EXHIBIT 10.3
CREDIT AGREEMENT
among
XXXXXX PRODUCTS COMPANY,
XXXXXX, INC.
and
IVAX CORPORATION
------------------------
Dated as of July 14, 1998
------------------------
$50,000,000
TABLE OF CONTENTS
PAGE
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SECTION 1. Amount and Terms of Credit.........................................1
1.01. Term Loan..........................................................1
1.02. Note...............................................................1
1.03. Interest...........................................................2
SECTION 2. Payments...........................................................2
2.01. Voluntary Prepayments..............................................2
2.02. Mandatory Prepayments..............................................2
2.03. Method and Place of Payment........................................3
2.04. No Net Payments....................................................4
SECTION 3. Conditions Precedent...............................................4
3.01. Conditions Precedent to the Term Loan..............................4
SECTION 4. Representations, Warranties and Agreements.........................9
4.01. Corporate Status..................................................10
4.02. Corporate Power and Authority; Business...........................10
4.03. No Violation......................................................10
4.04. Litigation........................................................11
4.05. Use of Proceeds...................................................11
4.06. Governmental Approvals, Etc.......................................11
4.07. Investment Company Act............................................11
4.08. Public Utility Holding Company Act................................12
4.09. True and Complete Disclosure......................................12
4.10. Consummation of the Acquisition...................................12
4.11. Financial Condition; Financial Statements; Projections............12
4.12. Security Interests................................................13
4.13. Tax Returns and Payments..........................................13
4.14. ERISA.............................................................14
4.15. Subsidiaries......................................................15
4.16. Patents, Etc......................................................15
4.17. Compliance with Laws, Etc.........................................15
4.18. Properties........................................................15
4.19. Securities........................................................16
4.20. Collective Bargaining Agreements..................................16
4.21. Indebtedness Outstanding..........................................16
4.22. Environmental Matters.............................................16
4.23. Environmental Investigations......................................17
4.24. Fine Products Company.............................................18
SECTION 5. Affirmative Covenants.............................................18
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5.01. Information Covenants.............................................18
5.02. Books, Records and Inspections....................................20
5.03. Maintenance of Property; Insurance................................21
5.04. Payment of Taxes..................................................21
5.05. Corporate Franchises..............................................22
5.06. Compliance with Statutes, Etc.....................................22
5.07. ERISA.............................................................22
5.08. Use of Proceeds...................................................22
5.09. Equal Security for Loan and Note; No Further Negative Pledges.....23
5.10. Pledge of Additional Collateral...................................23
5.11. Security Interests................................................24
5.12. Environmental Events..............................................24
5.13. New Subsidiaries..................................................24
5.14 Post-Closing Opinions.............................................25
SECTION 6. Negative Covenants................................................25
6.01. Changes in Business...............................................25
6.02. Amendments or Waivers of Certain Documents........................25
6.03. Liens.............................................................25
6.04. Indebtedness......................................................27
6.05. Advances, Investments and Loans...................................28
6.06. Prepayments of Indebtedness.......................................29
6.07. Dividends, Etc....................................................30
6.08. Transactions with Affiliates......................................30
6.09. Issuance of Subsidiary Stock......................................31
6.10. Disposition of Assets.............................................31
6.11. Contingent Obligations............................................33
6.12. ERISA.............................................................34
6.13. Merger and Consolidations.........................................34
6.14. Sale and Lease-Backs..............................................34
6.15. Sale or Discount of Receivables...................................35
6.16. Fine Products Company.............................................35
SECTION 7. Events of Default.................................................35
7.01. Payments..........................................................35
7.02. Representations, Etc..............................................35
7.03. Covenants.........................................................35
7.04. Default Under Other Agreements....................................35
7.05. Bankruptcy, Etc...................................................36
7.06. ERISA.............................................................36
7.07. Security Documents................................................37
7.08. Guarantees........................................................37
7.09. Judgments.........................................................37
7.10. Ownership; Board Composition......................................37
7.11. Certain Transactions Involving Xxxxxx Holdings Limited............38
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SECTION 8. Definitions.......................................................39
SECTION 9. Miscellaneous.....................................................51
9.01. Payment of Expenses, Etc..........................................52
9.02. Right of Setoff...................................................52
9.03. Notices...........................................................52
9.04. Benefit of Agreement..............................................53
9.05. No Waiver; Remedies Cumulative....................................53
9.06. Calculations; Computations........................................54
9.07. Governing Law; Submission to Jurisdiction; Venue..................54
9.08. Counterparts......................................................54
9.09. Effectiveness.....................................................54
9.10. Headings Descriptive..............................................55
9.11. Amendment or Waiver...............................................55
9.12. Survival..........................................................55
9.13. WAIVER OF JURY TRIAL..............................................55
9.14. Independence of Covenants.........................................55
9.15. Intercreditor Agreement with respect to
Revolving Credit Facility.......................................55
ANNEX I Schedule of Existing Debt
ANNEX II Schedule of Subsidiaries
ANNEX III Schedule of Collective Bargaining Agreements
ANNEX IV Summary of Corporate Insurance Policies
ANNEX V Schedule of Liens
ANNEX VI List of Mortgaged Real Property
ANNEX VII Schedule of Litigation
ANNEX VIII Schedule of Consents
ANNEX IX Schedule of Restrictions
ANNEX X Environmental Matters
ANNEX XI Taxes
ANNEX XII Schedule of Intellectual Property
ANNEX XIII Schedule of Existing Leases
ANNEX XIV Compliance with Laws
Exhibit A - Form of Term Note
Exhibit B - Form of Mortgage
Exhibit C - Form of Securities Pledge Agreement
Exhibit D - Form of Intellectual Property Security Agreement
Exhibit E - Form of General Security Agreement
Exhibit F - Form of Landlord Lien Assurance Agreement
Exhibit G - Form of Holdings Guarantee
Exhibit H - Form of Subsidiary Guarantee
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CREDIT AGREEMENT, dated as of July 14, 1998 (the "Agreement"), among
XXXXXX PRODUCTS COMPANY, a Delaware corporation (the "Borrower"), XXXXXX, INC.,
a Delaware corporation ("Holdings") and IVAX CORPORATION, a Florida corporation
(the "Lender"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 8 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, Holdings has entered into a Purchase Agreement dated as of
June 16, 1998 (as the same may be amended from time to time, the "Purchase
Agreement") with the Lender, and has assigned its rights thereunder to the
Borrower;
WHEREAS, pursuant to the Purchase Agreement, the Borrower shall
consummate on the Closing Date the acquisition (the "Acquisition") of all of the
outstanding shares of Xxxxxxx Products Co., Inc., a Florida corporation and a
wholly-owned subsidiary of the Lender;
WHEREAS, the Borrower desires to incur the Term Loan (as defined
herein) from the Lender, the proceeds of which will be applied to finance the
Acquisition and to pay certain fees and expenses related thereto, subject to the
conditions set forth herein;
WHEREAS, Holdings will execute a Guarantee, secured by a pledge of the
shares of capital stock of the Borrower, guaranteeing the Borrower's obligations
hereunder, and certain subsidiaries of Holdings will execute a Guarantee,
secured by a pledge of their assets, guaranteeing the Borrower's obligations
hereunder;
WHEREAS, in conjunction with this Agreement, the Borrower is
terminating its existing senior secured credit facility (the "Refinancing"), and
may enter into a new revolving credit facility (the "Revolving Credit Facility")
in accordance with the terms hereof; and
WHEREAS, the Lender is willing to make available the Term Loan provided
for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01. TERM LOAN. Subject to and upon the terms and conditions herein
set forth, the Lender agrees to make a term loan to the Borrower on the Closing
Date in the principal amount of $50,000,000.00 (the "Term Loan"), which shall
bear interest and shall be repaid in accordance with the terms hereof.
1.02. NOTE. (a) The Borrower's obligation to pay the principal of and
interest on the Term Loan made to it by the Lender shall be evidenced by a
promissory note (the "Term Note"), substantially in the form of Exhibit A
hereto.
(b) The Term Note of the Borrower issued to the Lender shall (i) be
duly executed and delivered by the Borrower, (ii) be payable to the order of the
Lender and be dated the Closing Date, (iii) be in a stated principal amount
equal to $50,000,000.00 and be payable in the aggregate principal amount of the
Term Loan evidenced thereby, (iv) mature on the Maturity Date, (v) be subject to
mandatory prepayment as provided in Section 2.02, (vi) bear interest as
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provided in Section 1.03 and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
1.03. INTEREST (a) The unpaid principal amount of the Term Loan shall
bear interest from the Closing Date until maturity (whether by acceleration or
otherwise) at a rate PER ANNUM equal to 9.0%.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of the Term Loan shall bear interest at a rate PER ANNUM
equal to 12.0%, such amount payable upon demand upon the occurrence, and during
the continuation, of any payment default (after the lapse of any applicable
grace periods).
(c) Interest shall accrue from and including the Closing Date to but
excluding the date of any repayment thereof and shall be payable (i) monthly in
arrears on the last Business Day of each calendar month beginning July 1998 and
(ii) on any prepayment (on the amount prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand.
(d) All computations of interest hereunder shall be made in accordance
with Section 9.06(b).
SECTION 2. PAYMENTS.
2.01. VOLUNTARY PREPAYMENTS The Borrower shall have the right to prepay
the Term Loan in whole or in part from time to time, without premium or penalty,
on the following terms and conditions: (i) the Borrower shall give the Lender
written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay the Term Loan and the amount of such prepayment, which notice
shall be given by the Borrower at least one Business Day prior to the date of
such prepayment; and (ii) each partial prepayment of the Term Loan shall be in
an aggregate principal amount of at least $100,000 and integral multiples of
$100,000 in excess of that amount.
2.02. MANDATORY PREPAYMENTS.
(A) REQUIREMENTS:
(a) As promptly as practicable, but in any event within five Business
Days of the date of receipt by Holdings, the Borrower and/or any of the
Borrower's Subsidiaries, as the case may be, of Net Cash Proceeds or Net
Financing Proceeds, an amount equal to 100% of such Net Cash Proceeds or Net
Financing Proceeds shall be applied as provided in Section 2.02(B); provided
that with respect to any Net Cash Proceeds of the sale of equity securities of
Holdings, the Borrower or any of its Subsidiaries, clause (b) of this Section
2.02(A) will govern and that with respect to any Net Cash Proceeds from any
Destruction or Taking, clause (c) of this Section 2.02(A) will govern.
(b) As promptly as practicable, but in any event within five Business
Days of the date of the receipt thereof by Holdings, the Borrower and/or any of
its Subsidiaries, an amount equal to 100% of the proceeds received by the
Borrower or Holdings (including capital contributions, other than those referred
to in clauses (i) and (ii) of this paragraph (b), received by the Borrower
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or any of its Subsidiaries) or such Subsidiary (net of underwriting discounts
and commissions and other costs and expenses directly associated therewith) of
the sale after the Closing Date of equity securities (other than proceeds from
the issuance of capital stock (i) of Holdings, the Borrower or any of its
Subsidiaries pursuant to any pension, stock option, profit sharing or other
employee benefit plan or agreement of Holdings, the Borrower or any of its
Subsidiaries in the ordinary course of business or (ii) by a Subsidiary to
another Subsidiary or to the Borrower) shall be applied as provided in Section
2.02(B).
(c) At the Lender's discretion, on the date of receipt thereof by
Holdings, the Borrower and/or any of the Borrower's Subsidiaries, an amount
equal to 100% of any proceeds received due to loss, damage, destruction or
condemnation of or to Assets (collectively, "Loss Proceeds"), less any portion
of such proceeds not in excess of $500,000, in the aggregate, to be used for
rebuilding, repairing or replacing productive assets of a kind then used or
usable in the business of the Borrower and its Subsidiaries (in each case to the
extent permitted by the Mortgages and the Security Documents) within 180 days of
receipt of such Loss Proceeds (or such longer periods as may be consented to by
the Lender, which consent shall not be unreasonably withheld) shall be delivered
by Holdings, the Borrower and/or the Borrower's Subsidiaries to the Lender to be
held by the Lender in a cash collateral account bearing interest payable to the
Borrower at a rate per annum (meaning 360 days) equal to the Federal Funds Rate.
Upon the Borrower's request, the Lender shall release such proceeds to the
Borrower for reinvestment, rebuilding, repair or replacement as described above.
To the extent the Borrower fails to use any or all of such released proceeds for
such rebuilding, repair or replacement of assets within 180 days (or such longer
periods as may be consented to by the Lender, which consent shall not be
unreasonably withheld) of such release, the Borrower shall, at the Lender's
discretion, return the unused portion of such released funds to the Lender and
authorize and direct the Lender to apply such proceeds as provided in Section
2.02(B).
(d) As promptly as practicable, but in any event within five Business
Days of the date of receipt by Holdings, the Borrower and/or its Subsidiaries of
any funds received pursuant to any post-closing purchase price adjustments
(unless such funds have been applied as an adjustment to working capital) or
indemnification payments in excess of out-of-pocket losses under either of stock
or asset purchase agreements and agreements related thereto pertaining to an
acquisition, an amount equal to 100% of such funds paid to Holdings, the
Borrower and/or any of its Subsidiaries shall be applied as provided in Section
2.02(B).
(B) APPLICATION:
Prepayments to be applied pursuant to this Section 2.02(B) shall be
applied without penalty or premium to the repayment of the Term Loan. With
respect to each such prepayment required by Section 2.02(A), the Borrower shall
give the Lender two Business Days' notice. All prepayments shall include payment
of accrued interest on the principal amount so prepaid and shall be applied to
the payment of interest before application to principal.
2.03. METHOD AND PLACE OF PAYMENT (a) Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the Lender
not later than 1:00 P.M. (New York time) on the date when due and shall be made
in immediately available funds in
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lawful money of the United States of America to the account specified therefor
by the Lender or if no account has been so specified at the Lender's Office.
(b) Any payments under this Agreement which are made by the Borrower
later than 1:00 P.M. (New York time) shall be deemed to have been made on the
next succeeding Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
2.04. NO NET PAYMENTS. All payments by the Borrower under this
Agreement or under any Credit Document shall be made without set-off or
counterclaim, including any claim that may otherwise be made by Holdings or the
Borrower pursuant to the Purchase Agreement.
SECTION 3. CONDITIONS PRECEDENT.
3.01. CONDITIONS PRECEDENT TO THE TERM LOAN. The obligation of the
Lender to make the Term Loan to the Borrower hereunder is subject, at the time
of the making of such Term Loan (except as otherwise hereinafter indicated), to
the satisfaction of the following conditions:
(A) CREDIT AGREEMENT. The Borrower and Holdings shall have duly
executed and delivered this Agreement.
(B) OFFICER'S CERTIFICATES. On the Closing Date, the Lender shall have
received a certificate dated such date signed by an appropriate officer of each
of Holdings and the Borrower stating that all of the applicable conditions set
forth in Sections 3.01(D), (E), (I), (J), (K), (L), (O), and (Q) (in each case
disregarding any reference therein that such condition be deemed satisfactory by
the Lender) have been satisfied in all material respects (without giving effect
to any materiality or similar exceptions contained therein) or waived as of such
date.
(C) OPINIONS OF COUNSEL. On the Closing Date (or on the date each
applicable Mortgage is executed and delivered), the Lender shall have received
an opinion or opinions addressed to it and dated the Closing Date, each in form
and substance reasonably satisfactory to the Lender, from (i) Milbank, Tweed,
Xxxxxx & XxXxxx, counsel to the Borrower and Holdings (ii) Hunter, Maclean,
Xxxxx & Xxxx, P.C., special Georgia counsel to the Borrower and Holdings, and
(iii) local counsel to the Borrower and Xxxxxxx Products in each jurisdiction in
which Mortgaged Real Property is located.
(D) CORPORATE PROCEEDINGS. All corporate and legal proceedings and all
instruments and agreements in connection with the transactions contemplated by
the Credit Documents shall be reasonably satisfactory in form and substance to
the Lender, and the Lender shall have received all information and copies of all
certificates, documents and papers, including records of corporate proceedings
and governmental approvals, if any, which the Lender reasonably may have
requested from Holdings, the Borrower and any Affiliate thereof in connection
therewith, such documents and papers where appropriate to be certified by proper
corporate or governmental authorities. Without limiting the foregoing, the
Lender shall have received (i) resolutions of the Board of Directors of each of
Holdings, the Borrower and any Affiliate thereof approving and authorizing such
documents and actions as are contemplated hereby in form and
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substance reasonably satisfactory to Lender including without limitation the
execution and delivery of all Credit Documents, certified by its corporate
secretary or an assistant secretary as being in full force and effect without
modification or amendment, and (ii) signature and incumbency certificates of
officers of Holdings, the Borrower or any Affiliate thereof executing
instruments, documents or agreements required to be executed in connection with
the Refinancing and the Credit Documents.
(E) CONSUMMATION OF THE ACQUISITION. On the Closing Date, the
Acquisition shall be consummated concurrently with the closing hereunder.
(F) ORGANIZATIONAL DOCUMENTATION, ETC. On or prior to the Closing Date,
the Lender shall have received copies of a true and complete certified copy of
the following documents of each of Holdings and the Borrower and each other
Credit Party:
(1) Its respective Certificate of Incorporation, which shall be
certified and be accompanied by a good standing certificate from the Secretary
of State of the State of Delaware or its respective jurisdiction and good
standing certificates from the jurisdictions in which it is qualified to do
business as a foreign corporation, each to be dated a recent date prior to the
Closing Date;
(2) Its respective By-laws, certified as of the Closing Date by its
corporate secretary.
(G) NOTE. There shall have been delivered to the Lender the Term Note
executed by the Borrower in the amount and maturity and as otherwise provided
herein.
(H) CONDITIONS RELATING TO MORTGAGED REAL PROPERTY AND REAL PROPERTY.
On or as soon as practicable but in any event no more than 10 days after the
Closing Date (except as otherwise specified below), the Borrower shall have
caused to be delivered to the Lender the following documents and instruments:
(i) a Mortgage encumbering each Mortgaged Real Property in
favor of the Lender, duly executed and acknowledged by the Credit Party
or another party that is the owner of or holder of an interest in such
Mortgaged Real Property, and otherwise in form for recording in the
recording office of each political subdivision where each such
Mortgaged Real Property is situated, together with such certificates,
affidavits, questionnaires or returns as shall be required in
connection with the recording or filing thereof to create a lien under
applicable law, and such UCC-1 financing statements and other similar
statements as are contemplated by the counsel opinions described in
Section 3.01(C)(iii) in respect of such Mortgage, all of which shall be
in form and substance reasonably satisfactory to the Lender and which
will be delivered to the Title Company for filing within 8 days after
the Closing Date, and any other instruments necessary to grant a
mortgage lien under the laws of any applicable jurisdiction, which
Mortgage and financing statements and other instruments shall be
effective to create a first priority Lien on such Mortgaged Real
Property subject to no Liens other than Prior Liens and Permitted
Encumbrances;
(ii) with respect to each Mortgaged Real Property, such
consents, approvals, amendments, supplements, estoppels, tenant
subordination agreements or other
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instruments as necessary or required to consummate the transactions
contemplated hereby or as shall reasonably be deemed necessary by the
Lender in order for the owner or holder of the fee or leasehold
interest constituting such Mortgaged Real Property to grant the Lien
contemplated by the Mortgage with respect to such Mortgaged Real
Property;
(iii) with respect to each Mortgage, a policy (or commitment
to issue a policy) of title insurance insuring (or committing to
insure) the Lien of such Mortgage as a valid first mortgage Lien on the
real property described therein in an amount not less than 115% of the
fair market value thereof as determined by appraisal reports, which
policies (or commitment) shall (a) be issued by the Title Company, (b)
include such reinsurance arrangements (with provisions for direct
access) as shall be reasonably acceptable to the Lender, (c) contain a
"tie-in" or "cluster" endorsement (if applicable and if available under
applicable law) (I.E., policies which insure against losses regardless
of location or allocated value of the insured property up to a stated
maximum coverage amount) and have been supplemented by such
endorsements (or where such endorsements are not available, opinions of
special counsel reasonably acceptable to the Lender to the extent that
such opinions can be obtained at a cost which is reasonable with
respect to the value of the Real Property subject to such Mortgage) as
shall be reasonably requested by the Lender (including, without
limitation, endorsements on matters relating to usury, first loss, last
dollar, contiguity (as applicable), doing business, zoning, variable
rate and so-called comprehensive coverage over covenants and
restrictions) and (d) contain only such exceptions to title as shall be
Prior Liens or are otherwise agreed to by the Lender on or prior to the
Closing Date with respect to such Mortgaged Real Property;
(iv) with respect to each Mortgaged Real Property, a Survey
(which in the case of the Mortgaged Property located in Illinois will
be delivered after the Closing Date as soon as it becomes available);
(v) with respect to each Mortgaged Real Property, policies or
certificates of insurance as required by the Mortgage relating thereto,
which policies or certificates shall comply with the insurance
requirements contained in such Mortgage;
(vi) with respect to each Mortgaged Real Property, UCC,
judgment and tax lien searches confirming that the personal property
comprising a part of such Mortgaged Real Property is subject to no
Liens other than Prior Liens;
(vii) with respect to each Mortgaged Real Property, such
affidavits, certificates, information (including financial data) and
instruments of indemnification (including, without limitation, a
so-called "gap" indemnification) as shall be required to induce the
Title Company to issue the policy or policies (or commitment) and
endorsements contemplated in subparagraph (iii) above;
(viii) evidence reasonably acceptable to the Lender of payment
by the Borrower of all title insurance premiums, search and examination
charges, survey costs and related charges, mortgage recording taxes,
fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the title insurance policies referred to in
subparagraph (iii) above;
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(ix) with respect to each Real Property or Mortgaged Real
Property, copies of all Leases in which a Credit Party holds the
landlord's, tenant's or other interest and any other agreements
relating to possessory interests in such Real Property or Mortgaged
Real Property; and
(x) with respect to the Mortgaged Real Property located in
Savannah, Georgia, an Officers' Certificate or other evidence
reasonably satisfactory to the Lender that as of the date thereof, to
the best of such officer's knowledge, there (a) have been issued and
are in effect valid and proper certificates of occupancy or other local
equivalents for the use then being made of such Mortgaged Real Property
to the extent currently required by law in the jurisdiction in which
such Mortgaged Real Property is located which certificates if not
obtained or maintained would have a material adverse effect upon the
value of the Mortgaged Real Property and that there is not outstanding
any citation, violation or similar notice indicating that such
Mortgaged Real Property contains conditions which are not in compliance
in all material respects with local codes or ordinances relating to
building or fire safety or structural soundness, (b) has not occurred
any Taking or Destruction of any Mortgaged Real Property that has not
been repaired or restored except as set forth therein and (c) is no
litigation regarding boundary lines, encroachment or possession of any
Mortgaged Real Property and no state of facts known to any Credit Party
which could give rise to any such claim, except as set forth therein.
(I) INSURANCE. Set forth on Annex IV is a summary of all insurance
policies maintained by Holdings and its Subsidiaries.
(J) INDEBTEDNESS, ETC. On or prior to the Closing Date and except as
set forth on Annex VIII, Holdings, the Borrower and its Subsidiaries shall have
received all necessary consents or waivers or amended, supplemented or otherwise
modified, repaid or defeased their outstanding Indebtedness in a manner and on
terms reasonably satisfactory to the Lender such that there exists no default or
potential default with respect to such Indebtedness or under any note, evidence
of indebtedness, mortgage, deed of trust, security document or other agreement
relating to such Indebtedness and such indentures, notes, evidences of
indebtedness, mortgages, deeds of trust or other agreements relating to such
Indebtedness shall not, other than as set forth on Annex IX, contain any
restriction on the ability of Holdings, the Borrower or any of its Subsidiaries
to enter into this Agreement, the Mortgages, Pledge Agreements or the granting
of any Lien in favor of the Lender in connection therewith, or contain any
financial covenants, agreements or tests applicable to Holdings, the Borrower or
any of its Subsidiaries. Annex V sets forth a true list of all Liens other than
Permitted Encumbrances (except for clause (j) of Section 6.03) on the property
of Holdings, the Borrower and its Subsidiaries as of the Closing Date.
(K) SECURITY DOCUMENTS AND GUARANTEES. The applicable Security
Documents (other than the Mortgages) and Guarantees shall have been duly
executed and delivered by the respective parties thereto and there shall have
been delivered to the Lender (i) certificates representing all Pledged
Securities, together with executed and undated stock powers and/or assignments
in blank, (ii) evidence of the due execution of appropriate financing statements
under the provisions of the UCC, applicable domestic or local laws, rules or
regulations in each
8
of the offices where such filing is necessary or appropriate to grant to the
Lender a perfected first priority Lien in the Collateral superior to and prior
to the rights of all third persons and subject to no other Liens other than
Prior Liens, (iii) certified copies of Requests for Information (Form UCC-11 or
the equivalent), or equivalent reports or lien search reports listing all
effective financing statements which name each Credit Party under such Security
Documents as debtor and which are filed in those jurisdictions in which any of
the Collateral is located and the jurisdictions in which each Credit Party's
principal place of business is located, none of which, except as set forth in
the applicable Security Documents, shall encumber the Collateral covered or
intended or purported to be covered by the Security Documents, (iv) evidence
that arrangements have been made for the prompt completion of all recordings and
filings of each Security Document related to Mortgaged Real Property (to be
filed upon execution and delivery of the relevant Mortgages) and delivery to the
Lender of such other security and other documents as may be necessary or, in the
reasonable opinion of the Lender, desirable to perfect the Liens created, or
purported or intended to be created, by the Security Documents and (v) evidence
that arrangements have been made for appropriate filings in all relevant
trademark, patent and copyright registration offices with respect to recording
the Lender's security interest in the patents, registration and applications, if
any, contained on the schedules to the Intellectual Property Security
Agreements.
(L) CONSENTS, ETC. All material governmental and third party approvals
and consents (including, without limitation, all material approvals and consents
required in connection with any environmental statutes, rules or regulations),
if any, in connection with the transactions contemplated by the Credit Documents
and otherwise referred to herein or therein to be completed on or before the
Closing Date shall have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes, in the reasonable
judgment of the Lender, materially adverse conditions upon the consummation of
the Acquisition, the Refinancing or the consummation of the transactions
contemplated by this Agreement. There shall not exist any adverse judgment,
order, injunction or other restraint issued or filed with respect to the making
of the Term Loan hereunder or the consummation of the Refinancing or Acquisition
and Holdings and the Borrower shall be in compliance with all material
applicable federal, state, local and foreign laws and regulations, both before
and after giving effect to the Acquisition, the Refinancing and the transactions
contemplated by the Credit Documents.
(M) LITIGATION. Except as set forth in Annex VII hereto, there shall be
no litigation by any Person pending, or to Holdings' or the Borrower's knowledge
threatened, with respect to the Credit Documents that, in the Lender's good
faith judgment, could reasonably be expected to have a Material Adverse Effect
after giving effect to the Acquisition, the Refinancing and the transactions
contemplated by the Credit Agreement.
(N) ENVIRONMENTAL REVIEW. The Lender shall be reasonably satisfied with
its environmental risk assessment of the property of Holdings, the Borrower and
its Subsidiaries (including any potential levels of environmental liability),
such assessment to be based upon any information known to the Lender with
respect to the properties of Xxxxxxx Products and information provided to the
Lender by or on behalf of Holdings or the Borrower with respect to its
properties. The Borrower need not update its environmental review dated as of
May 1995.
9
(O) NO MATERIAL ADVERSE CHANGE. From March 31, 1998 to and including
the Closing Date, there shall have been no material adverse change in the
business, assets, properties, condition (financial or otherwise) or prospects of
Holdings or the Borrower or in the industries in which they compete that has not
been disclosed to the Lender.
(P) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of the
making of the Term Loan and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
made by Holdings or the Borrower contained herein or in the other Credit
Documents in effect at such time shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of such Term Loan, unless such
representation and warranty expressly indicates that it is being made as of any
other specific date in which case on and as of such other date.
(Q) OPTIONS AND WARRANTS. There shall be no outstanding capital stock
(or right, option, warrant or other arrangement to acquire such capital stock)
of the Borrower, other than that owned by Holdings.
(R) MARGIN RULES. On the Closing Date, neither the making of the Term
Loan nor the use of the proceeds thereof will violate the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
The acceptance of the proceeds of the Term Loan shall constitute a
representation and warranty by each Credit Party to the Lender that all of the
applicable conditions specified above (in each case disregarding any reference
therein that such condition be deemed satisfactory by the Lender) have been
satisfied or waived as of that time.
All of the certificates, legal opinions and other documents and papers
referred to in this Section 3.01, unless otherwise specified, shall be delivered
to the Lender at the offices of Milbank, Tweed, Xxxxxx & XxXxxx, 0 Xxxxx
Xxxxxxxxx Xxxxx, Xxx Xxxx, XX 00000 (or such other location as may be specified
by the Lender) and shall be reasonably satisfactory in form and substance to the
Lender.
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Lender to enter into this Agreement and to
make the Term Loan provided for herein, each of Holdings and the Borrower makes
the following representations and warranties to, and agreements with, the
Lender, all of which shall survive the execution and delivery of this Agreement
and the making of the Term Loan (with the execution and delivery of this
Agreement and the making of the Term Loan being deemed to constitute a
representation and warranty that the matters specified in this Section 4 are
true and correct in all material respects both before and after giving effect to
the Refinancing and the Acquisition unless such representation and warranty
expressly indicates that it is being made as of any specific date; PROVIDED,
that (i) the representations and warranties relating to Xxxxxxx Products are
only to the best of Holdings' and the Borrower's knowledge based on the
information provided to them by the Lender in connection with the Purchase
Agreement and (ii) no representation or warranty
10
hereunder shall be deemed a waiver of any rights or the admission of the truth
thereof by any Credit Party as against any other party to the Purchase
Agreement):
4.01. CORPORATE STATUS. Each Credit Party (i) is a duly organized and
validly existing corporation in good standing under the laws of the jurisdiction
of its organization; (ii) has the corporate or other organizational power and
authority and, other than as set forth on Annex VIII, has obtained all requisite
governmental licenses, authorizations, consents and approvals to own and operate
its property and assets and to transact the business in which it is engaged and
presently proposes to engage including, without limitation, those in compliance
with or required by the Environmental Laws except as described in Annex X hereto
and except for those governmental licenses, authorizations, consents or
approvals the failure of which to be so obtained would not have a Materially
Adverse Effect and (iii) is duly qualified and is authorized to do business and
is in good standing in all jurisdictions where it is required to be so qualified
and where the failure to be so qualified would have a Materially Adverse Effect.
4.02. CORPORATE POWER AND AUTHORITY; BUSINESS. (a) Each Credit Party
has the corporate power and authority to execute, deliver and carry out the
terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each Credit Party
has duly executed and delivered each Credit Document to which it is a party and
each such Credit Document constitutes the legal, valid and binding obligation of
such Person enforceable against such Person in accordance with its terms except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally and except as
such enforceability may be limited by the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(b) Holdings was incorporated on May 10, 1995 and consummated (i) an
initial public offering of its common stock on October 18, 1996 and (ii) a
private placement of its Senior Subordinated Notes on November 6, 1997. The
Borrower was incorporated as Aminco, Inc. in Delaware on March 20, 1990. Prior
to the Closing Date, Holdings will not have engaged in any business or incurred
any liabilities except for activities, expenses and liabilities incident to its
organization, its initial public offering, its Senior Subordinated Notes
offering (and a related exchange offer of registered notes) and the carrying out
of the transactions contemplated by the Credit Documents, the Purchase Agreement
and the Refinancing.
4.03. NO VIOLATION. Neither the execution, delivery or performance by
any Credit Party of the Credit Documents to which it is a party nor compliance
with the terms and provisions thereof, nor the consummation of the transactions
contemplated therein (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or (other than pursuant to the Security
Documents) result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of any Credit Party or
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, material agreement or other material instrument to which any Credit Party
or its Subsidiaries is a party or by which it or any of its property or assets
is bound or to which it may be subject or (iii) will
11
violate any provision of the charter or by-laws of any Credit Party or its
Subsidiaries, except, in each such case, where such contravention, conflict,
inconsistency, breach, default, creation, imposition, obligation or violation
does not have a Materially Adverse Effect. The consummation of the Acquisition
and the Refinancing will not conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents) upon any of the property or assets of Holdings, the Borrower or any
of their respective Subsidiaries pursuant to the terms of, any indenture,
mortgage, deed of trust, material instrument or material agreement relating to
Indebtedness for borrowed money or the equivalent thereof or other material
agreement to which Holdings, the Borrower or any of their respective
Subsidiaries is a party or by which any of their respective property or assets
is bound or to which it may be subject, except, in each such case, where such
conflict, inconsistency, breach, default, creation, imposition or obligation
does not have a Materially Adverse Effect.
4.04. LITIGATION. Except as set forth on Annex VII, there are no
actions, judgments, suits or proceedings pending or, to Holdings' or the
Borrower's knowledge, threatened in any court of competent jurisdiction with
respect to any Credit Party or its Subsidiaries that are, individually or in the
aggregate, likely to have a Materially Adverse Effect.
4.05. USE OF PROCEEDS. (a) All the proceeds of the Term Loan to be made
hereunder shall be utilized to provide the financing required to consummate the
Acquisition and to pay related fees and expenses.
(b) Neither the making of the Term Loan hereunder, nor the use of the
proceeds thereof, will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
4.06. GOVERNMENTAL APPROVALS, ETC. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any third party or any foreign or domestic Governmental
Authority (other than those orders, consents, approvals, licenses,
authorizations or validations which, if not obtained or made, would not have a
Materially Adverse Effect or which have previously been obtained or made and
except for filings to perfect security interests granted pursuant to the
Security Documents) is required to authorize or is required in connection with
(i) the execution, delivery and performance of any Credit Document or the
transactions contemplated therein or (ii) the legality, validity, binding effect
or enforceability of any Credit Document. At the time of the making of the Term
Loan, there does not exist any judgment, order, injunction or other restraint
issued or filed with respect to the making of the Term Loan or the performance
by the Credit Parties of their obligations under the Credit Documents.
4.07. INVESTMENT COMPANY ACT. None of Holdings, the Borrower or their
respective Subsidiaries is, or will be after giving effect to the transactions
contemplated hereby, an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
12
4.08. PUBLIC UTILITY HOLDING COMPANY ACT. None of Holdings, the
Borrower or their respective Subsidiaries is, or will be after giving effect to
the transactions contemplated hereby, a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.09. TRUE AND COMPLETE DISCLOSURE. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of Holdings,
the Borrower or any of their Subsidiaries in writing to the Lender (including,
without limitation, all information contained in the Credit Documents) for
purposes of or in connection with this Agreement or any transaction contemplated
herein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of any such Person in writing to the Lender will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time in
light of the circumstances under which such information was provided. There is
no fact known to any Credit Party which has a Materially Adverse Effect which
has not been disclosed herein or in such other documents, certificates and
written statements furnished to the Lender for use in connection with the
transactions contemplated hereby.
4.10. CONSUMMATION OF THE ACQUISITION. On the Closing Date, the
Acquisition shall concurrently be consummated.
4.11. FINANCIAL CONDITION; FINANCIAL STATEMENTS; PROJECTIONS. No Credit
Party is entering into the arrangements contemplated hereby and by the other
Credit Documents, or intends to make any transfer or incur any obligations
hereunder or thereunder with actual intent to hinder, delay or defraud either
present or future creditors. On and as of the Closing Date, on a PRO FORMA basis
after giving effect to the Refinancing and to all Indebtedness incurred and
Liens created, or to be created, by each Credit Party in connection with the
Refinancing, the Acquisition and the Credit Documents, (w) Holdings and the
Borrower do not expect that final judgments against any Credit Party in actions
for money damages with respect to pending or threatened litigation will be
rendered at a time when, or in an amount such that, such Credit Party will be
unable to satisfy any such judgments promptly in accordance with their terms
(taking into account the maximum reasonable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered and the cash available to each Credit Party, after taking into account
all other anticipated uses of the cash of such Credit Party (including the
payments on or in respect of debts (including their Contingent Obligations));
(x) no Credit Party will have incurred or intends to, or believes that it will,
incur debts beyond its ability to pay such debts as such debts mature (taking
into account the timing and amounts of cash to be received by such Credit Party
from any source, and amounts to be payable on or in respect of debts of such
Credit Party and the amounts referred to in the preceding clause (w)); (y) each
Credit Party, after taking into account all other anticipated uses of the cash
of such Credit Party, anticipates being able to pay all amounts on or in respect
of debts of such Credit Party when such amounts are required to be paid; and (z)
each Credit Party will have sufficient capital with which to conduct its present
and proposed business and the property of such Credit Party does not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 4.11, "debt" means any liability on a
claim, and "claim"
13
means a (i) right to payment whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured; or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
As of the Closing Date, except as adequately reflected or reserved
against in Holdings' consolidated financial statements and the notes thereto as
of and for the year ended December 31, 1997 and as of and for the three-month
period ended March 31, 1998 or as set forth in Annexes VII, X and XIV, there
were no liabilities or obligations with respect to Holdings, the Borrower or any
of their respective Subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in the aggregate, would be material to Holdings, the Borrower or
any of their respective Subsidiaries, except as incurred by any Credit Party in
connection with this Agreement and the Refinancing. As of the Closing Date,
Holdings and the Borrower know of no basis for the assertion against Holdings,
the Borrower or any of their respective Subsidiaries of any liability or
obligation of any nature whatsoever that is not adequately reflected in the
consolidated financial statements of Holdings described above or otherwise
disclosed herein which, either individually or in the aggregate, could
reasonably be expected to be material to Holdings, the Borrower or any of their
respective Subsidiaries.
4.12. SECURITY INTERESTS. At all times after the execution of the
Security Documents, the Security Documents create, in favor of the Lender, as
security for the obligations purported to be secured thereby, a valid and
enforceable perfected first priority security interest in and Lien upon all of
the Collateral, superior to and prior to the rights of all third persons and
subject to no Liens, except Prior Liens and Permitted Encumbrances applicable to
such Collateral. The mortgagor under each Mortgage has good and marketable title
to the Mortgaged Real Property free and clear of all Liens other than Prior
Liens and Permitted Encumbrances and Liens expressly permitted by the applicable
Mortgage. The respective pledgor or assignor, as the case may be, has (or on and
after the time it executes the respective Security Document, will have) good and
marketable title to all items of Collateral (other than the Mortgaged Real
Property) covered by such Security Document free and clear of all Liens except
Prior Liens and Permitted Encumbrances and Liens expressly permitted by the
applicable Security Document. No filings or recordings are required in order to
perfect or confirm the perfection of the security interests created under any
Security Document except for filings or recordings required in connection with
any such Security Document which shall have been made prior to or
contemporaneously with the execution and delivery thereof.
4.13. TAX RETURNS AND PAYMENTS. Except as set forth on Annex XI hereto,
each Credit Party has filed all material tax returns required to be filed by it
and has paid all material taxes and assessments payable by it which have become
due, other than those not yet delinquent and except for those contested in good
faith and for which adequate reserves have been established. Except as set forth
on Annex XI hereto, each Credit Party has paid, or has provided adequate
reserves (in accordance with GAAP) for the payment of, all material federal,
state, local and foreign income taxes (including, without limitation, franchise
taxes based upon income) applicable for all prior fiscal years and for the
current fiscal year to the date hereof. Holdings knows of no proposed tax
assessment against Holdings or any of its Subsidiaries that could
14
reasonably be expected to have a Materially Adverse Effect which is not being
actively contested in good faith by such Person to the extent affected thereby
in good faith and by appropriate proceedings; PROVIDED that such reserves or
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
4.14. ERISA. (A) Each Credit Party and its ERISA Affiliates are in
compliance with all applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder with respect to all
employee benefit plans, Pension Plans and Multiemployer Plans except for any
failures to comply which, individually or in the aggregate, would not have a
Materially Adverse Effect.
(B) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan which resulted or would result in a
liability to any Credit Party or any ERISA Affiliate.
(C) The sum of the amount of unfunded benefit liabilities (determined
in accordance with Statement of Financial Accounting Standards No. 87) under all
Title IV Plans (excluding each Title IV Plan with an amount of unfunded benefit
liabilities of zero or less) is not more than $2,500,000. As of the Closing
Date, there are no unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA) under any Title IV Plans.
(D) As of the Closing Date, no Credit Party nor any ERISA Affiliate has
any obligation to contribute to or any liability or potential liability
(including, but not limited to, actual or potential withdrawal liability) with
respect to any employee benefit plan of the type described in Sections 4063 and
4064 of ERISA or in Section 413(c) of the Code. Each Credit Party and its ERISA
Affiliates have complied in all material respects with the requirements of ERISA
Section 515 with respect to each Multiemployer Plan. The aggregate potential
withdrawal payments, as determined in accordance with Title IV of ERISA, of each
Credit Party and its ERISA Affiliates with respect to all Multiemployer Plans
does not exceed $2,500,000. No Credit Party nor any ERISA Affiliate has incurred
or reasonably expects to incur any withdrawal liability under Section 4201 ET
SEQ. of ERISA to any Multiemployer Plan or any employee benefit plan of the type
described in Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code.
(E) No Credit Party nor any ERISA Affiliate has incurred any
accumulated funding deficiency (whether or not waived) with respect to any
Pension Plan.
(F) No Credit Party nor any ERISA Affiliate has or reasonably expects
to become subject to a Lien in favor of any Pension Plan under Section 302(f) or
307 of ERISA or Section 401(a)(29) or 412(n) of the Code.
(G) Assuming that no portion of the Term Loan to be advanced hereunder
is attributable, directly or indirectly, to the assets of any employee benefit
plan, the execution, performance and delivery of the Credit Documents by any
party thereto will not involve any prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975 of the Code for which an exemption
therefrom is not available.
As used in this Section 4.14, the term "accumulated funding deficiency"
has the meaning
15
specified in Section 302 of ERISA and Section 412 of the Code, and the term
"employee benefit plan" has the meaning specified in Section 3(3) of ERISA.
4.15. SUBSIDIARIES. Annex II hereto lists each direct and indirect
Subsidiary of Holdings existing on the Closing Date.
4.16. PATENTS, ETC. Each Credit Party owns or possesses adequate
licenses or other rights to use all patents, patent applications, trademarks,
trademark applications, servicemarks, servicemark applications, trade names,
copyrights, trade secrets and know how (collectively, the "Intellectual
Property") that are necessary for the operation of their respective businesses
as presently conducted and as proposed to be conducted. No claim is pending or,
to the best of Holdings' or the Borrower's knowledge, threatened to the effect
that Holdings or any of its Subsidiaries infringes upon the asserted rights of
any other person under any Intellectual Property, and to the best of Holdings'
or the Borrower's knowledge there is no basis for any such claim (whether or not
pending or threatened), in each case where such claim could reasonably be
expected to have a Materially Adverse Effect. No claim is pending or, to the
best of Holdings' or the Borrower's knowledge, threatened to the effect that any
such Intellectual Property owned or licensed by Holdings or any of its
Subsidiaries or which Holdings or the Borrower or any of its Subsidiaries
otherwise has the right to use is invalid or unenforceable by Holdings, the
Borrower or such Subsidiary, and, to the best of Holdings' or the Borrower's
knowledge, there is no basis for any such claim (whether or not pending or
threatened), in each case where such claim could reasonably be expected to have
a Materially Adverse Effect.
4.17. COMPLIANCE WITH LAWS, ETC. Except as set forth in Annex XIV
hereto, each Credit Party is in material compliance with all material laws and
regulations, including without limitation those relating to equal employment
opportunity and employee safety but excluding Environmental Laws (as to which
Section 4.22 is applicable), in all jurisdictions in which it is presently doing
business, and each Credit Party will comply and cause each of its Subsidiaries
to comply with all such laws and regulations which may be imposed in the future
in jurisdictions in which it or such Subsidiary may then be doing business in
each such case other than those the non-compliance with which would not have a
Materially Adverse Effect.
4.18. PROPERTIES. Holdings and each of its Subsidiaries have good and
marketable title to and beneficial ownership of all their respective properties
owned by them, including after the Closing Date all property reflected in
Holdings' most recent balance sheet described in Section 4.11 and except as sold
or otherwise disposed of since the date of such balance sheet in the ordinary
course of business, free and clear of all Liens, other than Prior Liens and
Permitted Encumbrances. Holdings and each Subsidiary thereof hold all material
licenses, certificates of occupancy or operation and similar certificates and
clearances of municipal and other authorities necessary to own and operate the
Mortgaged Real Property in the manner and for the purposes currently operated by
such party which if not obtained or maintained would have a material adverse
effect upon the value of the Mortgaged Real Property. There are no actual
defaults or defaults alleged in writing or, to the best knowledge of Holdings or
the Borrower, threatened defaults, in each case of a material nature with
respect to any leases of real property under which Holdings or any of its
Subsidiaries is lessor or lessee.
16
4.19. SECURITIES. On the Closing Date, the common stock of each
Subsidiary of Holdings whose stock is being pledged as of the Closing Date will
be duly authorized, issued and delivered and will be fully paid, nonassessable
and free of preemptive rights. There are not, as of the Closing Date and
thereafter, any existing options, warrants, calls, subscriptions, convertible or
exchangeable securities, rights, agreements, commitments or arrangements for any
person to acquire any capital stock of the Borrower any other securities
convertible into, exchangeable for or evidencing the right to subscribe for any
such capital stock.
4.20. COLLECTIVE BARGAINING AGREEMENTS. Set forth on Annex III hereto
is a list and description (including dates of termination) of all collective
bargaining or similar agreements between or applicable to Holdings and its
Subsidiaries as of the date hereof and any union, labor organization or other
bargaining agent in respect of the employees of Holdings and its Subsidiaries on
the date indicated in Annex III hereto.
4.21. INDEBTEDNESS OUTSTANDING. Set forth on Annex I hereto is a
complete list and description of all Indebtedness of Holdings, the Borrower and
their Subsidiaries (other than the Term Loan) that will be outstanding
immediately after the Closing Date and set forth on Annex I hereto is a complete
list and description of all Indebtedness of Holdings, the Borrower and their
Subsidiaries that will be repaid, defeased, transferred or otherwise terminated
on or prior to the Closing Date.
4.22. ENVIRONMENTAL MATTERS. (A) Except as set forth in Annex X hereto,
each of Holdings and its Subsidiaries and the properties and assets used in its
businesses (including the Real Properties) is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes,
without limitation, the possession of all material licenses, permits,
registrations and other governmental authorizations (collectively,
"Environmental Authorizations") required under applicable Environmental Laws,
and compliance in all material respects with the terms and conditions thereof
except as could not reasonably be expected to result in the incurrence of costs
in excess of $100,000, and there are no circumstances of a nature which may
materially prevent or interfere with such compliance in the future. Except as
set forth in Annex X hereto, neither Holdings nor any of its Subsidiaries has
been notified by any Governmental Authority, or has any basis to believe, that
any such Environmental Authorizations will be modified, suspended or revoked or
cannot be renewed or otherwise maintained in the ordinary course of business.
Except as set forth in Annex X hereto, in the last five years, neither Holdings
nor any of its Subsidiaries has received any communication, whether from a
Governmental Authority, citizen group, employee or otherwise, that alleges that
Holdings or any of its Subsidiaries or any of the properties or assets used in
their respective businesses (including the Real Properties) is not in compliance
with Environmental Laws.
(B) Except as set forth in Annex X hereto, there is no Environmental
Notice that (i) is pending or, to the best knowledge of Holdings or the Borrower
or any of its Subsidiaries, threatened against Holdings or any of its
Subsidiaries or (ii) is pending or, to the best knowledge of Holdings or the
Borrower or any of its Subsidiaries, threatened against any Person whose
liability for such Environmental Notice may have been retained or assumed by or
could reasonably be imputed or attributed by law or contract to Holdings, the
Borrower or any of its Subsidiaries.
17
(C) Except as set forth in Annex X hereto, to the best knowledge of
Holdings, the Borrower and its Subsidiaries, there are no past or present
actions, activities, circumstances, conditions, events or incidents arising out
of, based upon, resulting from or relating to the operation, ownership or use of
any properties or assets (including the Real Properties) currently or formerly
owned, operated, leased or used by Holdings or any of its Subsidiaries (or any
predecessor in interest of any of them), including, without limitation, the
emission, discharge, disposal or other release of any Hazardous Materials in or
into the Environment, that (i) could reasonably be expected to result in the
incurrence of costs in excess of $100,000, individually, under Environmental
Laws or (ii) could reasonably be expected to form the basis of any Environmental
Notice against or with respect to Holdings or any of its Subsidiaries, or
against any person or entity whose liability for any Environmental Notice may
have been retained or assumed by or could be imputed or attributed by law or
contract to Holdings or any of its Subsidiaries, which Notice could reasonably
be expected to result in the incurrence of costs in excess of $100,000.
(D) Except as set forth in Annex X hereto, without in any way limiting
the generality of the foregoing, (i) there are, and to the best knowledge of
Holdings, the Borrower and its Subsidiaries, have been, no underground storage
tanks, or related piping, located on, at or under property (including the Real
Properties) owned, operated, leased or used by Holdings or any of its
Subsidiaries (or any predecessor in interest of any of them), (ii) there are,
and, to the best knowledge of Holdings, the Borrower and its Subsidiaries, have
been, no polychlorinated biphenyls used or stored by Holdings or any of its
Subsidiaries, located on, at or under property (including the Real Properties)
owned, operated, leased or used by Holdings or any of its Subsidiaries, (iii)
there are and have been no properties (including the Real Properties) currently
or formerly owned, operated, managed, leased or used by Holdings or any of its
Subsidiaries (or any predecessor in interest of any of them) at which Hazardous
Materials generated, used, owned, managed, stored or controlled by Holdings or
any of its Subsidiaries (or any predecessor in interest of any of them) may have
been disposed of or otherwise released into the Environment except such
disposals or other releases which were both (a) in compliance with Environmental
Laws and Environmental Authorizations and (b) could not result in costs in
excess of $100,000, individually, under Environmental Laws and (iv) there is no
friable asbestos contained in or forming part of any building, building
component, structure or office space owned, operated, leased or used by Holdings
or any of its Subsidiaries.
(E) Prior to the Closing Date, Holdings and each of its Subsidiaries
shall have made all notifications, registrations and filings in accordance with
all applicable State and Local Real Property Disclosure Requirements, including,
without limitation, the use of forms provided by state or local agencies, where
such forms exist, whether to the Lender or to, or with, the state or local
agency, provided, that where such notification, registration or filing was made
to, or with, a state or local agency, a copy of such notification, registration
or filing shall be provided to the Lender prior to the Closing Date.
4.23. ENVIRONMENTAL INVESTIGATIONS. All material environmental
investigations, studies, audits, assessments or reviews conducted of which
Holdings or the Borrower is in possession in relation to the current or prior
business of Holdings, the Borrower or any of its Subsidiaries or any Real
Property or facility now or previously owned, operated, leased, used or
controlled by Holdings or any of its Subsidiaries, including, without
limitation, those relating to compliance
18
with or liability under any Environmental Law, have been delivered to the Lender
through its attorneys, Skadden, Arps, Slate, Xxxxxxx & Xxxx.
4.24. FINE PRODUCTS COMPANY. As of the date of this Agreement and as of
the Closing Date, Fine Products Company, a Georgia corporation ("Fine
Products"), has capital of $145,000 and has no other assets or, to the best of
the Borrower's knowledge, liabilities of any kind (other than its rights and
obligations under the purchase agreement dated as of February 1, 1994 between
Fine Products, Aminco Delaware and Xxxxxxx Xxxxx Co., Inc., and certain tax
attributes). There are no actions, claims, judgments, suits or proceedings
pending or, to Holdings' or the Borrower's knowledge, threatened in any court of
competent jurisdiction with respect to Fine Products and neither Holdings nor
the Borrower is aware of any facts or circumstances which would provide the
basis for the assertion against Fine Products of any such actions, claims, suits
or proceedings.
4.25. The Borrower is actively engaged in the process of attempting to
sell certain assets used in the business of selling, distributing, packaging,
manufacturing and marketing CUTEX brand nail care and lip color products in the
United States and Puerto Rico, and has engaged Xxxxxxx Xxxxx to act as its
financial adviser in connection with such sale.
SECTION 5. AFFIRMATIVE COVENANTS.
Holdings and the Borrower covenant and agree that on the Closing Date
and thereafter for so long as this Agreement is in effect and until the Term
Loan together with interest, fees and all other Obligations incurred hereunder
are paid in full (except as otherwise agreed or consented to or waived, in
writing, by the Lender):
5.01. INFORMATION COVENANTS. Holdings will furnish or cause to be
furnished to the Lender:
(a) As soon as available and in any event within 90 days after the
close of each fiscal year of Holdings, the consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, of shareholders' equity and of cash flows for
such fiscal year, setting forth comparative consolidated figures for the
preceding fiscal year and a report on such consolidated balance sheets and
financial statements by independent certified public accountants of recognized
national standing, which report shall not be qualified as to the scope of audit
or as to the status of Holdings and its Subsidiaries as a going concern and
shall state that such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP applied on a
basis consistent with prior years (except for such changes with which the
independent certified public accountants concur) and the examination by such
accountants was conducted in accordance with generally accepted auditing
standards.
(b) As soon as available and in any event within 45 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of Holdings, the consolidated balance sheet of Holdings and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated statements of income, of shareholders' equity and of cash flows for
such
19
quarterly accounting period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly accounting period, setting forth in
comparative form the same information for the corresponding periods of the prior
fiscal year.
(c) As soon as practicable and in any event within 30 days after the
end of the month of July, 1998 and each month thereafter, (i) the consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such period and
(ii) the related consolidated statements of income and cash flows of Holdings
each in the form customarily prepared by management, in each case for such
fiscal month and for the period from the beginning of the then current fiscal
year to the end of such fiscal month, setting forth in comparative form the same
information for the corresponding periods of the prior fiscal year, together
with a brief narrative discussion and analysis prepared by management describing
Holdings' results of operations for such fiscal month.
(d) At the time of the delivery of the financial statements provided
for in Sections 5.01(a) and (b), a certificate of the chief executive officer,
chief financial officer, controller, chief accounting officer or other
Authorized Officer of Holdings to the effect that such financial statements are
true and complete in all material respects and that no Default or Event of
Default exists, or, if any Default or Event of Default does exist, specifying
the nature and extent thereof.
(e) Promptly upon their becoming available, copies of all consolidated
financial statements, reports, notices and proxy statements sent or made
available generally by Holdings or any Subsidiary of Holdings to its security
holders (other than to Holdings, the Borrower or another Subsidiary of
Holdings), of all regular and periodic reports and all registration statements
and prospectuses, if any, filed by Holdings or any of its Subsidiaries with any
securities exchange or with the SEC and of all press releases and other
statements made available generally by Holdings or any Subsidiary of Holdings to
the public concerning material developments in the business of Holdings and its
Subsidiaries.
(f) Promptly upon any Senior Officer obtaining knowledge (w) of any
condition or event which constitutes a Default or Event of Default, (x) that any
Person has given any written notice to Holdings, the Borrower or any Subsidiary
of the Borrower or taken any other action with respect to a claimed default or
event or condition of the type referred to in Section 7.04, or (y) of a material
adverse change in the business, operations, properties, assets, nature of
assets, condition (financial or otherwise) or prospects of Holdings, the
Borrower and its Subsidiaries taken as a whole, an Officers' Certificate
specifying the nature and period of existence of any such condition or event, or
specifying the notice given or action taken by such holder or Person and the
nature of such claimed Default, Event of Default, event or condition, or
material adverse change, and what action Holdings has taken, is taking and
proposes to take with respect thereto.
(g) (i) Promptly upon any Senior Officer obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Holdings, the Borrower or any
of its Subsidiaries or any property of Holdings, the Borrower or any of its
Subsidiaries not previously disclosed to the Lender, which action, suit,
proceeding, governmental investigation or arbitration seeks (or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the
20
same general allegations or circumstances which seek) recovery from Holdings,
the Borrower or any of its Subsidiaries aggregating $500,000 or more (exclusive
of claims covered by insurance policies of Holdings, the Borrower or any of its
Subsidiaries unless the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims), Holdings shall give
notice thereof to the Lender and provide such other information as may be
reasonably available to enable the Lender and its counsel to evaluate such
matters; (ii) as soon as practicable and in any event within 45 days after the
end of each fiscal quarter, Holdings shall provide a report to the Lender
covering any institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration (not previously reported) against or
affecting Holdings, the Borrower or any of its Subsidiaries or any property of
Holdings, the Borrower or any of its Subsidiaries not previously disclosed to
the Lender, which action, suit, proceeding, governmental investigation or
arbitration seeks (or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same general
allegations or circumstances which seek) recovery from Holdings, the Borrower or
any of its Subsidiaries aggregating $250,000 or more (exclusive of claims
covered by insurance policies of Holdings, the Borrower or any of its
Subsidiaries unless the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims), and shall provide such
other information at such time as may be reasonably available to enable the
Lender and its counsel to evaluate such matters; (iii) in addition to the
requirements set forth in clauses (i) and (ii) of this Section 5.01(g), Holdings
upon request shall promptly give notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a report
delivered to the Lender pursuant to clause (i) or (ii) above to the Lender and
provide such other information as may be reasonably available to it to enable
the Lender and its counsel to evaluate such matters and (iv) promptly upon any
Senior Officer obtaining knowledge of any material dispute in respect of or the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration in respect of any material contract of Holdings,
the Borrower or any of its Subsidiaries, Holdings shall give notice thereof to
the Lender and shall provide such other information as may be reasonably
available to enable the Lender and its counsel to evaluate such matters.
(h) With reasonable promptness, such other information and data with
respect to Holdings, the Borrower or any of its Subsidiaries or any other
similar entity in which Holdings, the Borrower or any of its Subsidiaries has an
investment, as from time to time may be reasonably requested by the Lender and
may be reasonably available to Holdings or the Borrower.
(i) Holdings shall deliver to the Lender, within 15 days after filing
with the SEC, copies of Holdings' annual report and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which is filed by Holdings
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act within the time
periods prescribed under such rules and regulations. In addition, Holdings shall
file with the Lender Holdings' annual reports to shareholders and any quarterly
or other financial reports furnished by Holdings to shareholders generally.
5.02. BOOKS, RECORDS AND INSPECTIONS. Holdings will, and will cause
each of its Subsidiaries to, keep true books of records and accounts in which
full and correct entries will be
21
made of all their business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP.
Holdings will, and will cause each of its Subsidiaries to, permit, upon
reasonable prior notice to the chief financial officer, controller, chief
accounting officer or any other Authorized Officer of either of Holdings or the
Borrower, officers and designated representatives of the Lender to visit and
inspect any of the properties or assets of Holdings, the Borrower and any of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
Holdings, the Borrower and any of its Subsidiaries and discuss the affairs,
finances and accounts of Holdings, the Borrower and any of its Subsidiaries
with, and be advised as to the same by, its and their officers and independent
accountants (in the presence of such officers), all at such reasonable times
during regular business hours and intervals and to such reasonable extent as the
Lender may reasonably request.
5.03. MAINTENANCE OF PROPERTY; INSURANCE. (a) Holdings will, and will
cause each of its Subsidiaries to, exercise commercially reasonable efforts to
maintain or cause to be maintained in good repair, working order and condition
(subject to normal wear and tear) all properties used in its businesses and from
time to time will make or cause to be made all repairs, renewals and
replacements thereof which Holdings and the Borrower deem appropriate in their
commercially reasonable judgment and will maintain and renew as necessary all
licenses, permits and other clearances necessary in their commercially
reasonable judgment to use and occupy such properties of Holdings, the Borrower
and each Subsidiary of Holdings, as the case may be.
(b) Holdings will, and will cause each of its Subsidiaries to, maintain
or cause to be maintained, with financially sound and reputable insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such types
and in such amounts as are customarily carried under similar circumstances by
such other corporations to the extent that such types and such amounts of
insurance are available at commercially reasonable rates. Holdings will, and
will cause each of its Subsidiaries to, furnish to the Lender, upon reasonable
request, information as to the insurance carried.
(c) Without limiting subsection 5.03(b) above, Holdings will, and will
cause each of its Subsidiaries to, maintain in full force the insurance
coverages specified in the Mortgages and the other Security Documents.
5.04. PAYMENT OF TAXES. Holdings will pay and discharge, and will cause
each of its Subsidiaries to pay and discharge, all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
material penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of Holdings or any of its
Subsidiaries or cause a failure or forfeiture of title thereto; PROVIDED that
neither Holdings, the Borrower nor any Subsidiary of Holdings shall be required
to pay any such tax, assessment, charge, levy or claim that is being contested
in good faith and by proper proceedings timely instituted and diligently
conducted if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
22
5.05. CORPORATE FRANCHISES. Holdings will do, and will cause each
Subsidiary to do, or cause to be done, all things necessary to preserve and keep
in full force and effect its existence, rights and authority, except where such
failure to keep in full force and effect such rights and authority would not
have a Materially Adverse Effect.
5.06. COMPLIANCE WITH STATUTES, ETC. Holdings will, and will cause each
Subsidiary to, comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all Governmental Authorities, in
respect of the conduct of its business and the ownership of its property, other
than non-compliance which would not have a Materially Adverse Effect; PROVIDED
that with respect to non-compliance with Environmental Laws which is disclosed
in Annex X hereto, Holdings will, and will cause each Subsidiary to, comply with
such Environmental Laws as soon as practicable.
5.07. ERISA. Holdings or the Borrower, as the case may be, will furnish
to the Lender:
(a) promptly upon Holdings' or the Borrower's knowing or having reason
to know of the occurrence of any (i) Termination Event, or (ii) "prohibited
transaction," within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Pension Plan or any trust created thereunder, which
in the case of all such events described in clause (i) or (ii) results or could
reasonably be expected to result in a liability of a Credit Party or its ERISA
Affiliates in the aggregate in excess of $200,000 or the imposition of a Lien
other than a Permitted Encumbrance on the assets of a Credit Party, a written
notice specifying the nature thereof, what action the Credit Party or its ERISA
Affiliates have taken, are taking or propose to take with respect thereto, and,
when known, any action taken or threatened by the Internal Revenue Service,
Department of Labor, PBGC or Multiemployer Plan with respect thereto.
(b) with reasonable promptness, copies of (i) all notices received by a
Credit Party or any of its ERISA Affiliates of PBGC's intent to terminate any
Title IV Plan or to have a trustee appointed to administer any Title IV Plan,
the notice of which event is required pursuant to the preceding paragraph (a);
(ii) upon the request of the Lender each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by a Credit Party or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each Pension Plan
for which Schedule B is required; (iii) upon the request of the Lender, the most
recent actuarial valuation report for each Title IV Plan; and (iv) all notices
received by the Credit Parties or any of their ERISA Affiliates from a
Multiemployer Plan concerning the imposition or amount of withdrawal liability
pursuant to Section 4202 of ERISA, the notice of which event is required
pursuant to the preceding paragraph (a).
5.07. PERFORMANCE OF OBLIGATIONS. Holdings will, and will cause each of
its Subsidiaries to, perform in all material respects all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and material contract by which it is bound or to which it is a party,
except where such nonperformance would not have a Materially Adverse Effect.
5.08. USE OF PROCEEDS. The proceeds of the Term Loan shall be used as
provided in Section 4.05.
23
5.09. EQUAL SECURITY FOR LOAN AND NOTE; NO FURTHER NEGATIVE PLEDGES.
(a) If Holdings or any of its Subsidiaries shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter acquired and
whether or not such property or assets constitutes Collateral, other than
Permitted Encumbrances (unless prior written consent to the creation or
assumption thereof shall have been obtained from the Lender), it shall make or
cause to be made effective provisions whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Indebtedness thereby
secured as long as any such Indebtedness shall be secured; PROVIDED that this
covenant shall not be construed as consent by the Lender to any violation by the
Borrower of the provisions of Section 6.02.
(b) Except with respect to prohibitions against other encumbrances on
specific property encumbered to secure payment of particular Indebtedness
permitted hereunder (which Indebtedness relates solely to the acquisition or
improvement of such specific property) neither Holdings nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
5.10. PLEDGE OF ADDITIONAL COLLATERAL. Concurrently with the execution
and delivery by any Subsidiary of a Subsidiary Guarantee, and/or in the event
that Holdings or any such Subsidiary acquires any assets directly or indirectly
through merger or otherwise that would constitute Pledged Collateral or
Mortgaged Real Property or assets of the same type, Holdings will, or will cause
such Subsidiary to, take all necessary action to grant the Lender a perfected
first Lien in all of the real and personal property of Holdings or such
Subsidiary (to the extent permitted by applicable law) to secure the payment and
performance of the Obligations, Holdings' obligations and liabilities under its
Guarantee and such Subsidiary's obligations and liabilities under its Subsidiary
Guarantee; and promptly, and in any event within 30 days after the acquisition
of assets of a type that, but for the fact that such assets shall have been
acquired after the Closing Date, would have constituted Collateral, Holdings
will, and will cause each of its Subsidiaries to, take all necessary action to
grant the Lender a perfected first Lien in such newly acquired assets (such
personal property and assets of a Subsidiary executing a Subsidiary Guarantee
and such newly acquired assets of Holdings or any of its Subsidiaries are
referred to herein collectively as the "Additional Collateral"). Such action to
be taken by Holdings and the Subsidiaries shall include, without limitation, the
execution and delivery of security agreements, and/or supplements thereto, and
other instruments and documents, all in form and substance reasonably
satisfactory to the Lender, the filing of appropriate financing statements under
the provisions of the UCC, applicable domestic or local laws, rules or
regulations in each of the offices where such filing is necessary or
appropriate, and the delivery of such opinions of counsel with respect to the
foregoing as the Lender shall reasonably require; PROVIDED this Section 5.10
shall not apply to any assets subject to Liens permitted under Section 6.03(i).
Furthermore, promptly, and in any event within 30 days, after the acquisition of
an interest in Real Property within the United States not held as of the Closing
Date (the "Additional Real Property"), Holdings will, and will cause such of its
Subsidiaries acquiring such an interest to, take such actions and execute such
documents as the Lender shall reasonably require to confirm the Lien of a
Mortgage (including, without limitation, satisfaction of the conditions set
forth in Sections 3.01(C)(iii) and 3.01(H)), or execute a new Mortgage, with
respect to such Additional Real Property. All costs and expenses arising from
any action taken or required to be taken by Holdings or any of its Subsidiaries
in connection with the pledge of Additional Collateral or Additional Real
Property pursuant to this Section 5.10, including, without limitation, costs of
24
counsel to Holdings or such Subsidiary in connection with the delivery of
opinions as required by this Section 5.10, shall be payable by Holdings, the
Borrower or such Subsidiary. All agreements, instruments and documents executed
or delivered pursuant to or in furtherance of this Section 5.10, and all
amendments, modifications and supplements thereto from time to time entered
into, are and shall be within the definition of "Security Documents."
5.11. SECURITY INTERESTS. Holdings will, and will cause each of its
Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement) for filing in any
appropriate jurisdiction under the provisions of the UCC, local law or any
statute, rule or regulation of any applicable domestic jurisdiction which are
necessary in order to maintain or confirm in favor of the Lender a valid and
perfected Lien on the Collateral as collateral security for the payment and
performance of the Obligations, subject to no Liens except for Prior Liens and
Liens permitted by the applicable Security Documents. Holdings or the Borrower
shall, as promptly as practicable after the filing of any financing statements,
deliver to the Lender acknowledgment copies of, or copies of lien search reports
confirming the filing of, financing statements duly filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable judgment of the Lender,
desirable to perfect the Lien created, or purported or intended to be created,
by each Security Document.
5.12. ENVIRONMENTAL EVENTS. (i) Holdings will, and will cause each of
its Subsidiaries to, comply with any and all Environmental Laws, other than
non-compliance which could not reasonably be expected to result in liability
under any Environmental Laws in excess of $250,000 individually or in the
aggregate with any other liability under any Environmental Laws; PROVIDED that,
with respect to non-compliance with Environmental Laws which is disclosed in
Annex X hereto, Holdings will, and will cause each of its Subsidiaries to,
comply with such Environmental Laws as soon as practicable.
(ii) Holdings will, and will cause each of its Subsidiaries to,
promptly give notice to the Lender upon determining the existence of (a) any
violation of any Environmental Laws, (b) any Environmental Notice or (c) any
release or threatened release of Hazardous Materials at, on, upon, under or from
any of the Real Properties or any facility or equipment thereat in excess of a
reportable quantity or allowable standard or level under any Environmental Laws,
or in a manner and/or amount which could reasonably be expected to result in
liability under any Environmental Laws, in each case in excess of $250,000
individually or in the aggregate with any other liability under any
Environmental Laws (other than any such events disclosed in Annex X hereto).
(iii) In the event of the presence of Hazardous Materials on any of the
Real Properties which is in violation of, or which could reasonably be expected
to result in liability under, any Environmental Laws, in each case in excess of
$250,000 individually or in the aggregate with any other liability under any
Environmental Laws, Holdings or any of its Subsidiaries, upon discovery thereof,
shall take appropriate steps to initiate and expeditiously complete all
response, corrective and other action required under any Environmental Laws to
mitigate and eliminate any such violation or liability.
5.13. NEW SUBSIDIARIES. In addition to its obligations with respect to
Section 5.10, if, after the date hereof, Holdings, the Borrower or any
Subsidiary of Holdings shall create or
25
acquire any (A) domestic Subsidiary, Holdings shall, concurrently with the
creation or acquisition of such Subsidiary, (i) cause such Subsidiary to execute
and deliver to the Lender a Subsidiary Guarantee, substantially in the form of
Exhibit H annexed hereto, guaranteeing the Borrower's Obligations hereunder and
(ii) take all necessary actions and execute such agreements, instruments and
documents, including, without limitation, stock powers executed in blank, and
deliver such opinions of counsel with respect thereto, as the Lender may
reasonably require to cause all of the capital stock of such Subsidiary owned or
controlled by Holdings, the Borrower or any Subsidiary of Holdings to be pledged
to the Lender to secure the Borrower's Obligations hereunder such that the
Lender has a valid and perfected first-priority security interest in such
pledged capital stock or (B) foreign Subsidiary whose direct parent is any of
Holdings, the Borrower or a Guarantor, Holdings shall, concurrently with the
creation or acquisition of such foreign Subsidiary, (i) comply with the
requirements of clause (A)(i) above if permitted by applicable foreign law and
if such compliance would not cause such Subsidiary to hold or be deemed to hold
an obligation of a United States person or other "United States property" for
purposes of Section 956(a)(1)(A) of the Code and Treas. Reg. ss. 1.956-2 and
(ii) comply with the requirements of clause (A)(ii) above, but only to the
extent of 65% of the capital stock of such foreign Subsidiary.
5.14 POST-CLOSING OPINIONS. Holdings and the Borrower will deliver or
cause to be delivered to the Lender an opinion of special South African counsel
to Holdings, Borrower and Xxxxxx Holdings Limited with respect to the pledge of
the shares of Xxxxxx Holdings Limited, in form and substance reasonably
satisfactory to the Lender within 15 days after the Closing Date.
SECTION 6. NEGATIVE COVENANTS.
Holdings and the Borrower hereby covenant and agree that as of the
Closing Date and thereafter for so long as this Agreement is in effect and until
the Term Loan together with interest, fees and all other Obligations incurred
hereunder are paid in full (except as otherwise agreed or consented to or
waived, in writing, by the Lender):
6.01. CHANGES IN BUSINESS. Other than asset dispositions permitted
under Section 6.05, the Borrower will not, and will not permit any of its
Subsidiaries to, materially alter its businesses from that conducted by Holdings
or such Subsidiary at the Closing Date, and lines of business reasonably related
thereto.
6.02. AMENDMENTS OR WAIVERS OF CERTAIN DOCUMENTS. Holdings will not,
and will not permit any of its Subsidiaries to, amend or otherwise change the
terms of any Existing Debt, including, without limitation, the interest rate,
time of payment of interest, with respect to security (if any) and the scheduled
maturity of, the Senior Subordinated Notes.
6.03. LIENS. Holdings will not, and will not permit any Subsidiary of
Holdings to, directly or indirectly, create, incur, assume or permit or suffer
to exist any Lien upon or with respect to any item constituting Collateral,
whether now owned or hereafter acquired, except for the Lien of the Security
Document relating thereto, Prior Liens applicable thereto and other Liens
expressly permitted by such Security Document. Holdings will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any property or assets of Holdings or any
Subsidiary of Holdings which does not constitute
26
Collateral whether now owned or hereafter acquired, or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets or assign any right to receive income, or
file or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute, except the
following, which are herein collectively referred to as "Permitted
Encumbrances":
(a) Liens for taxes, assessments or governmental charges or claims not
yet delinquent or Liens for taxes, assessments or governmental charges or claims
being contested in good faith and by appropriate proceedings for which adequate
reserves, as may be required by GAAP, have been established;
(b) Liens in respect of property or assets of Holdings or any of its
Subsidiaries imposed by law (i) which were incurred in the ordinary course of
business, such as carriers', warehousemen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, and (x) which do not
in the aggregate materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of Holdings
or any of its Subsidiaries or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or asset subject to such Lien or (ii) which
do not relate to material liabilities of Holdings and its Subsidiaries and do
not in the aggregate materially detract from the value of the property and
assets of Holdings and its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment (including
judgment or appeal bonds) for amounts of less than $500,000 individually or less
than $1,000,000 in the aggregate (exclusive of any amount adequately covered by
insurance as to which the insurance company has acknowledged coverage) unless
the judgment it secures shall, within 60 days after the entry thereof, not have
been discharged or execution thereof not been stayed pending appeal, or shall
not have been discharged within 30 days after the expiration of any such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed money or the
equivalent);
(e) subject to the provisions of Section 6.14 and, with respect to any
Mortgaged Real Property, to the provisions of any applicable Mortgage, (i)
Leases with respect to the assets or properties of Holdings or the Borrower
entered into in the ordinary course of Holdings' or the Borrower's business and
subordinate in all respects to the Liens granted and evidenced by the Security
Documents, (ii) foreign Leases and (iii) Existing Leases and any extensions,
renewals or replacements thereof;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with the
business of Holdings or any of its Subsidiaries, in each case incurred in the
ordinary course of business and which do not materially impair for its intended
purposes the Real Property to which it relates;
27
(g) zoning and building by-laws and ordinances, municipal bylaws and
regulations, and restrictive covenants, which do not materially interfere with
the use of the subject property by Holdings or any of its Subsidiaries as such
property is used as of the Closing Date;
(h) Liens securing Indebtedness of a Subsidiary of Holdings owing to
Holdings or a Wholly Owned Subsidiary of Holdings;
(i) Liens upon real or tangible or intangible personal property
acquired or constructed by Holdings or its Subsidiaries after the date hereof or
on such property or equity securities of a Person at the time such Person
becomes a Subsidiary of Holdings or any of its Subsidiaries; PROVIDED that (i)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, the cost of the item of property subject
thereto or such Liens existed on the date such property or securities were
acquired and were not incurred as a result of or in anticipation of such
acquisition, (ii) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of the fair value (as determined in good faith by the board
of directors of Holdings or the Borrower, as the case may be) of the respective
property at the time it was so acquired or constructed, (iii) the Indebtedness
secured by the Lien is not created more than 180 days after the later of the
acquisition, completion of construction, repair, improvement, addition or
commencement of full operation of the property subject to the Lien, (iv) such
Lien does not extend to or cover any other property other than such item of
property and (v) the incurrence of such Indebtedness secured by such Lien is
permitted by Section 6.04;
(j) Liens on any property existing as of the date hereof securing
Existing Debt and any refinancing, extension, renewal or rearrangement thereof
provided that such Lien does not extend to or cover any other property other
than items of property encumbered as of the date hereof; and
(k) Liens on inventory and receivables and assets specifically related
thereto and proceeds thereof in connection with (i) the South African Credit
Agreement and (ii) the Revolving Credit Facility.
6.04. INDEBTEDNESS. Holdings will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
(b) Existing Debt and any refinancing, extension, renewal,
rearrangement or replacement thereof; PROVIDED that any such refinancing,
extension, renewal, rearrangement or replacement of Existing Debt shall be on
terms which, both taken as a whole and specifically as such terms relate to the
identity of the obligors, repayments of principal, covenants, events of default
and security in property of the debtor, are in each event no less favorable to
Holdings or the Borrower than the correlative terms of the Existing Debt;
(c) $1,000,000 of Indebtedness outstanding at any time to finance the
cost of the acquisition or construction of real or personal tangible or
intangible property (including Capital Leases), and any refinancing, extension,
renewal, rearrangement or replacement thereof; PROVIDED that such Indebtedness
(or the refinancing thereof) shall not exceed 100% of the fair
28
value of such property; and PROVIDED, FURTHER, that such Indebtedness (or the
refinancing thereof) is not secured by any Lien other than a Lien referred to in
clause (i) of Section 6.03;
(d) other unsecured Indebtedness not exceeding $1,000,000 in the
aggregate at any time outstanding;
(e) Indebtedness owed to Morningside under the Management Agreement;
(f) Indebtedness of Holdings to any of its Wholly Owned Subsidiaries
(provided that such Indebtedness owed by Holdings is used only to fund any
amounts required for the payment of (i) interest when due on the Senior
Subordinated Notes (provided no Default or Event of Default exists under this
Agreement) and (ii) taxes payable (A) by Holdings or (B) by Holdings, the
Borrower and/or its Subsidiaries on a consolidated, combined or unitary basis)
or of any Wholly Owned Subsidiary of Holdings to Holdings or another Wholly
Owned Subsidiary of Holdings (but only so long as such Indebtedness is held by
Holdings or its Wholly Owned Subsidiary), and Indebtedness permitted under
Section 6.05(i);
(g) Indebtedness in respect of performance bonds, return-of-money
bonds, surety and appeal bonds and other similar obligations incurred by
Holdings or any of its Subsidiaries in the ordinary course of business, PROVIDED
such Indebtedness does not exceed $100,000 at any time outstanding;
(h) Indebtedness of Holdings, the Borrower or any Subsidiary of
Holdings incurred pursuant to the Revolving Credit Facility in a maximum
principal amount not to exceed $15,000,000 in the aggregate at any time
outstanding;
(i) Indebtedness of Xxxxxx Holdings Limited pursuant to the South
African Credit Agreement in an amount not exceeding the equivalent of
US$2,000,000 in the aggregate at any time outstanding; PROVIDED that such
Indebtedness is not secured by any Lien other than a Lien referred to in Section
6.03(k); and
(j) Indebtedness of any Credit Party (including pursuant to the
issuance of any guarantees) incurred pursuant to the Senior Subordinated Notes.
6.05. ADVANCES, INVESTMENTS AND LOANS. Holdings will not, and will not
permit any of its Subsidiaries to, lend money or credit or make advances to any
Person, or purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to any Person, except:
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and suppliers,
in each case if created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(c) investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent
29
obligations of, and other disputes with, customers and suppliers arising in the
ordinary course of business;
(d) investments in any direct or indirect Wholly Owned Subsidiary of
Holdings;
(e) transactions between Holdings and any of its Wholly Owned
Subsidiaries and between Wholly Owned Subsidiaries, in each case permitted under
Sections 6.04(f);
(f) loans or advances made by Holdings to its officers, directors and
employees in the ordinary course of business not to exceed $500,000 in the
aggregate outstanding at any time;
(g) investments made as a result of the receipt of non-cash proceeds
from any Asset Sale made pursuant to and in compliance with Section 6.10;
(h) other investments, loans or advances not to exceed $500,000 in the
aggregate outstanding at any time;
(i) loans, advances and/or investments (in each case evidenced by notes
that shall constitute Pledged Collateral) by Holdings or the Borrower in Xxxxxx
Holdings Limited in an amount not to exceed the equivalent of US$5,000,000 in
the aggregate at any one time outstanding; and
(j) investments in one or more contract manufacturers, suppliers,
vendors and distributors that are Affiliates of Holdings in connection with the
provision by any such person of manufacturing, research and development,
outsourcing, sales, marketing and/or distribution services to Holdings and/or
one or more of its Subsidiaries in an aggregate amount at one time outstanding
not to exceed US$4,000,000.
6.06. PREPAYMENTS OF INDEBTEDNESS. (A) Other than in accordance with
Section 2.01, Holdings will not, and will not permit any of its Subsidiaries to
make (or give any notice in respect of) any voluntary or optional payment or
prepayment or redemption or acquisition for value of Indebtedness (including,
without limitation, by way of depositing with any trustee with respect thereto
money or securities before such Indebtedness is due for the purpose of paying
such Indebtedness when due) or exchange of any such Indebtedness or preferred
stock, as the case may be, or (B) other than in accordance with Section 2.02,
Holdings will not, and will not permit any of its Subsidiaries to, make (or give
any notice in respect of) any mandatory prepayment or redemption or acquisition
for value of Indebtedness (including, without limitation, by way of depositing
with any trustee with respect thereto money or securities for such purposes) or
exchange of any such Indebtedness or preferred stock, as the case may be, in
each case of clauses (A) and (B), until all Obligations under this Agreement
have been satisfied in full; PROVIDED that Holdings and any of its Subsidiaries
may make such a payment, prepayment, redemption, acquisition or exchange using
the proceeds of Indebtedness permitted to be incurred by Section 6.04 to
refinance or replace such Indebtedness.
(C) Holdings will not, and will not permit any of its Subsidiaries to:
amend, modify or change any of the Management Agreement, the Cutex Manufacturing
Agreement (other than in connection with a sale of the CUTEX business
contemplated by Section 4.25), the Certificate of Incorporation (including,
without limitation, by the filing of any certificate of designation) or
30
By-laws of Holdings or the Borrower, or any agreement entered into by Holdings
or the Borrower with respect to its capital stock, or enter into any new
agreement with respect to the capital stock of Holdings or the Borrower, in each
case without the prior consent of the Lender, which consent shall not be
unreasonably withheld.
6.07. DIVIDENDS, ETC. Holdings will not, and will not permit any of its
Subsidiaries to, declare or pay any dividends (other than dividends or
distributions payable in shares of capital stock of Holdings or any of its
Subsidiaries, other than redeemable stock) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for any consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants for
or options or stock appreciation rights in respect of any of such shares), or
make any loans or advances to Affiliates, or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of
Holdings or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing,
"Dividends"), except that (i) any direct or indirect Subsidiary of Holdings may
pay Dividends to its parent corporation if such parent corporation is a Wholly
Owned Subsidiary of Holdings, (ii) the Borrower or any other Subsidiary of
Holdings may pay to Holdings any amounts required for the payment of (I)
interest when due on the Senior Subordinated Notes (provided no Default or Event
of Default exists under this Agreement) and (II) any taxes payable (A) by
Holdings or (B) by Holdings, the Borrower and/or its Subsidiaries on a
consolidated, combined or unitary basis, (iii) Holdings or any of its
Subsidiaries may purchase capital stock held by employees of Holdings or any of
its Subsidiaries pursuant to any employee stock option or other benefit plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of any such plan in an amount not greater than
$250,000 in any calendar year; PROVIDED that the Borrower may purchase capital
stock pursuant to the Employment Agreement with Xx. Xxxxx Xxxxx dated as of
August 23, 1995, as amended, without regard to such limitation; and (iv)
Holdings or any of its Subsidiaries may make payments to Affiliates pursuant to
and in compliance with Section 6.08 hereof.
6.08. TRANSACTIONS WITH AFFILIATES. Holdings will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any holder of 5% or more
of any class of equity securities of Holdings or with any Affiliate of Holdings
other than on terms and conditions substantially as favorable to Holdings or
such Subsidiary as would be obtainable by Holdings or such Subsidiary at the
time in a comparable arm's-length transaction with a Person other than a holder
of 5% or more of any class of equity securities of Holdings or an Affiliate;
PROVIDED that the foregoing restrictions shall not apply to (i) transactions
between Holdings and any of its Wholly Owned Subsidiaries and between Wholly
Owned Subsidiaries, (ii) payments to Morningside pursuant to the Management
Agreement for management services not to exceed $500,000, or above such amount
up to an aggregate of $750,000 with approval of the board of directors of
Holdings, in any fiscal year (provided that all such payments made commencing
January 1, 1998 will be included in the calculation for the fiscal year ending
December 31, 1998), plus reimbursement of reasonable out-of-pocket expenses,
(iii) loans and other advances made by the Borrower to its officers, directors
and employees permitted under Section 6.05(f), (iv) the payment of customary
outside
31
directors' fees, customary indemnification arrangements and customary director
and officer liability insurance, (v) the issuance of capital stock of Holdings
or any of its Subsidiaries, pursuant to any pension, stock option, profit
sharing or other employee benefit plan or agreement of Holdings or any of its
Subsidiaries in the ordinary course of business and (vi) investments made
pursuant to Section 6.05(j) hereof.
6.09. ISSUANCE OF SUBSIDIARY STOCK. Holdings will not and will not
permit any of its Subsidiaries directly or indirectly to issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of such Subsidiaries'
capital stock or other equity securities (or warrants, rights or options to
acquire capital stock or convertible securities or other equity securities) of
such Subsidiary, except to Holdings or any other Wholly Owned Subsidiary of
Holdings (in each case other than directors' or nominees' qualifying shares or
shares of capital stock required to be owned by foreign nationals under
applicable law); PROVIDED, HOWEVER, that nothing contained in this Section 6.09
shall prohibit the issuance of capital stock of Xxxxxx Holdings Limited in
accordance with the terms of the Xxxxxx Holdings Limited Share Incentive Trust,
as in effect on the date hereof.
6.10. DISPOSITION OF ASSETS. (A) Holdings will not, and will not permit
any of its Subsidiaries to, sell, lease or otherwise dispose of all or any part
of its interest in any asset, except that Holdings and its Subsidiaries may
sell, lease or otherwise dispose of assets so long as either (i) such sales are
approved by the Lender; (ii) such sales are for at least the fair market value
of such assets and the aggregate amount of such asset sales is less than
$500,000 in any 12-month period and, in any such case, Holdings or such
Subsidiary complies with the mandatory prepayment provisions herein and, in the
case of Collateral, so long as the conditions to the release of Collateral
described herein and in the applicable Security Documents are met; (iii) such
sales are of inventory and in the ordinary course of business; (iv) such sales
or other dispositions are (A) of equipment that has become worn out, obsolete or
damaged or otherwise unsuitable or no longer needed for use in connection with
the business of Holdings or any of its Subsidiaries or should be replaced, as
the case may be, in each case as determined in good faith by the board of
directors of Holdings or its Subsidiary, as the case may be, (B) for at least
the fair market value of such equipment, (C) not in excess of $100,000
individually or $250,000 per year in the aggregate for sales of such equipment
and (D) the proceeds of the sales of such equipment are used within 90 days of
such sales to (1) purchase equipment used in substantially similar lines of
business or (2) repay Indebtedness under this Credit Agreement pursuant to
Sections 2.01 or 2.02; (v) such sales or other dispositions do not exceed
$50,000 individually and are for at least the fair market value of such assets
or as to such other dispositions, the likely amount of net sales proceeds that
would be realized upon a sale of such assets is such that a sale of such assets
is not, in the reasonable judgment of Holdings or the Borrower, economically
practicable but such other disposition is otherwise of commercial value to
Holdings or the Borrower; PROVIDED that in no case shall sales pursuant to this
clause (v) exceed an aggregate of $100,000 in any fiscal year, and in the case
of Collateral, so long as the conditions to the release of Collateral described
herein and in the applicable Security Documents are met; (vi) such sales consist
of the licensing or sublicensing of Holdings' or any of its Subsidiaries'
Intellectual Property in the ordinary course of business; or (vii) such sales
are of equity securities under any stock option or other benefit plan available
to the employees or directors of Holdings or any of its Subsidiaries.
32
The consideration received by Holdings and its Subsidiaries from each
sale of assets permitted by subsections (i) and (ii) above, other than with
respect to such sales involving consideration of not more than $100,000 in the
aggregate in any fiscal year, shall be payable by the purchaser in whole within
15 days of such sale and at least 70% of the consideration from each sale shall
consist of Cash or Cash Equivalents. Any non-cash proceeds received from the
sale of assets constituting Collateral shall be pledged pursuant to and in
accordance with the applicable Security Documents and shall constitute
Collateral.
(B) Upon compliance with the conditions in subsection (A) of this
Section 6.10, the Release Conditions and the Partial Release Conditions (each as
hereinafter defined), Holdings or its Subsidiaries shall be entitled to receive
from the Lender an instrument in form and substance reasonably satisfactory to
Holdings or such Subsidiary (each, a "Release"), releasing the Lien of the
Mortgage with respect to all or any portion of a Mortgaged Real Property (each,
a "Released Real Property"). Holdings or its Subsidiaries shall exercise their
rights under this Section by delivering to the Lender a notice (each, a "Release
Notice"), which shall refer to this Section, describe with particularity the
proposed Released Real Property and be accompanied by (i) four counterparts of
the Release fully executed and acknowledged by all necessary parties other than
the Lender, (ii) executed counterparts of UCC termination statements necessary
to terminate the Lien of the applicable Mortgage and (iii) an Officer's
Certificate certifying that no Default or Event of Default shall have occurred
and the parties executing any and all documents in connection with the Release
(other than the Lender) were duly authorized to do so (collectively, the
"Release Conditions"). In the event the proposed Released Property consists of
less than all of the Mortgaged Real Property subject to a single Mortgage, the
Partial Release Conditions must be satisfied in order for the Borrower or its
Subsidiaries to receive the Release.
(C) The Lender's obligation to deliver a Release in respect of less
than all of the Mortgaged Real Property subject to a single Mortgage shall be
contingent upon the satisfaction of the conditions in subsection (A) of this
Section 6.10 and the Release Conditions as well as the following conditions
(collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and
release of the Lien of the applicable Mortgage with respect to the
proposed Released Real Property, the remaining Mortgaged Real Property
shall have utility services and access to public roads, rail spurs and
other transportation structures sufficient and necessary in the
reasonable opinion of Holdings or the Borrower for the continued use of
such Mortgaged Real Property in the manner utilized prior to the
Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all material respects with applicable laws, rules,
regulations and ordinances relating to environmental protection,
zoning, land use, configuration and building and workplace safety
(except for such non-compliance which has been previously consented to
by the Lender);
(iii) following the sale, transfer or other disposition of the
proposed Released Real Property, the value of the remaining Mortgaged
Real Property shall not be less than the value of such remaining
Mortgaged Real Property prior to the Release due to such sale, transfer
or other disposition;
33
(iv) the Title Company shall be prepared to issue an
endorsement to the Lender's title insurance policy relating to the
Mortgaged Real Property confirming that after the proposed release, the
Lien of the applicable Mortgage continues unimpaired as a first
priority Lien upon the remaining Mortgaged Real Property subject only
to Prior Liens, those Liens permitted by the Mortgage or previously
consented to by the Lender;
(v) Holdings shall cause to have been delivered to the Lender
a Survey reasonably acceptable to the Lender of the Mortgaged Real
Property remaining after the proposed Released Real Property has been
released; and
(vi) Holdings or its Subsidiaries shall cause to have been
delivered to the Lender an Officer's Certificate certifying that the
conditions set forth in subsections (i) through (v) have been
satisfied.
(D) The Lender shall execute, acknowledge (if applicable) and deliver
to the Borrower counterparts of the documents described in subsections (B)(i)
and (ii) of this Section 6.10 within 10 Business Days after receipt by the
Lender of a Release Notice provided that the Release Conditions and the Partial
Release Conditions (if applicable) have been satisfied. Holdings or the Borrower
shall (i) execute, deliver, obtain and record such instruments as the Lender may
require, including, without limitation, amendments to the Security Documents or
this Agreement and, (ii) deliver to the Lender such evidence of the satisfaction
of the Release Conditions and the Partial Release Conditions as the Lender may
require and (iii) cause the Title Company to issue the endorsement referred to
in subsection (C)(iv) of this Section 6.10. Holdings or the Borrower shall
reimburse the Lender upon demand for all reasonable costs or expenses incurred
in connection with any actions taken pursuant to this Section 6.10.
6.11. CONTINGENT OBLIGATIONS. Holdings will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create or become or be
liable with respect to any Contingent Obligation except:
(i) guarantees resulting from endorsement of instruments for
deposit or collection in the ordinary course of business;
(ii) the Guarantees;
(iii) obligations arising as a direct consequence of the
Refinancing, the Acquisition or pursuant to the Cutex Manufacturing
Agreement;
(iv) obligations with respect to the Indebtedness permitted to
be incurred under Section 6.04;
(v) guarantees on a subordinated basis by the Borrower and any
of the Subsidiaries of Holdings of the obligations of Holdings pursuant
to the terms of the indenture governing the Senior Subordinated Notes;
and
(vi) other Contingent Obligations not to exceed $250,000
outstanding at any one time.
34
6.12. ERISA. The Credit Parties will not, and will not permit any of
their ERISA Affiliates to:
(i) engage in any transaction in connection with which the
Borrower or any of its ERISA Affiliates could be subject to either a
tax imposed by Section 4975(a) of the Code or the corresponding civil
penalty assessed pursuant to Section 502(i) of ERISA, which penalties
and taxes for all such transactions could reasonably be expected to be
in an aggregate amount in excess of $500,000;
(ii) permit to exist any accumulated funding deficiency, for
which a waiver has not been obtained from the Internal Revenue Service,
with respect to any Pension Plan;
(iii) permit to exist any failure to make contributions or any
unfunded benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security under
ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(iv) permit the sum of the amount of unfunded benefit
liabilities (determined in accordance with Statement of Financial
Accounting Standards No. 87) under all Title IV Plans (excluding each
Title IV Plan with an amount of unfunded benefit liabilities of zero or
less) to exceed $2,500,000 for a period in excess of twelve months; or
(v) fail to make any payment to any Multiemployer Plan that it
or any of its ERISA Affiliates may be required to make under such
Multiemployer Plan, any agreement relating to such Multiemployer Plan,
or any law pertaining thereto.
As used in this Section 6.12, the term "accumulated funding deficiency"
has the meaning specified in Section 302 of ERISA and Section 412 of the Code,
and the term "amount of unfunded benefit liabilities" has the meaning specified
in Section 4001(a)(18) of ERISA.
6.13. MERGER AND CONSOLIDATIONS. No Credit Party will merge or
consolidate with or into any other entity; PROVIDED that any Subsidiary of
Holdings may be merged or consolidated with or into (i) Holdings, if Holdings is
the continuing or surviving corporation or (ii) any other such Subsidiary, if
the continuing or surviving corporation is a Wholly Owned Subsidiary of
Holdings.
6.14. SALE AND LEASE-BACKS. Holdings will not, and will not permit any
of its Subsidiaries to, directly or indirectly, become or thereafter remain
liable as lessee or as guarantor or other surety with respect to the lessee's
obligations under any lease, whether an Operating Lease or a Capital Lease, of
any property (whether real or personal or mixed) whether now owned or hereafter
acquired, (i) which Holdings or any of its Subsidiaries has sold or transferred
or is to sell or transfer to any other Person or (ii) which Holdings or any such
Subsidiary intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by Holdings or any such
Subsidiary to any Person in connection with such lease, if in the case of clause
(i) or (ii) above, such sale and such lease are part of the same transaction or
a
35
series of related transactions or such sale and such lease occur with one year
of each other or are with the same other Person.
6.15. SALE OR DISCOUNT OF RECEIVABLES. Holdings will not, nor will it
permit any of its Subsidiaries to, sell, with or without recourse, or discount
(other than in connection with trade discounts or arrangements necessitated by
the creditworthiness of the other party, in each case in the ordinary course of
business consistent with past practice) or otherwise sell for less than the face
value thereof, notes receivable or accounts receivable owed to it by its third
party customers or suppliers.
6.16. FINE PRODUCTS COMPANY. Holdings will not, and will not permit any
Subsidiary to, transfer any cash or other property to Fine Products, other than
transfers of cash in amounts needed to enable Fine Products to pay amounts not
to exceed $25,000 in the aggregate then required to be paid by Fine Products to
Persons that are not Affiliates of Holdings. Holdings will not permit Fine
Products to engage in any business activity.
SECTION 7. EVENTS OF DEFAULT.
Upon the occurrence and during the continuance of any of the
following specified events (each an "Event of Default"):
7.01. PAYMENTS. The Borrower shall (i) default, and such default shall
continue for fifteen or more days, in the payment when due of any principal of
the Term Loan, (ii) default, and such default shall continue for three or more
Business Days, in the payment when due of any interest on the Term Loan or under
any other Credit Document or (iii) fail to pay any other amounts owing hereunder
for ten Business Days after receiving notice thereof; or
7.02. REPRESENTATIONS, ETC. Any representation, warranty or statement
made or deemed made by operation of Section 3.01 by any Credit Party herein or
in any other Credit Document or in any written statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made by
operation of Section 3.01; or
7.03. COVENANTS. Any Credit Party shall (a) default in the due
performance or observance by it of any term, covenant or agreement contained in
Sections 5.09, 5.10, 5.11, 5.13 or Section 6 hereof or Section 1.1 of any
Mortgage or (b) default in the due performance or observance by it of any other
term, covenant or agreement contained in this Agreement or any Security Document
and such default shall continue unremedied for a period of at least 30 days (or,
in the case of Section 5.12(iii), five Business Days) after the date of such
default; or
7.04. DEFAULT UNDER OTHER AGREEMENTS. (a) Any Credit Party shall (i)
default in any payment with respect to any Indebtedness (other than Obligations)
having a principal amount of $500,000 or more individually or $1,000,000 or more
in the aggregate, for all Credit Parties and their Subsidiaries, beyond the
period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created or (ii) default in the observance or performance
of any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or
36
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause any such Indebtedness to become due prior to its stated
maturity; or (b) any such Indebtedness of any Credit Party or any of its
respective Subsidiaries 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; or
7.05. BANKRUPTCY, ETC. Any Credit Party shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against any Credit Party
or any of its Subsidiaries and the petition is not controverted within 20 days,
or is not dismissed for a period of 60 consecutive days, after commencement of
the case; or a custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of any Credit Party
or any of its Subsidiaries; or any Credit Party or any of its Subsidiaries
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to any
Credit Party or any of its Subsidiaries; or there is commenced against any
Credit Party or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 consecutive days; or any Credit Party or any of
its Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered and continues
unstayed for a period of 60 consecutive days; or any Credit Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or unstayed for a
period of 60 consecutive days; or any Credit Party or any of its Subsidiaries
makes a general assignment for the benefit of creditors; or any corporate action
is taken by any Credit Party or any of its Subsidiaries for the purpose of
effecting any of the foregoing; or
7.06. ERISA. (i) Any "reportable event" as described in Section 4043 of
ERISA or the regulations thereunder (excluding those events for which the
requirement for notice has been waived by regulation by the PBGC), or any other
event or condition, which the Required Banks determine constitutes reasonable
grounds under Section 4042 of ERISA for the termination of any Title IV Plan by
the PBGC or for the appointment by the appropriate United States District Court
of a trustee to administer or liquidate any Title IV Plan shall have occurred;
or
(ii) A trustee shall be appointed by a United States District Court to
administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any Title IV
Plan or to appoint a trustee to administer any Title IV Plan; or
(iv) A Credit Party or any of its ERISA Affiliates shall become liable
to the PBGC or any other party under Section 4062, 4063, 4064 or 4069 of ERISA
with respect to any Title IV Plan; or
(v) A Credit Party or any of its ERISA Affiliates shall become liable
to any Multiemployer Plan under Section 4201 ET SEQ. of ERISA;
37
if the sum of each of such Credit Party's and its ERISA Affiliates'
various liabilities (such liabilities to include, without limitation, any
liability to the PBGC or to any other party under Section 4062, 4063, 4064 or
4069 of ERISA with respect to any Title IV Plan, or to any Multiemployer Plan
under Section 4201 ET SEQ. of ERISA) which the Required Banks determine could
reasonably be expected to be incurred as a result of such events listed in
subclauses (i) through (v) above exceeds $1,000,000; or
7.07. SECURITY DOCUMENTS. Any Security Document shall cease to be in
full force and effect, or shall cease to give the Lender the Liens, rights,
powers and privileges purported to be created thereby, in favor of the Lender,
superior to and prior to the rights of all third Persons and subject to no Liens
other than Prior Liens and Liens expressly permitted by the applicable Security
Document or any judgment creditor having a Lien against any item of Collateral
shall commence legal action to foreclose such Lien or otherwise exercise its
remedies against any item of Collateral; or
7.08. GUARANTEES. Any Guarantee or any provisions thereof shall cease
to be in full force or effect in all material respects, or the Guarantor
thereunder or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under such Guarantee or the Guarantor
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to such Guarantee; or
7.9. JUDGMENTS. One or more judgments or decrees shall be entered
against any Credit Party or any of its Subsidiaries involving a liability of
$500,000 or more in the case of any one such judgment or decree or $1,000,000 or
more in the aggregate for all such judgments and decrees for all Credit Parties
and their Subsidiaries (in either case in excess of the amount covered by
insurance as to which the insurance company has acknowledged coverage) and any
such judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal for a period of 60 consecutive days from the entry
thereof;
7.10. OWNERSHIP; BOARD COMPOSITION. (i) Holdings shall own less than
100% (on a fully diluted basis) of the issued and outstanding capital stock of
the Borrower, other than securities issued in the ordinary course of business
under any stock option or other benefit plan available to the employees or
directors of the Borrower or any of its Subsidiaries (each of clauses (i), (ii)
and (iii) of this Section 7.10 a "Change of Control"); or
(ii)(x) DNL Partners, Limited Partnership, together with the DNL
Affiliates, in the aggregate, cease to own or control at least more than 50% of
the Total Voting Power of Holdings, or (y) in the event that DNL Partners,
Limited Partnership distributes to its partners (pursuant to the terms of its
partnership agreement) all of the capital stock of Holdings owned by DNL
Partners, Limited Partnership, if, following such distribution, DNL Partners,
Limited Partnership, together with the DNL Affiliates, in the aggregate, cease
to own or control at least 33-1/3% of the Total Voting Power of Holdings;
PROVIDED that, for purposes of the calculations made pursuant to this paragraph
(ii) (I) in the event any shares of Class B Common Stock of Holdings are
converted into either shares of Class A Common Stock or Class C Common Stock of
Holdings (in any combination), then all such shares of Class A Common Stock
and/or Class C Common Stock issued upon such conversion shall be excluded and
(II) in the event shares of capital stock of Holdings are issued by Holdings as
consideration in whole or in part for the
38
acquisition, directly or indirectly, of another entity and the Aggregate Market
Value of such shares of stock so issued is more than $25,000,000, then all
shares of capital stock of Holdings issued in connection with such acquisition
shall be excluded. For purposes of the foregoing proviso the term "Aggregate
Market Value" means (a) the average closing price per share of the relevant
class of Holdings capital stock during the 10 consecutive trading day period
preceding the tenth trading day immediately preceding the closing date of the
acquisition transaction with respect to which such shares are to be issued,
times (b) the number of shares of such class of capital stock issued by Holdings
in such acquisition transaction. The closing price for any day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way for such
day, in each case (1) on The New York Stock Exchange as reported on the NYSE
composite tape as reported in THE WALL STREET JOURNAL or another newspaper of
general circulation in the Borough of Manhattan, City of New York, New York
customarily published on each business day or (2) if the relevant shares of
capital stock are not listed on The New York Stock Exchange, on the principal
national securities exchange on which the relevant shares of capital stock of
Holdings are listed or to which such shares are admitted to trading or (3) if
the relevant shares of capital stock are not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by
NASDAQ or any comparable system or (4) if the relevant shares of capital stock
are not listed on NASDAQ or a comparable system, or if for any other reason the
current market price per share cannot be determined pursuant to the foregoing
provisions of this paragraph, the current market price per share shall be the
fair market value thereof as determined in good faith by the Board of Directors
of Holdings; or
(iii) during any consecutive two-year period, individuals who at
the beginning of such period constituted the board of directors of Holdings
(together with any new directors whose election by such board of directors or
whose nomination for election by the stockholders of Holdings was approved by a
vote of a majority of the directors then still in office who are entitled to
vote to elect such new directors and were either directors at the beginning of
such period or persons whose election as directors or nomination for election
was previously so approved) cease for any reason to constitute a majority of the
board of directors of Holdings then in office; or
7.11. CERTAIN TRANSACTIONS INVOLVING XXXXXX HOLDINGS LIMITED. Holdings
shall consolidate with or merge into, or sell, lease, convey or otherwise
dispose of all or substantially all of its assets to, Xxxxxx Holdings Limited;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Lender shall, by written notice to Holdings and
the Borrower, take any or all of the following actions, without prejudice to the
rights of the Lender to enforce its claims against Holdings or the Borrower,
except as otherwise specifically provided for in this Agreement (PROVIDED that
if an Event of Default specified in Section 7.05 shall occur, with respect to
any Credit Party, the result which would occur upon the giving of written notice
by the Lender as specified in clause (i) below shall occur automatically without
the giving of any such notice): (i) declare the principal of and accrued
interest in respect of the Term Loan and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; and/or (ii) enforce any or all of the
remedies created
39
pursuant to the Security Documents. If an Event of Default is cured or waived in
accordance with the terms of the Agreement, it ceases (or is waived, pursuant to
the terms, and to the extent, of such waiver).
SECTION 8. DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms in this Agreement
shall include in the singular number the plural and in the plural the singular:
"ACQUISITION" means the purchase of all of the outstanding shares of
Xxxxxxx Products by the Borrower pursuant to the terms of the Purchase
Agreement.
"ADDITIONAL COLLATERAL" has the meaning provided in Section 5.10.
"ADDITIONAL REAL PROPERTY" has the meaning provided in Section 5.10.
"AFFILIATE" means with respect to any Person, any other Person directly
or indirectly controlling (including but not limited to all directors and
executive officers of such Person), controlled by, or under direct or indirect
common control with such Person. A Person shall be deemed to control a
corporation for the purposes of this definition if such Person possesses,
directly or indirectly, the power (i) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such corporation
or (ii) to direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Credit Agreement, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"ASSET SALE" means the sale, transfer or other disposition, to the
extent consummated after the Closing Date, (x) by Holdings of the Securities of
the Borrower held by it to any Person or (y) by Holdings or any Subsidiary of
Holdings to any Person other than Holdings or any Wholly Owned Subsidiary of
Holdings of any asset of Holdings or such Subsidiary (other than, in each such
case, (i) transactions included in the definition of Net Financing Proceeds,
(ii) the issuance of equity securities under any stock option or other benefit
plan available to the employees or directors of Holdings, the Borrower or any of
its Subsidiaries, (iii) sales, transfers or other dispositions of inventory in
the ordinary course of business and/or of equipment that has become worn out,
obsolete or damaged or otherwise unsuitable or no longer needed for use in
connection with the business of Holdings or any of its Subsidiaries or should be
replaced, as the case may be, in each case as determined in good faith by the
board of directors of Holdings or its Subsidiary, as the case may be, effected
in compliance with Section 6.10(A)(iv) or (v), and (iv) sales or other
dispositions pursuant to Section 6.10(A)(v), (vi) or (vii)).
"AUTHORIZED OFFICER" means any senior officer of the Borrower or
Holdings, as the case may be, designated as such in writing to the Lender by the
Borrower or Holdings, as the case may be.
40
"BANKRUPTCY CODE" has the meaning provided in Section 7.05.
"BORROWER" means Xxxxxx Products Company, a Delaware corporation.
"BORROWER GENERAL SECURITY AGREEMENT" means the Borrower General
Security Agreement substantially in the form of Exhibit E hereto, as the same
may after its execution be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"BORROWER INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the Borrower
Intellectual Property Security Agreement substantially in the form of Exhibit D
hereto, as the same may after its execution be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"BORROWER PLEDGE AGREEMENT" means the Borrower Securities Pledge
Agreement substantially in the form of Exhibit C hereto, except for such changes
therein as shall have been approved by the Lender, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which shall be in The City of New York, Chicago, Illinois or Savannah, Georgia a
legal holiday or a day on which banking institutions are authorized by law or
other governmental actions to close.
"CAPITAL LEASE" of any Person means any lease of any property (whether
real, personal or mixed) by that Person as lessee which, in conformity with
GAAP, is, or is required to be, accounted for as a capital lease on the balance
sheet of that Person, together with any renewals of such leases (or entry into
new leases) on substantially similar terms.
"CAPITALIZED LEASE OBLIGATIONS" of any Person means all obligations
under Capital Leases of such Person or any of its Subsidiaries in each case
taken at the amount thereof accounted for as liabilities in accordance with
GAAP.
"XXXXXX HOLDINGS LIMITED" means a South African majority owned
subsidiary of the Borrower.
"XXXXXX HOLDINGS LIMITED SHARE INCENTIVE TRUST" means the trust
pursuant to which certain additional shares of common stock of Xxxxxx Holdings
Limited may be issued from time to time.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than one year from the date of acquisition, (ii) marketable direct obligations
issued by any State of the United States of America or any local government or
other political subdivision thereof rated (at the time of acquisition of such
security) at least AA by Standard & Poor's Ratings Group ("S&P") or the
equivalent thereof by Xxxxx'x Investors Service, Inc.
41
("Moody's") having maturities of not more than one year from the date of
acquisition, (iii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) any domestic commercial bank of
recognized standing having capital and surplus in excess of $250,000,000 or (y)
any bank whose short-term commercial paper rating (at the time of acquisition of
such security) by S&P is at least A-1 or the equivalent thereof or by Xxxxx'x is
at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in
each case with maturities of not more than six months from the date of
acquisition, (iv) commercial paper and variable or fixed rate notes issued by
any Approved Bank or by the parent company of any Approved Bank and commercial
paper and variable rate notes issued by, or guaranteed by, any industrial or
financial company with a short-term commercial paper rating (at the time of
acquisition of such security) of at least A-1 or the equivalent thereof by S&P
or at least P-1 or the equivalent thereof by Moody's, or guaranteed by any
industrial company with a long-term unsecured debt rating (at the time of
acquisition of such security) of at least AA or the equivalent thereof by S&P or
the equivalent thereof by Moody's and in each case maturing within one year
after the date of acquisition, (v) repurchase agreements with any Approved Bank
or any primary dealer in U.S. government securities maturing within one year
from the date of acquisition that are fully collateralized by investment
instruments that would otherwise be Cash Equivalents; PROVIDED that the terms of
such repurchase agreements comply with the guidelines set forth in the Federal
Financial Institutions Examination Council Supervisory Policy -- Repurchase
Agreements of Depository Institutions With Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985, and (vi)
investments in money market mutual funds, all of the assets of which are
invested in securities and instruments of the types set forth in clauses (i)
through (iv) above.
"CERTIFICATE OF INCORPORATION" means the respective certificates of
incorporation of Holdings or the Borrower and each other Credit Party.
"CHANGE OF CONTROL" has the meaning provided in Section 7.10.
"CLOSING DATE" means the date on or before July 14, 1998 on which this
Agreement is signed and the consummation of the Acquisition occurs.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means all of the Pledged Collateral, Pledged Securities
and Mortgaged Real Property and all Additional Collateral and Additional Real
Property to the extent not otherwise included in any of the foregoing.
"CONTINGENT OBLIGATIONS" means, as to any Person, without duplication,
any obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the
42
owner of any such primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business and amounts that are permitted by Section 6.06. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the maximum
amount that such Person may be obligated to expend pursuant to the terms of such
Contingent Obligation or, if such Contingent Obligation is not so limited, the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"CREDIT DOCUMENTS" means (i) this Agreement, (ii) each Note, (iii) each
Guarantee and (iv) each Security Document.
"CREDIT PARTY" means at all times Holdings and the Borrower and each
Subsidiary of Holdings that pledges any stock, grants any Lien or issues any
Guarantee pursuant to any Credit Document.
"CUTEX MANUFACTURING AGREEMENT" means the manufacturing agreement dated
as of April 30, 1997 between the Borrower and CONOPCO, Inc. d/b/a
Cheseborough-Ponds USA Co., a subsidiary of Unilever plc., relating to the
manufacture by CONOPCO, Inc. of certain products for the Borrower.
"DEFAULT" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"DESTRUCTION" has the meaning assigned to that term in each Mortgage.
"DIVIDENDS" has the meaning provided in Section 6.07.
"DNL AFFILIATES" means Xxxxxxx X. Xxxxx, X. Xxxxxxx Xxxxxxxxxx,
Xxxxxxxx X. Xxxxxxxx, XX and Morningside, in each case together with Affiliates
thereof, any member of the immediate family of any of the foregoing, or any
trust or foundation for the benefit of any of the foregoing.
"DOLLARS" means United States Dollars.
"EFFECTIVE DATE" has the meaning provided in Section 9.09.
"ENVIRONMENT" shall mean any surface water, ground water, drinking
water supply, land surface or subsurface strata or ambient air and includes,
without limitation, any indoor location.
"ENVIRONMENTAL AUTHORIZATIONS" has the meaning provided in Section
4.22.
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign
laws, codes, regulations, ordinances, requirements, directives, orders, common
law, and administrative or judicial interpretations thereof that may be enforced
by any Governmental Authority or court, relating to pollution, the protection of
human health, the protection of the Environment, or the
43
emission, discharge, disposal or other release or threatened release of
Hazardous Materials in or into the Environment.
"ENVIRONMENTAL NOTICE" shall mean any written notice or claim by any
Governmental Authority or other third party alleging liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental costs, compliance costs or harm, injuries or damages to any person,
property or natural resources, or any fines or penalties) arising out of, based
upon, resulting from or relating to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" means any entity, whether or not incorporated, which
is under common control or would be considered a single employer with a Credit
Party within the meaning of Section 414(b), (c) or (m) of the Code and
regulations promulgated under those sections or within the meaning of section
4001(b) of ERISA and regulations promulgated under that section.
"EVENT OF DEFAULT" has the meaning provided in Section 7.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING DEBT" means the Indebtedness of Holdings and its Subsidiaries
set forth on Annex I.
"EXISTING LEASES" means the Leases of Holdings and its Subsidiaries set
forth on Annex XIII.
"FEDERAL FUNDS RATE" means on any one day the weighted average of the
rate on overnight Federal funds transactions with members of the Federal Reserve
System only arranged by Federal funds brokers as published as of such day by the
Federal Reserve Bank of New York, or if not so published, the rate then used by
leading banks in extending overnight loans to other leading banks.
"FINANCING PROCEEDS" means the cash (other than Net Cash Proceeds or
proceeds of any sale, transfer or other disposition of assets excluded from the
definition of "Asset Sale" by the exceptions contained therein) received by
Holdings, the Borrower and/or any of its Subsidiaries, directly or indirectly,
from any financing transaction of whatever kind or nature, including without
limitation from any incurrence of Indebtedness, any mortgage or pledge of an
asset or interest therein (including a transaction which is the substantial
equivalent of a mortgage or pledge), from the sale of tax benefits, from a lease
to a third party and a pledge of the lease payments due thereunder to secure
Indebtedness, from a joint venture arrangement, from an exchange of assets and a
sale of the assets received in such exchange, or any other similar arrangement
or technique whereby Holdings or any of its Subsidiaries obtains Cash in respect
of an asset, net of direct costs associated therewith. Financing Proceeds shall
not include any amounts with respect to (i) the incurrence or refinancing of the
Revolving Credit Facility, (ii) the
44
incurrence or refinancing of Indebtedness permitted by Sections 6.04(a), (b),
(c) and (d) effected in accordance with the applicable provisions of such
Sections, or (iii) transactions between any of the Borrower, Holdings and any
Wholly Owned Subsidiaries of Holdings.
"FINE PRODUCTS" has the meaning provided in Section 4.24.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on the Effective Date.
"GENERAL SECURITY AGREEMENTS" means and includes the Borrower General
Security Agreement, the Xxxxxxx Products General Security Agreement and any
other general security agreements delivered pursuant to Section 5.10.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, foreign or
other governmental or administrative (including self-regulatory) body,
instrumentality, department or agency or any court, tribunal, administrative
hearing body, arbitration panel, commission, or other similar dispute-resolving
panel or body including, without limitation, those governing the regulation and
protection of the Environment, whether now or hereafter in existence, or any
officer or official thereof.
"GUARANTEE" means and includes, once executed and delivered, each of
the Holdings Guarantee, the Xxxxxxx Products Guarantee and each Subsidiary
Guarantee delivered pursuant to Section 5.13.
"GUARANTOR" for purposes of this Agreement means, individually, each of
Holdings and each Subsidiary which executes a Subsidiary Guarantee.
"HAZARDOUS MATERIALS" means all pollutants, contaminants, or chemical,
industrial, hazardous or toxic materials, substances, constituents or wastes,
including, without limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls and petroleum, oil, or petroleum or oil products,
derivatives or constituents, including, without limitation, crude oil or any
fraction thereof.
"HOLDINGS" means Xxxxxx, Inc., a Delaware corporation.
"HOLDINGS GUARANTEE" means the Holdings Guarantee substantially in the
form of Exhibit G hereto, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"HOLDINGS PLEDGE AGREEMENT" means the Holdings Securities Pledge
Agreement substantially in the form of Exhibit C hereto, as the same may after
its execution be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof and hereof.
"INDEBTEDNESS" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, other than current
liabilities in respect of the foregoing, liabilities for accumulated
post-
45
retirement benefit obligations and liabilities for deferred compensation, (iii)
the face amount of all letters of credit issued for the account of such Person
and, without duplication, all drafts drawn and unpaid thereunder, (iv) all
Indebtedness of a second Person secured by any Lien on any property owned by
such first Person, whether or not such Indebtedness has been assumed by such
first Person, (v) all Capitalized Lease Obligations of such Person, (vi) all
obligations of such Person to pay a specified purchase price for goods or
services whether or not delivered or accepted, I.E., take-or-pay and similar
obligations, (vii) all obligations of such Person under Interest Rate Agreements
and (viii) all Contingent Obligations of such Person; PROVIDED that Indebtedness
shall not include trade payables, accrued expenses, accrued dividends and
accrued income taxes, in each case arising in the ordinary course of business.
"INTELLECTUAL PROPERTY" has the meaning provided in Section 4.16.
"INTELLECTUAL PROPERTY SECURITY AGREEMENTS" means and includes the
Borrower Intellectual Property Security Agreement, the Xxxxxxx Products
Intellectual Property Security Agreement and any other intellectual property
security agreements delivered pursuant to Section 5.10.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate option contract or other similar agreement or
arrangement to which the Borrower is a party, designed to protect the Borrower
or any of its Subsidiaries against fluctuations in interest rates.
"INVENTORY" means all of the inventory of the Borrower and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the business of the Borrower and its Subsidiaries;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by the Borrower or any of its
Subsidiaries.
"XXXXXXX PRODUCTS" means Xxxxxxx Products Co., Inc., a Florida
corporation, the outstanding shares of which are being purchased by the Borrower
from the Lender in the Acquisition pursuant to the Purchase Agreement.
"XXXXXXX PRODUCTS GENERAL SECURITY AGREEMENT" means the General
Security Agreement executed by Xxxxxxx Products substantially in the form of
Exhibit E hereto, as the same may after its execution be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof and
hereof.
"XXXXXXX PRODUCTS GUARANTEE" means the Subsidiary Guarantee executed by
Xxxxxxx Products substantially in the form of Exhibit G hereto, as the same may
after its execution be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"XXXXXXX PRODUCTS INTELLECTUAL PROPERTY SECURITY AGREEMENT" means the
Intellectual Property Security Agreement executed by Xxxxxxx Products
substantially in the form of Exhibit D hereto, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
46
"LANDLORD LIEN ASSURANCE" means, with respect to any Real Property
leased by Holdings or any of its Subsidiaries for use as a retail facility or
for the storage of Inventory, either (i) an agreement executed by the landlord
of such Real Property substantially in the form of Exhibit F hereto or (ii) a
legal opinion or other evidence, in each case reasonably satisfactory to the
Lender, that the laws of the jurisdiction or jurisdictions applicable to the
lease and the retail or storage facility do not give rise to any Lien in favor
of the landlord with respect to Inventory located at such facility.
"LEASE" means any lease, sublease, franchise agreement, license,
occupancy or concession agreement.
"LENDER'S OFFICE" means the office of the Lender located at 0000
Xxxxxxxx Xxxxxxxxx, Xxxxx, XX 00000, or such other office as the Lender may
hereafter designate in writing to the Borrower.
"LIEN" means any mortgage, pledge, security interest, encumbrance,
lien, claim, hypothecation, assignment for security or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof).
"LOSS PROCEEDS" has the meaning provided in Section 2.02(A)(c).
"MANAGEMENT AGREEMENT" means the management assistance agreement
between Morningside and the Borrower dated as of August 23, 1995, as amended.
"MATERIALLY ADVERSE EFFECT" means, (i) with respect to Holdings and the
Borrower and its Subsidiaries, any materially adverse effect (both before and
after giving effect to the Refinancing and the Acquisition and the other
transactions contemplated hereby) with respect to the operations, business,
properties, assets, liabilities (contingent or otherwise) or financial condition
or prospects of Holdings and the Borrower and its Subsidiaries, taken as a
whole, or (ii) any fact or circumstance (whether or not the result thereof would
be covered by insurance) as to which singly or in the aggregate there is a
reasonable likelihood of (w) a materially adverse change described in clause (i)
with respect to Holdings and the Borrower and its Subsidiaries, taken as a
whole, (x) the inability of any Credit Party to perform in any material respect
its Obligations or the inability of the Lender to enforce in any material
respect its rights purported to be granted hereunder or the Obligations
(including realizing on the Collateral), or (y) a materially adverse effect on
the ability to effect (including hindering or unduly delaying) the Acquisition,
the Refinancing and the other transactions contemplated hereby on the terms
contemplated hereby and thereby.
"MATURITY DATE" means November 30, 1998.
"MORNINGSIDE" means Morningside Capital Group, L.L.C., a Connecticut
limited liability company.
"MORTGAGE" means a term loan mortgage (or deed of trust or deed to
secure debt, as the case may be), assignment of rents, security agreement and
fixture filing creating and evidencing a Lien on a Mortgaged Real Property,
which shall be substantially in the form of Exhibit B
47
hereto, containing such schedules and including such additional provisions and
other deviations from such Exhibit as shall be necessary to conform such
document to applicable or local law or as shall be customary under applicable or
local law and which shall be dated the date of delivery thereof and made by the
owner (fee or leasehold, as the case may be) of the Mortgaged Real Property
described therein for the benefit of the Lender, as mortgagee (or beneficiary,
as the case may be), assignee and secured party, as the same may after its
execution be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"MORTGAGED REAL PROPERTY" means each Real Property designated on Annex
VI which shall be subject to a Mortgage.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA with respect to which any Credit Party or any of their
respective ERISA Affiliates is or has been required to contribute or otherwise
may have liability.
"NET AWARD" has the meaning assigned to that term in each Mortgage.
"NET CASH PROCEEDS" means:
(a) with respect to any Asset Sale, the aggregate cash payments
received by Holdings, the Borrower and/or any of the Borrower's Subsidiaries, as
the case may be, from such Asset Sale, net of direct expenses of sale paid to
Persons who are not Affiliates; and
(b) with respect to any Taking or Destruction, the Net Award or Net
Proceeds, as applicable, resulting therefrom, to be applied as Net Cash Proceeds
under this Agreement pursuant to the provisions of Sections 1.13.3 and 1.13.4 of
the Mortgages;
PROVIDED, FURTHER, that Net Cash Proceeds shall not include any amounts or items
included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein).
"NET FINANCING PROCEEDS" means Financing Proceeds, net of direct
expenses of the transaction paid to Persons who are not Affiliates.
"NET PROCEEDS" has the meaning assigned to that term in each Mortgage.
"OBLIGATIONS" means all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Lender pursuant to the terms of this Agreement or any other Credit Document or
secured by any of the Security Documents.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or any Assistant Treasurer; PROVIDED that
every Officers' Certificate with respect to compliance with a condition
precedent to the making of any Loan hereunder shall include (i) a statement that
the officers making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, in the opinion of the signers,
48
they have made or have caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signers, such condition has been complied with.
"OPERATING LEASE" of any Person, shall mean any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) by such Person as Lessee which is
not a Capital Lease.
"PARTIAL RELEASE CONDITIONS" has the meaning provided in Section
6.05(C).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"PENSION PLAN" means any pension plan as defined in Section 3(2) of
ERISA (other than a Multiemployer Plan) which is or has been maintained by or to
which contributions are or have been made by any Credit Party or their
respective ERISA Affiliates or as to which any Credit Party or their respective
ERISA Affiliates may have liability.
"PERMITTED ENCUMBRANCES" has the meaning provided in Section 6.03.
"PERSON" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any Governmental Authority.
"PLEDGE AGREEMENTS" means and includes the Holdings Pledge Agreement,
the Borrower Pledge Agreement, and any other securities pledge agreements
(including, without limitation, any supplements or amendments to any of the
foregoing) delivered pursuant to Section 5.10.
"PLEDGED COLLATERAL" means all the Pledged Collateral as defined in
each of the General Security Agreements and in the Intellectual Property
Security Agreements.
"PLEDGED SECURITIES" means all the securities and other collateral in
which a security interest is purported to be granted to the Lender by each of
the Pledge Agreements, including, without limitation, all Pledged Collateral as
defined therein.
"PRIOR LIENS" means (i) Liens which, pursuant to the provisions of any
Security Document, are or may be superior to the Lien of such Security Document
and (ii) Liens on inventory, receivables, assets specifically related thereto
and proceeds thereof and of Holdings, the Borrower and their Subsidiaries to the
extent required by Section 9.15 which secure or will secure the obligations of
Holdings, the Borrower or their Subsidiaries under the Revolving Credit
Facility, which Liens shall be prior to the Lien of the Lender on such
inventory, receivables, assets specifically related thereto and proceeds
thereof.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of June 16,
1998 by and between the Lender, as seller, and the Borrower, as buyer, as the
same may be amended from time to time.
49
"REAL PROPERTY" means all right, title and interest of Holdings or any
of its Subsidiaries (including, without limitation, any leasehold estate) in and
to a parcel of real property owned, leased or operated by Holdings or any of its
Subsidiaries together with, in each case, all of Holdings' or such Subsidiaries'
right, title and interest in and to all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental
to the ownership, lease or operation thereof.
"REFINANCING" has the meaning set forth in the recitals hereto.
"RELEASE" has the meaning provided in Section 6.10(B).
"RELEASE CONDITIONS" has the meaning provided in Section 6.10(B).
"RELEASE NOTICE" has the meaning provided in Section 6.10(B).
"RELEASED REAL PROPERTY" has the meaning provided in Section 6.10(B).
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.
"RESTORATION" has the meaning assigned to that term in each Mortgage.
"REVOLVING CREDIT FACILITY" means a credit facility or facilities to be
entered into on or after the Closing Date by Holdings, the Borrower and/or any
of their Subsidiaries with one or more lenders providing for revolving loans to
Holdings, the Borrower and/or their Subsidiaries, as the same may after its
execution be amended, supplemented, modified, restated, refinanced or replaced
from time to time.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, options, warrants, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
50
"SECURITY DOCUMENTS" means each of the Mortgages, the Pledge
Agreements, the General Security Agreements, the Intellectual Property Security
Agreements and any other documents utilized to pledge as Collateral for the
Obligations any property or assets of whatever kind or nature.
"SENIOR OFFICER" means any of the chief executive officer, chief
financial officer, controller, chief accounting officer, chief operating
officer, treasurer or any executive vice president of Holdings or the Borrower.
"SENIOR SUBORDINATED NOTES" means the 10-3/8% Senior Subordinated Notes
due 2007 of Holdings in an aggregate principal amount of $100,000,000 issued in
November 1997 (and any notes issued in exchange therefor pursuant to an
effective exchange offer registration statement under the Securities Act).
"SOUTH AFRICAN CREDIT AGREEMENT" means a South African inventory and
receivables facility between Xxxxxx Holdings Limited and a South African bank of
up to the equivalent of US$2,000,000 dollars, which shall be nonrecourse to
Holdings and its Subsidiaries other than Xxxxxx Holdings Limited and Xxxxxx
Products (Proprietary) Limited.
"STATE AND LOCAL REAL PROPERTY DISCLOSURE REQUIREMENTS" means any state
or local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to, concurrent with or following the sale of any real property or transfer
of control of an establishment, of the actual or threatened presence or release
into the environment, or the use, disposal, or handling of Hazardous Materials
on, at, under, or near the real property to be sold or the establishment for
which control is to be transferred.
"SUBSIDIARY" of any Person means and includes (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% equity interest at the time.
"SUBSIDIARY GUARANTEE" means each guarantee substantially in the form
of Exhibit H hereto, executed and delivered by a Subsidiary in accordance with
the terms hereof, as the same may after its execution be amended, supplemented
or otherwise modified from time to time in accordance with the terms hereof and
thereof; PROVIDED, HOWEVER, that (subject to change if applicable law is
modified from that in effect on the Closing Date), Xxxxxx Holdings Limited and
its subsidiaries, Xxxxxx U.K., Ltd., Xxxxxx Products do Brasil and any other
direct or indirect subsidiaries of Holdings organized or incorporated in a
jurisdiction other than the United States, any state of the United States or the
District of Columbia shall not be required to execute a Subsidiary Guarantee.
"SURVEY" means a survey of any Mortgaged Real Property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state where such Mortgaged Real Property is located, (ii)
certified by the surveyor (in a manner reasonably
51
acceptable to the Lender) to the Lender and the Title Company and (iii)
complying in all respects with the minimum detail requirements of the American
Land Title Association as such requirements are in effect on the date of
preparation of such survey.
"TAKING" has the meaning assigned to that term in each Mortgage.
"TERM LOAN" has the meaning provided in Section 1.01.
"TERMINATION EVENT" means (i) a "reportable event" described in Section
4043 of ERISA or in the regulations thereunder (excluding events for which the
requirement for notice of such reportable event has been waived by the PBGC)
with respect to a Title IV Plan, or (ii) the withdrawal of any Credit Party or
any of their respective ERISA Affiliates from a Title IV Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (iii) the filing of a notice of intent to terminate a Title IV Plan or
the treatment of a Title IV Plan amendment as a termination under Section 4041
of ERISA, or (iv) the institution of proceedings by the PBGC to terminate a
Title IV Plan or to appoint a trustee to administer a Title IV Plan, or (v) any
other event or condition which might constitute reasonable grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan, or (vi) the complete or partial withdrawal
(within the meaning of Sections 4203 and 4205, respectively, of ERISA) of any
Credit Party or any of their respective ERISA Affiliates from a Multiemployer
Plan, or (vii) the insolvency or reorganization (within the meaning of Sections
4245 and 4241, respectively, of ERISA) or termination of any Multiemployer Plan,
or (viii) the failure to make any payment or contribution to any Pension Plan or
Multiemployer Plan or the making of any amendment to any Pension Plan which
could result in the imposition of a lien or the posting of a bond or other
security.
"TITLE COMPANY" means Ticor Title Insurance or such other title
insurance or abstract company as shall be selected by Holdings or the Borrower
and reasonably acceptable to the Lender.
"TITLE IV PLAN" means any Pension Plan described in Section 4021(a) of
ERISA, and not excluded under Section 4021(b) of ERISA.
"TOTAL VOTING POWER" means the total combined voting power in the
election of directors of all shares of capital stock then outstanding.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York or any other applicable jurisdiction in the United States.
"WHOLLY OWNED SUBSIDIARY" of any Person means any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors' or nominees' qualifying shares or shares
of capital stock required to be owned by foreign nationals under applicable law,
is owned directly or indirectly by such Person.
"WRITTEN" or "IN WRITING" means any form of written communication or a
communication by means of telex, telecopier device, telegraph or cable.
SECTION 9. MISCELLANEOUS.
52
9.01. PAYMENT OF EXPENSES, ETC. Holdings and the Borrower agree to: (i)
pay all reasonable out-of-pocket costs and expenses of the Lender in connection
with the negotiation, preparation, execution and delivery of any amendment,
waiver or consent relating to the Credit Documents and the documents and
instruments referred to therein and in connection with the enforcement of the
Credit Documents and the documents and instruments referred to therein
(including, without limitation, in each case, the reasonable fees and
disbursements of counsel for the Lender with prior notice to Holdings and the
Borrower of the engagement of any counsel); (ii) pay and hold the Lender
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save the Lender harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission (other than to the extent attributable to the Lender) to pay such
taxes; and (iii) indemnify the Lender, its officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses (including, without
limitation, any and all losses, liabilities, claims, damages or expenses arising
under Environmental Laws except with regard to any losses, costs, damages or
expenses under Environmental Laws arising from or relating to acts or omissions
occurring after the Lender takes possession of, uses, operates, manages,
controls or sells the Mortgaged Property provided, however, that such exception
shall apply only to the extent such losses, costs, damages or expenses arise
solely from the gross negligence, bad faith or willful misconduct of the Lender
or of the agents of the Lender) incurred by any of them as a result of, or
arising out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not the Lender is a party thereto)
related to the entering into and/or performance of any Credit Document or the
use of the proceeds of the Term Loan hereunder or the Refinancing or the
consummation of any other transactions contemplated in any Credit Document,
including, without limitation, the reasonable fees and disbursements of counsel
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence, bad faith or
willful misconduct of the Person to be indemnified).
9.02. RIGHT OF SETOFF. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, the Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by the Lender to or for the
credit or the account of any Credit Party against and on account of the
Obligations and liabilities of such Credit Party to the Lender under this
Agreement or under any of the other Credit Documents, and all other claims of
any nature or description arising out of or connected with this Agreement or any
other Credit Document, irrespective of whether or not the Lender shall have made
any demand hereunder.
9.03. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to Holdings or the
Borrower at 00 Xxxx Xxxx, Xxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000,
Attention: Chief Financial Officer, with a copy to Morningside Capital Group,
L.L.C., 0 Xxxxxxxxxxx Xxxxx, Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, Attention:
President, or if
53
to another Credit Party, to its address specified in the other relevant Credit
Documents, as the case may be; if to the Lender, at the Lender's Office; or, at
such other address as shall be designated by any party in a written notice to
the other parties hereto. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective two days after being deposited in the mails, when
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or when sent by telex or telecopier.
9.04. BENEFIT OF AGREEMENT. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto, all future
holders of the Term Note evidencing the Term Loan, and their respective
successors and assigns; PROVIDED that no Credit Party may assign or transfer any
of its interests hereunder without the prior written consent of the Lender; and
PROVIDED, FURTHER, that the Lender may not assign or transfer any of its
interests hereunder without the prior written consent of Holdings and the
Borrower, which consent shall not be unreasonably withheld; provided, that if an
Event of Default occurs, no consent of Holdings or the Borrower shall be
required.
(b) The Lender agrees to keep confidential (and to cause its officers,
directors, employees, agents and representatives to keep confidential) all
information, materials and documents furnished to the Lender (the
"Information"). Notwithstanding the foregoing, the Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the transactions contemplated hereby or the
administration of this Agreement; (ii) to the extent required by applicable laws
and regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Agreement
or any other confidentiality agreement with respect thereto, (B) becomes
available to the Lender on a non-confidential basis from a source other than
Holdings, the Borrower, or any of their respective subsidiaries, officers,
directors, employees, agents or representatives or (C) was available to the
Lender on a non-confidential basis prior to its disclosure to the Lender by the
Borrower, Holdings or any of their respective subsidiaries; (iv) to the extent
the Borrower, Holdings or any of their respective subsidiaries shall have
consented to such disclosure in writing; or (v) in connection with the sale of
any Collateral pursuant to the provisions of any of the Security Documents; or
(vi) to a prospective transferee so long as such prospective transferee shall
enter into a written agreement with the Lender to preserve the confidentiality
of any Information to the extent set forth in this Section 9.04(b).
9.05. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of the Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between any Credit Party and the
Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power, or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of
54
the rights of the Lender to any other or further action in any circumstances
without notice or demand.
9.06. CALCULATIONS; COMPUTATIONS. (a) The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in accordance
with GAAP consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by Holdings to
the Lender).
(b) All computations of interest and fees hereunder shall be made on
the actual number of days elapsed over a year of 365 days.
9.07. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) This
Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each party hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts. Each party further irrevocably consents to
the service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the respective party at its address for notices
pursuant to Section 9.02, such service to become effective 15 days after such
mailing. Each Credit Party hereby irrevocably appoints the Borrower and such
other persons as may hereafter be selected by the Borrower irrevocably agreeing
in writing to serve as its agent for service of process in respect of any such
action or proceeding. Nothing herein shall affect the right of any party to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any party in any other jurisdiction.
(b) Each party hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Credit Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
9.08. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with Holdings, the Borrower
and the Lender.
9.09. EFFECTIVENESS. This Agreement shall become effective on the date
(the "Effective Date") on which Holdings, the Borrower and the Lender shall have
signed a copy hereof (whether the same or different copies).
55
9.10. HEADINGS DESCRIPTIVE. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
9.11. AMENDMENT OR WAIVER. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Borrower and the Lender.
9.12. SURVIVAL. All indemnities set forth herein including, without
limitation, in Section 9.01 shall survive the execution and delivery of this
Agreement and the making of the Term Loan and the repayment of the Obligations.
9.13. WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
9.14. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
9.15. INTERCREDITOR AGREEMENT WITH RESPECT TO REVOLVING CREDIT
FACILITY. The Lender hereby covenants and agrees to negotiate in good faith and
execute in a timely manner an intercreditor agreement, in form and substance
reasonably satisfactory to the Lender, with the agent and/or the lenders under
the Revolving Credit Facility with respect to the priority of the Liens of such
lenders on the inventory, receivables, assets specifically related thereto and
proceeds thereof of Holdings, the Borrower and their Subsidiaries to the extent
reasonably necessary to facilitate the execution of the Revolving Credit
Facility.
[signature pages follow]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
XXXXXX PRODUCTS COMPANY
By: /s/ X. XXXXXXX XXXXXXXXXX
-------------------------------------------
Name: X. Xxxxxxx Stonehouse
Title: Assistant Secretary
XXXXXX, INC.
By: /s/ X. XXXXXXX STONEHOUSE
-------------------------------------------
Name: X. Xxxxxxx Xxxxxxxxxx
Title: Assistant Secretary
Credit Agreement among Xxxxxx Products Company, Xxxxxx, Inc. and IVAX
Corporation.
IVAX CORPORATION
By: /s/ XXXXX X. XXXXXXX
-----------------------------------------
Name: Xxxxx X. Millsp
Title: Senior VP - Corporate Development
ANNEX I
EXISTING DEBT
DEBT REPAID ON OR PRIOR TO CLOSING DATE
ANNEX II
SUBSIDIARIES
ANNEX III
COLLECTIVE BARGAINING AGREEMENTS
ANNEX IV
INSURANCE
ANNEX V
LIENS
ANNEX VI
MORTGAGED REAL PROPERTY
ANNEX VII
LITIGATION
ANNEX VIII
CONSENTS
ANNEX IX
RESTRICTIONS
ANNEX X
ENVIRONMENTAL MATTERS
ANNEX XI
TAXES
ANNEX XII
SCHEDULE OF INTELLECTUAL PROPERTY
ANNEX XIII
SCHEDULE OF EXISTING LEASES
ANNEX XIV
COMPLIANCE WITH LAWS
