates of deposit or the
London interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances;
and the result of any of the foregoing is to increase the cost to a Lender
(or its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or
to reduce the amount of any sum received or receivable by a Lender (or its
LIBOR Lending Office) with respect thereto, by an amount deemed by a Lender
to be material, then, within 15 days after demand by a Lender, the Company
agrees to pay to such Lender such additional amount as will compensate such
Lender for such increased costs or reduced amounts, subject to Section 10.9
hereof. The affected
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Lender will as soon as practicable notify the Company of any event of which
it has knowledge, occurring after the date hereof, which will entitle such
Lender to compensation pursuant to this Section and will designate a
different LIBOR Lending Office or other lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the sole judgment of the affected Lender made in good faith, be
disadvantageous to such Lender.
(b) A certificate of any Lender claiming compensation under this Section
and setting forth the additional amounts to be paid to it hereunder and
calculations therefor shall be conclusive in the absence of manifest error.
In determining such amount, a Lender may use any reasonable averaging and
attribution methods. If a Lender demands compensation under this Section,
the Company may at any time, upon at least five Business Days' prior notice
to the Lender, after reimbursement to the Lender by the Company in accordance
with this Section of all costs incurred, prepay in full the then outstanding
LIBOR Advances of the Lender, together with accrued interest thereon to the
date of prepayment, along with any reimbursement required under Section 2.10
hereof. Concurrently with prepaying such LIBOR Advances, the Company shall
borrow a Base Rate Advance from the Lender, and the Lender shall make such
Base Rate Advance, in an amount such that the outstanding principal amount of
the Advances owing to such Lender shall equal the outstanding principal
amount of the Advances owing immediately prior to such prepayment, and such
Base Rate Advance shall be payable on the same date or dates as the LIBOR
Advances of such Lender would have otherwise been due and payable but for
this Section 9.3.
9.4. BASE RATE ADVANCES RATHER THAN LIBOR ADVANCES. If notice has been
given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of
a Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to
be repaid or prepaid, then, unless and until the Lender notifies the Company
that the circumstances giving rise to such repayment no longer apply, all
Advances which would otherwise be made by such Lender as LIBOR Advances shall
be made instead as Base Rate Advances, which shall be payable on the same
date or dates as the LIBOR Advances made by the other Lenders.
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ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Papers, nor consent to any departure by the
Company or any of its Subsidiaries therefrom, shall be effective unless the
same shall be in writing and signed by the Administrative Lender with the
consent of the Majority Lenders, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver, or consent shall,
unless in writing and signed by all of the Lenders, (a) increase the
Commitment, (b) reduce any principal, interest, fees, or other amounts
payable hereunder, or waive any Event of Default under Section 7.1(a) hereof,
(c) postpone any date fixed for any payment of principal, interest, fees, or
other amounts payable hereunder, (d) release any collateral or guaranties
securing the Company's obligations hereunder, other than releases
contemplated by the Loan Papers, (e) change the meaning of Specified
Percentage or the number of Lenders required to take any action hereunder, or
(f) amend this Section. No amendment, waiver, or consent shall affect the
Rights or duties of the Administrative Lender under any Loan Papers, unless
it is in writing and signed by the Administrative Lender in addition to the
requisite number of Lenders.
10.2. NOTICES. Unless otherwise provided herein, all notices, requests,
consents, demands, and other communications under the Loan Papers shall be in
writing and shall be personally delivered, sent by telecopy or telex
(answerback received), or mailed, by certified mail, postage prepaid, to the
following addresses:
(a) If to the Company:
PETsMART, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
with a copy to:
Cooley Godward LLP
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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(b) If to the Administrative Lender:
NationsBank of Texas, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Western Corporate Banking Department
(c) If to any Lender, to its address shown on the signature pages hereto
(d) If to the Issuing Bank:
NationsBank of Texas, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Western Corporate Banking Department
with a copy to:
NationsBank of Texas, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
or to such other address as any party may designate in written notice to the
other parties. All notices, requests, consents, demands, and other
communications hereunder will be effective when so personally delivered or
sent by telecopy or telex, or five days after being so mailed; provided,
however, that notices to the Administrative Lender pursuant to ARTICLE II
hereof shall be effective when received. The Company agrees that the
Administrative Lender shall have no duty or obligation to verify or otherwise
confirm telephonic notices given pursuant to ARTICLE II hereof, and agrees to
indemnify and hold harmless the Administrative Lender and Lenders for any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, and expenses resulting, directly or indirectly, from
acting upon any such notice.
10.3. PARTIES IN INTEREST. All covenants and agreements contained in this
Agreement and all other Loan Papers shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto. The Lenders may
from time to time assign or transfer their interests hereunder pursuant to
Section 10.4 hereof. The Company may not assign or transfer its Rights or
obligations hereunder without the prior written consent of all Lenders.
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10.4. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Lender may assign its Rights and obligations as a Lender under
the Loan Papers to one or more Eligible Assignees, so long as (i) each
assignment shall be of a constant, and not a varying, percentage of all
Rights and obligations thereunder, (ii) the Company shall approve of the
assignee (which approval shall not be unreasonably withheld with respect to
an Eligible Assignee which is organized under the laws of the United States
or any state thereof), (iii) the Eligible Assignee or the Lender entering
into such assignment, as the case may be, shall deliver to the Administrative
Lender a processing fee of $3,000, and (iv) the amount of the Commitment,
Advances and Reimbursement Obligations being assigned pursuant to each such
assignment (determined as of the date of the assignment with respect to such
assignment) shall in no event be less than $5,000,000 and which is an
integral multiple of $1,000,000. Within five Business Days after notice of
any such assignment, the Company shall execute and deliver to the
Administrative Lender, in exchange for the Note issued to such Lender, new
Notes to the order of such Lender and its assignee in amounts equal to their
respective Specified Percentages of the Commitment. Such new Notes shall be
dated the effective date of the assignment. It is specifically acknowledged
and agreed that on and after the effective date of each assignment, the
assignee shall be a party hereto and shall have the Rights and obligations of
a Lender under the Loan Papers.
(b) Each Lender may sell participations to one or more banks or other
entities in all or any of its Rights and obligations under the Loan Papers;
provided, however, that (i) such Lender's obligations under the Loan Papers
shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) such
Lender shall remain the holder of its Note for all purposes of the Loan
Papers, (iv) the participant shall be granted the Right to vote on or consent
to only those matters described in subsections (a) through (d) of Section
10.1 hereof, and (v) the Company, Administrative Lender, and other Lenders
shall continue to deal solely and directly with such Lender in connection
with its Rights and obligations under the Loan Papers.
(c) Any Lender may, in connection with any assignment or participation,
or proposed assignment or participation, disclose to the assignee or
participant, or proposed assignee or participant, any information relating to
the Company or any of its Subsidiaries furnished to such Lender by or on
behalf of the Company or its Subsidiaries; provided, however, that, prior to
any such disclosure, the assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
information received by it from such Lender.
(d) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of
its Rights under this Agreement (including, without limitation, the Advances
owing to it and the Note or Notes held by it) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System.
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(e) If the Company receives notice from any Lender requesting increased
costs or additional amounts under Section 2.9 or 10.7, the Company shall have
the right, unless such Lender has removed or cured the conditions which
resulted in the obligation to pay such increased costs or additional amounts
or agreed to waive and otherwise forego any right it may have to any payments
therein provided, to replace in its entirety such Lender (the "Replaced
Lender"), upon prior written notice to Administrative Lender and such
Replaced Lender, with one or more Eligible Assignees acceptable to the
Administrative Lender (which acceptance shall not be unreasonably withheld),
pursuant to the provisions of this Section 10.4; PROVIDED, HOWEVER, that
nothing herein contained shall relieve the Company of its obligation to pay
any such increased costs or additional amounts to the extent incurred prior
to the replacement of the applicable Lender and not reduced or omitted by the
replacement of the applicable Lender.
10.5. SHARING OF PAYMENTS. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any Right of
set-off, or otherwise) on account of its Advances in excess of its Specified
Percentage of all payments made by the Company, such Lender shall forthwith
purchase participations in Advances made by the other Lenders as shall be
necessary to share the excess payment pro rata according to Specified
Percentages with each of them; provided, however, that if any of such excess
payment is thereafter recovered from the purchasing Lender, its purchase from
each Lender shall be rescinded and each Lender shall repay the purchase price
to the extent of such recovery together with any interest or other amount
paid or payable by the purchasing Lender in respect of the total amount so
recovered according to Specified Percentages. The Company agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section may, to the fullest extent permitted by Applicable Law, exercise all
its Rights of payment (including the Right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Company in the amount of such participation.
10.6. RIGHT OF SET-OFF. Upon the occurrence and during the continuance of
any Event of Default, each Lender is hereby authorized at any time and from
time to time, to the fullest extent permitted by Applicable Law, to set-off
and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Lender to or for the credit or the account of the Company
against any and all of the obligations of the Company now or hereafter
existing under this Agreement and the other Loan Papers, whether or not such
Lender shall have made any demand under this Agreement or the other Loan
Papers, and even if such obligations are unmatured. Each Lender shall
promptly notify the Company after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The Rights of each Lender under this Section are in
addition to other Rights (including, without limitation, other Rights of
set-off) which each Lender may have.
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10.7. COSTS, EXPENSES, AND TAXES.
(a) The Company agrees to pay on demand (i) all costs and expenses of
the Administrative Lender in connection with the preparation, negotiation,
and administration of any Loan Papers, including without limitation the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender, (ii) all reasonable costs and expenses (including reasonable
attorneys' fees and expenses) of the Administrative Lender in connection with
modification, amendment, waiver, or release of any Loan Papers, and (iii) all
costs and expenses (including reasonable attorneys' fees and expenses) of the
Administrative Lender, Lenders, and Issuing Bank in connection with
enforcement of any Loan Papers.
(b) In addition, the Company shall pay any and all stamp, debt, and
other Taxes payable or determined to be payable in connection with any
payment hereunder (other than Taxes on the overall net income of the
Administrative Lender, any Lender, or the Issuing Bank or Taxes imposed by
foreign Laws or as a result of any Lender being organized under the laws of a
jurisdiction outside of the United States), or the execution, delivery, or
recordation of any Loan Papers, and agrees to save the Administrative Lender,
Lenders, and Issuing Bank harmless from and against any and all liabilities
with respect to, or resulting from any delay in paying or omission to pay any
Taxes in accordance with this Section, including any penalty, interest, and
expenses relating thereto. All payments by the Company or any Subsidiary
under any Loan Papers shall be made free and clear of and without deduction
for any present or future Taxes (other than Taxes on the overall net income
of the Administrative Lender, any Lender, or the Issuing Bank) of any nature
now or hereafter existing, levied, or withheld, including all interest,
penalties, or similar liabilities relating thereto. If the Company or any
Subsidiary shall be required by Applicable Law to deduct or to withhold any
Taxes from or in respect of any amount payable hereunder, (i) the amount so
payable shall be increased to the extent necessary so that, after making all
required deductions and withholdings (including Taxes on amounts payable to
the Administrative Lender, any Lender, or the Issuing Bank pursuant to this
sentence), the payee receives an amount equal to the sum it would have
received had no such deductions or withholdings been made, (ii) the Company
or such Subsidiary shall make such deductions or withholdings, and (iii) the
Company or such Subsidiary shall pay the full amount deducted or withheld to
the relevant taxing authority in accordance with Applicable Law. Any Lender
claiming any additional amounts payable pursuant to this Section 10.7 shall
use reasonable commercial efforts to change the jurisdiction of its lending
office if the making of such change would avoid the need for or materially
reduce the amount of any such additional amounts which may thereafter accrue
and if, in the reasonable opinion of such Lender, such change in lending
office would not be contrary to such Lender's normal banking practices or be
disadvantageous to such Lender.
(c) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the date hereof (or, in the case of a
Lender which becomes a party hereto pursuant to Section 11.6 after the date
hereof, the date upon which such Lender becomes a party hereto) deliver to
the Company:
(A) if any lending office is located in the United States of America,
two (2) accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("FORM 4224"),
(B) if any lending office is located outside the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 1001 or any successor thereto
("FORM 1001").
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such lending office or lending offices under this Agreement free
from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office or lending
offices or selects an additional lending office it shall, at the same time
or reasonably promptly thereafter but only to the extent the forms
previously delivered by it hereunder are no longer effective, deliver to
the Company, in replacement for the forms previously delivered by it
hereunder:
(A) if such changed or additional lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed originals of Form
1001,
in each case indicating that such Lender is on the date of delivery thereof
entitled to receive payments of principal, interest and fees for the
account of such changed or additional lending office under this Agreement
free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in
clause (ii) above) requiring a change in the most recent Form 4224 or Form
1001 previously delivered by such Lender and if the delivery of the same be
lawful, deliver to the Company, two (2) accurate and complete original
signed copies of Form 4224 or Form 1001 in replacement for the forms
previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Company, deliver to
the Company such other forms or similar documentation as may be required
from time to
-57-
time by any applicable law, treaty, rule or regulation in order to
establish such Lender's tax status for withholding purposes; and
(v) it shall notify the Company, within 30 days after any event
(including an amendment to, or a change in any applicable law or regulation
or in the written interpretation thereof by any regulatory authority or any
judicial authority, or by ruling applicable to such Lender of any
governmental authority charged with the interpretation or administration of
any law) shall occur that results in such Lender no longer being capable of
receiving payments without any deduction or withholding of United States
federal income tax.
10.8. INDEMNIFICATION BY COMPANY. The Company agrees to indemnify,
defend, and hold harmless the Administrative Lender, the Lenders, the Issuing
Bank, and their Affiliates, directors, officers, agents, employees, and
representatives, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs,
expenses, and disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against any of them in any way relating
to or arising out of any Loan Papers (including in connection with or as a
result, in whole or in part, of the negligence of any of them), any
transaction related hereto or thereto, or any act, omission, or transaction
of the Company and its Affiliates, or any of their directors, officers,
agents, employees, or representatives; provided, however, that the
Administrative Lender, Lenders, and Issuing Bank, as applicable, shall be
liable to the Company and its Subsidiaries only to the extent of any direct
(as opposed to consequential) damages suffered by the Company and its
Subsidiaries; and provided further, that the Administrative Lender, Lenders,
and Issuing Bank shall not be indemnified, defended, and held harmless
pursuant to this Section for any losses or damages which the Company proves
were caused by the indemnified party's willful misconduct or gross negligence.
10.9. RATE PROVISION. It is not the intention of any party to any Loan
Papers to make an agreement violative of the Applicable Laws of any
applicable jurisdiction relating to usury. In no event shall the Company or
any of its Subsidiaries be obligated to pay any amount in excess of the
Maximum Amount. If any Lender ever receives, collects or applies, as
interest, any such excess, such amount which would be excessive interest
shall be deemed a partial repayment of principal and treated hereunder as
such; and if principal is paid in full, any remaining excess shall be paid to
the Company. In determining whether or not the interest paid or payable,
under any specific contingency, exceeds the Maximum Amount, the Company and
Lenders shall, to the maximum extent permitted under Applicable Laws, (i)
characterize any nonprincipal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effect thereof,
and (iii) amortize, prorate, allocate and spread in equal parts, the total
amount of interest throughout the entire contemplated term of the Obligation
so that the interest rate is uniform throughout the entire term of the
Obligation; provided that if the Obligation is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum
Amount, Lenders shall
-58-
refund to the Company the amount of such excess or credit the amount of such
excess against the total principal amount owing, and, in such event, no
Lender shall be subject to any penalties provided by any Applicable Laws for
contracting for, charging or receiving interest in excess of the Maximum
Amount. This Section 10.9 shall control every other provision of all
agreements among the parties to this Agreement pertaining to the transactions
contemplated by or contained in the Loan Papers.
10.10. SEVERABILITY. If any provision of any Loan Papers is held to be
illegal, invalid, or unenforceable under present or future Applicable Laws
during the term thereof, such provision shall be fully severable, the
appropriate Loan Paper shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part thereof, and
the remaining provisions thereof shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or
by its severance therefrom. Furthermore, in lieu of such illegal, invalid,
or unenforceable provision there shall be added automatically as a part of
such Loan Paper a legal, valid, and enforceable provision as similar in terms
to the illegal, invalid, or unenforceable provision as may be possible.
10.11. EXCEPTIONS TO COVENANTS. Neither the Company nor any of its
Subsidiaries shall be deemed to be permitted to take any action or to fail to
take any action that is permitted as an exception to any covenant in any Loan
Papers, or that is within the permissible limits of any covenant, if such
action or omission would result in a violation of any other covenant in any
Loan Papers.
10.12 COUNTERPARTS. This Agreement and the other Loan Papers may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such
agreement, it shall not be necessary to produce or account for any
counterpart other than one signed by the party against which enforcement is
sought.
10.13. NO NOVATION. Except for Liens expressly released in connection
herewith, the execution, delivery and effectiveness of this Agreement shall
not extinguish the obligations for the payment of money outstanding under the
Prior Credit Agreement (as defined in the recitals hereof) or discharge or
release the Lien or priority of any security agreement, any pledge agreement
or any other security therefor. Nothing herein contained shall be construed
as a substitution or novation of the Obligations outstanding under the Prior
Credit Agreement or instruments securing the same, which shall remain in full
force and effect, except as modified hereby or by instruments executed
concurrently herewith. Nothing expressed or implied in this Agreement, or
any other document contemplated hereby shall be construed as a release or
other discharge of the Company under the Prior Credit Agreement or any
guarantor or pledgor under any Loan Paper (as such term is defined in the
Prior Credit Agreement) from any of its obligations and liabilities
thereunder. The Prior Credit Agreement and such Loan Papers shall remain in
full force and effect, until and except as modified hereby or in connection
herewith.
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10.14. PURCHASE BY LENDERS. Simultaneously with the satisfaction of the
conditions precedent to effectiveness set forth in Section 4.1 hereof, each
Lender shall be deemed to have purchased without recourse an amount of each
of the Prior Lender's outstanding Advances and Reimbursement Obligations
under the prior Credit Agreement such that after giving effect to this
Agreement, the percentage of each Lender's Commitment hereunder which has
been utilized will be equal.
10.15. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND ALL OTHER LOAN PAPERS SHALL BE DEEMED TO BE
CONTRACTS MADE IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
CONFLICT OF LAWS) AND THE UNITED STATES OF AMERICA. WITHOUT EXCLUDING ANY
OTHER JURISDICTION, THE COMPANY AGREES THAT THE STATE AND FEDERAL COURTS OF
TEXAS LOCATED IN DALLAS, TEXAS, WILL HAVE JURISDICTION OVER PROCEEDINGS IN
CONNECTION HEREWITH. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE COMPANY
HEREBY WAIVES ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE
(WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR OTHERWISE) ARISING UNDER OR
RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS, OR ANY RELATED MATTERS,
AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY.
(b) THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY LEGAL PROCESS UPON
IT. UNDER THE LOAN PAPERS, IN ADDITION, THE COMPANY AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO THE COMPANY AT ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER
DEPOSIT IN THE UNITED STATES MAIL. NOTHING IN THIS SECTION SHALL AFFECT THE
RIGHT OF THE ADMINISTRATIVE LENDER OR ANY LENDER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW.
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10.16. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
61
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
COMPANY: PETsMART, INC.
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Executive Vice President
---------------------------------
ADMINISTRATIVE LENDER: NATIONSBANK OF TEXAS, N.A., as Administrative
Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
ISSUING BANK: NATIONSBANK OF TEXAS, N.A., as Issuing Bank
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Letter of Credit Department
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LENDERS: NATIONSBANK OF TEXAS, N.A., Individually
Specified Percentage:
12.000000000%
Commitment: $15,000,000.00
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Western Corporate Banking Department
▇▇▇▇▇ FARGO BANK, N.A.
Specified Percentage:
8.000000000%
Commitment: $10,000,000.00
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Lending Division #929
NORWEST BANK COLORADO, N.A.
Specified Percentage:
5.333333336%
Commitment: $6,666,666.67
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
Specified Percentage:
10.666666664%
Commitment: $13,333,333.33
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President, Manager
---------------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABN AMRO BANK N.V., LOS ANGELES INTERNATIONAL
BRANCH
Specified Percentage:
5.333333328%
Commitment: $6,666,666.66
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Title: Vice President, Director
---------------------------------
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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THE INDUSTRIAL BANK OF JAPAN, LIMITED, LOS
ANGELES AGENCY
Specified Percentage:
8.000000000%
Commitment: $10,000,000.00
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President & Manager
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
Specified Percentage:
8.000000000%
Commitment: $10,000,000.00
By: /s/ T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
----------------------------------------
Name: T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
---------------------------------
Title: Deputy General Manager
---------------------------------
By: /s/ ▇▇▇▇▇ Read
----------------------------------------
Name: ▇▇▇▇▇ Read
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
Specified Percentage:
8.000000000%
Commitment: $10,000,000.00
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
CORESTATES BANK
Specified Percentage:
5.333333336%
Commitment: $6,666,666.67
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
IC: FC1-8-8-14
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-66-
FLEET NATIONAL BANK
Specified Percentage:
4.000000000%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Assistant Vice President
---------------------------------
Address:
Mail Stop: MA OF ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: National Retail Group
THE SUMITOMO BANK OF CALIFORNIA
Specified Percentage:
4.000000000%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THE BANK OF NOVA SCOTIA
Specified Percentage:
5.▇▇▇▇▇▇▇▇▇%
Commitment: $6,666,666.67
By: /s/ J.S. York
----------------------------------------
Name: J.S. York
---------------------------------
Title: Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-67-
THE SAKURA BANK, LIMITED
Specified Percentage:
4.000000000%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇
---------------------------------
Title: Senior Vice President &
Assistant General Manager
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
CREDIT LYONNAIS LOS ANGELES BRANCH
Specified Percentage:
4.000000000%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Title: Vice President & Branch Manager
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
THE DAI-ICHI KANGYO BANK, LTD., LOS ANGELES
AGENCY
Specified Percentage:
4.000000000%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Title: Sr. Vice President & Joint
General Manager
---------------------------------
Address:
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
-▇▇-
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
BANK OF MONTREAL
Specified Percentage:
4.▇▇▇▇▇▇▇▇▇%
Commitment: $5,000,000.00
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Title: Senior Vice President
---------------------------------
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-69-
