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Exhibit 10.26
SENIOR CREDIT AGREEMENT
dated as of
November 25, 1997
among
YOUNG AMERICA CORPORATION,
as Borrower,
THE SUBSIDIARY GUARANTORS named herein,
THE LENDERS named herein
and
BANKERS TRUST COMPANY, as Agent
TABLE OF CONTENTS
Page
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SECTION 1 DEFINITIONS................................................1
1.1 Certain Defined Terms.......................................
1.2 Accounting Terms............................................
1.3 Other Definitional Provisions...............................
SECTION 2 AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES........
2.1 Bridge Loan and Bridge Note.................................
2.2 Term Loan and Term Note.....................................
2.3 Interest on the Loans.......................................
2.4 Fees........................................................
2.5 Prepayments and Payments....................................
2.6 Use of Proceeds.............................................
SECTION 3 CONDITIONS..................................................
3.1 Conditions to Bridge Loan...................................
3.2 Conditions to Term Loan.....................................
SECTION 4 REPRESENTATIONS AND WARRANTIES..............................
4.1 Organization and Good Standing; Capitalization..............
4.2 Authorization and Power.....................................
4.3 No Conflicts or Consents....................................
4.4 Enforceable Obligations.....................................
4.5 Properties; Liens...........................................
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4.6 Financial Condition.........................................
4.7 Full Disclosure.............................................
4.8 No Default..................................................
4.9 Compliance with Contracts, Etc..............................
4.10 No Litigation...............................................
4.11 Use of Proceeds; Margin Stock, Etc..........................
4.12 Taxes.......................................................
4.13 ERISA.......................................................
4.14 Compliance with Law.........................................
4.15 Government Regulation.......................................
4.16 Capital Structure and Subsidiaries..........................
4.17 Intellectual Property.......................................
4.18 Environmental Matters.......................................
4.19 Survival of Representations and Warranties..................
4.20 Permits.....................................................
4.21 Insurance...................................................
4.22 Labor Matters...............................................
4.23 Guarantees..................................................
4.24 Senior Indenture; etc.......................................
4.25 Broker's or Finder's Fees...................................
4.26 Security Interests..........................................
SECTION 5 AFFIRMATIVE COVENANTS.......................................
5.1 Financial Statements and Other Reports......................
5.2 Corporate Existence, Etc....................................
5.3 Payment of Taxes and Claims; Tax Consolidation..............
5.4 Maintenance of Properties; Insurance........................
5.5 Inspection..................................................
5.6 Equal Security for Loans and Notes..........................
5.7 Compliance with Laws, Etc...................................
5.8 Maintenance of Accurate Records, Etc........................
5.9 Take-Out Financing..........................................
5.10 Exchange of Term Notes......................................
5.11 ERISA Compliance............................................
5.12 Register....................................................
5.13 Lenders Meeting.............................................
5.14 Additional Subsidiary Guarantors............................
5.15 Additional Security; Further Assurances; Pledge
of Additional Collateral....................................
SECTION 6 NEGATIVE COVENANTS..........................................
6.1 Indebtedness................................................
6.2 Liens.......................................................
6.3 Restricted Payments.........................................
6.4 Investments; Joint Ventures.................................
6.5 Contingent Obligations......................................
6.6 Senior Indebtedness.........................................
6.7 Restriction on Fundamental Changes..........................
6.8 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries......................................
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6.9 Transactions with Shareholders and Affiliates...............
6.10 Subsidiary Stock............................................
6.11 Business Activities.........................................
6.12 Amendments to Charter Documents.............................
6.13 Refinancing of the Loans in Part............................
6.14 Asset Sales.................................................
6.15 Transfer of Assets to Subsidiaries..........................
SECTION 7 EVENTS OF DEFAULT...........................................
7.1 Failure To Make Payments When Due...........................
7.2 Default in Other Agreements.................................
7.3 Breach of Certain Covenants.................................
7.4 Breach of Warranty..........................................
7.5 Other Defaults Under Agreement or Loan Documents............
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc.......
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.........
7.8 Judgments and Attachments...................................
7.9 Dissolution.................................................
7.10 Guarantee...................................................
SECTION 8 THE AGENT...................................................
8.1 Appointment.................................................
8.2 Delegation of Duties........................................
8.3 Exculpatory Provisions......................................
8.4 Reliance by Agent...........................................
8.5 Notice of Default...........................................
8.6 Non-Reliance on Agent and Other Lenders.....................
8.7 Indemnification.............................................
8.8 Agent in Its Individual Capacity............................
8.9 Resignation of the Agent; Successor Agent...................
SECTION 9 GUARANTEE...................................................
9.1 Unconditional Guarantee.....................................
9.2 Severability................................................
9.3 Release of a Subsidiary Guarantor...........................
9.4 Limitation of Subsidiary Guarantor's Liability..............
9.5 Subsidiary Guarantors May Consolidate,
etc., on Certain Terms......................................
9.6 Contribution................................................
9.7 Waiver of Subrogation.......................................
9.8 Evidence of Guarantee.......................................
9.9 Waiver of Stay, Extension or Usury Laws.....................
SECTION 10 MISCELLANEOUS...............................................
10.1 Representation of the Lenders...............................
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10.2 Participations in and Assignments of Loans and Notes........
10.3 Expenses....................................................
10.4 Indemnity...................................................
10.5 Setoff......................................................
10.6 Amendments and Waivers......................................
10.7 Independence of Covenants...................................
10.8 Entirety....................................................
10.9 Notices.....................................................
10.10 Survival of Warranties and Certain Agreements...............
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative.......
10.12 Severability................................................
10.13 Headings....................................................
10.14 Applicable Law..............................................
10.15 Successors and Assigns; Subsequent Holders of Notes.........
10.16 Counterparts; Effectiveness.................................
10.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial........
10.18 Payments Pro Rata...........................................
10.19 Taxes.......................................................
10.20 Waiver of Stay, Extension or Usury Laws.....................
10.21 Requirements of Law.........................................
10.22 Confidentiality.............................................
SCHEDULES
A EXISTING LIENS
B SUBSIDIARIES
C ERISA
D EXISTING INVESTMENTS
E INTELLECTUAL PROPERTY
F ENVIRONMENTAL MATTERS
G PERMITS
H BROKER FEES
I EXISTING INDEBTEDNESS
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF TERM NOTE
III FORM OF COMPLIANCE CERTIFICATE
IV-A FORM OF NOTICE OF BORROWING
IV-B FORM OF NOTICE OF CONVERSION
V TERM SHEET FOR REGISTRATION RIGHTS AGREEMENT
VI-A FORM OF OPINION OF X'XXXXXXXX GRAEV & KARABELL, LLP -
COUNSEL FOR THE BORROWER AND THE SUBSIDIARY
GUARANTORS
VI-B FORM OF OPINION OF XXXXXX, XXXXXXXX AND XXXXXX,
P.A. - MINNESOTA COUNSEL FOR THE BORROWER AND
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THE SUBSIDIARY GUARANTORS
VII FORM OF OPINION OF XXXXXX XXXXXX & XXXXXXX -
COUNSEL FOR THE LENDERS
VIII FORM OF NOTATION OF GUARANTEE
IX FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
X FORM OF STOCK PLEDGE AND SECURITY AGREEMENT
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This Senior Credit Agreement is dated as of November 25, 1997, and
entered into by and among Young America Corporation, a Minnesota corporation
(the "Company"), the Subsidiary Guarantors named on the signature pages hereto,
the Lenders named on the signature pages hereto (the "Lenders") and Bankers
Trust Company ("BTCo"), as agent for the Lenders (in such capacity, the
"Agent").
RECITALS
WHEREAS, the Company desires that the Lenders extend a senior credit
facility to the Company in connection with the Recapitalization (definition to
come);
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Adjusted Net Assets" shall have the meaning provided in Section
9.6.
"Affiliate," as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise, or (ii) the ownership of more than 10% of the voting
securities of that Person; provided that none of BTNY or any of its Affiliates
shall be treated as an Affiliate of the Company or of any Subsidiary of the
Company.
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"Agent" has the meaning ascribed to such term in the introduction to
this Agreement.
"Agreement" means this Senior Credit Agreement dated as of November
25, 1997, as it may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof.
"Amount of Unfunded Benefit Liability" means, with respect to any
Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a)(18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(l)(7) of the
Internal Revenue Code) or the actuarial present value of the accrued benefits
with respect to such Pension Plan over (b) the market value of the assets of
such Pension Plan.
"Applicable Rate" means for each Quarterly Period, the LIBOR Rate
then in effect.
"Applicable Spread" means 6.0% for the period from and including the
Closing Date and to but excluding the last day of the Quarterly Period in which
the Closing Date occurs and for each subsequent Quarterly Period the Applicable
Spread in effect for the immediately preceding Quarterly Period plus .50%.
Notwithstanding the foregoing, from December 15, 1997 until such time as the
requirements of Section 5.1(xv) are met, the Applicable Spread shall be
increased by an additional .50%.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, lease, assignment, transfer or other disposition for value
(including, without limitation, pursuant to any amalgamation, merger or
consolidation or pursuant to any sale-and-leaseback transaction) by the Company
or by any of its Subsidiaries to any Person other than the Company or any of its
Wholly-Owned Subsidiaries (any such transaction, a "disposition") of (i) any of
the stock of any of the Company's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of the Company or of any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of the
Company or of any of its Subsidiaries; excluding (a) any disposition of Cash
Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or the lease or sublease of any real or personal property in the
ordinary course of business and (b) any disposition of stock or assets in any
single transaction or related series of transactions the aggregate value of
which is equal to $250,000 or less.
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"Bankruptcy Law" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute or any
other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation, winding
up, dissolution or reorganization, or appointing a custodian of a debtor or of
all or any substantial part of a debtor's property, or providing for the
staying, arrangement, adjustment or composition of indebtedness or other relief
of a debtor.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any duly authorized committee of that Board.
"Bridge Loan" means, collectively, the loans made by the Lenders
pursuant to Section 2.1A.
"Bridge Loan Commitment" means the commitment of the Lenders to make
the Bridge Loan as set forth in Section 2.1A.
"Bridge Notes" has the meaning ascribed to such term in Section
2.1D.
"BTNY" means Bankers Trust New York Corporation.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of New York, New York or is a day on
which banking institutions therein located are authorized or required by law or
other governmental action to close.
"Capital Lease," as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
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"Capitalized Lease Obligation" means obligations under a Capital
Lease and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or Xxxxx'x Investors Service,
Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250.0 million; (v) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; and (vi) investments in money
market funds which invest substantially all their assets in securities of the
types described in clauses (i) through (v) above.
"Cash Proceeds" means, with respect to any Asset Sale, cash payments
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when so
received) received from such Asset Sale.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group"), together with any Affiliates
thereof; (ii) the approval by the holders of Capital Stock of the Company of any
plan or proposal for the liquidation or dissolution of the Company; (iii) any
Person or Group (other than the Permitted Holders) shall become the owner,
directly or indirectly, beneficially
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or of record, of shares representing more than 35% of the Voting Stock of the
Company, unless at such time the Permitted Holders beneficially own (within the
meaning of Rule 13d-3 and 13d-5 under the Exchange Act) in the aggregate, not
less than a majority of such Voting Stock of the Company; (iv) the replacement
of a majority of the Board of Directors of the Company over a two-year period
from the directors who constituted the Board of Directors of the Company at the
beginning of such period, and such replacement shall not have been approved
either in accordance with the shareholder's agreement or by a vote of at least a
majority of the Board of Directors of the Company then still in office who
either were members of such Board of Directors at the beginning of such period
or whose election as a member of such Board of Directors was previously so
approved, unless at such time the Permitted Holders beneficially own (within the
meaning of Rule 13d-3 and 13d-5 under the Exchange Act) in the aggregate, not
less than a majority of the Voting Stock of the Company; or (v) prior to the
Conversion Date, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of the shares of Voting Stock of the Company beneficially owned by
the Permitted Holders on the Closing Date.
"Change of Control Date" has the meaning ascribed to such term in
Section 2.5A(iv).
"Change of Control Offer" has the meaning ascribed to such term in
Section 2.5A(iv).
"Closing Date" means the date on or before November 25, 1997 on
which the initial Bridge Loan is made and the conditions set forth in Section
3.1 are satisfied or waived in accordance with Section 10.6.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Closing Date or issued after the Closing Date, and includes, without limitation,
all series and classes of such common stock.
"Company" has the meaning ascribed to such term in the introduction
to this Agreement.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit III delivered to the Agent by the Company pursuant to Section
5.1(iv)(b).
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"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the net income (or loss) of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (a) the net income of any other Person in which such
Person or any of its Subsidiaries has an interest (which interest does not cause
the net income of such other Person to be consolidated with the net income of
such Person and its Subsidiaries in accordance with GAAP) shall be included only
to the extent of the amount of dividends or distributions actually paid to such
Person or such Subsidiary by such other Person during such period; (b) the net
income of any Subsidiary of such Person that is subject to any Payment
Restriction shall be excluded to the extent such Payment Restriction would
prevent the payment of an amount that otherwise could have been paid to such
Person or to a Subsidiary of such Person not subject to any Payment Restriction;
and (c) there shall be excluded (i) the net income (or loss) of any other Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition, (ii) all after-tax gains and losses realized on any Asset
Sale (without regard to the $250,000 threshold set forth in the definition of
Asset Sale), (iii) after-tax income or losses attributable to discontinued
operations (including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued), (iv) all
after-tax gains and losses realized on the purchase or other acquisition by such
Person or any of its Subsidiaries of any Securities of such Person or any of its
Subsidiaries and (v) all other after-tax extraordinary gains and losses.
"Contested Claim" means any Tax, Indebtedness or other claim or
liability (i) the validity or amount of which is being diligently contested in
good faith, (ii) for which adequate reserve, or other appropriate provision, if
any, as required in conformity with GAAP shall have been made, and (iii) with
respect to which any right to execute upon or sell any assets of the Company or
of any of its Subsidiaries has not matured or has been and continues to be
effectively enjoined, superseded or stayed.
"Contingent Obligation," as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with respect
to any Indebtedness, lease, dividend or other obligation of another if the
primary purpose or intent thereof by the Person incurring the Contingent
Obligation is to provide assurance to the obligee of such obligation of another
that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account of
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that Person or as to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise) or (Y) to maintain the solvency or any balance sheet item, level
of income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited. Contingent Obligations shall not
include obligations in respect of performance or other surety bonds incurred, to
the extent required by applicable law, in connection with the Company's
sweepstakes management service.
"Contractual Obligation", as applied to any Person, means any
obligation of that Person under any Security issued by that Person or any
indenture, mortgage, deed of trust, contract, legally binding undertaking,
agreement or other instrument to which that Person is a party.
"Controlled Group" means (i) a controlled group of corporations as
defined in Section 1563(a) of the Internal Revenue Code or (ii) a group of
trades or businesses under common control, as defined in Section 414(c) of the
Internal Revenue Code, of which the Company or any of its Subsidiaries is a part
or becomes a part.
"Conversion Date" means the one year anniversary of the Closing Date
or such later date to which the Conversion Date may be deferred pursuant to
Sections 3.2B, 3.2C or 3.2D.
"Covered Taxes" has the meaning ascribed to it in Section 10.19.
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"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator or similar official charged
with maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Demand Take-Out Notes" means unsecured senior notes of the Company
issued under an indenture substantially similar to the Senior Indenture the
proceeds of which shall be used to repay the Bridge Notes in whole or in part,
which Demand Take-Out Notes shall be guaranteed by each entity that guarantees
on an unsecured basis the Bridge Loan.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except upon the occurrence of a Change
of Control), in whole or in part, on or prior to the final maturity date of the
Notes, or (ii) is convertible into or exchangeable for (whether at the option of
the issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) above, in each case at any time prior to the final maturity
of the Notes; provided that only the portion of Capital Stock which so matures
or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such final maturity date
shall be deemed to be Disqualified Capital Stock.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"EBITDA" means, with respect to any Person, for any period, the
Consolidated Net Income of such Person for such period, plus, in each case to
the extent deducted in computing Consolidated Net Income of such Person for such
period (without duplication), (i) provisions for income taxes or similar charges
recognized by such Person and its consolidated Subsidiaries, (ii) depreciation
and amortization expense of such Person and its consolidated Subsidiaries (but
only to the extent not included in Fixed Charges), (iii) Fixed Charges of such
Person and its consolidated Subsidiaries, (iv) the amount of any restructuring
reserve or charge in accordance with GAAP,
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including any such reserve or charge related to the Transactions, (v) any other
non-cash charges reducing Consolidated Net Income (excluding, except to the
extent provided in clauses (iv) and (vi)(y) of this definition, any such charge
which requires an accrual of or a cash reserve for anticipated cash charges for
any future period) and (vi) fees paid pursuant to Section 2.4, less, without
duplication, (x) non-cash items increasing Consolidated Net Income of such
Person for such period (excluding any such items representing an accrual of
anticipated cash receipts in a future period) in each case determined in
accordance with GAAP and (y) the amount of all cash payments made by such Person
or its Subsidiaries during such period to the extent that such cash payment has
been provided for in a restructuring reserve or charge referred to in clause
(iv) above (and was not otherwise deducted in the computation of Consolidated
Net Income of such Person for any period).
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States of America or any state thereof; (ii) a savings
and loan association or savings bank organized under the laws of the United
States or any state thereof; (iii) a commercial bank organized under the laws of
any other country or a political subdivision thereof; provided that (x) such
bank is acting through a branch or agency located in the United States or (y)
such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country; and (iv) any other entity which is an "accredited investor" (as
defined in Regulation D under the Securities Act of 1933) which extends credit
or buys loans as one of its businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is reasonably acceptable to the Agent; and
(B) any Lender and any Affiliate of any Lender.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA (i) which is, or, at any time within the five calendar
years immediately preceding the date hereof, was at any time, maintained or
contributed to by the Company or its Subsidiaries or any of their respective
ERISA Affiliates or (ii) with respect to which the Company or its Subsidiaries
retains any liability, including any potential joint and several liability as a
result of an affiliation with an ERISA Affiliate or a party that would be an
ERISA Affiliate except for the fact the affiliation ceased more than five
calendar years prior to the date hereof.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise)
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by any governmental authority or any Person for any response or corrective
action, any damage, including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, in each case arising under
any Environmental Law, including without limitation, relating to, resulting from
or in connection with Hazardous Materials and relating to the Company, any of
its Subsidiaries or any of their respective properties or predecessors in
interest.
"Environmental Laws" means the common law and all statutes,
ordinances, orders, rules, regulations, plans, policies or decrees and the like
relating to (i) environmental matters, including, without limitation, those
relating to fines, injunctions, penalties, damages, contribution, cost recovery
compensation, losses or injuries resulting from the Release or threatened
Release of Hazardous Materials, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air
Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. ss. 136 et seq.), the Occupational Safety and Health Act (29 U.S.C. ss.
651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42
U.S.C. ss. 11001 et seq.), each as amended or supplemented, and any analogous
future or present statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of determination.
"Environmental Lien" means a Lien in favor of a Tribunal or other
Person (i) for any liability under an Environmental Law or (ii) for damages
arising from or costs incurred by such Tribunal or other Person in response to a
release or threatened release of hazardous or toxic waste, substance or
constituent into the environment.
"Equity Financing" shall mean the issuance and sale by the Company
on the Closing Date of Common Stock of the Company generating gross cash
proceeds of not less than $38.5 million.
16
"Equity Financing Documents" shall mean each of the documents
related to the consummation of the Equity Financing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time within the five calendar years
immediately preceding the date hereof, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; (ii) any trade or business
(whether or not incorporated) which is, or was at any time within the five
calendar years immediately preceding the date hereof, a member of a group of
trades or businesses under common control within the meaning of Section 414(c)
of the Internal Revenue Code of which that Person is, or was at any time within
the five calendar years immediately preceding the date hereof, a member; and
(iii) any member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is, or was at any time within the five calendar years immediately
preceding the date hereof, a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates from any Pension Plan with two or more contributing sponsors or
the termination of any such Pension Plan resulting in liability pursuant to
Sections 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings
to terminate any Pension Plan, or the occurrence of any event or condition which
might reasonably be expected to constitute grounds under ERISA for the
17
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the
withdrawal by the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by the Company or any of its
Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to
Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated
under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or
omission which could reasonably be expected to give rise to the imposition on
the Company or any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409 or 502(c), (i) or (l) or 4071 of
ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material
claim (other than routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or against the Company or
any of its Subsidiaries or any of their respective ERISA Affiliates in
connection with any such Employee Benefit Plan; (x) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Exchange Notes" has the meaning ascribed to it in Section 5.10(ii).
"Exchange Request" has the meaning ascribed to it in Section 5.10.
"Existing Credit Agreement" means the credit facility provided to
the Company and certain Subsidiaries
18
pursuant to the Credit Agreement dated as of June 9, 1997 among the Company, the
Subsidiaries named therein, the financial institutions party thereto, and
Norwest Bank Minnesota N.A. as Agent, as amended.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company, its
Subsidiaries or any of their respective predecessors in interest.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent.
"Fee Letter" means the letter agreement dated the date hereof
between the Company and BTNY pursuant to which the Company committed to pay BTNY
certain fees.
"Fixed Charge Coverage Ratio" means, with respect to any Person, the
ratio of (1) EBITDA of such Person during the four full fiscal quarters
(determined based on a fiscal year ending December 31) (the "Four Quarter
Period") ending on or prior to the date of the transaction giving rise to the
need to calculate the Fixed Charge Coverage Ratio (the "Transaction Date") to
(2) the aggregate Fixed Charges of such Person for the Four Quarter Period. In
addition to and without limitation of the foregoing, for purposes of this
definition, "EBITDA" and "Fixed Charges" shall be calculated after giving effect
on a pro forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Subsidiaries (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, at any time subsequent to the first day
of the Four Quarter Period and on or prior to the Transaction Date (the
"Reference Period"), (ii) any Investment, during the Reference Period, in any
other Person that, as a result of such Investment, becomes a Subsidiary of such
Person, (iii) the acquisition, during the Reference Period (by
19
merger, consolidation or purchase of stock or assets) of any business or product
or service line, (iv) the sale or other disposition (whether by merger,
consolidation or sale of stock or assets) of any business or product or service
line occurring during the Reference Period, in each case as if such incurrence,
repayment, Investment, acquisition or sale had occurred on the first day of the
Reference Period including giving effect from such first day to the related
addition or elimination of any EBITDA (including any pro forma expense and cost
reductions and other operating improvements as determined in good faith by a
responsible financial or accounting officer of the Company and as approved by
the Agent) attributable to the business or product or service line that is the
subject of such acquisition or sale and (v) expense and cost adjustments related
to the Recapitalization, as approved by the Agent. If such Person or any of its
Subsidiaries directly or indirectly guarantees any Indebtedness of a third
Person, the Fixed Charge Coverage Ratio shall give effect to the incurrence of
such Indebtedness as if such Person or Subsidiary had directly incurred such
guaranteed Indebtedness.
"Fixed Charges" means, with respect to any Person, for any period,
the aggregate amount of (i) interest expense (determined in accordance with
GAAP) in respect of all Indebtedness of such Person and its consolidated
Subsidiaries (including (a) amortization of original issue discount on any
Indebtedness, but excluding amortization of debt issuance costs, and (b) the
interest portion of all deferred payment obligations, calculated in accordance
with the effective interest method, in each case to the extent attributable to
such period, but excluding amortization of debt issuance costs) and (ii) the
amount of all dividend payments on any series of Capital Stock of such Person
and its consolidated Subsidiaries (other than dividends payable in shares of
Qualified Capital Stock) paid, accrued or scheduled to be paid or accrued during
such period and excluding items eliminated in consolidation. For purposes of
this definition, (a) interest on a Capitalized Lease Obligation shall be deemed
to accrue in accordance with GAAP, (b) interest on Indebtedness that is
determined on a fluctuating basis shall be deemed to have accrued at a fixed
rate per annum equal to the rate of interest of such Indebtedness in effect on
the date Fixed Charges are being calculated and (c) Fixed Charges shall be
increased or reduced by the net cost (including amortization of discount) or
benefit associated with Interest Rate Agreements attributable to such period.
For purposes of clause (ii) above, dividend payments shall be increased to an
amount representing the pretax earnings that would be required to cover such
dividend payments; accordingly, the increased amount shall be equal to a
fraction, the numerator of which is the amount of such dividend requirements and
the
20
denominator of which is one (1) minus the applicable actual combined federal,
state, local and foreign income tax rate of such Person and its subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Fixed Charges.
"Fixed Rate" has the meaning ascribed to it in Section 2.3(A)(ii).
"Fixed Rate Loans" means Loans described in Section 2.3A(ii).
"Floating Rate Loans" means Loans described in Section 2.3A(i).
"Funding Subsidiary Guarantor" has the meaning ascribed to it in
Section 9.6.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board and which are consistently applied for all periods after the date hereof
so as to properly reflect the financial conditions, and the results of
operations and changes in financial position, of the Company and its
Subsidiaries, except that any accounting principle or practice required to be
changed in order to continue as a generally accepted accounting principle or
practice may be so changed.
"Guarantees" means, collectively, the guarantees delivered to the
Lenders by the Subsidiary Guarantors pursuant to Section 9 which are evidenced
by notations of guarantee substantially in the form of Exhibit VIII.
"Hazardous Materials" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) asbestos in any
form; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any
21
oil or dielectric fluid containing levels of polychlorinated biphenyls in excess
of fifty parts per million; (ix) pesticides; and (x) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to human health
or safety or the environment.
"Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation (and "Incurrence," "Incurred," "Incurrable" and "Incurring"
shall have meanings correlative to the foregoing); provided that any amendment,
modification or waiver of any document pursuant to which Indebtedness was
previously Incurred shall only be deemed to be an Incurrence of Indebtedness if
and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate payable thereon or (ii) changes to an earlier
date the stated maturity thereof or the date of any scheduled or required
principal payment thereon or the time or circumstances under which such
Indebtedness shall be redeemed; provided, further, that any Indebtedness of a
Person existing at the time such Person becomes a Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary of the
Company.
"Indebtedness" means, with respect to any Person, (i) all
indebtedness, obligations and liabilities of such Person for borrowed money,
(ii) Capitalized Lease Obligations, (iii) notes payable and drafts accepted
representing extensions of credit, whether or not representing obligations for
borrowed money, of such Person, (iv) any indebtedness, obligation or liability
of such Person owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA),
which purchase price is (a) due more than six months (or a longer period of up
to one year, if such terms are available from suppliers in the ordinary course
of business) from the date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument, except that
"Indebtedness" shall not include trade payables and accrued liabilities Incurred
in the ordinary course of business for the purchase of goods or services which
are not secured by a Lien other than a Permitted Encumbrance and obligations
under Interest Rate Agreements and Currency Agreements (which constitute
Contingent Obligations, not Indebtedness), (v) all indebtedness, obligations and
liabilities secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall
22
have been assumed by that Person or is nonrecourse to the credit of that Person,
the amount of such Indebtedness being the lesser of the fair market value of
such property or asset or the amount of the Indebtedness so secured, (vi)
guarantees of such Person in respect of Indebtedness of other Persons and (vii)
all Disqualified Capital Stock issued by such Person with the amount of
Indebtedness represented by such Disqualified Capital Stock being equal to the
greater of its voluntary or involuntary liquidation preference and its maximum
fixed repurchase price, but excluding accrued dividends, if any. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Disqualified Capital Stock, such fair
market value to be determined reasonably and in good faith by the board of
directors of the issuer of such Disqualified Capital Stock. Indebtedness shall
not include obligations in respect of performance or other surety bonds incurred
to the extent required by applicable law in connection with the Company's
sweepstakes management service.
"Indemnified Liabilities" has the meaning ascribed to such term in
Section 10.4.
"Indemnitees" has the meaning ascribed to such term in Section 10.4.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Company as currently conducted that are material
to the condition (financial or otherwise), business, operations or prospects of
the Company and its Subsidiaries, taken as a whole.
"Intercompany Indebtedness" means any Indebtedness of the Company or
any Subsidiary of the Company which, in the case of the Company, is owing to any
Wholly-Owned Subsidiary of the Company and which, in the case of any such
Subsidiary, is owing to the Company or any Wholly-Owned Subsidiary of the
Company; provided that if as of any date
23
any Person other than the Company or a Wholly-Owned Subsidiary of the Company
owns or holds such Indebtedness, or holds any Lien in respect thereof, such
Indebtedness shall no longer be Intercompany Indebtedness permitted to be
Incurred pursuant to Section 6.1(v).
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its Subsidiaries
against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to any
Quarterly Period, the second Business Day on which banks in New York and London
are open prior to the first Business Day of such Quarterly Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor code or statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition of, or of a beneficial interest in, any Securities of any other
Person or (ii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit or
capital contribution to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales or the provision of services to that other Person in the
ordinary course of business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups (including
pursuant to the equity method of accounting therefor), write-downs or write-offs
with respect to such Investment reduced by the payment of dividends or
distributions in connection with such Investment or any other amounts received
in respect of such Investment.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that, as to any such arrangement in corporate form, such corporation shall not,
as to any Person of which such corporation is a Subsidiary, be considered to be
a Joint Venture to which such Person is a party.
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, orders, judgments, writs, injunctions or decrees of any state,
commonwealth, nation, territory, possession, province, county, parish, town,
24
township, village, municipality or Tribunal, and "Law" means each of the
foregoing.
"Lenders" has the meaning ascribed to that term in the introduction
to this Agreement and shall include any permitted assignee of any Loan, Note or
Loan Commitment to the extent of such assignment.
"LIBOR Rate" means the rate determined on the basis of the offered
rates for deposits in U.S. Dollars for a period of three months which appear on
the Reuters Screen LIBO Page as of 11:00 a.m., London time, on the Interest Rate
Determination Date for such Quarterly Period. If at least two rates appear on
the Reuters Screen LIBO Page, the rate for such Quarterly Period will be the
arithmetic mean of such rates rounded upwards, if necessary, to the nearest 1/16
of 1%. If fewer than two rates appear on the Reuters Screen LIBO Page, then such
rate shall equal the arithmetic mean (rounded upward to the nearest 1/16 of 1%)
of the interest rates per annum at which deposits in U.S. Dollars for a period
of three months are offered by BTCo or its designee reasonably acceptable to the
Company at approximately 11:00 a.m., London time, on such Interest Rate
Determination Date to first class banks in the London interbank market.
"Lien" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
"Litigation" means any action, suit, proceeding, claim, lawsuit
and/or investigation conducted or threatened by or before any Tribunal.
"Loan Commitment" means the Bridge Loan Commitment and the Term Loan
Commitment.
"Loan Documents" means this Agreement, the Bridge Notes, the Term
Notes, the Guarantees, the Exchange Notes, the Registration Rights Agreement and
the Stock Pledge and Security Agreement.
"Loans" means the Bridge Loan and the Term Loan as each may be
outstanding.
"Margin Stock" has the meaning assigned to that term in Regulation U
and Regulation G of the Board of Governors of the Federal Reserve System as in
effect from time to time.
25
"Material Adverse Change" means a material adverse change in the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets, condition (financial or otherwise)
or prospects of the Company and its Subsidiaries, taken as a whole, or (ii) the
impairment of the ability of the Company and its Subsidiaries, taken as a whole,
to perform in any material respect, or the impairment of the ability of the
Agent or Lenders to enforce in any material respect, the Obligations.
"Material Subsidiary" means, with respect to any accounting period,
any Subsidiary of the Company (i) whose revenues constitute greater than 10% of
the aggregate dollar value of the revenues of Company and its Subsidiaries,
taken as a whole, for such accounting period or (ii) the fair market value of
whose assets at any time during such accounting period is greater than 10% of
the fair market value of all of the assets of Company and its Subsidiaries at
such time.
"Maximum Cash Interest Rate" means an interest rate of 14% per
annum; provided that in computing such interest rate, fees paid to the Lenders
shall not be deemed an interest payment.
"Multiemployer Plan" means a Pension Plan which is a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including, but
not limited to, (i) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions), (ii) taxes reasonably estimated to be
actually payable as a result of such Asset Sale within two years of the date of
such Asset Sale and (iii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on any Indebtedness that is required to
be repaid as a result of such Asset Sale (whether because such Indebtedness is
secured by a Lien on the stock or assets in question, because the terms of such
Indebtedness so provide or because repayment is required in order to obtain any
required consent to such Asset Sale by the holder of such Indebtedness) and (iv)
appropriate amounts to be provided by the Company or any of its Subsidiaries, as
the case may be, as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale and retained by the Company or any Subsidiary,
as the case may be, after
26
such Asset Sale, including, without limitation, liabilities under any
indemnification obligations associated with such Asset Sale.
"Notes" means, collectively, the Bridge Notes and the Term Notes.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit IV-A with respect to a proposed borrowing.
"Notice of Conversion" means a notice substantially in the form of
Exhibit IV-B with respect to a proposed conversion.
"Obligations" means all obligations of every nature of the Company
from time to time owed to the Lenders and the Agent under the Loan Documents,
whether for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance).
"Offer Payment Date" has the meaning ascribed to such term in
Section 2.5A(iv).
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Controller, any Assistant
Controller, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of each of the Company and the Subsidiary Guarantors.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two Officers; provided
that every Officers' Certificate with respect to the compliance with a condition
precedent to the making of the Loans hereunder shall include (i) a statement
that the officer or 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, 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.
"Other Taxes" has the meaning ascribed to such term in Section
10.19.
"Payment Office" shall mean the office of the Agent located at One
Bankers Trust Plaza, New York, New York
27
10006 or such other office as the Agent may designate to the Company and the
Lenders from time to time.
"Payment Restriction" has the meaning ascribed to such term in
Section 6.8.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA which is subject to the provisions of Title IV of ERISA
and which is maintained for employees of the Company, any Subsidiary of the
Company or any member of the Controlled Group.
"Permits" has the meaning ascribed to such term in Section 4.20.
"Permitted Encumbrances" means (i) Liens existing on the Closing
Date set forth on Schedule A to the extent and in the manner such Liens are in
effect on the Closing Date ("Prior Liens"); (ii) Liens for taxes, assessments or
governmental charges or claims the payment of which is not, at the time,
required by Section 5.3; (iii) statutory Liens of landlords and banks and rights
of offset, and Liens of carriers, warehousemen, workmen, repairmen, mechanics
and materialmen and other Liens imposed by law incurred in the ordinary course
of business for sums not yet delinquent or being contested in good faith, if
such reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor; (iv) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, including Liens
securing letters of credit issued in the ordinary course of business in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts, trade
contracts, utility payments, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money); (v) any attachment or judgment Lien not constituting an Event of
Default; (vi) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of the Company and
its Subsidiaries, taken as a whole; (vii) easements, rights-of-way,
restrictions, minor defects, encroachments or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of the Company and its Subsidiaries, taken as a
whole; (viii) any (a) interest or title of a lessor or sublessor under any
lease, (b) restriction or encumbrance that the interest or title of such lessor
or
28
sublessor may be subject to (including without limitation ground leases or other
prior leases of the demised premises, mortgages, mechanics liens, tax liens, and
easements), or (c) subordination of the interest of the lessee or sublessee
under such lease to any restrictions or encumbrance referred to in the preceding
clause (b); (ix) Liens arising from filing UCC financing statements for
precautionary purposes relating solely to true leases of personal property
permitted by this Agreement under which the Company or any of its Subsidiaries
is a lessee; (x) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; (xi) any zoning or similar law or right reserved to or
vested in any governmental office or agency to control or regulate the use of
any real property; (xii) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating, reciprocal
easement or similar agreements entered into in the ordinary course of business
of the Company and its Subsidiaries; (xiii) Liens upon specific items of
inventory or other goods and proceeds of any Person securing such Person's
obligations in respect of bankers' acceptances issued or created for the account
of such Person to facilitate the purchase, shipment or storage of such inventory
or other goods; (xiv) Liens securing reimbursement obligations with respect to
letters of credit which encumber documents and other property relating to such
letters of credit and the products and proceeds thereof; (xv) Liens encumbering
customary initial deposits and margin deposits, and other Liens incurred in the
ordinary course of business that are within the general parameters customary in
the industry, in each case securing obligations under Interest Rate Agreements,
Currency Agreements or forward contracts, option futures contracts, futures
options or similar agreements or arrangements designed to protect the Company or
any Subsidiary from fluctuations in the price of commodities; (xvi) Liens
arising out of consignment or similar arrangements for the sale of goods entered
into by the Company or any Subsidiary in the ordinary course of business in
accordance with past practices; (xvii) Liens to secure Permitted Refinancing
Indebtedness to the extent the Indebtedness Refinanced was secured and such
Liens do not extend to any property other than the property which was subject to
the Lien under the Indebtedness being Refinanced; (xviii) licenses of patents,
trademarks and other intellectual property rights granted by the Company or any
of its Subsidiaries in the ordinary course of business and not interfering in
any material respect with the ordinary conduct of the business of the Company or
any such Subsidiary; and (xix) Liens securing purchase money indebtedness;
provided that such Liens extend only to the assets so purchased.
29
"Permitted Holders" means BT Capital Partners, Inc. and its
Affiliates.
"Permitted Investments" means (a) Investments in cash and Cash
Equivalents; (b) Investments by the Company or by any Subsidiary of the Company
in any Person that is or will become immediately after such Investment a
Wholly-Owned Subsidiary of the Company that either (I) has not Incurred (and
will not Incur as a result of or in connection with such transaction) any
Indebtedness (other than Indebtedness permitted to be Incurred by such
Subsidiary under Section 6.1) or (II) is a Subsidiary Guarantor; provided that
(x) such Investment shall be a Permitted Investment only for so long as any such
Subsidiary in which the Investment has been made meets the conditions set forth
above and (y) no Investment in any such Person or Subsidiary (including any
transaction pursuant to which any Person becomes a Subsidiary of the Company)
will be a Permitted Investment if and for so long as such Subsidiary is or would
be subject to any Payment Restriction; (c) any Investments in the Company by any
Subsidiary of the Company; provided that any Indebtedness of the Company for
payment in respect of such Investment is subordinated in right of payment,
pursuant to a written agreement, to the Company's Obligations; (d) Investments
made by the Company or by its Subsidiaries out of the Net Cash Proceeds of an
Asset Sale made in compliance with Section 2.5A(ii)(a); and (e) Intercompany
Indebtedness by and between the Company and its Subsidiaries.
"Permitted Refinancing Indebtedness" means (A) any Refinancing by
the Company of Indebtedness of the Company or of its Subsidiaries (other than
Indebtedness Incurred or outstanding pursuant to clauses (v), (vi), (ix) and
(xi) of Section 6.1, which Indebtedness shall remain subject to the maximum
aggregate amounts outstanding as set forth therein) and (B) any Indebtedness
incurred pursuant to a Refinancing by any Subsidiary of the Company of
Indebtedness Incurred by such Subsidiary (other than Indebtedness Incurred or
outstanding pursuant to clauses (v), (vi), (ix) and (xi) of Section 6.1, which
Indebtedness shall remain subject to the maximum aggregate amounts outstanding
as set forth therein), in the case of each of (A) and (B), that does not (1)
result in an increase in the total of the aggregate principal amount of the
Indebtedness of such Person being Refinanced as of the date of such proposed
Refinancing except to finance the payment of applicable prepayment penalties or
call premiums, accrued interest on such Indebtedness and reasonable costs and
expenses incurred in connection with such Permitted Refinancing (if such
Indebtedness that is Refinancing the existing Indebtedness is issued at a price
less than 100% of the principal amount thereof, an increase shall not be deemed
to have occurred unless the gross proceeds of such Indebtedness that is
Refinancing the
30
existing Indebtedness are in excess of the total of the aggregate principal
amount of the Indebtedness being Refinanced as of the date of such proposed
Refinancing) or (2) create Indebtedness with a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being Refinanced; provided that (x) if such Indebtedness being Refinanced is
Indebtedness of the Company, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company, and (y) if such Indebtedness being
Refinanced is subordinate or junior in right of payment to the Loans or the
Guarantees, as the case may be, or if recourse in respect of the Indebtedness
being Refinanced is limited in any respect, then such Indebtedness proposed to
be Incurred to Refinance the existing Indebtedness shall be subordinate in right
of payment to the Loans or the Guarantees, as the case may be, and recourse with
respect thereto, as the case may be, shall be limited at least to the same
extent and in the same manner as the Indebtedness being Refinanced.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
"PIK Interest Amount" has the meaning ascribed to such term in
Section 2.3B.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA maintained by the Company or any of its Subsidiaries for employees of the
Company or any of its Subsidiaries.
"Pledged Collateral" shall have the meaning assigned to such term in
the Security Agreement.
"Potential Event of Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights (as compared to any other Capital Stock of
such Person) with respect to dividends or redemptions or upon liquidation.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
31
"Quarterly Period" shall mean the period commencing on the first
calendar day of each three-month period, if such day is a Business Day, or the
first Business Day succeeding the first calendar day of each three-month period
and ending on the day next preceding the first Business Day of the following
Quarterly Period; provided that the first Quarterly Period shall commence on the
Closing Date and shall end on and exclude January 1, 1998.
"Real Property Assets" means interests in land, buildings,
improvements, and fixtures attached thereto or used in the operation thereof, in
each case owned or leased (as lessee) by the Company or its Subsidiaries.
"Recapitalization" means the recapitalization by the Company
pursuant to the Recapitalization Agreement.
"Recapitalization Agreement" means the Recapitalization Agreement
dated as of November 25, 1997, by and among the Company, Xxx X. Xxxxxxx, Xxxx X.
Xxxxxxx 1995 Irrevocable Trust, Xxxxxxx XxXxxxxx Xxxxxxx 1995 Irrevocable Trust,
Xxxx X. Xxxxxxx 1997 Irrevocable Trust, Xxxxxxx XxXxxxxx Xxxxxxx 1997
Irrevocable Trust, Xxx X. Xxxxxxx 1997 Irrevocable Annuity Trust and BT Capital
Partners, Inc., relating to the Recapitalization.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to such term in Section 5.13.
"Registration Rights Agreement" means a registration rights
agreement substantially containing the terms of Exhibit V (with such changes
therein as the Agent and the Company shall approve).
"Related Business" means any capital expenditure or Investment in
properties and assets that replace the properties and assets that were the
subject of an Asset Sale or in properties and assets that will be used in the
business of the Company and its Subsidiaries as existing on the Closing Date or
in businesses reasonably related or complementary thereto.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment
32
or disposal of any barrels, containers or other closed receptacles containing
any Hazardous Materials), or into or out of any Facility, including the movement
of any Hazardous Material through the air, soil, surface water, groundwater or
property.
"Reportable Event" has the meaning set forth in Section 4043 of
ERISA, but excluding any event for which the 30-day notice requirement has been
waived by applicable regulations of the PBGC.
"Required Lenders" means Lenders holding in the aggregate more than
50% of the outstanding principal amount of Notes.
"Restricted Payment" has the meaning ascribed to such term in
Section 6.3.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit
sharing agreement or arrangement, 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.
"Security Agreement" shall have the meaning provided in Section
3.1(U)
"Senior Indenture" means an indenture between the Company and a
trustee containing terms and provisions typical for high yield financings, and
containing events of default and guarantees substantially similar to the
provisions of Sections 7 and 9, respectively, and in the case of an indenture
for Exchange Notes, negative covenants substantially similar to the provisions
of Section 6, and in the case of an indenture for Demand Take-Out Notes,
negative covenants substantially similar to Section 6, except for Sections 6.1,
6.3 and Section 6.7 which shall be in accordance with high yield market practice
at such time (with such changes therein as the Agent and the Company shall
approve, and, at such time as notes issued thereunder are sold in a public
offering, with other appropriate changes to reflect such public offering).
"Subordinated Indebtedness" means Indebtedness of the Company or any
Subsidiary Guarantor which is expressly subordinated in right of payment to the
Notes or the Guarantee of such Subsidiary Guarantor, as the case may be.
33
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Subsidiary Guarantors" means each of the present and future
Subsidiaries of the Company.
"Take-Out Bank" has the meaning ascribed to such term in Section
3.1N.
"Take-Out Securities" means (i) any Securities of the Company and/or
the Subsidiary Guarantors the proceeds of which are used to repay the Notes in
full and (ii) any Securities of the Company issued in accordance with Section
6.13 the proceeds of which are used to Refinance the Notes in part, including,
without limitation, the Demand Take-Out Notes.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, liabilities, withholdings or other charges of any nature
whatsoever, including interest and penalties thereon, from time to time or at
any time imposed by any Law or any Tribunal.
"Term Loan" means the loans made by the Lenders pursuant to Section
2.2A.
"Term Loan Commitment" has the meaning ascribed to such term in
Section 2.2A.
"Term Notes" has the meaning ascribed to such term in Section 2.2E.
"Transaction Costs" means the fees, costs and expenses payable by
the Company pursuant hereto and other fees, costs and expenses payable by the
Company or a Subsidiary of the Company in connection with the Transactions.
"Transactions" shall mean, collectively, (i) the Equity Financing,
(ii) the incurrence of the Bridge Loans hereunder on the Closing Date, (iii) the
Recapitalization, (iv) any other transaction on the Closing Date contemplated in
relation to the foregoing and (v) the payment of fees and expenses in connection
with the foregoing.
"Transferee" has the meaning ascribed to such term in Section 10.19.
34
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency, authority or
instrumentality of the United States or any state, province, commonwealth,
nation, territory, possession, county, parish, town, township, village or
municipality, whether now or hereafter constituted and/or existing.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or other governing body of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person or a combination thereof.
1.2 Accounting Terms
For the purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP.
1.3 Other Definitional Provisions
Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
35
SECTION 2 AMOUNT AND TERMS OF LOAN COMMITMENT AND LOANS; NOTES
2.1 Bridge Loan and Bridge Note
A. Bridge Loan Commitment. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of the
Company herein set forth, the Lenders hereby agree to lend to the Company on the
Closing Date $80.0 million in the aggregate (the "Bridge Loan"), each such
Lender committing to lend the amount set forth next to such Lender's name on the
signature pages hereto. The Lenders' commitments to make the Bridge Loan to the
Company pursuant to this Section 2.1A are herein called individually, the
"Bridge Loan Commitment" and collectively, the "Bridge Loan Commitments."
B. Notice of Borrowing. When the Company desires to borrow under
this Section 2.1, it shall deliver to the Agent a Notice of Borrowing no later
than 11:00 A.M. (New York time), at least two Business Days in advance of the
Closing Date or such later date as shall be agreed to by the Agent. The Notice
of Borrowing shall specify the applicable date of borrowing (which shall be a
Business Day). Upon receipt of such Notice of Borrowing, the Agent shall
promptly notify each Lender of its share of the Bridge Loan and the other
matters covered by the Notice of Borrowing.
C. Disbursement of Funds. (a) No later than 12:00 Noon (New York
time) on the Closing Date, each Lender will make available its pro rata share of
the Bridge Loan requested to be made on such date in the manner provided below.
All amounts shall be made available to the Agent in U.S. Legal Tender and
immediately available funds at the Payment Office and the Agent promptly will
make available to the Company by depositing to its account at the Payment Office
the aggregate of the amounts so made available in the type of funds received.
Unless the Agent shall have been notified by any Lender prior to the Closing
Date that such Lender does not intend to make available to the Agent its portion
of the Bridge Loan to be made on such date, the Agent may assume that such
Lender has made such amount available to the Agent on such date, and the Agent,
in reliance upon such assumption, may (in its sole discretion and without any
obligation to do so) make available to the Company a corresponding amount. If
such corresponding amount is not in fact made available to the Agent by such
Lender and the Agent has made available same to the Company, the Agent shall be
entitled to recover such corresponding amount from such Lender. If such Lender
does not pay such corresponding amount forthwith upon the Agent's demand
therefor, the Agent shall promptly notify the Company, and the Company shall
immediately pay such corresponding amount
36
to the Agent. The Agent shall also be entitled to recover from such Lender or
the Company, as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was made available
by the Agent to the Company to the date such corresponding amount is recovered
by the Agent, at a rate per annum equal to (x) if paid by such Lender, the
overnight Federal Funds Rate or (y) if paid by the Company, the then applicable
rate of interest on the Loans.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any
rights which the Company may have against any Lender as a result of any default
by such Lender hereunder.
D. Bridge Notes. The Company shall execute and deliver to each
Lender on the Closing Date a Bridge Note dated the Closing Date substantially in
the form of Exhibit I to evidence such Lender's portion of the Bridge Loan
Commitment and with appropriate insertions (the "Original Bridge Notes"). On
each interest payment date prior to the Conversion Date on which the Company
elects to pay a PIK Interest Amount pursuant to Section 2.3B, the Company shall
execute and deliver to each Lender on such interest payment date a Bridge Note
dated such interest payment date substantially in the form of Exhibit I annexed
hereto in a principal amount equal to such Lender's pro rata portion of such PIK
Interest Amount and with other appropriate insertions (each a "Subsequent Bridge
Note" and, together with the Original Bridge Notes, the "Bridge Notes"). A
Subsequent Bridge Note shall bear interest from the date of its issuance at the
same rate borne by all Bridge Notes.
E. Scheduled Payment of Bridge Loan. Subject to Section 2.2, the
Company shall pay in full the outstanding amount of the Bridge Loan and all
other Obligations owing hereunder no later than the Conversion Date.
F. Termination of Bridge Loan Commitment. The Bridge Loan Commitment
hereunder shall terminate on the earlier of (i) the date on which the
Recapitalization Agreement is terminated in accordance with its terms or (ii)
November 30, 1997 if the Bridge Loan is not made on or before such date.
G. Pro Rata Borrowings. The Bridge Loan made under this Agreement
shall be made by the Lenders pro rata on the basis of their respective Bridge
Loan Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Bridge
Loan
37
hereunder and that each Lender shall be obligated to make its portion of the
Bridge Loan hereunder, regardless of the failure of any other Lender to fulfill
its commitments hereunder.
2.2 Term Loan and Term Note
A. Term Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Company
herein set forth, the Lenders hereby agree, on the Conversion Date, upon the
request of the Company, to convert the then outstanding principal amount of the
Bridge Notes into a term loan (the "Term Loan"), such Term Loan to be in the
aggregate principal amount of the then outstanding principal amount of the
Bridge Notes. The Lenders' commitments under this Section 2.2A are herein called
collectively, the "Term Loan Commitment."
B. Notice of Conversion/Borrowing. If the Company has not repaid the
Bridge Loan in full on or prior to the Conversion Date, then the Company shall
convert the then outstanding principal amount of the Bridge Notes into a Term
Loan under this Section 2.2. The Company shall deliver to the Lenders a Notice
of Conversion no later than 11:00 A.M. (New York time), at least two Business
Days in advance of the Conversion Date. The Notice of Conversion shall specify
the principal amount of the Bridge Notes outstanding on the Conversion Date to
be converted into a Term Loan.
C. Making of Term Loan. Upon satisfaction or waiver of the
conditions precedent specified in Section 3.2, each Lender shall extend to the
Company the Term Loan to be issued on the Conversion Date by such Lender by
canceling on its records a corresponding principal amount of the Bridge Notes
held by such Lender.
D. Maturity of Term Loan. The Term Loan shall mature and the Company
shall pay in full the outstanding principal amount thereof and accrued interest
thereon on the seventh anniversary of the Closing Date (the "Maturity Date").
E. Term Notes. The Company, as borrower, shall execute and deliver
to each Lender on the Conversion Date a Term Note dated the Conversion Date
substantially in the form of Exhibit II to evidence the Term Loan made on such
date, in the principal amount of the Bridge Notes held by such Lender on such
date and with other appropriate insertions (collectively the "Original Term
Notes"). On or after the Conversion Date, on each interest payment date on which
the Company elects to pay a PIK Interest Amount pursuant to Section 2.3B, the
Company shall execute and deliver to each Lender on such interest payment date a
Term Note dated such interest payment date substantially in the form of Exhibit
II annexed hereto in a principal amount
38
equal to such Lender's pro rata portion of such PIK Interest Amount and with
other appropriate insertions (each a "Subsequent Term Note" and, together with
the Original Term Notes, the "Term Notes"). A Subsequent Term Note shall bear
interest at the same rate borne by all Term Notes.
2.3 Interest on the Loans
A. Rate of Interest. The Loans shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
prepayment, acceleration or otherwise) at a rate determined as set forth below.
(i) Floating Rate Loans. Subject to Section 2.3A(ii), the Loans
shall bear interest for each Quarterly Period at a rate per annum equal to the
Applicable Rate for such period plus the Applicable Spread.
(ii) Fixed Rate Loans. At any time, on one occasion, on and after
the Conversion Date, at the request of the Required Lenders, all or any portion
of the Term Loan owing to the Required Lenders shall bear interest at a fixed
rate per annum equal to the rate of interest borne by the Term Loans at the time
of such request (such rate of interest equal to the Applicable Rate plus the
Applicable Spread) plus .50% (the "Fixed Rate"), effective as of the first
interest payment date with respect to such Term Loan after such notice so long
as the 20 Business Days' notice set forth below is given; provided that no such
conversion shall be permitted in respect of amounts to be voluntarily prepaid
following receipt of a notice of prepayment pursuant to Section 2.5A. In order
to request the conversion of a Floating Rate Loan to a Fixed Rate Loan, the
Required Lenders shall notify the Agent in writing of their intention to do so
at least 60 Business Days prior to an interest payment date, indicating the
amount of the Term Loan for which they are requesting conversion to a Fixed Rate
Loan, which shall be not less than $5.0 million and increments of $10,000 in
excess thereof, and the Agent shall so notify the Company at least 60 Business
Days prior to such next succeeding interest payment date. Upon the conversion of
a portion of a Floating Rate Loan to a Fixed Rate Loan an appropriate notation
will be made on the Term Note and, on and after the first interest payment date
following the receipt by the Company of a notice hereunder, such portion of the
Term Loan which is converted to a Fixed Rate Loan shall bear interest at the
Fixed Rate until repaid.
(iii) Notwithstanding clause (i) or (ii) of this Section 2.3A or any
other provision herein, in no event will the combined sum of interest on the
Loans exceed 16.00% per annum.
39
B. Interest Payments. Interest shall be payable (i) with respect to
the Bridge Loan, in arrears on February 15, 1998, May 15, 1998, August 15, 1998
and November 15, 1998, and upon any prepayment of the Bridge Loan (to the extent
accrued on the amount being prepaid) and at maturity of the Bridge Loan in
respect of any amounts paid on such date and not converted to Term Loans and
(ii) with respect to the Term Loan, in arrears on each February 15, May 15,
August 15 and November 15 of each year, commencing on the first of such dates to
follow the Conversion Date, upon any prepayment of the Term Loan (to the extent
accrued on the amount being prepaid) and at maturity of the Term Loan; provided,
however, that if, on any interest payment date, the interest rate borne by the
Bridge Notes or the Term Notes, as the case may be, exceeds the Maximum Cash
Interest Rate, the Company may pay all or a portion of the interest payable in
excess of the amount of interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes or Subsequent
Term Notes, as the case may be, in an aggregate principal amount equal to the
amount of such interest being so paid (the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the Loans not
paid when due and, to the extent permitted by applicable law, any interest
payment on the Loans not paid when due, in each case whether at stated maturity,
by notice of prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate which is 2.00% per annum in excess of the
rate of interest otherwise payable under this Agreement for the Loans.
D. Computation of Interest. Interest on the Loans shall be computed
on the basis of a 360-day year and, with respect to any amount of the Loans
which are Floating Rate Loans, the actual number of days elapsed in the period
during which it accrues or, with respect to any amount of the Loans which are
Fixed Rate Loans, twelve 30-day months. In computing interest on the Loans, the
date of the making of the Loans shall be included and the date of payment shall
be excluded; provided that if a Loan is repaid on the same day on which it is
made, one day's interest shall be paid on that Loan.
2.4 Fees
(i) The Company agrees to pay to BTNY all fees and other obligations
in accordance with, and at the times specified by, the Fee Letter.
(ii) The Company shall pay to BTCo an annual agency fee of $10,000
payable quarterly in advance beginning on the Closing Date.
40
(iii) On the six-month anniversary of the Closing Date and if the
Bridge Loan is outstanding on such date, the Company shall pay a fee to the
Lenders or their designated affiliates, payable in the form of warrants to
purchase for a nominal exercise price Common Stock of the Company ("Warrants")
in an amount equal to 2.0% of the outstanding Common Stock of the Company as of
the Closing Date; on the nine-month anniversary of the Closing Date and if the
Bridge Loan is outstanding on such date, the Company shall pay a fee to the
Lenders or their designated affiliates, payable in the form of Warrants in an
amount equal to 2.0% of the outstanding Common Stock of the Company as of the
Closing Date; and on the twelve-month anniversary of the Closing Date and if the
Bridge Loan is outstanding on such date, the Company shall pay a fee to the
Lenders or their designated affiliates, payable in the form of Warrants in an
amount equal to 2.0% of the outstanding Common Stock of the Company as of the
Closing Date. The Warrants shall contain terms and provisions mutually
satisfactory to the Lenders and the Company, including mutually acceptable
antidilution provisions.
2.5 Prepayments and Payments
A. Prepayments
(i) Voluntary Prepayments. The Company may, upon not less than two
Business Days' prior written or telephonic notice confirmed in writing to
the Agent at any time and from time to time, prepay the Loans made to the
Company in whole or in part in an aggregate minimum amount of $500,000 and
integral multiples of $100,000 in excess of that amount; provided that,
prior to the Conversion Date, unless Loans are to be prepaid in full, such
voluntary prepayments shall not result in the aggregate amount of the
Loans outstanding being less than $60.0 million or shall not be made at a
time when the aggregate amount of the Loans outstanding is less than $60.0
million; provided, further, that at such time as all or part of the Term
Loan bears interest at the Fixed Rate, the Term Loan or such part that
bears interest at the Fixed Rate, as the case may be, will be redeemable
at the option of the Company, in whole or in part, at any time at a
redemption price equal to 100% of the principal amount plus a premium,
which premium shall be equal to the Fixed Rate during the first year after
the Conversion Date and shall reduce ratably on each annual anniversary of
the Conversion Date, which premium shall be zero on the fifth anniversary
of the Conversion Date and thereafter, plus in each case accrued and
unpaid interest to the redemption date.
41
Notice of prepayment having been given as aforesaid, the principal
amount of the Loans to be prepaid shall become due and payable on the prepayment
date. Amounts of the Loans so prepaid may not be reborrowed.
(ii) Mandatory Prepayments.
(a) Prepayments from Asset Sales.
The Company shall, or shall cause its Subsidiaries to, prepay the
Loans with the Net Cash Proceeds received from any Asset Sale on a date
not later than the Business Day next succeeding (i) the third Business day
after the receipt thereof if such date of receipt is on or prior to the
Conversion Date and (ii) the 270th day after the consummation of such
Asset Sale if and to the extent that such Net Cash Proceeds are not
applied by the Company or any Subsidiary of the Company within 270 days to
a Related Business if such date of receipt is after the Conversion Date;
provided that at such time as the Term Loan bears interest at the Fixed
Rate, any such Net Cash Proceeds not so applied shall be used to make an
offer to purchase the Term Loan from each Lender on a pro rata basis at
100% of the principal amount thereof plus accrued and unpaid interest
thereon to the date of repurchase. Concurrently with the consummation of
an Asset Sale, the Company shall deliver to the Agent an Officer's
Certificate demonstrating the derivation of Net Cash Proceeds from the
gross sales price of such Asset Sale.
(b) Prepayments from Issuances of Take-Out Securities. Concurrently
with the receipt by the Company of proceeds from the issuance of Take-Out
Securities, the Company shall prepay the Loans (at a price per Note equal
to the principal amount of such Note plus accrued and unpaid interest, if
any, to the date of payment) in a principal amount equal to the lesser of
the proceeds thereof (net of expenses payable by the Company to any Person
other than an Affiliate of the Company in connection with the issuance
thereof) or the aggregate principal amount of the Notes then outstanding.
(c) Notice. The Company shall notify the Agent of any prepayment to
be made pursuant to this Section 2.5A(ii) at least two Business Days prior
to such prepayment date (unless shorter notice is satisfactory to the
Required Lenders).
(iii) Company's Mandatory Prepayment Obligation; Application of
Prepayments. All prepayments shall include payment of accrued interest on
the principal
42
amount so prepaid and shall be applied to payment of interest before
application to principal.
(iv) Mandatory Offer to Purchase Notes.
(a) Upon the occurrence of a Change of Control (the date of such
occurrence, the "Change of Control Date"), the Lenders shall have the
right to require the repurchase of all of the Notes pursuant to an offer
to purchase (the "Change of Control Offer") at a purchase price equal to
100% of the aggregate principal amount thereof plus accrued interest
thereon to the date of repurchase.
(b) The notice (referred to in (c) below) to the Agent shall contain
all instructions and materials necessary to enable the Lenders to tender
Notes.
(c) Within 30 days following any Change of Control the Company shall
mail a notice to the Agent stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 2.5(A)(iv) and that all Notes validly tendered will be accepted
for payment;
(2) the purchase price and the purchase date (the "Offer Payment
Date"), which shall be no earlier than 30 days nor later than 40 days from
the date such notice is mailed;
(3) that any Note not tendered will continue to accrue interest;
(4) that any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Offer Payment Date
unless the Company shall default in the payment of the repurchase price of
the Notes;
(5) that if a Lender elects to have a Note purchased pursuant to the
Change of Control Offer it will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Note completed, to the Company prior to 5:00 p.m. New York time on the
Offer Payment Date;
(6) that a Lender will be entitled to withdraw its election if the
Company receives, not later than 5:00 p.m. New York time on the Business
Day preceding the Offer Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the principal amount of Notes such
Lender delivered for purchase, and
43
a statement that such Lender is withdrawing its election to have such Note
purchased; and
(7) that if Notes are purchased only in part a new Note of the same
type will be issued in principal amount equal to the unpurchased portion
of the Notes surrendered.
(d) On or before the Offer Payment Date, the Company shall (i)
accept for payment Notes or portions thereof which are to be purchased in
accordance with the above, and (ii) deposit at the Payment Office U.S.
Legal Tender sufficient to pay the purchase price of all Notes to be
purchased. The Agent shall promptly mail to the Lenders whose Notes are so
accepted payment in an amount equal to the purchase price.
(e) The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in
connection with the purchase of Notes pursuant to an offer hereunder. To
the extent the provisions of any securities laws or regulations conflict
with the provisions under this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
B. Manner and Time of Payment. All payments of principal and
interest hereunder and under the Notes by the Company shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Agent, unless otherwise specified, not later than 12:00 Noon (New York time) on
the date due at the Payment Office for the account of the Lenders; funds
received by the Agent after that time shall be deemed to have been paid by the
Company on the next succeeding Business Day. The Company hereby authorizes the
Agent to charge its account with the Agent in order to cause timely payment to
be made of all principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
C. Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, the payment shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder or under the Notes or of the commitment and other fees
hereunder, as the case may be.
44
D. Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting participations
therein), such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify the Company of the name and address of the transferee of that
Note; provided that the failure to make (or any error in the making of) such a
notation or to notify the Company of the name and address of such transferee
shall not limit or otherwise affect the obligation of the Company hereunder or
under such Notes with respect to the Loans and payments of principal or interest
on any such Note.
2.6 Use of Proceeds
A. Bridge Loan. The proceeds of the Bridge Loan shall be applied by
the Company, together with funds raised in the Equity Financing, to the payment
of the Transaction Costs and to pay the consideration for the Recapitalization.
B. Term Loan. Upon the extension of the Term Loan by the Lenders,
the Bridge Notes shall be cancelled and exchanged for Term Notes.
C. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company in any manner which might
cause the borrowing or the application of such proceeds to violate the
applicable requirements of Regulation G, Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of the Board of Governors or to violate the Exchange Act, in
each case as in effect on the date or dates of such borrowing and such use of
proceeds.
SECTION 3 CONDITIONS
3.1 Conditions to Bridge Loan
The obligation of the Lenders to make the Bridge Loan is subject to
prior or concurrent satisfaction of each of the following conditions:
A. On or before the Closing Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Agent shall be reasonably satisfactory in form and substance
to the Agent, and the Agent shall have received on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Closing Date:
45
1. a certified copy of the Company's, each Subsidiary Guarantor's
and any other of the Company's Subsidiaries' charter, together with a
certificate of status, compliance, good standing or like certificate with
respect to the Company and each Subsidiary Guarantor issued by the
appropriate government officials of the jurisdiction of its incorporation
and of each jurisdiction in which it owns any material assets or carries
on any material business, each to be dated a recent date prior to the
Closing Date;
2. a copy of the Company's and each Subsidiary Guarantors' and any
other of the Company's Subsidiaries' bylaws, certified as of the Closing
Date by one of its Officers;
3. resolutions of the Company's and each Subsidiary Guarantor's
Board of Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents and any
other documents, instruments and certificates required to be executed by
the Company or such Subsidiary Guarantor in connection herewith and
therewith and approving and authorizing the execution, delivery and
payment of the Notes and the consummation of the Transactions, each
certified as of the Closing Date by one of its Officers as being in full
force and effect without modification or amendment;
4. signature and incumbency certificates of the Company's and each
Subsidiary Guarantor's Officers executing this Agreement and the Bridge
Notes;
5. executed copies of this Agreement and the Bridge Notes
substantially in the form of Exhibit I executed in accordance with Section
2.1D drawn to the order of the Lenders and with appropriate insertions;
6. an originally executed Notice of Borrowing substantially in the
form of Exhibit IV-A, signed by the President or a Vice President of the
Company on behalf of the Company in writing delivered to the Agent;
7. originally executed copies of one or more favorable written
opinions of (I) X'Xxxxxxxx Graev & Karabell, LLP, counsel for the Company
and the Subsidiary Guarantors, substantially in the form of Exhibit VI-A
and addressed to the Lenders and Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.,
Minnesota counsel for the Company and the Subsidiary Guarantors,
substantially in the form of Exhibit VI-B and addressed to the Lenders,
(II) Xxxxxx Xxxxxx & Xxxxxxx, counsel for the Lenders, substantially in
the form of Exhibit VII and addressed
46
to the Lenders, and (III) such other opinions of counsel and such
certificates or opinions of accountants, appraisers or other professionals
as the Agent shall have reasonably requested;
8. a certificate, delivered by the Company and signed by the Chief
Financial or Accounting Officer of the Company and addressed to the
Lenders in form and substance reasonably satisfactory to the Agent, with
appropriate attachments, stating that, after giving effect to the
consummation of the Transactions, the fair saleable value of the assets
(including going concern value) of the Company and its Subsidiaries will
not be less than the probable liability on their debts, that each of the
Company and its Subsidiaries will be able to pay its debts as they mature
and that each will not have unreasonably small capital to conduct its
business;
9. true and correct copies of the Recapitalization Agreement, which
shall not have been amended without the Agent's consent (which consent
shall not be unreasonably withheld or delayed) and which shall be in full
force and effect and each of the conditions to purchase contained therein
shall have been satisfied and not materially waived or amended without the
Agent's prior written consent (which consent shall not be unreasonably
withheld or delayed);
10. a notation of Guarantee, executed and delivered by each
Subsidiary Guarantor, dated the date of this Agreement, substantially in
the form of Exhibit VIII, as applicable; and
11. a copy of all closing documents relating to the Recapitalization
and all such counterpart originals or certified copies of such other
documents, instruments, certificates and opinions as the Agent may
reasonably request.
B. On or before the Closing Date, all material authorizations,
consents and approvals necessary in connection with the Transactions shall have
been obtained and remain in full force and effect and all applicable waiting
periods under Law applicable to the Recapitalization shall have expired without
any action being taken by any competent authority (including without limitation,
any Tribunal) which restrains, prevents or imposes materially adverse conditions
upon the completion of the Recapitalization or the financing thereof and
evidence of the receipt of such authorizations, consents and approvals
satisfactory to the Agent shall have been delivered to the Agent.
47
C. On or before the Closing Date, the Company shall have paid to
BTNY the fees payable on the Closing Date pursuant to Section 2.4.
D. On or before the Closing Date, the Company shall have performed
in all material respects all agreements which this Agreement provides shall be
performed on or before the Closing Date except as otherwise disclosed to and
agreed to in writing by the Agent.
E. At the Closing Date, the Company shall have consummated the
Equity Financing and received gross cash proceeds of at least $38.5 million
therefrom. The Equity Financing shall have been definitively documented on terms
and conditions reasonably satisfactory to the Agent, all such documentation
shall be in full force and effect and the parties thereto shall be in compliance
in all material respects with all material agreements thereunder.
F. Simultaneously with the making of the Bridge Loan by the Lenders,
the Company shall have delivered to the Agent an Officers' Certificate from the
Company in form and substance satisfactory to the Agent to the effect that (i)
the representations and warranties in Section 4 are true, correct and complete
in all material respects on and as of the Closing Date to the same extent as
though made on and as of that date, (ii) on or prior to the Closing Date, the
Company has performed and complied with in all material respects all covenants
and conditions to be performed and observed by the Company on or prior to the
Closing Date and (iii) all conditions to the consummation of the
Recapitalization in the Recapitalization Agreement have been satisfied
substantially on the terms set forth therein and have not been waived or amended
in any material respect without the Agent's prior written consent.
G. Existing Credit Agreement. (a) On the Closing Date, the
commitments under the Existing Credit Agreement shall have been terminated, all
loans thereunder shall have been repaid in full, together with all accrued and
unpaid interest thereon, all accrued and unpaid fees thereon shall have been
repaid in full, all letters of credit (except the letter of credit referred to
in Section 3.1(G)(b)) issued thereunder shall have been terminated, and all
other amounts then owing pursuant to the Existing Credit Agreement shall have
been repaid in full.
(b) On the Closing Date, all security interests and Liens created
under the Existing Credit Agreement and the related security documents on the
capital stock of, and assets owned by, the Company and its Subsidiaries shall
have been terminated and released (except for the cash collateral account as
security for Letter of Credit #403942 in the amount of $355,429.00), and the
Agent shall have received
48
all such releases as may have been requested by the Agent, which releases shall
be in the form and substance reasonably satisfactory to the Agent.
(c) The Agent shall have received evidence from the lenders under
the Existing Credit Agreement in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 3.1(G)(a) and (b)
have been satisfied at such time.
H. Immediately following the making of the Bridge Loan by the
Lenders, the Recapitalization shall be consummated without the waiver of any
material conditions precedent thereto.
I. None of the Company or any of the Subsidiaries of the Company
shall have sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or any legal or governmental
proceeding, which loss or interference, in the reasonable judgment of the Agent,
has had or could reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the ability of the Company or its Subsidiaries to
consummate the Transactions and to execute, deliver and perform its respective
obligations under the Loan Documents and each other document or instrument to be
delivered in connection with the Transactions executed or to be executed by it;
there shall not have been, in the reasonable judgment of the Agent, any Material
Adverse Change, or any development involving a prospective Material Adverse
Change.
J. No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by the Notice of Borrowing
which would constitute an Event of Default or Potential Event of Default.
K. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain the Lenders from
making the Bridge Loan.
L. There shall not be pending or, to the knowledge of the Company,
threatened any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Company or, to its knowledge, any property
or asset of the Company or any of its respective Affiliates which has not been
disclosed by the Company in writing to the Agent (and the Agent shall have
received on the Closing Date an Officer's Certificate dated the Closing Date
attesting to the same) and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental investigation or
arbitration so
49
disclosed, which, in each case, singly or in the aggregate, in the reasonable
opinion of the Agent, could reasonably be expected to have a Material Adverse
Effect. No injunction or other restraining order shall have been issued and no
hearing to cause an injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding seeking to
restrain, enjoin, delay, prohibit or otherwise prevent the consummation of, or
to recover any material damages or obtain material relief against the Company as
a result of, the Transactions. There shall not be threatened, instituted or
pending any action, proceeding or application before or by any Tribunal, or any
other Person, domestic or foreign (i) challenging the Transactions or seeking to
restrain, delay or prohibit the consummation thereof; (ii) seeking to prohibit
or impose material limitations on the Company's ownership or operation of all or
any portion of the Company's business or assets (including the business or
assets of any Subsidiary thereof) or to compel the Company to dispose of or hold
separate all or any material portion of the Company's business or assets
(including the business or assets of any Subsidiary thereof) as a result of the
Recapitalization; (iii) which, in any event, could reasonably be expected to
materially adversely affect the Bridge Loan; or (iv) seeking to impose any
materially adverse conditions upon the Transactions.
M. The making of the Bridge Loan in the manner contemplated in this
Agreement shall not violate the applicable provisions of Regulation G, T, U or X
of the Board of Governors of the Federal Reserve Board or any other regulation
of the Board.
N. The Company shall have entered into an agreement with BT Alex.
Xxxxx Incorporated (the "Take-Out Bank") such that the Take-Out Bank will, to
the extent that the Company deems it necessary and advisable, publicly sell or
privately place the Demand Take-Out Notes.
O. The pro forma consolidated capital structure of the Company and
its Subsidiaries, after giving effect to the Transactions, shall be satisfactory
to the Lenders.
P. There shall not have occurred (i) any general suspension of, or
limitation on times or prices for, trading in securities on the New York Stock
Exchange or American Stock Exchange or in the over-the-counter market in the
United States or minimum or maximum prices established on any such exchanges;
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of the banks in the United States or New York; or (iii) either (A) an
outbreak or escalation of hostilities between the United States and any foreign
power, or (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or any other national or
50
international calamity or emergency, or (C) any material change in the financial
markets of the United States, which, in the sole judgment of the Agent, makes it
impracticable or inadvisable to proceed with the consummation of the
Transactions or the Bridge Loan or any of the other transactions contemplated
hereby including, without limitation, the issuance and sale of the Demand
Take-Out Notes or that would materially affect the ability to sell or syndicate
the Bridge Loan.
Q. There shall not have been any disclosure of information relating
to conditions or events not previously disclosed to the Lenders, or new
information regarding previously disclosed matters, in the course of the
Lenders' continuing legal, financial, tax, environmental, business and
accounting due diligence review which the Lenders shall reasonably determine is
material and adverse to the Company.
R. The results of the Agent's financial, legal, tax and accounting
due diligence investigations and any supplemental business or financial due
diligence that the Agent reasonably determines has become necessary shall be
satisfactory in all respects to the Agent and the Lenders shall have received
any information reasonably necessary to conduct such due diligence.
S. On the Closing Date, the Agent shall receive, to the extent
available, the audited, unaudited and pro forma financial statements meeting the
requirements of Regulation S-X under the Securities Act of 1933, as amended, of
the Company and each Subsidiary Guarantor.
T. The Agent and its counsel shall be satisfied that the
consummation of the Recapitalization and the related financing, including the
funding of the Bridge Loan, shall be in compliance with all applicable Laws.
There shall not have been any statute, rule, regulation, injunction or order
applicable to the Recapitalization, or the financing thereof, promulgated,
enacted, entered or enforced by any state or federal government or governmental
or regulatory authority or agency or by any federal or state court, or by any
Tribunal, nor shall there be pending any action or proceeding by or before any
such authority, court or tribunal, involving a substantial likelihood of an
order, that would prohibit, restrict, delay or otherwise materially affect the
Recapitalization or the financing thereof.
U. On the Closing Date, the Company shall have duly authorized,
executed and delivered a Stock Pledge and Security Agreement in the form of
Exhibit X (as modified, amended or supplemented from time to time in accordance
with the terms thereof and hereof, the "Security Agreement") covering all of the
Pledged Collateral (as defined in the Security Agreement), together with:
51
(A) executed copies of Financing Statements (Form UCC-1) or
appropriate local equivalent in appropriate form for filing under the UCC
or appropriate local equivalent of each jurisdiction as may be necessary
to perfect the security interests purported to be created by the Security
Agreement;
(B) certified copies of Requests for Information or Copies (Form
UCC-11), or equivalent reports, each of a recent date, listing all
effective financing statements that name the Company as debtor and that
are filed in the jurisdictions referred to in clause (A) above, together
with copies of such financing statements that name the Company as debtor
(none of which shall cover the Pledged Collateral except (x) those with
respect to which appropriate termination statements executed by the
secured lender thereunder have been delivered to the Agent and (y) to the
extent evidencing Permitted Encumbrances);
(C) evidence of the completion of all other recordings and filings
of, or with respect to, the Security Agreement as may be necessary or, in
the reasonable opinion of the Agent, desirable to perfect the security
interests purported to be created by the Security Agreement; and
(D) evidence that all other actions necessary or, in the reasonable
opinion of the Agent, desirable to perfect the security interests
purported to be created by the Security Agreement have been taken;
and the Security Agreement shall be in full force and effect.
3.2 Conditions to Term Loan
The obligation of the Lenders to make the Term Loan on the
Conversion Date is subject to the prior or concurrent satisfaction or waiver of
the following conditions precedent:
A. The Agent shall have received in accordance with the provisions
of Section 2.2B an originally executed Notice of Conversion.
B. The Company or any of its Material Subsidiaries shall not be
subject to a Bankruptcy Order or a bankruptcy or other insolvency proceeding and
an Event of Default shall not have occurred under Section 7.6, 7.7 or 7.9
provided that if any Bankruptcy Order exists or any bankruptcy or other
insolvency proceeding is pending that does not constitute an Event of Default
under Section 7.6 or 7.9 on the Conversion Date, then the Conversion Date shall
52
be deferred until the earlier to occur of (x) the date when such Bankruptcy
Order has been stayed, discharged or dismissed or such proceeding ceases to be
pending or (y) such Bankruptcy Order or proceeding constitutes an Event of
Default under Section 7.6 or 7.9.
C. No Event of Default or Potential Event of Default (whether
matured or not) shall have occurred under Section 7.1 provided that if, as of
the Conversion Date, any Potential Event of Default under Section 7.1 shall have
occurred that has not matured into an Event of Default, then the Conversion Date
shall be deferred until the earlier to occur of (x) the cure of such Potential
Event of Default or (y) such Potential Event of Default becoming an Event of
Default.
D. No Event of Default or Potential Event of Default shall have
occurred under Section 7.2; provided that if an event described in this Section
3.2D is continuing at the Conversion Date but 30 days has not passed since the
date of written notice of the commencement of such 30-day period from the holder
or holders of not less than 50% in aggregate principal amount of the Loans then
outstanding (the "Grace Period"), the Conversion Date shall be deferred until
the earlier to occur of (x) the cure of such event or (y) the expiration of such
Grace Period.
E. On the Conversion Date, the Agent shall have received an
Officers' Certificate from the Company, dated the Conversion Date and
satisfactory in form and substance to the Agent, to the effect that the
conditions in this Section 3.2 are satisfied on and as of the Conversion Date.
F. The Company shall have executed and delivered to the Agent on the
Conversion Date for delivery to the Lenders Term Notes dated the Conversion Date
substantially in the form of Exhibit II to evidence the Term Loan, in the
principal amount of (which principal amount shall be the aggregate principal
amount of the Bridge Loan outstanding on the Conversion Date) the Term Loan and
with other appropriate insertions.
G. The Company shall have paid any fees owing pursuant to Section
2.4 in cash to BTNY and BTCo.
H. The making of the Term Loan shall not violate Regulation G, T, U
or X of the Board of Governors of the Federal Reserve Board or any other
regulation of the Board.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans, the Company represents and
53
warrants to the Lenders that, at the time of execution hereof and after
consummation of the Transactions, the following statements are true, correct and
complete:
4.1 Organization and Good Standing; Capitalization
(a) Each of the Company and its Subsidiaries is a corporation duly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation. Each of the Company and its Subsidiaries has the corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted and is duly qualified
as a foreign corporation and in good standing in all jurisdictions in which it
is doing business, except where failure to be so qualified or in good standing,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect or a material adverse effect on the ability of the Company or its
subsidiaries to consummate the Transactions and to execute, deliver and perform
its respective obligations under the Loan Documents and each other document or
instrument to be delivered in connection with the Transactions executed or to be
executed by it.
(b) All of the Subsidiaries of the Company as of the Closing Date
are identified in Schedule B. The Capital Stock of each of the Subsidiaries of
the Company identified in Schedule B is duly authorized, validly issued, fully
paid and nonassessable and none of such capital stock constitutes Margin Stock.
(c) As of the Closing Date and after giving effect to the
Transactions, there are issued and outstanding 1,920,000 shares of Common Stock
of the Company. Such shares of Common Stock of the Company have been duly and
validly issued and are fully paid and nonassessable. Any issuance and sale of
Common Stock of the Company, upon such issuance and sale, will either (a) have
been registered or qualified under applicable federal and state securities laws
or (b) be exempt therefrom.
4.2 Authorization and Power
Each of the Company and its Subsidiaries has the corporate power and
requisite authority, and, to the extent a party thereto, has taken all corporate
action necessary, to consummate the Transactions and to execute, deliver and
perform its obligations under the Loan Documents and each other document and
instrument to be delivered in connection with the Transactions executed or to be
executed by it and to issue the Notes and the Exchange Notes.
4.3 No Conflicts or Consents
54
(a) The execution and delivery of the Loan Documents, the
Recapitalization Agreement and each other document to be executed and delivered
in connection with the Transactions, the consummation of each of the
transactions herein or therein contemplated, the compliance with each of the
terms and provisions hereof or thereof, and the issuance, delivery and
performance of the Notes and the Exchange Notes, do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
any of the Company and its Subsidiaries, the Certificate or Articles of
Incorporation or bylaws of any of them or any order, judgment or decree of any
court or other agency of government binding on any of them which, in any case
other than a violation of the Certificate or Articles of Incorporation or bylaws
of the Company, could reasonably be expected to result in a Material Adverse
Effect or have a material adverse effect on the ability of the Company or its
Subsidiaries to consummate the Transactions and to execute, deliver and perform
its obligations under the Loan Documents and each other document and instrument
to be delivered in connection with the Transactions executed or to be executed
by it, (ii) conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any Contractual Obligation of any of
the Company and its Subsidiaries which could reasonably be expected to result in
a Material Adverse Effect or have a material adverse effect on the ability of
the Company or its Subsidiaries to consummate the Transactions and to execute,
deliver and perform its obligations under the Loan Documents and each other
document and instrument to be delivered in connection with the Transactions
executed or to be executed by it, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of any of the
Company and its Subsidiaries (other than Liens permitted by this Agreement) or
(iv) require any approval of stockholders or any approval or consent of any
Person under any Contractual Obligation of any of the Company and its
Subsidiaries except for such approvals or consents which will be obtained on or
before the Closing Date and disclosed in writing to Lenders or such approvals or
consents the failure to obtain which could not reasonably be expected to singly
or in the aggregate result in a Material Adverse Effect or have a material
adverse effect on the ability of the Company or its Subsidiaries to consummate
the Transactions and to execute, deliver and perform its obligations under the
Loan Documents and each other document and instrument to be delivered in
connection with the Transactions executed or to be executed by it.
(b) No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery by the
Company or any of its Subsidiaries of the Loan Documents or any other document
or
55
instrument to be delivered in connection with the Transactions or the
consummation of the transactions contemplated hereby or thereby, other than any
such consent, approval, authorization or order which has been obtained and
remains in full force and effect or which has been waived in writing by the
Agent on behalf of the Lenders or the failure of which to obtain would not,
singly or in the aggregate, have a Material Adverse Effect or a material adverse
effect on the ability of the Company or its Subsidiaries to consummate the
Transactions and to execute, deliver and perform its respective obligations
under the Loan Documents and each other document or instrument to be delivered
in connection with the Transactions executed or to be executed by it.
4.4 Enforceable Obligations
Each of the Loan Documents, the Recapitalization Agreement and each
other document or instrument to be delivered in connection therewith has been
duly authorized; each of the Loan Documents, the Recapitalization Agreement and
each other document or instrument to be delivered in connection therewith to be
executed and delivered on or prior to the Closing Date has been duly executed
and delivered by the Company and each of its Subsidiaries that are a party
thereto; and each of the Loan Documents, the Recapitalization Agreement and each
other document or instrument to be delivered in connection therewith to be
executed and delivered on or prior to the Closing Date is, and each of the Loan
Documents to be executed and delivered after the Closing Date will be, upon such
execution and delivery, the legal, valid and binding obligations of the Company
and each such Subsidiary (to the extent a party thereto), enforceable in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.5 Properties; Liens
Each of the Company and its Subsidiaries has good, sufficient and
legal title to all their respective properties and assets, and all properties
held under lease by any of them are held under valid, subsisting and enforceable
leases, and none of the Company or its Subsidiaries and, to the knowledge of the
Company, any other party thereto, is in default under any lease, except in each
case for such defects or defaults that, singly or in the aggregate, would not
have a Material Adverse Effect. Except as permitted by this Agreement, all such
properties and
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assets owned or leased are so owned or leased free and clear of Liens.
4.6 Financial Condition
(a) The audited consolidated balance sheets of the Company and its
Subsidiaries at December 31, 1996, December 31, 1995 and December 31, 1994 and
the related consolidated statements of income, shareholders equity and cash
flows of the Company and its Subsidiaries for the three-year period ended
December 31, 1996, certified by the independent certified public accountants of
the Company copies of which have been delivered to the Agent, were prepared in
accordance with GAAP, have been prepared from, and are consistent with, the
books and records of the Company and its Subsidiaries and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries, as at the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its Subsidiaries, for the periods
then ended. None of the Company or any of its Subsidiaries had at October 31,
1997 any material contingent liabilities, liabilities for Taxes or long-term
leases, unusual forward or long-term commitments or unrealized or unanticipated
losses from any unfavorable commitments which are not reflected or reserved
against in the foregoing statements or in the notes thereto to the extent
required by GAAP. No events which have had or could reasonably be expected to
have a Material Adverse Effect have occurred since December 31, 1996 except as
reflected therein.
(b) The unaudited consolidated balance sheets of the Company and its
Subsidiaries at October 31, 1997 and the related consolidated statements of
income, retained earnings (deficit) and cash flows of each such entity for the
period then ended, a copy of which has been delivered to the Agent, were
prepared in accordance with GAAP consistently applied (except to the extent
noted therein), have been prepared from, and are consistent with, the books and
records of each such entity and fairly present in all material respects the
consolidated financial position of each such entity as of such date and the
consolidated results of operations and cash flows of each such entity for the
period covered thereby, in each case subject to normal year-end audit
adjustments (including footnotes), consistent with past practices. None of the
Company or any of its Subsidiaries had on such date any material contingent
liabilities, liabilities for Taxes or long-term leases, unusual forward or
long-term commitment or unrealized or unanticipated losses from any unfavorable
commitment which are not reflected or reserved against in the foregoing
statements or in the notes thereto to the extent required by GAAP.
57
(c) The pro forma balance sheet of the Company as of October 31,
1997, a copy of which has heretofore been furnished to the Agent, fairly
presents in all material respects the estimated consolidated opening balance
sheet of the Company assuming the Transactions had occurred as of October 31,
1997 and the financial condition of the Company on the Closing Date does not
differ in any material respect from the information therein set forth.
(d) Upon giving effect to the Transactions:
(i) The fair saleable value of the assets (including going concern
value) of the Company and each of its Subsidiaries, on a stand-alone
basis, exceeds the amount that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of such Person as they mature.
(ii) The assets of each of the Company and its Subsidiaries, on a
stand-alone basis, do not constitute unreasonably small capital for any
such Person to carry out its business as now conducted and as proposed to
be conducted including the capital needs of any such Person, taking into
account the particular capital requirements of the business conducted by
such Person, and projected capital requirements and debt and equity
capital availability thereof.
(iii) The Company does not intend to, and will not permit any of its
Subsidiaries to, incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable
on or in respect of debt of each of such Person). The cash flow of the
Company and each of its Subsidiaries and the debt and equity capital
available to the Company and its Subsidiaries, after taking into account
all anticipated uses of the cash of each such Person, will at all times be
sufficient to pay all amounts on or in respect of debt of each such
company when such amounts are required to be paid.
(iv) The Company does not intend, and does not believe, that final
judgments against any of the Company or its Subsidiaries in actions for
money damages will be rendered at a time when, or in an amount such that,
any such Person 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). The cash flow of the
Company and each of its Subsidiaries and the debt and equity capital
available to the Company and its Subsidiaries, on a
58
stand-alone basis, after taking into account all other anticipated uses of
the cash of each such Person (including the payments on or in respect of
debt referred to in paragraph (iii) of this Section 4.6(d)), will at all
times be sufficient to pay all such judgments promptly in accordance with
their terms.
4.7 Full Disclosure
The financial projections (including, without limitation, the pro
forma financial statements included therewith) heretofore furnished to the Agent
by the Company were prepared by or under the direction of an officer of the
Company and were prepared in good faith on the basis of information and
assumptions that the Company believed to be reasonable as of the date of such
information, and which assumptions are believed to be reasonable as of the date
hereof. All other factual information heretofore or contemporaneously furnished
in writing by or on behalf of the Company or any of its Subsidiaries to the
Agent or Lenders for purposes of or in connection with this Agreement
(including, but not limited to, the Recapitalization Agreement and all exhibits
and appendices thereto), taken as a whole, does not contain any untrue statement
by such party or, to its knowledge, any other party of a material fact or omit
to state any material fact known to the Company or any of its Subsidiaries
necessary to keep the statements made by such party or, to its knowledge, any
other party contained herein or therein from being misleading. No fact is known,
no condition exists nor has any event occurred which is known to the Company or
any of its Subsidiaries and has not been disclosed herein or in any other
document, certificate or statement furnished to the Agent or the Lenders for use
in the transactions contemplated hereby which, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
4.8 No Default
No event has occurred and is continuing which constitutes a
Potential Event of Default or an Event of Default.
4.9 Compliance with Contracts, Etc.
None of the Company or any of its Subsidiaries is in violation of
(A) its certificate of incorporation, by-laws or other organizational documents
or (B) any applicable law, ordinance, administrative or governmental rule or
regulation or (C) any order, decree or judgment of any Tribunal having
jurisdiction over any of them; no event of default or event that but for the
giving of notice or the lapse of time, or both, would constitute an event of
default on the part of the Company or any of its Subsidiaries exists
59
under any material Contractual Obligation except, in any case other than clause
(A), for such violations and defaults that would not, singly or in the
aggregate, have a Material Adverse Effect.
4.10 No Litigation
There is no Litigation pending or, to the best knowledge of the
Company, threatened by, against, or which may relate to or affect, (a) any
benefit plan of the Company or any of its Subsidiaries or any fiduciary or
administrator thereof, (b) the Transactions, or (c) the Company or any of its
Subsidiaries that, singly or in the aggregate, could reasonably be expected to
have a Material Adverse Effect or that could reasonably be expected to
materially and adversely affect the ability of the Company to consummate the
Recapitalization in a timely manner. There are no outstanding injunctions or
restraining orders prohibiting consummation of any of the transactions
contemplated by the Loan Documents. There are no unsatisfied judgments against
the Company or any of its Subsidiaries or its business or activities that could
reasonably be expected to have a Material Adverse Effect. None of the Company or
any of its Subsidiaries has been advised that there is a reasonable likelihood
of an adverse determination of any Litigation which adverse determination,
should it occur, would have a Material Adverse Effect or a material adverse
effect on the ability of the Company or its Subsidiaries to consummate the
Transactions and to execute, deliver and perform its respective obligations
under the Loan Documents and each other document or instrument to be delivered
in connection with the Transactions executed or to be executed by it.
4.11 Use of Proceeds; Margin Stock, Etc.
The proceeds of the Bridge Loan will be used solely for the purposes
specified herein. None of such proceeds will be used for the purpose of
purchasing or carrying any Margin Stock within the meaning of the applicable
provisions of Regulation G, T, U or X, or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry a
Margin Stock or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of the applicable provisions of Regulation
G, T, U or X. Neither the Company nor any of its Subsidiaries has taken or will
take any action which might cause any of the Loan Documents to violate the
applicable provisions of Regulation G, T, U or X, or any other regulation of the
Board of Governors of the Federal Reserve System.
4.12 Taxes
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All material tax returns, foreign and domestic, required to be filed
prior to the Closing Date by the Company and each of its Subsidiaries in any
jurisdiction have been filed, and all material Taxes for which they are directly
or indirectly liable or to which any of their respective properties or assets
are subject have been paid prior to the time that such Taxes could give rise to
a Lien thereon. There is no material proposed tax assessment against the Company
or any of its Subsidiaries, and, to the best knowledge of the Company, there is
no basis for such assessment, except for Contested Claims.
4.13 ERISA
A. The Company, its Subsidiaries and each of their respective ERISA
Affiliates are in material compliance with all applicable provisions and
requirements of the Internal Revenue Code and ERISA and the regulations and
published interpretations thereunder with respect to each Employee Benefit Plan,
and have performed all their material obligations under each Employee Benefit
Plan.
B. No ERISA Events have occurred or are reasonably expected to occur
which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of the Company or any Subsidiary of the
Company or any of their respective ERISA Affiliates in excess of $100,000 during
the term of this Agreement.
C. Except as disclosed on Schedule C and except to the extent
required under Section 4980B of the Internal Revenue Code, no Employee Benefit
Plan provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees of the Company or any Subsidiary
of the Company or any of their respective ERISA Affiliates.
D. In accordance with the most recent actuarial valuations, the
Amount of Unfunded Benefit Liabilities individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans
which have a negative Amount of Unfunded Benefit Liabilities), does not exceed
$100,000.
E. None of the Company or any of its Subsidiaries is a party to any
Foreign Plans. For purposes hereof, the term "Foreign Plans" shall mean any
plan, program, policy, arrangement or agreement maintained or contributed to by,
or entered into with, the Company or any of its Subsidiaries with respect to
employees employed outside the United States.
4.14 Compliance with Law
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The Company and each of its Subsidiaries is in compliance with all
Laws, except where the failure to comply, singly or in the aggregate, would not
have a Material Adverse Effect.
4.15 Government Regulation
Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or other Law which regulates the Incurrence by the Company or any
of its Subsidiaries of Indebtedness, including, but not limited to, Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
4.16 Capital Structure and Subsidiaries
After giving effect to the Transactions, the Company will have no
interest in any Person other than the Subsidiaries of the Company set forth on
Schedule B and other Investments of the Company as set forth on Schedule D and
the Company will own, free and clear of all Liens, claims or restrictions on
voting or transfer (other than as permitted by this Agreement), 100% of all
classes of outstanding Capital Stock of each of the entities set forth on such
Schedule B, except as specified on Schedule B. All of the issued and outstanding
shares of Capital Stock of the Company and of each of its Subsidiaries is, and
at and as of the date of consummation of the Transactions will be, duly
authorized, validly issued, fully paid and nonassessable.
4.17 Intellectual Property
A. Schedule E sets forth a complete and correct list, as of the
Closing Date, of: (i) all patented or registered Intellectual Property and
pending patent applications or applications for registration of Intellectual
Property owned or filed by or on behalf of the Company or any of its
Subsidiaries; (ii) all trade names and unregistered trademarks or service marks
owned by or used by the Company or any of its Subsidiaries; and (iii) all
licenses of Intellectual Property to which the Company or any of its
Subsidiaries is a party, either as licensee or licensor. Except as set forth on
Schedule E, the Company and its Subsidiaries own or are licensed to use all
material Intellectual Property necessary to permit the operation of their
businesses as currently conducted.
B. Except as disclosed on Schedule E, no material claim has been
asserted by any Person with respect to the use of any such Intellectual
Property, or challenging or questioning the validity or effectiveness of any
such
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Intellectual Property. Except as disclosed on Schedule E, the use of such
Intellectual Property by the Company or any of its Subsidiaries does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liabilities on the part of the
Company or any of its Subsidiaries that are material to the Company and its
Subsidiaries, taken as a whole. The consummation of the Transactions will not in
any material manner or to any material extent impair the ownership of (or the
license to use, as the case may be) any of such Intellectual Property by the
Company or any of its Subsidiaries.
4.18 Environmental Matters
Except as set forth on Schedule F:
(i) the operations of each of the Company and its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply in all material respects with all Environmental Laws,
except for any such noncompliance which would not reasonably be expected
to have a Material Adverse Effect;
(ii) each of the Company and its Subsidiaries has obtained all
Permits under Environmental Laws necessary to their respective operations,
and all such Permits are being maintained in good standing, and each of
the Company and its Subsidiaries is in compliance with all material terms
and conditions of such Permits, except for any such failure to obtain,
maintain or comply which would not reasonably be expected to have a
Material Adverse Effect;
(iii) none of the Company or its Subsidiaries has received (a) any
notice or claim to the effect that it is or may be liable to any Person
under any Environmental Law, including without limitation, any relating to
any Hazardous Materials, except as would not reasonably be expected to
have a Material Adverse Effect, or (b) any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9604) or comparable foreign
or state laws regarding any matter which could reasonably be expected to
result in a Material Adverse Effect, and, to the best of the Company's
knowledge, none of the Company or its Subsidiaries is involved in any
investigation, response or corrective action relating to or in connection
with any Hazardous Materials at any Facility or at any other location,
except for such of the foregoing which would not reasonably be expected to
have a Material Adverse Effect;
63
(iv) none of the Company or its Subsidiaries is subject to any
judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined could
reasonably be expected to have a Material Adverse Effect;
(v) none of the Company or its Subsidiaries or any of their
respective Facilities or operations are subject to any outstanding written
order or agreement with any governmental authority or private party
relating to (a) any actual or potential violation of or liability under
Environmental Laws or (b) any Environmental Claims, except for such of the
foregoing which would not reasonably be expected to have a Material
Adverse Effect;
(vi) none of the Company or its Subsidiaries has any contingent
liability in connection with any Release or threatened Release of any
Hazardous Materials by any of the Company or its Subsidiaries, except for
such of the foregoing which would not reasonably be expected to have a
Material Adverse Effect;
(vii) none of the Company or its Subsidiaries or, to the best of the
Company's knowledge, any predecessor of any of the Company or its
Subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state equivalent except in
compliance in all material respects with Environmental Laws;
(viii) no Hazardous Materials exist on, under or about any Facility
in a manner that would reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect, and none of the
Company or its Subsidiaries has filed any notice or report of a Release of
any Hazardous Materials that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect;
(ix) none of the Company or its Subsidiaries or, to the best of the
Company's knowledge, any of their respective predecessors has disposed of
any Hazardous Materials in a manner that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(x) no underground storage tanks or surface impoundments are on or
at any Facility; and
(xi) no Lien in favor of any Person relating to or in connection
with any Environmental Claim has been
64
filed or has been attached to any Facility or other assets of the Company
or any of its Subsidiaries, except for any such Lien which would not
reasonably be expected to have a Material Adverse Effect.
Notwithstanding anything in this Section 4.18 to the contrary, to the Company's
knowledge, no event or condition has occurred which may interfere with present
compliance by the Company or its Subsidiaries with any Environmental Law, or
which may give rise to any liability under any Environmental Law, including,
without limitation, any matter disclosed on Schedule F which, individually or in
the aggregate, has had a Material Adverse Effect.
4.19 Survival of Representations and Warranties
Subject to Section 10.10B, all representations and warranties in the
Loan Documents shall survive delivery of the Bridge Notes and the making of the
Bridge Loan and shall continue until one year after repayment of the Notes and
the Obligations, and any investigation at any time made by or on behalf of the
Lenders shall not diminish the Lenders' right to rely thereon.
4.20 Permits
Except as disclosed on Schedule G, the Company and its Subsidiaries
have such certificates, permits, licenses, franchises, consents, approvals,
authorizations and clearances that are material to the condition (financial or
otherwise), business or operations of the Company and its Subsidiaries, taken as
a whole ("Permits"), and are (and will be immediately after the consummation of
the Transactions) in compliance in all material respects with all applicable
Laws of all Tribunals as are necessary to own, lease or operate their respective
properties and to conduct their businesses in the manner as presently conducted
and to be conducted immediately after the consummation of the Transactions, and
all such Permits are valid and in full force and effect and will be valid and in
full force and effect immediately upon consummation of the Transactions. The
Company and its Subsidiaries are, and immediately after the consummation of the
Transactions will be, in compliance in all material respects with their
respective obligations under such Permits and no event has occurred that allows,
or after notice or lapse of time would allow, revocation or termination of such
Permits, except for any such revocation or termination as would not, singly or
in the aggregate, have a Material Adverse Effect.
4.21 Insurance
The Company and its Subsidiaries carry or are entitled to the
benefits of insurance (including self-
65
insurance) in such amounts and covering such risks as is generally maintained by
companies of established repute engaged in the same or similar businesses, and
all such insurance is (and will be immediately after the consummation of the
Transactions) in full force and effect.
4.22 Labor Matters
No labor disturbance by the employees of the Company and its
Subsidiaries exists or, to the best knowledge of the Company, is threatened, and
the Company is not aware of any existing or imminent labor disturbance by the
employees of the Company's or its Subsidiaries' principal suppliers,
manufacturers or customers that, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
4.23 Guarantees
Each Subsidiary Guarantor shall, on the date it executes and
delivers a Guarantee hereunder, have the full corporate power, authority and
capacity to execute and deliver such Guarantee and to perform all of its
obligations to be performed thereunder; all corporate and other acts, conditions
and things required to be done and performed or to have occurred prior to such
execution and delivery to constitute such Guarantee as a valid and legally
binding obligation of such Subsidiary Guarantor enforceable in accordance with
its terms shall have been done and performed and shall have occurred in due
compliance in all material respects with all applicable Laws; on the date of
such execution and delivery, the execution, delivery and performance of such
Guarantee by such Subsidiary Guarantor will not (i) violate any provision of Law
or any provision of the charter or bylaws of such Subsidiary Guarantor, or (ii)
result in a breach of, a default under (including, without limitation, any event
which with notice or lapse of time, or both, would constitute a breach of or a
default under), or the creation of any Lien on the properties or assets of such
Subsidiary Guarantor, the Company or any other Subsidiary of the Company under
any Contract to which such Subsidiary Guarantor or the Company or any other
Subsidiary of the Company is a party or by which the properties or assets of
such Subsidiary Guarantor, the Company or any other Subsidiary of the Company
may be bound except, in any case other than a violation of the charter or bylaws
of such Subsidiary Guarantor, for any breach, default or violation that could
not reasonably be expected to result in a Material Adverse Effect; on the date
of such execution and delivery, each Guarantee executed and delivered by a
Subsidiary Guarantor shall constitute legal, valid, binding and unconditional
obligations of the Subsidiary Guarantor executing and delivering it to the
Lenders hereunder, enforceable in accordance with its terms, except to the
66
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law); and
the foregoing representations and warranties of the Company shall be deemed for
all purposes to have been made on each date when a Guarantee is delivered
hereunder with respect solely to that Guarantee and the Subsidiary Guarantor so
issuing such Guarantee.
4.24 Senior Indenture; etc.
Each of the Company and the Subsidiary Guarantors shall (to the
extent such documents are executed), on the date it executes and delivers the
Senior Indenture and the Exchange Notes and the Demand Take-Out Notes and the
indenture governing the Demand Take-Out Notes (or the guarantees related
thereto, as the case may be), have the full corporate power, authority and
capacity to do so and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute them as valid and legally binding obligations of the Company
enforceable against the Company and the Subsidiary Guarantors in accordance with
their respective terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), shall have been done and performed and shall
have occurred in due compliance with all applicable Laws; on the date, if any,
of such execution and delivery by the Company and the Subsidiary Guarantors, the
Senior Indenture and the Exchange Notes and the Demand Take-Out Notes (and the
guarantees) and the indenture governing the Demand Take-Out Notes shall
constitute legal, valid, binding and unconditional obligations of the Company
and the Subsidiary Guarantors, as the case may be, enforceable against the
Company and the Subsidiary Guarantors, as the case may be, in accordance with
their respective terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).
4.25 Broker's or Finder's Fees
Except as set forth on Schedule H, no broker's or finder's fees or
commissions will be payable by the Company
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or any of its Subsidiaries with respect to any transaction contemplated hereby
and no similar fees or commissions will be payable by the Company or any of its
Subsidiaries for any other services rendered to the Company or any of its
Subsidiaries in connection with the transactions contemplated hereby and
thereby.
4.26 Security Interests
On and after the Closing Date, each of the Security Documents
creates (or after the execution and delivery thereof and, where applicable,
filing and/or recording thereof will create), as security for the Obligations, a
valid and enforceable perfected security interest in and Lien on all of the
Pledged Collateral subject thereto, superior to and prior to the rights of all
third Persons, and subject to no Liens other than Prior Liens and Liens
permitted under the Security Documents or under this Agreement. No filings or
recordings are required in order to perfect 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 on or prior to the
Closing Date as contemplated by Section 3.1U or on or prior to the execution and
delivery thereof as contemplated by Section 5.15.
SECTION 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Loans and the Notes
and all other amounts due under this Agreement have been paid in full it shall
perform all covenants in this Section 5 required to be performed by it:
5.1 Financial Statements and Other Reports
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to each Lender and
the Agent:
(i) as soon as available and in any event within 30 days after the
end of each month ending after the Closing Date, (1) the consolidated
balance sheet of the Company and its Subsidiaries and the consolidating
balance sheets of the Company and the Material Subsidiaries, in each case
as at the end of such month, and (2) the related consolidated and
consolidating statements of income, stockholders' equity and cash flows,
in each case for such month and for the period from the beginning of the
then current fiscal year to the end of such month, setting forth in each
case in
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comparative form the corresponding consolidated figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the current
fiscal year delivered pursuant to Section 5.1(x), all in reasonable detail
and certified by the chief financial officer or the controller of the
Company that they fairly present the financial condition of such entities
as at the dates indicated and the results of their operations and their
cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments;
(ii) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year, (1)
the consolidated balance sheet of the Company and its Subsidiaries and the
consolidating balance sheets of the Company and the Material Subsidiaries
as at the end of such fiscal quarter, (2) the related consolidated and
consolidating statements of income, stockholders' equity and cash flows
for such fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the current
fiscal year delivered pursuant to Section 5.1(x), all in reasonable detail
and certified by the chief financial officer or the controller of the
Company that they fairly present, in all material respects, the financial
condition of each the Company and its Subsidiaries and the Company and the
Material Subsidiaries, as the case may be, at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (3) only if the Company does not file quarterly reports
on Form 10-Q with the Commission, a narrative report describing the
operations of the Company and its Subsidiaries (in the form of
management's discussion and analysis of such operations which would comply
with the disclosure requirements of the Exchange Act and rules and
regulations promulgated thereunder with respect to management's discussion
and analysis set forth in quarterly reports on Form 10-Q) prepared for
such fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter;
(iii) as soon as available and in any event within 100 days after
the end of each fiscal year, (1) the consolidated balance sheet of the
Company and its Subsidiaries and the consolidating balance sheets of
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the Company and the Material Subsidiaries as at the end of such fiscal
year, (2) the related consolidated and consolidating statements of income,
stockholders' equity and cash flows for such fiscal year, setting forth in
each case in comparative form the corresponding figures for the previous
fiscal year and the corresponding figures from the consolidated plan and
financial forecast for the current fiscal year delivered pursuant to
Section 5.1(x) for the fiscal year covered by such financial statements,
all in reasonable detail and certified by the chief financial officer or
the controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries and
the Company and the Material Subsidiaries, as the case may be, at the
dates and the results of their operations and their cash flows for the
periods indicated, (3) the Company's annual report on form 10-K for such
year, (4) only if the Company does not file annual reports on Form 10-K
with the Commission, a narrative report describing the operations of the
Company and its Subsidiaries (in the form of management's discussion and
analysis of such operations which would comply with the disclosure
requirements of the Exchange Act and rules and regulations promulgated
thereunder with respect to management's discussion and analysis set forth
in annual reports on Form 10-K) prepared for such fiscal year, and (5) in
the case of such consolidated financial statements, a report thereon of
independent certified public accountants of recognized national standing,
which report shall be unqualified as to scope of audit, shall express no
doubts about the ability of the Company and its Subsidiaries to continue
as a going concern, and shall state that such consolidated financial
statements fairly present in all material respects the consolidated
financial position of the Company 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 as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance
with generally accepted auditing standards;
(iv) together with each delivery of financial statements pursuant to
Sections 5.1(ii) and (iii) above, an Officers' Certificate of the Company
stating that the signers have reviewed the terms of this Agreement and the
Notes and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of the
Company and its Subsidiaries during the accounting period
70
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as of the date
of the Officers' Certificate, of any condition or event which constitutes
an Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period of
existence thereof and what action the Company has taken, is taking and
proposes to take with respect thereto;
(v) together with each delivery of consolidated financial statements
pursuant to Section 5.1(iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating
whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default that relates to accounting
matters has come to their attention and, if any such condition or event
has come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default that would
not be disclosed in the course of their audit examination, and (b) stating
that based on their audit examination nothing has come to their attention
that causes them to believe that the information set forth and as defined
in the certificates delivered therewith is not fairly stated, in all
material respects, in relation to the financial statements from which it
has been derived;
(vi) promptly upon receipt thereof (unless restricted by applicable
professional standards), copies of all reports in final form (other than
reports of a routine or ministerial nature which are not material)
submitted to the Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of the Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
(vii) promptly upon the sending or filing thereof, copies of (a) all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to their security holders or by any
Subsidiary of the Company to its security holders other than the Company
or another Subsidiary of the Company, (b) all regular and periodic reports
and all registration statements (other than on Form S-8 or a similar form)
and prospectuses, if any, filed by the
71
Company or any of its Subsidiaries with any securities exchange or with
the Securities and Exchange Commission or any governmental authority
(other than reports of a routine or ministerial nature which are not
material), and (c) all press releases and other statements made available
generally by the Company or any of its Subsidiaries to the public
concerning material developments in the business of the Company or any of
its Subsidiaries;
(viii) promptly upon any executive officer of the Company obtaining
actual knowledge (a) of any condition or event which constitutes an Event
of Default or Potential Event of Default, or becoming aware that any
Lender or Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default under
this Agreement, (b) that any Person has given any notice to the Company or
any Subsidiary of the Company or taken any other action with respect to a
claimed default or event or condition which could reasonably be expected
to result in an Event of Default referred to in Section 7.2, or (c) of the
occurrence of any event or change that has caused or evidences, either in
any case or in the aggregate, a Material Adverse Effect, 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,
Potential Event of Default, event or condition, and what action the
Company has taken, is taking and proposes to take with respect thereto;
(ix) promptly upon any executive officer of the Company obtaining
actual knowledge of (X) the institution of, or non-frivolous threat of,
any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
the Company or any of its Subsidiaries or any property of the Company or
any of its Subsidiaries (collectively, "Proceedings") not previously
disclosed in writing by the Company to Lenders or (Y) any material
development in any Proceeding that, in any case:
(1) has a reasonable possibility of giving rise to a Material
Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
Transactions;
written notice thereof together with such other information as may be
reasonably available to the
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Company or any of its Subsidiaries to enable Lenders and their counsel to
evaluate such matters;
(x) as soon as practicable but in any event no later than 40 days
following the first day of each fiscal year a forecast for each of the
twelve months of the current year of the consolidated balance sheet and
the consolidated statements of income, cash flow and cash position of the
Company and its Subsidiaries and the consolidating balance sheet and the
consolidating statements of income, cash flow and cash position of the
Company and the Material Subsidiaries, together with an outline of the
major assumptions upon which the forecast is based. Together with each
delivery of financial statements pursuant to Sections 5.1(ii) and (iii)
above, the Company shall deliver a comparison of the current year to date
financial results against the budget required to be submitted pursuant to
this Section;
(xi) in writing, promptly upon an executive officer of the Company
obtaining actual knowledge that the Company or any of its Subsidiaries has
received notice of any claim, demand, action, report or investigation of
any potential or actual liability arising in connection with (x) the
non-compliance with or violation of the requirements of any Environmental
Law which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (y) the release or threatened
release of any Hazardous Material, substance or constituent into the
environment which, in any such case referred to in (x) or (y), could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect or which release the Company or any of its
Subsidiaries would have a duty to report to a Tribunal under an
Environmental Law, or (z) the existence of any Environmental Lien on any
properties or assets of the Company or any of its Subsidiaries;
(xii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of the
Company or any of its Subsidiaries;
(xiii) promptly upon any Person becoming a Subsidiary of the
Company, a written notice setting forth with respect to such Person (a)
the date on which such Person became a Subsidiary of the Company and (b)
all of the data required to be set forth in Schedule B with respect to all
Subsidiaries of the Company; and
73
(xiv) with reasonable promptness, such other information and data
with respect to the Company or any of its Subsidiaries or any of their
respective property, business or assets as from time to time may be
reasonably requested by any Lender; provided that no information or data
shall be required to be delivered hereunder or under any other provision
of this Agreement if it would violate any applicable attorney-client or
accountant-client privilege.
(xv) as soon as available, the audited, unaudited and pro forma
financial statements meeting the requirements of Regulation S-X under the
Securities Act of 1933, as amended, of the Company and each Subsidiary
Guarantor.
5.2 Corporate Existence, Etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises to its business and
those of each of its Subsidiaries, except as permitted by Section 6.7 or where
the failure to so preserve or keep will not, singly or in the aggregate, have a
Material Adverse Effect.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. The Company will, and will cause each of its Subsidiaries to, pay
all material Taxes, assessments and other governmental charges imposed upon it
or any of its material properties or assets or in respect of any of its
franchises, business, income or property before any material penalty accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien upon any of its properties or assets
prior to the time when any material penalty or fine shall be incurred with
respect thereto, provided that no such charge or claim need be paid if the
validity or amount of such charge or claim is being diligently contested in good
faith and if such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor.
B. The Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than the Company or any of its Subsidiaries so long as the filing
of such consolidated income tax return is permitted by applicable law).
5.4 Maintenance of Properties; Insurance
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The Company will maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of the Company and its Subsidiaries
and from time to time promptly will make or cause to be made all necessary
repairs, renewals and replacements thereof; provided that nothing in this
Section 5.4 shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any such properties, or
disposing of any of them, if such action is in the ordinary course of business
or, in the reasonable good faith judgment of the Company, necessary or desirable
in the conduct of its business or otherwise permitted by this Agreement. The
Company will maintain or cause to be maintained, with financially sound and
reputable insurers or with self insurance programs, in each case to the extent
consistent with prudent business practices and customary in its industry,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage of the kinds (including,
in any event, business interruption insurance) and in the amounts customarily
carried or maintained under similar circumstances by corporations of established
reputation engaged in similar businesses and owning similar properties in the
same general respective areas in which the Company and its Subsidiaries operate.
5.5 Inspection
The Company shall permit any authorized representatives designated
by the Agent to visit and inspect any of the properties of the Company or its
Subsidiaries, including, without limitation, its and their financial and
accounting records, and to receive copies and extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of the Company or
any of its Subsidiaries may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and without undue disruption of normal business
operations and as often as may be reasonably requested.
5.6 Equal Security for Loans and Notes
If the Company or any of its Subsidiaries shall create, assume or
suffer to exist any Lien upon any of their respective property or assets,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of Section 6.2, the Company shall, at the request of the Agent, make
or cause to be made effective provision whereby the Obligations under this
Agreement will be secured by such Lien equally and ratably with any and all
other
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Indebtedness thereby secured as long as any such Indebtedness shall be secured;
provided that this covenant shall not be construed as or deemed to be a consent
by the Lenders to any violation of the provisions of Section 6.2; and provided,
further, that the Company shall under no circumstances be required to make or
cause to be made effective provision whereby the Obligations under this
Agreement will be secured, directly or indirectly, by Margin Stock.
5.7 Compliance with Laws, Etc.
The Company shall and shall cause each of its Subsidiaries to comply
with the requirements of all applicable Laws of any Tribunal, to the extent
noncompliance, singly or in the aggregate, could reasonably be expected to have
a Material Adverse Effect.
5.8 Maintenance of Accurate Records, Etc.
The Company shall keep, and will cause each of its Subsidiaries to
keep, true books and records and accounts in which full and correct entries will
be made of all its respective business transactions, and will reflect, and cause
each of its Subsidiaries to reflect, in its respective financial statements
adequate accruals and appropriations to reserves all in accordance with GAAP and
consistent with prior business practices.
5.9 Take-Out Financing
A. The Company agrees that upon request (a "Request") from the
holder or holders of a majority in aggregate principal amount of the Loans then
outstanding made at any time after January 1, 1998 and prior to the earlier of
(x) payment in full of the Loans and (y) the Conversion Date, the Company will
take all reasonable actions necessary or desirable, to the extent reasonably
within its power, so that the Take-Out Bank can, as soon as reasonably
practicable after such Request, publicly sell or privately place the Take-Out
Securities (the "Initial Request Date"). The Company further agrees that upon
reasonable notice by the Take-Out Bank, at any time and from time to time
following the Initial Request Date, the Company will issue and sell Demand
Take-Out Notes upon such terms and conditions as specified in such notice;
provided that (i) the interest rate thereon shall be determined by the Take-Out
Bank to be the rate reasonably necessary to enable the Demand Take-Out Notes to
be sold, in light of the then prevailing market conditions but in no event shall
the interest rate on the Demand Take-Out Notes exceed 15% per annum; (ii) the
Demand Take-Out Notes shall be issued through a private placement; (iii) the
maturity of any Demand Take-Out Notes shall not be earlier than the seventh
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anniversary of the Closing Date; and (iv) all other arrangements with respect to
the Demand Take-Out Notes shall be reasonably satisfactory in all respects to
the Take-Out Bank and the Company in light of the then prevailing market
conditions.
B. If it shall be reasonably determined by the Take-Out Bank based
upon the prevailing market conditions that it is necessary and advisable to sell
the Demand Take-Out Notes with an equity component, the Company shall issue
common equity or common equity equivalents to the purchasers of the Demand
Take-Out Notes in such amount as is reasonably necessary in order for the
Company to receive net proceeds from the sale of the Demand Take-Out Notes in an
amount sufficient to repay the Bridge Loan in full; provided that in no event
will the Company be required to issue common equity or common equity equivalents
representing more than 5% of its outstanding common equity (calculated on a
fully-diluted basis) pursuant to this sentence.
5.10 Exchange of Term Notes
The Company will, on the 5th Business Day following the written
request (the "Exchange Request") of the holders of a majority of the Term Notes
bearing interest at the Fixed Rate (which the majority shall be entitled to
deliver on a single occasion):
(i) Execute and deliver, cause each Subsidiary Guarantor to execute
and deliver, and use its best efforts to cause a bank or trust company
acting as trustee thereunder to execute and deliver, the Senior Indenture,
if such Senior Indenture has not previously been executed and delivered;
(ii) Execute and deliver to the holders in accordance with the
Senior Indenture notes in the form attached to the Senior Indenture (the
"Exchange Notes") bearing a fixed interest rate equal to the Fixed Rate in
exchange for such Term Notes dated the date of the issuance of such
Exchange Note, payable to the order of such holders in the same principal
amount as such Term Notes, and cause each Subsidiary Guarantor to endorse
its guarantee thereon; and
(iii) Execute and deliver, and cause each Subsidiary Guarantor to
execute and deliver, to such holders a Registration Rights Agreement, if
such Registration Rights Agreement has not previously been executed and
delivered or, if such Registration Rights Agreement has previously been
executed and delivered and such holders are not already party thereto,
permit such holders to become party thereto.
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Term Notes delivered to the Company under this Section 5.10 in
exchange for Exchange Notes shall be canceled and the corresponding amount of
the Term Loan deemed repaid and the Exchange Notes shall be governed by and
construed in accordance with the terms of the Senior Indenture.
The bank or trust company acting as trustee under the Senior
Indenture shall at all times be a corporation organized and doing business under
the laws of the United States of America or the State of New York, in good
standing and having its principal offices in the Borough of Manhattan, in The
City of New York, which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by Federal or State
authority and which has a combined capital and surplus of not less than $50.0
million.
5.11 ERISA Compliance
Each of the Company and its Subsidiaries will (i) make prompt
payment of all contributions which it is obligated to make under all Pension
Plans and which are required to meet the minimum funding standard set forth in
ERISA with respect to each of the Pension Plans, (ii) within 30 days after the
filing thereof, furnish to the Lenders each Schedule B to the annual
return/report (Form 5500 Series), required to be filed with the Department of
Labor and/or the Internal Revenue Service pursuant to ERISA, with respect to
each of the Pension Plans that is not a Multiemployer Plan for each Plan year,
and (iii) notify the Lenders promptly upon becoming aware of any fact, including
but not limited to, any Reportable Event arising in connection with any of the
Pension Plans that is not a Multiemployer Plan, which could be reasonably
expected to constitute grounds for termination thereof by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such Pension Plan, together with a statement as to the action, if
any, proposed to be taken with respect thereto.
5.12 Register
The Company hereby designates the Agent to serve as the Company's
agent, solely for purposes of this Section 5.12, to maintain a register (the
"Register") on which it will record the Loans made by each of the Lenders and
each repayment in respect of the principal amount of the Loans of each Lender.
Failure to make any such recordation, or any error in such recordation shall not
affect the Company's obligations in respect of such Loans. With respect to any
Lender, the transfer of the Loan Commitments of such Lender and the rights to
the principal of, and interest on, any Loan made pursuant to such Loan
Commitments shall not be
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effective until such transfer is recorded on the Register maintained by the
Agent with respect to ownership of such Loan Commitments and Loans and prior to
such recordation all amounts owing to the transferor with respect to such Loan
Commitments and Loans shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Loan Commitments and Loans shall be
recorded by the Agent on the Register only upon the receipt by the Agent of a
properly executed and delivered assignment and assumption agreement pursuant to
Section 10.2A. Coincident with the delivery of such an assignment and assumption
agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note evidencing such Loan, and thereupon
one or more new Notes of the same type and in the same aggregate principal
amount shall be issued to the assigning or transferor Lender and/or the new
Lender.
5.13 Lenders Meeting
The Company will participate in a meeting with the Lenders once
during each fiscal year during which any Obligations are outstanding hereunder
to be held at a location and a time selected by the Company and reasonably
satisfactory to the Required Lenders.
5.14 Additional Subsidiary Guarantors
The Company will cause any Person which becomes a Subsidiary of the
Company (whether by creation, acquisition or otherwise) to execute and deliver a
guarantee, in form and substance satisfactory to the Agent (and with such
documentation relating thereto as the Agent shall require, including, without
limitation, a supplement or amendment to this Agreement and opinions of counsel
as to the enforceability of such guarantee) pursuant to which such Subsidiary
shall become a Subsidiary Guarantor under the Bridge Notes and this Agreement in
accordance with Section 9 with the same effect and to the same extent as if such
Person had been named herein as a Subsidiary Guarantor.
5.15 Additional Security; Further Assurances; Pledge of Additional
Collateral
Promptly, and in any event within 30 days after the acquisition of
assets of the type that would have constituted Pledged Collateral (if the person
acquiring such assets had executed an appropriate Security Document on the
Closing Date) at the Closing Date (the "Additional Collateral"), the Company
will, and will cause each of the Subsidiary Guarantors to, at the request of the
Agent following consultation with the Company as to the value of any such
Additional Collateral, take all necessary action,
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including entering into the appropriate security documents and filing the
appropriate financing statements under the provisions of the UCC or applicable
foreign, domestic or local laws, rules or regulations in each of the offices
where such filing is necessary or appropriate to grant the Agent a perfected
Lien in such Pledged Collateral pursuant to and to the full extent required by
the Security Documents and this Agreement; provided that no such action will be
required by the Company or any Subsidiary Guarantor to the extent that any such
Additional Collateral is subject to a preexisting agreement which prohibits the
granting of any additional liens. All actions taken by the parties in connection
with the pledge of Additional Collateral, including, without limitation, costs
of counsel for the Agent, shall be for the account of the Company, which shall
pay all sums due on demand.
SECTION 6 NEGATIVE COVENANTS
The Company covenants and agrees that until the satisfaction in full
of the Loans and the Notes and all other Obligations due under this Agreement it
will fully and timely perform all covenants in this Section 6.
6.1 Indebtedness
The Company shall not, and shall not cause or permit any of its
Subsidiaries, directly or indirectly, to Incur after the Closing Date any
Indebtedness, except for the following ("Permitted Indebtedness"):
(i) the Company and the Subsidiary Guarantors may Incur the
Obligations;
(ii) the Company and the Subsidiary Guarantors may Incur the Bridge
Notes, Term Notes, Take-Out Securities and Exchange Notes;
(iii) the Company and the Subsidiary Guarantors may Incur
obligations under a credit facility (the "New Credit Facility") in an
amount not exceeding $10.0 million; provided, such New Credit Facility is
reasonably acceptable to the Agent;
(iv) the Company and its Subsidiaries may Incur Contingent
Obligations permitted by Section 6.5 and, upon any matured obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligations so extinguished;
(v) the Company and its Subsidiaries may Incur Indebtedness in
respect of Capital Leases; provided that the aggregate amount of
Indebtedness incurred
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under this Section 6.1(v) and Section 6.1(ix) (A) from and after the
Closing Date and on or prior to the Conversion Date, shall not exceed $1.5
million at any time outstanding, and (B) after the Conversion Date, shall
not exceed $3.0 million at any time outstanding;
(vi) the Company and its Subsidiaries may Incur Intercompany
Indebtedness;
(vii) the Company and its Subsidiaries may remain liable with
respect to the Indebtedness which is existing on the Closing Date and is
described on Schedule I;
(viii) the Company and its Subsidiaries may Incur Permitted
Refinancing Indebtedness;
(ix) the Company and its Subsidiaries may Incur Indebtedness to
finance (a) the purchase price of equipment, fixtures and any other
similar property or the remodeling or other improvement costs of any
facility of the Company or any of its Subsidiaries or (b) the purchase
price of any Real Property Assets; provided that the aggregate principal
amount of all such Indebtedness, together with all Indebtedness incurred
under Section 6.1(v) above, (A) from and after the Closing Date and on or
prior to the Conversion Date, shall not exceed $1.5 million at any time
outstanding and (B) after the Conversion Date, shall not exceed $3.0
million at any time outstanding;
(x) Subsidiaries of the Company acquired after the Closing Date may
remain liable with respect to Indebtedness existing immediately prior to
the time any such entity became a Subsidiary of Company in an amount which
does not exceed $1.0 million at any one time outstanding; provided that
such Indebtedness is not incurred in contemplation of such acquisition;
and
(xi) after the Conversion Date, the Company and its Subsidiaries may
Incur other Indebtedness in an aggregate principal amount not to exceed at
any time outstanding $1.0 million.
In addition to the foregoing, at any time after the Conversion Date,
if no Potential Event of Default with respect to payment of principal of, or
interest on, the Notes or Event of Default shall have occurred and be continuing
at the time of or as a consequence of the incurrence of any such Indebtedness,
the Company or any Subsidiary Guarantor may Incur Indebtedness if immediately
after giving effect to the incurrence of such Indebtedness the Fixed Charge
Coverage Ratio of the Company would be greater than 2.0 to 1.0.
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6.2 Liens
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or of any of its Subsidiaries, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive any income or profits
therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens securing the obligations under the New Credit Facility,
provided that such Liens encumber only the accounts receivable, and other
properties and assets related thereto (as determined in good faith by the
board of directors of the Company), of the Company and its Subsidiaries;
(iii) Liens on (a) Real Property Assets or (b) equipment, fixtures
and other similar property of Company and any of its Subsidiaries, in each
case securing Indebtedness described in Sections 6.1(v) and 6.1(ix);
provided that such Liens shall extend only to the equipment, fixtures, and
other similar property so financed (and improvements or attachments
thereto) and the proceeds thereof;
(iv) Liens securing Indebtedness permitted under Section 6.1(x),
which Liens are existing prior to the time the entity which incurred such
Indebtedness became a Subsidiary of the Company; provided that such Liens
were not incurred in connection with, or in contemplation of, the
acquisition of such Subsidiary and such Liens extend or cover only the
property and assets of such entity which were covered by such Liens and
which were owned by such entity, in each case at the time such entity
became a Subsidiary of the Company (and improvements or attachments
thereto);
(v) the replacement, extension or renewal of any Lien permitted by
this Section 6.2 upon or in the same property subject to such Lien and as
security for the same obligations or any refinancings thereof to the
extent such refinancings are permitted under Section 6.1; provided that
such Lien does not extend to or cover any property other than the property
covered by such Lien immediately prior to such replacement, extension or
renewal of such Lien (and improvements or attachments thereto) and the
principal of the obligations secured thereby is not increased; and
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(vi) after the Conversion Date, additional Liens securing
Indebtedness or other obligations at any one time outstanding not
exceeding $1.0 million.
6.3 Restricted Payments
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly (a) declare or pay any dividend, or make
any distribution, on any Capital Stock of the Company (other than dividends or
distributions payable solely in Qualified Capital Stock of the Company), (b)
purchase, redeem or otherwise acquire or retire for value any of the Company's
Capital Stock, or any warrants, rights or options to acquire shares of any class
of such Capital Stock or (c) make any principal payment on, purchase, defease,
redeem, prepay, or otherwise acquire or retire for value, other than any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Subordinated Indebtedness of the Company or of a Subsidiary Guarantor (any
such dividend, distribution, purchase, redemption, acquisition, retirement,
defeasance or prepayment set forth in clauses (a), (b) and (c) above a
"Restricted Payment").
(b) Notwithstanding the foregoing, if no Potential Event of Default
or Event of Default shall have occurred and be continuing or shall be caused as
a consequence thereof, the provisions set forth in the immediately preceding
paragraph will not prevent (1) the acquisition of any shares of Capital Stock of
the Company or the repurchase, redemption or other repayment of any Subordinated
Indebtedness of the Company or of a Subsidiary Guarantor in exchange for or
solely out of the proceeds of the substantially concurrent sale (other than to
the Company or a Subsidiary of the Company) of shares of Qualified Capital Stock
of the Company, (2) the repurchase, redemption or other repayment of any
Subordinated Indebtedness of the Company in exchange for or solely out of the
proceeds of the substantially concurrent sale (other than to the Company or a
Subsidiary of the Company) of Subordinated Indebtedness of the Company with a
Weighted Average Life to Maturity equal to or greater than the then remaining
Weighted Average Life to Maturity of the Subordinated Indebtedness repurchased,
redeemed or repaid and (3) repurchases by the Company of Common Stock of the
Company from employees of the Company upon the death, disability or termination
of employment of such employees in an aggregate amount not to exceed $750,000.
6.4 Investments; Joint Ventures
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment (other than
Permitted
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Investments) in any Person, including any Joint Venture, except:
(i) the Company and its Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any Subsidiaries of
the Company and described on Schedule B;
(ii) the Company and its Subsidiaries may continue to own the
Investments owned by them and described on Schedule D;
(iii) the Company and its Subsidiaries may accept promissory notes
received in consideration of, or the deferral of a portion of the sales
price accepted with respect to, any Asset Sale permitted under Section
6.14;
(iv) the Company and its Subsidiaries may make and own Investments
received in connection with the bankruptcy of suppliers and customers or
received pursuant to a plan of reorganization of any supplier or customer,
in each case in settlement of delinquent obligations or disputes with such
suppliers or customers;
(v) the Company or any of its Subsidiaries may make loans to its
employees for the purpose of purchasing Common Stock of the Company; and
so long as no Potential Event of Default or Event of Default shall have
occurred and be continuing, the Company or any of its Subsidiaries may
make loans to its employees for other bona fide business purposes;
provided that the aggregate amount of such loans shall not exceed $1.0
million at any time outstanding; and
(vi) The Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed $1.0 million (including
the amount of any Indebtedness constituting the deferred purchase price
payable in connection with any Asset Sale and any amounts that may become
payable in connection therewith as a result of post-closing adjustments)
at any time outstanding.
6.5 Contingent Obligations
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) the Company and its Subsidiaries may become and remain liable
with respect to Contingent
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Obligations outstanding on the Closing Date described in Schedule H;
(ii) the Subsidiary Guarantors may become and remain liable with
respect to Contingent Obligations under the Guarantees;
(iii) the Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with the Recapitalization, additional acquisitions of assets or
stock, Asset Sales or other sales of assets; provided that the maximum
assumable liability in respect of all such obligations in connection with
Asset Sales or other sales shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in connection with
such Asset Sales and other sales;
(iv) the Company and its Subsidiaries may become and remain liable
with respect to guarantees of Indebtedness or other obligations of a
Wholly-Owned Subsidiary of the Company and a Subsidiary of the Company may
become and remain liable with respect to guarantees of Indebtedness or
other obligations of the Company or a Wholly-Owned Subsidiary of the
Company; and
(v) after the Conversion Date, the Company and its Subsidiaries may
become and remain liable with respect to other Contingent Obligations;
provided that the maximum aggregate liability, contingent or otherwise, of
the Company and its Subsidiaries in respect of all such Contingent
Obligations shall at no time exceed $500,000.
6.6 Senior Indebtedness
Neither the Company nor any of the Subsidiary Guarantors shall,
directly or indirectly, Incur any Indebtedness that is by its terms (or by the
terms of any agreement governing such Indebtedness) subordinated in right of
payment to any other Indebtedness of the Company or of such Subsidiary Guarantor
unless such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate in right of payment to
the Loans and the Notes and the Guarantees.
6.7 Restriction on Fundamental Changes
Subject to Section 5.2 and other than the sale of 100% of a
Subsidiary of the Company in accordance with Section 2.5A(ii)(a) and Section
6.14, the Company shall not,
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and shall not cause or permit any of its Subsidiaries to, directly or
indirectly, enter into any transaction, or series of related transactions, of
merger, amalgamation, consolidation or combination, or consolidate, or
liquidate, windup or dissolve itself (or suffer any liquidation or dissolution),
or convey, sell, lease, sublease, transfer or otherwise dispose of, in one
transaction or in a series of transactions, all or substantially all of its
business, property or assets, whether now owned or hereafter acquired, except
that any Subsidiary of the Company may be merged, amalgamated, consolidated or
combined with or into the Company or any Wholly-Owned Subsidiary of the Company
(including any entity that will become a Wholly-Owned Subsidiary of the Company
as a result of such transaction) or be liquidated, wound up or dissolved, or all
or substantially all of its business, property or assets may be conveyed, sold,
leased, transferred or otherwise disposed of, in one transaction or in a series
of transactions, to the Company or to any Wholly-Owned Subsidiary of the
Company; provided that (A) no Potential Event of Default or Event of Default
shall have occurred and be continuing or would result therefrom, (B) in the case
of such a merger, amalgamation, consolidation or combination of the Company and
a Subsidiary of the Company, the Company shall be the continuing or surviving
corporation, and (C) the surviving entity (I) continues to be bound as such
under this Agreement or the Guarantee of such Subsidiary Guarantor, as the case
may be, and (II) executes and delivers to the Agent immediately upon
consummation of such transaction a written confirmation or acknowledgment to
such effect, in form and substance satisfactory to the Agent, together with
evidence of appropriate corporate power, authority and action and a written
legal opinion in form and substance satisfactory to the Agent to the effect that
this Agreement and such Guarantee continue to be a legal, valid and binding
obligation of such entity, enforceable against such entity in accordance with
its terms (subject to customary exceptions in respect of bankruptcy, insolvency
and other equitable remedies) and with respect to such other matters as the
Agent may reasonably request provided, further, that if such transaction and the
assumption contemplated by clause (C)(I) above occurs after the Conversion Date,
the Company (i) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction and
(2) shall be able to incur at least $1.00 of additional indebtedness pursuant to
Section 6.1.
6.8 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or
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become effective any encumbrance or restriction on the ability of any Subsidiary
of the Company to (a) pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by, such
Subsidiary's profits; (b) make loans or advances or pay any Indebtedness or
other obligation owed to the Company or to any Subsidiary of the Company; or (c)
transfer any of its property or assets to the Company or to any Subsidiary of
the Company (any such restriction or encumbrance a "Payment Restriction"),
except for such encumbrances or restrictions existing under or by reason of: (1)
any restrictions contained in (i) the Loan Documents, the Senior Indenture and
any agreement or instrument governing the New Credit Facility or the Take-Out
Securities or Exchange Notes to the extent Incurred in accordance with this
Agreement; (ii) the Indebtedness pertaining to a Subsidiary of the Company that
is not a Subsidiary of the Company on the Closing Date in existence at the time
such Subsidiary becomes a Subsidiary of the Company; provided that any such
Indebtedness was not incurred as a result of, in connection with or in
anticipation of the transaction pursuant to which such entity becomes a
Subsidiary of the Company and it does not apply to any Person, or the properties
of assets of any Person, other than the Subsidiary acquired and such
Indebtedness is otherwise permitted to be incurred pursuant to Section 6.1; or
(iii) secured Indebtedness otherwise permitted to be incurred pursuant to
Sections 6.1 and 6.2 that limits the right of the debtor to dispose of the
assets securing such Indebtedness; (2) customary non-assignment provisions of
any lease governing a leasehold interest of any Subsidiary of the Company or any
other contract governing the rights thereunder of a Subsidiary or the Company;
(3) customary net worth provisions contained in leases and other agreements
entered into by a Subsidiary in the ordinary course of business; (4) customary
restrictions with respect to a Subsidiary pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary; (5) applicable law; and (6) any
instrument that Refinances any Indebtedness effecting any such encumbrance or
restriction pursuant to clause (1) above; provided that the provisions relating
to any such encumbrance or restriction in any such instrument are not materially
less favorable to the Company or its Subsidiaries or the Lenders than those
contained in the agreements referred to in clause (1).
6.9 Transactions with Shareholders and Affiliates
(a) The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the
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purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any Affiliate of the Company (each such
transaction, an "Affiliate Transaction") or of any such holder other than (x)
Affiliate Transactions permitted under paragraph (b) below and (y) Affiliate
Transactions on terms that are no less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate of the Company or such
Subsidiary. With respect to all Affiliate Transactions involving aggregate
payments equal to or in excess of $100,000 and less than $1.0 million, the
Company or such Subsidiary, as the case may be, shall have delivered an
officers' certificate to the Agent certifying that such transaction or series of
transactions complies with clause (y) above. All Affiliate Transactions (and
each series of related Affiliate Transactions which are similar or part of a
common plan) involving aggregate payments or other property with a fair market
value in excess of $1.0 million and less than $3.0 million shall be approved by
the Board of Directors of the Company or such Subsidiary, as the case may be,
such approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Subsidiary of the Company enters into an
Affiliate Transaction (or a series of related Affiliate Transactions related to
a common plan) that involves an aggregate fair market value of more than $3.0
million, the Company or such Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Agent.
(b) The foregoing restriction shall not apply to the following
"Permitted Affiliate Transactions": (i) any transaction exclusively between the
Company and any of the Subsidiary Guarantors or exclusively between any of the
Subsidiary Guarantors to the extent any are otherwise in compliance with all of
the terms of this Agreement, (ii) reasonable and customary fees paid to members
of the Board of Directors of the Company and of its Subsidiaries, (iii)
reasonable and customary fees and compensation paid to, and indemnity provided
on behalf of, officers, directors or employees of the Company or any of its
Subsidiaries, as determined by the Board of Directors of the Company or any such
Subsidiary or the senior management thereof in good faith, including, without
limitation, issuances of stock, payment of bonuses and other transactions
pursuant to employment or compensation agreements, stock option agreements,
indemnification agreements and other arrangements in effect on the Closing Date
or substantially
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similar thereto and (iv) management fees in an aggregate amount of $250,000 per
year.
6.10 Subsidiary Stock
Except for any sale of 100% of the Capital Stock or other equity
securities of any of the Company's Subsidiaries in compliance with the
provisions of Section 6.7, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity securities of
any of its Subsidiaries, except (i) to qualify directors if required by
applicable law, (ii) to the Company or to a Wholly-Owned Subsidiary of the
Company, or (iii) Asset Sales made in compliance with this Agreement.
6.11 Business Activities
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, materially alter the nature of the
consolidated business of the Company and its Subsidiaries from that in existence
immediately after giving effect to the Transactions and similar, related or
complementary businesses.
6.12 Amendments to Charter Documents
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, amend its certificate of incorporation or bylaws in any respect
which could be materially adverse to the interests of the Lenders.
6.13 Refinancing of the Loans in Part
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, Incur any Indebtedness to Refinance the Loans in part other
than the Demand Take-Out Notes or the Exchange Notes, unless the terms,
conditions, covenants, events of default and other provisions in respect of the
instruments evidencing the Indebtedness Incurred to Refinance the Loans in part
shall have been approved in writing by the Agent prior to the Incurrence of any
such Indebtedness (such approval not to be unreasonably withheld or delayed);
provided that, prior to the Conversion Date, no Refinancing in part shall result
in the amount of the Loans outstanding being less than $60.0 million and no
Refinancing in part shall occur at a time when the amount of the Loans
outstanding is less than $60.0 million.
6.14 Asset Sales
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly,
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consummate any Asset Sale unless (1) such Asset Sale occurs after the Conversion
Date, (2) the Company or such Subsidiary, as the case may be, receives
consideration therefor at the time thereof at least equal to the fair market
value at the time of such Asset Sale of the property, assets or stock that is
the subject of such Asset Sale, (3) at least 85% of the consideration received
therefor by the Company or such Subsidiary is in the form of cash or Cash
Equivalents and (4) all of the Net Cash Proceeds in respect thereof are applied
by the Company or a Subsidiary of the Company in accordance with Section
2.5A(ii)(a).
Nothing in this covenant shall be deemed to prevent the exercise of
remedies by secured creditors of the Company or any Subsidiary of the Company.
6.15 Transfer of Assets to Subsidiaries
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, transfer (other than in the ordinary
course of business and other than pursuant to a Permitted Investment) any assets
or property to any Subsidiary of the Company unless such Subsidiary pays fair
market value therefor to the Company or to a Wholly-Owned Subsidiary of the
Company and except as provided in Sections 6.3, 6.4, 6.5, 6.7 and 6.9. For
purposes of this Section 6.16, except to the extent permitted by any of such
Sections the fair market value paid by such Subsidiary shall not consist in
whole or in part of any securities or debt instruments of such Subsidiary or of
any Affiliate of such Subsidiary.
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
7.1 Failure To Make Payments When Due
Failure to pay any installment of principal of the Loans when due,
whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; or failure to pay any interest on the Loans or any other amount due
under this Agreement within (A) prior to the time the Term Loan shall accrue
interest at a Fixed Rate, ten days or more after the date due or (B) after such
time as the Term Loan shall accrue interest at a Fixed Rate, 30 days after the
date due; or
7.2 Default in Other Agreements
(A) Failure of the Company or any of its Subsidiaries to pay at
final maturity principal on one or
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more issues of Indebtedness of the Company or of any of its Subsidiaries (other
than Indebtedness referred to in Section 7.1) or (B) breach or default by the
Company or any of its Subsidiaries with respect to any other term of any one or
more issues of Indebtedness of the Company or of any of its Subsidiaries or any
agreement or instrument evidencing or securing such Indebtedness and such breach
or default results in the acceleration of that Indebtedness prior to its stated
maturity and, in any case, the principal amount of such Indebtedness and all
other such Indebtedness of the Company and its Subsidiaries in respect of which
there is such a failure to pay principal or which has been so accelerated equals
$1.0 million or more; or
7.3 Breach of Certain Covenants
Failure of the Company to perform or comply with any covenant, term
or condition contained in Section 2.5A(ii), 2.5A(iv) or 5.2; or
7.4 Breach of Warranty
Any representation, warranty or certification made by the Company in
any Loan Document or in any statement or certificate at any time given by the
Company in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false or incorrect in any material respect on the date as of
which made or deemed made; or
7.5 Other Defaults Under Agreement or Loan Documents
The Company shall default in the performance of or compliance with
any covenant, term or condition contained in this Agreement or the other Loan
Documents (other than those covered by Section 7.1, 7.3, 7.4 or 7.10) and such
default shall not have been remedied or waived in accordance with this Agreement
within 30 days after the date of written notice from the holder or holders of
not less than 25% in aggregate principal amount of the Loans then outstanding of
such default; or
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc.
A court of competent jurisdiction enters a Bankruptcy Order under
any Bankruptcy Law that:
(A) is for relief against the Company or any Material Subsidiary in
an involuntary case or proceeding, or
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(B) appoints a Custodian of the Company or any Material Subsidiary
for all or substantially all of its properties, or
(C) orders the liquidation of the Company or any Material
Subsidiary;
and in each case the order or decree remains unstayed and in effect for 60 days;
or
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.
The Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief against
it in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors or
files a proposal or scheme of arrangement involving the rescheduling or
composition of its indebtedness, or
(E) consents to the filing of a petition in bankruptcy against it,
or
(F) shall generally not pay its debts when such debts become due or
shall admit in writing its inability to pay its debts generally; or
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or similar
process involving in any individual case or in the aggregate at any time an
amount in excess of $1.0 million (to the extent not covered by third-party
insurance as to which the insurance company has acknowledged coverage) shall be
entered or filed against the Company or any of its Subsidiaries or any of their
respective properties or assets and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 60 days or in any event later than five
days prior to the date of any proposed sale thereunder; or
7.9 Dissolution
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Any order, judgment or decree shall be entered against the Company
or any Material Subsidiary decreeing the dissolution or split-up of the Company
or that Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 60 days; or
7.10 Guarantee
(i) Any Guarantee or any material provision thereof shall cease to
be in full force or effect (other than in accordance with its express terms), or
(ii) any Subsidiary Guarantor or any Person acting by or on behalf of such
Subsidiary Guarantor shall deny or disaffirm such Subsidiary Guarantor's
obligations under its Guarantee, or (iii) any Subsidiary Guarantor shall default
in the due performance or observance of any term, covenant or agreement on its
part to be performed or observed, after giving effect to any applicable grace
periods, pursuant to its Guarantee.
THEN (i) upon the occurrence of any Event of Default described in
the foregoing Sections 7.6 or 7.7, all of the unpaid principal amount of and
accrued interest on the Loans and all other outstanding Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company, and the commitments of the Lenders hereunder shall
thereupon terminate, and (ii) upon the occurrence of any other Event of Default,
the Agent shall, upon written notice of the holder or holders of a majority in
aggregate principal amount of the Loans then outstanding, by written notice to
the Company, declare all of the unpaid principal amount of and accrued interest
on the Loans and all other outstanding Obligations to be, and the same shall
forthwith become, due and payable, and the obligations of the Lenders hereunder
shall thereupon terminate. Nevertheless, if at any time after acceleration of
the maturity of the Loans, the Company shall pay all arrears of interest and all
payments on account of the principal thereof which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement
or the Notes) and all Events of Default and Potential Events of Default (other
than non-payment of principal of and accrued interest on the Loans and the Notes
due and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to Section 10.6, then the Agent shall, upon written notice of the
holders of a majority in aggregate principal amount of the Loans then
outstanding, by written notice to the Company rescind and annul the acceleration
and its consequences; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right consequent thereon.
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SECTION 8 THE AGENT
8.1 Appointment
Each Lender hereby irrevocably designates and appoints BTCo as Agent
of such Lender to act as specified herein and in the other Loan Documents, and
each Lender hereby irrevocably authorizes BTCo as the Agent to take such action
on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Agent agrees to act as such upon the express conditions contained in this
Section 8. Notwithstanding any provision to the contrary elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other Loan
Documents, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent. The provisions
of this Section 8 are solely for the benefit of the Agent and the Lenders, and
neither the Company nor any of its Subsidiaries shall have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement, the Agent shall act solely as agent of the
Lenders and the Agent does not assume and shall not be deemed to have assumed
any obligation or relationship of agent or trust with or for the Company or any
of its Subsidiaries.
8.2 Delegation of Duties
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care except to the
extent otherwise required by Section 8.3.
8.3 Exculpatory Provisions
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
94
or warranties made by the Company, any of its Subsidiaries or any of their
respective officers contained in this Agreement, any other Loan Documents, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for any failure of the Company, any of its Subsidiaries
or any of their respective officers to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Company or any
of its Subsidiaries. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Agent to the Lenders or by or on behalf of
the Company or any of its Subsidiaries to the Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Potential Event of Default or Event of Default.
8.4 Reliance by Agent
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company or any of its Subsidiaries), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
As between the Agent and the Lenders, the Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
other Loan Documents in
95
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders.
8.5 Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Event of Default or Event of Default hereunder
unless the Agent has actually received notice from a Lender or the Company
referring to this Agreement, describing such Potential Event of Default or Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to such
Potential Event of Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, as between the Agent and the Lenders
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Event of Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
8.6 Non-Reliance on Agent and Other Lenders
Each Lender expressly acknowledges that neither the Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the affairs of the Company
or any of its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations,
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assets, property, financial and other condition, prospects or creditworthiness
of the Company or any of its Subsidiaries which may come into the possession of
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
8.7 Indemnification
The Lenders agree to indemnify the Agent in its capacity as such
ratably according to their respective "percentages" as used in determining the
Required Lenders at such time, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment in full
of the Obligations) be imposed on, incurred by or asserted against the Agent in
its capacity as such in any way relating to or arising out of this Agreement or
any other Loan Document, or any documents contemplated by or referred to herein
or the transactions contemplated hereby of any action taken or omitted to be
taken by the Agent under or in connection with any of the foregoing, but only to
the extent that any of the foregoing is not paid by the Company or any of its
Subsidiaries; provided that no Lender shall be liable to the Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 8.7 shall
survive the payment in full of all Obligations.
8.8 Agent in Its Individual Capacity
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company and its
Subsidiaries as though the Agent were not the Agent hereunder. With respect to
the Loans made by it and all Obligations owing to it, the Agent shall have the
same rights and powers under this Agreement as any Lender and may exercise the
same as though it were not the Agent and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
8.9 Resignation of the Agent; Successor Agent
The Agent may resign as the Agent upon 20 days' notice to the
Lenders and the Company. Upon the resignation of the Agent, the Required Lenders
shall appoint from among
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the Lenders a successor Agent which is a bank or a trust company for the Lenders
subject to prior approval by the Company (such approval not to be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Agent, and the term "Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as the Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the resignation of the Agent hereunder, the provisions of
this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement.
SECTION 9 GUARANTEE
9.1 Unconditional Guarantee
Each Subsidiary Guarantor hereby unconditionally, jointly and
severally, guarantees (such guarantee to be referred to herein as the
"Guarantee"), to each of the Lenders and to the Agent and their respective
successors and assigns that (i) the principal of and interest on the Loans will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Loans and all other obligations of the Company to the Lenders or the Agent
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any of the Loans or of any such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise. Each
Subsidiary Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Loans or this Agreement, the absence of any action to enforce the same, any
waiver or consent by any of the Lenders with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a Subsidiary Guarantor. Each Subsidiary
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice (except
as contemplated by this Agreement) and all demands whatsoever and covenants that
this Guarantee will
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not be discharged except by complete performance of the obligations contained in
the Loans, this Agreement and in this Guarantee. If any Lender or the Agent is
required by any court or otherwise to return to the Company, any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Subsidiary Guarantor, any amount paid
by the Company or any Subsidiary Guarantor to the Agent or such Lender, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor further agrees that, as between each
Subsidiary Guarantor, on the one hand, and the Lenders and the Agent, on the
other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 7 for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Section 7, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Guarantor for the purpose of this Guarantee.
9.2 Severability
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
9.3 Release of a Subsidiary Guarantor
Upon the sale or disposition (whether by merger, stock purchase,
asset sale or otherwise) of a Subsidiary Guarantor (or all or substantially all
its assets) to an entity which is not a Subsidiary of the Company and which sale
or disposition is otherwise in compliance with the terms of this Agreement, such
Subsidiary Guarantor shall be deemed released from all obligations under this
Section 9 without any further action required on the part of the Agent or any
Lender; provided that any such termination shall occur only to the extent that
all obligations of such Subsidiary Guarantor under all of its guarantees of, and
under all of its pledges of assets or other security interests which secure
Indebtedness of the Company shall also terminate upon such release, sale or
transfer.
The Agent shall deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section 9.3. Any
Subsidiary Guarantor not so released remains liable for the full amount of
principal of and interest on the Loans as provided in this Section 9.
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9.4 Limitation of Subsidiary Guarantor's Liability
Each Subsidiary Guarantor and by its acceptance hereof each of the
Lenders hereby confirms that it is the intention of all such parties that the
guarantee by such Subsidiary Guarantor pursuant to its Guarantee not constitute
a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar Federal or state law. To effectuate the foregoing intention, the Lenders
and such Subsidiary Guarantor hereby irrevocably agree that the obligations of
such Subsidiary Guarantor under the Guarantee shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Guarantee or pursuant to Section 9.7, result in the obligations of such
Subsidiary Guarantor under the Guarantee not constituting such fraudulent
transfer or conveyance.
9.5 Subsidiary Guarantors May Consolidate, etc., on Certain Terms
(a) Nothing contained in this Agreement or in the Loans shall
prevent any consolidation or merger of a Subsidiary Guarantor with or into the
Company or another Subsidiary Guarantor or shall prevent any sale or conveyance
of the property of a Subsidiary Guarantor as an entirety or substantially as an
entirety, to the Company or another Subsidiary Guarantor. Upon any such
consolidation, merger, sale or conveyance, the Guarantee given by such
Subsidiary Guarantor shall no longer have any force or effect.
(b) Except as set forth in Section 6.7, nothing contained in this
Agreement or in the Loans shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into a corporation or corporations other than the
Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor); provided that, subject to Sections 9.4 and 9.5(a), (i)
immediately after such transaction, and giving effect thereto, no Potential
Event of Default or Event of Default shall have occurred as a result of such
transaction and be continuing, and (ii) upon any such consolidation, merger,
sale or conveyance, the Guarantee of such Subsidiary Guarantor set forth in this
Section 9, and the due and punctual performance and observance of all of the
covenants and conditions of this Agreement to be performed by such Subsidiary
Guarantor, shall be expressly assumed (in the event that the Subsidiary
Guarantor is not the surviving corporation in the merger),
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by supplemental indenture satisfactory in form to the Agent, executed and
delivered to the Agent, by the corporation formed by such consolidation, or into
which the Subsidiary Guarantor shall have merged, or by the corporation that
shall have acquired such property. In the case of any such consolidation,
merger, sale or conveyance and upon the assumption by the successor corporation,
by supplemental indenture executed and delivered to the Agent and satisfactory
in form and substance to the Agent of the due and punctual performance of all of
the covenants and conditions of this Agreement to be performed by the Subsidiary
Guarantor, such successor corporation shall succeed to and be substituted for
the Subsidiary Guarantor with the same effect as if it had been named herein as
a Subsidiary Guarantor.
9.6 Contribution
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Subsidiary Guarantor") under its Guarantee, such Funding Subsidiary
Guarantor shall be entitled to a contribution from all other Subsidiary
Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Subsidiary Guarantor (including the Funding Subsidiary Guarantor) for all
payments, damages and expenses incurred by that Funding Subsidiary Guarantor in
discharging the Company's obligations with respect to the Obligations. "Adjusted
Net Assets" of such Subsidiary Guarantor at any date shall mean the lesser of
(x) the amount by which the fair value of the property of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and (y) the amount by
which the present fair salable value of the assets of such Subsidiary Guarantor
at such date exceeds the amount that will be required to pay the probable
liabilities of such Subsidiary Guarantor on its debts (after giving effect to
all other fixed and contingent liabilities incurred or assumed on such date and
after giving effect to any collection from any Subsidiary of such Subsidiary
Guarantor in respect of the obligations of such Subsidiary under the Guarantee),
excluding debt in respect of the Guarantee of such Subsidiary Guarantor, as they
become absolute and matured.
9.7 Waiver of Subrogation
Each Subsidiary Guarantor hereby irrevocably waives, until such time
as all Obligations (other than reimbursement and indemnity obligations for which
no claim has been made) payable under this Agreement have been paid,
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any claim or other rights which it may now or hereafter acquire against the
Company that arise from the existence, payment, performance or enforcement of
such Subsidiary Guarantor's obligations under its Guarantee and this Agreement,
including, without limitation, any right of subrogation, reimbursement,
exoneration, indemnification, and any right to participate in any claim or
remedy of any Lender against the Company, whether or not such claim, remedy or
right arises in equity, or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Subsidiary Guarantor in violation of the preceding sentence
and the Loans shall not have been paid in full, such amount shall be deemed to
have been paid to such Subsidiary Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders, and shall, forthwith be paid to the Agent
for the benefit of such Lenders to be credited and applied upon the Loans,
whether matured or unmatured, in accordance with the terms of this Agreement.
Each Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section 9.7 is knowingly made in contemplation of
such benefits.
9.8 Evidence of Guarantee
To evidence their guarantees to the Lenders set forth in this
Section 9, each of the Subsidiary Guarantors hereby agrees to execute the
notation of Guarantee in substantially the form included in Exhibit VIII. Each
such notation of Guarantee shall be signed on behalf of each Subsidiary
Guarantor by two Officers, or an Officer and an assistant Secretary or one
Officer shall sign and one Officer or an assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to such notation of Guarantee.
9.9 Waiver of Stay, Extension or Usury Laws
Each Subsidiary Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive such
Subsidiary Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and each Subsidiary Guarantor
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede
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the execution of any power herein granted to the Agent, but will suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 10 MISCELLANEOUS
10.1 Representation of the Lenders
Each Lender hereby represents that it is a commercial lender which
makes loans in the ordinary course of its business and that it will make the
Loans hereunder for its own account or the account of its affiliates in the
ordinary course of such business.
10.2 Participations in and Assignments of Loans and Notes
A. Each Lender shall have the right at any time to sell, assign,
transfer or negotiate all or any portion of its Notes or its Loan Commitment in
an aggregate amount of not less than $2.5 million to any Eligible Assignee,
other than to an Eligible Assignee which has, or has an Affiliate which has, a
principal line of business similar to any principal line of business of the
Company or any of its Subsidiaries. In the case of any sale, transfer or
negotiation of all or part of the Notes or any Loan Commitment authorized under
this Section 10.2A, the assignee, transferee or recipient shall become a party
to this Agreement as a Lender by execution of an assignment and assumption
agreement; provided that (i) at such time Section 2.1A or 2.2A, as the case may
be, shall be deemed modified to reflect the Loan Commitment of such new Lender
and of the existing Lenders, (ii) upon surrender of the Notes, new Notes will be
issued, at the Company's expense, to such new Lender and to the assigning
Lender, such new Notes to be in conformity with the requirements of Section 2.1D
or 2.2E as the case may be (with appropriate modifications) to the extent needed
to reflect the revised Loan Commitment, and (iii) the Agent shall receive at the
time of each such assignment, from the assigning or assignee Lender, the payment
of a non-refundable assignment fee of $3,500; and provided, further, that such
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 5.12. To the extent of any assignment pursuant to
this Section 10.2A, the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Loan Commitment, and the assignee,
transferee or recipient shall have, to the extent of such sale, assignment,
transfer or negotiation, the same rights, benefits and obligations as it would
if it were a Lender with respect to such Notes or Loan Commitment, including,
without limitation, the right to approve or disapprove actions which, in
accordance with the terms hereof, require
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the approval of a Lender. At the time of each assignment pursuant to this
Section 10.2A to an Eligible Assignee which is not already a Lender hereunder
and which is not a United States Person (as such term is defined in Section
7701(a)(30) of the Internal Revenue Code) for Federal income tax purposes, the
respective Eligible Assignee shall provide to the Company and the Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section
10.2E(ii) Certificate) described in Section 10.2E.
B. Each Lender may grant participations in all or any part of its
Notes or its Loan Commitment in an aggregate amount of not less than $2.5
million to any Eligible Assignee, other than to an Eligible Assignee which has,
or has an Affiliate which has, a principal line of business similar to any
principal line of business of the Company or any of its Subsidiaries; provided,
that no Lender shall transfer or grant any participation under which the
participant shall have rights to approve any amendment to or waiver of any
Credit Document except to the extent such amendment or waiver would (i) extend
the Maturity Date, or reduce the rate or extend the time of payment of interest
or Fees on Loans in which such participant is participating or reduce the
principal amount thereof, (ii) consent to the assignment or transfer by the
Company of its rights and obligations under this Agreement or (iii) release
substantially all of the Pledged Collateral under all of the Security Agreement.
No participant shall be entitled to receive any payment in respect of its
participation under Section 10.2 or 10.19 than the applicable Lender would have
been entitled to receive with respect to the rights participated.
C. The Company shall, at its own cost and expense, provide such
certificates, acknowledgments and further assurances in respect of this
Agreement and the Loans as any Lender may reasonably require in connection with
any participation, transfer or assignment pursuant to this Section 10.2.
D. Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loan and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Lender from such Federal Reserve Bank.
E. Each Lender that is an assignee or transferee of an interest
under this Agreement pursuant to Section 10.2A (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer) and
that is not a United States Person (as such term is defined in Section
7701(a)(30) of the Internal Revenue Code) agrees to deliver to the Company and
the Agent, on the date of such assignment or transfer to such Lender, (i) two
accurate and complete original signed copies
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of Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note,
or (ii) if the Lender is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code and cannot deliver either Internal Revenue Service
Form 1001 or 4224 pursuant to clause (i) above, two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Note. In addition, each Lender agrees that, when a
lapse in time or change in circumstances renders the previous certification
obsolete or inaccurate in any material respect, it will deliver to the Company
and the Agent two new accurate and complete original signed copies of Internal
Revenue Service Form 4224 or 1001, or Form W-8, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Company and the Agent of its inability to
deliver any such Form or Certificate. Subject to Section 10.2A and the
immediately succeeding sentence, the Company shall be entitled, to the extent it
is required to do so by law, to deduct or withhold income or similar taxes
imposed by the United States (or any political subdivision or taxing authority
thereof or therein) from interest, fees or other amounts payable hereunder or
made on any other Loan Document for the account of any Lender which is not a
United States Person (as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Company U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 10.2E and except as set forth in Section 10.2A, the
Company agrees to pay additional amounts and to indemnify and hold harmless each
Lender (without regard to the identity of the jurisdiction requiring the
deduction or withholding), and reimburse such Lender upon its written request,
in respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the date of any
assignment or transfer in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
10.3 Expenses
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Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and of
furnishing all opinions by counsel for the Company (including without limitation
any opinions requested by the Lenders as to any legal matters arising
hereunder), and of the Company's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with; (ii) the reasonable fees, expenses and disbursements of counsel
to the Lenders (including reasonable allocated costs of internal counsel) in
connection with the negotiation, preparation and execution of the Loan Documents
and the Loans hereunder, and any amendments, modifications and waivers hereto or
thereto and consents to departures from the terms hereof and thereof; and (iii)
after the occurrence of an Event of Default, all costs and expenses (including
actual and reasonable attorneys fees, including allocated costs of internal
counsel, and costs of settlement) incurred by the Lenders or the Agent in
enforcing any Obligations of or in collecting any payments due from the Company
hereunder or under the Notes by reason of such Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings.
10.4 Indemnity
In addition to the payment of expenses pursuant to Section 10.3 (but
without duplication thereof), whether or not the transactions contemplated
hereby shall be consummated, the Company agrees to indemnify, pay and hold each
of the Lenders, the Agent and any holder of any of the Notes, and each of their
respective officers, directors, employees, agents, representatives and
affiliates (collectively called the "Indemnitees"), harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated as a party thereto), which
may be suffered by, imposed on, incurred by, or asserted against that
Indemnitee, in any manner resulting from, connected with, in respect of,
relating to or arising out of this Agreement, the other Loan Documents, the
Commitment Letter, the Lenders' agreements to make the Loans or the use or
intended use of any of the proceeds of the Loans hereunder, the issuance of the
Exchange Notes or the Take-Out Securities or the Recapitalization (the
"Indemnified Liabilities"); provided that the Company shall
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have no obligation to an Indemnitee hereunder with respect to Indemnified
Liabilities (i) to the extent such liabilities are finally judicially determined
to have resulted solely from (A) the gross negligence or willful misconduct of
that Indemnitee or (B) the failure of such Indemnitee to perform its obligations
under any Loan Document or (C) such Indemnitee's violation of law or (ii) in
connection with the obligations of any Indemnitee under any Loan Document or for
any transfer fees. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Company shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
10.5 Setoff
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default, each Lender, the Agent and each subsequent holder of any Note
is hereby authorized by the Company at any time or from time to time, without
notice to the Company, or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured but not
including trust accounts or any other accounts held for the benefit of another
Person) and any other Indebtedness at any time held or owing by such Person or
any such subsequent holder to or for the credit or the account of the Company
against and on account of the obligations and liabilities of the Company to such
Person or such subsequent holder under this Agreement and the Notes, including,
but not limited to, all claims of any nature or description arising out of or
connected with this Agreement or the Notes, irrespective of whether or not (a)
such Person or such subsequent holder shall have made any demand hereunder or
(b) such Person or such subsequent holder shall have declared the principal of
or the interest on its portion of the Loans and its Notes and other amounts due
hereunder to be due and payable as permitted by Section 7 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.
10.6 Amendments and Waivers
No amendment, modification, termination or waiver of any term or
provision of this Agreement, of the Notes, any Guarantee or, prior to the
execution and delivery thereof, of the form of the Registration Rights Agreement
or the Senior Indenture or consent to any departure by the
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Company or any Subsidiary Guarantor therefrom, shall in any event be effective
without the prior written concurrence of the Company or such Subsidiary
Guarantor, as the case may be, and the Required Lenders; provided that,
notwithstanding the third sentence of Section 10.15, without the prior written
consent of each Lender affected, an amendment, modification, termination or
waiver of this Agreement, any Notes, any Guarantee, and, prior to the execution
and delivery thereof, of the form of Registration Rights Agreement and the form
of Senior Indenture or consent to departure from a term or provision hereof or
thereof may not: (i) reduce the principal amount of Notes whose holders must
consent to any such amendment, modification, termination, waiver or consent;
(ii) reduce the rate of or extend the time for payment of principal or interest
on any Note; (iii) reduce the principal amount of any Note; (iv) make any Note
payable in money other than that stated in the Note; (v) make any change in
Section 2.5A(iv) or in the definition of Change of Control, in the last
paragraph of Section 7; (vi) reduce the rate or extend the time of payment of
fees or other compensation payable to the Lenders hereunder; or (vii) waive
performance by the Company of its obligations under, or consent to any departure
from any of the terms and provisions of, Section 2.5A(iv); and provided,
further, that without the consent of the Agent, no such amendment, modification,
termination or waiver may amend, modify, terminate or waive any provision of
Section 8 as the same applies to the Agent or any other provision of this
Agreement as it relates to the rights or obligations of the Agent. No notice to
or demand on the Company in any case shall entitle the Company to any further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 10.6
shall be binding upon each holder of the Notes at the time outstanding, each
further holder of the Notes, and, if signed by the Company or a Subsidiary
Guarantor, on the Company and such Subsidiary Guarantor.
10.7 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 an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
10.8 Entirety
The Loan Documents, the Commitment Letter and the Assignment
Agreement embody the entire agreement of the parties and supersede all prior
agreements and
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understandings, if any, relating to the subject matter hereof and thereof.
10.9 Notices
Unless otherwise provided herein, any notice or other communications
herein required or permitted to be given shall be in writing and may be
personally served, telecopied or sent by mail and shall be deemed to have been
given when delivered in person, upon receipt of telecopy against receipt of
answer back or four Business Days after depositing it in the mail, registered or
certified, with postage prepaid and properly addressed; provided that notices
shall not be effective until received. For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as provided in
this Section 10.9) shall be set forth under each party's name on the signature
pages hereto.
10.10 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the Commitment Letter,
the making of the Loans hereunder and the execution and delivery of the Notes
and, notwithstanding the making of the Loans, the execution and delivery of the
Notes or any investigation made by or on behalf of any party, shall continue in
full force and effect. The closing of the transactions herein contemplated shall
not prejudice any right of one party against any other party in respect of
anything done or omitted hereunder or in respect of any right to damages or
other remedies.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of the Company set forth in Sections 10.3, 10.4,
10.14, 10.15, 10.17, 10.19 and 10.22 shall survive the payment of the Loans and
the Notes and the termination of this Agreement.
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of the Agent or any Lender or any
holder of any Note in the exercise of any power, right or privilege hereunder,
under a Guarantee or under the Notes shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement, under a Guarantee or the
Notes are
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cumulative to and not exclusive of any rights or remedies otherwise available.
10.12 Severability
In case any provision in or obligation under this Agreement, under a
Guarantee or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
10.13 Headings
Section and Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.14 Applicable Law
THIS AGREEMENT, EACH GUARANTEE AND THE NOTES SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
10.15 Successors and Assigns; Subsequent Holders of Notes
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. The terms and provisions
of this Agreement and each Guarantee shall inure to the benefit of any assignee
or transferee of the Notes pursuant to Section 10.2A, and in the event of such
transfer or assignment, the rights and privileges herein conferred upon the
Lenders shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Except as provided in
Section 10.6, in determining whether the holders of a sufficient aggregate
principal amount of the Loans shall have consented to any action under this
Agreement, any amount of the Loans owned or held by the Company, any Subsidiary
Guarantor or any of their respective Affiliates shall be disregarded. The
Company's rights or any interest therein hereunder may not be assigned without
the prior express written consent of each of the Lenders.
10.16 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or supplements
may be executed in any number of
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counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto, and delivery thereof to the Agent or, in the case of
the Lenders, written telex or facsimile notice or telephonic notification
(confirmed in writing) of such execution and delivery. The Agent will give the
Company and each Lender prompt notice of the effectiveness of this Agreement.
10.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial
A. Any legal action or proceeding with respect to this Agreement,
any Note or any Guarantee may be brought in the courts of the State of New York
sitting in New York City or of the United States for the Southern District of
New York, and, by execution and delivery of this Agreement, each of the parties
to this Agreement hereby irrevocably accepts for itself and in respect of its
respective property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Each of the parties to this Agreement hereby further
irrevocably waives any claim that any such courts lack jurisdiction over such
party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Agreement, the Notes or the Guarantees brought in any of the
aforesaid courts, that any such court lacks jurisdiction over such party. Each
of the parties to this Agreement irrevocably consents to the service of process
in any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to such party, at its respective address for
notices pursuant to Section 10.9, such service to become effective 30 days after
such mailing. To the extent permitted by law, each of the parties to this
Agreement hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder or under any Note or any Guarantee that service
of process was in any way invalid or ineffective. Nothing herein shall affect
the right of any party to this Agreement 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 of the parties to this Agreement 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, the Notes or the Guarantees brought in the courts referred to in
clause A above and hereby further irrevocably waives and agrees not to plead or
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claim in any such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
C. 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 Notes or the Guarantees or the
transactions contemplated hereby or thereby.
10.18 Payments Pro Rata
A. The Agent agrees that promptly after its receipt of each payment
of any interest or premium on or principal of the Notes from or on behalf of the
Company or any Subsidiary Guarantor, it shall, except as otherwise provided in
this Agreement, distribute such payment to the Lenders (other than any Lender
that has consented in writing to waive its pro rata share of such payment) pro
rata based upon their respective pro rata shares, if any, of such payment.
B. Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Loans of a sum which with respect to the related sum or sums received by other
Lenders is in a greater proportion than the total of such Obligation then owed
and due to such Lender bears to the total of such Obligation then owed and due
to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Company to
such Lenders in such amount as shall result in a proportional participation by
all of the Lenders in such amount; provided that, if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
10.19 Taxes
A. Any and all payments by the Company hereunder or under any of the
other Loan Documents shall be made free and clear of and without deduction or
withholding for any and all present or future Taxes, unless such Taxes are
required by law or the administration thereof to be deducted or withheld and
excluding (i) in the case of each Lender and the Agent, Taxes imposed on its net
income and franchise taxes imposed on it by the jurisdiction under the laws of
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which such Person is organized or any political subdivision thereof, (ii) in the
case of each such Lender and the Agent, any Taxes that are in effect and that
would apply to a payment to such Person, as applicable, as of the Closing Date,
and (iii) if any Person acquires any interest in this Agreement (a
"Transferee"), any Taxes to the extent that they are in effect and would apply
to a payment to such Transferee as of the date of the acquisition of such
interest, as the case may be (all such nonexcluded Taxes being hereinafter
referred to as "Covered Taxes"). If the Company shall be required by Law or the
administration thereof to deduct or withhold any Covered Taxes from or in
respect of any sum payable hereunder or under any other Loan Document, (a)
unless such requirement results from the failure of the payee to perform its
obligations under Section 10.2E, the sum payable shall be increased as may be
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional amounts paid
under this paragraph), the Lender receives an amount equal to the sum it would
have received if no such deduction or withholding had been made; (b) the Company
shall make such deductions or withholdings; and (c) the Company forthwith shall
pay the full amount deducted or withheld to the relevant taxation or other
authority in accordance with applicable Law.
B. The Company agrees to pay forthwith any present or future stamp
documentary taxes or any other excise or property taxes, charges or similar
levies (all such taxes, charges and levies being herein referred to as "Other
Taxes") imposed by any jurisdiction (or any political subdivision or taxing
authority thereof or therein) which arise from any payment made by the Company
hereunder or under any of the other Loan Documents or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
of the other Loan Documents.
C. The Company agrees to indemnify the Agent and each of the Lenders
for the full amount of Covered Taxes or Other Taxes not deducted or withheld and
paid by the Company in accordance with Sections 10.19A and 10.19B to the
relevant taxation or other authority and any Taxes other than Covered Taxes or
Other Taxes imposed by any jurisdiction on amounts payable by the Company under
this Section 10.19 paid by the Lender or the Agent and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not any such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days from the date
the Agent or such Lender makes written demand therefor. A certificate as to the
amount of such Taxes or Other Taxes and evidence of payment thereof submitted to
the Company shall be prima facie evidence,
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absent manifest error, of the amount due from the Company to the Agent or such
Lender.
D. The Company shall furnish to the Agent and each of the Lenders
the original or a certified copy of a receipt evidencing any payment of Taxes or
Other Taxes made by the Company as soon as such receipt becomes available.
E. The provisions of this Section 10.19 shall survive the
termination of the Agreement and repayment of all Obligations.
10.20 Waiver of Stay, Extension or Usury Laws
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law that would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on the Loans as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Agent, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
10.21 Requirements of Law
(a) In the event that any change in law occurring after the date
that any lender becomes a Lender party to this Agreement with respect to such
Lender shall, in the opinion of such Lender, require that any Bridge Loan
Commitment of such Lender be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Lender or any corporation controlling such Lender, and such change in law
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital, as the case may be, as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation, as the case may be, could have achieved but for such change in law
(taking into account such Lender's or such corporation's policies, as the case
may be, with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time following notice by such Lender to the
Company of such change in law as provided in paragraph (b) of this Section
10.21, within 15 days after demand by such Lender, the Company shall pay to such
Lender such additional amount
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or amounts as will compensate such Lender or such corporation, as the case may
be, for such reduction.
(b) The Company shall not be required to make any payments to any
Lender for any additional amounts pursuant to this Section 10.21 unless such
Lender has given written notice to the Company, through the Agent, of its intent
to request such payments prior to or within 60 days after the date on which such
Lender became entitled to claim such amounts. If any Lender requests
compensation from the Company under this Section 10.21, the Company may, by
notice to such Lender (with a copy to the Agent), suspend the obligation of such
Lender thereafter to make or continue Loans, until the requirement of law giving
rise to such request ceases to be in effect; provided that such suspension shall
not affect the right of such Lender to receive the compensation so requested.
10.22 Confidentiality
Each Lender shall hold all non-public information obtained pursuant
to the requirements of or in connection with this Agreement which has been
identified as confidential by the Company in accordance with such Lender's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being understood and agreed
by the Company that (i) in any event, subject to the last sentence of this
Section 10.22, a Lender may make disclosures reasonably required by any bona
fide assignee, transferee or participant in connection with the contemplated
assignment or transfer by such Lender of any Loans or any participation therein
or as required or requested by any governmental agency or representative thereof
or pursuant to legal process; provided that unless specifically prohibited by
applicable law or court order, each Lender shall notify the Company of any
request by any governmental agency or representative thereof (other than any
such request in connection with any examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information and (ii) a Lender may share
with any of its affiliates, and such affiliates may share with any Lender, any
information related to the Company or the Company's or their respective
affiliates (including information relating to creditworthiness), the
Recapitalization or the financing therefor; and provided, further, that in no
event shall any Lender be obligated or required to return any materials
furnished by the Company or any Subsidiaries of the Company. In connection with
any actual or prospective sales, assignments or transfers referred to in Section
10.2A, a Lender shall obtain agreements from the actual or prospective
purchasers, assignees or transferees, as the
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case may be, reasonably satisfactory to the Company, that such parties will
comply with this Section 10.22.
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
YOUNG AMERICA CORPORATION
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
Notice Address:
000 Xxxxx Xxxx--
Xxxxx Xxxxxxx, XX 00000
Attn.: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
cc:
BT Capital Partners, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxxxxx Xxxxxxx
SUBSIDIARY GUARANTOR:
YAC CORP.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
AGENT:
BANKERS TRUST COMPANY,
as agent
By: /s/ Xxxx Xxx Xxxxx
---------------------------------
Name: Xxxx Xxx Xxxxx
Title: Managing Director
116
Title:
Notice Address:
One Bankers Trust Plaza
000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
LENDERS:
Commitment: $80,000,000 BANKERS TRUST NEW YORK
CORPORATION
By: /s/ Xxxx Xxx Xxxxx
--------------------------------
Name: Xxxx Xxx Xxxxx
Title: Managing Director
Notice Address:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxx Xxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
117
LENDERS:
Commitment: $80,000,000 BANKERS TRUST NEW YORK
CORPORATION
By: /s/ X. Xxxxxxx
---------------------------
Name: X. Xxxxxxx
Title:
Notice Address:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxx Xxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
