Exhibit 10.15
CREDIT AGREEMENT
AMONG
XXXXXXX AMERICAN CORPORATION
("Borrower"),
THE LENDERS SET FORTH ON SCHEDULE 1 HERETO
("Lenders")
AND
FIRST UNION NATIONAL BANK,
AS AGENT FOR THE LENDERS
("Agent")
December 18, 1998
TABLE OF CONTENTS
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Page
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SECTION 1 DEFINITIONS........................................ 1
1.1. Definitions......................................... 1
1.2. Rules of Construction............................... 15
1.3. Proforma Calculations............................... 16
SECTION 2 CREDIT FACILITY.................................... 16
2.1. The Facilities...................................... 16
2.2. Promissory Notes.................................... 16
2.3. Lenders' Participation.............................. 17
2.4. Use of Proceeds..................................... 17
2.5. Repayment........................................... 17
2.6. Interest............................................ 18
2.7. Advances............................................ 21
2.8. Reduction and Termination of Commitment............. 23
2.9. Prepayment.......................................... 23
2.10. Funding Costs and Loss of Earnings.................. 26
2.11. Payments............................................ 26
2.12. Commitment Fee...................................... 26
2.13. Agent's Fees........................................ 26
2.14. Regulatory Changes in Capital Requirements.......... 26
SECTION 2A LETTERS OF CREDIT................................. 27
2A.1. Availability of Credits............................. 27
2A.2. Commitment Availability............................. 28
2A.3. Approval and Issuance............................... 28
2A.4. Obligations of the Borrower......................... 29
2A.5. Payment by Lenders on Letters of Credit............. 30
2A.6. Collateral Security................................. 30
2A.7. General Terms of Credits............................ 31
SECTION 3 REPRESENTATIONS AND WARRANTIES..................... 32
3.1. Organization and Good Standing...................... 32
3.2. Power and Authority; Validity of Agreement.......... 32
3.3. No Violation of Laws or Agreements.................. 32
3.4. Material Contracts.................................. 33
3.5. Compliance.......................................... 33
3.6. Litigation.......................................... 33
3.7. Title to Assets..................................... 33
3.8. Accuracy of Information; Full Disclosure............ 34
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3.9. Taxes and Assessments................................ 34
3.10. Indebtedness......................................... 35
3.11. Management Agreements................................ 35
3.12. Investments.......................................... 35
3.13. ERISA................................................ 35
3.14. Fees and Commissions................................. 36
3.15. No Extension of Credit for Securities................ 36
3.16. Perfection of Security Interest...................... 36
3.17. Hazardous Wastes, Substances and Petroleum Products.. 36
3.18. Solvency............................................. 37
3.19. Employee Controversies............................... 37
SECTION 4 CONDITIONS.......................................... 38
4.1. Effectiveness........................................ 38
4.2. Advances............................................. 41
SECTION 5 AFFIRMATIVE COVENANTS............................... 41
5.1. Existence and Good Standing.......................... 41
5.2. Interim Financial Statements......................... 41
5.3. Annual Financial Statements.......................... 41
5.4. Compliance Certificate............................... 42
5.5. Additional Reports................................... 42
5.6. Public Information................................... 42
5.7. Books and Records.................................... 42
5.8. Insurance............................................ 42
5.9. Litigation; Event of Default......................... 42
5.10. Taxes................................................ 43
5.11. Costs and Expenses................................... 43
5.12. Compliance; Notification............................. 43
5.13. ERISA................................................ 44
5.14. Total Debt to EBITDA Ratio........................... 44
5.15. Senior Debt to EBITDA................................ 44
5.16. Minimum EBITDA....................................... 45
5.17. Minimum Debt Service Coverage Ratio.................. 45
5.18. Minimum Fixed Charge Coverage Ratio.................. 45
5.19. Borrowing Base....................................... 46
5.20. Management Changes................................... 46
5.21. Transactions Among Affiliates........................ 46
5.22. Joinders, etc........................................ 46
5.23. Additional Collateral Security Documents............. 46
5.24. Other Information.................................... 46
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Page
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SECTION 6 NEGATIVE COVENANTS.................................. 47
6.1. Indebtedness......................................... 47
6.2. Guaranties........................................... 47
6.3. Loans................................................ 47
6.4. Liens and Encumbrances............................... 48
6.5. Additional Negative Pledge........................... 48
6.6. Restricted Payments.................................. 48
6.7. Transfer of Assets; Liquidation...................... 49
6.8. Acquisitions and Investments......................... 49
6.9. Payments to Affiliates............................... 50
6.10. Certain Changes...................................... 50
6.11. Restrictive Agreements............................... 51
6.12. Use of Proceeds...................................... 51
SECTION 7 DEFAULT............................................. 51
7.1. Events of Default.................................... 51
7.2. Remedies............................................. 53
7.3. Right of Set-off..................................... 54
7.4. Turnover of Property Held by Lender's Affiliates..... 54
7.5. Remedies Cumulative; No Waiver....................... 54
SECTION 8 AGENCY PROVISIONS................................... 55
8.1. Application of Payments.............................. 55
8.2. Set-Off.............................................. 55
8.3. Modifications and Waivers............................ 55
8.4. Obligations Several.................................. 55
8.5. Lenders' Representations............................. 56
8.6. Investigation........................................ 56
8.7. Powers of Agent...................................... 56
8.8. General Duties of Agent, Immunity and Indemnity...... 56
8.9. No Responsibility for Representations or Validity,
etc................................................ 56
8.10. Action on Instruction of Lenders; Right to
Indemnity.......................................... 56
8.11. Employment of Agents................................. 57
8.12. Reliance on Documents................................ 57
8.13. Agent's Rights as a Lender........................... 57
8.14. Expenses............................................. 57
8.15. Resignation of Agent................................. 57
8.16. Successor Agent...................................... 57
8.17. Collateral Security.................................. 58
8.18. Enforcement by Agent................................. 58
SECTION 9 MISCELLANEOUS....................................... 58
9.1. Indemnification and Release Provisions............... 58
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Page
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9.2. Participations and Assignments....................... 59
9.3. Binding and Governing Law............................ 59
9.4. Survival............................................. 59
9.5. No Waiver; Delay..................................... 59
9.6. Modification......................................... 60
9.7. Headings............................................. 60
9.8. Notices.............................................. 60
9.9. Payment on Non-Business Days......................... 60
9.10. Time of Day.......................................... 61
9.11. Severability......................................... 61
9.12. Counterparts......................................... 61
9.13. Confidentiality...................................... 61
9.14. Consent to Jurisdiction and Service of Process....... 61
9.15. WAIVER OF JURY TRIAL................................. 62
9.16. ACKNOWLEDGMENTS...................................... 62
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LIST OF EXHIBITS
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Exhibit A-1: Advance Request Form
Exhibit A-2: Letter of Credit Request Form
Exhibit B-1: Form of Revolving Credit Note
Exhibit B-2: Form of Term Note
Exhibit C: Disclosure Pursuant to Representations and Warranties
Exhibit D: Funding Costs and Loss of Earnings Calculation
Exhibit E: Form of Compliance Certificate
Exhibit F: Form of Borrowing Base Certificate
Exhibit G: Notice of Acquisition
Exhibit H: Form of Assignment
Exhibit I: Incumbency Certificate
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT (this "Agreement") is made this 18th day of
December, 1998, by and among XXXXXXX AMERICAN CORPORATION, a Delaware
corporation ("Borrower"); FIRST UNION NATIONAL BANK, a national banking
association ("First Union") and the other financial institutions identified on
Schedule 1 attached hereto (each individually a "Lender" and individually and
collectively, "Lenders"); and FIRST UNION as agent for the Lenders ("Agent").
In consideration of the agreements hereinafter set forth, and
intending to be legally bound, the parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS
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1.1. Definitions. When used in this Agreement, the following terms
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shall have the respective meanings set forth below.
"ABD/Xxxxxxx Dispute" means the dispute between one or more
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subsidiaries of Borrower and ABD Sales, Inc. Xxxxxx X. Xxxxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx X. Xxxxx and Xxxxxxx Xxxxxxxxxx, which is
currently pending before the American Arbitration Association.
"Acquisition Price" shall mean, with respect to any acquisition, the
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total consideration to be paid, incurred or assumed by the Company or its
Subsidiaries in connection with such acquisition, including, without limitation,
the principal amount of any Indebtedness assumed or acquired, and the full
amount of any deferred purchase price or contingent obligations.
"Adjusted EBITDA" means, for any period, EBITDA for such period less
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capital expenditures made during such period as determined in accordance with
GAAP.
"Adjusted Libor Rate" means, for any Interest Period, as applied to a
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Libor Portion, the rate per annum (rounded upwards, if necessary to the next
1/32 of 1%) determined pursuant to the following formula:
Adjusted Libor Rate = Libor Rate
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[1 - Reserve Percentage]
For purposes hereof, "Libor Rate" shall mean, as applied to a Libor Portion, the
rate which appears on the Telerate Page 3750 at approximately 9:00 a.m.
Philadelphia time two London
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Business Days prior to the commencement of such Interest Period for the offering
to leading banks in the London Interbank Market of deposits in United States
dollars ("Eurodollars") or, if such rate does not appear on the Telerate page
3750, the rate which appears (or, if two or more such rates appear, the average
rounded up to the nearest 1/32 of 1% of the rates which appear) on the Reuters
Screen LIBO Page as of 9:00 a.m. Philadelphia time two London Business Days
prior to the commencement of the Interest Period, in either case for an amount
substantially equal to such Portion as to which Borrower may elect the Adjusted
Libor Rate to be applicable with a maturity of comparable duration to the
Interest Period selected by Borrower for such Libor Portion, as may be adjusted
from time to time in accordance with Paragraph 2.6(e) hereof.
"Adjusted Rolling Period" means (i) as of March 31, 1998, the one (1)
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fiscal quarter then ended; (ii) as of June 30, 1999, the two (2) fiscal quarters
then ended; (iii) as of September 30, 1999, the three (3) fiscal quarters then
ended, and (iv) thereafter, the most recent Rolling Period.
"Advance" means a borrowing under the Revolving Credit Commitment
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pursuant to Paragraph 2.7 hereof.
"Advance Request Form" means the certificate in the form attached
--------------------
hereto as Exhibit A-1 to be delivered by Borrower to Agent as a condition of
each Advance.
"Affiliate" means as to any party: (i) any Person who or entity which
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directly or indirectly owns, controls or holds five percent (5%) or more of the
outstanding beneficial interests in such party; (ii) any entity of which five
percent (5%) or more of the outstanding beneficial interest is directly or
indirectly owned, controlled, or held by such party; (iii) any entity which
directly or indirectly is under common control with such party; (iv) any
director or general partner of such party or any Affiliate; or (v) any immediate
family member of any Person who is an Affiliate. For purposes of this
definition, "control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of an entity,
whether through the ownership of voting securities, by contract, or otherwise.
"Agent" means First Union National Bank, in its capacity as agent for
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the Lenders hereunder and any successor in such capacity appointed pursuant to
Paragraphs 8.15 and 8.16 hereof.
"Agreement" means this Credit Agreement and all exhibits hereto, as
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each may be amended, modified, extended, consolidated or restated from time to
time.
"Applicable Margin" means the percentage per annum set forth in the
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appropriate column below that corresponds to the ratio of Funded Debt to EBITDA
for Borrower and its consolidated Subsidiaries (the Applicable Margin being the
lowest applicable percentage per annum as to which the ratio requirement has
been attained):
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Revolving Credit Loan
Applicable Margin Term Loan
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Ratio of Total Base Rate Libor Base Rate Libor
Level Debt to EBITDA Portions Portions Portions Portions
------- ------------------------- ----------- -------- ---------- ---------
I Less than 1.50 to 1 0.75% 2.25% 1.00% 2.50%
II Less than 2.50 to 1 but 1.25% 2.75% 1.50% 3.00%
greater than or equal to
1.50 to 1
III Less than 3.00 to 1 but 1.50% 3.00% 1.75% 3.25%
greater than or equal to
2.50 to 1
IV Greater than or equal to 1.75% 3.25% 2.00% 3.50%
3.00 to 1
Notwithstanding the foregoing, the Applicable Margin from the date hereof
through June 30, 1999 shall be based on Level IV. Thereafter, commencing with
the delivery of a Compliance Certificate for the period ended June 30, 1999, the
Applicable Margin shall adjust automatically, as appropriate, on the day
following delivery of a quarterly Compliance Certificate in accordance with
Paragraph 5.4 hereof, provided, that in the event that a quarterly compliance
certificate has not been delivered on the date required by Paragraph 5.4 then
the Applicable Margin shall adjust to the highest margin provided above as of
the date of required delivery; provided further, however, that the Applicable
Margin shall readjust on the day after delivery of such delinquent Compliance
Certificate based on the ratio set forth in such Compliance Certificate.
"Authorized Officer" means any of the officers of the Borrower
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designated as such pursuant to an Incumbency Certificate in the form of Exhibit
I attached hereto delivered to Lenders from time to time. Any designated
Authorized Officer shall remain as such until Lenders and Agent shall have
actually received a superseding Incumbency Certificate.
"Base Rate" means the higher of (a) the Federal Funds Rate plus one
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half of one percent ( 1/2%) per annum or (b) the Prime Rate.
"Base Rate Portion" means a Portion as to which the applicable rate of
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interest is based on the Base Rate.
"Borrower" means Xxxxxxx American Corporation, a Delaware corporation.
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"Borrowing Base" means eighty percent (80%) of Eligible Accounts.
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"Borrowing Base Certificate" means a certificate in the form of
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Exhibit F attached hereto delivered by Borrower to Lenders pursuant to Paragraph
5.5 or Paragraph 4.1 hereof.
"Business Day" means any day not a Saturday, Sunday or a day on which
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Lenders are required or permitted to be closed under the laws of the
Commonwealth of Pennsylvania.
"Capital Leases" means capital leases and subleases, as defined in
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Statement 13 of the Financial Accounting Standards Board dated November 1976, as
amended and updated from time to time.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
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and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and all rules and
regulations promulgated pursuant thereto.
"Code" means the Internal Revenue Code of 1986, as amended from time
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to time, and regulations with respect thereto in effect from time to time.
"Collateral" means the collateral security for the Loan, including
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under the Collateral Security Documents, this Agreement or any other Loan
Document.
"Collateral Security Documents" means the Security Agreement, the
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Guaranty, the Pledge Agreements, and any other document or instrument executed
and/or delivered from time to time hereunder or in connection herewith granting
or evidencing Collateral for the Senior Obligations.
"Combination" shall mean the transactions pursuant to which, on the
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Effective Date of this Agreement, Xxxxxxx Enterprises and Xxxxxx-American shall
become wholly-owned subsidiaries of the Borrower, as described in the
Registration Statement.
"Company" means individually, and "Companies" means individually and
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collectively, Borrower and each Guarantor.
"Compliance Certificate" means a certificate in the form of Exhibit E
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attached hereto delivered by Borrower to Lenders pursuant to Paragraph 5.5
hereof.
"Debt Service" means, for any period, the sum of interest expense and
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scheduled debt payments for such period.
"Default" means an event, condition or circumstance the occurrence of
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which would, with the giving of notice or the passage of time or both,
constitute an Event of Default.
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"EBITDA" means, for any period, net income for such period as defined
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in accordance with GAAP, excluding any extraordinary gains, plus interest
expense, taxes, depreciation and amortization, and all other non-cash charges to
income for such period, in each case as defined in accordance with GAAP and to
the extent each has been deducted in determining net income.
"Eligible Accounts" means, as of any date of determination thereof,
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the aggregate of all trade account receivables of Borrower and its consolidated
Subsidiaries, at book value in accordance with GAAP, excluding, without
duplication:
(a) any receivable not payable in United States Dollars;
(b) any receivable as to which the account debtor is not located
within the United States, unless such receivable is backed by a letter of credit
in form and substance satisfactory to Agent and issued by a financial
institution acceptable to Agent;
(c) any receivable which by its terms is due later than the end of the
month following the month of shipment;
(d) any receivable due from any Company or any Subsidiary or Affiliate
of any Company;
(e) any receivable with respect to all or part of which a check,
promissory note, draft, trade acceptance or other instrument for the payment of
money has been presented for payment and returned uncollected for any reason;
(f) any receivable as to which Borrower or the applicable owner knows
that any one or more of the following events has occurred with respect to the
account debtor: death or judicial declaration of incompetency; the filing by or
against such account debtor of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, or
other relief under the bankruptcy, insolvency, or similar laws of the United
States, any state or territory thereof, or any foreign jurisdiction, now or
hereafter in effect; the making of any general assignment by such account debtor
for the benefit of creditors; the appointment of a receiver or trustee for such
account debtor or for any of the assets of such account debtor, including,
without limitation, the appointment of or taking possession by a "custodian," as
defined in the Bankruptcy Code; the institution by or against such account
debtor of any other type of insolvency proceeding (under the bankruptcy laws of
the United States or elsewhere) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of
affairs of, such account debtor; the sale, assignment, or transfer of all or
substantially all of the assets of such account debtor; the inability to pay or
the nonpayment by such account debtor of its debts generally as they become due;
the cessation of the business of such account debtor as a going concern; or, in
Agent's sole reasonable judgment, unsatisfactory general financial performance
or credit standing or likelihood of unsatisfactory general financial performance
or credit standing in the near future;
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(g) any receivable which is more than sixty (60) days past the due
date;
(h) any receivable from an account debtor as to which more than fifty
percent (50%) of the amount of all outstanding receivables from such account
debtor are more than ninety (90) days past the date of invoice;
(i) any receivable as to which there is any good faith dispute,
defense, offset or counterclaim with or by the account debtor, to the extent
thereof;
(j) any receivable that has not been created in the ordinary course of
business; and
(k) any receivable representing an obligation for goods placed on
consignment and not yet sold by the consignee, or for goods on approval;
(l) any receivable payable to a Subsidiary that is not a Guarantor;
"Environmental Laws" means any federal, state, county, regional or
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local laws governing the control, handling, storage, removal, spill, release or
discharge of Hazardous Substances, including without limitation CERCLA, the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1976, the
Hazardous Materials Transportation Act, the Emergency Planning and Community
Right to Know Act of 1986, the National Environmental Policy Act of 1975, the
Oil Pollution Act of 1990, any similar or implementing state law, and in each
case including all amendments thereto, and all rules and regulations promulgated
thereunder and permits issued pursuant thereto.
"EPA" means the United States Environmental Protection Agency, or any
---
successor thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, all
-----
amendments thereto and all rules and regulations in effect at any time
thereunder.
"ERISA Affiliate" means, when used with respect to any Plan, ERISA,
---------------
the PBGC or a provision of the Code pertaining to employee benefit plans, any
Person or entity that is a member of any group or organization within the
meaning of Code Sections 414(b), (c), (m) or (o) of which Borrower or any
Guarantor is a member.
"Event of Default" means an event described in Paragraph 7.1 hereof.
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"Excess Cash Flow" means, for any fiscal year, EBITDA for such fiscal
----------------
year, less (i) all payments of principal, interest, fees and expenses with
respect to Total Debt made during such year, (ii) taxes paid in cash during such
fiscal year, (iii) capital expenditures made during such fiscal year, and (iv)
the change in Working Capital since the end of the prior fiscal year (such
change in Working Capital to constitute a reduction in Excess Cash Flow to the
extent that it is negative, and an increase to Excess Cash Flow to the extent
that it is positive).
"Executive Officer" means, with respect to the Borrower, its
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President, Chief Financial Officer, Chief Operating Officer, and any other
officer who is an "executive officer" as defined in Rule 3b.7 under the
Securities Exchange Act of 1934, as amended.
"Federal Funds Rate" means, for any day, the effective rate of
------------------
interest for such day, as announced from time to time by the Board of Governors
of the Federal Reserve System as shown in publication H.15 as the "Federal Funds
Rate."
"Fixed Charges" means, for any period, the sum of Debt Service for
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such period plus Capital Lease payments for such period and cash income taxes
paid during such period.
"GAAP" means generally accepted accounting principles set forth in the
----
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements of the Financial Accounting
Standards Board and in such other statements by such other entity as Agent may
reasonably approve, which are applicable in the circumstances as of the date in
question, subject to Paragraph 1.2(a) hereof; and such principles observed in a
current period shall be comparable in all material respects to those applied in
a preceding period.
"Guarantor" means individually, and "Guarantors" means individually
--------- ----------
and collectively, Xxxxxxx Enterprises, Xxxxxx-American and their respective
Subsidiaries on the date hereof, and any Material Subsidiaries of Borrower which
may join in the Guaranty pursuant to Paragraph 5.22 hereof.
"Guaranty" means the Guaranty Agreement executed by Guarantors in
--------
favor of Lenders as required to be delivered pursuant to Paragraph 4.1 hereof
and including any joinders thereto pursuant to Paragraph 5.22 hereof, as may be
amended, modified or restated from time to time.
"Hazardous Substance" means petroleum products and items defined in
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the Environmental Laws as "hazardous substances", "hazardous wastes",
"pollutants" or "contaminants" and any other toxic, reactive, corrosive,
carcinogenic, flammable or hazardous substance or other pollutant.
"Indebtedness" of any Person as of any date of determination means and
------------
includes all obligations of such Person which, in accordance with GAAP, shall be
classified on
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a balance sheet of such Person as liabilities of such Person and in any event
shall include, without duplication, all (i) obligations of such Person for
borrowed money or which have been incurred in connection with acquisition of
property or assets, (ii) obligations secured by any lien upon property or assets
owned by such Person, notwithstanding that such Person has not assumed or become
liable for the payment of such obligations, (iii) obligations created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person, notwithstanding the fact that the rights and
remedies of the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property, (iv) Capital Leases,
(v) guarantees, (vi) letters of credit and letter of credit reimbursement
obligations, and (vii) any obligation with respect to an interest rate or
currency swap or similar obligation obligating such Person to make payments,
whether periodically or upon the happening of a contingency, except that if any
agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such obligation shall be the net amount thereof.
"Indemnification Escrow Agreement" means the Indemnification Escrow
--------------------------------
Agreement dated the date hereof, entered into pursuant to the Xxxxxxx
Acquisition Agreement.
"Initial Offering" means the initial public offering of shares of
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common stock of Borrower pursuant to the Registration Statement.
"Interest Period" means, with respect to a Libor Portion, a period of
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one (1), two (2), three (3) or six (6) months' duration, as Borrower may elect,
during which the Adjusted Libor Rate is applicable; provided, however, that (a)
if any Interest Period would otherwise end on a day which shall not be a London
Business Day, such Interest Period shall be extended to the next succeeding
London Business Day, unless such London Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding London
Business Day, subject to clause (c) below; (b) interest shall accrue from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires; (c) with respect to an Interest Period which
begins on the last London Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period), the Interest Period shall end on the last London
Business Day of a calendar month; and (d) Borrower may not elect an Interest
Period that would extend past the Termination Date.
"Lender" means individually, and "Lenders" means individually and
------ -------
collectively, the institutions identified on Schedule 1 attached hereto and
their respective successors and assigns so long as any such institution retains
any portion of the Revolving Credit Commitment or Loans hereunder.
"Letter of Credit" means individually, and "Letters of Credit" shall
---------------- -----------------
mean individually and collectively, the letter(s) of credit issued for the
account of Borrower, in the
8
form agreed upon at the time of issuance thereof by Agent and Borrower,
participated in by all the Lenders pursuant to the terms and conditions of
Section 2A hereof.
"Letter of Credit Request Form" means the certificate in the form
-----------------------------
attached as Exhibit A-2 hereto, to be delivered to Agent as a condition of each
issuance of a Letter of Credit pursuant to Paragraph 2A.3 hereof.
"Letter of Credit Sublimit" means the portion of the Revolving Credit
-------------------------
Commitment up to which Lenders have agreed to participate in the issuance by
Agent of Letters of Credit pursuant to Section 2A hereof, being Five Million
Dollars ($5,000,000).
"Libor Portion" means a Portion as to which the applicable rate of
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interest is based on the Adjusted Libor Rate.
"Loan" means individually, and "Loans" means individually and
---- -----
collectively, the Revolving Credit Loan and the Term Loan.
"Loan Documents" means the Agreement, the Notes, Collateral Security
--------------
Documents, and the other documents and agreements executed and delivered in
connection with this Agreement. The Loan Documents shall not include any
agreements or documents relating to swaps, xxxxxx or similar arrangements with
any Lender.
"Local Authorities" means individually and collectively the state and
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local governmental authorities and administrative agencies which govern the
business, commercial activities or facilities owned or operated by any Company.
"London Business Day" means any Business Day on which banks in London,
-------------------
England are open for business.
"Material Adverse Effect" means a material adverse effect on the
-----------------------
business, financial condition or prospects of the Borrower and its consolidated
Subsidiaries taken as a whole, or on the Companies' ability to perform their
obligations under this Agreement and the other Loan Documents.
"Material Subsidiary" means any direct or indirect Subsidiary of
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Borrower which either: (i) comprises 5% or more of the assets of Borrower and
its consolidated Subsidiaries as of the last day of the most recently ended
fiscal quarter, or (ii) is responsible for 5% or more of the EBITDA of the
Borrower and its consolidated Subsidiaries for the most recent Rolling Period.
"Maximum Principal Amount" means the maximum principal amount of the
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Revolving Credit Commitment, up to which the applicable Lender has agreed to
lend funds and/or participate in the issuance of Letters of Credit as set forth
in Schedule 1 attached hereto, as such amounts may be reduced or terminated from
time to time pursuant to Paragraph 2.8 hereof.
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"Xxxxxxx Enterprises" means Xxxxxxx Enterprises, Inc., a Massachusetts
-------------------
corporation.
"Xxxxxxx Stock Purchase Agreement" means the Stock Purchase Agreement
--------------------------------
dated May 20, 1998 among the Borrower (formerly Monroe, Inc.), Xxxxxxx
Enterprises, and the stockholders of Xxxxxxx Enterprises, as amended by
Amendment No. 1 to Stock Purchase Agreement dated November 18, 1998 and by
Amendment No. 2 to Stock Purchase Agreement dated December 15, 1998.
"Net Cash Proceeds" means, with respect to any Sale of Material
-----------------
Assets, the cash proceeds (including insurance proceeds) received by the
Borrower or its Subsidiaries in such a transaction less (i) the reasonable costs
of the transaction, (ii) applicable taxes arising out of the transaction, and
(iii) payment of any Indebtedness secured by such assets pursuant to liens
permitted under Paragraph 6.4(i) or (v).
"Note" means individually and "Notes" means individually and
---- -----
collectively the Revolving Credit Notes and the Term Notes.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
----
successor thereto.
"Permitted Investments" means (i) investments in commercial paper
---------------------
maturing in 180 days or less from the date of issuance which is rated A1 or
better by Standard & Poor's Corporation or P1 or better by Xxxxx'x Investors
Services, Inc.; (ii) investments in direct obligations of the United States of
America or obligations of any agency thereof which are guaranteed by the United
States of America, provided that such obligations mature within twelve (12)
months of the date of acquisition thereof; (iii) investments in certificates of
deposit maturing within one (1) year from the date of acquisition thereof issued
by a bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $500,000,000 and the long-term deposits of which are rated A1 or better by
Xxxxx'x Investors Services, Inc. or equivalent by Standard & Poor's Corporation;
and (iv) money market funds registered under the Investment Company Act of 1940,
as amended, whose shares are registered under the Securities Act of 1933, as
amended, and having a rating by Standard & Poor's Corporation of AAAm-G, AAAm or
AAm.
"Permitted Liens" shall mean liens permitted pursuant to Paragraph 6.4
---------------
hereof.
"Person" shall mean any individual, corporation, partnership, company,
------
association, limited liability corporation or other legal entity.
10
"Plan" means any employee pension benefit or employee welfare benefit
----
plan as defined in Sections 3(1) or (2) of ERISA maintained or sponsored by,
contributed to, or covering employees of, either Borrower or any ERISA
Affiliate.
"Pledge Agreements" shall mean the Pledge Agreement executed by
-----------------
Borrower in favor of Agent pursuant to Paragraph 4.1 hereof and any additional
Pledge Agreement executed and delivered from time to time pursuant to Paragraph
5.22 hereof, as may be amended, modified or restated from time to time.
"Portion" means a portion of the Loan as to which a specific interest
-------
rate and, in the case of a Libor Portion, an Interest Period, has been elected
by Borrower.
"Prime Rate" means the rate of interest announced by Agent from time
----------
to time as its prime rate. Such rate is an index or base rate and is not
necessarily the lowest or best rate charged by Agent to its customers or other
banks.
"Pro Rata Share" means, as to a Lender, the ratio which the
--------------
outstanding principal balance of its portion of the Loans hereunder bears to the
aggregate outstanding principal balance of the Loans at any time; or if no
indebtedness is outstanding hereunder or the context otherwise requires, its
percentage share of the Revolving Credit Commitment as set forth in Schedule 1
attached hereto.
"Registration Statement" means the registration statement filed by the
----------------------
Borrower on Form S-1, No. 333-53419, as amended and in the form as declared
effective by the Securities and Exchange Commission on December 15, 1998,
together with the prospectus contained therein, as supplemented pursuant to Rule
424(b) under the Securities Act of 1933, as amended.
"Regulation D" means Regulation D of the Board of Governors of the
------------
Federal Reserve System, comprising Part 204 of Title 12 Code of Federal
Regulations, as amended, and any successor thereto.
"Release" means any spill, leak, emission, discharge or the pumping,
-------
pouring, emptying, disposing, injecting, escaping, leaching or dumping of a
Hazardous Substance into the environment.
"Required Lenders" means those Lenders (which may include Agent in its
----------------
capacity as a Lender) holding Pro Rata Shares aggregating sixty-six and two-
thirds percent (66-2/3%) or more.
"Reserve" means, for any day, that reserve (expressed as a decimal)
-------
which is in effect (whether or not actually incurred) with respect to a Lender
(or any bank Affiliate of such Lender) on such day, as prescribed by the Board
of Governors of the Federal Reserve System (or any successor or any other
banking authority to which a Lender (or any bank Affiliate of
11
such Lender) is subject including any board or governmental or administrative
agency of the United States or any other jurisdiction to which a Lender (or any
bank Affiliate of such Lender) is subject for determining the maximum reserve
requirement (including without limitation any basic, supplemental, marginal or
emergency reserves) for Eurocurrency liabilities as defined in Regulation D.
"Reserve Percentage" means, for a Lender (or any bank Affiliate of
------------------
such Lender) on any day, that percentage (expressed as a decimal) prescribed by
the Board of Governors of the Federal Reserve System (or any successor or any
other banking authority to which a Lender (or any bank Affiliate of such Lender)
is subject, including any board or governmental or administrative agency of the
United States or any other jurisdiction to which a Lender is subject), for
determining the reserve requirement (including without limitation any basic,
supplemental, marginal or emergency reserves) for (i) deposits of United States
Dollars or (ii) Eurocurrency liabilities as defined in Regulation D, in each
case used to fund a Portion subject to an Adjusted Libor Rate or any Loan made
with the proceeds of such deposit. The Adjusted Libor Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.
"Restricted Payments" means redemptions, repurchases, and
-------------------
distributions of any kind (including redemptions in exchange for real or
tangible personal property) in respect of the capital stock of Borrower (other
than dividends or distributions consisting solely of shares of capital stock of
Borrower), and payments of principal and interest or other amounts on
Subordinated Debt.
"Revolving Credit Commitment" means at any time the maximum aggregate
---------------------------
principal amount which Lenders have agreed to make available at such time under
Paragraph 2.1 hereof, being Twenty-Five Million Dollars ($25,000,000) in the
aggregate on the date hereof.
"Revolving Credit Loan" means the aggregate outstanding principal
---------------------
balance of Indebtedness advanced under the Revolving Credit Commitment, together
with interest accrued thereon and fees and expenses incurred in connection with
any of the foregoing.
"Revolving Credit Note" means individually, and "Revolving Credit
--------------------- ----------------
Notes" means individually and collectively, the promissory notes in the form of
-----
Exhibit B-1 attached hereto delivered by Borrower to each Lender, as may be
amended, modified, extended, consolidated or restated from time to time.
"Xxxxxx Stock Purchase Agreement" means the Stock Purchase Agreement
-------------------------------
dated as of May 22, 1998 among Borrower (formerly Monroe, Inc.), Xxxxxx-
American, Xxxxxx X. Xxxxxx, Xx., as stockholders' representative, and the
stockholders of Xxxxxx-American, as amended by Amendment no. 1 to the Stock
Purchase Agreement dated November 16, 1998.
12
"Xxxxxx-American" means Xxxxxx-American Company, Inc., a North
---------------
Carolina corporation.
"Rolling Period" means a period of four consecutive fiscal quarters.
--------------
"Sale of Material Assets" means the sale or other disposition
-----------------------
(including damage, destruction or condemnation of assets) by Borrower or any of
its Subsidiaries, in a single transaction or in the aggregate as to all
transactions within any twelve (12) consecutive months, of assets (including
stock or other investments or interests in a Person) which, valued at the
greater of book value or fair market value, have a value of One Hundred Thousand
Dollars ($100,000) or more; excluding (i) the sale of inventory in the ordinary
course of business, and (ii) the sale of Permitted Investments for cash or the
conversion into cash of Permitted Investments.
"Security Agreement" means the Security Agreement executed by Borrower
------------------
and Guarantors delivered pursuant to Paragraph 4.1 hereof (including as joined
in by any additional Guarantors pursuant to Paragraph 5.22 hereof from time to
time), as may be amended, modified, or restated from time to time.
"Seller Obligations" means (i) obligations of any of the Companies or
------------------
their Subsidiaries to sellers of previously acquired businesses, including all
employment and consulting arrangements, and (ii) obligations to previous
shareholders of any of the Companies relating to repurchase of their shares.
"Senior Debt" means Total Debt less Subordinated Debt.
-----------
"Senior Obligations" means the obligations of the Borrower and its
------------------
Subsidiaries to Lenders or Agent with respect to (i) the Loans, (ii) any
currency or interest rate swap or similar obligation with any Lender, and (iii)
any other obligation under any Loan Document.
"Subordinated Debt" means indebtedness of Borrower or a Subsidiary
-----------------
subordinated to the Senior Obligations pursuant to a subordination agreement in
form and substance satisfactory to Required Lenders.
"Subsidiary" means, with respect to any Person, any other Person of
----------
which such Person, directly or indirectly, owns or controls more than fifty
percent (50%) of any class or classes of securities, membership interests,
partnership interests or other equity interests, and any partnership in which
such Person is a general partner. Unless otherwise specified, references to
"Subsidiaries" herein shall mean direct and indirect Subsidiaries of Borrower.
"Tax Escrow Agreement" means the Tax Escrow Agreement dated the date
--------------------
hereof, entered into pursuant to the Xxxxxxx Acquisition Agreement.
13
"Term Loan" means the outstanding principal balance of indebtedness
---------
advanced pursuant to Paragraph 2.1(b) hereof, together with interest accrued
thereon and fees and expenses payable hereunder in connection therewith.
"Term Note" means individually, and "Term Notes" means individually
--------- ----------
and collectively, the Term Notes in the form of Exhibit C-2 attached hereto to
be delivered by Borrower to Lenders pursuant to Paragraph 4.1 hereof, as may be
amended, modified or restated from time to time.
"Termination Date" means the earlier of (i) December 31, 2001, or (ii)
----------------
the date on which the Revolving Credit Commitment is terminated pursuant to
Paragraph 2.8 hereof.
"Total Debt" means, as of the date of determination, the aggregate
----------
outstanding principal amount of all Indebtedness for: (A) borrowed money,
including without limitation the Loans hereunder and any outstanding
Subordinated Debt; (B) the purchase price for installment purchases of real or
personal property; (C) the principal portion of Capital Leases; (D) guaranties
of Indebtedness of others; (E) reimbursement obligations under letters of
credit; in each case without duplication; and (F) Seller Obligations (except to
the extent funds thereunder have been placed in escrow with Agent on terms
satisfactory to Agent).
"Working Capital" means current assets (net of cash) less current
---------------
liabilities (net of short term debt and current maturities of long term debt).
"Year 2000 Compliant" and "Year 200 Compliance"means, as to any
------------------- -------------------
material computer system or application or micro-processor dependent good or
equipment, that it will operate as designed and intended prior to, during and
after the calendar year 2000 without error relating to date data or date
information, specifically including any error relating to, or the product of,
date data or date information that represents or references different centuries
or more than one century.
1.2. Rules of Construction.
---------------------
(a) GAAP. Except as otherwise provided herein, financial and
----
accounting terms used in the foregoing definitions or elsewhere in this
Agreement, shall be defined in accordance with GAAP. If Borrower or Required
Lenders determine that a change in GAAP from that in effect on the date hereof
has altered the treatment of certain financial data to its detriment under this
Agreement, such party may, by written notice to the other within ten (10) days
after the effective date of such change in GAAP, request renegotiation of the
financial covenants affected by such change. If Borrower and Required Lenders
have not agreed on revised covenants within thirty (30) days after the delivery
of such notice, then, for purposes of this Agreement, GAAP will mean generally
accepted accounting principles on the date just prior to the date on which the
change occurred that gave rise to the notice.
14
(b) Use of term "consolidated". Any term defined in Paragraph
--------------------------
1.1 hereof, when modified by the word "consolidated," shall have the meaning
given to such term herein as to Borrower and all entities whose accounts,
financial results or position, for financial accounting purposes, are
consolidated with those of Borrower in accordance with GAAP.
1.3. Proforma Calculations. In calculating EBITDA, Adjusted EBITDA,
---------------------
Debt Service, Fixed Charges, or Interest Expense, or in making any similar
calculation hereunder, for any period, in the event that the Combination or any
acquisition or Sale of Substantial Assets has been consummated during such
period, then such calculations shall be made based on proforma financial
statements setting forth the results of operations of Borrower and its
consolidated Subsidiaries as though such Combination, acquisition or Sale of
Material Assets had been consummated as of the first day of such period,
including, in the case of the Combination, integration adjustments as described
on page 34 of the Registration Statement and such additional integration
adjustments as may be agreed to by Agent.
SECTION 2
CREDIT FACILITY
---------------
2.1. The Facilities.
--------------
(a) Revolving Credit Commitment. From time to time prior to the
---------------------------
Termination Date, subject to the provisions below, each Lender severally agrees
to make Advances to Borrower up to its respective Maximum Principal Amount,
which Borrower may repay and reborrow prior to the Termination Date, for
purposes specified in Paragraph 2.4 hereof; provided, however, that the
aggregate outstanding principal amount of such Advances, together with the
undrawn amount of all outstanding Letters of Credit and all unreimbursed draws
on Letters of Credit, shall not exceed at any time the lesser of the Revolving
Credit Commitment or the Borrowing Base.
(b) Term Loan. On the Effective Date, each Lender severally
---------
agree to advance to Borrower its Maximum Principal Amount with respect to the
Term Loan, in the aggregate amount of Fifty Million Dollars ($50,000,000).
2.2. Promissory Notes. The Indebtedness of the Borrower to each Lender
----------------
under the Revolving Credit Loan will be evidenced by a Revolving Credit Note
executed by Borrower in favor of such Lender, and the Indebtedness of the
Borrower to each Lender under the Term Loan will be evidenced by a Term Note
executed by Borrower in favor of such Lender. The original principal amount of
each Lender's Revolving Credit Note and Term Note will be in the amount
identified in Schedule 1 attached hereto as its Maximum Principal Amount with
respect to the Revolving Credit Loan and the Term Loan, respectively; provided,
however, that notwithstanding the face amount of each such Note, Borrower's
liability
15
thereunder shall be limited at all times to the actual indebtedness, principal,
interest, fees and expenses then outstanding to such Lender under the Revolving
Credit Loan and the Term Loan, respectively.
2.3. Lenders' Participation. Lenders shall be lenders in the Loans in
----------------------
the Maximum Principal Amounts and Pro Rata Shares set forth in Schedule 1
attached hereto.
2.4. Use of Proceeds. Funds advanced under the Loans shall be used
---------------
solely to finance a portion of the purchase price, transaction expenses and fees
with respect to the Combination, the Initial Offering and the transactions
contemplated by this Agreement; to refinance certain existing indebtedness of
Xxxxxxx Enterprises and Xxxxxx-American; to pay Seller Obligations; to finance
the buyout of employment arrangements of departing executives of Xxxxxxx
Enterprises and Xxxxxx-American; and for the working capital needs and general
corporate purposes of the Companies, provided that in no event shall funds
advanced hereunder be advanced to or used by Subsidiaries that are not
Guarantors.
2.5. Repayment.
---------
(a) Revolving Credit Loan. Subject to certain mandatory
---------------------
prepayments as set forth in Paragraph 2.9 hereof, the aggregate outstanding
principal balance under the Revolving Credit Loan on the Termination Date,
together with all interest, fees and costs due hereunder, shall be due and
payable in full on such Termination Date. Notwithstanding the immediately
preceding sentence, the aggregate outstanding balance of the Revolving Credit
Loan shall be due and payable immediately upon acceleration of the Revolving
Credit Loan in accordance with Paragraph 7.2 hereof.
(b) Term Loan. Subject to certain mandatory prepayments as set
---------
forth in Paragraph 2.9 hereof, the Term Loan shall be payable in quarterly
installments as follows:
Scheduled Payment Date Amount of Payment
---------------------- -----------------
March 31, 1999 $1,562,500
June 30, 1999 $1,562,500
September 30, 1999 $1,562,500
December 31, 1999 $1,562,500
March 31, 2000 $2,187,500
June 30, 2000 $2,187,500
September 30, 2000 $2,187,500
December 31, 2000 $2,187,500
March 31, 2001 $2,500,000
June 30, 2001 $2,500,000
16
September 30, 2001 $2,500,000
December 31, 2001 $2,500,000
March 31, 2002 $3,125,000
June 30, 2002 $3,125,000
September 30, 2002 $3,125,000
December 31, 2002 $3,125,000
March 31, 2003 $3,125,000
June 30, 2003 $3,125,000
September 30, 2003 $3,125,000
December 31, 2003 $3,125,000
Notwithstanding the foregoing, the entire outstanding balance of the Term Loan
shall be due and payable immediately upon the acceleration of the Term Loan in
accordance with Paragraph 7.2 hereof.
2.6. Interest. Portions of the Loans shall bear interest on the
--------
outstanding principal amount thereof in accordance with the following
provisions:
(a) Interest on Loan.
----------------
(i) At the Borrower's election in accordance with the
provisions of Paragraph 2.6(b) below, in the absence of the existence and
continuance of an Event of Default hereunder and prior to maturity or judgment,
and subject to clause (ii) below, any Portion of the Loans shall bear interest
at either of the following rates:
(A) Base Rate. The Base Rate plus the Applicable
---------
Margin.
(B) Adjusted Libor Rate. The Adjusted Libor Rate plus
-------------------
the Applicable Margin.
(ii) Notwithstanding the foregoing, upon the occurrence and
during the continuance of an Event of Default hereunder, including after
maturity and upon judgment, Borrower hereby agrees to pay to Lenders interest
(A) on any outstanding Libor Portion, at the rate which is two percent (2%) per
annum in excess of the Adjusted Libor Rate plus the Applicable Margin for each
such Libor Portion through the end of the applicable Interest Period, and
thereafter, at the rate of two percent (2%) per annum in excess of the Base Rate
plus the Applicable Margin, and (B) on any Base Rate Portion, at the rate of two
percent (2%) per annum in excess of the Base Rate plus the Applicable Margin.
17
(b) Procedure for Determining Interest Periods and Rates of
-------------------------------------------------------
Interest.
--------
(i) If Borrower elects the rate based on the Base Rate to be
applicable to a Portion, Borrower must notify Agent of such election in writing
prior to eleven o'clock (11:00) a.m. Philadelphia time one (1) Business Day
prior to the proposed application of such rate. If Borrower elects the rate
based on the Adjusted Libor Rate to be applicable to a Portion, Borrower must
notify Agent of such election and the Interest Period selected prior to eleven
o'clock (11:00) a.m. Philadelphia time at least three (3) London Business Days
prior to the commencement of the proposed Interest Period. If Borrower does not
provide notice for the rate based on the Adjusted Libor Rate, then Borrower
shall be deemed to have requested that the rate based on the Base Rate shall
apply to any Portion as to which the Interest Period is expiring and to any new
Advance of the Revolving Credit Loan until Borrower shall have given proper
notice of a change in or determination of the rate of interest in accordance
with this Paragraph 2.6(b).
(ii) Borrower shall not elect more than six (6) different
Libor Portions to be applicable to the Loans at one time. Any Base Rate Portion
shall be in an amount equal to Five Hundred Thousand Dollars ($500,000) or an
even multiple of One Hundred Thousand Dollars ($100,000) in excess thereof, and
any Libor Portion shall be in an amount equal to Two Million Five Hundred
Thousand Dollars ($2,500,000) or an even multiple of One Hundred Thousand
Dollars ($100,000) in excess thereof.
(c) Payment and Calculation of Interest. With respect to
-----------------------------------
Portions which bear interest at the rate based on the Adjusted Libor Rate,
interest shall be due and payable on the last day of each Interest Period for
each such Portion, and, in the case of a Portion with an Interest Period of six
(6) months, on the ninetieth (90) day after the commencement of such Interest
Period and on the last day of the Interest Period. With respect to Portions
which bear interest at the rate based on the Base Rate, interest shall be due
and payable on the last Business Day of each March, June, September and
December. Interest shall be calculated in accordance with the provisions of
Paragraph 2.6(b) hereof; all interest shall be calculated on the basis of the
actual number of days elapsed over a year of 360 days in the case of interest
based on the Adjusted Libor Rate, or over a year of 365 or 366 days, as
applicable, in the case of interest based on the Base Rate.
(d) Reserves. If at any time when a Portion is subject to the
--------
rate based on the Adjusted Libor Rate, a Lender (or a bank Affiliate of such
Lender) is subject to and incurs a Reserve, other than a Reserve Percentage
included in the calculation of the applicable Adjusted Libor Rate, Borrower
hereby agrees to pay within five (5) Business Days of written demand thereof
from time to time, as billed by Agent on behalf of itself or any other Lender,
such amount as is necessary to reimburse such Lender (or such Lender's bank
Affiliate) for its costs in maintaining such Reserve, as described in reasonable
detail in such demand. Such amount shall be computed by taking into account the
cost incurred by such Lender (or such Lender's bank Affiliate) in maintaining
such Reserve in an amount equal to such Lender's ratable share of the Portion on
which such Reserve is incurred, which
18
computation shall be set forth in any such demand by Agent on behalf of itself
or any other Lender. The good faith determination by Agent or any Lender of such
costs incurred and the allocation of such costs among Borrower and other
customers which have similar arrangements with such Lender (or such Lender's
bank Affiliate) shall be prima facie evidence of the correctness of the fact and
the amount of such additional costs. Upon notification to Borrower of any
payment required pursuant to this Paragraph 2.6(d), Borrower (A) shall make such
payment in accordance with the provisions hereof, and (B) may repay the Portion
of the Loans with respect to which such payment is required, subject to the
requirements of Paragraph 2.9 and 2.10 hereof.
(e) Special Provisions Applicable to Adjusted Libor Rate. The
----------------------------------------------------
following special provisions shall apply to the Adjusted Libor Rate:
(i) Change of Adjusted Libor Rate. The Adjusted Libor Rate
-----------------------------
may be automatically adjusted by Agent on a prospective basis to take into
account the additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in applicable law or
regulation or the interpretation thereof occurring subsequent to the
commencement of the then applicable Interest Period, including but not limited
to changes in tax laws (except changes of general applicability in corporate
income tax laws) and changes in the reserve requirements imposed by the Board of
Governors of the Federal Reserve System (or any successor), excluding the
Reserve Percentage and any Reserve which has resulted in a payment pursuant to
subparagraph (d) above, that increase the cost to Lenders of funding the Loans
or a portion thereof bearing interest based on the Adjusted Libor Rate. Agent
shall give Borrower notice of such a good faith determination and adjustment,
described in reasonable detail, which determination shall be prima facie
evidence of the correctness of the fact and the amount of such adjustment.
Borrower may, by notice to Agent, (A) request Agent to furnish to Borrower a
statement setting forth the basis for adjusting such Adjusted Libor Rate and the
method for determining the amount of such adjustment; and/or (B) repay the
Portion of the Loans with respect to which such adjustment is made, subject to
the requirements of Paragraph 2.9 and 2.10 hereof.
(ii) Unavailability of Eurodollar Funds. In the event that
----------------------------------
Borrower shall have requested the rate based on the Adjusted Libor Rate in
accordance with Paragraph 2.6(b) and any Lender (or such Lender's bank
Affiliate) shall have reasonably determined that Eurodollar deposits equal to
the amount of the principal of the Portion and for the Interest Period specified
are unavailable, or that the rate based on the Adjusted Libor Rate will not
adequately and fairly reflect the cost of making or maintaining the principal
amount of the Portion specified by Borrower during the Interest Period
specified, or that by reason of circumstances affecting Eurodollar markets,
adequate and reasonable means do not exist for ascertaining the rate based on
the Adjusted Libor Rate applicable to the specified Interest Period, such Lender
shall give notice to Agent and Agent shall promptly give notice of such
determination to Borrower that the rate based on the Adjusted Libor Rate is not
available. A good faith determination by such Lender (or such Lender's bank
Affiliate) hereunder shall be prima facie evidence of the correctness of the
fact and amount of such additional costs or unavailability.
19
Upon such a determination, (i) the obligation to advance or maintain Portions at
the rate based on the Adjusted Libor Rate shall be suspended until Agent shall
have notified Borrower and Lenders that such conditions shall have ceased to
exist, and (ii) the rate based on the Base Rate shall be applicable to all such
Portions (provided, that Borrower shall not be required to compensate the
affected Lender for funding costs or loss of earnings as a result of such change
in interest rate).
(iii) Illegality. In the event that it becomes unlawful for
----------
a Lender (or such Lender's bank Affiliate) to maintain Eurodollar liabilities
sufficient to fund any Portion of the Loans subject to the rate based on the
Adjusted Libor Rate, then such Lender shall immediately notify Borrower thereof
(with a copy to Agent) and such Lender's obligations hereunder to advance or
maintain advances at the rate based on the Adjusted Libor Rate shall be
suspended until such time as such Lender (or such Lender's bank Affiliate) may
again cause the rate based on the Adjusted Libor Rate to be applicable to any
Portion of the outstanding principal balance of the Loans and any such Lender's
share of any Portion shall then be subject to the rate based on the Base Rate
(provided, that Borrower shall not be required to compensate the affected Lender
for funding costs or loss of earnings as a result of such change in interest
rate).
2.7. Advances.
--------
(a) Advance Request. Borrower shall give Agent written notice,
---------------
not later than eleven o'clock (11:00) a.m. Philadelphia time one (1) Business
Day prior to the proposed Advance in the case of an advance to bear interest
based on the Base Rate, and three (3) Business Days prior to an advance to bear
interest based on the Adjusted Libor Rate, of each requested Advance under the
Revolving Credit Commitment specifying the date, amount and purpose thereof.
Such notice shall be in the form of the Advance Request Form attached hereto as
Exhibit A-1, shall be certified by an Authorized Officer of Borrower, and shall
contain the following information and representations, which shall be deemed
affirmed and true and correct as of and upon receipt of the date of and upon
receipt of the requested Advance:
(i) the aggregate amount of the requested Advance, which
shall be no less than $2,500,000 in the case of an Advance to bear interest
based on the Adjusted Libor Rate and no less than $500,000 in the case of an
Advance to bear interest based on the Base Rate, and in either case shall be in
an even multiple of $100,000;
(ii) confirmation of the interest rate(s) elected by the
Borrower to apply to each Advance, and, if applicable, the Interest Period
elected by the Borrower to apply to each Libor Portion to be advanced;
(iii) confirmation of Borrower's compliance with Paragraphs
5.14 through 5.19 as of the most recently ended fiscal quarter for which a
Compliance
20
Certificate has been (or is required to have been) delivered, and taking into
account any Advances, including the requested Advance, and payments since such
date;
(iv) confirmation of Borrower's compliance with the
Borrowing Base, as of the end of the most recent month for which a Borrowing
Base Certificate has been (or is required to have been) delivered, and taking
into account any Advances, including the requested Advance, and payments since
such date;
(v) statements that the representations and warranties set
forth herein and in the other Loan Documents are true and correct in all
material respects as of the date thereof; no Event of Default or Default
hereunder has occurred and is then continuing or will be caused by the requested
Advance; and there has been no Material Adverse Effect since the date of this
Agreement.
(b) Procedures.
----------
(i) Upon receiving a request for an Advance in accordance
with subparagraph (a) above, Agent shall request by prompt notice to Lenders
that each Lender advance funds to Agent so that each Lender participates in the
requested Advance in the same percentage as it participates in the Revolving
Credit Commitment. Each Lender shall advance its applicable percentage of the
requested Advance to Agent by delivering federal funds immediately available at
Agent's offices prior to twelve o'clock (12:00) noon Philadelphia time on the
date of the Advance. Subject to the satisfaction of the terms and conditions
hereof, Agent shall make the requested Advance available to Borrower by
crediting such amount to Borrower's deposit account with Agent not later than
two o'clock (2:00) p.m. on the day of the requested Advance; provided, however,
that in the event Agent does not receive a Lender's share of the requested
Advance by such time as provided above, Agent shall not be obligated to advance
such Lender's share.
(ii) Unless Agent shall have been notified by a Lender
prior to the date such Lender's share of any such Advance is to be made by such
Lender that such Lender does not intend to make its share of such requested
Advance available to Agent, Agent may assume that such Lender has made such
proceeds available to Agent on such date, and Agent may, in reliance upon such
assumption (but shall not be obligated to), make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to Agent by such Lender on the date the Advance is made, Agent shall be entitled
to recover such amount on demand from such Lender (or, if such Lender fails to
pay such amount forthwith upon such demand, from Borrower) together with
interest thereon in respect of each day during the period commencing on the date
such amount was made available to Borrower and ending on (but excluding) the
date Agent recovers such amount, from such Lender, at a rate per annum equal to
the effective rate for overnight federal funds in New York as reported by the
Federal Reserve Lender of New York for such day (or, if such day is not a
Business Day, for the next preceding Business Day) and from Borrower, at a rate
per annum based on the Base Rate as provided in Paragraph 2.6(a) hereof.
21
(c) Requests Irrevocable. Each request for an Advance pursuant
--------------------
to this Paragraph 2.7 shall be irrevocable and binding on Borrower. In the case
of any Advance bearing interest at the rate based upon the Adjusted Libor Rate,
Borrower shall indemnify Lenders against any loss, cost or expense incurred by
Lender as a result of not borrowing such funds on the requested Advance date,
including as a result of any failure to fulfill on or before the date specified
in such request for an Advance the applicable conditions set forth in Section
Four hereof, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or redeployment of deposits or other funds acquired
by Lenders to fund the Advance to be made by Lenders when such Advance, as a
result of such failure, is not made on such date, as calculated by Agent in
accordance with Exhibit D attached hereto.
2.8. Reduction and Termination of Commitment.
---------------------------------------
(a) Borrower. Borrower shall have the right at any time and
--------
from time to time, upon three (3) Business Days' prior written notice to Agent,
to reduce the Revolving Credit Commitment in increments of Five Million Dollars
($5,000,000) or multiples thereof without penalty or premium, provided that on
the effective date of such reduction Borrower shall make a prepayment of the
Revolving Credit Loan in an amount, if any, by which the aggregate outstanding
principal balance of the Revolving Credit Loan exceeds the amount of the
Revolving Credit Commitment as then so reduced, together with accrued interest
on the amount so prepaid and any amounts due pursuant to Paragraph 2.10 hereof.
(b) Lenders. Required Lenders shall have the right to terminate
-------
the Revolving Credit Commitment at any time, in their discretion and upon notice
to Borrower, upon the occurrence and during the continuance of any Event of
Default hereunder (except if an Event of Default described in Paragraph 7.1(i)
shall occur, in which case termination of the Revolving Credit Commitment shall
occur automatically without notice).
(c) Restoration Only With Consent. Any termination or reduction
-----------------------------
to the Revolving Credit Commitment pursuant to subparagraphs 2.8(a) and (b)
shall result in a pro rata reduction in each Lender's Maximum Principal Amount
with respect thereto. Any termination or reduction of the Revolving Credit
Commitment shall be permanent, and the Revolving Credit Commitment and
respective Maximum Principal Amounts cannot thereafter be restored or increased
without the written consent of all affected Lenders.
2.9. Prepayment.
----------
(a) Voluntary Prepayments. Upon one (1) Business Day's prior
---------------------
written notice by Borrower to Agent, Borrower may repay all or any portion of
the outstanding principal balance under the Revolving Credit Loan or the Term
Loan without premium or penalty, provided that any such payment shall include
all accrued interest on the amount prepaid plus any amounts which may be due
pursuant to Paragraph 2.10 hereof. Any such payments made with respect to the
Revolving Credit Loan prior to the Termination Date shall not reduce the
Revolving Credit Commitment and may be reborrowed in accordance with this
22
Agreement. Any such payment with respect to the Term Loan shall be applied to
the scheduled installments thereof in the inverse order of maturity.
(b) Mandatory Payments.
------------------
(i) In addition to any other required payments hereunder,
Borrowers shall make principal payments on the Loans in the circumstances and in
the amounts set forth below:
(A) Asset Dispositions. In connection with each Sale of Material
------------------
Assets (it being understood and agreed that any such Sale of Material Assets
shall require the approval of Required Lenders, except to the extent expressly
authorized pursuant to Paragraph 6.7 hereof), the Net Cash Proceeds to the
seller of such transaction shall be paid directly to Agent for the account of
Lenders and applied to the Loans as set forth in subparagraph (D) below;
provided, however, that (i) insurance proceeds with respect to damage or
destruction of property shall not be required to be applied to the Loans
pursuant hereto if such proceeds are used to repair or replace such property
within ninety (90) days after receipt by Borrower or its Subsidiaries, and (ii)
the proceeds of the sale of the Xxxxxx Building in Charlotte, North Carolina
pursuant to Paragraph 6.7(a) hereof shall be applied first to payment of the
mortgage thereon, and then to payment to certain shareholders of Xxxxxx-
American.
(B) New Debt. In the event a Borrower incurs Indebtedness
--------
consented to by Required Lenders which is not otherwise permitted pursuant to
Paragraph 6.1 hereof, the net cash proceeds of such Indebtedness shall be paid
directly to Agent for the account of the Lenders and applied to the Loan as set
forth in subparagraph (D) below.
(C) Equity Issuance. In connection with any issuance of equity
---------------
the Borrower after the date of this Agreement (other than (x) pursuant to the
exercise of the underwriter's overallotment with respect to the Initial
Offering, (y) pursuant to the exercise of stock options issued to officers,
employees and directors of the Borrowers or its Subsidiaries, and (z) the
issuance of stock as consideration for acquisitions), the net cash proceeds to
the Borrower of such issuance shall be paid directly to Agent for the account of
the Lenders and applied to the Loan as set forth in subparagraph (D) below.
(D) Application of Payments. Payments made pursuant to
-----------------------
subparagraph 2.9(b)(i)(A) through (C) above shall be applied first to the
outstanding principal balance of the Term Loan in the inverse order of maturity
of the installments thereof, and then to the outstanding principal balance of
the Revolving Credit Loan.
(ii) Underwriter's Overallotment. If the actual price per
---------------------------
share in the Initial Offering is less than the anticipated price range as
indicated in the Registration
23
Statement for the Initial Offering, then the net cash proceeds to the Borrower
from exercise of the underwriter's overallotment with respect to the Initial
Offering shall be applied to repayment of the Term Loan in the inverse order of
maturity of the installments thereof. If the actual price per share in the
Initial Offering is within or above the anticipated price range as indicated in
the Registration Statement for the Initial Offering, then Required Lenders may
require the net cash proceeds to the Borrower from exercise of the underwriter's
overallotment to be applied to repayment of the Revolving Credit Loan.
(ii) Excess Cash Flow. Until the Term Loan has been repaid
----------------
in full, at the time of delivery of a Compliance Certificate with respect to
each fiscal year, commencing with the fiscal year ending December 31, 1999,
Borrower shall make a prepayment in an amount equal to seventy-five percent
(75%) of Excess Cash Flow for such fiscal year, such payment to be applied to
the Term Loan in the inverse order of maturity of the installments thereof.
(iv) Additional Requirements. Any payments pursuant to this
-----------------------
Paragraph 2.9(b) shall be accompanied by all accrued and unpaid interest and
fees in connection with the amount prepaid (including any amount payable under
Paragraph 2.10 hereof); provided, however, that in the absence of an Event of
Default or Default hereunder: (x) the Borrower shall be entitled to determine
the order in which Portions of the applicable Loan shall be repaid pursuant to
such payments; and (y) if any amount would otherwise be payable by Borrower
pursuant to Paragraph 2.10 hereof as a result of a prepayment pursuant thereto,
the required amount shall, at the request of Borrower, be held by Agent in a
cash collateral account and applied to the payment of the applicable Libor
Portion(s) at the expiration of the Interest Period with respect thereto. If a
cash collateral account is established pursuant to the foregoing clause (y),
Borrowers shall be entitled to any interest on such funds while held in such
account, and the applicable Libor Portion(s) shall remain outstanding hereunder
and shall continue to accrue interest in accordance herewith until such funds
are actually applied to repay such Libor Portion(s). Any payments with respect
to the Revolving Credit Loan prior to the Termination Date shall not reduce the
Revolving Credit Commitment and may be reborrowed in accordance with this
Agreement.
(c) Borrowing Base. If at any time the aggregate outstanding
--------------
principal balance of the Revolving Credit Loan, together with the undrawn amount
of outstanding Letters of Credit and any unreimbursed draws under Letters of
Credit, is in excess of the Borrowing Base, Borrower shall immediately make a
prepayment of the Revolving Credit Loan in accordance with subparagraph (a)
above in an amount sufficient to reduce the balance of the Revolving Credit
Loan, together with the undrawn amount of outstanding Letters of Credit and any
unreimbursed draws under Letters of Credit, to an amount less than or equal to
the Borrowing Base, together with interest on the amount prepaid through the
date or prepayment and any amounts owed pursuant to Paragraph 2.10 hereof.
24
(d) Effect on Other Agreements. Any prepayment hereunder shall
--------------------------
not affect the obligation of Borrower or any Subsidiary under any swap, hedge or
similar arrangement with any Lender.
2.10. Funding Costs and Loss of Earnings. In the event that Borrower
----------------------------------
shall have requested the Adjusted Libor Rate to be applicable to a Portion to be
Advanced and Borrower shall revoke the request for such Advance or shall fail to
meet the conditions to such Advance as set forth in Section Four hereof, and in
connection with any prepayment or repayment of a Portion bearing interest at the
rate based on the Adjusted Libor Rate made on other than the last day of the
applicable Interest Period, whether such prepayment or repayment is voluntary,
mandatory, by demand, acceleration or otherwise, Borrower shall pay to Lenders
all reasonable funding costs and loss of earnings which may arise in connection
with such revocation of request for or failure to meet the conditions to such
Advance or such prepayment or repayment, as calculated by Agent in accordance
with Exhibit D hereto.
2.11. Payments. All payments of principal, interest, fees and other
--------
amounts due hereunder, including any prepayments thereof, shall be made by
Borrower to Agent for the account of Lenders in immediately available funds
before two o'clock (2:00) p.m., Philadelphia time, on any Business Day at the
office of Agent set forth on Schedule 1 hereto. Borrower hereby authorizes Agent
to charge Borrower's account with Agent for all payments of principal, interest
and fees when due hereunder.
2.12. Commitment Fee. Borrower shall pay to Agent, for the benefit of
--------------
Lenders in accordance with their Pro Rata Shares, a non-refundable commitment
fee at the rate of half of one percent ( 1/2%) per annum on the unborrowed
portion of the Revolving Credit Commitment from the date hereof through the
Termination Date (as calculated by Agent), which fees shall be payable at the
offices of Agent quarterly in arrears on the last day of each March, June,
September, and December and on the Termination Date. The commitment fee shall
be calculated on the basis of the actual number of days elapsed over a year of
three hundred sixty (360) days.
2.13. Agent's Fees. Borrower shall pay to Agent fees as agreed
------------
between Borrower and Agent.
2.14. Regulatory Changes in Capital Requirements. If any Lender shall
------------------------------------------
have determined that the adoption or the effectiveness after the date hereof of
any law, rule, regulation or guideline regarding capital adequacy, or any change
in any of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central Lender or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, as a consequence of this
Agreement, the Revolving Credit Commitment,
25
Advances or the Loans to a level below that which such Lender or its holding
company could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or its holding
company for any such reduction suffered together with interest on each such
amount from the date demanded until payment in full thereof at the rate provided
in Paragraph 2.6(a)(ii) hereof with respect to amounts not paid when due. Such
Lender will notify Borrower of any event occurring after the date of this
Agreement that will entitle such Lender to compensation pursuant to this
Paragraph 2.14, including a description in reasonable detail of the nature of
such event and the amount of such compensation, as promptly as practicable after
it obtains knowledge thereof and determines to request such compensation, and
such compensation shall not be charged for any period more than three (3) months
prior to the date of such notice.
A certificate of such Lender setting forth such amount or amounts as
shall be necessary to compensate such Lender or its holding company as specified
above shall be delivered to Borrower and shall be conclusive absent manifest
error, if calculated and charged in a manner consistent with similar charges
made by such Lender to its other customers having similar arrangements with such
Lender. Borrower shall pay such Lender the amount shown as due on any such
certificate delivered by such Lender within ten (10) days after its receipt of
the same.
Failure on the part of any Lender to demand compensation for increased
costs or reduction in amounts received or receivable or reductions in return on
capital with respect to any period shall not constitute a waiver of such
Lender's right to demand compensation with respect to any other period except as
otherwise limited by the terms of this Paragraph 2.14.
SECTION 2A
LETTERS OF CREDIT
-----------------
2A.1. Availability of Credits. Subject to the terms and conditions
-----------------------
set forth herein, Lenders shall from time to time prior to the Termination Date
participate in the issuance by Agent of Letters of Credit for the account of
Borrower on the following terms and conditions:
(a) at the time of issuance of the Letter of Credit, the lesser
of (x) the unborrowed portion of the Revolving Credit Commitment or (y) the
available Borrowing Base, shall equal or exceed the sum of the amount available
to be drawn under such Letter of Credit and the amount available to be drawn
under and any unreimbursed draws under all other Letters of Credit;
26
(b) at the time of issuance of the Letter of Credit, the amount
available to be drawn under such Letter of Credit and all other Letters of
Credit then outstanding hereunder plus any unreimbursed draws under all other
Letters of Credit shall not exceed, in the aggregate, the Letter of Credit
Sublimit;
(c) except as provided in clause (d) below, the final
expiration date of each Letter of Credit shall be on or before the earlier of
(i) one year from the date of issuance thereof or (ii) the Termination Date;
(d) "evergreen" letters of credit with automatic renewal
provisions may be issued on terms and conditions reasonably satisfactory to
Agent;
(e) there shall not exist at the time of issuance of the Letter
of Credit, or as a result thereof, any Default or Event of Default; and
(f) each Letter of Credit issued under this Section 2A shall be
for the business purposes of a Borrower or a Guarantor.
Upon issuance of each Letter of Credit by Agent, each Lender shall
have a participating interest therein based on its percentage share of the
Revolving Credit Commitment as set forth in Paragraph 2.3 hereof.
2A.2. Commitment Availability. The amount available under the
-----------------------
Revolving Credit Commitment as from time to time in effect shall be reduced by
the amount available to be drawn under all outstanding Letters of Credit and
unreimbursed amounts of any draws under Letters of Credit. The amount by which
the Revolving Credit Commitment is so reduced shall not be available for
advances under Paragraph 2.7 hereof, except advances thereunder which are made
to reimburse Agent for draws under the Letters of Credit as permitted pursuant
to Paragraph 2A.4(b) hereof.
2A.3. Approval and Issuance.
---------------------
(a) Borrower shall provide Agent not less than three (3)
Business Days' prior written notice of each request for the issuance of a Letter
of Credit by delivery of a Letter of Credit Request Form, which shall be
certified by an Authorized Officer of Borrower, and shall, in addition to the
matters described in Paragraph 2.7(a) hereof, list all Letters of Credit
outstanding for the account of Borrower at that time and, for each Letter of
Credit so listed, its face amount, outstanding undrawn balance and expiration
date. It shall be a condition to the issuance of any Letter of Credit that Agent
shall have received a Letter of Credit Request Form as described above and such
letter of credit application and agreement as Agent shall reasonably require in
connection therewith, and that the conditions set forth in Paragraph 4.2 shall
be satisfied.
27
(b) Agent will promptly provide to Lenders written (including
fax) or telephonic notification of Agent's receipt of the Letter of Credit
Request Form which shall state (i) the amount of the Letter of Credit requested
and (ii) the expiration date of the requested Letter of Credit.
2A.4. Obligations of the Borrower.
---------------------------
(a) Borrower agrees to pay to Agent in connection with each
Letter of Credit issued hereunder: (i) immediately upon the demand of Agent on
behalf of all Lenders, the amount paid by each Lender with respect to such
Letter of Credit; (ii) immediately upon demand of Agent, the amount of any draft
presented purporting to be drawn under such Letter of Credit provided that the
draft and accompanying documents conform to the terms of the Letter of Credit
but subject to the terms of Paragraph 2A.7 (whether or not Agent has at such
time honored such draft) and any other amounts paid thereunder (it being
understood that Agent is not required to make demand upon or proceed against any
Lender or other party or to resort to any Collateral before obtaining payment
from Borrower); (iii) on the date of issuance of each Letter of Credit and on
the effective date of any renewal or extension of any Letter of Credit a fee of
one-eighth of one percent (1/8%) of the outstanding face amount of such Letter
of Credit, payable to Agent for its own account; (iv) quarterly in arrears a
non-refundable fee for the benefit of Lenders in accordance with each Lender's
percentage share of the Revolving Credit Commitment as set forth on Schedule 1
attached hereto at a rate per annum equal to the Applicable Margin with respect
to Libor Portions under the Revolving Credit Loan on the outstanding face amount
of such Letter of Credit; and (v) interest on any indebtedness outstanding with
respect to such Letter of Credit, whether for funds paid on drafts on such
Letter of Credit, or otherwise (but such indebtedness shall not include undrawn
balances of such Letter of Credit issued hereunder) at the rate applicable to
Base Rate Portions under the Revolving Credit Loan under Paragraph 2.6(a)(i)(A)
hereof from the date of payment by Agent or Lenders (if not reimbursed by
Borrower on the same day) to the date one (1) Business Day after notice to
Borrower of such payment, and thereafter at the rate applicable to such Base
Rate Portions under Paragraph 2.6(a)(ii) hereof. Interest under the preceding
clause (v) shall be paid at the times and in the manner set forth in Paragraph
2.6 hereof, and shall accrue on amounts paid on a Letter of Credit (if not
reimbursed by Borrower on the same day) from the date of payment by Agent or
Lenders, whether or not demand is made, until such amounts are reimbursed by
Borrower whether before, at or after demand.
(b) On or before the Termination Date, in the absence of a
Default or Event of Default, and subject to the provisions of Paragraph 2.7
hereof, Lenders hereby agree to advance funds to Borrower under the Revolving
Credit Loan to make the payments required under Paragraphs 2A.4(a)(i) and (ii)
hereof. If any payment by the Agent of a draft drawn under a Letter of Credit is
for any reason (including without limitation the occurrence or continuation of a
Default or Event of Default hereunder) not reimbursed prior to or on the date of
such payment, the amount of such payment shall thereupon be deemed for purposes
hereof an advance under Paragraph 2.7 hereof. Such reimbursement obligation
shall be repayable,
28
prepayable, and otherwise subject to all the terms and conditions thereof as if
advanced by Lenders pursuant to Paragraph 2.7 hereof (but without duplication).
2A.5. Payment by Lenders on Letters of Credit.
---------------------------------------
(a) With respect to each Letter of Credit issued hereunder,
each Lender agrees that it is irrevocably obligated to pay to Agent, for each
such Letter of Credit, such Lender's Pro Rata Share of each and every payment
made or to be made by Agent under such Letter of Credit (each such payment to be
made, a "LOC Contribution"). Each Lender's LOC Contribution shall be due from
such Lender immediately upon, and in any event no later than the same day as,
receipt of written notice (which may be sent by telex or telecopier) from Agent
(except that if such notice is received after 3:00 p.m. on any Business Day,
payment may be made on the following Business Day, together with interest equal
to the effective rate for overnight funds in New York as reported by the Federal
Reserve Bank of New York for such day (or, if such day is not a Business Day,
for the next preceding Business Day)) that (i) it has made a payment or (ii) a
draft has been presented purporting to be drawn on a Letter of Credit issued
hereunder. Such payment shall be made at Agent's offices in immediately
available federal funds.
(b) The obligation of each Lender to make its LOC Contribution
hereunder is absolute, continuing and unconditional, and Agent shall not be
required first to make demand upon or proceed against Borrower or any guarantor
or surety, or any others liable with respect to the applicable Letter of Credit
and shall not be required first to resort to any Collateral. LOC Contributions
shall be made without regard to termination of this Agreement or the Revolving
Credit Commitment, the existence of an Event of Default or Default hereunder,
the acceleration of indebtedness hereunder or any other event or circumstance.
2A.6. Collateral Security.
-------------------
(a) The indebtedness, liabilities and obligations of Borrower
under this Section 2A, however created or incurred, whether now existing or
hereafter arising, due or to become due, absolute or contingent, direct or
indirect, secured or unsecured, are among the obligations secured by the
security interests, liens and encumbrances created by the Collateral Security
Documents delivered to Agent by Borrower, and Agent and the Lenders are entitled
to the benefit of the collateral security granted thereunder with respect to
such indebtedness.
(b) Notwithstanding the payment in full of the Loans, the
termination of the Revolving Credit Commitment or the occurrence of the
Termination Date, unless and until Borrower shall have provided the collateral
in the form of cash or U.S. Treasury bills as required by subparagraph (c)
below, the Collateral shall continue to secure the indebtedness, liabilities and
obligations of Borrower under this Section 2A until all Letters of Credit shall
29
have expired and all indebtedness, liabilities and obligations under this
Section 2A shall have been paid in full.
(c) On the termination of the Revolving Credit Commitment or
the occurrence of an Event of Default, Required Lenders may require (and in the
case of an Event of Default occurring under Paragraph 7.1(i) it shall be
required automatically) that Borrower deliver to Agent, cash or U.S. Treasury
Bills with maturities of not more than 90 days from the date of delivery
(discounted in accordance with customary banking practice to present value to
determine amount) in an amount equal at all times to one hundred ten percent
(110%) of the outstanding undrawn amount of all Letters of Credit, such cash or
U.S. Treasury Bills and all interest earned thereon to constitute cash
collateral for all such Letters of Credit. At such time as such collateral is
required to be and has not been deposited, Agent on behalf of Lenders shall be
entitled to liquidate such of the other collateral for the Loans (if any) as is
necessary or appropriate in its sole judgment so as to create such cash
collateral.
(d) Any cash collateral deposited under subparagraph (c) above,
and all interest earned thereon, shall be held by Agent and invested and
reinvested at the expense and the written direction of Borrower, in U.S.
Treasury Bills with maturities of no more than ninety (90) days from the date of
investment.
2A.7. General Terms of Credits. In addition to the terms of the
------------------------
applicable letter of credit application and agreement, the following terms and
conditions apply with respect to each Letter of Credit (a "Credit")
notwithstanding anything to the contrary contained herein:
(a) Borrower assumes all risks of the acts or omissions of the
beneficiary of each Credit with respect to the use of the Credit or with respect
to the beneficiary's obligations to Borrower. None of the Lenders (other than
First Union in its capacity as Agent) nor any of their officers or directors
shall be liable or responsible for, and the Lenders hereby agree to indemnify
and hold Agent harmless (except for Agent's gross negligence or willful
misconduct) with respect to: (i) the use which may be made of the Credit or for
any acts or omissions of the beneficiary in connection therewith; (ii) the
accuracy, truth, validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects false, misleading, inaccurate, invalid, insufficient, fraudulent,
or forged; (iii) the payment by Agent against presentation of documents which do
not comply with the terms of the Credit, including failure of any documents to
bear any reference or adequate reference to a Credit; (iv) any other
circumstances whatsoever in making or failing to make payment under a Credit; or
(v) any inaccuracy, interruption, error or delay in transmission or delivery of
correspondence or documents by post, telegraph or otherwise. In furtherance and
not in limitation of the foregoing, Agent may after good faith inspection accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
30
(b) Notwithstanding the foregoing, with respect to any Credit,
Borrower shall have a claim against Agent, and Agent shall be liable to
Borrower, to the extent, but only to the extent, of any direct, as opposed to
indirect or consequential, damages suffered by Borrower caused by the Agent's
willful misconduct or gross negligence.
(c) To the extent not inconsistent with this Agreement, the
Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, are hereby made a part of
this Agreement with respect to obligations in connection with each Credit.
SECTION 3
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Lenders as follows:
3.1. Organization and Good Standing. Each Company is a corporation
------------------------------
duly incorporated and validly existing under the laws of its jurisdiction of
formation as set forth on Exhibit C, and each has the power and authority to
carry on its business as now conducted and is qualified to do business in the
states indicated on Exhibit C which constitute, except as to failures to qualify
which would not, either singly or in the aggregate, have a Material Adverse
Effect, all states in which the nature of its business or the ownership of its
properties requires such qualification.
3.2. Power and Authority; Validity of Agreement. Each Company has the
------------------------------------------
power and authority under applicable law and under its organizational documents
to enter into and perform the Loan Documents to the extent that it is a party
thereto; and all actions necessary or appropriate for the execution and
performance by each Company of the Loan Documents to which it is a party have
been taken, and, upon their execution, the same will constitute the valid and
binding obligations of each Company to the extent it is a party thereto,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy or equitable principles applicable
to the enforcement of creditors' rights generally.
3.3. No Violation of Laws or Agreements. The execution, delivery and
----------------------------------
performance of the Loan Documents by the Companies will not violate any
provisions of any law or regulation, federal, state or local, or its
organizational documents, or result in any breach or violation of, or constitute
a default under, any material agreement or instruments by which any Company or
its property may be bound, except for such breaches, defaults and violations of
agreements or instruments as would not, either singly or in the aggregate, have
a Material Adverse Effect.
31
3.4. Material Contracts. Except as set forth on Exhibit C attached
------------------
hereto, there exists no material default under any contracts material to the
businesses of the Companies or their Subsidiaries.
3.5. Compliance.
----------
(a) Each of the Companies and their Subsidiaries is in compliance
with all applicable laws and regulations, federal, state and local (including
without limitation those administered by the Local Authorities), except for such
failures to comply as would not either singly or in the aggregate, have a
Material Adverse Effect;
(b) The Companies and their Subsidiaries possess all the
franchises, permits, licenses, certificates of compliance and approval and
grants of authority, necessary or required in the conduct of their respective
businesses as of the date hereof; and except as identified on Exhibit C attached
hereto, as of the date hereof all such franchises, permits, licenses,
certificates and grants are valid, binding, enforceable and subsisting without
any defaults thereunder or enforceable adverse limitations thereon and are not
subject to any proceedings or claims opposing the issuance, development or use
thereof or contesting the validity thereof, except to the extent that the
failure to possess or maintain any of the foregoing would not, and except for
such defaults, limitations, proceedings or claims as would not, either singly or
in the aggregate, have a Material Adverse Effect; and
(c) No authorization, consent, approval, waiver, license or
formal exemptions from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority (federal, state or local) or
non-governmental entity, under the terms of contracts or otherwise, is required
by the Companies by reason of or in connection with the Companies' execution and
performance of the Loan Documents, except those which have been obtained or have
been delivered to Agent for filing in connection with perfecting liens.
3.6. Litigation. Except as set forth on Exhibit C, there are no
----------
actions, suits, proceedings or claims which are pending or, to the best of the
Companies' knowledge or threatened against any Company or any Subsidiary which,
if adversely resolved, would, either singly or in the aggregate, have a Material
Adverse Effect.
3.7. Title to Assets. Each of the Companies and their Subsidiaries
---------------
has good and marketable title to or valid leasehold interests in all of its
properties and assets material to the conduct of its business, free and clear of
any liens and encumbrances except the security interests granted under the
Collateral Security Documents, liens and encumbrances permitted pursuant to
Paragraph 6.4 hereof and the liens and security interests identified on Exhibit
C attached hereto. All such assets are fully covered by the insurance required
under Paragraph 5.8 hereof.
32
3.8. Accuracy of Information; Full Disclosure.
----------------------------------------
(a) All information furnished to Lenders concerning the financial
condition and results of operations of the Companies, including the pro forma
financial statements for the Companies on a consolidated basis for the fiscal
year ended December 31, 1997 and the interim pro forma financial statements for
the Companies on a consolidated basis for the nine months ended September 30,
1998, (but not including projections) has been prepared in accordance with GAAP
(except in the case of the pro forma financial statements delivered to Lenders
giving effect to certain integration adjustments as referenced in Paragraph 1.3
hereof) and fairly presents in all material respects the financial condition and
results of operations of the Companies as of the dates and for the periods
covered and discloses all liabilities of the Companies required to be disclosed
in accordance with GAAP, except that interim statements do not have footnotes
and are subject to year-end adjustments, and there has been no material adverse
change in the financial condition or business of the Companies from the date of
such statements to the date hereof; and
(b) This Agreement, the Registration Statement and all financial
statements (excluding financial projections) and other documents furnished by
the Companies to Lenders pursuant to this Agreement and the other Loan
Documents, taken together, do not and will not contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the
statements contained herein and therein not misleading. The Companies have
disclosed to the Lenders in writing (including, without limitation, in the
Registration Statement) any and all facts which would, either singly or in the
aggregate, have a Material Adverse Effect.
3.9. Taxes and Assessments. Except as described on Exhibit C hereto:
---------------------
(a) Each Company and each Subsidiary has filed all required tax
returns or has filed for extensions of time for the filing thereof, and has paid
all applicable federal, state and local taxes, other than taxes not yet due or
which may be paid hereafter without penalty; provided that no such taxes shall
be required to be paid if they are being contested in good faith by appropriate
proceedings and are covered by appropriate reserves maintained in accordance
with GAAP; and there is no material tax deficiency or additional assessment in
connection therewith not provided for in the financial statements required
hereunder; and
(b) Each Company and each Subsidiary has properly withheld all
amounts required by law to be withheld for income taxes and unemployment taxes
including without limitation, all amounts required with respect to social
security and unemployment compensation, relating to its employees, and has
remitted such withheld amounts in a timely manner to the appropriate taxing
authority, agency or body.
33
3.10. Indebtedness. The Companies and their Subsidiaries have no
------------
presently outstanding Indebtedness or obligations, including contingent
obligations and obligations of any of the Companies under leases of property
from others, except the Indebtedness and obligations described in Exhibit C
hereto, and indebtedness permitted pursuant to Paragraph 6.1 hereof. Without
limiting the foregoing, set forth on Exhibit C is a complete and accurate
description of all Seller Obligations, and indication of those obligations which
will be terminated upon closing as required pursuant to Paragraph 4.1(p); and
all such Seller Obligations, to the extent they remain unpaid, have been
capitalized and appear as a liability on the balance sheet of the Company and
its Consolidated Subsidiaries.
3.11. Management Agreements. No Company is a party to any management
---------------------
or consulting agreements for the provision of senior executive services to such
Company except as described on Exhibit C hereto.
3.12. Investments. Each direct and indirect Subsidiary of Borrower is
-----------
identified on Exhibit C attached hereto, which indicates the number of shares
and classes of the capital stock, membership interests, partnership interests or
other equity interests, as applicable, of each such Subsidiary, and the
ownership thereof. No Company has any other Subsidiaries or any investments in
or loans to any other individuals or business entities except for loans and
investments permitted pursuant to Paragraphs 6.3 or 6.8 hereof.
3.13. ERISA. Each of the Companies, their Subsidiaries and each ERISA
-----
Affiliate is in compliance in all material respects with all applicable
provisions of ERISA and the regulations promulgated thereunder; and,
(a) No Company nor any Subsidiary or ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in section 4001 of ERISA) under which any Company, any Subsidiary or any
ERISA Affiliate could have any withdrawal liability which would, either singly
or in the aggregate, have a Material Adverse Effect;
(b) No Company nor any Subsidiary or ERISA Affiliate, sponsors or
maintains any Plan under which there is an accumulated funding deficiency within
the meaning of (S)412 of the Code, whether or not waived which would, either
singly or in the aggregate, have a Material Adverse Effect;
(c) The aggregate liability for accrued benefits and other
ancillary benefits under each defined benefit pension Plan that is sponsored or
maintained by any Company, any Subsidiary or any ERISA Affiliate (determined on
the basis of the actuarial assumptions prescribed for valuing benefits under
terminating single-employer defined benefit plans under Title IV of ERISA) does
not exceed the aggregate fair market value of the assets under each such defined
benefit pension Plan by an amount which would, either singly or in the
aggregate, have a Material Adverse Effect;
34
(d) The aggregate liability of each Company, and each Subsidiary
or ERISA Affiliate arising out of or relating to a failure of any Plan to comply
with the provisions of ERISA or the Code, is not an amount which would, either
singly or in the aggregate, have a Material Adverse Effect; and
(e) There does not exist any unfunded liability (determined on
the basis of actuarial assumptions utilized by the actuary for the Plan in
preparing the most recent Annual Report) of any Company or any Subsidiary or
ERISA Affiliate under any Plan providing post-retirement life or health benefits
which would, either singly or in the aggregate, have a Material Adverse Effect.
3.14. Fees and Commissions. Except as set forth on Exhibit C, the
--------------------
Companies owe no brokers' or finders' fees or commissions of any kind, and know
of no claim for any brokers' or finders' fees or commissions, in connection with
the Companies' obtaining the Revolving Credit Commitment or the Loans from
Lenders, except those provided herein.
3.15. No Extension of Credit for Securities. The Companies are not
-------------------------------------
now, nor at any time have they been engaged principally, or as one of their
respective important activities, in the business of extending or arranging for
the extension of credit, for the purpose of purchasing or carrying any margin
stock or margin securities; nor will the proceeds of the Loans be used by any
Company directly or indirectly, for such purposes.
3.16. Perfection of Security Interest. Upon the filing of UCC
-------------------------------
financing statements with respect to the collateral covered by the Security
Agreement in the jurisdictions identified on Exhibit C attached hereto, and
taking of possession by the Agent of the certificates evidencing the shares
pledged pursuant to the Pledge Agreement, Agent, for the benefit of Lenders, has
a perfected, first-priority security interest and lien on the Collateral covered
by the Security Agreement and the Pledge Agreement, subject to the Permitted
Liens.
3.17. Hazardous Wastes, Substances and Petroleum Products. Except as
---------------------------------------------------
otherwise set forth on Exhibit C attached hereto:
(a) Each Company and each Subsidiary (i) has received all permits
and has filed all notifications required by applicable Environmental Laws to
carry on its respective business(es); and (ii) is in compliance with all
Environmental Laws, except in each case for such matters as would not, either
singly or in the aggregate, have a Material Adverse Effect.
(b) No Company or Subsidiary has given any written or oral
notice, or failed to give any required notice, to the EPA or any state or local
agency with regard to any Release or threat of Release of Hazardous Substances
on properties owned, leased or operated by such Company or used in connection
with the conduct of its business and operations which would, either singly or in
the aggregate, have a Material Adverse Effect.
35
(c) No Company or Subsidiary has received written notice that it
is potentially responsible for clean-up, remediation, costs of clean-up or
remediation, fines or penalties with respect to any Release or threat of Release
of Hazardous Substances pursuant to any Environmental Law which would, either
singly or in the aggregate, have a Material Adverse Effect.
3.18. Solvency.
--------
(a) To the best of each Company's knowledge, each Company, after
giving effect to the Initial Offering and the expected use of proceeds thereof,
and after receipt and application of the first Advance under this Agreement and
taking into consideration the mutual rights and obligations among the Companies
set forth in subparagraph (b) below, will be, solvent such that (i) the fair
value of its assets (including without limitation the fair salable value of the
goodwill and other intangible property of such Company) is greater than the
total amount of its liabilities, including without limitation, contingent
liabilities, (ii) the present fair salable value of its assets (including
without limitation the fair salable value of the goodwill and other intangible
property of such Company) is not less than the amount that will be required to
pay the probable liability on their debts as they become absolute and matured,
and (iii) it is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and other commitments as they mature in the
normal course of business. No Company intends to, nor believes that it will,
incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature, and no Company is engaged in a business or transaction, or
about to engage in a business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice and industry in which it is engaged. For purposes of this
Paragraph 3.18, in computing the amount of contingent liabilities at any time,
it is intended that such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such time, represents the
amount that reasonably can be expected to become an actual matured liability of
the applicable Company.
(b) Each Company hereby agrees that to the extent a Company shall
have paid more than its proportionate share of any payment made hereunder or
under the Guaranty, such Company shall be entitled to seek and receive
contribution from and against any other Company who has not paid its
proportionate share of such payment; provided however such Company shall not
seek any such contribution from any other Company until the Loans have been paid
in full and all commitments of the Lenders hereunder have been terminated. The
provisions of this paragraph shall in no respect limit the obligations and
liabilities of any Company to the Agent and the Lenders and each Company shall
remain liable to the Agent and the Lenders for the full amount of its
obligations hereunder and under the Guaranty.
3.19. Employee Controversies. Except as described in Exhibit C, there
----------------------
are no material controversies pending or, to the knowledge of the Companies,
threatened or anticipated between any Company and any of its respective
employees, and there are no labor
36
disputes, grievances, arbitration proceedings or any strikes, work stoppages or
slowdowns pending, or to the Companies' knowledge, threatened between any
Company and its respective employees and representatives, which, in any such
case, would, either singly or in the aggregate, have a Material Adverse Effect.
SECTION 4
CONDITIONS
----------
4.1. Effectiveness. The effectiveness of this Agreement shall be
-------------
subject to Agent's receipt of the following documents and satisfaction of the
following conditions, each in form and substance satisfactory to Agent:
(a) Promissory Notes. The Notes duly executed by Borrower.
----------------
(b) Guaranty. A Guaranty Agreement executed by Xxxxxxx
--------
Enterprises and Xxxxxx-American, and Xxxxxx-American Company of Florida, Inc.,
jointly and severally, in favor of Lenders.
(c) Authorization Documents. A certificate of the secretary of
-----------------------
each Company attaching and certifying as to (i) the certificate or articles of
incorporation and bylaws of such Company; (ii) resolutions or other evidence of
authorization by the board of directors of such Company, authorizing its
execution and full performance of Loan Documents and all other documents and
actions required hereunder; and (iii) incumbency certificates setting forth the
name, title and specimen signature of each officer of such Company who is
authorized to execute the Loan Documents on behalf of such entity.
(d) Good Standing. Certificates of good standing or the
-------------
equivalent for each Company in its state of formation and each of the states in
which it is qualified to do business.
(e) Opinions of Counsel. Opinion letters from counsel for the
-------------------
Companies as may be reasonably satisfactory to Agent.
(f) Borrowing Base Certificates. A Borrowing Base certificate
---------------------------
in the form of Exhibit F attached hereto calculated as of November 30, 1998, for
the Borrower and its consolidated Subsidiaries on a pro forma basis based on
consummation of the Combination.
(g) Financial Statements.
--------------------
(i) Unaudited combined financial statements for the three
years ended December 31, 1997 and for the nine month period ended September 30,
1998 prepared (A) on a proforma basis for the Borrower and its consolidated
Subsidiaries after
37
giving effect to the Combination and (B), with respect to the September 30, 1998
statements, as adjusted for the integration adjustments as described on page 34
of the Registration Statement, showing such adjustments for each fiscal
quarter.
(ii) Calculation of the ratio of Senior Debt as of the
Closing Date giving effect to the transactions contemplated on such date, to
EBITDA for the most recent Rolling Period ended September 30, 1998, based on pro
forma financial statements giving effect to the Combination and adjusted for the
integration adjustments as described on page 34 of the Registration Statement,
which ratio shall be not in excess of 3.0 to 1.
(h) Fees and Expenses. Payment of all fees required by
-----------------
Paragraphs 2.12 and 2.13 hereof.
(i) Searches. Uniform Commercial Code, tax and judgment searches
--------
against the Companies, with results satisfactory to Agent, in those offices and
jurisdictions as Agent shall reasonably request.
(j) Security Agreement. A Security Agreement executed by each
------------------
of the Companies in favor of Agent, for the benefit of Lenders, granting Agent,
for the benefit of Lenders, a lien on all assets of the Companies as Collateral
for the Senior Obligations, together with UCC financing statements in such
jurisdictions and such other documents and instruments as Agent shall reasonably
require, all in form and substance satisfactory to Agent.
(k) Pledge Agreement. Duly executed and delivered Pledge
----------------
Agreements pledging all of the issued and outstanding shares of capital stock of
each direct and indirect Subsidiary of Borrower, together with the stock
certificates evidencing the pledged shares and stock powers duly endorsed in
blank.
(l) Blocked Account Agreements. Blocked account agreements in
--------------------------
favor of Agent with USTrust and Wachovia Bank, N.A.
(m) Interest Rate Protection. Interest rate protection
------------------------
agreements entered into by Borrower in a form acceptable to Agent and from one
or more of the Lenders or an institution acceptable to Agent, with respect to at
least fifty percent (50%) of the Term Loan and for a period of at least three
years; provided, however, that (a) the protected rate shall be no greater than
1.50% above the all-in rate on the date hereof; (b) Borrower hereby grants a
security interest in the Collateral to the Agent for the benefit of such Lenders
as security for Borrower's obligations with respect to any such interest rate
protection agreements, which security interest shall be pari passu with the
security interests of Agent for the benefit of such Lenders for Borrower's
obligations under the Loan Documents; and (c) all documentation for such
interest rate protection shall conform to ISDA standards and must be reasonably
acceptable to Agent with respect to intercreditor issues.
38
(n) Financial Projections. Projections for Borrower and its
---------------------
consolidated Subsidiaries for the period through December 31, 2005, certified by
the chief financial officer of Borrower as constituting a good faith projection
based upon assumptions believed to be reasonable.
(o) Initial Offering; Combination. A copy of the Registration
-----------------------------
Statement shall have been provided to Lenders; the Initial Offering shall have
been completed and Borrower shall have received not less than Fifty-Five Million
Dollars ($55,000,000) in gross proceeds therefrom (excluding the underwriter's
overallotment); and the Combination shall be consummated in accordance with the
Xxxxxxx Stock Purchase Agreement and the Xxxxxx Stock Purchase Agreement
simultaneously with the first Advance, which first Advance shall not exceed (in
addition to the amount of the Term Loan) Twelve Million Dollars ($12,000,000).
(p) Repayment of Existing Debt. All outstanding bank debt, all
--------------------------
existing Seller Obligations, and all tax liabilities, shall have been paid in
full or be repaid out of the first Advance, except for (i) up to $14,003,101
principal amount of Seller Obligations which may remain outstanding as of the
closing date provided that such obligations shall be unsecured and shall be on
terms satisfactory to Agent; (ii) pending federal tax liability for fiscal years
1995 through 1997 and state tax liabilities for fiscal years 1992 through 1997,
provided that such liability has been reserved for and funds shall have been
placed in escrow with State Street Bank and Trust Company in accordance with the
Xxxxxxx Stock Purchase Agreement, the Indemnification Escrow Agreement and the
Tax Escrow Agreement and be available for payment of such tax liabilities; and
(iii) mortgage debt approved by Agent.
(q) Litigation and Arbitration. All pending litigation and/or
--------------------------
arbitration described in the Registration Statement shall have been settled on
terms satisfactory to Agent, provided that with respect to the ABD/Xxxxxxx
Dispute (i) funds in the amount of Two Million Dollars ($2,000,000) shall be
placed in escrow with State Street Bank and Trust Company and be available for
payment of any final award in such arbitration in accordance with the Xxxxxxx
Stock Purchase Agreement and the Indemnification Escrow Agreement, and (ii)
funds in the amount of Eight Million Dollars ($8,000,000) from the Term Loan
hereunder shall be held in escrow by First Union and be available for payment of
any such final award.
(r) Consents. Receipt of all required consents and approvals
--------
under applicable law or contract.
(s) Certain Agreements. Copies of the agreement(s) with Monroe &
------------------
Company, LLC, which shall be in form and substance satisfactory to Agent.
(t) Other Documents. Such additional documents as Agent
---------------
reasonably may request.
39
4.2. Advances. The obligation of Lenders to make Advances under the
--------
Revolving Credit Commitment shall be subject to Borrower's compliance with
Paragraph 2.7 hereof and it shall be a condition to Lenders' obligation
hereunder to make any such Advance that (a) the representations and warranties
set forth herein and in the other Loan Documents shall be true and correct in
all material respects as if made on the date of such Advance, (b) no Event of
Default or Default shall have occurred and not have been waived on the date of
such Advance or be caused by such Advance, (c) all fees required pursuant to
Paragraphs 2.11, 2.12 and 2.13 hereof have been paid as and when due, and (d)
there shall have been no Material Adverse Effect since the date of this
Agreement.
SECTION 5
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that so long as the Revolving Credit
Commitment of Lenders to Borrower or any Indebtedness of Borrower to Lenders is
outstanding, each of the Companies will and will cause each of its Subsidiaries
(and with respect to Paragraph 5.13, will cause each ERISA Affiliate) to:
5.1. Existence and Good Standing. Except for any merger permitted
---------------------------
pursuant to Paragraph 6.8(iii), preserve and maintain (a) its existence as a
corporation and its good standing in all states in which it conducts business
and (b) the effectiveness and validity of all its franchises, licenses, permits,
certificates of compliance or grants of authority required in the conduct of its
business, except for such instances of ineffectiveness or invalidity as would
not, either singly or in the aggregate, have a Material Adverse Effect.
5.2. Interim Financial Statements. Furnish to each Lender within
----------------------------
forty-five (45) days after the end of each of the first three quarterly periods
in each fiscal year of Borrower, unaudited quarterly consolidated and
consolidating financial statements, in form and substance as reasonably required
by Agent, including (i) a consolidated balance sheet, (ii) a consolidated
statement of income, and (iii) a statement of cash flows, prepared in accordance
with GAAP consistently applied (except that such interim statements need not
contain footnotes and may be subject to year-end adjustments).
5.3. Annual Financial Statements. Furnish to each Lender within one
---------------------------
hundred twenty (120) days after the close of each fiscal year audited
consolidated and consolidating annual financial statements, including the
information required under Paragraph 5.2 hereof, which financial statements
shall be prepared in accordance with GAAP and shall be certified without
qualification (except with respect to changes in GAAP as to which Borrower's
independent certified public accountants have concurred) by an independent
certified public accounting firm reasonably satisfactory to Agent; and cause
Agent to be furnished, at the time of the completion of the annual audit, with
copies of any management letters prepared by such
40
accountants and with a certificate signed by such accountants to the effect that
to the best of their knowledge there exists no Event of Default or Default
hereunder.
5.4. Compliance Certificate. At the time of delivery of financial
----------------------
statements pursuant to Paragraph 5.2 and 5.3 hereof, deliver to Lenders a
certificate in the form of Exhibit E attached hereto executed by the chief
financial officer of Borrower or other Authorized Officer approved by Agent,
showing the calculation of the covenants set forth in Paragraph 5.14 through
5.18 hereof.
5.5. Additional Reports.
------------------
(a) Within twenty (20) days after the end of each month, furnish
to Lenders (i) a Borrowing Base Certificate in the form of Exhibit F attached
hereto, and (ii) a schedule and aging report with respect to accounts receivable
and payable of Borrower and its consolidated Subsidiaries, in form and substance
reasonably satisfactory to Agent.
(b) On or before November 1 of each year, deliver to Lenders, in
form reasonably satisfactory to Agent, a business plan for the following year
approved by the Board of Directors of Borrower.
5.6. Public Information. Deliver to Lenders promptly following
------------------
transmission thereof, copies of all financial statements, proxy statements,
notices and reports, and copies of any registration statement or annual or
quarterly reports, if any, filed with the Securities and Exchange Commission (or
successor entity) or sent to shareholders of Borrower.
5.7. Books and Records. Keep and maintain satisfactory and adequate
-----------------
books and records of account in accordance with GAAP and make or cause the same
to be made available to Agent or its agents or nominees at any reasonable time
upon reasonable notice for inspection and to make extracts thereof and permit
Agent or its agents or nominees to discuss contents of same with senior officers
of Borrower and also with outside auditors and accountants of Borrower.
5.8. Insurance. Keep and maintain all of its property and assets in
---------
good order and repair and covered by insurance with reputable and financially
sound insurance companies against such hazards and in such amounts as is
customary in the industry, under policies requiring the insurer to furnish
reasonable notice to Agent and opportunity to cure any non-payment of premiums
prior to termination of coverage and naming Agent, for the benefit of Lenders,
as loss payee and additional insured.
5.9. Litigation; Event of Default. Notify Lenders in writing
----------------------------
immediately of the institution of any litigation, the commencement of any
administrative proceedings, the happening of any event or the assertion or
threat in writing of any claim, to the extent that any of the foregoing, either
singly or in the aggregate, would, either singly or in the aggregate,
41
have a Material Adverse Effect, or the occurrence of any Event of Default or
Default hereunder.
5.10. Taxes. Subject to the matters disclosed on Exhibit C pursuant to
-----
Paragraph 3.9 hereof, pay and discharge all taxes, assessments or other
governmental charges or levies imposed on it or any of its property or assets
prior to the date on which any penalty for non-payment or late payment is
incurred, unless the same are currently being contested in good faith by
appropriate proceedings, diligently prosecuted and covered by appropriate
reserves maintained in accordance with GAAP.
5.11. Costs and Expenses. Pay or reimburse Agent for all reasonable
------------------
out-of-pocket costs and reasonable expenses (including but not limited to
reasonable attorneys' fees and disbursements) Agent may reasonably pay or incur
in connection with the preparation and review of this Agreement and all waivers,
consents and amendments in connection therewith and all other documentation
related thereto, and the making of the Loan hereunder, and pay or reimburse
Lenders for all costs, liabilities and expenses (including but not limited to
reasonable attorneys' fees and disbursements) associated with the collection or
enforcement of the same, including without limitation any fees and disbursements
incurred in defense of or to retain amounts of principal, interest or fees paid
or in connection with any audit or examination of the Companies. All
obligations provided for in this Paragraph 5.11 shall survive any termination of
this Agreement or the Revolving Credit Commitment and the repayment of the Loan.
5.12. Compliance; Notification.
------------------------
(a) Comply in all material respects with all local, state and
federal laws and regulations applicable to its business, including without
limitation all laws and regulations of the Local Authorities, and with the
provisions and requirements of all franchises, permits, certificates of
compliance, approval and need issued by regulatory authorities and with other
like grants of authority held by any Company; and notify Lenders immediately in
detail of any actual or alleged failure to comply with or perform, breach,
violation or default under any such laws or regulations or under the terms of
any of such franchises, licenses or grants of authority, or of the occurrence or
existence of any facts or circumstances which with the passage of time, the
giving of notice or otherwise could create such a breach, violation or default
or could, either singly or in the aggregate, occasion the termination of any of
such franchises, licenses or grants of authority, to the extent that any of the
foregoing would, either singly or in the aggregate, have a Material Adverse
Effect.
(b) With respect to applicable Environmental Laws, promptly
notify Agent when, in connection with the conduct of the Companies' business(es)
or operations, any Person (including, without limitation, EPA or any state or
local agency) provides oral or written notification to any Company, or any
Company otherwise becomes aware, of a condition with regard to a Release or
threat of Release of Hazardous Substances which would, either singly or in the
aggregate, have a Material Adverse Effect; and notify Agent in detail
42
promptly upon the receipt by a Company of a written assertion of liability under
any Environmental Laws, of any actual or alleged failure to comply with, failure
to perform, breach, violation or default under any such Environmental Laws (or
any combination thereof) which would, either singly or in the aggregate, have a
Material Adverse Effect.
5.13. ERISA. (a) Comply in all material respects with the provisions
-----
of ERISA to the extent applicable to any Plan maintained for the employees of
any Company or any ERISA Affiliate; (b) do or cause to be done all such acts and
things that are required to maintain the qualified status of each Plan which is
intended to meet the requirements of 401(a) of the Code and tax exempt status of
each trust forming part of such Plan; (c) not incur any material accumulated
funding deficiency (within the meaning of ERISA and the regulations promulgated
thereunder), or any material liability to the PBGC (as established by ERISA);
(d) not permit any event to occur with respect to any Plan sponsored by any
Company or any ERISA Affiliate (i) as described in Section 4042 of ERISA or (ii)
which may result in the imposition of a lien on its properties or assets; and
(e) notify Agent in writing promptly after it has come to the attention of
senior management of any Company of the written assertion or threat of any event
described in Section 4042 of ERISA (relating to the soundness of a Plan)
(including any "reportable event" described in Section 4042(a)(3) of ERISA) or
the PBGC's ability to assert a material liability against it or impose a lien on
any Company's, or any ERISA Affiliate's properties or assets; and (f) refrain
from engaging in any prohibited transactions or actions causing possible
liability under Section 502 of ERISA.
5.14. Total Debt to EBITDA Ratio. Maintain at all times during the
--------------------------
periods set forth in the left-hand column below, a ratio of (a) Total Debt of
Borrower and its consolidated Subsidiaries to (b) EBITDA of Borrower and its
Consolidated Subsidiaries for the most recent Rolling Period, of not greater
than the ratio set forth in the right-hand column below:
Period Ratio
------- -----
Date hereof through 3/30/00 4.00 to 1
3/31/00 through 3/30/01 3.50 to 1
3/31/01 and thereafter 3.00 to 1
5.15. Senior Debt to EBITDA. Maintain at all times during the periods
---------------------
set forth in the left-hand column below a ratio of Senior Debt of Borrower and
its consolidated Subsidiaries to EBITDA of Borrower and its consolidated
Subsidiaries for the most recent Rolling Period, of not greater than the ratio
set forth in the right-hand column below:
Period Ratio
------ -----
Date hereof through 3/30/00 3.25 to 1
3/31/00 through 3/30/01 2.75 to 1
3/31/01 and thereafter 2.25 to 1
43
5.16. Minimum EBITDA. Maintain as of the last day of each fiscal
--------------
quarter set forth in the left-hand column below EBITDA of Borrower and its
consolidated Subsidiaries for the periods specified of not less than the amount
set forth in the right-hand column below:
Period Ratio
------ ------
12/31/98, for the one fiscal quarter then ended 6,750
3/31/99, for the two fiscal quarters then ended 12,000
6/30/99, for the three fiscal quarters then ended 17,350
9/30/99, for the most recent Rolling Period 23,750
12/31/99, for the most recent Rolling Period 24,600
3/31/00, for the most recent Rolling Period 24,600
6/30/00, for the most recent Rolling Period 25,250
9/30/00, for the most recent Rolling Period 25,900
12/31/00, for the most recent Rolling Period 26,600
3/31/01, for the most recent Rolling Period 27,100
6/30/01, for the most recent Rolling Period 27,600
9/30/01, for the most recent Rolling Period 28,600
12/31/01 and thereto, for the most recent Rolling Period 29,600
5.17. Minimum Debt Service Coverage Ratio. Maintain as of the last day
-----------------------------------
of each fiscal quarter during the periods set forth in the left-hand column
below (commencing with March 31, 1999) a ratio of EBITDA to Debt Service for
Borrower and its consolidated Subsidiaries for the most recent Adjusted Rolling
Period of not less than the ratio set forth in the right hand column below:
Period Ratio
------- -----
3/31/99 1.50 to 1
4/1/99 to 6/30/99 1.50 to 1
7/1/99 to 9/30/99 1.75 to 1
10/1/99 to 12/31/99 2.00 to 1
1/1/00 and thereafter 2.00 to 1
5.18. Minimum Fixed Charge Coverage Ratio. Maintain as of the last day
-----------------------------------
of each fiscal quarter a ratio of Adjusted EBITDA to Fixed Charges for Borrower
and its consolidated Subsidiaries for the most recent Adjusted Rolling Period of
not less than 1.10 to 1.
44
5.19. Borrowing Base. Maintain at all times the outstanding principal
--------------
balance of the Revolving Credit Loan, together with the undrawn amount of all
outstanding Letters of Credit and all unreimbursed draws under Letters of
Credit, in an amount less than or equal to the Borrowing Base.
5.20. Management Changes. Notify Agent in writing within ten (10)
------------------
Business Days after any change of its Executive Officers.
5.21. Transactions Among Affiliates. Except pursuant to existing
-----------------------------
agreements as described on Exhibit C hereto, cause all transactions between and
among it and its Affiliates, other than transactions among the Companies, to be
on an arms-length basis and on such terms and conditions as are customary in the
applicable industry between and among unrelated entities.
5.22. Joinders, etc. If any wholly-owned Subsidiary becomes a Material
-------------
Subsidiary or if a new Material Subsidiary is formed or acquired and such
Material Subsidiary is wholly-owned, execute or cause such Material Subsidiary
to execute, as applicable, a joinder to the Guaranty and the Security Agreement
by such Material Subsidiary, a supplement to the Pledge agreements or an
additional Pledge Agreement pledging all of the shares of stock of such Material
Subsidiary, and such other documents as Agent may reasonably require in
connection therewith, including without limitation UCC-1 financing statements,
secretary's certificates and opinions of counsel.
5.23. Additional Collateral Security Documents.
----------------------------------------
(a) Use reasonable best efforts to promptly obtain and deliver to
Agent landlord consents and waivers in form and substance satisfactory to Agent
with respect to all premises at which any Collateral may be located.
(b) Within sixty (60) days after the date of this Agreement,
obtain and deliver to Agent blocked account letters with each depository
institution with which any Company maintains a deposit account and as to which
Agent has indicated that such blocked account letter is required.
(c) Execute, deliver, file and record such additional documents,
instruments or agreements as Agent shall reasonably require from time to time in
order to perfect, maintain, protect or realize upon the Collateral, including
without limitation additional UCC financing statements, landlord waivers and
consents and other documentation as may be required in connection with the
establishment by a Company of additional inventory locations.
5.24. Other Information. Provide any Lender with any other documents
-----------------
and information, financial or otherwise, reasonably requested by such Lender
from time to time.
45
SECTION 6
NEGATIVE COVENANTS
------------------
So long as any Revolving Credit Commitment or any Indebtedness of
Borrower to Lenders remains outstanding hereunder, Borrower covenants and agrees
that without Required Lenders' prior written consent, each Company and its
Subsidiaries will not:
6.1. Indebtedness. Borrow any monies or create or permit to exist any
------------
Indebtedness except: (i) the Senior Obligations; (ii) trade Indebtedness in the
normal and ordinary course of business for value received; (iii) Indebtedness
and obligations incurred to purchase or lease fixed or capital assets, provided,
that the aggregate outstanding principal amount of such indebtedness and
obligations shall not exceed in the aggregate One Million Five Hundred Thousand
Dollars ($1,500,000) outstanding at any time; (iv) Subordinated Debt on terms
satisfactory to Required Lenders; (v) existing Seller Obligations as described
on Exhibit C not to exceed Fourteen Million, Three Thousand One Hundred One
Dollars ($14,003,101), as reduced from time to time by payments thereon,
provided, that by March 31, 1999 such Seller Obligations shall be reduced to an
aggregate principal amount not to exceed Eleven Million Seventy-Nine Thousand
Six Hundred Ninety-Eight Dollars ($11,079,698); (vi) the existing mortgage
indebtedness on the buildings in Canton, Massachusetts, and Charlotte, North
Carolina described on Exhibit C in the outstanding principal amount at September
30, 1998 of $9,413,062 and $3,720,000 respectively, as reduced from time to time
by payments thereon, provided that the mortgage indebtedness on the Xxxxxx
Building in Charlotte, North Carolina, so described, shall be paid off in full
upon sale of such building; (v) tax obligations for which funds have been
escrowed as provided in Paragraph 4.1(p) hereof, and (vi) obligations which are
the subject of the ABD/Xxxxxxx Dispute for which funds have been escrowed as
provided in Paragraph 4.1(q) hereof.
6.2. Guaranties. Guarantee or assume or be or agree to become liable
----------
in any way, either directly or indirectly, for any Indebtedness or liability of
others except: (i) to endorse checks or drafts in the ordinary course of
business; (ii) pursuant to the Guaranty; (iii) the guaranty by Xxxxxx-American
of indebtedness of Merchandising Corporation of America, Inc, as described on
Exhibit C, provided that the principal amount thereof shall not exceed at any
time Five Hundred Thousand Dollars ($500,000); and (iv) the guaranty by Borrower
of the mortgage indebtedness permitted pursuant to Paragraph 6.1(vi) hereof with
respect to the Canton, Massachusetts building.
6.3. Loans. Make or permit to exist any loans or advances to others,
-----
other than (i) loans or advances by any Company to any other Company, (ii) loans
to any Subsidiary that is not a Guarantor, subject to the limitations set forth
in paragraph 6.8(i) hereof and (iii) loans to employees outstanding on the date
hereof as described on Exhibit C, and other loans or advances to employees for
travel and entertainment expenses, or in connection with relocation of
employees, in an aggregate principal amount outstanding (for all loans under
this clause (iii)) not to exceed at any time Two Hundred Thousand Dollars
($200,000).
46
6.4. Liens and Encumbrances. Create, permit or suffer the creation or
----------------------
existence of any liens, security interests, or any other encumbrances on
(including any conditional sales arrangement with respect to) any of its
property, real or personal, except the security interests in favor of the Agent
on behalf of Lenders as security for the Loans, and except (i) liens arising in
favor of sellers or lessors for indebtedness and obligations incurred to
purchase or lease fixed or capital assets permitted under Paragraph 6.1(iii)
hereof, provided, however, that such liens secure only the indebtedness and
obligations created thereunder and (except with respect to the two certificates
of deposit each in the amount of $108,572 pledged to Norwest Equipment Finance
Inc.) are limited to the assets purchased or leased pursuant thereto and the
proceeds thereof; (ii) mechanic's and xxxxxxx'x liens, liens for taxes,
assessments or other governmental charges, federal, state or local, which are
then being currently contested in good faith by appropriate proceedings and are
covered by appropriate reserves maintained in accordance with GAAP; (iii)
pledges or deposits to secure obligations under workmen's compensation,
unemployment insurance or social security laws or similar legislation; (iv)
deposits to secure surety, appeal or custom bonds required in the ordinary
course of business and the $250,000 deposit to secure any remaining obligations
to Wachovia Bank, N.A., and (v) the existing mortgage liens pursuant to the
mortgage indebtedness permitted pursuant to Paragraph 6.1(vi) hereof.
6.5. Additional Negative Pledge. Except for existing agreements
--------------------------
relating to the mortgage debt permitted pursuant to Paragraph 6.1(v) hereof,
agree or covenant with or promise any Person or entity other than the Lenders
that it will not pledge its assets or properties or otherwise grant any liens,
security interests or encumbrances on its property.
6.6. Restricted Payments.
-------------------
(a) Make any Restricted Payments.
(b) Make any voluntary payment or prepayment of any
Indebtedness, including, without limitation, any obligations to sellers in
connection with previous acquisitions, other than the Senior Obligations, and
provided that, in the absence of an Event of Default hereunder, Borrower and its
Subsidiaries may (i) make all regularly scheduled payments of principal and
interest on account of any such Indebtedness and obligations and (ii) make
prepayments of Seller Obligations in final settlement of all obligations to a
seller in an aggregate amount not to exceed Ten Million Dollars ($10,000,000).
(c) Make any payments of management fees or consulting fees;
provided, however, that in the absence of an Event of Default hereunder, (i)
Borrower may pay consulting fees to Monroe & Company LLC (A) as described in
clause (i) of the disclosure under Paragraph 6.9 on Exhibit C, and (B) as
described in clause (ii) of the disclosure under Paragraph 6.9 of Exhibit C, in
an aggregate amount not to exceed in any twelve month period $250,000; and (ii)
Xxxxxxx Enterprises and Xxxxxx-American may make payments required under the
agreements described under Paragraph 3.11 on Exhibit C.
47
6.7. Transfer of Assets; Liquidation.
-------------------------------
(a) Sell, lease, transfer or otherwise dispose of all or any
portion of its assets, real or personal, including any sale/leaseback or similar
transaction, other than such transactions in the normal and ordinary course of
business for value received provided, however, that in the absence of an Event
of Default or Default hereunder, Borrower and its Subsidiaries may consummate
the sale of the Xxxxxx Building, in Charlotte, North Carolina, and the
subsequent lease thereof by the Companies as described in the Registration
Statement; or
(b) discontinue, liquidate, or change in any material respect any
substantial part of its operations or business(es), except as a result of an
intercompany merger permitted pursuant to Paragraph 6.8(iii) hereof.
6.8. Acquisitions and Investments. Purchase or otherwise acquire
----------------------------
(including without limitation by way of share exchange) any part or amount of
the capital stock, partnership interests, or assets of, or make any investments
in, any other Person; or enter into any new business activities or ventures not
directly related to its present business; or merge or consolidate with or into
any other Person; or create any Subsidiary; provided, however that:
(i) the Companies may own the Subsidiaries owned by them on the
date hereof as set forth on Exhibit C attached hereto, may create or form
additional wholly-owned Subsidiaries, subject to compliance with Paragraph 5.22
hereof, if applicable and may make additional investments in any such
Subsidiaries, provided, that the aggregate amount of all investments in or loans
to Subsidiaries that are not Guarantors hereunder, together with any investments
authorized pursuant to clause (v) in Persons that are not Subsidiaries (in each
case, whether now existing or hereafter arising) shall not exceed at any time
Three Million Dollars ($3,000,000), and provided further, that the aggregate
investment in and loans to Xxxxxxx Laboratories, Inc. shall not exceed One
Hundred Thousand Dollars ($100,000).
(ii) the Companies may make Permitted Investments, subject to
the conditions and limitations set forth in the definition thereof;
(iii) any Company or wholly-owned Subsidiary may merge with
or into any Company, provided that the surviving entity shall be the Borrower or
a Guarantor hereunder;
(iv) the Companies (or a newly-formed Subsidiary which shall
become a Company pursuant to Paragraph 5.22 hereof) may make acquisitions if:
(A) excluding the acquisition of Xxxxx Xxxxxx and Xxxx, in the case of any
acquisition with respect to which the aggregate Acquisition Price is in excess
of Three Million Dollars ($3,000,000), or together with the aggregate
Acquisition Price of all other acquisitions consummated after the date of this
Agreement and within twelve months prior to such acquisition is in excess of
Twenty Million Dollars ($20,000,000), Required Lenders shall have
48
consented thereto, (B) at least ten (10) Business Days prior to the consummation
of such acquisition, the Company delivers to Agent a notice of acquisition in
the form of Exhibit G setting forth a description of the material terms of the
transaction, together with three (3) years of historical financial information
for the entity to be acquired and pro forma financial statements for the
preceding year and the current year, and a certificate of the chief financial
officer of the Company setting forth the calculation of the covenants set forth
in Paragraphs 5.14 through 5.19 and the following clause (C) on a pro forma
basis for the combined group as of the consummation of the acquisition and as of
the fiscal year end following the acquisition and certifying as to the matters
in clauses (D) and (E) following, (C) the ratio of Senior Debt to EBITDA,
calculated on a pro forma basis to give effect to the acquisition, will be at
the level required pursuant to Paragraph 5.15 hereof, less .25, (D) there is no
Event of Default or Default hereunder in existence at the time of such
acquisition or investment or which would be caused by such acquisition or
investment, (E) giving effect to such acquisition, the representations and
warranties set forth in Section 3 hereof will be true and correct in all
material respects as applied to Borrowers and their Subsidiaries including the
acquired company or business (including without limitation the absence or
indebtedness or liens except as permitted pursuant to Paragraphs 6.1 and 6.4
hereof), (F) in the case of the acquisition of stock, the Companies (or newly-
formed Subsidiary which shall become a Company pursuant to Paragraph 5.22
hereof) obtains ownership of not less than one hundred percent (100%) of all
classes of voting securities; and (G) such acquisition or investment has been
approved by the board of directors (or equivalent governing authority) of the
entity to be acquired in office immediately prior to the proposed acquisition;
and
(v) the Companies may make and maintain investments in one or
more Persons that are not wholly-owned Subsidiaries provided that (A) such
Person is engaged in a business substantially related to the business of the
Companies, (B) the aggregate amount of all investments in such Persons (whether
now existing or hereinafter arising) at any time shall be subject to the
limitation set forth in Paragraph 6.8(i) hereof, and (C) if such Person will be
a Subsidiary as defined herein, then notice of such investment shall be required
as set forth in clause (iv) above with respect to acquisition, and such
investment shall be subject to the other conditions set forth in such clause
(iv), other than subclause (F) thereof.
6.9. Payments to Affiliates. Pay any salaries, compensation,
----------------------
management fees, consulting fees, service fees, licensing fees, or other similar
payments to Affiliates of any Company other than on an arms-length basis for
value, and on terms and conditions as are customary in the industry between and
among unrelated entities, except pursuant to existing agreements as described on
Exhibit C hereto.
6.10. Certain Changes.
---------------
(a) Make any change in the fiscal year end of Borrower; or
(b) enter into any amendments to the financial covenants, rate or
interest, amount or time of payments with respect to other outstanding
Indebtedness which are
49
more burdensome to the Companies, or which increase or accelerate any payment
thereunder; or
(c) agree to any amendment for the Tax Escrow Agreement or the
Indemnification Escrow Agreement or agree to any release of the escrowed funds
pursuant to Section 3.1 of the Indemnification Escrow Agreement or Section 4(a)
of the Tax Escrow Agreement without the consent of Agent.
6.11. Restrictive Agreements. Except for existing agreements relating
----------------------
to the mortgage debt permitted pursuant to Paragraph 6.1(v) hereof, the
Companies will not, and will not permit any of their Subsidiaries to, directly
or indirectly, enter into, incur or permit to exist any agreement or other
arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of any Company or any Subsidiary to create, incur or permit to exist any
lien upon any of its material property or assets, or (b) the ability of any
Subsidiary to pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to any Company or any
other Subsidiary or to guarantee indebtedness of any Company or any other
Subsidiary; provided that the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement.
6.12. Use of Proceeds. Use any of the proceeds of the Loan, directly
---------------
or indirectly, to purchase or carry margin securities within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System; or engage
as its principal business in the extension of credit for purchasing or carrying
such securities.
SECTION 7
DEFAULT
-------
7.1. Events of Default. Each of the following events shall be an
-----------------
Event of Default hereunder:
(a) If Borrower shall fail to pay when due any installment of
principal, or fail to pay within three (3) Business Days of when due any
interest, fees, costs, expenses or any other sum, payable to Lenders or Agent
under the Senior Obligations; or
(b) If any representation or warranty made herein or in
connection herewith or in any statement, certificate or other document furnished
hereunder is false or misleading in any material respect when made; or
(c) If any Company shall default (after expiration of any
applicable cure or grace periods) in the payment or performance of any
obligation or Indebtedness to another either singly or in the aggregate in
excess of Five Hundred Thousand Dollars ($500,000), whether now or hereafter
incurred; or
50
(d) If there shall be a default in or failure to observe at any
test date the covenants set forth in Paragraphs 5.14 through 5.19 hereof or in
Section 6 hereof; or
(e) If any Company shall default in the performance of any other
agreement or covenant contained herein (other than as provided in subparagraphs
(a), (b) or (d) above) or in any document executed or delivered in connection
herewith or otherwise in connection with the Senior Obligations, including
without limitation with respect to any Collateral, and such default shall
continue uncured for thirty (30) days after notice thereof to Borrower given by
Agent; or
(f) If Borrower shall cease to own, directly or indirectly, one
hundred percent (100%) of the outstanding capital stock of each Guarantor
(except as a result of the merger of such Guarantor into a Company as permitted
pursuant to Paragraph 6.8(iii) hereof); or
(g) If (i) any person or group within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the rules and regulations promulgated thereunder (other than Xxxxx X. Xxxxxx and
Persons controlled by him) shall have beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act), directly or indirectly, of securities of the
Company (or other securities convertible into such securities within the time
specified in Rule 13d-3 of the 0000 Xxx) representing a percentage of the
combined voting power of all securities of the Borrower entitled to vote in the
election of directors in excess of the greater of (x) twenty percent (20%) or
(y) the aggregate percentage ownership held by Executive Officers and directors
of the Companies (hereinafter called a "Controlling Person"); or (ii) a majority
of the board of directors of the Borrower shall cease for any reason to consist
of (A) individuals who on the date hereof were serving as directors of Borrower
and (B) individuals who subsequently become members of the Board if such
individuals' nominations for election or elections to the Board are recommended
or approved by a majority of the Board of Directors of the Borrower. For
purposes of clause (i) above, a person or group shall not be a Controlling
Person if such person or group (x) holds voting power in good faith, and not for
the purpose of circumventing this Paragraph 7.1(g) as an agent, bank, broker,
nominee, trustee, or holder of revocable proxies given in response to a
solicitation pursuant to the 1934 Act, for one or more beneficial owners who do
not individually, or, if they are a group acting in concert, as a group, have
the voting power specified in clause (i) above, or (y) is an investment company
registered under the Investment Company Act of 1940, as amended, and has not
indicated an intent to exercise a controlling influence over the Companies;
(h) If custody or control of any substantial part of the property
of any Company shall be assumed by any governmental agency or any court of
competent jurisdiction at the instance of any governmental agency; if any
license or franchise of a Company shall be suspended, revoked, not renewed or
otherwise terminated the loss of which would, either singly or in the aggregate,
have a Material Adverse Effect; or if any material contract (as determined in
accordance with Regulation S-K under the Securities Act of 1933, as amended)
51
is terminated; or if any governmental regulatory authority or judicial body
shall make any other final non-appealable determination the effect of which
would, either singly or in the aggregate, have a Material Adverse Effect; or
(i) If any Company or any Subsidiary becomes insolvent, bankrupt
or generally fails to pay its debts as such debts become due; is adjudicated
insolvent or bankrupt; admits in writing its inability to pay its debts; or
shall suffer a custodian, receiver or trustee for it or substantially all of its
property to be appointed and if appointed without its consent, not be discharged
within sixty (60) days; makes a general assignment for the benefit of creditors;
or suffers proceedings under any law related to bankruptcy, insolvency,
liquidation or the reorganization, readjustment or the release of debtors to be
instituted against it and if contested by it not dismissed or stayed within
sixty (60) days; if proceedings under any law related to bankruptcy, insolvency,
liquidation, or the reorganization, readjustment or the release of debtors is
instituted or commenced by any Company or any Subsidiary; if any order for
relief is entered relating to any of the foregoing proceedings; if any Company
or any Subsidiary shall call a meeting of its creditors with a view to arranging
a composition or adjustment of its debts; or if any Company or any Subsidiary
shall by any act or failure to act indicate its consent to, approval of or
acquiescence in any of the foregoing; or
(j) any event or condition shall occur or exist with respect to
any Hazardous Substance as a result of which event or condition, the Companies
have incurred or in the opinion of Borrower are reasonably likely to incur
liabilities in the aggregate in excess of Five Hundred Thousand Dollars
($500,000); or
(k) if any judgment, writ, warrant or attachment or execution or
similar process which calls for payment or presents liability in excess of Five
Hundred Thousand Dollars ($500,000) shall be rendered, issued or levied against
any Company or its respective property and such process shall not be paid,
waived, stayed, vacated, discharged, settled, satisfied or fully bonded within
sixty (60) days after its issuance or levy unless such judgment is covered by
insurance and the insurer has acknowledged coverage in writing with respect
thereto; or
7.2. Remedies. Upon the happening of any Event of Default and at any
--------
time during the continuance thereof, at the election of Required Lenders, and by
notice by Agent to Borrower (except if an Event of Default described in
Paragraph 7.1(i) shall occur in which case acceleration shall occur
automatically without notice), Required Lenders may declare the entire unpaid
balance, principal, interest and fees, of all Indebtedness of Borrower to
Lenders, hereunder or under any other Loan Document, to be immediately due and
payable. Upon such declaration, the Revolving Credit Commitment shall
immediately and automatically terminate and Lenders shall have no further
obligation to make any advances and they shall have the immediate right to
enforce or realize on any collateral in a commercially reasonable manner in any
manner or order they deem expedient without regard to any equitable principles
of marshaling or otherwise. Whether such a declaration has been made by
Required Lenders that the Indebtedness is due and payable following an Event of
Default, Required Lenders may
52
terminate the Revolving Credit Commitments at any time during the continuance of
an Event of Default by notice thereof by Agent to Borrower. In addition to any
rights granted hereunder or in any documents delivered in connection herewith,
Lenders shall have all the rights and remedies granted by any applicable law,
all of which shall be cumulative in nature.
7.3. Right of Set-off. If any obligations hereunder or under any
----------------
other Loan Document, including under any interest rate swap or rate protection
agreement with a Lender (collectively, the "Liabilities") shall be due and
payable (subject to notice and cure periods) or any one or more Events of
Default shall have occurred and be continuing, whether or not the Agent shall
have made demand under any Loan Document and regardless of the adequacy of any
collateral for the Liabilities or other means of obtaining repayment of the
Liabilities, each Lender shall have the right, without notice to the Borrower
and is specifically authorized hereby to set-off against and apply to the then
unpaid balance of the Liabilities any items or funds of the Borrower held by
each Lender or any affiliate of such Lender, any and all deposits (whether
general or special, time or demand, matured or unmatured) or any other property
of the Borrower including, without limitation, securities and/or certificates of
deposit, now or hereafter maintained by any Borrower for its or their own
account with any Lender or any affiliate of such Lender, and any other
indebtedness at any time held or owing by any Lender or any affiliate of such
Lender, to or for the credit or the account of Borrower, even if effecting such
set-off results in a loss or reduction of interest or the imposition of a
penalty applicable to the early withdrawal of time deposits. For such purpose,
the Lenders shall have, and Borrower hereby grant to each Lender, a first lien
on and security interest in such deposits, property, funds and accounts and the
proceeds thereof.
7.4. Turnover of Property Held by Lender's Affiliates. Borrower
------------------------------------------------
further authorizes any affiliate of each Lender, upon the occurrence and during
the continuance of an Event of Default, at the request of any such Lender, and
without notice to Borrower, to turn over to the Agent any property of Borrower,
including, without limitation, funds and securities, held by any Lender's
affiliate for any such Borrower's account and to debit any deposit account
maintained by Borrower with such Lender's affiliate (even if such deposit
account is not then due or there results a loss or reduction of interest or the
imposition of a penalty in accordance with law applicable to the early
withdrawal of time deposits), in the amount requested by the Lenders up to the
amount of the Liabilities, and to pay or transfer such amount or property to the
Agent for application to the Liabilities.
7.5. Remedies Cumulative; No Waiver. The rights, powers and remedies
------------------------------
of the Lenders provided in this Agreement and any in the other Loan Documents
are cumulative and not exclusive of any right, power or remedy provided by law
or equity. No failure or delay on the part of the Agent or any Lender in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise preclude any other or further exercise
thereof, or the exercise of any other right, power or remedy.
53
SECTION 8
AGENCY PROVISIONS
-----------------
This Section sets forth the relative rights and duties of Agent and
Lenders respecting the Loan and, with the exception of Paragraphs 8.3 and 8.15
hereof, does not confer any enforceable rights on Borrower against Lenders or
create on the part of Lenders any duties or obligations to Borrower.
8.1. Application of Payments. Agent shall apply all payments of
-----------------------
principal, interest, commitment fee or other amounts hereunder made to Agent by
or on behalf of Borrower with respect to the Loan to Lenders on the basis of
their Pro Rata Shares of the outstanding principal balance of the Loans, except
the fees payable under Paragraph 2.13 hereof, which shall be paid solely to
Agent. Such distribution of payments shall be made promptly in federal funds
immediately available at the office of each Lender set forth above.
8.2. Set-Off. In the event a Lender, by exercise of its right of set-
-------
off, or otherwise, receives any payment of principal or interest, in an amount
greater than its Pro Rata Share of such payment based upon the Lenders'
respective shares of principal Indebtedness outstanding hereunder immediately
before such payment, such Lender shall purchase a portion of the Indebtedness
hereunder owing to each other Lender so that after such purchase each Lender
shall hold its Pro Rata Share of all the Indebtedness then outstanding
hereunder, provided that if all or any portion of such excess payment is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of any such recovery, but without
interest.
8.3. Modifications and Waivers. No modification or amendment hereof,
-------------------------
consent hereunder or waiver of any Event of Default shall be effective except by
written consent of the Required Lenders; provided, however, that the written
consent of all Lenders shall be required to (i) modify, amend, waive, discharge,
terminate or suspend compliance with (A) any rate of interest applicable to the
Loans to the extent it is proposed to be decreased, (B) the amount of the
Revolving Credit Commitment to the extent it is proposed to be increased, or the
Lenders' respective shares thereof; (C) the date or amounts of payment of the
Loans or interest thereon, to postpone payment thereof, (D) the commitment fee
set forth in Paragraph 2.12 hereof or other amounts payable by Borrower
hereunder except if payable solely to the Agent, to the extent any such amount
is proposed to be decreased, (E) the definition of Required Lenders, (F) this
Paragraph 8.3, or (G) the definition of Pro Rata Share; (ii) release all or
substantially all of the Collateral; or (iii) release any Guarantor that is a
Material Subsidiary except pursuant to mergers permitted pursuant to Paragraph
6.8(iii) hereof.
8.4. Obligations Several. The obligations of the Lenders hereunder
-------------------
are several, and each Lender hereunder shall not be responsible for the
obligations of the other Lenders
54
hereunder, nor will the failure of one Lender to perform any of its obligations
hereunder relieve the other Lenders from the performance of their respective
obligations hereunder.
8.5. Lenders' Representations. Each Lender represents and warrants to
------------------------
the other Lenders that (i) it has been furnished all information it has
requested for the purpose of evaluating its proposed participation under this
Agreement; and (ii) it has decided to enter into this Agreement on the basis of
its independent review and credit analysis of Borrower, this Agreement and the
documentation in connection therewith and has not relied for such analysis on
any information or analysis provided by any other Lender.
8.6. Investigation. No Lender shall have any obligation to the others
-------------
to investigate the condition of Borrower or any of the Collateral or any other
matter concerning the Loan.
8.7. Powers of Agent. Agent shall have and may exercise those powers
---------------
specifically delegated to Agent herein, together with such powers as are
reasonably incidental thereto.
8.8. General Duties of Agent, Immunity and Indemnity. Upon receipt of
-----------------------------------------------
notices and reports delivered by Borrower to the Agent under this Agreement, the
Agent shall promptly deliver the same in the form received to the Lenders.
Required Lenders shall also have the right to request Agent to inspect
Borrower's books and records and take the other steps provided in Paragraph 5.7
hereof. In performing its duties as Agent hereunder, Agent will take the same
care as it takes in connection with loans in which it alone is interested,
subject to the limitations on liabilities contained herein; provided that Agent
shall not be obligated to ascertain or inquire as to the performance of any of
the terms, covenants or conditions hereof by Borrower. Neither Agent nor any of
its directors, officers, agents or employees, shall be liable for any action or
omission by any of them hereunder or in connection herewith except for gross
negligence or willful misconduct. Subject to such exception, each of the
Lenders hereby indemnifies Agent (in its capacity as Agent) on the basis of such
Lender's Pro Rata Share, against any liability, claim, loss or expense arising
from or relating to any action taken or omitted to be taken with respect to this
Agreement, any other Loan Document or the transactions contemplated thereby or
Borrower, to the extent that the Agent has not been reimbursed therefor by
Borrower, without affecting any obligation of Borrower to reimburse.
8.9. No Responsibility for Representations or Validity, etc. Each
------------------------------------------------------
Lender agrees that Agent shall not be responsible to any Lender for any
representations, statements, or warranties of Borrower herein or in the other
Loan Documents. Neither Agent nor any of its directors, officers, employees or
agents, shall be responsible for the validity, effectiveness, sufficiency,
perfection or enforceability of this Agreement or the other Loan Documents, or
any Collateral, or any documents relating thereto or for the priority of any of
Lenders' security interests in any such Collateral.
55
8.10. Action on Instruction of Lenders; Right to Indemnity. Agent
----------------------------------------------------
shall act upon written instruction of Lenders or Required Lenders, as
appropriate, and in all cases Agent shall be fully protected in acting or
refraining from acting hereunder in accordance with such written instructions to
it signed by Required Lenders unless the consent of all the Lenders is expressly
required hereunder in which case Agent shall be so protected when acting in
accordance with such instructions from all the Lenders. Such instructions and
any action taken or failure to act pursuant thereto shall be binding on all the
Lenders, provided that except as otherwise provided herein, Agent may act
hereunder in its own discretion without requesting such instructions.
8.11. Employment of Agents. In connection with its activities
--------------------
hereunder, Agent may employ agents and attorneys-in-fact and shall not be
answerable, except as to money or securities received by it or its authorized
agents, for the default or misconduct of agents or attorneys-in-fact selected
with reasonable care.
8.12. Reliance on Documents. Agent shall be entitled to rely upon (a)
---------------------
any paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons and (b) upon the opinion of its
counsel with respect to legal matters.
8.13. Agent's Rights as a Lender. With respect to their share of the
--------------------------
indebtedness hereunder, Agent shall have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not Agent. Each of
the Lenders may accept deposits from and generally engage in other banking or
trust business with Borrower as if it were not Agent or a Lender hereunder.
8.14. Expenses. Each of the Lenders shall reimburse Agent from time to
--------
time at the request of Agent for its Pro Rata Share of any expenses incurred by
Agent in connection with the performance of its functions hereunder without
affecting any obligation of Borrower to reimburse, provided however that in the
event Lenders shall reimburse Agent for expenses for which Borrower subsequently
reimburses Agent, then Agent shall remit to each Lender the respective amount
received from such Lender against such expenses.
8.15. Resignation of Agent. Agent may at any time resign its position
--------------------
as Agent, without affecting its position as a Lender, by giving written notice
to Lenders and Borrower. Such resignation shall take effect upon the
appointment of a successor agent in accordance with this Paragraph 8.15. In the
event Agent shall resign, Required Lenders with the consent of Borrower, which
consent will not be unreasonably withheld, shall appoint a Lender as successor
Agent. If within thirty (30) days of the Agent's notice of resignation no
successor agent shall have been appointed by Lenders and accepted such
appointment, then Agent, in its discretion may appoint any other Lender with
banking powers as a successor agent.
56
8.16. Successor Agent. The successor Agent appointed pursuant to
---------------
Paragraph 8.15 shall execute and deliver to its predecessor and Lenders an
instrument in writing accepting such appointment, and thereupon such successor,
without any further act, deed or conveyance, shall become fully vested with all
the properties, rights, duties and obligations of its predecessor Agent. The
predecessor Agent shall deliver to its successor Agent forthwith all Collateral,
documents and moneys held by it as Agent, if any, whereupon such predecessor
Agent shall be discharged from its duties and obligations as Agent under this
Agreement.
8.17. Collateral Security. Agent will hold, administer and manage any
-------------------
Collateral pledged from time to time hereunder either in its own name or as
Agent on behalf of the Lenders, but each Lender shall hold a direct, undivided
pro-rata beneficial interest therein, on the basis of its Pro Rata Share, by
reason of and as evidenced by this Agreement.
8.18. Enforcement by Agent. All rights of action under this Agreement
--------------------
and under the Notes and all rights to the Collateral hereunder may be enforced
by Agent and any suit or proceeding instituted by Agent in furtherance of such
enforcement shall be brought in its name as Agent, without the necessity of
joining as plaintiffs or defendants any other Lenders, and the recovery of any
judgment shall be for the benefit of Lenders subject to the expenses of Agent.
SECTION 9
MISCELLANEOUS
-------------
9.1. Indemnification and Release Provisions. Borrower hereby agrees
--------------------------------------
to defend Agent and each Lender and their directors, officers, agents, employees
and counsel from, and hold each of them harmless against, any and all losses,
liabilities (including without limitation settlement costs and amounts, transfer
taxes, documentary taxes, or assessments or charges made by any governmental
authority), claims, damages, interest judgments, costs, or expenses, including
without limitation reasonable fees and disbursements of counsel, incurred by any
of them arising out of or in connection with or by reason of this Agreement, the
Revolving Credit Commitment, the making of the Loans or any Collateral therefor,
other than those resulting from any such party's own wilful misconduct or gross
negligence, including without limitation, any and all losses, liabilities,
claims, damages, interests, judgments, costs or expenses relating to or arising
under any Environmental Law. Borrower hereby releases Agent and each Lender and
their directors, officers, agents, employees and counsel from any and all claims
for loss, damages, costs or expenses caused or alleged to be caused by any act
or omission on the part of any of them other than those resulting from any such
party's own wilful misconduct or gross negligence. All obligations provided for
in this Paragraph 9.1 shall survive any termination of this Agreement or the
Revolving Credit Commitment and the repayment of the Loans.
57
9.2. Participations and Assignments. Borrower hereby acknowledges and
------------------------------
agrees that a Lender may at any time: (a) grant participations in its share of
the Loans or any Note or of its right, title and interest therein or in or to
this Agreement (collectively, "Participations") to any other lending office or
to any other bank, lending institution or other Person which has the requisite
sophistication to evaluate the merits and risks of investments in Participations
("Participants"); provided, however, that: (i) all amounts payable by Borrower
hereunder shall be determined as if such Lender had not granted such
Participation; and (ii) any agreement pursuant to which any Lender may grant a
Participation: (A) shall provide that such Lender shall retain the sole right
and responsibility to enforce the obligations of Borrower hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; (B) may provide that such Lender will not
agree to any modification, amendment or waiver of this Agreement requiring
approval of all Lenders pursuant to Paragraph 8.3 hereof without the consent of
the Participant and (C) shall not relieve such Lender from its obligations,
which shall remain absolute, to make Advances as provided hereunder; and (b)
assign (i) all or any percent of its share of the Loans or any Note or right,
title and interest therein or in and to this Agreement, to (x) a Lender; (y) any
Affiliate of a Lender; or (z) any Federal Reserve Bank; or (ii) all or any part
of its share of the Loans or any Note or right, title and interest therein or in
and to this Agreement to a third party; provided, however, that in the absence
of an Event of Default or Default hereunder no assignment pursuant to (b)(ii)
above shall be made without the prior written consent of the Agent and
Borrowers, which consent shall not be unreasonably withheld. Any participations
and any assignments pursuant to subparagraph (b) shall be in an amount not less
than Five Million dollars ($5,000,000) and, shall not result in the aggregate
Maximum Principal Amount of the assigning Lender being less than Five Million
Dollars ($5,000,000) unless it is reduced to zero (0). Any assignment pursuant
to subparagraph (b) shall require payment by the applicable Lender to Agent of a
$3,500 transfer fee. Any assignment pursuant to subparagraph (b) shall be in
the form attached hereto as Exhibit H.
9.3. Binding and Governing Law. This Agreement and all documents
-------------------------
executed hereunder shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns and, except as may be
required by mandatory provisions of applicable law, shall be governed as to
their validity, interpretation and effect by the laws of the Commonwealth of
Pennsylvania.
9.4. Survival. All agreements, representations, warranties and
--------
covenants of Borrower contained herein or in any documentation required
hereunder shall survive the execution of this Agreement and the making of the
Loan hereunder, and except for Paragraphs 5.11 and 9.1 which provide otherwise
will continue in full force and effect as long as any indebtedness or other
obligation of Borrower to Lenders remains outstanding.
9.5. No Waiver; Delay. If Lenders shall waive any power, right or
----------------
remedy arising hereunder or under any applicable law, such waiver shall not be
deemed to be a waiver upon the later occurrence or recurrence of any of said
events with respect to Lenders. No
58
delay by Lenders in the exercise of any power, right or remedy shall, under any
circumstances, constitute or be deemed to be a waiver, express or implied, of
the same and no course of dealing between the parties hereto shall constitute a
waiver of Lenders' powers, rights or remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
9.6. Modification; Waiver. Except as otherwise provided in this
--------------------
Agreement, no modification or amendment hereof, or waiver or consent hereunder,
shall be effective unless made in a writing signed by appropriate officers of
the parties hereto.
9.7. Headings. The various headings in this Agreement are inserted
--------
for convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
9.8. Notices. Any notice, request or consent required hereunder or in
-------
connection herewith shall be deemed satisfactorily given if in writing and
delivered by hand, mailed (registered or certified mail) or sent by facsimile
transmission to Agent or Borrower at their respective addresses or telecopier
number set forth below, or to Lenders at their respective addresses or
telecopier numbers set forth on Schedule 1 attached hereto, or to any party at
such other addresses or telecopier numbers as may be given by any party to the
others in writing:
if to Borrower:
Xxxxxxx American Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Telecopier: (000) 000-0000
if to Agent:
First Union National Bank
0000 Xxxxxxxx Xxxxxx
XX 4843
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
9.9. Payment on Non-Business Days. Whenever any payment to be made
----------------------------
hereunder shall be stated to be due on a day other than a Business Day, such
payment may be made on the next succeeding Business Day, provided however that
such extension of time shall
59
be included in the computation of interest due in conjunction with such payment
or other fees due hereunder, as the case may be.
9.10. Time of Day. All time of day restrictions imposed herein shall
-----------
be calculated using Agent's local time.
9.11. Severability. If any provision of this Agreement or the
------------
application thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other Persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
9.12. Counterparts. This Agreement may be executed in any number of
------------
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document, and each such counterpart shall be deemed to be an
original.
9.13. Confidentiality.
---------------
(a) All Confidential Information (as defined below) received by a
Lender hereunder shall be kept confidential by such Lender and shall be used
solely in connection with such Lender's role as a Lender hereunder (or, in the
case of Agent, as Agent hereunder). "Confidential Information" shall mean all
information delivered to a Lender by Companies hereunder, other than information
which (i) is generally available to the public other than as a result of
disclosure by such Lender, or (ii) is or becomes available to such Lender from a
Person or entity other than Companies or another Lender, unless such Lender
knows, or should have known, that such Person or entity is bound by a
confidentiality agreement or covenant with Companies prohibiting such Person or
entity from publicly disclosing such information.
(b) Notwithstanding the foregoing, nothing herein shall prevent
Lenders from making disclosure (i) to any of their Affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any potential transferee, participant or assignee, so
long as said recipient agrees to keep such Confidential Information or
disclosures confidential pursuant to the terms of this Agreement, (ii) as
requested by any examiner, governmental agency or representative thereof or
pursuant to legal process, (iii) as reasonably necessary in connection with the
exercise of any rights or remedies or otherwise in defense of its interests
under or in connection with any Loan Document or otherwise with respect to the
Senior Obligations, or (iv) as reasonably necessary in any suit, action or
proceeding for the purpose of defending itself or reducing its liability.
9.14 Consent to Jurisdiction and Service of Process. Each Company
----------------------------------------------
irrevocably appoints each officer of Borrower as its attorney upon whom may be
served any notice, process or pleading in any action or proceeding against it
arising out of or in connection with this Agreement, the Notes, the Loan
Documents or any of the Collateral; each
60
Company hereby consents that any action or proceeding against it be commenced
and maintained in any court within the Commonwealth of Pennsylvania or in the
United States District Court for the Eastern District of Pennsylvania by service
of process on any officer of Borrower; and each Company agrees that the courts
of the Commonwealth of Pennsylvania and the United States District Court for the
Eastern District of Pennsylvania shall have jurisdiction with respect to the
subject matter hereof and the person of each Company and the Collateral.
Notwithstanding the foregoing, Agent, in its absolute discretion may also
initiate proceedings in the courts of any other jurisdiction in which any
Company may be found or in which any of its properties or Collateral may be
located.
9.15. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
--------------------
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE NOTES OR OTHER LOAN DOCUMENTS OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF AGENT OR LENDERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDERS' ENTERING INTO THIS AGREEMENT.
9.16. ACKNOWLEDGMENTS. BORROWER ACKNOWLEDGES THAT IT HAS HAD THE
---------------
ASSISTANCE OF COUNSEL IN THE REVIEW AND EXECUTION OF THIS AGREEMENT AND,
SPECIFICALLY, PARAGRAPH 9.15 HEREOF, AND FURTHER ACKNOWLEDGES THAT THE MEANING
AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAVE BEEN FULLY EXPLAINED TO
BORROWER BY SUCH COUNSEL.
61
IN WITNESS WHEREOF, the undersigned, by their duly authorized
officers, as applicable, have executed this Agreement the day and year first
above written.
Attest: XXXXXXX AMERICAN CORPORATION
By: /s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxxxx X. Xxxxxxx
------------------------- ---------------------
Name: Xxxxxx X. Xxxxxx, Xx. Name: Xxxxxx X. Xxxxxxx
Title: Secretary Title: President
FIRST UNION NATIONAL BANK, for
itself and as Agent
By: /s/ Xxxx X. Xxxxx
-----------------
Name: Xxxx X. Xxxxx
Title: Vice President
62
Schedule 1
----------
Lenders, Pro Rata Shares and
Maximum Principal Amounts
Maximum Principal Amount
---------------------------------- Pro Rata
Lender Revolving Credit Loan Term Loan Share
------ --------------------- ----------- ---------
First Union National Bank $25,000,000 $50,000,000 100.000%
0000 Xxxxxxxx Xxxxxx
XX 0000
Xxxxxxxxxxxx, XX 00000
Attn: Agency Services
Tel: (000) 000-0000 or 5733
Fax: (000) 000-0000
----------- ----------- -------
TOTAL: $25,000,000 $50,000,000 100.000%
63
