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Kmart Holding - Credit Agreement, Dated As of May 6, 2003
EXHIBIT 10.1
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CREDIT AGREEMENT
Dated as of May 6, 2003
among
KMART CORPORATION,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Co-Collateral Agent and Lender
GECC CAPITAL MARKETS GROUP, INC.
as Co-Lead Arranger and Co-Book Runner
FLEET RETAIL FINANCE INC.,
as Co-Syndication Agent, Co-Collateral Agent and Lender
FLEET SECURITIES, INC.,
as Co-Lead Arranger and Co-Book Runner
BANK OF AMERICA, N.A.,
as Co-Syndication Agent and Lender
BANC OF AMERICA SECURITIES LLC,
as Co-Lead Arranger and Co-Book Runner
GMAC COMMERCIAL FINANCE LLC,
as Co-Documentation Agent
and
FOOTHILL CAPITAL CORPORATION,
as Co-Documentation Agent
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INDEX OF APPENDICES
Annex A (Recitals) - Definitions Annex B (Section 1.2) - Letters of Credit Annex C (Section 1.8) - Cash Management System Annex D (Section 2.1(a)) - Closing Checklist Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting Annex F (Section 4.1(b)) - Collateral Reports Annex G (Section 6.10) - Financial Covenants Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information Annex I (Section 11.10) - Notice Addresses Annex J (from Annex A- Commitments definition) - Commitments as of Closing Date Annex K (Section 1.1) Reserves/Other Changes to the Borrowing Base
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance Exhibit 1.1(a)(ii) - Form of Revolving Note Exhibit 1.1(c)(ii) - Form of Swing Line Note Exhibit 3.4(b) - Business Plan Exhibit 3.19 - Form of Letter of Direction Exhibit 1.5(e) - Form of Notice of Conversion/Continuation Exhibit 4.1(b) - Form of Borrowing Base Certificate Exhibit 9.1(a) - Form of Assignment Agreement Exhibit B-1 - Application for Standby Letter of Credit Exhibit B-2 - Application for Documentary Letter of Credit Exhibit C-1 - Form of Control Agreement Exhibit C-2 - Form of Investment Account Control Agreement Exhibit D-2 - Form of ESL Notes Exhibit D-2 - Form of ESL Guarantee Exhibit E-1 - Form of Plan of Reorganization Exhibit E-2 - Form of Disclosure Statement Exhibit E-3 - Form of Confirmation Order Exhibit F-1 - Form of Landlord Waiver Exhibit F-2 - Form of Bailee/Warehouseman Waiver Exhibit G-1 - Form of Supplement to Subsidiary Guaranty Exhibit G-2 - Form of Supplement to Security Agreement
Schedule 1.1 - Agent's Representatives Schedule 1.2 - Existing Letters of Credit Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN Disclosure Schedule 3.4(a) - Financial Statements Disclosure Schedule 3.4(b) - Projections Disclosure Schedule 3.6 - Real Estate and Leases Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock Disclosure Schedule 3.11 - Tax Matters Disclosure Schedule 3.12 - ERISA Plans Disclosure Schedule 3.14 - Brokers Disclosure Schedule 3.15 - Intellectual Property Disclosure Schedule 3.18 - Insurance Disclosure Schedule 3.19 - Deposit and Loan Proceeds Accounts Disclosure Schedule 3.20 - Top 10 Vendors Disclosure Schedule 5.1 - Trade Names Disclosure Schedule 5.15(b) - Franchise Tax Jurisdictions Disclosure Schedule 6.2 - Investments Disclosure Schedule 6.3 - Indebtedness Disclosure Schedule 6.4(a) - Transactions with Affiliates Disclosure Schedule 6.6 - Guaranteed Indebtedness Disclosure Schedule 6.7 - Existing Liens Disclosure Schedule 6.8 - Stores and DCs to be Closed
This CREDIT AGREEMENT (this "Agreement"), dated as of May 6, 2003 among KMART CORPORATION, a Michigan corporation ("Borrower"); the other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (in its individual capacity, "GE Capital"), for itself, as Lender, and as Administrative Agent for Lenders, and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower has requested that Lenders extend a revolving credit and letter of credit facility to Borrower of up to Two Billion Dollars ($2,000,000,000.00) in the aggregate for the purpose of funding a portion of the payments to be made by Borrower and the other Credit Parties under the Plan of Reorganization on the terms set forth herein, to fund certain fees and expenses incurred by Borrower in connection with this Agreement and to provide (a) working capital financing for Borrower and the other Credit Parties, (b) funds for other general corporate purposes of Borrower and the other Credit Parties and (c) funds for other purposes permitted hereunder; and for these purposes, Lenders are willing to make certain loans and other extensions of credit to Borrower of up to such amount upon the terms and conditions set forth herein; and
WHEREAS, Borrower has agreed to secure all of its obligations under the Loan Documents by granting to Administrative Agent, for the benefit of Administrative Agent and the other Secured Parties, a security interest in and Lien upon all of its existing and after-acquired Inventory and certain categories of personal property relating thereto; and
WHEREAS, certain Subsidiaries of Borrower are willing to jointly and severally guarantee all of the obligations of Borrower to Administrative Agent and the Secured Parties under the Loan Documents and to secure such guarantees by granting to Administrative Agent, for the benefit of Administrative Agent and the Secured Parties, a security interest in and Lien upon all of their respective existing and after-acquired Inventory and certain categories of personal property relating thereto; and
WHEREAS, Kmart Holding Corporation, a Delaware corporation ("Holdings") is willing to guarantee all of the obligations of Borrower to Administrative Agent and the Secured Parties under the Loan Documents; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes, Disclosure Schedules, Exhibits and other attachments (collectively, "Appendices") hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrower from time to time until the Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving Credit Advance"). The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this Section 1.1(a); provided, that the amount of any Revolving Credit Advance to be made at any time shall not exceed, after giving effect to the use of proceeds thereof, Borrowing Availability at such time. Each Revolving Credit Advance shall be (A) in an aggregate principal amount not less than $1,000,000 and multiples of $100,000 in excess thereof (or such other amount as may be required to repay any Swing Line Loan required to be repaid pursuant to the terms hereof) and (B) made on notice by Borrower to one of the representatives of Administrative Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (A) noon (New York time) on the Business Day of the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or (B) noon (New York time) on the date which is three (3) Business Days prior to the proposed Revolving Credit Advance, in the case of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance") must be given in writing (by telecopy or overnight courier) substantially in the form of Exhibit 1.1(a)(i), and shall include the information required in such Exhibit. If Borrower desires to have the Revolving Credit Advances bear interest by reference to a LIBOR Rate, Borrower must comply with Section 1.5(e). Any voluntary prepayments of Revolving Credit Advances shall be in an aggregate principal amount not less than $1,000,000 and multiples of $100,000 in excess thereof.
(ii) Except as provided in Section 1.12, Borrower shall execute and deliver to each Revolving Lender a promissory note to evidence the Revolving Loan Commitment of that Revolving Lender. Each promissory note shall be in the principal amount of the Revolving Loan Commitment of the applicable Revolving Lender and substantially in the form of Exhibit 1.1(a)(ii) (each a "Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note shall represent the obligation of Borrower to pay the amount of the applicable Revolving Lender's Revolving Loan Commitment or, if less, such Revolving Lender's Pro Rata Share (subject to Section 9.9) of the aggregate unpaid principal amount of the Revolving Loan made to Borrower together with interest thereon as prescribed in Section 1.5. The entire unpaid balance of the Revolving Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date.
(iii) Any provision of this Agreement to the contrary notwithstanding, at the request of Borrower, in its discretion Administrative Agent may (but shall have absolutely no obligation to), make Revolving Credit Advances to Borrower on behalf of Revolving Lenders in amounts that cause the outstanding balance of the aggregate Revolving Loan to exceed the
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Borrowing Base (less the Swing Line Loan, the Synthetic Loan and the amount set forth in paragraph (c) of Annex G) (any such excess Revolving Credit Advances are herein referred to collectively as "Overadvances"); provided that (A) no such event or occurrence shall cause or constitute a waiver of Administrative Agent's, the Swing Line Lender's or Revolving Lenders' right to refuse to make any further Overadvances, Swing Line Advances or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the case may be, at any time that an Overadvance exists, (B) no Overadvance shall result in a Default or Event of Default based on Borrower's failure to comply with Section 1.3(b) for so long as Administrative Agent permits such Overadvance to remain outstanding, but solely with respect to the amount of such Overadvance and (C) such Overadvances shall only be made to protect and preserve the Collateral. In addition, Overadvances may be made even if the conditions to lending set forth in Section 2 have not been met. All Overadvances shall constitute Index Rate Loans, shall bear interest at the Default Rate and shall be payable on demand. The authority of Administrative Agent to make Overadvances is limited to an aggregate amount not to exceed $50,000,000 at any time, shall not cause the Loans to exceed the Maximum Amount, may be revoked prospectively by a written notice to Administrative Agent signed by the Requisite Lenders and may only be advanced and outstanding for sixty (60) days in each one hundred twenty (120) day period occurring through the Commitment Termination Date.
(b) Intentionally Omitted.
(c) Swing Line Facility.
(i) Administrative Agent shall notify the Swing Line Lender upon Administrative Agent's receipt of any Notice of Revolving Credit Advance. Subject to the terms and conditions hereof, the Swing Line Lender may, in its discretion, make available from time to time until the Commitment Termination Date advances (each, a "Swing Line Advance") in accordance with any such notice. The provisions of this Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make Revolving Credit Advances under Section 1.1(a); provided that if the Swing Line Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line Advance shall be in lieu of any Revolving Credit Advance that otherwise may be made by Revolving Lenders pursuant to such notice. The aggregate amount of Swing Line Advances outstanding shall not exceed at any time the lesser of (A) the Swing Line Commitment and (B) the lesser of (1) the Maximum Amount less the outstanding balance of the Loans at such time and (2) except for Overadvances, the Borrowing Base less the outstanding balance of the Loans at such time ("Swing Line Availability"). Until the Commitment Termination Date, Borrower may from time to time borrow, repay and reborrow under this Section 1.1(c). Each Swing Line Advance shall be made pursuant to a Notice of Revolving Credit Advance delivered by Borrower to Administrative Agent in accordance with Section 1.1(a). Any such notice must be given no later than 1:00 p.m. (New York time) on the Business Day of the proposed Swing Line Advance. Notwithstanding any other provision of this Agreement or the other Credit Loan Documents, the Swing Line Loan shall constitute an Index Rate Loan. Borrower shall repay the aggregate outstanding principal amount of the Swing Line Loan upon demand therefor by Administrative Agent; provided that Administrative Agent shall make reasonable efforts, so long as no Event of Default then exists, to manage any such demand for payment to enable Borrower to refinance such Swing Line Loan with the proceeds of a Revolving Credit Advance; provided further that if an Event of Default then exists and Borrower
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does not have sufficient cash or Cash Equivalents to repay such Swing Line Loan, then no Cash Dominion Event shall occur solely as a result of the failure to repay such Swing Line Loan.
(ii) Borrower shall execute and deliver to the Swing Line Lender a promissory note to evidence the Swing Line Commitment. Such note shall be in the principal amount of the Swing Line Commitment of the Swing Line Lender, dated the Closing Date and substantially in the form of Exhibit 1.1(c)(ii) (the "Swing Line Note"). The Swing Line Note shall represent the obligation of Borrower to pay the amount of the Swing Line Commitment or, if less, the aggregate unpaid principal amount of all Swing Line Advances made to Borrower together with interest thereon as prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Commitment Termination Date if not sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time no less frequently than once weekly, shall on behalf of Borrower (and Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its behalf) request each Revolving Lender (including the Swing Line Lender) to make a Revolving Credit Advance to Borrower (which shall be an Index Rate Loan) in an amount equal to that Revolving Lender's Pro Rata Share of the principal amount of the Swing Line Loan (the "Refunded Swing Line Loan") outstanding on the date such notice is given. Unless any of the events described in Sections 8.1(h) or 8.1(i) has occurred (in which event the procedures of Section 1.1(c)(iv) shall apply) and regardless of whether the conditions precedent set forth in this Agreement to the making of a Revolving Credit Advance are then satisfied, each Revolving Lender shall disburse directly to Administrative Agent, on behalf of the Swing Line Lender, its Pro Rata Share of a Revolving Credit Advance prior to 3:00 p.m. (New York time), in immediately available funds on the Business Day next succeeding the date that notice is given. The proceeds of those Revolving Credit Advances shall be immediately paid to the Swing Line Lender and applied to repay the Refunded Swing Line Loan.
(iv) If, prior to refunding a Swing Line Loan with a Revolving Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of Section 1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving Credit Advance was to have been made for the benefit of Borrower, purchase from the Swing Line Lender an undivided participation interest in the Swing Line Loan in an amount equal to its Pro Rata Share of such Swing Line Loan. Upon request, each Revolving Lender shall promptly transfer to the Swing Line Lender, in immediately available funds, the amount of its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit Advances in accordance with Section 1.1(c)(iii) and to purchase participation interests in accordance with Section 1.1(c)(iv) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right that such Revolving Lender may have against the Swing Line Lender, Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of any Default or Event of Default, (C) any inability of Borrower to satisfy the conditions precedent to borrowing set forth in this Agreement at any time or (D) any other circumstance, happening or event whatsoever,
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whether or not similar to any of the foregoing. If any Revolving Lender does not make available to Administrative Agent or the Swing Line Lender, as applicable, the amount required pursuant to Sections 1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender shall be entitled to recover such amount on demand from such Revolving Lender or Borrower, together with interest thereon for each day from the date of nonpayment until such amount is paid in full at the Federal Funds Rate for the first two (2) Business Days and at the Index Rate thereafter.
(d) Reliance on Notices. Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or similar notice believed by Administrative Agent to be genuine. Administrative Agent may assume that each Person executing and delivering any notice in accordance herewith was duly authorized, unless the responsible individual acting thereon for Administrative Agent has actual knowledge to the contrary.
1.2 Letters of Credit. Subject to and in accordance with the terms and conditions contained herein and in Annex B, Borrower shall have the right to request, and Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of Borrower and the other Credit Parties.
1.3 Prepayments.
(a) Voluntary Reductions in Revolving Loan Commitments. Borrower may at any time and from time to time on at least five (5) Business Days' prior written notice to Administrative Agent permanently reduce (but not terminate) the Revolving Loan Commitment without penalty or premium (except as provided in Section 1.13(b) to the extent applicable); provided that (A) any such reductions shall be in a minimum amount of $50,000,000 and integral multiples of $25,000,000 in excess of such amount, (B) the Revolving Loan Commitment shall not be reduced to an amount less than the amount of the Revolving Loan and Swing Line Loan then outstanding and (C) after giving effect to such reductions, Borrower shall comply with Section 1.3(b). In addition, Borrower may at any time on at least five (5) Business Days' prior written notice to Administrative Agent (or such shorter period as Administrative Agent may agree to) terminate the Commitments without penalty or premium (except as provided in Section 1.13(b) to the extent applicable); provided that upon such termination all Loans and other Obligations shall be immediately due and payable in full and all Letter of Credit Obligations shall be cash collateralized or otherwise satisfied in accordance with Annex B hereto. Any voluntary reduction or termination of the Revolving Loan Commitment must be accompanied by payment of the accrued but unpaid Unused Line Fee on the amount of the Revolving Loan Commitment so reduced or terminated, as applicable, through the date of such termination or reduction, as applicable, plus the payment of any LIBOR funding breakage costs in accordance with Section 1.13(b). Upon any such reduction of the Revolving Loan Commitment, Borrower's right to request Revolving Credit Advances or Swing Line Advances, or to request that Letter of Credit Obligations be incurred on its behalf or on behalf of any other Credit Party shall simultaneously be permanently reduced. A permanent reduction of the Revolving Loan Commitment shall not require a corresponding pro rata reduction in the L/C Sublimit; provided that if the Revolving Loan Commitment is reduced to an amount less than the L/C Sublimit, then the L/C Sublimit shall be reduced to an amount equal to (or, at Borrower's option, less than) the Revolving Loan Commitment. Upon any termination of the Commitments, Borrower's right to
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request Revolving Credit Advances or Swing Line Advances, or to request that Letter of Credit Obligations be incurred on its behalf (or on behalf of any other Credit Party) shall be simultaneously terminated. Upon any termination of the Commitments which results in a termination of any Lender's Synthetic Loan Commitment, Agent shall promptly remit to each Synthetic Loan Lender its pro rata share of the amount of such reduction from the Synthetic Loan Credit-Linked Deposit Account.
(b) Mandatory Prepayments. If at any time the aggregate outstanding balances of the Loans exceed the lesser of (i) the Maximum Amount and (ii) the Borrowing Base (any such excess amount, the "Overage"), Borrower shall immediately repay (to the extent required to eliminate the Overage) first, the aggregate outstanding Swing Line Advances and second, the aggregate outstanding Revolving Credit Advances. If any such Overage remains after repayment in full of the aggregate outstanding Swing Line Advances and Revolving Credit Advances, Borrower shall provide cash collateral for the Letter of Credit Obligations in the manner set forth in Annex B to the extent required to eliminate such Overage and, in the absence of a Default or Event of Default, any such cash collateral in excess of the amount required pursuant to Annex B to eliminate the Overage shall be promptly returned to Borrower on a weekly basis. Notwithstanding the foregoing, any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid in accordance with Section 1.1(a)(iii).
(c) Reduction in Commitments for Dispositions under Section 6.8(i). Upon the earlier to occur of (i) the date upon which the exception provided by Section 6.8(g) is no longer available and (ii) the date upon which the five hundredth (500th) Store is sold under Section 6.8, Borrower shall permanently reduce the Commitments, without premium or penalty, to the extent, and in the amounts, required pursuant to Section 6.8(i)(Y) and all such reductions in the Commitments shall be made pro rata to the Revolving Loan Commitments and the Synthetic Loan Commitments; provided that after giving effect to such reductions, Borrower shall comply with Section 1.3(b).
1.4 Use of Proceeds. Borrower (a) may utilize the proceeds of the Loans as of the Closing Date solely for the following purposes: (i) to repay certain post-petition secured Indebtedness on the Effective Date, (ii) to otherwise enable Borrower to consummate the Plan of Reorganization (excluding payments of pre-petition Claims in cash other than payments (A)(1) to a class of convenience Claims in an amount not to exceed $20,000,000 in the aggregate and (2) in respect of any pre-petition letters of credit that have not been replaced or backstopped with a Letter of Credit in an amount not to exceed $16,500,000 in the aggregate; provided that in no event shall payments permitted under this clause (A) exceed $30,000,000 in the aggregate, (B) in respect of pre-petition Claims and cure payments in respect of assumed executory contracts in an amount not to exceed $80,000,000 and (C) in respect of pre-petition Claims otherwise entitled to payment in cash or priority pursuant to the Bankruptcy Code or prior Bankruptcy Court order, in each case, to the extent reflected in the Business Plan) and (iii) to fund certain fees and expenses associated with this Agreement and (b) may, on or after the Closing Date, utilize the proceeds of the Loans solely for (i) Borrower's and the other Credit Parties' working capital requirements, (ii) Borrower's and the other Credit Parties' general corporate purposes (including, without limitation, obligations incurred after the filing of the Chapter 11 Cases and Capital Expenditures permitted hereunder) and (iii) other purposes permitted hereunder; provided that in no event may Borrower utilize the proceeds of the Loans to
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make Investments pursuant to clauses (j), (k) or (l) of Section 6.2. Disclosure Schedule (1.4) contains a description of Borrower's sources and uses of funds as of the Closing Date, including Loans and Letter of Credit Obligations to be made or incurred on that date, and a funds flow memorandum detailing how funds from each source are to be transferred to particular uses.
1.5 Interest and Applicable Margins.
(a) Borrower shall pay interest to Administrative Agent, for the ratable benefit of Lenders in accordance with the various Loans being made by each Lender, in arrears on each applicable Interest Payment Date, at the following rates: (i) with respect to the Revolving Credit Advances, the Index Rate plus the Applicable Revolver Index Margin per annum or, at the election of Borrower, the applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum and (ii) with respect to the Swing Line Loan, the Index Rate plus the Applicable Revolver Index Margin per annum.
During the period from the Closing Date through the first anniversary thereof, the Applicable Margins shall be based on Level I (regardless of EBITDA during such period). Thereafter, the Applicable Margins may be adjusted (up or down) by reference to the following grid:
- ----------------------------------------------------------------------
LEVEL OF
IF LTM EBITDA IS: APPLICABLE MARGINS: - ----------------------------------------------------------------------
or = $350,000,000 but or = $550,000,000 Level III - ----------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
APPLICABLE MARGINS - -------------------------------------------------------------------------------------------
LEVEL I LEVEL II LEVEL III - ------------------------------------------------------------------------------------------- Applicable Revolver Index Margin 2.50% 2.25% 2.00% - ------------------------------------------------------------------------------------------- Applicable Revolver LIBOR Margin 3.50% 3.25% 3.00% - ------------------------------------------------------------------------------------------- Applicable Revolving L/C Margin 3.50% 3.25% 3.00% - ------------------------------------------------------------------------------------------- Applicable Synthetic L/C Margin 3.50% 3.25% 3.00% - -------------------------------------------------------------------------------------------
Any such adjustments in the Applicable Margins shall be implemented quarterly on a prospective basis on the fifth (5th) day following the delivery of Financial Statements in accordance with paragraphs (b) or (d), as applicable, of Annex E evidencing the need for an adjustment. Concurrently with the delivery of those Financial Statements, Borrower shall deliver to Administrative Agent and Lenders a certificate, signed by a Financial Officer, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Margins. Failure to timely deliver such Financial Statements shall, in addition to any other remedy provided for in this Agreement, result in an increase in the Applicable Margins to the highest level set forth in the foregoing grid, until the fifth (5th) day following the delivery of those Financial Statements demonstrating that such an increase is not required. If an Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be
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implemented, that reduction shall be deferred until the third (3rd) Business Day following the date on which such Event of Default is waived or ceases to continue, as the case may be.
(b) If any payment hereunder becomes due and payable on a day other than a Business Day, the maturity thereof will be extended to the next succeeding Business Day (except as set forth in the definition of LIBOR Period) and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and interest based on the LIBOR Rate or calculated by reference to clause (b) of the definition of Index Rate shall be made by Administrative Agent on the basis of a 360-day year, in each case for the actual number of days occurring in the period for which such interest and Fees are payable. If the Index Rate is calculated by reference to clause (a) of the definition thereof, then computation of such interest shall be made by Administrative Agent on the basis of a 365/6-day year, as applicable, for the actual number of days occurring in the period for which such interest is payable. The Index Rate is a floating rate determined for each day. Each determination by Administrative Agent of interest rates and Fees hereunder shall be conclusive, final and binding on Borrower, absent manifest error.
(d) So long as either (i) an Event of Default has occurred and is continuing under Section 8.1(a), (h) or (i), or (ii) so long as any other Event of Default has occurred and is continuing and, in the case of this clause (ii), at the election of Administrative Agent (or upon the written request of the Majority Lenders) confirmed by written notice from Administrative Agent to Borrower, the interest rates applicable to the Loans and the Letter of Credit Fees shall be increased by two percentage points (2%) per annum above the rates of interest or the rate of such Fees otherwise applicable hereunder (the "Default Rate"), and all outstanding Obligations shall bear interest at the Default Rate applicable to such Obligations. Interest and Letter of Credit Fees at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is waived or ceases to continue, as the case may be, and shall be payable upon demand.
(e) So long as no Event of Default has occurred and is continuing, Borrower shall have the option to (i) request that any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding Revolving Credit Advances from Index Rate Loans to LIBOR Loans, or (iii) continue all or any portion of any Revolving Loan as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the succeeding LIBOR Period of that continued Revolving Loan shall commence on the last day of the LIBOR Period of the Loan to be continued. Borrower shall have the option to convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in accordance with Section 1.13(b) if such conversion is made prior to the expiration of the LIBOR Period applicable thereto, irrespective of whether an Event of Default has occurred. Any Revolving Credit Advances or group of Revolving Credit Advances having the same proposed LIBOR Period to be made or continued as, or converted into, a LIBOR Loan must be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of such amount. Any such election must be made by noon (New York time) on the third (3rd) Business Day prior to (A) the date of any proposed Revolving Credit Advance which is to bear interest at the LIBOR Rate, (B) the end of each LIBOR Period with respect to any LIBOR Loans to be continued as such, or (C) the date
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on which Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such election. If no election is received with respect to a LIBOR Loan by noon (New York time) on the third (3rd) Business Day prior to the end of the LIBOR Period with respect thereto (or if an Event of Default has occurred and is continuing), that LIBOR Loan shall be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower must make such election by notice to Administrative Agent in writing, including by telecopy or overnight courier. In the case of any conversion or continuation, such election must be made pursuant to a written notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.5(e). In furtherance of the foregoing, to the extent that any Loans are made as or converted into LIBOR Loans on or after the Closing Date but prior to the earlier of (i) forty-five (45) days after the Closing Date and (ii) the completion of primary syndication as determined by Administrative Agent, Borrower acknowledges and agrees that to the extent additional Lenders become parties to this Agreement during such period Borrower will, at the request of Administrative Agent, be required to repay any such outstanding LIBOR Loans prior to the end of the related Interest Period (which may be repaid with the proceeds of a new Revolving Credit Advance) and will pay any associated breakage costs as provided in Section 1.13(b).
(f) Notwithstanding anything to the contrary set forth in this Section 1.5, if a court of competent jurisdiction determines in a final order that the rate of interest payable hereunder exceeds the highest rate of interest permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder shall be equal to the Maximum Lawful Rate and any amounts received by any Lender hereunder in excess of the Maximum Lawful Rate shall be applied to the reduction of the principal amount of the Loans on a pro rata basis and not refunded to Borrower; provided, however, that if at any time thereafter the rate of interest payable hereunder is less than the Maximum Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum Lawful Rate until such time as the total interest received by Administrative Agent, on behalf of Lenders, is equal to the total in...
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