EXHIBIT 10.19
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CREDIT AGREEMENT
among
STYLING TECHNOLOGY CORPORATION,
and
CREDIT AGRICOLE INDOSUEZ, NEW YORK BRANCH,
AS AGENT,
and
THE LENDING INSTITUTIONS LISTED HEREIN
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Dated as of June 25, 1997
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$28,000,000
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PAGE
TABLE OF CONTENTS
Page
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SECTION 1. Amount and Terms of Credit........................................1
1.01. Commitments.........................................................1
1.02. Minimum Amount of Each Borrowing; Maximum Number of Borrowings......2
1.03. Notice of Borrowings................................................3
1.04. Disbursement of Funds...............................................3
1.05. Notes...............................................................4
1.06. Pro Rata Borrowings.................................................6
1.07. Interest............................................................6
1.08. Capital Requirements................................................6
1.09. Total Loan Commitments; Limitations on Outstanding Loan Amounts.....7
1.10. Letters of Credit...................................................7
SECTION 2. Commitments......................................................16
2.01. Voluntary Reduction of Commitments.................................16
2.02. Mandatory Adjustments of Commitments, etc..........................17
2.03. Commitment Commission..............................................17
SECTION 3. Payments ........................................................18
3.01. Voluntary Prepayments..............................................18
3.02. Mandatory Prepayments..............................................18
3.03. Method and Place of Payment........................................21
3.04. Net Payments.......................................................22
SECTION 4. Conditions Precedent.............................................23
4.01. Conditions Precedent to Initial Loans..............................23
4.02. Conditions Precedent to All Loans..................................31
4.03. Conditions Precedent to All Letters of Credit......................33
SECTION 5. Representations, Warranties and Agreements.......................34
5.01. Status ............................................................34
5.02. Corporate Power and Authority; Business............................34
5.03. No Violation.......................................................35
5.04. Litigation.........................................................35
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5.05. Use of Proceeds.....................................................35
5.06. Governmental Approvals, etc.........................................36
5.07. Investment Company Act..............................................36
5.08. Public Utility Holding Company Act..................................36
5.09. True and Complete Disclosure........................................37
5.10. Transaction.........................................................37
5.11. Financial Condition; Financial Statements; Projections..............37
5.12. Security Interests..................................................40
5.13. Tax Returns and Payments............................................40
5.14. ERISA...............................................................41
5.15. Subsidiaries........................................................42
5.16. Patents, etc........................................................42
5.17. Compliance with Laws, etc...........................................43
5.18. Properties..........................................................43
5.19. Securities..........................................................43
5.20. Collective Bargaining Agreements....................................44
5.21. Indebtedness Outstanding; Prior Liens...............................44
5.22. Environmental Protection............................................44
5.23. Environmental Investigations........................................46
5.24. Certain Liens.......................................................46
SECTION 6. Affirmative Covenants............................................46
6.01. Information Covenants...............................................46
6.02. Books, Records and Inspections......................................51
6.03. Maintenance of Property; Insurance..................................52
6.04. Payment of Taxes....................................................52
6.05. Corporate Franchises................................................53
6.06. Compliance with Statutes, etc.......................................53
6.07. ERISA...............................................................53
6.08. Performance of Obligations..........................................54
6.09. End of Fiscal Years; Fiscal Quarters................................54
6.10. Use of Proceeds.....................................................54
6.11. Interest Rate Protection............................................54
6.12. Equal Security for Loans and Notes; No Further Negative Pledges.....54
6.13. Lender Meeting......................................................55
6.14. Pledge of Additional Collateral.....................................55
6.15. Security Interests..................................................56
6.16. Subsidiary Guarantees...............................................56
6.17. Environmental Events................................................56
6.18. Landlord Lien Assurance.............................................57
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SECTION 7. Negative Covenants...............................................57
7.01. Conduct of Business.................................................58
7.02. Amendments or Waivers of Certain Documents..........................58
7.03. Liens...............................................................58
7.04. Indebtedness........................................................60
7.05. Capital Expenditures................................................62
7.06. Advances, Investments and Loans.....................................62
7.07. Prepayments of Indebtedness, etc....................................63
7.08. Dividends, etc......................................................63
7.09. Transaction with Affiliates.........................................63
7.10. Total Interest Coverage Ratio.......................................64
7.11. Fixed Charge Coverage Ratio.........................................65
7.12. Leverage Ratio......................................................65
7.13. Minimum Consolidated EBITDA.........................................66
7.14. Issuance of Subsidiary Stock........................................67
7.15. Disposition of Assets...............................................67
7.16. Contingent Obligations..............................................69
7.17. ERISA...............................................................70
7.18. Merger and Consolidations...........................................71
7.19. Sale and Lease-Backs................................................71
7.20. Sale or Discount of Receivables.....................................71
7.21. Xxxx Payments.......................................................72
SECTION 8. Events of Default................................................72
8.01. Payments............................................................72
8.02. Representations, etc................................................72
8.03. Covenants...........................................................72
8.04. Default Under Other Agreements......................................72
8.05. Bankruptcy, etc.....................................................73
8.06. ERISA...............................................................73
8.07. Security Documents..................................................74
8.08. Guarantees..........................................................74
8.09. Judgments...........................................................74
8.10. Ownership...........................................................75
SECTION 9. Definitions......................................................76
SECTION 10. The Agent......................................................103
10.01. Appointment........................................................103
10.02. Delegation of Duties...............................................103
10.03. Exculpatory Provisions.............................................104
10.04. Reliance by the Agent..............................................104
10.05. Notice of Default..................................................105
10.06. Non-Reliance on Agent and Other Banks..............................105
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10.07. Indemnification....................................................106
10.08. The Agent in Its Individual Capacity...............................106
10.09. Successor Agent....................................................107
10.10. Resignation by Agent...............................................107
SECTION 11. Miscellaneous..................................................108
11.01. Payment of Expenses, etc...........................................108
11.02. Right of Setoff....................................................109
11.03. Notices............................................................109
11.04. Benefit of Agreement...............................................110
11.05. No Waiver; Remedies Cumulative.....................................112
11.06. Payments Pro Rata..................................................112
11.07. Calculations; Computations.........................................113
11.08. Governing Law; Submission to Jurisdiction; Venue...................113
11.09. Counterparts.......................................................114
11.10. Effectiveness......................................................114
11.11. Headings Descriptive...............................................114
11.12. Amendment or Waiver................................................115
11.13. Survival...........................................................115
11.14. Domicile of Loans..................................................115
11.15. Waiver of Jury Trial...............................................115
11.16. Independence of Covenants..........................................115
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Annex I - List of Banks
Annex II - Bank Addresses
Schedule 4.01(t)(i) - List of Mortgaged Real Property
Schedule 5.15 - Subsidiaries
Schedule 5.19 - Securities
Schedule 5.20 - Schedule of Collective Bargaining
Agreements
Schedule 5.21(a) - Schedule of Existing Debt
Schedule 5.21(b) - Prior Liens
Schedule 5.22 - Environmental
Schedule 5.24 - Certain Liens
Schedule 6.01(i) - Summary of Corporate Insurance Policies
Exhibit A-1 - Form of A Term Note
Exhibit A-2 - Form of B Term Note
Exhibit B - Form of Revolving Note
Exhibit C-1 - Form of Opinion of X'Xxxxxx, Cavanagh,
Anderson, Xxxxxxxxxxxxx & Xxxxxxxx
Exhibit C-2 - Form of Local Counsel Opinions
Exhibit D - Form of Mortgage
Exhibit E - Form of Subsidiary Guarantee
Exhibit F-1 - Form of Borrower Securities Pledge Agreement
Exhibit G-1 - Form of Borrower Intellectual Property
Security Agreement
Exhibit G-2 - Form of Subsidiary Intellectual Property
Security Agreement
Exhibit H-1 - Form of Borrower General Security Agreement
Exhibit H-2 - Form of Subsidiary General Security Agreement
Exhibit I-1 - Form of Notice of Assignment
Exhibit I-2 - Form of Assignment and Assumption Agreement
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Borrowing Base Certificate
Exhibit L - Form of Officers' Certificate Regarding
Environmental Review
Exhibit M - Form of Officers' Solvency Certificate
Exhibit N - Form of Landlord Lien Assurance
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CREDIT AGREEMENT, dated as of June 25, 1997, among STYLING
TECHNOLOGY CORPORATION, a Delaware corporation (the "Borrower"), the lending
institutions listed in Annex I (each a "Bank" and, collectively, the "Banks")
and CREDIT AGRICOLE INDOSUEZ ("Indosuez"), as agent for the Banks (in such
capacity "Agent") and as collateral agent for the Banks (in such capacity, the
"Collateral Agent"). Unless otherwise defined herein, all capitalized terms used
herein and defined in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, the Borrower has entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with Xxxxx Xxxxxxx, Xxxxxx Xxxxx,
Xxxxxx Xxxxxxxx Xxxx and Xxxxx Xxxxxxx (the "Sellers"), to effect the purchase
by the Borrower of the stock of ABBA (the "Transaction");
WHEREAS, the Borrower desires to incur Loans from the Banks,
the proceeds of which will be applied, to the extent necessary, to finance the
Transaction, to pay certain fees and expenses incurred in connection with the
Transaction, to repay certain Indebtedness, to provide working capital to the
Borrower and for general corporate purposes of the Borrower after the
Transaction;
WHEREAS, the Guarantors, in accordance with the terms and
conditions hereinafter set forth, have agreed to guarantee the obligations of
the Borrower hereunder; and
WHEREAS, the Banks are willing to make available the credit
facilities provided for herein.
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01. Commitments. Subject to and upon the terms and
conditions herein set forth, each Bank severally agrees in the case of any
Borrowing under the A Term Loan Facility or the B Term Loan Facility, in each
case, on the Closing Date, and in the case of any Borrowing under the Revolving
Portion, at any time and from time to time after the Closing Date and prior to
the Revolving Loan Commitment Termination Date, to make a Loan or Loans to the
Borrower, which Loans shall be drawn under the Loan Facility (including the
Revolving Portion and Term Portion thereof), as set forth below.
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(a) Loans under the Term Portion of the Loan Facility (each a
"Term Loan" and, collectively, the "Term Loans") may be made under the
A Term Loan Facility (each an "A Term Loan" and, collectively, the "A
Term Loans") and the B Term Loan Facility (each a "B Term Loan" and,
collectively, the "B Term Loans"). Once repaid, Term Loans may not be
reborrowed.
(i) Each A Term Loan under the A Term Loan Facility
(a) shall be made as a single drawing on the Closing Date in
an amount not to exceed the Total A Term Loan Commitment;
provided, that the full amount of the Total B Term Loan
Commitment has been used on the Closing Date, (b) shall be
made as a Base Rate Loan and, (c) shall not exceed for any
Bank at any time outstanding that aggregate principal amount
which equals the A Term Loan Commitment of such Bank.
(ii) Each B Term Loan under the B Term Loan Facility
(a) shall be made as a single drawing on the Closing Date in
an amount not to exceed the Total B Term Loan Commitment, (b)
shall be made as a Base Rate Loan and (c) shall not exceed for
any Bank at any time outstanding that aggregate principal
amount which equals the B Term Loan Commitment of such Bank.
(b) Loans under the Revolving Portion of the Loan Facility
(each a "Revolving Loan" and, collectively, the "Revolving Loans") (i)
shall be made at any time and from time to time after the Closing Date
and prior to the Revolving Loan Commitment Termination Date, (ii) shall
be made as a Base Rate Loan, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, (iv) shall not exceed for any
Bank at any time outstanding the Revolving Loan Commitment of such Bank
at such time and (v) shall not in any case be made if the aggregate
principal amount of Revolving Loans then outstanding, after giving
effect to the Revolving Loan requested by the relevant Notice of
Borrowing, plus the then outstanding Letters of Credit Usage, after
giving effect to the issuance of all Letters of Credit subject to
outstanding requests for issuance, would exceed the lesser of the
Borrowing Base as shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 6.01 or the Total
Revolving Loan Commitment then in effect.
1.02. Minimum Amount of Each Borrowing; Maximum Number of
Borrowings. The minimum aggregate principal amount of a Borrowing of Loans shall
be the Minimum Borrowing Amount and, if greater, shall be in integral multiples
of $100,000; provided, however, that the Borrowing of the A Term Loan portion
and the B Term Loan portion of the Initial Loans shall be in an aggregate
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principal amount of $13,000,000 and $10,000,000, respectively. The minimum
aggregate principal amount of a Borrowing of Revolving Loans shall be the
Minimum Borrowing Amount (other than a Borrowing of Base Rate Loans such that
the total amount of Revolving Loans to be outstanding after giving effect to
such Borrowing shall be equal to the Total Revolving Commitment) and, if
greater, shall be in integral multiples of $100,000. More than one Borrowing may
be incurred on any date.
1.03. Notice of Borrowings. Whenever the Borrower desires that
the Banks make the Initial Loans, an Authorized Officer of the Borrower shall
give the Agent at the Agent's Office prior to Noon (New York time) at least two
Business Days' prior written notice (or telephone notice promptly confirmed in
writing) of such Borrowing. Whenever the Borrower desires that the Banks make
Base Rate Loans under the Loan Facility after the Closing Date an Authorized
Officer of the Borrower shall give the Agent at the Agent's Office prior to Noon
(New York time) on the proposed date of such Borrowing prior written notice (or
telephonic notice promptly confirmed in writing) of each such Borrowing of Base
Rate Loans. Each such notice, which shall be substantially in the form of
Exhibit J hereto (each a "Notice of Borrowing"), shall be irrevocable, shall be
deemed a representation by the Borrower that all conditions precedent to such
Borrowing have been satisfied and shall specify (i) whether such Borrowing is to
be made from the A Term Loan Facility, the B Term Loan Facility or the Revolving
Loan Facility, (ii) the aggregate principal amount in Dollars of the Loans to be
made pursuant to such Borrowing, all of which shall be specified in such manner
as is necessary to comply with all limitations on Term Loans and Revolving Loans
outstanding hereunder, including without limitation, availability under the
Borrowing Base, and (iii) the date of Borrowing (which shall be a Business Day).
The Agent shall as promptly as practicable give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank's proportionate share thereof and of the other matters covered by the
Notice of Borrowing.
1.04. Disbursement of Funds. (a) No later than 3:00 P.M. (New
York time) on the date specified in each Notice of Borrowing, each Bank will
make available to the Agent in New York its pro rata portion of each Borrowing
requested to be made on such date in the manner provided below.
(b) Each Bank shall make available all amounts it is to fund
under any Borrowing on or after the Closing Date in immediately available funds
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to the Agent to the account specified therefor by the Agent or if no account is
so specified at the Agent's Office and the Agent will make such funds available
to the Borrower by depositing to the account specified therefor by the Borrower
or if no account is so specified to its account at the Agent's Office the
aggregate of the amounts so made available in the type of funds received. Unless
the Agent shall have been notified by any Bank prior to the date of any such
Borrowing that such Bank does not intend to make available to the Agent its
portion of the Borrowing or Borrowings to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of Borrowing, and the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Bank and the Agent has made such corresponding amount
available to the Borrower, the Agent shall be entitled to recover such amount
from such Bank. If such Bank does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the Agent.
The Agent shall also be entitled to recover from such Bank or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Agent to the
Borrower to the date such amount is recovered by the Agent, at a rate per annum
equal to (x) if paid by such Bank, the Federal Funds Rate or (y) if paid by the
Borrower (and/or one or more other Credit Parties), the then applicable rate of
interest, calculated in accordance with Section 1.07, for the respective Loans.
The Agent shall also be entitled to recover from any Bank an amount equal to any
other losses incurred by the Agent as a result of the failure of such Bank to
provide such amount as provided in this Agreement.
(c) Nothing herein shall be deemed to relieve any Bank from
its obligation to fulfill its Commitment hereunder or to prejudice any rights
which the Borrower or any other Credit Party may have against any Bank as a
result of any default by such Bank hereunder.
1.05. Notes. (a) The Borrower's obligation to pay the
principal of and interest on all the Loans made to it by each Bank shall be
evidenced: (i) if A Term Loans, by a promissory note (each, an "A Term Note"
and, collectively, the "A Term Notes") duly executed and delivered by the
Borrower, substantially in the form of Exhibit A-1 hereto, each with blanks
appropriately completed in conformity herewith; (ii) if B Term Loans, by a
promissory note (each, a "B Term Note" and, collectively, the "B Term Notes")
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duly executed and delivered by the Borrower, substantially in the form of
Exhibit A-2 hereto, each with blanks appropriately completed in conformity
herewith; and (iii) if Revolving Loans, by a promissory note (each, a "Revolving
Note" and, collectively, the "Revolving Notes") duly executed and delivered by
the Borrower substantially in the form of Exhibit B hereto, with blanks
appropriately completed in conformity herewith.
(b) The A Term Note of the Borrower issued to each Bank shall
(i) be executed by the Borrower, (ii) be payable to the order of such Bank and
be dated the Effective Date, (iii) be in a stated principal amount equal to the
A Term Loan Commitment of such Bank and be payable in the aggregate principal
amount of the A Term Loans evidenced thereby, (iv) mature, with respect to each
Loan evidenced thereby, on the Final A Term Loan Maturity Date, (v) be subject
to mandatory prepayment as provided in Section 3.02, (vi) bear interest as
provided in the appropriate clause of Section 1.07 in respect of the Base Rate
Loans evidenced thereby and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
(c) The B Term Note of the Borrower issued to each Bank shall
(i) be executed by the Borrower, (ii) be payable to the order of such Bank and
be dated the Effective Date, (iii) be in a stated principal amount equal to the
B Term Loan Commitment of such Bank and be payable in the aggregate principal
amount of the B Term Loans evidenced thereby, (iv) mature, with respect to each
Loan evidenced thereby, on the Final B Term Loan Maturity Date, (v) be subject
to mandatory prepayment as provided in Section 3.02, (vi) bear interest as
provided in the appropriate clause of Section 1.07 in respect of the Base Rate
Loans evidenced thereby and (vii) be entitled to the benefits of this Agreement
and the other applicable Credit Documents.
(d) The Revolving Note of the Borrower issued to each Bank
shall (i) be executed by the Borrower, (ii) be payable to the order of such Bank
and be dated the Effective Date, (iii) be in a stated principal amount equal to
the Revolving Loan Commitment of such Bank and be payable in the aggregate
principal amount of the Revolving Loans evidenced thereby, (iv) mature, with
respect to each Loan evidenced thereby, on the Revolving Loan Maturity Date, (v)
be subject to mandatory prepayment as provided in Section 3.02, (vi) bear
interest as provided in the appropriate clause of Section 1.07 in respect of the
Base Rate Loans evidenced thereby and (vii) be entitled to the benefits of this
Agreement and the other applicable Credit Documents.
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(e) Each Bank will note on its internal records the amount of
each Loan made by it and each payment in respect thereof and will, prior to any
transfer of any of its Notes, endorse on the reverse side thereof the
outstanding principal amount of Loans evidenced thereby. Failure to make any
such notation shall not affect the Borrower's or any Credit Party's obligations
hereunder or under the other applicable Credit Documents in respect of such
Loans.
1.06. Pro Rata Borrowings. All Borrowings under this Agreement
shall be loaned by the Banks pro rata on the basis of their A Term Loan
Commitments, B Term Loan Commitments or Revolving Loan Commitments, as the case
may be. No Bank shall be responsible for any default by any other Bank in its
obligation to make Loans hereunder and each Bank shall be obligated to make the
Loans provided to be made by it hereunder, regardless of the failure of any
other Bank to fulfill its commitments hereunder.
1.07. Interest. (a) The unpaid principal amount of each Base
Rate Loan shall bear interest from the date of the Borrowing thereof until
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the sum of (i) the Base Rate in effect from time to
time and (ii) the applicable Interest Margin.
(b) The unpaid principal amount of each Loan, upon the
occurrence and during the continuance of an Event of Default, overdue principal
and, to the extent permitted by law, overdue interest in respect of each Loan
shall bear interest at a rate per annum equal to 2% plus the rate (including any
applicable margin) in effect from time to time.
(c) Interest shall accrue from and including the date of any
Borrowing to but excluding the date of any repayment thereof and shall be
payable (i) quarterly in arrears on the last Business Day of each March, June,
September and December beginning September 30, 1997; and (ii) in respect of each
Loan, on any prepayment (on the amount prepaid), at maturity (whether by
acceleration or otherwise) and, after such maturity, on demand. Notwithstanding
the foregoing, interest payable at the rate provided in Section 1.07(b) shall be
payable on demand.
(d) All computations of interest hereunder shall be made in
accordance with Section 11.07(b).
1.08. Capital Requirements. If any Bank shall have determined
that the adoption or effectiveness after the Effective Date of any applicable
law, rule or regulation regarding capital adequacy, or any change therein, or
7
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Bank or such Bank's parent 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
(including in each case any such change proposed or published prior to the date
hereof but taking effect thereafter), has or would have the effect of reducing
the rate of return on such Bank's or such Bank's parent's capital or assets as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank or such Bank's parent could have achieved but for such adoption,
effectiveness or change or as a consequence of an increase in the amount of
capital required to be maintained by such Bank (including in each case, without
limitation, with respect to any Bank's Commitment or any Loan), then from time
to time, within 15 days after demand by such Bank (with a copy to the Agent),
the Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank or such Bank's parent, as the case may be, for such
reduction. Each Bank, upon determining in good faith that any additional amounts
will be payable pursuant to this Section 1.08, will give written notice thereof
to the Borrower, which notice shall set forth in reasonable detail the basis of
the calculation of such additional amounts.
1.09. Total Loan Commitments; Limitations on Outstanding Loan
Amounts. The original amount of the (i) Total Commitments is $28,000,000, (ii)
Total A Term Loan Commitment is $13,000,000, (iii) Total B Term Loan Commitment
is $10,000,000 and (iv) Total Revolving Loan Commitment is $5,000,000, including
up to $2,500,000 of Letters of Credit. Anything contained in this Agreement to
the contrary notwithstanding, (a) in no event shall the sum of the aggregate
principal amount of all Term Loans and Revolving Loans of any Bank at any time
exceed such Bank's portion of the Total Commitments, (b) in no event shall the
sum of the aggregate principal amount of all Term Loans and Revolving Loans from
all Banks at any time exceed the Total Commitments and (c) in no event shall the
Total Utilization of Revolving Loan Commitments and Letters of Credit Usage
exceed the lesser of the Total Revolving Loan Commitments or the Borrowing Base.
1.10. Letters of Credit.
(a) Letters of Credit. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of the
Borrower set forth herein and in the other Credit Documents, in addition to
requesting that the Banks make Revolving Loans pursuant to Section 1.03, the
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Borrower may request, in accordance with the provisions of this Section 1.10,
that one or more Issuing Banks issue Letters of Credit for the account of the
Borrower; provided that (i) the Borrower shall not request that any Bank issue
any Letter of Credit and a Bank shall not issue any Letter of Credit, if after
giving effect to such issuance the sum of (A) the Letters of Credit Usage on the
date of such issuance, after giving effect to the issuance of all Letters of
Credit subject to outstanding requests for issuance of a Letter of Credit, plus
(B) the aggregate principal amount of Revolving Loans then outstanding, after
giving effect to the making of all Revolving Loans then requested by all
outstanding but unfunded Notices of Borrowing, would exceed the lesser of the
Borrowing Base as would be shown in the Borrowing Base Certificate that was last
required to be delivered pursuant to Section 6.01 or the Total Revolving Loan
Commitment then in effect, (ii) in no event shall any Issuing Bank issue (A) any
Letter of Credit having an expiration date later than thirty (30) Business Days
prior to the Revolving Loan Maturity Date, after giving effect to any possible
renewal of such Letter of Credit pursuant to the proviso to the following clause
(ii)(B), (B) subject to the foregoing clause (ii)(A), any Letter of Credit
having an expiration date more than one year after its date of issuance;
provided that, subject to the foregoing clause (ii)(A), this clause (B) shall
not prevent any Issuing Bank from issuing a Letter of Credit containing a
provision to the effect that such Letter of Credit will automatically be renewed
annually for a period not to exceed one year, so long as such renewable Letter
of Credit provides that it shall not at any time be renewed for an additional
year if (I) the Borrower notifies the Issuing Bank in writing one Business Day
prior to the applicable renewal date that the Borrower elects to allow the
Letter of Credit to expire without being renewed, or (II) the Issuing Bank or
the Required Banks notify the Borrower in writing, prior to the date set forth
in such Letter of Credit as the date by which the beneficiary thereof is to be
notified whether such Letter of Credit is to be renewed, that such Letter of
Credit shall not be so renewed, in which case such Letter of Credit shall not be
so renewed, (C) any Letter of Credit the initial stated amount of which is less
than $5,000, or (D) any Letter of Credit (I) which is governed by laws other
than the laws of the State of New York, without regard to the principles of
conflicts of laws, or (II) as to which the beneficiary is not required, by
acceptance of the Letter of Credit, to be subject to the exclusive jurisdiction
of any competent state or federal court in the State of New York with regard to
such Letter of Credit and (iii) the Borrower shall not request that any Issuing
Bank issue and no Issuing Bank shall issue any Letter of Credit if, after giving
effect to such issuance and the issuance of all other requested Letters of
9
Credit, the then outstanding Letters of Credit Usage in respect of all Letters
of Credit would exceed $2,500,000. The issuance of any Letter of Credit in
accordance with the provisions of this Section 1.10 shall be given effect in the
calculation of the aggregate principal amount of Revolving Loans outstanding and
the Letters of Credit Usage and shall require the satisfaction of each condition
set forth in Sections 4.01, 4.02 and 4.03.
Immediately upon the issuance of each Letter of Credit in
compliance with this Agreement, each Bank other than the Issuing Bank or Banks
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Bank a participation (such participation of each Bank in each Letter of
Credit being hereinafter referred to as its "Letter of Credit Participation") in
such Letter of Credit and each drawing thereunder in an amount equal to such
Bank's pro rata share (determined on the basis of such Bank's Revolving Loan
Commitment) of the maximum amount which is or at any time may become available
to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Bank may
(but shall not be required to) pay the beneficiary thereof upon the occurrence
of an Event of Default and the acceleration of the maturity of the Revolving
Loans or, if payment is not then due to the beneficiary, provide for the deposit
of funds in an account to secure payment to the beneficiary and that any funds
so deposited shall be paid to the beneficiary of the Letter of Credit if
conditions to such payment are satisfied or returned to the Issuing Bank for
distribution to the Banks (or, if all Obligations shall have been paid in full,
to the Borrower) if no payment to the beneficiary has been made and the final
date available for drawings under the Letter of Credit has passed. Each payment
or deposit of funds by an Issuing Bank as provided in this paragraph shall be
treated for all purposes of this Agreement as a drawing duly honored by such
Issuing Bank under the related Letter of Credit.
(b) Request for Issuance. Whenever the Borrower desires the
issuance of a Letter of Credit, it shall deliver to the Agent a request for
issuance of a Letter of Credit no later than Noon (New York time) at least three
Business Days, or such shorter period as may be agreed to by any Issuing Bank in
any particular instance, in advance of the proposed date of issuance. The
request for issuance with respect to any Letter of Credit shall specify (i) the
proposed date of issuance (which shall be a business day under the laws of the
jurisdiction of the Issuing Bank) of such Letter of Credit, (ii) the face amount
of such Letter of Credit, (iii) the expiration date of such Letter of Credit and
(iv) the name and address of the beneficiary of such Letter of Credit. As soon
10
as practicable after delivery of such request for issuance of a Letter of
Credit, the Issuing Bank for such Letter of Credit shall be determined as
provided in Section 1.10(c). Prior to the date of issuance, the Borrower shall
specify a precise description of the documents and the verbatim text of any
certificate to be presented by the beneficiary of such Letter of Credit which,
if presented by such beneficiary prior to the expiration date of the Letter of
Credit, would require the Issuing Bank to make payment under the Letter of
Credit; provided that the Issuing Bank, in its sole judgment, may require
changes in any such documents and certificates; and provided, further, that no
Letter of Credit shall require payment against a conforming draft to be made
thereunder earlier than Noon in the time zone of the Issuing Bank on the
Business Day (which shall be a business day under the laws of the jurisdiction
of the Issuing Bank) next succeeding the Business Day (which shall be a Business
Day under the laws of the jurisdiction of the Issuing Bank) that such draft is
presented. In determining whether to pay under any Letter of Credit, the Issuing
Bank shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of Credit.
Promptly after receipt of a request for issuance of a Letter of Credit and the
determination of the Issuing Bank thereof, the Agent shall notify each Bank of
the proposed issuance, the identity of the Issuing Bank and the amount of each
other Bank's respective participation therein, determined in accordance with
Section 1.10(a).
(c) Determination of Issuing Bank.
(1) Upon receipt by the Agent of a request for issuance
pursuant to Section 1.10(b) with respect to a Letter of Credit, in the event the
Agent elects to issue such Letter of Credit, the Agent shall so notify the
Borrower, and the Agent shall be the Issuing Bank with respect thereto. In the
event that the Agent, in its sole discretion, elects not to issue such Letter of
Credit, the Agent shall promptly so notify the Borrower, and the Borrower may
request any other Bank to issue such Letter of Credit. Each such Bank so
requested to issue such Letter of Credit shall promptly notify the Borrower and
the Agent whether or not, in its sole discretion, it has elected to issue such
Letter of Credit, and any such Bank that so elects to issue such Letter of
Credit shall be the Issuing Bank with respect thereto. In the event that each
other Bank elects not to issue such Letter of Credit, the Agent agrees to issue
such Letter of Credit and to be the Issuing Bank with respect thereto. No
Issuing Bank shall issue any Letter of Credit denominated in a currency other
than Dollars.
11
(2) Each Issuing Bank that elects to issue a Letter of Credit
shall promptly give written notice to the Agent and each other Bank of the
information required under Section 1.10(b)(i)-(iv) relating to the Letter of
Credit.
(d) Payment of Amounts Drawn Under Letters of Credit. In the
event of any request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Bank shall notify the Borrower and the Agent on or before
the date on which such Issuing Bank intends to honor such drawing, and the
Borrower shall reimburse such Issuing Bank on the day on which such drawing is
honored in an amount in same day funds equal to the amount of such drawing;
provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless the Borrower shall have notified the Agent and such
Issuing Bank prior to Noon (New York time) on the Business Day of the date of
such drawing that the Borrower intends to reimburse such Issuing Bank for the
amount of such drawing with funds other than the proceeds of Revolving Loans,
the Borrower shall be deemed to have timely given a Notice of Borrowing to the
Agent requesting the Banks to make Revolving Loans on the date on which such
drawing is honored in an amount equal to the amount of such drawing, and (ii)
subject to satisfaction or waiver of the conditions specified in Section 4.02,
the Banks shall, on the date of such drawing, make Revolving Loans that are Base
Rate Loans in the amount of such drawing, the proceeds of which shall be applied
directly by the Agent to reimburse such Issuing Bank for the amount of such
drawing; and further provided that if, for any reason, proceeds of Revolving
Loans are not received by such Issuing Bank on such date in an amount equal to
the amount of such drawing, the Borrower shall reimburse such Issuing Bank, on
the Business Day (which shall be a business day under the laws of the
jurisdiction of such Issuing Bank) immediately following the date of such
drawing, in an amount in same day funds equal to the excess of the amount of
such drawing over the amount of such Revolving Loans, if any, that are so
received, plus accrued interest on such amount at the rate set forth in Section
1.10(f)(1)(i).
(e) Payment by Banks. In the event that the Borrower shall
fail to reimburse an Issuing Bank as provided in Section 1.10(d) in an amount
equal to the amount of any drawing honored by such Issuing Bank under a Letter
of Credit issued by it, such Issuing Bank shall promptly notify each Bank of the
unreimbursed amount of such drawing and of such Bank's respective participation
therein. Each Bank shall make available to such Issuing Bank an amount equal to
its respective participation in same day funds, at the office of such Issuing
Bank specified in such notice, not later than 1:00 P.M. (New York time) on the
Business Day (which shall be a business day under the laws of the jurisdiction
12
of such Issuing Bank) after the date notified by such Issuing Bank. In the event
that any Bank fails to make available to such Issuing Bank the amount of such
Bank's participation in such Letter of Credit as provided in this Section
1.10(e), such Issuing Bank shall be entitled to recover such amount on demand
from such Bank together with interest at the customary rate set by the Agent for
the correction of errors among banks for three Business Days and thereafter at
the Federal Funds Rate. Each Issuing Bank shall distribute to each other Bank
which has paid all amounts payable by it under this Section 1.10(e) with respect
to any Letter of Credit issued by such Issuing Bank such other Bank's pro rata
share of all payments received by such Issuing Bank from the Borrower in
reimbursement of drawings honored by such Issuing Bank under such Letter of
Credit when such payments are received. Nothing in this Section 1.10(e) shall be
deemed to relieve any Bank from its obligation to pay all amounts payable by it
under this Section 1.10(e) with respect to any Letter of Credit issued by an
Issuing Bank or to prejudice any rights that the Borrower or any other Bank may
have against a Bank as a result of any default by such Bank hereunder.
(f) Compensation.
(1) The Borrower agrees to pay the following amounts with
respect to all Letters of Credit:
(i) with respect to drawings made under any Letter of
Credit, interest, payable on demand, on the amount paid by such Issuing
Bank in respect of each such drawing from and including the date of the
drawing through the date such amount is reimbursed by the Borrower
(including any such reimbursement out of the proceeds of Revolving
Loans pursuant to Section 1.10(d)) at a rate which is equal to the
interest rate then applicable to Base Rate Loans for the period from
the date of such drawing to and including the first Business Day after
the date of such drawing and thereafter at a rate equal to 2% per annum
in excess of the rate of interest otherwise payable under this
Agreement for Base Rate Loans during such period; provided that amounts
reimbursed after 1:00 p.m. (New York time) on any date shall be deemed
to be reimbursed on the next succeeding Business Day; and
(ii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each drawing made thereunder, documentary and
processing charges in accordance with such Issuing Bank's standard
schedule for such charges in effect at the time of such amendment,
transfer or drawing, as the case may be.
13
(2) The Borrower agrees to pay to the Agent for distribution
to each Bank in respect of each Letter of Credit outstanding such Bank's pro
rata share of a commission equal to 2.00% per annum of the maximum amount
available from time to time to be drawn under such outstanding Letters of
Credit, payable in arrears on and through the last day of each fiscal quarter of
the Borrower and calculated on the basis of a 365-day year and the actual number
of days elapsed. Upon the happening and during the continuance of an Event of
Default described in Section 8.01, the commission referred to in the preceding
sentence shall be 4.00% per annum.
(3) The Borrower agrees to pay to each Issuing Bank in
respect of each Letter of Credit on the date of issuance a commission equal to
(i) with respect to any Standby Letter of Credit, 0.25% per annum of the maximum
amount available at any time to be drawn under such Letter of Credit issued by
such Issuing Bank, payable in arrears on and through the last day of each fiscal
quarter of the Borrower and calculated on the basis of a 365-day year and the
actual number of days elapsed and (ii) with respect to any Commercial Letter of
Credit, on the issuance date thereof, the greater of (A) 0.25% per annum of the
minimum amount available to be drawn under such Letter of Credit or (B) $250.
Amounts payable under clauses (1)(i) and (2) of this Section
1.10(f) shall be paid to the Agent on behalf of the Banks. The Agent shall
distribute promptly to each Bank its pro rata share of such amount. Amounts
payable under clauses (1)(ii) and (3) of this Section 1.10(f) shall be paid
directly to the Issuing Bank.
(g) Obligations Absolute. The obligation of the Borrower to
reimburse each Issuing Bank for drawings made under the Letters of Credit issued
by it and the obligations of the Banks under Section 1.10(e) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including, without limitation,
the following circumstances:
(1) any lack of validity or enforceability of any Letter of
Credit;
(2) the existence of any claim, setoff, defense or other
right that the Borrower or any Affiliate of the Borrower or any other
Person may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any persons or entities for whom any such
14
beneficiary or transferee may be acting), such Issuing Bank, any Bank
or any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction;
(3) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(4) payment by such Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other
document that does not comply with the terms of such Letter of Credit;
(5) any other circumstance or happening whatsoever that is
similar to any of the foregoing; or
(6) the fact that a Default or Event of Default shall have
occurred and be continuing.
(h) Additional Payments. If by reason of (a)any change after
the Effective Date in applicable law, regulation, rule, decree or regulatory
requirement or any change in the interpretation or application by any judicial
or regulatory authority of any law, regulation, rule, decree or regulatory
requirement or (b) compliance by any Issuing Bank or any Bank with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority including, without limitation, Regulation
D:
(i) such Issuing Bank or any Bank shall be subject to any
tax, levy, charge or withholding of any nature or to any variation
thereof or to any penalty with respect to the maintenance or
fulfillment of its obligations under this Section 1.10, whether
directly or by such being imposed on or suffered by such Issuing Bank
or any Bank;
(ii) any reserve, deposit or similar requirement is or shall
be applicable, imposed or modified in respect of any Letter of Credit
issued by such Issuing Bank or participations therein purchased by any
Bank; or
15
(iii) there shall be imposed on such Issuing Bank or any Bank
any other condition regarding this Section 1.10, any Letter of Credit
or any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Issuing Bank or any Bank of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
the amount receivable in respect thereof by such Issuing Bank or any Bank, then
and in any such case such Issuing Bank or such Bank shall, as promptly as
practical after the additional cost is incurred or the amount received is
reduced, notify the Borrower and the Borrower shall pay on demand such amounts
as such Issuing Bank or such Bank may specify to be necessary to compensate such
Issuing Bank or such Bank for such additional cost or reduced receipt, together
with interest on such amount from the date demanded until payment in full
thereof at a rate per annum equal at all times to the rate applicable to Base
Rate Loans then in effect; provided, however, that the failure of any Bank to
timely give such notice shall not affect the obligations of the Borrower to pay
such amounts. A certificate in reasonable detail as to the amount of such
increased cost or reduced receipt, submitted to the Borrower and the Agent by
that Issuing Bank or any Bank, as the case may be, shall, absent manifest error,
be final, conclusive and binding for all purposes.
(i) Indemnification; Nature of Issuing Bank's Duties. In
addition to amounts payable as elsewhere provided in this Section 1.10, without
duplication, the Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Bank (and if the other Banks have been requested to participate pursuant
to Section 1.10(e), the Banks) harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel) which such
Bank may incur or be subject to as a consequence, direct or indirect, of (i) the
issuance of the Letters of Credit or (ii) the failure of such Issuing Bank to
honor a drawing under any Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or Governmental Authority (all such acts or omissions herein called
"Government Acts").
As between the Borrower and each Issuing Bank, the Borrower
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by such Issuing Bank at the Borrower's request by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Bank shall not be responsible: (i) for the form,
16
validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of
such Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, that may prove to
be invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they are in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of such Issuing Bank, including, without
limitation, any Government Acts. None of the above shall affect, impair, or
prevent the vesting of any of such Issuing Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by any
Issuing Bank in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Bank under any resulting liability to the Borrower.
Notwithstanding anything to the contrary contained in this
Section 1.10, the Borrower shall have no obligation to indemnify any Issuing
Bank in respect of any liability incurred by such Issuing Bank arising solely
out of and to the extent of the gross negligence or willful misconduct of such
Issuing Bank or out of the wrongful dishonor by such Issuing Bank of a proper
demand for payment under the Letters of Credit issued by it.
SECTION 2. Commitments.
2.01. Voluntary Reduction of Commitments. Upon at least one
Business Day's prior written notice (or telephonic notice promptly confirmed in
writing) to the Agent at the Agent's Office (which notice the Agent shall
promptly transmit to each of the Banks), the Borrower shall have the right,
without premium or penalty, to terminate the unutilized portion of the Total
17
Revolving Loan Commitment, in part or in whole, available to the Borrower;
provided that (x) any such termination shall permanently reduce the Revolving
Loan Commitment, respectively, of each of the Banks on a pro rata basis and (y)
any partial reduction pursuant to this Section 2.01 shall be in the amount of at
least $100,000 and integral multiples of $100,000 in excess of that amount;
provided, further, that the Total Revolving Loan Commitment shall not be reduced
to an amount less than the aggregate Total Utilization of Revolving Loan
Commitments and Letters of Credit Usage then outstanding.
2.02. Mandatory Adjustments of Commitments, etc. (a) The
Total Revolving Loan Commitment shall terminate on the Revolving Loan Commitment
Termination Date.
(b) The Total A Term Loan Commitment shall be reduced (i) on
the Closing Date to the amount of A Term Loans then outstanding and (ii) on the
date on which any payments of principal on the A Term Loans are made (other than
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(c) The Total B Term Loan Commitment shall be reduced (i) on
the Closing Date to the amount of B Term Loans then outstanding and (ii) on the
date on which any payments of principal on the B Term Loans are made (other than
pursuant to Section 3.02(A)(a)) in an aggregate amount equal to such payments.
(d) The Total Revolving Loan Commitment shall be permanently
reduced in the amount and at the time of any payment on the Loans required to be
applied to the Revolving Loans or Revolving Loan Commitments or to cash
collateralize Letters of Credit pursuant to Section 3.02(B)(a).
(e) Each reduction or termination of the A Term Loan
Commitment, the B Term Loan Commitment or the Total Revolving Loan Commitment
pursuant to this Section 2.02 shall apply proportionately to the A Term Loan
Commitment, the B Term Loan Commitment or the Revolving Loan Commitment, as the
case may be, of each Bank.
2.03. Commitment Commission. The Borrower agrees to pay the
Agent a commitment commission ("Commitment Commission") for the account of each
Bank for the period from and including the Closing Date to but not including the
date the Total Commitments have been terminated, computed at a rate equal to
1/2% per annum on the daily average Unutilized Commitment of such Bank. Accrued
Commitment Commission shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing with
September 30, 1997 and on the Revolving Loan Commitment Termination Date, based
on the actual number of days elapsed over a year of 360 days.
18
SECTION 3. Payments.
3.01. Voluntary Prepayments. The Borrower shall have the right
to prepay Term Loans and Revolving Loans incurred by it in whole or in part from
time to time on the following terms and conditions: (i) the Borrower shall give
the Agent at the Agent's Office written notice (or telephonic notice promptly
confirmed in writing) of its intent to prepay the Loans and the amount of such
prepayment, which notice shall be given by the Borrower at least one Business
Day prior to the date of such prepayment and which notice shall promptly be
transmitted by the Agent to each of the Banks; (ii) each partial prepayment of
any Borrowing shall be in an aggregate principal amount of at least $100,000 and
integral multiples of $100,000 in excess of that amount; and (iii) each
prepayment in respect of any Term Loans made pursuant to a Borrowing shall be
applied pro rata to the A Term Loans and B Term Loans. Voluntary prepayments of
Loans under the A Term Portion of the Loan Facility shall be applied to the
prepayment of the outstanding principal amount of A Term Loans pro rata to all
remaining Scheduled A Term Loans Principal Payments such that each Scheduled A
Term Loans Principal Payment then remaining shall be reduced by an amount equal
to the product of (A) such payment and (B) a fraction of which the numerator is
equal to the amount of such Scheduled A Term Loans Principal Payment then
remaining and the denominator is equal to the amount of all Scheduled A Term
Loans Principal Payments remaining. Voluntary prepayments of Loans under the B
Term Portion of the Loan Facility shall be applied to the prepayment of the
outstanding principal amount of B Term Loans pro rata to all remaining Scheduled
B Term Loans Principal Payments such that each Scheduled B Term Loans Principal
Payment then remaining shall be reduced by an amount equal to the product of (A)
such payment and (B) a fraction of which the numerator is equal to the amount of
such Scheduled B Term Loans Principal Payment then remaining and the denominator
is equal to the amount of all Scheduled B Term Loans Principal Payments
remaining.
3.02. Mandatory Prepayments.
(A) Requirements:
(a) The Borrower shall prepay the outstanding principal amount
of the A Term Loans, the B Term Loans or the Revolving Loans on any
date on which the aggregate outstanding principal amount of such Loans
(after giving effect to any other repayments or prepayments on such day
19
and together with the outstanding principal amount of Letters of Credit
Usage) exceeds the Total A Term Loan Commitment, the Total B Term Loan
Commitment or the Total Revolving Loan Commitment, as the case may be,
in the amount of such excess.
(b) If the aggregate principal amount of outstanding Revolving
Loans and Letters of Credit Usage exceeds the Borrowing Base as set
forth in the most recent Borrowing Base Certificate required to be
delivered pursuant to Section 6.01 of this Agreement, then the Borrower
shall prepay Revolving Loans in a principal amount equal to such excess
no later than two (2) Business Days after the Borrower has delivered,
or was required to deliver, such Borrowing Base Certificate to the
Agent and the Banks.
(c) The Borrower shall cause to be paid Scheduled A Term Loans
Principal Payments on the A Term Loans until the A Term Loans are paid
in full in the amounts and at the times specified in the definition of
Scheduled A Term Loans Principal Payments to the extent that
prepayments have not previously been applied to such Scheduled A Term
Loans Principal Payments (and such Scheduled A Term Loans Principal
Payments have not otherwise been reduced) pursuant to the terms hereof.
(d) The Borrower shall cause to be paid each Scheduled B Term
Loans Principal Payment on the B Term Loans until all B Term Loans are
paid in full in the amounts and at the times specified in the
definition of Scheduled B Term Loans Principal Payments to the extent
that prepayments have not previously been applied to such Schedule B
Terms Loans Principal Payments (and such Scheduled B Term Loans
Principal Payments have not otherwise been reduced) pursuant to the
terms hereof.
(e) After the Closing Date, on the date of receipt thereof by
the Borrower and/or any of its Subsidiaries of Net Cash Proceeds or Net
Financing Proceeds (other than Indebtedness permitted by Section 7.04),
an amount equal to 100% of such Net Cash Proceeds (provided, however,
that this Section 3.02A(e) shall not apply if such Net Cash Proceeds
aggregate less than $100,000) or Net Financing Proceeds shall be
applied as provided in Section 3.02(B).
20
(f) On the date which is 90 days after the last day of each
fiscal year of the Borrower, commencing with December 31, 1997, an
amount equal to 75% of the Borrower's Excess Cash Flow for such fiscal
year shall be applied as provided in Section 3.02(B).
(g) On the date of the receipt thereof by the Borrower and/or
any of its Subsidiaries, an amount equal to 100% of the proceeds
received by such Person (net of underwriting discounts and commissions
and other reasonably incurred costs and expenses directly associated
therewith) of the sale after the Closing Date of equity (other than
upon the exercise of stock options by employees or directors of the
Borrower) shall be applied as provided in Section 3.02(B).
(h) At the Agent's discretion, one Business Day after the date
of receipt thereof by the Borrower and/or any of its Subsidiaries, an
amount equal to 100% of any insurance proceeds (less reasonably
incurred costs to recover) received less any portion of such proceeds
not in excess of $100,000, so long as there exists no Event of Default,
that is promptly applied to repair or replace the damaged property
shall be applied as provided in Section 3.02(B).
(i) If any of the Mortgaged Real Property is the subject of a
Taking or Destruction and either the Borrower or its applicable
Subsidiary has elected not to effect a Restoration or neither the
Collateral Agent nor the Borrower or its applicable Subsidiary, as the
case may be, has elected to effect a Restoration, in each case, in
accordance with the provisions of the applicable Mortgage, then on the
first Business Day following the last day the Borrower or its
applicable Subsidiary can elect to effect a Restoration (in the event
that the Borrower or its applicable Subsidiary has the right to make
such an election) or, in the event that the Borrower or its applicable
Subsidiary does not have the right to make an election to effect a
Restoration, the day the Collateral Agent has notified the Borrower or
its applicable Subsidiary that a Restoration will not be required in
the case of any of the Mortgaged Real Property being the subject of a
Taking or Destruction, an amount equal to the applicable Net Award or
Net Proceeds, as the case may be, as a result of such Taking or
Destruction, shall be applied as provided in Section 3.02(B).
(j) One Business Day after the receipt thereof by the Borrower
and/or any of its Subsidiaries, an amount equal to 100% of (i) any
surplus assets of any Pension Plan returned to the Borrower or such
Subsidiary or (ii) any tax refund made to the Borrower or such
Subsidiary (provided, however, that this clause 3.02(A)(j)(ii) shall
only apply for tax refunds in excess of $100,000) shall be applied as
provided in Section 3.02(B).
21
(B) Application:
Prepayments to be applied pursuant to this Section
3.02(B) shall be applied as follows: (i) first, on a pro rata basis
between the A Term Loans and the B Term Loans in each case, in inverse
order of maturity with respect to the remaining Scheduled A Term Loans
Principal Payments and the remaining Scheduled B Term Loans Principal
Payments; (ii) second, to prepay Revolving Loans and to permanently
reduce the Revolving Loan Commitment in the amount prepaid; and (iii)
third, to cash collateralize Letters of Credit in a manner reasonably
satisfactory to the Agent and thereafter, the Revolving Loan Commitment
will be permanently reduced in an amount equal to the amount otherwise
required to be prepaid. Amounts applied pursuant to this Section
3.02(B) may not be reborrowed.
3.03. Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments under this Agreement shall be made to
the Agent, for the ratable account of the Banks entitled thereto, not later than
1:00 P.M. (New York time) on the date when due and shall be made in immediately
available funds in lawful money of the United States of America to the account
specified therefor by the Agent or if no account has been so specified at the
Agent's Office, it being understood that written notice by the Borrower to the
Agent to make a payment from the funds in the Borrower's account at the Agent's
Office shall constitute the making of such payment to the extent of such funds
held in such account. The Agent will thereafter cause to be distributed on the
same day (if payment is actually received by the Agent in New York prior to 1:00
P.M. (New York time) on such day) funds relating to the payment of principal or
interest or fees ratably to the Banks entitled to receive any such payment in
accordance with the terms of this Agreement. If and to the extent that any such
distribution shall not be so made by the Agent in full on the same day (if
payment is actually received by the Agent prior to 1:00 P.M. (New York time) on
such day), the Agent shall pay to each Bank its ratable amount thereof and each
such Bank shall be entitled to receive from the Agent, upon demand, interest on
such amount at the Federal Funds Rate for each day from the date such amount is
paid to the Agent until the date the Agent pays such amount to such Bank.
(b) Any payments under this Agreement which are made by the
Borrower later than 1:00 P.M. (New York time) shall be deemed to have been made
22
on the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.
3.04. Net Payments. All payments by the Borrower under this
Agreement and/or under any Credit Document shall be made without setoff or
counterclaim and in such amounts as may be necessary in order that all such
payments (after deduction or withholding for or on account of any present or
future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any Governmental Authority, other than any tax on or measured by the
net income of a Bank pursuant to the income tax laws of the jurisdictions where
such Bank's principal or lending office is located (collectively, "Taxes"))
shall not be less than the amounts otherwise specified to be paid under this
Agreement and/or under any Credit Document. If the Borrower is required by law
to make any deduction or withholding on account of Taxes from any payment due
hereunder or under the Notes, then (a) the Borrower shall timely remit such
Taxes to the Governmental Authority imposing the same and (b) the amount payable
hereunder or under the Notes will be increased to such amount which, after
deduction from such increased amount of all amounts required to be deducted or
withheld therefrom, will not be less than the amount otherwise due and payable.
Without prejudice to the foregoing, if any Bank or the Agent is required to make
any payment on account of Taxes, the Borrower will, upon notification by the
Bank or the Agent promptly indemnify such person against such Taxes, together
with any interest, penalties and expenses payable or incurred in connection
therewith. The Borrower shall also reimburse each Bank, upon the written request
of such Bank, for taxes imposed on or measured by the net income of such Bank
pursuant to the laws of the jurisdiction in which the principal office or
lending office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction as such Bank shall
determine are payable by such Bank in respect of Taxes paid to or on behalf of
such Bank pursuant to this Section 3.04. For purposes of this Section, the term
"Taxes" includes interest, penalties and expenses payable or incurred in
connection therewith. A certificate as to any additional amounts payable to a
Bank under this Section 3.04 submitted to the Borrower by such Bank shall,
absent manifest error, be final, conclusive and binding for all purposes upon
all parties hereto. With respect to each deduction or withholding for or on
account of any Taxes, the Borrower shall promptly furnish to each Bank such
certificates, receipts and other documents as may be required (in the judgment
of such Bank) to establish any tax credit to which such Bank may be entitled.
23
SECTION 4. Conditions Precedent.
4.01. Conditions Precedent to Initial Loans. The obligations
of the Banks to make the Initial Loans to the Borrower hereunder are subject, at
the time of the making of each such Initial Loan (except as otherwise
hereinafter indicated), to the substantially contemporaneous satisfaction of the
following conditions:
(a) Officers' Certificate. On the Closing Date, the Agent
shall have received certificates dated such date signed by appropriate
officers of each of the Credit Parties, stating that all of the
applicable conditions set forth in Sections 4.01, 4.02 and, if
applicable, 4.03 (in each case disregarding any reference therein that
such condition be deemed satisfactory by the Agent and/or the Required
Banks) have been satisfied or waived as of such date.
(b) Opinions of Counsel. On the Closing Date, the Agent shall
have received an opinion or opinions addressed to each of the Banks and
dated the Closing Date, each in form and substance satisfactory to the
Agent, from (i) X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx,
P.A., counsel to each Credit Party, which opinion shall be in the form
of Exhibit C-1 hereto and (ii) local counsel to the Borrower in certain
jurisdictions in which Collateral is located, which opinions shall be
in the form of Exhibit C-2 hereto.
(c) Corporate Proceedings. All corporate and legal proceedings
and all instruments and agreements in connection with the transactions
contemplated by the Documents shall be satisfactory in form and
substance to the Agent, and the Agent shall have received all
information and copies of all certificates, documents and papers,
including records of corporate proceedings and governmental approvals,
if any, which the Agent reasonably may have requested from any Credit
Party or any Affiliate of either thereof in connection therewith, such
documents and papers where appropriate to be certified by proper
corporate or governmental authorities. Without limiting the foregoing,
the Agent shall have received (i) evidence satisfactory to them that
the Boards of Directors or Board of Managers, as the case may be, of
24
each Credit Party and any Affiliate thereof, shall have approved the
transactions contemplated by the Documents, (ii) resolutions of the
Boards of Directors or Board of Managers, as the case may be, of each
Credit Party, and any Affiliate thereof approving and authorizing such
documents and actions as are contemplated hereby in form and substance
reasonably satisfactory to the Agent including without limitation the
execution and delivery of all Documents to be executed by such Person,
certified by its corporate secretary or an assistant secretary as being
in full force and effect without modification or amendment, and (iii)
signature and incumbency certificates of officers of each Credit Party
and any Affiliate thereof executing instruments, documents or
agreements required to be executed in connection with the transactions
contemplated by the Documents.
(d) Transaction Documents; Transaction.
(i) Full, complete and accurate copies of the
Transaction Documents shall have been provided to the Agent.
The Transaction Documents and any amendments thereto shall be
in form and substance satisfactory to the Agent, and each of
the Transaction Documents required to be executed and
delivered on or prior to the Closing Date shall have been duly
authorized, executed and delivered by each of the parties
thereto and shall be in full force and effect. No term or
provision of the Transaction Documents shall have been
modified, and no condition to the consummation of the
Transaction shall have been waived, in either case in a manner
detrimental to any Credit Party, by any of the parties
thereto. Each Credit Party and any of their Affiliates shall
have in all material respects done and performed such acts and
observed such covenants which each is required to do or
perform under the Transaction Documents and in order to
consummate the Transaction on or prior to the Effective Date.
(ii) Each Credit Party shall have provided evidence
satisfactory in form and substance to the Agent that the
Transaction has been consummated.
(e) Organizational Documentation, etc.
(i) On or prior to the Closing Date, the Banks shall
have received copies of true and complete certified copies of
the following documents of each Credit Party, the provisions
of which shall be reasonably satisfactory to the Agent:
25
(A) Each such Person's respective
Certificate or Articles of Incorporation or
Certificate of Formation, which shall be certified
and be accompanied by a good standing certificate, if
any, from the jurisdiction of its organization and
good standing certificates, if any, from the
jurisdictions in which it is qualified to do business
as a foreign corporation, each to be dated a recent
date prior to the Closing Date; and
(B) Each such Person's respective By-laws or
Operating Agreement, certified as of the Closing Date
by its corporate secretary.
(ii) The corporate, management and capital
structure of the Borrower shall be reasonably satisfactory
to the Agent in all respects.
(f) Credit Documents. Each of this Agreement and each other
Credit Document shall (i) be in form and substance satisfactory to the
Agent and (ii) have been, on or prior to the Closing Date, duly
authorized, executed and delivered by each of the parties signatory
thereto.
(g) Notes. There shall have been delivered to the Agent for
the account of each of the Banks the Term Notes and the Revolving Notes
executed by the Borrower in the amounts and maturities and as otherwise
provided herein.
(h) Certain Fees. All costs, fees and expenses (including,
without limitation, legal fees and expenses) payable to Indosuez by the
Borrower pursuant to the letter agreements between the Borrower and
Indosuez dated May 8, 1997 shall have been paid in full and the
Borrower shall have paid or have caused to be paid the commitment and
other fees and expenses (including, without limitation, reasonable
legal fees and expenses of the Agent) contemplated hereby and/or in
connection with the other Documents.
(i) Financial Statements, etc. Prior to the Closing Date, the
Agent shall have received (i) audited financial statements including a
balance sheet and statements of income and cash flow of Borrower and
its Subsidiaries for the period from the commencement of operations to
December 31, 1996 and unaudited financial statements of the Borrower
and its Subsidiaries for the quarter ended Xxxxx 00, 0000, (xx) audited
financial statements of each of the Predecessor Companies for the last
two full fiscal years preceding December 31, 1996 (one year for
Kotchammer Investments, Inc.), (iii) reviewed financial statements of
26
ABBA for its fiscal years ended September 30, 1994 and 1995 and
December 31, 1996 and unaudited financials for the three months ended
March 31, 1997 and (iv) the estimated pro forma opening balance sheet,
reviewed by a "Big Six" accounting firm of the Borrower as of December
31, 1996, after giving effect to the Transaction and the Borrowings
under this Agreement. The Borrower shall have delivered to the Agent
consolidating financial projections (including quarterly financial
projections for the fiscal year ended 1997) which give effect to the
Transaction and the Borrowings under this Agreement, accompanied by a
statement by the Borrower that such projections are based on
assumptions believed by it in good faith to be reasonable as to the
future financial performance of the Borrower, reasonably satisfactory
to the Agent.
(j) Insurance. Set forth on Schedule 6.01(i) is a summary of
all insurance policies maintained by the Credit Parties and their
respective Subsidiaries, and the insurance coverage provided for the
Credit Parties and their respective Subsidiaries by such insurance
policies shall be reasonably satisfactory to the Agent.
(k) Performance Bonds. On the Closing Date, the Agent shall be
reasonably satisfied that the Borrower will be able to service and
maintain any performance bonds that may be required in the ordinary
course of business on reasonable terms and conditions.
(l) Indebtedness, etc. On or prior to the Closing Date and
except as set forth on Schedule 5.21(a), the Credit Parties and their
respective Subsidiaries shall have repaid or defeased all existing
Indebtedness.
(m) Security Documents and Guarantees. The Security Documents
and the Guarantees shall have been duly executed and delivered by the
respective parties thereto and there shall have been delivered to the
Collateral Agent (i) certificates representing all Pledged Securities
(if certificated), together with executed and undated stock powers
and/or assignments in blank, (ii) evidence of the filing of appropriate
financing statements or comparable documents under the provisions of
the UCC and applicable domestic or local laws, rules or regulations in
each of the offices where such filing is necessary or appropriate to
grant to the Collateral Agent a perfected first priority Lien in such
Collateral superior to and prior to the rights of all third persons,
other than Prior Liens, and subject to no other Liens, other than Liens
27
expressly permitted by the applicable Security Document, (iii)
certified copies of Requests for Information (Form UCC-11 or the
equivalent) or equivalent reports or lien search reports listing all
effective financing statements or comparable documents which name any
Credit Party or any of its Subsidiaries (prior to and after giving
effect to the Transaction) as debtor and which are filed in those
jurisdictions in which any of the Collateral is located and the
jurisdictions in which any Credit Party or any of its Subsidiaries
maintains its chief executive office, none of which shall encumber the
Collateral covered or intended or purported to be covered by the
Security Documents (other than Prior Liens) and (iv) evidence of the
completion of all recordings and filings of each Security Document and
delivery of such other security and other documents as may be necessary
or, in the opinion of the Collateral Agent, desirable to perfect the
Liens created, or purported or intended to be created, by the Security
Documents.
(n) Due Diligence. Prior to the Closing Date, the Banks shall
have received an agreed upon procedures report from Xxxxxx Xxxxxxxx LLP
in form and substance satisfactory to the Agent.
(o) Consents, etc. All material governmental and third party
approvals and consents (including, without limitation, all material
approvals and consents required in connection with any environmental
statutes, rules or regulations), if any, in connection with the
Transaction, the transactions contemplated by the Credit Documents and
the Transaction Documents, and in either case otherwise referred to
herein or therein to be completed on or before the Closing Date shall
have been obtained and remain in effect, and all applicable waiting
periods shall have expired without any action being taken by any
competent authority which restrains, prevents or imposes, in the
judgment of the Agent, materially adverse conditions upon the
consummation of the Transaction. There shall not exist any judgment,
order, injunction or other restraint issued or filed with respect to
the making of the Loans hereunder or the consummation of the
Transaction.
(p) Environmental Review. At or prior to the Effective Date,
there shall have been delivered to the Agent for each of the Banks an
Officers' Certificate of the Borrower in substantially the form of
Exhibit L hereto, and the Agent shall be satisfied as to any
environmental matters relating to the properties of any Credit Party.
28
(q) Borrowing Base Certificate. Prior to the initial Revolving
Loan, the Agent and the Banks shall have received and the Agent shall
be satisfied (both as to form and substance) with a Borrowing Base
Certificate which shall be prepared as of a date prior to the Effective
Date that is satisfactory to the Agent which Borrowing Base Certificate
shall indicate that the Borrowing Base as of May 31, 1997 will exceed
the Revolving Loan Borrowing to be incurred on the Closing Date by at
least $3,000,000.
(r) Leases. All Capital Leases of the Credit Parties or their
respective Subsidiaries and all Operating Leases of the Credit Parties
or their respective Subsidiaries outstanding immediately prior to the
Transaction shall remain outstanding after giving effect to the
Transaction, on terms satisfactory to the Agent.
(s) Solvency. On the Closing Date, the Banks shall have
received an Officers' Solvency Certificate in the form of Exhibit M
hereto.
(t) Conditions Relating to Mortgaged Real Property and Real
Property. On or prior to the Closing Date, the Borrower shall have
caused to be delivered to the Collateral Agent, on behalf of the Banks,
the following documents and instruments:
(i) Mortgages encumbering each Mortgaged Real
Property set forth on Schedule 4.01(t)(i) in favor of the
Collateral Agent, for the benefit of the Banks, duly executed
and acknowledged by the entity holding title thereto, and
otherwise in form for recording in the recording office where
each such Mortgaged Real Property is situated, together with
such certificates, affidavits, questionnaires or returns as
shall be required in connection with the recording or filing
thereof to create a lien under applicable law, and such UCC-1
financing statements and other similar statements as are
contemplated by the counsel opinions described in Section
4.01(b)(ii) in respect of such Mortgage, all of which shall be
in form and substance reasonably satisfactory to the
Collateral Agent, and any other instruments necessary to grant
a mortgage lien under the laws of any applicable jurisdiction,
which Mortgage and financing statements and other instruments
shall when recorded be effective to create a first priority
Lien on such Mortgaged Real Property subject to no Liens other
than Prior Liens;
29
(ii) with respect to each Mortgaged Real Property,
such consents, approvals, amendments, supplements, estoppels,
tenant subordination agreements or other instruments as
necessary or required to consummate the transactions
contemplated hereby or as shall reasonably be deemed necessary
by the Collateral Agent in order for the owner or holder of
the fee or leasehold interest constituting such Mortgaged Real
Property to grant the Lien contemplated by the Mortgage with
respect to such Mortgaged Real Property;
(iii) with respect to each Mortgage, a policy (or
commitment to issue a policy) of title insurance insuring (or
committing to insure) the Lien of such Mortgage as a valid
first mortgage Lien on the real property and fixtures
described therein in an amount not less than 115% of the fair
market value thereof, which policies (or commitments) shall
(w) be issued by the Title Company, (x) include such
reinsurance arrangements (with provisions for direct access)
as shall be reasonably acceptable to the Collateral Agent, (y)
contain a "tie-in" or "cluster" endorsement (if available
under applicable law) (i.e., policies which insure against
losses regardless of location or allocated value of the
insured property up to a stated maximum coverage amount) and
have been supplemented by such endorsements (or where such
endorsements are not available, opinions of special counsel,
architects or other professionals reasonably acceptable to the
Collateral Agent to the extent that such opinions can be
obtained at a cost which is reasonable with respect to the
value of the real property subject to such Mortgage) as shall
be reasonably requested by the Collateral Agent (including,
without limitation, endorsements on matters relating to usury,
first loss, last dollar, zoning, contiguity, revolving credit,
doing business and so-called comprehensive coverage over
covenants and restrictions) and (z) contain only such
exceptions to title as shall be Prior Liens or are otherwise
reasonably agreed to by the Collateral Agent on or prior to
the Closing Date with respect to such Mortgaged Real Property;
(iv) with respect to each Mortgaged Real Property,
policies or certificates of insurance as required by the
Mortgage relating thereto, which policies or certificates
shall comply with the insurance requirements contained in such
Mortgage;
30
(v) with respect to each Mortgaged Real Property,
UCC, judgment and tax lien searches (or foreign jurisdiction
equivalents) confirming that the personal property comprising
a part of such Real Property or Mortgaged Real Property is
subject to no Liens other than Prior Liens;
(vi) with respect to each Mortgaged Real Property,
such affidavits, certificates, information (including
financial data) and instruments of indemnification (including,
without limitation, a so-called "gap" indemnification) as
shall be required to induce the Title Company to issue the
policy or policies (or commitment) and endorsements
contemplated in subparagraph (iii) above;
(vii) evidence reasonably acceptable to the Collateral
Agent of payment by the appropriate Credit Party or Subsidiary
thereof of all applicable title insurance premiums, search and
examination charges, survey costs and related charges,
mortgage recording taxes, fees, charges, costs and expenses
required for the recording of the Mortgages and issuance of
the title insurance policies referred to in subparagraph (iii)
above;
(viii) with respect to each Real Property or Mortgaged
Real Property, copies of all Leases, leases in which a Credit
Party or Subsidiary thereof holds the tenant's interest or
other agreements relating to possessory interests. To the
extent any of the foregoing affect any Mortgaged Real
Property, such agreement shall be subordinate to the Mortgage
to be recorded against such Mortgaged Real Property and
otherwise acceptable to the Collateral Agent; and
(ix) with respect to each Mortgaged Real Property, an
Officers' Certificate or other evidence reasonably
satisfactory to the Collateral Agent that as of the date
thereof there (x) has been issued and is in effect a valid and
proper certificate of occupancy or other local equivalent, if
any, for the use then being made of such Mortgaged Real
Property and that there is not outstanding any material
citation, violation or similar notice indicating that such
Mortgaged Real Property contains conditions which are not in
compliance with local codes or ordinances relating to building
or fire safety or structural soundness, (y) has not occurred
any Taking or Destruction of any Mortgaged Real Property or
Real Property and (z) to the knowledge of such officers, are
31
no disputes regarding boundary lines, location, encroachment
or possession of any Real Property or Mortgaged Real Property
and no state of facts existing which could give rise to any
such claim.
(u) Labor Matters. There shall be no labor disputes, strikes
or work stoppages, pending or threatened, involving any Credit Party or
any of their Subsidiaries that could reasonably be expected to
adversely affect the consummation of the Transaction or that could
reasonably be expected to have a Materially Adverse Effect.
(v) Discharge of Certain Indebtedness. Except as set forth on
Schedule 5.21(a)(i) and 5.21(a)(iii), all principal amounts, prepayment
charges, if any, accrued interest, and fees, charges and other
obligations of the Borrower in respect of Existing Debt shall have been
paid and discharged in full, and the Agent shall have received the
originals or copies authenticated to its satisfaction of (i) all
promissory notes outstanding in connection therewith, duly cancelled by
the respective payees thereof, (ii) duly executed discharge letters and
receipts evidencing payment in full of all amounts due thereunder,
(iii) duly executed releases and UCC-3 Termination Statements
satisfactory in form and substance to the Agent, effectively releasing
and discharging all Liens incurred in connection with such Existing
Debt (including duly cancelled stock powers), in proper form for filing
or recording, as applicable, and (iv) such other documents as the Agent
may reasonably request in order to evidence the discharge of such
Existing Debt and the release of all Liens in connection therewith.
The acceptance of the proceeds of each Borrowing of Initial
Loans shall constitute a representation and warranty by each Credit Party to
each of the Banks that all of the applicable conditions specified above have
been satisfied or waived as of that time and that, at the time of a Borrowing of
such Initial Loan (or substantially contemporaneous therewith), the conditions
specified in Section 4.02 have been satisfied or waived. All of the
certificates, legal opinions and other documents and papers referred to in this
Section 4.01, unless otherwise specified, shall be delivered to the Agent at the
Agent's Office (or such other location as may be specified by the Agent) for the
account of each of the Banks and in sufficient counterparts for each of the
Banks and shall be satisfactory in form and substance to the Agent.
4.02. Conditions Precedent to All Loans. The obligation of the
Banks to make all Loans, including the Initial Loans, is subject, at the time of
each such Loan, to the satisfaction of the following conditions:
32
(a) Effectiveness. This Agreement shall have become
effective as provided in Section 11.10.
(b) No Default; Representations and Warranties. At the time of
the making of each Loan and also after giving effect thereto (i) there
shall exist no Default or Event of Default and (ii) all representations
and warranties contained herein or in the other Credit Documents in
effect at such time shall be true and correct in all material respects
with the same effect as though such representations and warranties had
been made on and as of the date of the making of such Loan, unless such
representation and warranty expressly indicates that it is being made
as of any other specific date in which case on and as of such other
date.
(c) Adverse Change, etc. (i) Since December 31, 1996, nothing
shall have occurred or become known which the Required Banks or the
Agent shall have determined has a Materially Adverse Effect; such
determination shall be made both before (only for the Initial Loans)
and after giving effect to the Transaction and the making of the Loans
hereunder.
(ii) All material governmental and third party approvals and
consents (including, without limitation, all material approvals and
consents required in connection with any environmental statutes, rules
or regulations), if any, in connection with the conduct of the business
of each Credit Party or its respective Subsidiaries shall have been
obtained and remain in effect.
(iii) There shall not exist any judgment, order, injunction or
other restraint issued or filed with respect to the making of any Loans
hereunder the effect of which judgment, order, injunction or restraint
is adverse to any Bank.
(d) Documentation and Opinions of Counsel. The Agent shall
have received such documentation and opinion or opinions, addressed to
each of the Banks, from counsel to each Credit Party as may be
reasonably required, with reasonable notice under the circumstances,
which shall be reasonably satisfactory to the Agent from (i) such
counsel to each Credit Party and (ii) appropriate local counsel, which
opinions shall cover such matters as reasonably requested by, and be in
form and substance satisfactory to, the Agent.
33
(e) Margin Rules. On the date of each Borrowing of Loans,
neither the making of any Loan nor the use of the proceeds thereof will
violate the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(f) Borrowing Base Certificate. The Agent shall have received
and shall be reasonably satisfied (both as to form and substance) with
the Borrowing Base Certificate last required to be delivered to the
Banks.
(g) Real Property Disclosure. Each Credit Party shall have
made all notifications, registrations, and filings in accordance with
all State and Local Disclosure Requirements applicable to the Real
Property, including the use of forms provided by state or local
agencies, where such forms exist, whether to the Borrower or to or with
the state or local agency to the extent failure to make such filings
could reasonably be expected to have a Material Adverse Effect.
The acceptance of the proceeds of each Borrowing of Loans
shall constitute a representation and warranty by each Credit Party to each of
the Banks that all of the applicable conditions specified in Section 4.02 have
been satisfied or waived.
All of the certificates, legal opinions and other documents
and papers referred to in this Section 4.02, unless otherwise specified, shall
be delivered to the Agent at the Agent's Office (or such other location as may
be specified by the Agent) for the account of each of the Banks and in
sufficient counterparts for each of the Banks and shall be satisfactory in form
and substance to the Agent.
4.03. Conditions Precedent to All Letters of Credit. The right
of the Borrower to obtain the issuance of any Letter of Credit that the relevant
Issuing Bank determines to issue in its sole discretion hereunder is subject to
prior or concurrent satisfaction of all of the following conditions:
(A) Required Documentation. On or prior to the date of
issuance of a Letter of Credit, the Agent shall have received, in
accordance with the provisions of Section 1.10(b), a request for
issuance with respect to such Letter of Credit (the furnishing by the
Borrower of each such request for issuance shall be deemed to
constitute a representation and warranty of the Borrower to the effect
that the conditions set forth in Sections 4.01 and 4.02 are satisfied
as of the date of delivery and will be satisfied on the relevant date
34
of issuance), all other information specified in Section 1.10(b), and
such other documents as the Issuing Bank may reasonably require in
connection with the issuance of such Letter of Credit.
(B) Conditions. On the date of issuance of each such Letter of
Credit, all conditions precedent described in Sections 4.01 and 4.02
shall be satisfied to the same extent as though the issuance of such
Letter of Credit were the making of a Revolving Loan.
SECTION 5. Representations, Warranties and Agreements. In
order to induce the Agent and the Banks to enter into this Agreement and to make
the Loans provided for herein, the Credit Parties make the following
representations and warranties to, and agreements with, the Agent and the Banks,
all of which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the execution and delivery of this Agreement and the
making of each Loan thereafter being deemed to constitute a representation and
warranty that the matters specified in this Section 5 are true and correct in
all material respects both before and after giving effect to the Transaction and
the related transactions and as of the date of each such Loan unless such
representation and warranty expressly indicates that it is being made as of any
specific date):
5.01. Status. Each Credit Party and each of its respective
Subsidiaries (i) is a duly organized and validly existing corporation or limited
liability company in good standing under the laws of the jurisdiction of its
organization; (ii) has the requisite corporate or other organizational power and
authority and has obtained all requisite governmental licenses, authorizations,
consents and approvals to own and operate its property and assets and to
transact the business in which it is engaged and presently proposes to engage,
except for those governmental licenses, authorizations, consents or approvals
the failure of which to be so obtained would not have a Materially Adverse
Effect and (iii) is duly qualified, or as of the Closing Date has taken
appropriate steps to qualify, and is authorized to do business, or as of the
Closing Date has taken appropriate steps to be authorized to do business, and is
in good standing in all jurisdictions where it is required to be so qualified
and where the failure to be so qualified would have a Materially Adverse Effect.
5.02. Corporate Power and Authority; Business. Each Credit
Party and each of its respective Subsidiaries has the requisite corporate or
limited liability company power and authority to execute, deliver and carry out
the terms and provisions of the Documents to which it is a party and has taken
all necessary corporate or limited liability company action to authorize the
execution, delivery and performance of the Documents to which it is a party.
35
Each Credit Party and each of its respective Subsidiaries has duly executed and
delivered each Document to which it is a party and each such Document
constitutes the legal, valid and binding obligation of such Person enforceable
in accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
5.03. No Violation. Neither the execution, delivery and
performance by any Credit Party or its respective Subsidiaries of this Agreement
or the other Documents to which it is a party nor compliance with the terms and
provisions hereof and thereof, nor the consummation of the transactions
contemplated herein and therein (i) will contravene any applicable provision of
any law, statute, rule, regulation, order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach of any of the terms, covenants, conditions or
provisions of, or constitute a default under, or (other than pursuant to the
Security Documents) result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of any Credit
Party or its respective Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which any Credit Party
or its respective Subsidiaries is a party or by which it or any of its property
or assets is bound or to which it may be subject or (iii) will violate any
provision of the charter or by-laws or the certificate of formation or operating
agreement, as applicable, of any Credit Party or its respective Subsidiaries,
except, in each case, where such contravention, conflict, inconsistency, breach,
default, creation, imposition, obligation or violation would not have a
Materially Adverse Effect.
5.04. Litigation. There are no actions, judgments, suits or
proceedings pending or, to the Borrower's knowledge, threatened with respect to
(i) the transactions contemplated by the Documents and (ii) any Credit Party or
its respective Subsidiaries as to which could reasonably be expected to have a
Materially Adverse Effect.
5.05. Use of Proceeds. (a) The proceeds of all A Term Loans
and B Term Loans to be made to the Borrower hereunder shall be utilized by the
Borrower to finance the Transaction, to repay certain Indebtedness and to pay
related fees and expenses, which such fees and expenses shall not exceed
$2,500,000.
36
(b) The proceeds of the Revolving Loans shall be utilized for
working capital and other general corporate purposes.
(c) Neither the making of any Loan hereunder, nor the use of
the proceeds thereof, will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
5.06. Governmental Approvals, etc. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any third party or any foreign or domestic
governmental or public body or authority, or by any subdivision thereof (other
than those orders, consents, approvals, licenses, authorizations or validations
which, if not obtained or made, would not reasonably be expected to have a
Materially Adverse Effect or which have previously been obtained or made or,
filings to perfect security interests granted pursuant to the Security
Documents, which will be accomplished on or prior to the Closing Date (unless
otherwise agreed to by the Agent)), is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Document or
the transactions contemplated therein or (ii) the legality, validity, binding
effect or enforceability of any Document. At the time of the making of the
Initial Loans, there does not exist any judgment, order, injunction or other
restraint issued or filed with respect to the consummation of the Transaction or
the making of Loans or the performance by the Credit Parties or their respective
Subsidiaries of their respective obligations under the Documents.
5.07. Investment Company Act. No Credit Party or any of its
respective Subsidiaries is, or will be after giving effect to the transactions
contemplated hereby, an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended, or subject to any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed or guarantee such
indebtedness as contemplated hereby or by any other Credit Document.
5.08. Public Utility Holding Company Act. No Credit Party or
any of its respective Subsidiaries is, or will be after giving effect to the
transactions contemplated hereby, a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
37
5.09. True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Credit Parties in writing to any Bank (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement or any transaction contemplated herein is (or was, on the
date of making the Initial Loans), and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of any such Person in writing to
any Bank will be, true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete by omitting to
state any material fact necessary to make such information not misleading at
such time in light of the circumstances under which such information was
provided. The projections and pro forma financial information contained in such
materials are based on good faith estimates and assumptions believed by such
Persons to be reasonable at the time made, it being recognized by the Banks that
such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may
differ from the projected results. There is no fact known to any officer of any
Credit Party which materially and adversely affects the business, operations,
property, assets, nature of assets, liabilities, condition (financial or
otherwise) or prospects of the Credit Parties, taken as a whole, which has not
been disclosed herein or in such other documents, certificates and written
statements furnished to the Banks for use in connection with the transactions
contemplated hereby.
5.10. Transaction. At the time of making the Initial Loans,
all necessary governmental and third-party approvals in connection with the
Transaction have been or, prior to the time when required, will have been,
obtained and remain in effect, and all applicable waiting periods have or, prior
to the time when required, will have, expired without, in all such cases, any
action being taken by any competent authority which is reasonably likely to have
a Materially Adverse Effect on the Transaction.
5.11. Financial Condition; Financial Statements; Projections.
(a) No Credit Party is entering into the arrangements contemplated hereby and by
the other Credit Documents, or intends to make any transfer or incur any
obligations hereunder or thereunder with actual intent to hinder, delay or
defraud either present or future creditors. On and as of the Closing Date, on a
pro forma basis after giving effect to the Transaction and to all Indebtedness
incurred and Liens and Guarantees created, or to be created, by each Credit
38
Party or its respective Subsidiaries in connection with the Transaction, (w) the
Borrower does not expect that final judgments against any Credit Party or its
respective Subsidiaries in actions for money damages with respect to pending or
threatened litigation will be rendered at a time when, or in an amount such
that, such Credit Party will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered and the cash available to each Credit Party or
its respective Subsidiaries, after taking into account all other anticipated
uses of the cash of such Credit Party or its respective Subsidiaries (including
the payments on or in respect of debts and insurance proceeds, including their
Contingent Obligations)); (x) no Credit Party or its respective Subsidiaries
will have incurred or intends to, or believes that it will, incur debts beyond
its ability to pay such debts as such debts mature (taking into account the
timing and amounts of cash to be received by such Credit Party or its respective
Subsidiaries from any source, and of amounts to be payable on or in respect of
debts of such Credit Party or its respective Subsidiaries and the amounts
referred to in the preceding clause (w)); (y) each Credit Party or its
respective Subsidiaries, after taking into account all other anticipated uses of
the cash of such Credit Party or its respective Subsidiaries, anticipates being
able to pay all amounts on or in respect of debts of such Credit Party or its
respective Subsidiaries when such amounts are required to be paid; and (z) each
Credit Party and its respective Subsidiaries will have sufficient capital with
which to conduct its present and presently proposed business and the property of
such Credit Party and its respective Subsidiaries does not constitute
unreasonably small capital with which to conduct its present or proposed
business. For purposes of this Section 5.11, "debt" means any liability on a
claim, and "claim" means a (i) right to payment whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or (ii)
right to an equitable remedy for breach of performance if such breach gives rise
to a payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. On the date of each Borrowing and the issuance of each Letter of
Credit (and after giving effect to all Borrowings and Letters of Credit as of
such date), the representations set forth in this Section 5.11(a) shall be true
and correct with respect to the Borrower on such date and any Credit Party which
is a guarantor with respect to any or all of such Borrowings or Letters of
Credit.
39
(b) The Borrower has heretofore delivered to the Banks the
historical financial statements set forth in Section 4.01(i). The financial
statements referred to in the preceding sentence were prepared in accordance
with GAAP consistently applied and fairly present the financial position and
results of operations of the Borrower for the periods covered thereby.
There has also been delivered the estimated pro forma (after
giving effect to the Transaction) opening balance sheet, reviewed by a "Big Six"
accounting firm, of the Borrower and its Subsidiaries as of December 31, 1996,
which presents a good faith estimate of the consolidated pro forma financial
position of the Borrower and its Subsidiaries for such periods. The assumptions
made in preparing such pro forma balance sheet are reasonable as of the date of
such statements and as of the Closing Date and all material assumptions are set
forth therein. Except as contemplated hereby, since December 31, 1996 (on a pro
forma basis after giving effect to the Transaction) no event or events have
occurred that could reasonably be expected to have a Materially Adverse Effect.
(c) There have heretofore been delivered to the Banks pro
forma consolidating income projections for the Borrower and its Subsidiaries,
pro forma consolidating balance sheet projections for the Borrower and its
Subsidiaries and pro forma consolidating cash flow projections for the Borrower
and its Subsidiaries, all for the fiscal years ending December 31, 1997 through
December 31, 2002, inclusive (the "Projected Financial Statements"), which give
effect to the Transaction and all Indebtedness and Liens incurred or created in
connection with the Transaction. The assumptions made in preparing the Projected
Financial Statements are reasonable as of the date of such projections and as of
the Closing Date and all material assumptions with respect to the Projected
Financial Statements are set forth therein. The Projected Financial Statements
present a good faith estimate by the Borrower of the consolidated financial
information contained therein at the date thereof.
(d) As of the Closing Date, except as fully reflected or
reserved against in the financial statements and the notes thereto described in
Section 5.11(b), to the knowledge of the Credit Parties there were no
liabilities or obligations with respect to the Borrower or its respective
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would reasonably be expected to result in a Materially Adverse Effect on the
Borrower and its respective Subsidiaries, taken as a whole. As of the Closing
Date, the Borrower does not know of any basis for the assertion against any
Credit Party or its respective Subsidiaries of any liability or obligation of
any nature whatsoever that is not fully reflected in the financial statements
40
described in Section 5.11(b) or (c), except as incurred by any Credit Party in
connection with the Transaction, which, either individually or in the aggregate,
could reasonably be expected to be material to such Credit Party and its
respective Subsidiaries.
5.12. Security Interests. The Security Documents, when filed
and/or recorded, together with delivery to the Collateral Agent of any
Collateral in which a security interest is perfected by possession, will create,
in favor of the Collateral Agent for the benefit of the Banks, as security for
the obligations purported to be secured thereby, a valid and enforceable
perfected first priority security interest in and Lien upon all of the
Collateral, superior to and prior to the rights of all third persons and subject
to no other Liens except Prior Liens and other Liens expressly permitted by the
applicable Security Documents. The mortgagor under each Mortgage has good title
to the Mortgaged Real Property free and clear of all Liens other than Prior
Liens and other Liens expressly permitted by the applicable Security Documents.
The respective pledgor or assignor, as the case may be, has (or on and after the
time it executes the respective Security Document, will have) good title to all
items of Collateral (other than real property subject to a Mortgage) covered by
such Security Document free and clear of all Liens except Prior Liens and other
Liens expressly permitted by the applicable Security Documents. No filings or
recordings are required in order to perfect the security interests created under
any Security Document except for filings or recordings required in connection
with any such Security Document which shall have been made prior to or
contemporaneously with the execution and delivery thereof (unless otherwise
agreed to by the Agent).
5.13. Tax Returns and Payments. Each of the Credit Parties and
each of its respective Subsidiaries has filed all tax returns required to be
filed by it and has paid all material taxes and assessments payable by it which
have become due, other than those not yet delinquent and except for those
contested in good faith and for which adequate reserves have been established.
Each of the Credit Parties and each of its respective Subsidiaries has paid, or
has provided adequate reserves (in accordance with GAAP) for the payment of, all
federal, state, local and foreign income taxes (including, without limitation,
franchise taxes based upon income) applicable for all prior fiscal years and for
the current fiscal year to the date hereof. The Borrower does not know of any
proposed tax assessment against any Credit Party or any of its respective
Subsidiaries that could reasonably be expected to have a Materially Adverse
Effect which is not being actively contested in good faith by such Person to the
41
extent affected thereby in good faith and by appropriate proceedings; provided
that such reserves or other appropriate provisions, if any, as shall be required
in conformity with GAAP shall have been made or provided therefor. The pro forma
financial statements delivered pursuant to Section 5.11(b) reflected all taxes
resulting from the transactions contemplated by the Transaction.
5.14. ERISA. (a) Each Credit Party, its respective
Subsidiaries and its respective ERISA Affiliates is in compliance in all
material respects with all applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder with respect to all
employee benefit plans.
(b) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan which resulted or would
result in a material liability to any Credit Party, its respective Subsidiaries
or its respective ERISA Affiliates.
(c) The sum of the amount of unfunded benefit liabilities
(determined in accordance with Statement of Financial Accounting Standards No.
87) under all Title IV Plans (excluding each Title IV Plan with an amount of
unfunded benefit liabilities of zero or less) is not more than $100,000. As of
the Closing Date, the sum of the amount of unfunded benefit liabilities (within
the meaning of Section 4001(a)(18) of ERISA) under all Title IV Plans (excluding
each Pension Plan with an amount of unfunded benefit liabilities of zero or
less) is not more than $100,000.
(d) As of the Closing Date, none of the Credit Parties, their
respective Subsidiaries nor their respective ERISA Affiliates has any obligation
to contribute to or any liability or potential liability (including, but not
limited to, actual or potential withdrawal liability) with respect to any
Multiemployer Plan or any employee benefit plan of the type described in
Sections 4063 and 4064 of ERISA or in Section 413(c) of the Code. None of the
Credit Parties, their respective Subsidiaries nor their respective ERISA
Affiliates has incurred or reasonably expects to incur any material withdrawal
liability under Section 4201 et seq. of ERISA to any Multiemployer Plan or any
employee benefit plan of the type described in Sections 4063 and 4064 of ERISA
or in Section 413(c) of the Code.
(e) None of the Credit Parties, their respective Subsidiaries
nor their respective ERISA Affiliates has incurred any accumulated funding
deficiency (whether or not waived) with respect to any Pension Plan.
42
(f) None of the Credit Parties, their respective Subsidiaries
nor their respective ERISA Affiliates has or reasonably expects to become
subject to a Lien in favor of any Pension Plan under Section 302(f) or 307 of
ERISA or Section 401(a)(29) or 412(n) of the Code.
(g) Assuming that no portion of the Loans to be advanced
hereunder is attributable, directly or indirectly, to the assets of any employee
benefit plan, the execution, performance and delivery of the Credit Documents by
any party thereto will not constitute any prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code for which an
exemption therefrom is not available.
As used in this Section 5.14, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "employee benefit plan" has the meaning specified in
Section 3(3) of ERISA.
5.15. Subsidiaries. After giving effect to the Transaction,
all of the outstanding units or common stock, as the case may be, of each Credit
Party shall be validly issued, fully paid and nonassessable and shall be owned
beneficially and of record by each Credit Party as set forth as Schedule 5.15
hereto, subject to no Liens other than Liens in favor of the Collateral Agent.
Other than as set forth on Schedule 5.19, after giving effect to the
Transaction, there shall be no preemptive rights on the part of any holder of
any class of securities of any Credit Party or other rights, such as warrants or
options, to acquire any class of securities of any Credit Party.
5.16. Patents, etc. Each Credit Party or its respective
Subsidiaries owns or possesses adequate licenses or other rights to use all
material patents, patent applications, trademark registrations, trademark
applications, servicemark registrations, servicemark applications, trade names,
copyright registrations, trade secrets and know how (collectively, the
"Intellectual Property") that are necessary for the operation of its respective
businesses as presently conducted and as currently proposed to be conducted. No
claim is pending or, to the knowledge of each Credit Party and its respective
Subsidiaries, threatened to the effect that any Credit Party or its respective
Subsidiaries infringes upon or conflicts with the asserted rights of any other
person under any Intellectual Property, and, to the knowledge of each Credit
Party and its respective Subsidiaries, there is no basis for any such claim
(whether or not pending or threatened). No claim is pending or, to the knowledge
of each Credit Party and its respective Subsidiaries, threatened to the effect
43
that any such Intellectual Property owned or licensed by any Credit Party or its
respective Subsidiaries or which any Credit Party or its respective Subsidiaries
otherwise has the right to use, is invalid or unenforceable by such Credit Party
or its respective Subsidiaries, and, to the knowledge of each Credit Party and
its respective Subsidiaries, there is no basis for any such claim (whether or
not pending or threatened).
5.17. Compliance with Laws, etc. Each Credit Party and its
respective Subsidiaries is in material compliance with all laws and regulations
in all jurisdictions in which it is presently doing business, and each Credit
Party and its respective Subsidiaries will comply with all such laws and
regulations which may be imposed in the future in jurisdictions in which it or
such Subsidiary may then be doing business except to the extent the
non-compliance with such laws and regulations would not reasonably be expected
to have a Materially Adverse Effect. To its knowledge, no Credit Party is
currently under investigation for the violation of any crime the conviction for
which would reasonably be expected to have a Material Adverse Effect.
5.18. Properties. Each Credit Party or its respective
Subsidiaries has good and marketable title to and beneficial ownership of all
material properties owned by it, including after the Closing Date all property
reflected in the most recent balance sheet referred to in Section 5.11(b)
(except as sold or otherwise disposed of since the date of such balance sheet in
the ordinary course of business), free and clear of all Liens, other than, in
the case of property not constituting Collateral, Permitted Encumbrances and, in
the case of property constituting Collateral, Prior Liens. Each Credit Party or
its respective Subsidiaries holds all material licenses, certificates of
occupancy or operation and similar certificates and clearances of municipal and
other authorities necessary to own and operate its properties in the manner and
for the purposes currently operated by such party. Each Real Property and each
Mortgaged Real Property is suitable for its intended purposes and is served by
such utilities as are necessary for the operation thereof. There are no actual,
threatened or alleged defaults of a material nature with respect to any Leases
of Real Property under which any Credit Party or any of its respective
Subsidiaries is lessor or lessee.
5.19. Securities. Except as set forth on Schedule 5.19 hereto,
there are not, as of the Effective Date, any existing options, warrants, calls,
subscriptions, convertible or exchangeable securities, rights, agreements,
commitments or arrangements for any Person to acquire any equity security of any
Credit Party or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any such equity security.
44
5.20. Collective Bargaining Agreements. Set forth on Schedule
5.20 hereto is a list and description (including dates of termination) of all
collective bargaining or similar agreements between or applicable to any Credit
Party or its respective Subsidiaries as of the date hereof and any union, labor
organization or other bargaining agent in respect of the employees of any Credit
Party or its respective Subsidiaries on the date indicated in Schedule 5.20
hereto.
5.21. Indebtedness Outstanding; Prior Liens. (a) Set forth on
Schedule 5.21(a) hereto is a list and description of (i) all Indebtedness of the
Credit Parties and their respective Subsidiaries (other than the Loans) that
shall be outstanding immediately after the Closing Date and (ii) all
Indebtedness of the Credit Parties and their respective Subsidiaries that was
repaid, defeased, transferred or otherwise terminated on the Closing Date.
(b) Schedule 5.21(b) hereto sets forth a true list of all
Liens other than Permitted Encumbrances on the property of the Credit Parties
immediately following the Closing Date.
5.22. Environmental Protection. Except as set forth on
Schedule 5.22 hereto and except as would not have a Materially Adverse Effect,
(a) Each Credit Party and its respective Subsidiaries has
obtained all permits, licenses and other authorizations which are
required with respect to the operation of the business and assets, and
use, ownership and operation of Real Property of the Borrower and its
Subsidiaries, in each case taken as a whole, under any Environmental
Law and each such authorization is in full force and effect.
(b) Each Credit Party and its respective Subsidiaries is in
compliance with all terms and conditions of the permits, licenses and
authorizations specified in subsection 5.22(a) above, and is also in
compliance with, and not currently liable under, any Environmental Laws
applicable to it and its business, assets, operations and Real
Property.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice of violation, investigation,
proceeding, notice or demand letter or request for information pending
or, to the knowledge of any Credit Party or any of its respective
Subsidiaries, threatened against any Credit Party or any of its
respective Subsidiaries under any Environmental Law.
45
(d) None of the Credit Parties nor any of its respective
Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (CERCLA)
or any comparable state law nor has any Credit Party or any of its
respective Subsidiaries received any notification that any Hazardous
Materials that it, or any of its Subsidiaries, or any of their
respective predecessors in interest has used, generated, stored,
treated, handled, transported or disposed of, or arranged for disposal
or treatment of, or arranged with a transporter for transport for
disposal or treatment of, have been found at any site at which any
governmental agency or private party is conducting or plans to conduct
a remedial investigation or other action pursuant to any Environmental
Law.
(e) There have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of
Hazardous Materials by any Credit Party or any of its respective
Subsidiaries or, to the knowledge of the Credit Party after due
inquiry, their respective predecessors in interest on, at, upon, into
or from any of the Real Properties. To the knowledge of any Credit
Party and each of its respective Subsidiaries after due inquiry there
have been no such releases on, at, upon, under, from or into any real
property in the vicinity of any of the Real Properties that, through
soil, air, surface water or groundwater migration or contamination, may
have migrated to or under such Real Properties.
(f) No asbestos is present in, on, or at any Real Properties
or any facility or equipment of any Credit Party or any of its
respective Subsidiaries.
(g) No Real Properties of any Credit Party or any of its
respective Subsidiaries or any of their respective predecessors in
interest are (i) listed or formally proposed for listing on the
National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA or (iii)
included on any comparable lists maintained by any governmental
authority.
46
(h) There are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans which
could reasonably be expected to interfere with or prevent compliance
with any Environmental Law, or which could reasonably be expected to
give rise to any liability under any Environmental Law, including,
without limitation, liability under CERCLA or similar state, local or
foreign laws, or otherwise form the basis of any claim, action, demand,
suit, proceeding, hearing or notice of violation, notice of potential
liability or investigation, based on or related to the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport, shipping or handling, or the emission, discharge,
release or threatened release into the environment, of any Hazardous
Materials.
(i) No Lien has been recorded under any Environmental Law with
respect to any assets, facility, inventory or Real Property owned,
operated, leased or controlled by any Credit Party or any of its
respective Subsidiaries.
5.23. All environmental investigations, studies, audits,
assessments or reviews conducted of which any Credit Party has knowledge in
relation to the current or prior business or assets of any Credit Party or any
of its respective Subsidiaries or any Real Property, assets or facility now or
previously owned, operated, leased, used or controlled by any Credit Party or
any of its respective Subsidiaries have been delivered to the Agent.
5.24. Certain Liens. With respect to each and every lien set
forth on Schedule 5.24 hereto, as of the date hereof, Borrower represents and
warrants that the underlying agreements, documents or instruments, if any, which
created such liens, have been paid, terminated, discharged and are no longer in
effect.
SECTION 6. Affirmative Covenants. The Borrower covenants and
agrees that on the Effective Date and thereafter for so long as this Agreement
is in effect and until the Commitments have terminated and the Loans together
with interest and fees are paid in full and all other Obligations incurred
hereunder, to the extent then due and payable, are paid in full:
6.01. Information Covenants. The Borrower will furnish or
cause to be furnished to each Bank:
(a) As soon as available and in any event within 90 days after
the close of each fiscal year of the Borrower, the consolidating and
consolidated balance sheets of the Borrower and its Subsidiaries as at
47
the end of such fiscal year and the related consolidating and
consolidated statements of income, of stockholders' equity and of cash
flows for such fiscal year, setting forth comparative consolidating and
consolidated figures for the preceding fiscal year and a report on such
consolidated balance sheets and financial statements by independent
certified public accountants of recognized national standing, which
report shall not be qualified as to the scope of audit or as to the
status of the Borrower and its Subsidiaries as a going concern and
shall state that such consolidated financial statements present fairly
the consolidated financial position of the Borrower and its
Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except for
such changes with which the independent certified public accountants
concur) and the examination by such accountants was conducted in
accordance with generally accepted auditing standards.
(b) As soon as practicable and in any event within 30 days
after the end of the each month ending after the Closing Date, (i) the
consolidating and consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such period and (ii) the related
statements of income and cash flows of the Borrower and its
Subsidiaries, in each case for such fiscal month and for the period
from the beginning of the then current fiscal year to the end of such
fiscal month, setting forth in comparative form the corresponding
periods of the prior fiscal year, the corresponding periods of the
current fiscal year's budget and a Management's Discussion and Analysis
for such financial statements covering the month then ended and the
year to date.
(c) Together with each delivery of financial statements of the
Borrower and its Subsidiaries pursuant to subsection (a) above, a
written statement by the independent public accountants giving the
report thereon (i) stating that their audit examination has included a
review of the terms of Sections 6, 7, 8 and 9 of this Agreement as they
relate to accounting matters but without having conducted any special
auditing procedures in connection therewith, (ii) stating whether, in
connection with their audit examination, any condition or event which
constitutes a Default or Event of Default has come to their attention,
and if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Default or Event of Default that would not be
48
disclosed in the course of their audit examination, and (iii) stating
that based on their audit examination nothing has come to their
attention which causes them to believe that as of the end of such
fiscal year of the Borrower there existed a Default or an Event of
Default related to the breach of any covenant set forth in Section 6 or
7 as they relate to accounting matters and if such a condition or event
has come to their attention, specifying the nature and period of
existence thereof and what action the Borrower has taken, is taking and
propose to take with respect thereto.
(d) At the time of the delivery of the financial statements
provided for in Sections 6.01(a) and (b), a certificate of the chief
financial officer, controller, chief accounting officer or other
Authorized Officer of the Borrower to the effect that no Default or
Event of Default exists, or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and what actions have
been or will be taken in respect thereof, which certificate shall be
accompanied on a quarterly basis by a Compliance Certificate in a form
reasonably acceptable to the Agent setting forth the calculations
required to establish whether the Borrower was in compliance with the
covenants in this Agreement (including without limitation the covenants
set forth in Sections 7.05 and 7.10 through 7.13 inclusive) as at the
end of such fiscal period or year, as the case may be.
(e) Promptly upon receipt thereof, a copy, if any, of each
annual "management letter" submitted to the Borrower by its independent
accountants in connection with any annual audit made by them of the
books of the Borrower or any of its Subsidiaries.
(f) Promptly upon their becoming available, copies of all
consolidating and consolidated financial statements, reports, notices
and proxy statements sent or made available generally by the Borrower
or any Subsidiary of the Borrower to its security holders in their
capacity as such (other than to the Borrower or another Subsidiary) of
all regular and periodic reports and all registration statements and
prospectuses, if any, filed by the Borrower or any of its Subsidiaries
with any securities exchange or with the SEC (including reports filed
on Forms 10-Q and 10-K) and of all press releases and other statements
made available generally by the Borrower or any Subsidiary of the
Borrower to the public concerning material developments in the business
of the Borrower and its Subsidiaries.
49
(g) Promptly upon any officer of the Borrower obtaining
knowledge (w) of any condition or event which constitutes a Default or
Event of Default, or becoming aware that any Bank has given any notice
or taken any other action with respect to a claimed Default or Event of
Default under this Agreement, (x) that any Person has given any notice
to the Borrower or taken any other action with respect to a claimed
default or event or condition of the type referred to in Section 8.04,
or (y) of a material adverse change in the business, operations,
properties, assets, nature of assets, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries, taken as
a whole, an Officers' Certificate specifying the nature and period of
existence of any such condition or event, or specifying the notice
given or action taken by such holder or Person and the nature of such
claimed Default, Event of Default, event or condition, or material
adverse change, and what action the Borrower has taken, is taking and
propose to take with respect thereto.
(h) (w) Promptly upon any officer of the Borrower obtaining
knowledge of the institution of, or written threat of, any action,
suit, proceeding, governmental investigation or arbitration against or
affecting any Credit Party or its respective Subsidiaries or any
property of any Credit Party or its respective Subsidiaries not
previously disclosed to the Banks, which action, suit, proceeding,
governmental investigation or arbitration seeks (or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or
circumstances which seek) recovery from any Credit Party or its
respective Subsidiaries aggregating $250,000 or more (exclusive of
claims covered by insurance policies unless the insurers of such claims
have disclaimed coverage or reserved the right to disclaim coverage on
such claims), the Borrower shall give notice thereof to the Banks and
provide such other information as may be reasonably available to enable
the Banks and their counsel to evaluate such matters; (x) as soon as
practicable and in any event within 45 days after the end of each
fiscal quarter, the Borrower shall provide a quarterly report to the
Banks covering the institution of, or written threat of, any action,
suit, proceeding, governmental investigation or arbitration (not
previously reported) against or affecting any Credit Party or its
respective Subsidiaries or any property of any Credit Party or its
respective Subsidiaries not previously disclosed to the Banks, which
action, suit, proceedings, governmental investigation or arbitration
50
seeks (or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same
general allegations or circumstances which seek) recovery from any
Credit Party or its respective Subsidiaries aggregating $500,000 or
more (exclusive of claims covered by insurance policies unless the
insurers of such claims have disclaimed coverage or reserved the right
to disclaim coverage on such claims), and shall provide such other
information at such time as may be reasonably available to enable the
Banks and their counsel to evaluate such matters; (y) in addition to
the requirements set forth in clauses (w) and (x) of this Section
6.01(h), the Borrower upon request shall promptly give notice of the
status of any action, suit, proceeding, governmental investigation or
arbitration covered by a report delivered to the Banks pursuant to
clause (w) or (x) above to the Banks and provide such other information
as may be reasonably available to them to enable the Banks and their
counsel to evaluate such matters; and (z) promptly upon any officer of
the Borrower obtaining knowledge of any dispute in respect of or the
institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration in respect of any material
contract of any Credit Party or its respective Subsidiaries, the
Borrower shall give notice thereof to the Banks and shall provide such
other information as may be reasonably available to enable the Banks
and their counsel to evaluate such matters.
(i) Within 15 days of any material changes to the terms of any
insurance policy as in effect on the Effective Date and described on
Schedule 6.01(i) or any cancellation of any such policy without
replacement with a substantially similar policy, a report in form and
substance reasonably satisfactory to Agent outlining such changes or
the terms of the replacement policy, as the case may be.
(j) To the extent reasonably requested by the Agent, as soon
as practicable and in any event within ten days of the later of such
request and the making of any such amendment or waiver, copies of
amendments or waivers with respect to Indebtedness of any Credit Party
or its respective Subsidiaries.
(k) On or prior to December 31, 1997 and each December 31
thereafter, a consolidated plan/budget for each month in the succeeding
fiscal year prepared in accordance with the Borrower's normal
accounting procedures (and which will represent management's reasonable
estimate of the Borrower's projected performance during such periods)
applied on a consistent basis, including, without limitation, (i)
forecasted consolidated balance sheets, consolidated statements of
51
operations, of stockholders' equity and of cash flows of the Borrower
and its Subsidiaries on a consolidated basis for such periods, (ii) the
amount of forecasted capital expenditures for such fiscal periods,
(iii) forecasted compliance with Sections 7.05 and 7.10-7.13 and (iv)
an appropriate discussion of the principal assumptions on which such
plan/budget is based; provided that if any such forecast indicates that
the Borrower may not be in compliance with any provision of this
Agreement at some future date, such forecast shall not constitute a
Default or an Event of Default or anticipatory or other breach thereof.
Together with each delivery of financial statements pursuant to
Sections 6.01(a) and (b), a comparison of the current year to date
financial results against the plan/budget required to be submitted
pursuant to this subsection (k) shall be presented.
(l) Within ten (10) Business Days after the last Business Day
of each month, a borrowing base certificate in the form of Exhibit L
hereto (the "Borrowing Base Certificate") detailing the Borrower's
Eligible Accounts Receivable and Eligible Inventory as of the last day
of such month, certified as complete and correct on behalf of the
Borrower by the chief executive officer, chief financial officer,
controller or other Authorized Officer of the Borrower. In addition,
each Borrowing Base Certificate shall have attached to it such
additional schedules and/or other information as the Agent may
reasonably request. If the Borrower fails to deliver any such Borrowing
Base Certificate within twenty-five (25) days after the end of any such
month, then the Borrowing Base shall be deemed to be $0 until such time
as the Borrower shall deliver such required Borrowing Base Certificate.
(m) With reasonable promptness, such other information and
data with respect to any Credit Party or its respective Subsidiaries or
any other similar entity in which the Borrower has an investment, as
from time to time may be reasonably requested by the Agent.
6.02. Books, Records and Inspections. The Borrower will, and
will cause each of its Subsidiaries to, keep true books of records and accounts
in which full and correct entries will be made of all of its business
transactions, and will reflect in its financial statements adequate accruals and
appropriations to reserves, all in accordance with GAAP. The Borrower will, and
will cause each of its Subsidiaries to, permit officers and designated
representatives of the Agent or any Bank to visit and inspect any of the
properties or assets of the Borrower or any of its Subsidiaries in whosesoever
52
possession, and to examine the books of account of the Borrower or any of its
Subsidiaries and discuss the affairs, finances and accounts of the Borrower or
any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants (in the presence of such officers), all at
such reasonable times and intervals and to such reasonable extent as the Agent
or any Bank may reasonably request.
6.03. Maintenance of Property; Insurance. (a) The Borrower and
its Subsidiaries will exercise commercially reasonable efforts to maintain or
cause to be maintained in good repair, working order and condition (subject to
normal wear and tear) all properties used in its businesses and from time to
time will make or cause to be made all appropriate repairs, renewals and
replacements thereof and will maintain and renew as necessary all licenses,
permits and other clearances necessary to use and occupy such properties.
(b) Subject to the provisions of subsection 6.03(c) below, the
Borrower and its Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations to
the extent that such types and such amounts of insurance are available at
commercially reasonable rates. The Borrower will, and will cause each of its
Subsidiaries to, furnish to each Bank, upon reasonable request, information as
to the insurance carried, and will not cancel, without replacement with a
substantially similar policy, any such insurance without the reasonable consent
of the Required Banks.
(c) The Borrower will, and will cause each of its Subsidiaries
to, maintain in full force the insurance coverages in respect of the Collateral
as set forth in the Security Documents.
6.04. Payment of Taxes. The Borrower will, and shall cause
each of its Subsidiaries to, pay and discharge all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any properties belonging to it, prior to the date on which
material penalties attach thereto, and all lawful claims which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Subsidiaries or cause a failure or forfeiture of title thereto; provided that
neither the Borrower nor any of its Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim that is being contested in good
53
faith and by proper proceedings promptly instituted and diligently conducted,
which proceedings have the effect of preventing the forfeiture or sale of the
property or asset that may become subject to such Lien, if it has maintained
adequate reserves with respect thereto in accordance with and to the extent
required under GAAP.
6.05. Corporate Franchises. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights and authority,
and its Intellectual Property, except where such failure to keep in full force
and effect such rights and authority would not have a Materially Adverse Effect.
6.06. Compliance with Statutes, etc. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls) other than non-compliance which could not reasonably be expected to
have a Materially Adverse Effect.
6.07. ERISA. The Borrower will furnish to each of the Banks:
(a) promptly upon the Borrower knowing or having reason to
know of the occurrence of any (i) Termination Event or (ii) "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975
of the Code, in connection with any Pension Plan or any trust created
thereunder, which in the case of all such events described in clause
(i) or (ii) results or could reasonably be expected to result in a
liability of any Credit Party or its respective Subsidiaries in the
aggregate in excess of $100,000 or the imposition of a Lien on the
assets of a Credit Party, a written notice specifying the nature
thereof, what action such Credit Party, its respective Subsidiaries or
its respective ERISA Affiliates have taken, are taking or propose to
take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor, PBGC
or Multiemployer Plan sponsor with respect thereto; and
(b) with reasonable promptness copies of (i) all notices
received by any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates of PBGC's intent to terminate any Title IV
Plan or to have a trustee appointed to administer any Title IV Plan,
54
the notice of which event is required pursuant to the preceding
paragraph (a); (ii) upon the request of the Agent each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by any Credit Party, its respective Subsidiaries or its respective
ERISA Affiliates with the Internal Revenue Service with respect to each
Pension Plan; (iii) upon the request of the Agent, the most recent
actuarial valuation report for each Title IV Plan which is then
maintained by any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates or as to which any Credit Party, its
respective Subsidiaries or its respective ERISA Affiliates has any
continuing funding obligations; and (iv) all notices received by any
Credit Party, its respective Subsidiaries or its respective ERISA
Affiliates from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA,
the notice of which event is required pursuant to the preceding
paragraph (a).
6.08. Performance of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, perform in all material respects all of their
respective obligations under the terms of each mortgage, indenture, security
agreement, other debt instrument and material contract by which they are bound
or to which they are a party, except where such nonperformance would not have a
Materially Adverse Effect.
6.09. End of Fiscal Years; Fiscal Quarters. Each Credit Party
will, for financial reporting purposes, and will cause each of its Subsidiaries
to, have its (i) fiscal years end on December 31, and (ii) fiscal quarters end
on March 31, June 30, September 30, and December 31.
6.10. Use of Proceeds. All proceeds of the Loans shall be
used as provided in Section 5.05.
6.11. Interest Rate Protection. The Borrower shall, no later
than 90 days after the Closing Date and in respect of no less than 50% of the
outstanding Term Loans as in effect from time to time enter into Interest Rate
Agreements reasonably acceptable to the Agent for a period of not less than
three years.
6.12. Equal Security for Loans and Notes; No Further Negative
Pledges. (a) If the Borrower or any of its respective Subsidiaries shall create
or assume any Lien upon any of its property or assets, whether now owned or
hereafter acquired and whether or not such property or assets constitutes
Collateral, other than Liens permitted by the applicable Security Document
55
(unless prior written consent to the creation or assumption thereof shall have
been obtained from the Agent and the Required Banks), the Borrower shall, and
shall cause any applicable Subsidiary to, make or cause to be made effective
provisions whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness thereby secured as long as any such
Indebtedness shall be secured; provided that this covenant shall not be
construed as consent by the Agent and the Required Banks to any violation by the
Borrower of the provisions of Section 7.03.
(b) Except with respect to prohibitions against other
encumbrances on specific property encumbered to secure payment of particular
Indebtedness permitted hereunder (which Indebtedness relates solely to the
acquisition or improvement of such specific property), neither the Borrower nor
any of its Subsidiaries shall enter into any agreement prohibiting the creation
or assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired.
6.13. Lender Meeting. The Borrower will participate in a
meeting of the Banks once during each fiscal year (commencing with the fiscal
year ending December 31, 1997) relating to the financial statements of the
previous fiscal year to be held at a location and a time selected by the
Borrower and reasonably acceptable to the Agent.
6.14. Pledge of Additional Collateral. Subject to Section
6.12(b), and in any event within 30 days after the acquisition by the Borrower
or any of its Subsidiaries of (i) Real Property, (ii) assets of the type that
would have constituted Collateral (pursuant to the appropriate Security Document
on the Closing Date or Effective Date, as applicable, executed by such Person)
at the Closing Date or the Effective Date or (iii) capital stock or other equity
interest of any Subsidiary (whether by capital contribution or acquisition)
(collectively, (i), (ii), (iii) and the assets of any Subsidiary described in
(iii), the "Additional Collateral"), the Borrower will, and will cause each of
its Subsidiaries to, take all necessary action, including the filing of
appropriate financing statements under the provisions of the UCC, applicable
foreign, domestic or local laws, rules or regulations in each of the offices
where such filing is necessary or appropriate, entering into or amending
Security Documents or, in the case the Borrower or any of its Subsidiaries
creates or acquires a Subsidiary, entering into such additional pledge
agreements and security agreements in form and substance satisfactory to the
Collateral Agent (and, in the case of the acquisition of Real Property,
satisfaction of the conditions set forth in Sections 4.01(b)(ii), 4.01(p) and
56
4.01(t) and, in the case of the acquisition of personal property, satisfaction
of the conditions set forth in Sections 4.01(b)(ii) and 4.01(m)), to grant to
the Collateral Agent a perfected first priority Lien, subject to Prior Liens and
other Liens permitted by the applicable Security Documents, in such Collateral
pursuant to and to the full extent required by the Security Documents and this
Agreement. All actions taken by the parties in connection with the pledge of
Additional Collateral, including, without limitation, costs of counsel for the
Agent or the Collateral Agent, shall be for the account of the Borrower, which
shall pay all sums due within 5 Business Days of demand.
6.15. Security Interests. The Borrower will, and will cause
its Subsidiaries to, perform any and all acts and execute any and all documents
(including, without limitation, the execution, amendment or supplementation of
any financing statement and continuation statement) for filing in any
appropriate jurisdiction under the provisions of the UCC, local law or any
statute, rule or regulation of any applicable jurisdiction which are necessary
in order to maintain or confirm in favor of the Collateral Agent for the benefit
of the Banks a valid and perfected Lien on the Collateral and any Additional
Collateral, subject to no Liens except for Prior Liens and other Liens expressly
permitted by the applicable Security Documents. The Borrower shall, as promptly
as practicable after the filing of any financing statements, deliver or cause to
be delivered to the Agent acknowledgment copies of, or copies of lien search
reports confirming the filing of, financing statements duly filed under the UCC
of all jurisdictions as may be necessary or, in the reasonable judgment of the
Agent, desirable to perfect the Lien created, or purported or intended to be
created, by each Security Document.
6.16. Subsidiary Guarantees. In the event the Borrower or any
of its Subsidiaries creates or acquires a Subsidiary, the Borrower will cause
such Subsidiary to execute and deliver to the Collateral Agent for the benefit
of the Banks a subsidiary guarantee, in form and substance satisfactory to the
Collateral Agent, guaranteeing the Obligations.
6.17. Environmental Events. (a) The Borrower will promptly
give notice to the Agent upon becoming aware thereof (i) of any violation of any
Environmental Law, (ii) of any inquiry, proceeding, investigation or other
action, including a request for information or a notice of potential liability
under any Environmental Law from any Person (in the case of each of clause (i)
and (ii), that which could reasonably be expected to result in a Material
Adverse Effect) or (iii) of the discovery of the release or threatened release
of any Hazardous Material at, on, upon, under or from any of the Real Properties
57
or any facility or equipment thereat in excess of reportable quantities and
which must be reported under applicable Environmental Laws, or in a manner
and/or amount which could reasonably be expected to result in liability under
any Environmental Law, in each case which would have a Materially Adverse
Effect.
(b) In the event of the presence of any Hazardous Material on,
at, upon or under any of the Real Properties which is in violation of, or which
could reasonably be expected to result in liability under, any Environmental
Law, in each case which would have a Materially Adverse Effect, the Borrower or
any of its Subsidiaries, upon discovery thereof, shall take all necessary steps
to initiate and expeditiously complete all responsive, corrective and other
action required under any Environmental Law to mitigate and eliminate any such
adverse effect.
(c) The Borrower shall as promptly as practicable notify the
Agent of the occurrence of any event specified in Section 6.17(b) and shall
thereafter keep the Agent informed on a periodic basis of any actions taken in
response to such event and the results of such actions.
(d) The Borrower shall provide the Agent with copies of any
notice, submittal or documentation provided by the Borrower or any of its
Subsidiaries to any Governmental Authority or third party under any
Environmental Law if the matter which is the subject of the notice, submittal or
other documentation could reasonably be expected to result in a Materially
Adverse Effect. Such notice, submittal or documentation shall be provided to the
Agent promptly and, in any event, within 5 business days after such material is
provided to the Governmental Authority or third party.
6.18. Landlord Lien Assurance. The Borrower will use its best
efforts to obtain Landlord Lien Assurances, in the form of Exhibit N hereto,
from the landlords of leased Real Property of the Borrower and its Subsidiaries
where Inventory is located.
SECTION 7. Negative Covenants. The Credit Parties hereby
covenant and agree that as of the Closing Date and thereafter for so long as
this Agreement is in effect and until the Commitments have terminated and the
Loans together with interest and fees are paid in full and all other Obligations
incurred hereunder, to the extent then due and payable, are paid in full:
58
7.01. Conduct of Business. The Borrower will, and will cause
each of its Subsidiaries to, at all times take any and all such actions as may
be necessary or appropriate to permit the Borrower and its Subsidiaries to
continue to conduct its business in substantially the same manner as heretofore
conducted prior to the Transaction by the Borrower's predecessors. The Borrower
will not, and will not permit any of its Subsidiaries to, engage in any business
other than such business and any businesses or activities substantially similar
or related thereto.
7.02. Amendments or Waivers of Certain Documents. (a) No
Credit Party or its respective Subsidiaries will amend or otherwise change the
terms of any Existing Debt in a manner adverse to the Banks without the prior
written consent of the Required Banks.
(b) After the Closing Date, no Credit Party or its respective
Subsidiaries will amend or otherwise change the terms of the Transaction
Documents in a manner adverse to the Banks without the prior written consent of
the Required Banks.
7.03. Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, directly or indirectly create, incur, assume or permit or
suffer to exist any Lien upon or with respect to any item constituting
Collateral, whether now owned or hereafter acquired, or sell any such Collateral
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Collateral or assign any right to receive income, or file or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute, except for the Lien of the
Security Document relating thereto, Prior Liens applicable thereto and other
Liens expressly permitted by such Security Document. The Borrower will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets of the Borrower or
any Subsidiary which does not constitute Collateral whether now owned or
hereafter acquired, or sell any Collateral, property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
or assets or assign any right to receive income, or file or permit the filing of
any financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute, except the following, which are herein
collectively referred to as "Permitted Encumbrances":
59
(a) Liens for taxes, assessments or governmental charges or
claims not yet delinquent or Liens for taxes, assessments or
governmental charges or claims being contested in good faith and by
appropriate proceedings for which adequate reserves, as may be required
by GAAP, have been established;
(b) Liens in respect of property or assets of the Borrower or
any of its Subsidiaries imposed by law (i) which were incurred in the
ordinary course of business, such as landlords' carriers',
warehousemen's and mechanics' Liens and other similar Liens arising in
the ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of
the Borrower or any of its Subsidiaries or (y) which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property or
asset subject to such Lien or (ii) which do not relate to material
liabilities of the Borrower or any of its Subsidiaries and do not in
the aggregate materially detract from the value of the property and
assets of the Borrower and its Subsidiaries taken as a whole;
(c) Liens in connection with any attachment or judgment
(including judgment or appeal bonds) not in excess of $100,000
individually or $250,000 in the aggregate for the Borrower and its
Subsidiaries (exclusive of any amount adequately covered by insurance
as to which the insurance company has acknowledged coverage) unless the
judgment it secures shall, within 60 days after the entry thereof, not
have been discharged or execution thereof not stayed pending appeal, or
shall not have been discharged within 30 days after the expiration of
any such stay;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money or the
equivalent);
60
(e) Subject to the provisions of Section 7.19 and, with
respect to any Mortgaged Real Property, to the provisions of any
applicable Mortgage, Leases with respect to the assets or properties of
the Borrower or any of its Subsidiaries entered into in the ordinary
course of the Borrower's or such Subsidiary's business and subordinate
in all respects to the Liens granted and evidenced by the Security
Documents;
(f) Easements, rights of way, restrictions, minor defects or
irregularities in title not interfering in any material respect with
the business of the Borrower or any of its Subsidiaries, in each case
incurred in the ordinary course of business and which do not materially
impair for its intended purposes the use or value of the Real Property
to which it relates; and
(g) Liens upon real or tangible personal property (including
Capital Leases) acquired by the Borrower or any of its Subsidiaries
after the date hereof; provided that (i) any such Lien is created
solely for the purpose of securing Indebtedness representing, or
incurred to finance, the cost of the item of property subject thereto,
(ii) the principal amount of the Indebtedness secured by such Lien is
at least 70%, and does not exceed 100% of the fair value (as determined
in good faith by the board of directors or members of the appropriate
entity) of the respective property at the time it was so acquired,
(iii) such Lien does not extend to or cover any other property other
than such item of property and (d) the incurrence of such Indebtedness
secured by such Lien is permitted by Section 7.04.
The Borrower shall use its commercially reasonable best
efforts to obtain the waiver of any Lien referred to in clause (b)(i) above on
or in respect of any Equipment or Inventory. The term "Permitted Encumbrances"
shall mean, with respect to Mortgaged Real Property, Liens permitted under the
Mortgages.
7.04. Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Credit Documents;
provided that the aggregate principal amount of Indebtedness incurred
pursuant to this Agreement shall in no event exceed the Total
Commitments;
61
(b) Existing Debt and any refinancing thereof; provided that
any such refinancing of Existing Debt shall be on terms which, both
taken as a whole and specifically as such terms relate to the identity
of the obligors, repayments of principal, covenants, events of default
and security in property of the debtor, are in each event no more
favorable to the creditor than the correlative terms of the Existing
Debt;
(c) Interest Rate Agreements to the extent required by
Section 6.11;
(d) $500,000 of principal Indebtedness in the aggregate
outstanding at any time for the Borrower and its Subsidiaries incurred
to finance the cost of the acquisition of real or tangible personal
property (including Capital Leases); provided that such Indebtedness
shall be at least 70% and shall not exceed 100% of the fair value of
such property; and provided, further, that such Indebtedness is not
secured by any Lien other than a Lien referred to in clause (g) of
Section 7.03;
(e) Contingent Obligations permitted by Section 7.16;
(f) Indebtedness issued to sellers in connection with an
acquisition, in an amount not to exceed $500,000 in the aggregate
outstanding at any time, provided that such Indebtedness is unsecured
and contains subordination and other terms satisfactory to the Agent;
(g) Indebtedness of the Borrower to any of its Wholly Owned
Subsidiaries or of any Subsidiary to the Borrower or another Wholly
Owned Subsidiary of the Borrower (but only so long as such Indebtedness
is held by the Borrower or its Wholly Owned Subsidiary; and
(h) other unsecured Indebtedness not exceeding $250,000 in the
aggregate for the Borrower and its Subsidiaries at any time
outstanding.
62
7.05. Capital Expenditures. The Borrower will not, and will
not permit any of its Subsidiaries to, make Consolidated Capital Expenditures
for any purpose in excess of the amounts set forth below for the period set
forth below:
Period Amount in $
------ -----------
Closing Date to December 31, 1997 .......................... $ 300,000
Fiscal Year Ending December 31, 1998 ....................... 1,000,000
Fiscal Year Ending December 31, 1999 ....................... 1,000,000
Fiscal Year Ending December 31, 2000 ....................... 1,250,000
Fiscal Year Ending December 31, 2001 ....................... 1,500,000
Fiscal Year Ending December 31, 2002 ....................... 1,500,000
Six Months Ending June 30, 2003 ............................ 750,000
7.06. Advances, Investments and Loans. The Borrower will not,
and will not permit any of its Subsidiaries to, lend money or credit or make
advances (which shall not include progress payments made by any Credit Party to
its subcontractors in the ordinary course of business consistent with industry
practice) to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to any
Person, except:
(a) investments in Cash and Cash Equivalents;
(b) receivables owing to them and advances to customers and
suppliers, in each case if created, acquired or made in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms;
(c) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course
of business;
(d) the acceptance of a form of consideration other than Cash
or Cash Equivalents in connection with the sale or disposition of
assets to the extent provided in Section 7.15;
(e) up to $500,000 per year to acquire Capital Stock of any
other Person, provided that immediately after the transaction such
Person becomes a Wholly-Owned Subsidiary of the Borrower;
(f) investments in and advances to Credit Parties; and
(g) additional loans, advances and/or investments of a nature
not contemplated by the foregoing clauses (a) through (f); provided
that all loans, advances and investments made pursuant to this clause
(g) shall not exceed $250,000 in the aggregate at any time outstanding
for the Borrower and its Subsidiaries.
63
7.07. Prepayments of Indebtedness, etc. The Borrower will not,
and will not permit any of its Subsidiaries to: (a) after the issuance thereof,
amend or modify (or permit the amendment or modification of) any of the terms or
provisions, to the extent any such amendment or modification would be adverse to
the issuer thereof or to the interests of the Banks, of any of the Indebtedness
(or any agreement relating thereto) of the type described in Section 7.04(b),
(f) or (g); (b) make (or give any notice in respect of) any voluntary or
optional payment or prepayment or redemption or acquisition for value of
(including, without limitation, by way of depositing with any trustee with
respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of any such
Indebtedness; and/or (c) amend, modify or change any of its respective charter
documents, or any agreement entered into by the Borrower or its Subsidiaries
with respect to its equity securities, or enter into any new agreement with
respect to the equity securities of the Borrower or any Subsidiary the result of
which is reasonably likely to be adverse to the interests of the Banks (in their
capacity as such) hereunder.
7.08. Dividends, etc. The Borrower will not, and will not
permit any of its Subsidiaries to, declare or pay any dividends or return any
capital to, its members or authorize or make any other distribution, payment or
delivery of property or cash to its members as such, or redeem, retire, purchase
or otherwise acquire, directly or indirectly, for any consideration, any of its
equity interest now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such equity interests), or make
any loans or advances to Affiliates, or set aside any funds for any of the
foregoing purposes, or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any equity interest of the Borrower or any other
Subsidiary, as the case may be, now or hereafter outstanding (or any options or
warrants or stock appreciation rights issued by such Person with respect to its
equity interest) (all of the foregoing, "Dividends"), except that any Subsidiary
of the Borrower may pay Dividends to its parent corporation if such parent
corporation is (x) the Borrower or (y) a Wholly-Owned Subsidiary of the
Borrower.
7.09. Transaction with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction or series
of transactions, whether or not in the ordinary course of business, with any
holder of 5% or more of the equity securities of the Borrower or with any
Affiliate of the Borrower other than on terms and conditions substantially as
favorable to the Borrower or any Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm's-length transaction
64
with a Person other than a holder of 5% or more of the equity securities of the
Borrower or an Affiliate of the Borrower; provided that the foregoing
restrictions shall not apply to (i) transactions between or among the Borrower
and its Wholly-Owned Subsidiaries and (ii) the payment of fees to Indosuez and
its Affiliates for financial services, such fees not to exceed Indosuez' usual
and customary fees for similar services.
7.10. Total Interest Coverage Ratio. The ratio of (i)
Consolidated EBITDA to (ii) cash Consolidated Interest Expense for the Borrower
set forth below for the Test Period ending on each date listed below shall not
be less than the ratio set forth opposite such date below; provided that for the
computation of Consolidated EBITDA for the Test Period ending September 30,
1997, Consolidated EBITDA shall be equal to the product of the amount of
Consolidated EBITDA since December 31, 1996 and a fraction, the numerator of
which is 365 and the denominator of which is the number of days elapsed during
such period since December 31, 1996; and provided further that for any
computation pursuant to clause (ii) of the definition of Test Period,
Consolidated Interest Expense shall be equal to the product of the amount of
Consolidated Interest Expense since the Closing Date and a fraction, the
numerator of which is 365 and the denominator of which is the number of days
elapsed during such period since the Closing Date:
Test Period Ratio
----------- -----
September 30, 1997 ........................ 3.00 to 1.0
December 31, 1997 ......................... 3.00 to 1.0
March 31, 1998 ............................ 3.25 to 1.0
June 30, 1998 ............................. 3.25 to 1.0
September 30, 1998 ........................ 3.25 to 1.0
December 31, 1998 ......................... 3.75 to 1.0
March 31, 1999 ............................ 3.75 to 1.0
June 30, 1999 ............................. 3.75 to 1.0
September 30, 1999 ........................ 3.75 to 1.0
December 31, 1999 ......................... 4.50 to 1.0
March 31, 2000 ............................ 4.50 to 1.0
June 30, 2000 ............................. 4.50 to 1.0
September 30, 2000 ........................ 4.50 to 1.0
December 31, 2000 ......................... 5.00 to 1.0
March 31, 2001 ............................ 5.00 to 1.0
June 30, 2001 ............................. 5.00 to 1.0
September 30, 2001 ........................ 5.00 to 1.0
December 31, 2001 ......................... 5.00 to 1.0
March 31, 2002 ............................ 5.00 to 1.0
June 30, 2002 ............................. 5.00 to 1.0
September 30, 2002 ........................ 5.00 to 1.0
December 31, 2002 ......................... 5.00 to 1.0
March 31, 2003 ............................ 5.00 to 1.0
June 30, 2003 ............................. 5.00 to 1.0
65
7.11. Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio of (i) Consolidated EBITDAC of the Borrower minus cash taxes to
(ii) cash Consolidated Interest Expense of the Borrower plus the amount of
scheduled mandatory payments on account of principal of Indebtedness of the
Borrower for the Test Period ending on each date listed below, to be less than
the ratio set forth opposite such date below; provided that for any computation
pursuant to clause (ii) of the definition of Test Period, Consolidated Interest
Expense shall be equal to the product of the amount of Consolidated Interest
Expense since the Closing Date and a fraction, the numerator of which is 365 and
the denominator of which is the number of days elapsed during such period since
the Closing Date:
Test Period Ratio
----------- -----
December 31, 1997 ........................... 1.00 to 1.0
March 31, 1998 .............................. 1.00 to 1.0
June 30, 1998 ............................... 1.00 to 1.0
September 30, 1998 .......................... 1.00 to 1.0
December 31, 1998 ........................... 1.00 to 1.0
March 31, 1999 .............................. 1.00 to 1.0
June 30, 1999 ............................... 1.00 to 1.0
September 30, 1999 .......................... 1.00 to 1.0
December 31, 1999 ........................... 1.20 to 1.0
March 31, 2000 .............................. 1.20 to 1.0
June 30, 2000 ............................... 1.20 to 1.0
September 30, 2000 .......................... 1.20 to 1.0
December 31, 2000 ........................... 1.20 to 1.0
March 31, 2001 .............................. 1.20 to 1.0
June 30, 2001 ............................... 1.20 to 1.0
September 30, 2001 .......................... 1.20 to 1.0
December 31, 2001 ........................... 1.20 to 1.0
March 31, 2002 .............................. 1.20 to 1.0
June 30, 2002 ............................... 1.20 to 1.0
September 30, 2002 .......................... 1.20 to 1.0
December 31, 2002 ........................... 1.20 to 1.0
March 31, 2003 .............................. 1.20 to 1.0
June 30, 2003 ............................... 1.20 to 1.0
7.12. Leverage Ratio. The Borrower will not permit the ratio
of (i) Indebtedness of the Borrower and its Subsidiaries on each date listed
below to (ii) cash Consolidated EBITDA of the Borrower for the Test Period
ending on each date listed below to be more than the ratio set forth below;
66
provided that the portion of Indebtedness of the Borrower and its Subsidiaries
which constitute Revolving Loans shall be the average amount outstanding during
the Test Period ending on such date (with computations pursuant to clause (ii)
of the definition of Test Period being computed from the Closing Date):
Test Period Ratio
----------- -----
September 30, 1997 ........................ 3.00 to 1.0
December 31, 1997 ......................... 3.00 to 1.0
March 31, 1998 ............................ 2.75 to 1.0
June 30, 1998 ............................. 2.75 to 1.0
September 30, 1998 ........................ 2.75 to 1.0
December 31, 1998 ......................... 2.50 to 1.0
March 31, 1999 ............................ 2.50 to 1.0
June 30, 1999 ............................. 2.50 to 1.0
September 30, 1999 ........................ 2.50 to 1.0
December 31, 1999 ......................... 2.00 to 1.0
March 31, 2000 ............................ 2.00 to 1.0
June 30, 2000 ............................. 2.00 to 1.0
September 30, 2000 ........................ 2.00 to 1.0
December 31, 2000 ......................... 1.50 to 1.0
March 31, 2001 ............................ 1.50 to 1.0
June 30, 2001 ............................. 1.50 to 1.0
September 30, 2001 ........................ 1.50 to 1.0
December 31, 2001 ......................... 1.50 to 1.0
March 31, 2002 ............................ 1.50 to 1.0
June 30, 2002 ............................. 1.50 to 1.0
September 30, 2002 ........................ 1.50 to 1.0
December 31, 2002 ......................... 1.50 to 1.0
March 31, 2003 ............................ 1.50 to 1.0
June 30, 2003 ............................. 1.50 to 1.0
7.13. Minimum Consolidated EBITDA. The Borrower will maintain
a Consolidated EBITDA of at least the amount set forth below for the Test Period
ending on each date listed below:
Minimum EBITDA
Test Period ($ Millions)
----------- ------------
September 30, 1997 ...................... $ 7.00
December 31, 1997 ....................... 8.50
March 31, 1998 .......................... 9.00
June 30, 1998 ........................... 9.00
September 30, 1998 ...................... 9.00
December 31, 1998 ....................... 10.50
March 31, 1999 .......................... 10.50
67
June 30, 1999 ........................... 10.50
September 30, 1999 ...................... 10.50
December 31, 1999 ....................... 12.50
March 31, 2000 .......................... 12.50
June 30, 2000 ........................... 12.50
September 30, 2000 ...................... 12.50
December 31, 2000 ....................... 14.00
March 31, 2001 .......................... 14.00
June 30, 2001 ........................... 14.00
September 30, 2001 ...................... 14.00
December 31, 2001 ....................... 14.00
March 31, 2002 .......................... 14.00
June 30, 2002 ........................... 14.00
September 30, 2002 ...................... 14.00
December 31, 2002 ....................... 14.00
March 31, 2003 .......................... 14.00
June 30, 2003 ........................... 14.00
7.14. Issuance of Subsidiary Stock. The Borrower will not, and
will not permit any of its Subsidiaries, directly or indirectly, to issue, sell,
assign, pledge or otherwise encumber or dispose of any shares of any
Subsidiaries' capital stock or other securities or equity interests (or
warrants, rights or options to acquire capital stock or convertible securities
or other equity securities) of such Subsidiary, other than pursuant to the
Security Documents and as contemplated by the Transaction.
7.15. Disposition of Assets. (a) The Borrower will not, and
will not permit any of its Subsidiaries to, dispose of all or any part of its
interest in any asset, except that the Borrower and its Subsidiaries may sell
assets so long as (i) such sales are approved by the Required Banks and the
sales price thereof is, in the reasonable judgment of the Agent, at least equal
to the fair market value of such assets, or (ii) such sales are for at least the
fair market value of such assets and the aggregate amount of such asset sales is
less than $250,000 in any 12-month period and, in any such case, the Borrower
complies with the mandatory prepayment and Commitment reduction provisions of
this Agreement and, in the case of Collateral, so long as the conditions to the
release of Collateral described herein and in the applicable Security Documents
are met, or (iii) such sales are of inventory in the ordinary course of
business, or (iv) such sales are (A) of obsolete equipment, (B) for at least the
fair market value of such equipment, (C) not in excess of 250,000 per year in
the aggregate and (D) the proceeds of such sales are used within 60 days of such
sales to (1) purchase equipment used in substantially similar lines of business
or (2) repay Indebtedness under this Agreement pursuant to Section 3.02.
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The consideration received by the Borrower or its Subsidiaries
from each sale of assets permitted above shall be received in whole at the time
of sale and at least 70% of the consideration from each sale shall consist of
Cash or Cash Equivalents. Any non-cash proceeds received from the sale of assets
shall be pledged to the Collateral Agent pursuant to and in accordance with the
applicable Security Documents and shall constitute Collateral.
(b) Upon compliance with the conditions in subsection (a) of
this Section 7.15, the Release Conditions and the Partial Release Conditions
(each as hereinafter defined), the Borrower shall be entitled to receive from
the Collateral Agent an instrument in form and substance reasonably satisfactory
to the Borrower (each, a "Release") releasing the Lien of the Mortgage with
respect to all or any portion of a Mortgaged Real Property (each, a "Released
Real Property"). The Borrower shall exercise its rights under this Section by
delivering to the Collateral Agent a notice (each, a "Release Notice"), which
shall refer to this Section, describe with particularity the proposed Released
Real Property and be accompanied by (i) four counterparts of the Release fully
executed and acknowledged by all necessary parties other than Collateral Agent,
(ii) executed counterparts of UCC or other applicable termination statements
necessary to terminate the Lien of the applicable Mortgage and (iii) an
Officers' Certificate certifying that no Default or Event of Default shall have
occurred and the parties executing any and all documents in connection with the
Release (other than the Collateral Agent) were duly authorized to do so
(collectively, the "Release Conditions"). In the event the proposed Released
Real Property consists of less than all of the Mortgaged Real Property subject
to a single Mortgage, the Partial Release Conditions must be satisfied in order
for the Borrower to receive the Release.
(c) The Collateral Agent's obligation to deliver a Release in
respect of less than all of the Mortgaged Real Property subject to a single
Mortgage shall be contingent upon the satisfaction of the conditions in
subsection (a) of this Section 7.15 and the Release Conditions as well as the
following conditions (collectively, the "Partial Release Conditions"):
(i) following the sale, transfer or other disposition of and
release of the Lien of the applicable Mortgage with respect to the
proposed Released Real Property, the remaining Mortgaged Real Property
shall have utility services and access to public roads, rail spurs and
69
other transportation structures sufficient and necessary for the
continued use of such Mortgaged Real Property in the manner utilized
prior to the Release;
(ii) following the sale, transfer or other disposition of the
proposed Released Real Property, the remaining Mortgaged Real Property
shall comply in all material respects with applicable laws, rules,
regulations and ordinances relating to environmental protection,
zoning, land use, configuration and building and workplace safety;
(iii) following the sale, transfer or other disposition of the
proposed Released Real Property, the value of the remaining Mortgaged
Real Property shall not be less than the value of such remaining
Mortgaged Real Property prior to the Release;
(iv) the Title Company shall have issued an endorsement to
the Banks' title insurance policy relating to the Mortgaged Real
Property confirming that after the proposed release, the Lien of the
applicable Mortgage continues unimpaired as a first priority Lien upon
the remaining Mortgaged Real Property subject only to Prior Liens; and
(v) the Borrower shall cause to have been delivered to
Collateral Agent an Officer's Certificate certifying that the
conditions set forth in subsections (i) through (iv) have been
satisfied.
(d) The Collateral Agent shall execute, acknowledge (if
applicable) and deliver to the Borrower counterparts of the documents described
in subsection (b)(i) and (ii) within 30 days after receipt by the Collateral
Agent of a Release Notice provided that the Release Conditions and the Partial
Release Conditions (if applicable) have been satisfied. The Borrower shall (i)
execute, deliver, obtain and record such instruments as the Collateral Agent may
require, including, without limitation, amendments to the Security Documents or
this Agreement and (ii) deliver to the Collateral Agent such evidence of the
satisfaction of the Release Conditions and the Partial Release Conditions as the
Collateral Agent may require. The Borrower shall reimburse the Collateral Agent,
Agent and the Banks upon demand for all costs or expenses incurred in connection
with any actions taken pursuant to this Section 7.15.
7.16. Contingent Obligations. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create or become
or be liable with respect to any Contingent Obligation except:
70
(i) guarantees resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Interest Rate Agreements to the extent required by
Section 6.11 of this Agreement;
(iii) performance guarantees by the Borrower of contractual
obligations of the Subsidiaries of the Borrower, in each case entered
into the ordinary course of business; and
(iv) Other Contingent Obligations not to exceed $250,000 in
the aggregate for the Borrower and its Subsidiaries outstanding at any
one time.
7.17. ERISA. The Borrower will not, and will not permit any
of its Subsidiaries to:
(i) engage in any transaction in connection with which the
Borrower or its Subsidiaries could reasonably be subject to either a
tax imposed by Section 4975(a) of the Code or the corresponding civil
penalty assessed pursuant to Section 502(i) of ERISA, which penalties
and taxes for all such transactions could reasonably be expected to be
in an aggregate amount in excess of $100,000;
(ii) permit to exist any accumulated funding deficiency, for
which a waiver has not been obtained from the Internal Revenue Service,
with respect to any Pension Plan which is then maintained by the
Borrower or its Subsidiaries or as to which the Borrower or its
Subsidiaries has any continuing funding obligations;
(iii) permit to exist any failure to make contributions or any
unfunded benefits liability which creates, or with the passage of time
would create, a statutory lien or requirement to provide security under
ERISA or the Code in favor of the PBGC or any Pension Plan,
Multiemployer Plan or other entity;
(iv) permit the sum of the amount of unfunded benefit
liabilities (determined in accordance with Statement of Financial
Accounting Standards No. 87) under all Title IV Plans which are then
maintained by the Borrower or its Subsidiaries or as to which any
Credit Party or its Subsidiaries have any funding obligations
(excluding each Title IV Plan with an amount of unfunded benefit
liabilities of zero or less) to exceed $100,000 for a period in excess
of twelve months; or
71
(v) fail to make any material payment to any Multiemployer
Plan that it may be required to make under such Multiemployer Plan, any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto.
As used in this Section 7.17, the term "accumulated funding
deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of
the Code, and the term "amount of unfunded benefit liabilities" has the meaning
specified in Section 4001(a)(18) of ERISA.
7.18. Merger and Consolidations. No Credit Party will merge or
consolidate with or into any other entity, except that any Wholly Owned
Subsidiary of the Borrower may merge or consolidate with or into any other
wholly-owned Subsidiary of the Borrower or into the Borrower, provided that no
Default or Event of Default exists or would result therefrom.
7.19. Sale and Lease-Backs. Unless constituting a permitted
disposition of assets under Section 7.15 hereof, the Borrower will not, and will
not permit its Subsidiaries to, directly or indirectly, become or thereafter
remain liable as lessee or as guarantor or other surety with respect to the
lessee's obligations under any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired (i) which the Borrower or its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than in
connection with the Transaction) or (ii) which the Borrower or its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by the Borrower or its Subsidiaries to
any Person in connection with such lease, if in the case of clause (i) or (ii)
above, such sale and such lease are part of the same transaction or a series of
related transactions or such sale and such lease occur within one year of each
other or are with the same other Person.
7.20. Sale or Discount of Receivables. The Borrower will not,
and will not permit its Subsidiaries to, sell, with or without recourse, or
discount (other than in connection with trade discounts in the ordinary course
of business) or otherwise sell for less than the face value thereof, notes or
accounts receivable, other than receivables, that, in accordance with GAAP, are
deemed uncollectible.
72
7.21. Xxxx Payments. The Borrower will not, and will not
permit its Subsidiaries to, make any cash payments pursuant to the Stock Escrow
and Buy-Back Agreement dated November 26, 1996 if at the time of such cash
payment or after giving effect thereto, a Default shall have occurred and be
continuing.
SECTION 8. Events of Default. Upon the occurrence and during
the continuance of any of the following specified events (each an "Event of
Default"):
8.01. Payments. The Borrower shall (i) default in the payment
when due of any principal of the Loans, (ii) default, and such default shall
continue for two or more Business Days, in the payment when due of any interest
on the Loans or under any other Credit Document or (iii) fail to pay any other
amounts owing hereunder for five days after receiving notice from the Agent of
such default; or
8.02. Representations, etc. Any representation, warranty or
statement made or deemed made by any Credit Party or its respective Subsidiaries
herein or in any other Credit Document or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall prove to
be untrue in any material respect on the date as of which made or deemed made;
or
8.03. Covenants. Any Credit Party or its respective
Subsidiaries shall (a) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 6.11, 6.12, 6.14, 6.15, 6.16 or
Section 7 hereof or Section 1.1 of any Mortgage or (b) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement or any Security Document (other than those referred
to in Section 8.01 or 8.02) and such default shall continue unremedied for a
period of at least thirty days after the date of such default; or
8.04. Default Under Other Agreements. (a) Any Credit Party or
its respective Subsidiaries shall (i) default in any payment with respect to any
Indebtedness (other than Obligations) having a principal amount in excess of
$250,000 in the aggregate for all Credit Parties and their Subsidiaries, beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created or (ii) default in the observance or performance
of any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or other
event or condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
73
cause any such Indebtedness to become due prior to its stated maturity; or (b)
any such Indebtedness of any Credit Party or any of its respective Subsidiaries
shall be declared to be due and payable, or required to be prepaid other than by
a regularly scheduled required prepayment, prior to the stated maturity thereof;
or
8.05. Bankruptcy, etc. Any Credit Party or its respective
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against any Credit Party or any of its respective Subsidiaries and the
petition is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of any Credit Party or any of its respective Subsidiaries; or any
Credit Party or any of its respective Subsidiaries commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to any Credit Party or
any of its respective Subsidiaries; or there is commenced against any Credit
Party or any of its respective Subsidiaries any such proceeding which remains
undismissed for a period of 60 days; or any Credit Party or any of its
respective Subsidiaries is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or any
Credit Party or any of its respective Subsidiaries suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or any Credit Party
or any of its respective Subsidiaries makes a general assignment for the benefit
of creditors; or any corporate action is taken by any Credit Party or any of its
respective Subsidiaries for the purpose of effecting any of the foregoing; or
8.06. ERISA. (i) Any "reportable event" as described in
Section 4043 of ERISA or the regulations thereunder (excluding those events for
which the requirement for notice has been waived by the PBGC), or any other
event or condition, which the Required Banks determine constitutes reasonable
grounds under Section 4042 of ERISA for the termination of any Pension Plan by
the PBGC or for the appointment by the appropriate United States District Court
of a trustee to administer or liquidate any Title IV Plan shall have occurred;
or
74
(ii) A trustee shall be appointed by a United States
District Court to administer any Title IV Plan; or
(iii) The PBGC shall institute proceedings to terminate any
Title IV Plan or to appoint a trustee to administer any Title IV Plan;
or
(iv) Any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates shall become liable to the PBGC or any
other party under Section 4062, 4063, 4064 or 4069 of ERISA with
respect to any Title IV Plan; or
(v) Any Credit Party, its respective Subsidiaries or its
respective ERISA Affiliates shall become liable to any Multiemployer
Plan under Section 4201 et seq. of ERISA; and
if the sum of each of such Credit Party's, its respective
Subsidiaries' and its respective ERISA Affiliates' various liabilities
(such liabilities to include, without limitation, any liability to the
PBGC or to any other party under Section 4062, 4063, 4064 or 4069 of
ERISA) with respect to any Title IV Plan, or to any Multiemployer Plan
under Section 4201 et seq. of ERISA which the Required Banks determine
could reasonably be expected to be incurred as a result of such events
listed in subclauses (i) through (v) above exceeds $100,000; or
8.07. Security Documents. Any Security Document shall cease to
be in full force and effect, or shall cease to give the Collateral Agent the
Liens, rights, powers and privileges purported to be created thereby, in favor
of the Collateral Agent, superior to and prior to the rights of all third
Persons and subject to no Liens other than Prior Liens and Liens expressly
permitted by the applicable Security Document; or
8.08. Guarantees. Any Guarantee or any provisions thereof
shall cease to be in full force or effect in all material respects, or the
Guarantor thereunder or Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such Guarantee or the
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any
Guarantee; or
8.09. Judgments. One or more judgments or decrees shall be
entered against any Credit Party or any of its respective Subsidiaries involving
a liability of $100,000 or more in the case of any one such judgment or decree
and $250,000 or more in the aggregate for all such judgments and decrees for all
Credit Parties and their respective Subsidiaries (in either case in excess of
75
the amount covered by insurance as to which the insurance company has
acknowledged coverage) and (i) any such judgments or decrees shall not have been
vacated, discharged, bonded or enforcement thereof stayed pending appeal within
30 days from the entry thereof or (ii) any enforcement proceeding therefor shall
have been commenced; or
8.10. Ownership. (i) The consummation of any transaction the
result of which is that any person or "group" (as such term is used in Section
13(d)(3) of the Exchange Act) owns (x) directly or indirectly 30% or more of the
issued and outstanding Common Stock of the Borrower or (y) 30% or more of the
equity securities of the Borrower entitled (without regard to the occurrence of
any contingency) to vote for the election of the members of the board of
directors of the Borrower or (ii) individuals who constituted the board of
directors of the Borrower on the Closing Date (together with any new directors
whose proposal for election by the members of the Borrower was approved by a
vote of a majority of the directors of the Borrower then still in office who
either were directors on the Closing Date or whose election or nomination for
election was previously so approved) shall cease for any reason to constitute a
majority of the members of the board of directors of the Borrower still in
office (each, a "Change in Control").
Then, and in any such event, and at any time thereafter, if
any Event of Default shall then be continuing, the Agent shall, upon the written
request of the Required Banks, by written notice to the Borrower, take any or
all of the following actions, without prejudice to the rights of the Agent or
any Bank to enforce its claims against the Borrower, except as otherwise
specifically provided for in this Agreement (provided that, if an Event of
Default specified in Section 8.05 shall occur, with respect to any Credit Party
or its respective Subsidiaries, the result which would occur upon the giving of
written notice by the Agent as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice): (i) declare the
Total Commitments terminated, whereupon the Commitment of each Bank shall
forthwith terminate immediately and any accrued and unpaid Commitment Commission
shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and accrued interest in respect of all Loans and
all Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party; and/or
(iii) enforce, as Collateral Agent (or direct the Collateral Agent to enforce),
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any or all of the remedies created pursuant to the Security Documents. If an
Event of Default is cured or waived in accordance with the terms of the
Agreement, it ceases (and, if waived, pursuant to the terms, and to the extent,
of such waiver).
SECTION 9. Definitions. As used herein, the following terms
shall have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural the singular:
"A Term Loan" has the meaning provided in Section 1.01(a).
"A Term Loan Commitment" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "A Term Loan Commitment," as the same may be
reduced from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"A Term Loan Facility" means the Loan Facility evidenced by
the Total A Term Loan Commitment.
"A Term Note" has the meaning provided in Section 1.05(a).
"A Term Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total A Term Loan Commitment.
"ABBA" means U.K. ABBA Products, Inc.
"Account" means all of the "accounts" (as that term is defined
in Section 9-106 of the Uniform Commercial Code as in effect in the State of New
York) of the Borrower and its Subsidiaries whether or not such Account has been
earned by performance, whether now existing or existing in the future,
including, without limitation, all (i) accounts receivable, including, without
limitation, all accounts created by or arising from all of the Borrower's and
its Subsidiaries' sales of goods or rendition of services or licensing or
subleasing of any of the Borrower's and its Subsidiaries' Intellectual Property;
(ii) unpaid seller's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including returned or
repossessed goods; (iv) reserves and credit balances held by the Borrower and
its Subsidiaries with respect to any such accounts receivable or any account
debtor; (v) guarantees or collateral for any of the foregoing; and (vi)
insurance policies or rights relating to any of the foregoing.
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"Additional Collateral" has the meaning provided in Section
6.14.
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors,
managers and executive officers of such Person), controlled by, or under direct
or indirect common control with, such Person. A Person shall be deemed to
control a corporation or a limited liability company for the purposes of this
definition if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such corporation or limited liability company or
(ii) to direct or cause the direction of the management and policies of such
corporation or limited liability company, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" has the meaning provided in the first paragraph of
this Agreement and shall include any successor thereto appointed in accordance
herewith.
"Agent's Office" means the office of the Agent located at 1211
Avenue of the Americas, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
office in New York as the Agent may hereafter designate in writing as such to
the other parties hereto.
"Agreement" means this Credit Agreement, as the same may after
its execution be amended, supplemented or otherwise modified from time to time
in accordance with the terms hereof.
"Approved Bank" has the meaning set forth in the definition
of "Cash Equivalents" below.
"Asset Sale" means the sale, transfer or other disposition, to
the extent consummated after the Closing Date, by the Borrower or any of its
Subsidiaries of any asset of the Borrower or its Subsidiaries to any Person
(other than transactions included in the definition of Net Financing Proceeds
and sales, transfers or other dispositions of inventory in the ordinary course
of business and/or of obsolete equipment effected in compliance with Section
7.15(a)(iv)).
"Authorized Officer" means any senior officer of the Borrower
designated as such in writing to the Agent by the Borrower, to the extent
acceptable to the Agent.
"B Term Loan" has the meaning provided in Section 1.01(a).
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"B Term Loan Commitment" means, with respect to each Bank, the
amount set forth below such Bank's name on the signature pages hereto directly
across from the entry entitled "B Term Loan Commitment," as the same may be
reduced from time to time pursuant to Sections 2.02, 3.02 and/or 8.
"B Term Loan Facility" means the Loan Facility evidenced by
the Total B Term Loan Commitment.
"B Term Note" has the meaning provided in Section 1.05(a).
"B Term Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total B Term Loan Commitment.
"Bank" has the meaning provided in the first paragraph of
this Agreement and in Section 11.04.
"Bankruptcy Code" has the meaning provided in Section 8.05.
"Base Rate" means the higher of (x) 1/2% per annum in excess
of the Federal Funds Rate and (y) the rate which the Agent announces from time
to time as its prime commercial lending rate, as in effect from time to time.
The rate the Agent announces as its prime lending rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Agent may make commercial loans or other loans at rates of
interest at, above or below the rate it announces as its prime commercial
lending rate.
"Base Rate Loan" means each Loan bearing interest at the rate
provided in Section 1.07(a).
"Borrower" has the meaning provided in the first paragraph
of this Agreement.
"Borrower General Security Agreement" means the General
Security Agreement executed and delivered by the Borrower substantially in the
form of Exhibit H-1 hereto, except for such changes as shall have been approved
by the Agent, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms and the terms hereof.
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"Borrower Securities Pledge Agreement" means the Securities
Pledge Agreement executed and delivered by the Borrower substantially in the
form of Exhibit F-1 hereto, except for such changes therein as shall have been
approved by the Agent, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Borrowing" means the incurrence pursuant to a Notice of
Borrowing and to the Loan Facility of a Loan by the Borrower from all of the
Banks on a pro rata basis on a given date.
"Borrowing Base" means an amount equal to the sum of (i) 80%
of the Eligible Accounts Receivable and (ii) 50% of the Eligible Inventory.
"Borrowing Base Certificate" has the meaning assigned to
that term in Section 6.01.
"Business Day" means any day excluding Saturday, Sunday and
any day which shall be in the City of New York a legal holiday or a day on which
banking institutions are authorized by law or other governmental actions to
close.
"Capital Lease" of any Person means any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is, or is required to be, accounted for as a capital lease on the
balance sheet of that Person, together with any renewals of such leases (or
entry into new leases) on substantially similar terms.
"Capitalized Lease Obligations" of any Person means all
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in accordance
with GAAP.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than three years from the date of acquisition, (ii) marketable direct
obligations issued by any State of the United States of America or any local
government or other political subdivision thereof rated (at the time of
acquisition of such security) at least AA by Standard & Poor's Corporation
("S&P") or the equivalent thereof by Xxxxx'x Investors Service, Inc. ("Moody's")
having maturities of not more than one year from the date of acquisition, (iii)
U.S. dollar denominated time deposits, certificates of deposit and bankers'
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acceptances of (x) any Bank, (y) any domestic commercial bank of recognized
standing having capital and surplus in excess of $250,000,000 or (z) any bank
whose short-term commercial paper rating (at the time of acquisition of such
security) by S&P is at least A-1 or the equivalent thereof or by Xxxxx'x is at
least P-1 or the equivalent thereof (any such bank, an "Approved Bank"), in each
case with maturities of not more than six months from the date of acquisition,
(iv) commercial paper and variable or fixed rate notes issued by any Bank or
Approved Bank or by the parent company of any Bank or Approved Bank and
commercial paper and variable rate notes issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating (at
the time of acquisition of such security) of at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's, or
guaranteed by any industrial company with a long-term unsecured debt rating (at
the time of acquisition of such security) of at least AA or the equivalent
thereof by S&P or the equivalent thereof by Moody's and in each case maturing
within one year after the date of acquisition, and (v) repurchase agreements
with any Bank or any primary dealer maturing within one year from the date of
acquisition that are fully collateralized by investment instruments that would
otherwise be Cash Equivalents; provided that the terms of such repurchase
agreements comply with the guidelines set forth in the Federal Financial
Institutions Examination Council Supervisory Policy -- Repurchase Agreements of
Depository Institutions With Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985.
"CERCLA" has the meaning provided in Section 5.22(b).
"Certain Indebtedness" means all Indebtedness and any other
obligations of any Credit Party in connection with the existing mortgage on the
Duncanville, Texas property to be repaid pursuant to Section 5.21(a) as set
forth on Schedule 5.21(a).
"Change in Control" has the meaning provided in Section 8.10.
"Closing Date" means June 25, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Collateral" means all of the Pledged Collateral, Pledged
Securities and Mortgaged Real Property.
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"Collateral Agent" means Indosuez in its capacity as
collateral agent for the Banks and shall include any successor thereto appointed
in accordance herewith.
"Commercial Letter of Credit" means any letter of credit or
similar instrument issued for the account of Borrower for the purpose of
providing the primary payment mechanism in connection with the purchase of any
materials, goods or services by Borrower or any of its Subsidiaries in the
ordinary course of business of Borrower or Subsidiaries.
"Commitment" means, with respect to each Bank, such Bank's
Term Loan Commitment and Revolving Loan Commitment.
"Commitment Commission" has the meaning provided in Section
2.03.
"Common Stock" means all of the Common Stock, $.0001 par
value, of the Borrower.
"Compliance Certificate" means a certificate issued pursuant
to Section 6.01(d) signed by a chief financial officer, controller, chief
accounting officer or other Authorized Officer of the Borrower.
"Consolidated Amortization Expense" for any Person means, for
any period, the consolidated amortization expense of such Person for such
period, determined on a consolidated basis for such Person and its Subsidiaries
in conformity with GAAP.
"Consolidated Capital Expenditures" of any Person means, for
any period, the amount expended for property, plant or equipment in conformity
with GAAP, but excluding expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent financed from insurance
proceeds paid on account of the loss of or damage to the assets being replaced
or restored, (ii) with awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced or (iii) with regard to
equipment that is purchased simultaneously with the trade-in of existing
equipment, fixed assets or improvements, the credit granted by the seller of
such equipment for the trade-in of such equipment, fixed assets or improvements;
provided that Consolidated Capital Expenditures shall in any event include the
purchase price paid in connection with the acquisition of any other Person
(including through the purchase of all of the capital stock or other ownership
interests of such Person or through merger or consolidation) to the extent
allocable to property, plant and equipment.
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"Consolidated Current Assets" means, with respect to any
Person as at any date of determination, the total assets of such Person and its
consolidated Subsidiaries which may properly be classified as current assets on
a consolidated balance sheet of such Person and its Subsidiaries in accordance
with GAAP.
"Consolidated Current Liabilities" means, with respect to any
Person as at any date of determination, the total liabilities of such Person and
its consolidated Subsidiaries which may properly be classified as current
liabilities (other than the current portion of any Loans and of any Existing
Indebtedness) on a consolidated balance sheet of such Person and its
consolidated Subsidiaries in accordance with GAAP.
"Consolidated Depreciation Expense" for any Person means, for
any period, the consolidated depreciation expense of such Person for such
period, determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP.
"Consolidated EBITDA" for any Person means, for any period,
the difference between (A) the sum of the amounts for such period of (i)
Consolidated Net Income, (ii) Consolidated Tax Expense, (iii) Consolidated
Interest Expense, (iv) Consolidated Amortization Expense and (v) Consolidated
Depreciation Expense; provided that the sums included in clauses (ii) through
(v) shall be added back only to the extent deducted in calculating Consolidated
Net Income less (B) the sum of the amounts for such period of interest income
and (C) net gains in connection with sales of assets (excluding sales in the
ordinary course of business), whether or not extraordinary, all as determined on
a consolidated basis for such Person and its consolidated Subsidiaries in
accordance with GAAP.
"Consolidated EBITDAC" for any Person means, for any period,
Consolidated EBITDA minus Consolidated Capital Expenditures.
"Consolidated Interest Expense" for any Person shall means,
for any period, total interest expense (including that attributable to Capital
Leases in accordance with GAAP) of such Person and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of such Person
and its Subsidiaries, including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, but excluding, however, any amortization of deferred
financing costs, all as determined on a consolidated basis for such Person and
its consolidated Subsidiaries in accordance with GAAP.
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"Consolidated Net Income" for any Person means, for any
period, the net income (or loss) of such Person and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined on a consolidated basis for such Person and its consolidated
Subsidiaries in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any other Person (other than consolidated Subsidiaries
of such Person) in which any third Person (other than such Person or any of its
consolidated Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to such Person or any
of its Subsidiaries by such other Person during such period, (ii) the income (or
loss) of any other Person accrued prior to the date it becomes a consolidated
Subsidiary of such Person or is merged into or consolidated with such Person or
any of its consolidated Subsidiaries or such other Person's assets are acquired
by such Person or any of its consolidated Subsidiaries, and (iii) the income of
any consolidated Subsidiary of such Person to the extent that the declaration or
payment of dividends or similar distributions by that consolidated Subsidiary of
that income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that consolidated Subsidiary.
"Consolidated Net Worth" of any Person means, at any time for
the determination thereof, the sum of the capital stock and additional paid-in
capital plus retained earnings (or minus accumulated deficit) of such Person and
its consolidated Subsidiaries, all as determined on a consolidated basis for
such Person and its consolidated Subsidiaries in conformity with GAAP.
"Consolidated Tax Expense" for any Person means, for any
period, without duplication, the consolidated tax expense of such Person for
such period, determined on a consolidated basis for such Person and its
consolidated Subsidiaries in conformity with GAAP.
"Contingent Obligations" means, as to any Person, without
duplication, any obligation of such Person guaranteeing or intended to guarantee
any Indebtedness, leases, dividends or other obligations ("primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
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purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (d) otherwise to assure or hold
harmless the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business and amounts that are included in Section 7.16. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the maximum
amount that such Person may be obligated to expend pursuant to the terms of such
Contingent Obligation or, if such Contingent Obligation is not so limited, the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Documents" means (i) this Agreement, (ii) each Note,
(iii) each Guarantee and (iv) each Security Document.
"Credit Party" means at all times the Borrower and each
Subsidiary thereof that pledges any stock, grants any Lien or issues any
guarantee pursuant to any Credit Document.
"Currency Protection Agreement" shall mean any foreign
exchange contract, currency swap agreement, or other financial agreements or
arrangements designed to protect the Borrower against fluctuations in currency
values.
"Default" means any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Deposit Account" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Destruction" has the meaning assigned to that term in each
Mortgage.
"Dividends" has the meaning provided in Section 7.08.
"Documents" means each Credit Document and each Transaction
Document.
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"Dollars" or "$" means United States Dollars.
"Effective Date" has the meaning provided in Section 11.10.
"Effective Time" has the meaning provided in Section 11.10.
"Eligible Accounts Receivable" means, as at any applicable
date of determination, the aggregate face amount of the Accounts of the Credit
Parties included in clause (i) of the definition of Account hereunder (excluding
any Accounts set forth in clauses (ii) through (vi) of such definition), without
duplication, in each case less (without duplication) the aggregate amount of all
reserves, limits and deductions with respect to such Accounts set forth below
and less the aggregate amount of all returns, discounts, claims, rebates,
offsets, credits, charges (including warehouseman's charges) and allowances of
any nature with respect to such Accounts (whether issued, owing, granted or
outstanding). Unless otherwise approved in writing by the Agent in its sole
discretion, no individual Account shall be deemed to be an Eligible Account
Receivable if:
(a) a Credit Party does not have legal and valid title to
the Account; or
(b) the Account is not the valid, binding and legally
enforceable obligation of the account debtor subject, as to
enforceability, only to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect
affecting the enforceability of creditors' rights generally and (ii)
judicial discretion in connection with the remedy of specific
performance and other equitable remedies; or
(c) the Account arises out of a sale made by a Credit Party
to an Affiliate of such Credit Party; or
(d) that portion of any Account that is unpaid more than 60
days after the original invoice date, with respect to Accounts the
invoice for which provides that payment is due in 30 days or less from
the date of such invoice; or
(e) the Account is unpaid more than 30 days after the
original payment due date, with respect to Accounts the invoice for
which provides that payment is due more than 30 days from the date of
such invoice; provided, however, that the aggregate percentage of all
invoices providing for payment more than 30 days from the date of the
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invoice that may constitute Eligible Accounts Receivable shall not
exceed 20% at any one time; or (f) such Account, when aggregated with
all other Accounts of the same account debtor (or any Affiliate
thereof), exceeds twenty percent in face value of all Accounts of the
Credit Parties then outstanding, to the extent of such excess; or
(g) (i) the account debtor for such Account is also a
creditor of a Credit Party, to the extent of the amount owed by such
Credit Party to the account debtor, (ii) the Account is subject to any
claim on the part of the account debtor disputing liability under such
Account in whole or in part, to the extent of the amount of such
dispute or (iii) the Account otherwise is or is reasonably likely to
become subject to any right of setoff or any counterclaim, claim or
defense by the account debtor, to the extent of the amount of such
setoff or counterclaim, claim or defense; or
(h) the account debtor for such Account has commenced a
voluntary case under the federal bankruptcy laws, as now constituted
or hereafter amended, or made an assignment for the benefit of
creditors or if a decree or order for relief has been entered by a
court having jurisdiction in the premises in respect of the account
debtor in an involuntary case under the federal bankruptcy laws, as
now constituted or hereafter amended, or if any other petition or
other application for relief under the federal bankruptcy laws has
been filed by or against the account debtor, or if the account debtor
has failed, suspended business, ceased to be solvent, or consented to
or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or
affairs; or
(i) the Agent does not have a valid and perfected first
priority security interest in such Account (subject only to a tax lien
being contested in good faith and by appropriate proceedings and
permitted by Section 7.03(a)); or
(j) the sale to the account debtor for such Account is on a
consignment, sale on approval, guaranteed sale or sale-and-return
basis or pursuant to any written agreement requiring repurchase or
return; or
(k) such Account is from an account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of other
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Accounts from either such account debtor or any Affiliate thereof are
due or unpaid for more than 60 days after the original invoice date;
or
(l) fifty percent (50%) or more, in face amount, of other
Accounts from the same account debtor for such Account are not deemed
Eligible Accounts Receivable hereunder; or
(m) the account debtor for such Account is a foreign
government or any agency, department or institution thereof; or
(n) such Account is an Account a security interest in which
would be subject to the Federal Assignment of Claims Act of 1940, as
amended (31 U.S.C. ss. 3727 et seq.), unless the Credit Party has
assigned the Account to the Agent in compliance with the provisions of
such Act; or
(o) the account debtor for such Account is outside the United
States or incorporated in or conducting substantially all of its
business in any jurisdiction located outside the United States, unless
(i) the sale is on letter of credit or sight draft, guaranty or
acceptance terms, in each case acceptable to the Agent or (ii) such
Account is otherwise approved by and reasonably acceptable to the
Agent; or
(p) the Agent determines in good faith in accordance with its
internal credit policies that (i) collection of the account is insecure
or (ii) such Account may not be paid by reason of the account debtor's
financial inability to pay; provided, however, that any Account
referred to in this clause (p) shall not become ineligible until the
Agent shall have given the Credit Party three Business Days' advance
notice of such determination; or
(q) the goods giving rise to such Account have not been
shipped or the services giving rise to such Account have not been
performed by a Credit Party or the Account otherwise does not represent
a final sale; or
(r) such Account does not comply in all material respects with
all applicable legal requirements, including, where applicable, the
Federal Consumer Credit Protection Act, the Federal Truth in Lending
Act and Regulation Z of the Board of Governors of the Federal Reserve
System, in each case as amended.
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In addition to the foregoing, Eligible Accounts Receivable
includes such Accounts as a Credit Party requests and that the Agent approves in
advance, in writing and in its sole discretion (or if the aggregate face amount
to be approved exceeds $500,000 at any one time, the approval of the Required
Banks has been obtained in writing).
"Eligible Inventory" means (A) the gross amount of Inventory
of the Credit Parties, valued at the lower of cost (on a FIFO basis) or market,
which (i) is owned solely by a Credit Party and with respect to which such
Credit Party has good, valid and marketable title; (ii) is stored on property
that is either (a) owned or leased by a Credit Party, provided, that with
respect to any leased property, from and after the sixtieth (60th) day following
the Closing Date the landlord has executed and delivered a Landlord Lien
Assurance or (b) owned or leased by a warehouseman that has contracted
(including purchase orders) with a Credit Party to store Inventory on such
warehouseman's property (provided that with respect to Inventory stored on
property owned or leased by a warehouseman, from and after the sixtieth (60th)
day following the Closing Date the warehouseman has executed and delivered to
the Agent an agreement reasonably satisfactory to the Agent whereby the
warehouseman acknowledges the priority of the lien of the Collateral Agent);
(iii) is subject to a valid, enforceable and first priority Lien in favor of the
Agent subject only to a tax lien being contested in good faith and by
appropriate proceedings and permitted by Section 7.03(a); (iv) is located in the
United States; and (v) is not, in the reasonable judgment of the Agent, obsolete
or slow moving in relation to customary industry practice, and which otherwise
conforms to the requirements for eligibility contained herein; (B) less the
amount of any goods returned or rejected by the Credit Parties' customers and
goods in transit to third parties (other than to the Credit Parties' agents or
warehousemen that comply with clause (A)(ii)(b) above); and (C) less the amount
of any reserves for special order goods or otherwise. In addition to the
foregoing, Eligible Inventory shall include such items of the Credit Parties'
Inventory as Borrower shall request and that the Agent approves in advance, in
writing and in its sole discretion (or if the aggregate amount to be approved
exceeds $500,000 at any one time, the approval of the Required Banks has been
obtained).
"Environmental Laws" means the common law and all federal,
state, local and foreign laws or regulations, codes, orders, decrees, judgments
or injunctions issued, promulgated, approved or entered thereunder, now or
hereafter in effect, relating to pollution or protection of public or employee
health and safety or the environment, including, without limitation, laws
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relating to (i) emissions, discharges, releases or threatened releases of
Hazardous Materials, into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata),
(ii) the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of Hazardous Materials, and (iii)
underground and aboveground storage tanks, and related piping, and emissions,
discharges, releases or threatened releases therefrom.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any entity, whether or not
incorporated, which is under common control or would be considered a single
employer with any Credit Party within the meaning of Section 414(b), (c) or (m)
of the Code and regulations promulgated under those sections or within the
meaning of section 4001(b) of ERISA and regulations promulgated under that
section.
"Event of Default" has the meaning provided in Section 8.
"Excess Cash Flow" means, without duplication, for any Person
for any period for which such amount is being determined, (i) Consolidated Net
Income, minus (ii) any amount of gain included in both (x) Consolidated Net
Income and (y) either Net Cash Proceeds or Net Financing Proceeds required to be
applied to the prepayment of the Loans pursuant to Section 3.02(A)(e), plus
(minus) (iii) the amount of depreciation, depletion, amortization of
intangibles, deferred taxes and other non-cash expenses (revenues) which,
pursuant to GAAP, were deducted (added) in determining such Consolidated Net
Income of such Person minus (plus) (iv) additions (reductions) to working
capital for such period (i.e., the increase or decrease in Consolidated Current
Assets (excluding cash) of such Person minus Consolidated Current Liabilities
(excluding (A) changes in current liabilities for borrowed money and (B) Cash or
Cash Equivalents which are either Net Cash Proceeds or Net Financing Proceeds
required to be applied to the prepayment of the Loans pursuant to Section
3.02(A)(e) of such Person from the beginning to the end of such period) minus
(v) the amount of Consolidated Capital Expenditures minus (vi) Term Loan
principal payments (excluding mandatory payments made pursuant to Section 3.02)
made during such period. For purposes of the foregoing and without duplication,
Consolidated Net Income will exclude (x) all losses on the sale of capital
assets or out of the ordinary course of business and (y) all write-downs of
capital assets.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Debt" means the Indebtedness of the Credit Parties
set forth on Schedule 5.21(a).
"Federal Funds Rate" means on any one day the weighted average
of the rate on overnight Federal funds transactions with members of the Federal
Reserve System only arranged by Federal funds brokers as published as of such
day by the Federal Reserve Bank of New York, or if not so published, the rate
then used by first class banks in extending overnight loans to other first class
banks.
"Final A Term Loan Maturity Date" means the last Business
Day of June, 2002.
"Final B Term Loan Maturity Date" means the last Business
Day of June, 2003.
"Financing Proceeds" means the cash (other than Net Cash
Proceeds) received by the Borrower and/or any of its Subsidiaries, directly or
indirectly, from any financing transaction of whatever kind or nature, including
without limitation from any incurrence of Indebtedness, any mortgage or pledge
of an asset or interest therein (including a transaction which is the
substantial equivalent of a mortgage or pledge), from the sale of tax benefits,
from a lease to a third party and a pledge of the lease payments due thereunder
to secure Indebtedness, from a joint venture arrangement, from an exchange of
assets and a sale of the assets received in such exchange, or any other similar
arrangement or technique whereby the Borrower or any of its Subsidiaries obtains
Cash in respect of an asset.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 7,
including defined terms as used therein, are subject (to the extent provided
therein) to Section 11.07(a).
"General Security Agreements" means and includes the Borrower
General Security Agreement, the Subsidiary General Security Agreements and any
other general security agreements delivered pursuant to Section 6.14 or 6.15.
91
"Government Acts" shall have the meaning provided in Section
1.10(i).
"Governmental Authority" shall mean any federal, state, local,
foreign or other governmental or administrative body, instrumentality,
department or agency or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute-resolving panel or body.
"Guarantees" means and includes, once executed and delivered,
the Subsidiary Guarantees and any subsidiary guarantee delivered pursuant to
Section 6.16.
"Guarantors" for purposes of this Agreement means each of the
Borrower's Subsidiaries and any subsidiary that delivers a subsidiary guarantee
pursuant to Section 6.16.
"Hazardous Materials" means any pollutant, contaminant,
chemical or industrial, toxic or hazardous substance, constituent or waste,
including without limitation, petroleum including crude oil or any fraction
thereof, or any petroleum product, subject to regulation under any Environmental
Law.
"Indebtedness" of any Person means, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (iii) the face amount of all
letters of credit issued for the account of such Person and, without
duplication, all unreimbursed drafts drawn thereunder, (iv) all Indebtedness of
a second Person secured by any Lien on any property owned by such first Person,
whether or not such Indebtedness has been assumed by such first Person, (v) all
Capitalized Lease Obligations of such Person, (vi) all obligations of such
Person to pay a specified purchase price for goods or services whether or not
delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all
obligations of such Person under Interest Rate Agreements or Currency Protection
Agreements and (viii) all net Contingent Obligations of such Person; provided
that Indebtedness shall not include trade payables, accrued expenses, accrued
dividends, stock redemption payments, royalty payments, accrued retirees or
employees benefits, deferred taxes and accrued income taxes, in each case
arising in the ordinary course of business. For purposes of clause (iv) above
(where the relevant Indebtedness has not been assumed by such first Person), the
amount of Indebtedness is equal to the lesser of the amount of Indebtedness
secured or the fair market value of the property subject to the Lien.
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"Indosuez" has the meaning provided in the first paragraph
of this Agreement.
"Initial Bank" means a Bank that was an original signatory
to this Agreement.
"Initial Loans" means the initial Loans made under this
Agreement on the Closing Date.
"Intellectual Property" has the meaning provided in Section
5.16.
"Intellectual Property Security Agreements" means and includes
the Subsidiary Intellectual Property Security Agreement and any other
intellectual property security agreements delivered pursuant to Section 6.14 or
6.15.
"Interest Margin" shall mean, in respect of (i) Base Rate
Loans that are (a) A Term Loans, 1.50%, (b) B Term Loans, 2.00% and (c)
Revolving Loans, 1.50%.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate futures contract, interest rate option contract or other similar agreement
or arrangement to which the Borrower is a party, designed to protect the
Borrower or any of its Subsidiaries against fluctuations in interest rates.
"Inventory" means all of the inventory of Borrower and its
Subsidiaries (on a consolidated basis) including without limitation: (i) all raw
materials, work in process, parts, components, assemblies, supplies and
materials used or consumed in the business of the Borrower and its Subsidiaries;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by Borrower or any of its Subsidiaries.
"Issuing Bank" means the Bank that agrees to issue a Letter of
Credit, determined as provided in Section 1.10(c).
"Lease" means any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"Letter of Credit" or "Letters of Credit" means (i) Standby
Letter or Letters of Credit and (ii) Commercial Letter or Letters of Credit, in
each case, issued or to be issued by Issuing Banks for the account of the
Borrower pursuant to Section 1.10.
93
"Letter of Credit Participation" has the meaning assigned to
that term in Section 1.10(a).
"Letters of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount that is or at any
time thereafter may become available under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by all Issuing Banks and not theretofore reimbursed by the
Borrower.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien, claim, hypothecation, assignment for security or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement or any lease in the nature thereof).
"Loan" means each and every Term Loan or Revolving Loan.
"Loan Facility" means the credit facility evidenced by the
Total Term Loan Commitment and the Total Revolving Loan Commitment.
"Materially Adverse Effect" means (i) any materially adverse
effect (both before and after giving effect to the Transaction and the financing
thereof and the other transactions contemplated hereby and by the other
Documents) with respect to the operations, business, properties, assets, nature
of assets, liabilities (contingent or otherwise), financial condition or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii) any fact
or circumstance (whether or not the result thereof would be covered by
insurance) as to which singly or in the aggregate there is a reasonable
likelihood of (w) a materially adverse change described in clause (i) with
respect to the Borrower and its Subsidiaries, taken as a whole, (x) the
inability of any Credit Party to perform in any material respect its Obligations
hereunder or under any of the other Documents or the inability of the Banks to
enforce in any material respect their rights purported to be granted hereunder
or under any of the other Documents or the Obligations (including realizing on
the Collateral), or (y) a materially adverse effect on the ability to effect
(including hindering or unduly delaying) the Transaction and the other
transactions contemplated hereby and by the Documents on the terms contemplated
hereby and thereby or (iii) any fact or circumstance relating to any Credit
Party as to which singly or in the aggregate there is a reasonable likelihood of
any significant liability on the part of the Banks or the Agent.
"Minimum Borrowing Amount" means $100,000.
94
"Mortgage" means a term loan and revolving credit mortgage or
deed of trust, assignment of rents, security agreement and fixture filing
creating and evidencing a Lien on each Mortgaged Real Property, which shall be
substantially in the form of Exhibit D hereto, in each such case containing such
schedules and including such additional provisions and other deviations from
such Exhibit as shall be necessary to conform such document to applicable or
local law or as shall be customary under local law and made and which shall be
dated the date of delivery thereof and made by the owner of the Mortgaged Real
Property described therein for the benefit of the Collateral Agent, as
mortgagee, assignee and secured party, as the same may at any time be amended or
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Mortgaged Real Property" means each Real Property
designated on Schedule 4.01(t)(i).
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA with respect to which any Credit Party or its
respective ERISA Affiliates is or has been required to contribute or otherwise
may have liability.
"Net Award" has the meaning assigned to that term in each
Mortgage.
"Net Cash Proceeds" means:
(a) with respect to any Asset Sale, the aggregate cash
payments received by the Borrower and/or any of its Subsidiaries, as
the case may be, from such Asset Sale, net of the reasonably incurred
direct expenses of sale; provided that, with respect to taxes, expenses
shall only include taxes to the extent that taxes are payable in cash
in the current year or in the next succeeding year with respect to the
current year as a result of such Asset Sale; and
(b) with respect to any Taking or Destruction, the Net Award
or Net Proceeds, as applicable, resulting therefrom, to be applied as
Net Cash Proceeds under this Agreement pursuant to the provisions of
each Mortgage;
provided, further, that Net Cash Proceeds shall not include any amounts or items
included in the definition of Financing Proceeds or Net Financing Proceeds
(including in any proviso appearing therein or exclusion therefrom).
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"Net Financing Proceeds" means Financing Proceeds, net of the
reasonably incurred direct expenses of the transaction and net of taxes
(including income taxes) currently paid or payable in cash as a result thereof
in the current year or in the next succeeding year with respect to the current
year as a result of the transaction generating Net Financing Proceeds.
"Net Proceeds" has the meaning assigned to that term in each
Mortgage.
"Notes" means any Revolving Note or Term Note.
"Notice of Borrowing" has the meaning provided in Section 1.03.
"Obligations" means all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to the Agent, the Agent, the Collateral Agent or any Bank pursuant to the
terms of this Agreement or any other Credit Document or secured by any of the
Security Documents.
"Officers' Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its Chairman of the
Board (if an officer) or its President or one of its Vice Presidents and by its
Chief Financial Officer or its Treasurer or any Assistant Treasurer; provided
that every Officers' Certificate with respect to compliance with a condition
precedent to the making of any Loan hereunder shall include, on behalf of the
Borrower, (i) a statement that the officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"Officers' Solvency Certificate" means the Officers' Solvency
Certificate in the form set forth as Exhibit M hereto.
"Operating Lease" of any Person, shall mean any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) by such Person as
Lessee which is not a Capital Lease.
96
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Pension Plan" means any pension plan as defined in Section
3(2) of ERISA (other than a Multiemployer Plan) which is or has been maintained
by or to which contributions are or have been made by any Credit Party or its
respective ERISA Affiliates or as to which any Credit Party or its respective
ERISA Affiliates may have liability.
"Permitted Encumbrances" has the meaning provided in Section
7.03.
"Person" means any individual, partnership, limited liability
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Pledge Agreements" means and includes the Borrower Securities
Pledge Agreement and any securities pledge agreements delivered pursuant to
Section 6.14 or 6.15.
"Pledged Collateral" means all the Pledged Collateral as
defined in the General Security Agreements and the Intellectual Property
Security Agreements.
"Pledged Securities" means all the Pledged Collateral as
defined in each of the Pledge Agreements.
"Portion" means the Term Portion or the Revolving Portion.
"Predecessor Companies" means each of Xxxx Laboratories,
Inc., Body Drench (a Division of Designs by Xxxxxxx, Inc.), JDS Manufacturing
Co., Inc. and Kotchammer Investments, Inc.
"Prior Liens" means Liens which, to the extent permitted by
the provisions of any Security Document, are or may be superior to the Lien of
such Security Document.
"Projected Financial Statements" has the meaning provided in
Section 5.11(c).
"Real Property" means all right, title and interest of any
Credit Party or its respective Subsidiaries (including, without limitation, any
leasehold estate) in and to a parcel of real property acquired by any Credit
Party together with, in each case, all improvements and appurtenant fixtures,
equipment, personal property, easements and other property and rights incidental
to the ownership, lease or operation thereof.
97
"Register" has the meaning provided in Section 11.04(b)(A)
of this Agreement.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation T" means Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Regulation X" means Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing margin requirements.
"Required Banks" shall mean at any time one or more Banks
holding at least 51% of the Total Commitments held by Banks (or, if the Total
Commitments shall have been terminated, Banks holding at least 51% of the
outstanding Loans); provided that for the purposes of Section 4, the requirement
that any document, agreement, certificate or other writing is to be satisfactory
to the Required Banks shall be satisfied if (x) such document, agreement,
certificate or other writing was delivered in its final form to the Banks prior
to the Effective Date (or if amended or modified thereafter, the Agent have
reasonably determined such amendment or modification not to be material), (y)
such document, agreement, certificate or other writing is satisfactory to the
Agent and (z) Banks holding more than 33-1/3% of the Total Commitments held by
Banks have not objected in writing to such document, agreement, certificate or
other writing to the Agent prior to the Closing Date.
98
"Restoration" has the meaning assigned to that term in each
Mortgage.
"Revolving Loan Commitment" means, with respect to each Bank,
the amount set forth below such Bank's name on the signature pages hereto
directly across from the entry entitled "Revolving Loan Commitment," as such
amount may be reduced from time to time pursuant to Sections 2.01, 2.02, 3.02
and/or 8.
"Revolving Loan Commitment Termination Date" means the
Business Day immediately preceding the Revolving Loan Maturity Date.
"Revolving Loans" has the meaning provided in Section 1.01(b).
"Revolving Loan Maturity Date" means the last Business Day of
June, 2002 or such earlier date on which all Revolving Loan Commitments have
been terminated.
"Revolving Note" has the meaning provided in Section 1.05(a).
"Revolving Portion" means, at any time, the Portion of the
Loan Facility evidenced by the Total Revolving Loan Commitments.
"Scheduled A Term Loans Principal Payments" means, with
respect to the principal payments on the A Term Loans on the last Business Day
of each month set forth below, the U.S. dollar amount set forth opposite
thereto:
Scheduled A Term Loan
Date Principal Payment
---- -----------------
September 1997 $375,000
December 1997 375,000
March 1998 375,000
June 1998 375,000
September 1998 500,000
December 1998 500,000
March 1999 500,000
June 1999 500,000
September 1999 687,500
December 1999 687,500
March 2000 687,500
June 2000 687,500
September 2000 812,500
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December 2000 812,500
March 2001 812,500
June 2001 812,500
September 2001 875,000
December 2001 875,000
March 2002 875,000
June 2002 875,000
"Scheduled B Term Loans Principal Payments" means with respect
to the principal payments on the B Term Loans on the last Business Day of each
month set forth below, the U.S. dollar amount set forth opposite thereto:
Total B Term Loans
Date Principal Payments
---- ------------------
September 1997 $25,000
December 1997 25,000
March 1998 25,000
June 1998 25,000
September 1998 25,000
December 1998 25,000
March 1999 25,000
June 1999 25,000
September 1999 25,000
December 1999 25,000
March 2000 25,000
June 2000 25,000
September 2000 25,000
December 2000 25,000
March 2001 25,000
June 2001 25,000
September 2001 25,000
December 2001 25,000
March 2002 25,000
June 2002 25,000
September 2002 2,375,000
December 2002 2,375,000
March 2003 2,375,000
June 2003 2,375,000
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"Security Documents" means each of the Pledge Agreements, the
General Security Agreements, the Intellectual Property Security Agreements, the
Mortgages and any other documents utilized to pledge as Collateral for the
Obligations any property or assets of whatever kind or nature.
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"Sellers" has the meaning set forth in the first recital to
this Agreement.
"State and Local Real Property Disclosure Requirements" means
any state or local laws requiring notification of the buyer of real property, or
notification, registration, or filing to or with any state or local agency,
prior to the sale of any real property or transfer of control of an
establishment, of [knowledge of] the actual or threatened presence or release
into the environment, or the use, disposal, or handling of Hazardous Materials
on, at, under, or near the real property to be sold or the establishment for
which control is to be transferred.
"Stock Purchase Agreement" means the Stock Purchase Agreement,
dated as of June 25, 1997, by and among the Borrower and the Sellers.
"Subsidiary" of any Person means and includes (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (excluding stock of any class or classes of such corporation that
might have voting power solely by reason of the happening of any contingency) is
at the time owned by such Person directly or indirectly through Subsidiaries,
and (ii) any partnership, limited liability company, association, joint venture
or other entity in which such Person directly or indirectly through Subsidiaries
has more than a 50% equity interest at the time.
"Subsidiary General Security Agreement" means the General
Security Agreements executed and delivered by each Subsidiary substantially in
the form of Exhibit H-2 hereto, except for such changes as shall have been
approved by the Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"Subsidiary Guarantee" means each subsidiary guarantee
executed by the subsidiaries of the Borrower substantially in the form of
Exhibit E hereto, except for such changes as shall have been approved by the
Agent, as the same may after its execution be amended, supplemented or otherwise
modified from time to time in accordance with its terms and the terms hereof.
"Subsidiary Intellectual Property Security Agreement" means
the Intellectual Property Security Agreement executed and delivered by certain
101
Credit Parties substantially in the form of Exhibit G hereto, except for such
changes as shall have been approved by the Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms and the terms hereof.
"Subsidiary Securities Pledge Agreement" means the Securities
Pledge Agreement executed and delivered by certain Credit Parties substantially
in the form of Exhibit F-3 hereto, except for such changes therein as shall have
been approved by the Agent, as the same may after its execution be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Taking" has the meaning assigned to that term in each
Mortgage.
"Taxes" has the meaning provided in Section 3.04.
"Term Loans" has the meaning provided in Section 1.01(a).
"Term Note" means an A Term Note or B Term Note.
"Term Portion" means, at any time, the portion of the Loan
Facility evidenced by the Total Term Loan Commitment.
"Termination Event" means (i) a "reportable event" described
in Section 4043 of ERISA or in the regulations thereunder (excluding events for
which the requirement for notice of such reportable event has been waived by the
PBGC by regulation) with respect to a Title IV Plan, or (ii) the withdrawal of
any Credit Party or any of its respective ERISA Affiliates from a Title IV Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a Title IV Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the institution of proceedings
by the PBGC to terminate a Title IV Plan or to appoint a trustee to administer a
Title IV Plan, or (v) any other event or condition which might constitute
reasonable grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Title IV Plan, or (vi) the complete
or partial withdrawal (within the meaning of Sections 4203 and 4205,
respectively, of ERISA) of any Credit Party or any of its respective ERISA
Affiliates from a Multiemployer Plan, or (vii) the insolvency or reorganization
(within the meaning of Sections 4245 and 4241, respectively, of ERISA) or
termination of any Multiemployer Plan, or (viii) the failure to make any payment
102
or contribution to any Pension Plan or Multiemployer Plan or the making of any
amendment to any Pension Plan which could result in the imposition of a lien or
the posting of a bond or other security.
"Test Period" means the shorter of (i) the four consecutive
complete fiscal quarters of the Borrower then last ended or (ii) the number of
consecutive complete fiscal quarters of the Borrower, in each case computed on a
pro forma basis giving effect to the Transaction and the Borrowings hereunder
since December 31, 1996.
"Title Company" means First American Title Insurance Company
of New York or such other title insurance or abstract company as shall be
designated by the Agent.
"Title IV Plan" means any Pension Plan described in Section
4021(a) of ERISA, and not excluded under Section 4021(b) of ERISA.
"Total A Term Loan Commitment" means the sum of the A Term
Loan Commitments of each of the Banks.
"Total B Term Loan Commitment" means the sum of the B Term
Loan Commitments of each of the Banks.
"Total Commitment" means the sum of the Total Term Loan
Commitments and the Total Revolving Loan Commitments.
"Total Revolving Loan Commitment" means the sum of the
Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" means the sum of the A Term Loan
Commitment and B Term Loan Commitment of each of the Banks.
"Total Utilization of Revolving Loan Commitments" means, at
any date of determination, the sum of the aggregate principal amount of all
outstanding Revolving Loans.
"Transaction" has the meaning set forth in the recitals to
this Agreement.
"Transaction Documents" means the Stock Purchase Agreement
and all schedules and exhibits thereto.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York.
103
"Unutilized Commitment" for any Bank at any time means, on and
after the Closing Date, the unutilized Revolving Loan Commitment of such Bank,
after taking into effect the Letters of Credit Usage.
"Wholly-Owned Subsidiary" of any Person means any Subsidiary
of such Person to the extent all of the capital stock or other ownership
interests in such Subsidiary, other than directors' or nominees' qualifying
shares, is owned directly or indirectly by such Person.
"Written" or "in writing" means any form of written
communication or a communication by means of telex, telecopier device, telegraph
or cable.
SECTION 10. The Agent.
10.01. Appointment. Each Bank hereby irrevocably designates
and appoints Indosuez as Agent (such term to include the Agent acting as
Collateral Agent or in any other representative capacity under any other Credit
Document) of such Bank to act as specified herein and in the other Credit
Documents and each such Bank hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Credit Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Credit Documents, together with such other powers as are reasonably incidental
thereto. The Agent agrees to act as such upon the express conditions contained
in this Section 10. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein or in the other Credit Documents, or any
fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Agent. The provisions of this Section
10 are solely for the benefit of the Agent and the Banks, and no Credit Party
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for any Credit Party. The Borrower hereby agrees to pay the Agent an annual
agency fee as previously agreed with the Agent.
10.02. Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
104
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care except to the extent otherwise required by Section 10.03.
10.03. Exculpatory Provisions. Neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Banks for any recitals, statements, representations or
warranties by the Borrower, any Subsidiary of the Borrower or any of their
respective officers contained in this Agreement, any other Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Document or for any failure of the Borrower or any Subsidiary of the
Borrower or any of their respective officers to perform its obligations
hereunder or thereunder. The Agent shall not be under any obligation to any Bank
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Borrower or any Subsidiary of the Borrower.
The Agent shall not be responsible to any Bank for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Banks or by or on behalf of the Borrower
to the Agent or any Bank or be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or Event of
Default.
10.04. Reliance by the Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Credit Parties),
105
independent accountants and other experts selected by the Agent. The Agent shall
be fully justified in failing or refusing to take any action under this
Agreement or any other Credit Document unless it shall first receive such advice
or concurrence of the Required Banks as it deems appropriate or it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Credit
Documents in accordance with a request of the Required Banks (or to the extent
specifically provided in Section 11.12, all the Banks), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks.
10.05. Notice of Default. The Agent shall not be deemed to
have knowledge of the occurrence of any Default or Event of Default, other than
a default in the payment of principal or interest on the Loans hereunder unless
it has received notice from a Bank or the Borrower or any other Credit Party
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the Banks.
The Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Banks.
10.06. Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Borrower or any Subsidiary of
the Borrower, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of the Borrower
and its Subsidiaries and made its own decision to make its Loans hereunder and
enter into this Agreement and the other agreements contemplated hereby. Each
Bank also represents that it will, independently and without reliance upon the
106
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Banks by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and other
conditions, prospects or creditworthiness of the Borrower or any of its
Subsidiaries which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates. Neither
the Agent nor any Bank shall be deemed to be a fiduciary or have any fiduciary
duty to any other Bank or Credit Party.
10.07. Indemnification. The Banks agree to indemnify the Agent
in its capacity as such or in any other representative capacity under any other
Credit Document ratably according to their aggregate Commitments, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Agent in its capacity as such in any way relating to or
arising out of this Agreement or any other Credit Document, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted to be taken by the Agent under or in connection with
any of the foregoing, but only to the extent that any of the foregoing is not
paid by the Borrower or any of its Subsidiaries; provided that no Bank shall be
liable to the Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from the Agent's gross negligence or
willful misconduct. If any indemnity furnished to the Agent for any purpose
shall, in the opinion of the Agent, be insufficient or become impaired, the
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished. The
agreements in this Section 10.07 shall survive the payment of all Obligations.
10.08. The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower, its Subsidiaries and other Affiliates of the
107
Borrower as though the Agent were not the Agent hereunder. With respect to the
Loans made by it and all Obligations owing to it, the Agent shall have the same
rights and powers under this Agreement as any Bank and may exercise the same as
though it were not the Agent, and the terms "Bank" and "Banks" shall include the
Agent in its individual capacity.
10.09. Successor Agent. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, the term "Agent" shall include such
successor agent effective upon its appointment, and the resigning Agent's
rights, powers and duties as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement. After the retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
10.10. Resignation by Agent. (a) The Agent may resign from the
performance of all its functions and duties hereunder at any time by giving 15
Business Days' prior written notice to the Borrower and the Banks. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to subsections (b) and (c) below or as otherwise provided
below.
(b) Upon any such notice of resignation of the Agent, the
Required Banks shall appoint a successor Agent acceptable to the Borrower and
which shall be an incorporated bank or trust company or other qualified
financial institution with operations in the United States and total assets of
at least $1 billion.
(c) If a successor Agent shall not have been so appointed
within said 15 Business Day period, the resigning Agent with the consent of the
Borrower shall then appoint a successor Agent (which shall be an incorporated
bank or trust company or other qualified financial institution with operations
in the United States and total assets of at least $1 billion) who shall serve as
Agent until such time, if any, as the Required Banks appoint a successor Agent
as provided above.
(d) If no successor Agent has been appointed pursuant to
subsection (b) or (c) by the 20th Business Day after the date such notice of
resignation was given by the resigning Agent, such Agent's resignation shall
become effective and the Required Banks shall thereafter perform all the duties
of Agent hereunder until such time, if any, as the Required Banks with the
consent of Borrower appoint a successor Agent as provided above.
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(e) Notwithstanding anything to the contrary contained in this
Section 10, Indosuez, as Agent, may transfer its rights and obligations to
perform all of its functions and duties hereunder to its parent company or to
any Affiliate of it or its parent company.
SECTION 11. Miscellaneous.
11.01. Payment of Expenses, etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
out-of-pocket costs and expenses (x) of the Agent in connection with the
negotiation, preparation, execution and delivery of the Credit Documents and the
documents and instruments referred to therein and any amendment, waiver or
consent relating thereto (including, without limitation, the reasonable fees and
disbursements of Xxxxxx Xxxxxx & Xxxxxxx and local counsel to the Banks) with
prior notice to the Borrower of the engagement of any counsel and (y) of each of
the Banks in connection with the enforcement of the Credit Documents (including
in connection with any "work-out" or other restructuring of the Borrower's
Obligations or in connection with any bankruptcy, reorganization or similar
proceeding with respect to any Credit Party or its Subsidiaries) and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for each of the Banks) with
prior notice to the Borrower of the engagement of any counsel and the reasonable
fees and expenses of any appraisers or any consultants or other advisors engaged
with prior notice to the Borrower of any such engagement with respect to
environmental or other matters; (ii) pay all out-of-pocket costs and expenses
(including attorneys' fees) of the Agent or Indosuez or in connection with the
assignment or attempted assignment to any other Person of all or any portion of
Indosuez's interest under this Agreement pursuant to Section 11.04 incurred
prior to 120 days following the Closing Date; (iii) pay and hold each of the
Banks harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such Bank)
to pay such taxes; and (iv) indemnify each Bank, its officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses (including,
without limitation, any and all losses, liabilities, claims, damages or expenses
arising under Environmental Laws) incurred by any of them as a result of, or
arising out of, or in any way related to the entering into and/or performance of
any Document or the use of the proceeds of any Loans hereunder or the
109
Transaction or the consummation of any other transactions contemplated in any
Credit Document, including, without limitation, the documented reasonable fees
and disbursements of counsel incurred by any of them (but excluding any such
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
11.02. Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to any
Credit Party or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of any Credit Party against and on
account of the Obligations and liabilities of such Credit Party to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of such Credit Party purchased
by such Bank pursuant to Section 11.06(b), and all other claims of any nature or
description arising out of or connected with this Agreement or any other Credit
Document, irrespective of whether or not such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
11.03. Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(which may include telecopier communication) and couriered for delivery of the
next Business Day, and shall be sent, if to any Credit Party, to:
Styling Technology Corporation
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxx 00000
Telecopy No.
Attention: Xxxxxxx X. Xxxx
with copies to:
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, P.A.
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
110
if to any Bank, at its address specified for such Bank on Annex II hereto; or,
at such other address as shall be designated by any party in a written notice to
the other parties hereto. All such notices and communications shall, when
telecopied or sent by overnight courier, be effective when sent by telecopier or
delivered to the overnight courier, as the case may be, except that notices and
communications to the Agent shall not be effective until received by the Agent.
11.04. Benefit of Agreement. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, all future holders of the Notes, and their respective successors and
assigns; provided that no Credit Party may assign or transfer any of its
interests hereunder without the prior written consent of all of the Banks in
their sole discretion; and provided, further, that the rights of each Bank to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth below in this Section 11.04; provided
that nothing in this Section 11.04 shall prevent or prohibit any Bank from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings
made by such Bank from such Federal Reserve Bank and (ii) subject to Section
11.04(b)(B), granting participations in or assignments of all or a portion of
such Bank's Loans, Notes and/or Commitments hereunder (y) to its parent company
and/or to any Affiliate of such Bank that is at least 50% owned by such Bank or
its parent company or (z) to an entity managed by a Person referred to in
Section 11.04(a)(ii)(y).
(b) Each Bank shall have the right to transfer, assign or
grant participations in all or any part of its remaining Loans, Notes and/or
Commitments hereunder on the basis set forth below in this clause (b). Each Bank
may furnish any information concerning the Borrower in the possession of such
Bank from time to time to assignees and participants (including prospective
assignees and participants).
(A) Assignments. Each Bank, with the written consent of the
Agent, which shall not be unreasonably withheld, which shall be
evidenced on the notice in the form of Exhibit I-1 hereto, may assign
pursuant to an Assignment and Assumption Agreement substantially in the
form of Exhibit I-2 hereto all or a portion of its Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(A) to (x) one or more
111
Banks or (y) one or more commercial banks or other financial or lending
institutions; provided that any such assignment pursuant to this clause
(y) shall be in an amount equal to at least $3,000,000 or such Bank's
remaining Loans, Notes or Commitments. Any assignment pursuant to this
clause (b)(A) will become effective no later than five Business Days
after the Agent's receipt of (i) a written notice in the form of
Exhibit I-1 hereto from the assigning Bank and the assignee Bank and
(ii) a processing and recordation fee of $2,000 from the assigning Bank
in connection with the Agent's recording of such sale, assignment,
transfer or negotiation; provided that such fee shall only be payable
if the assignment is between a Bank and a party that is not a Bank
prior to the assignment. The Borrower shall issue new Notes to the
assignee in conformity with Section 1.05 and the assignor shall return
the old Notes to the Borrower. Upon the effectiveness of any assignment
in accordance with this clause (b)(A), the assignee will become a
"Bank" for all purposes of this Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning Bank
shall be relieved of its obligations hereunder with respect to the
Loans, Notes or Commitments being assigned. The Agent shall maintain at
its address specified in Annex II hereto a copy of each Assignment
Agreement delivered to and accepted by it and a register in which it
shall record the names and addresses of the Banks and the Commitment
of, and principal amount of the Loans owing to, each Bank from time to
time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent demonstrable error, and the
Borrower, the Agent and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower, the Agent or any Bank at any reasonable time and from time to
time upon reasonable prior notice.
(B) Participations. Each Bank may transfer, grant or assign
participations in all or any part of such Bank's Loans, Notes and/or
Commitments hereunder pursuant to this clause (b)(B) to any Person;
provided that (i) such Bank shall remain a "Bank" for all purposes of
this Agreement and the transferee of such participation shall not
constitute a Bank hereunder and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver
112
of this Agreement or any other Credit Document except to the extent
such amendment or waiver would (x) extend the scheduled final maturity
date of any of the Loans, Notes or Commitments in which such
participant is participating or (y) reduce the principal amount,
interest rate or fees applicable to any of the Loans, Notes or
Commitments in which such participant is participating or postpone the
payment of any interest or fees or (z) release all or substantially all
of the Collateral (except as expressly permitted by the Credit
Documents). In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the other
Credit Documents (the participant's rights against the granting Bank in
respect of such participation to be those set forth in the agreement
with such Bank creating such participation) and all amounts payable by
the Borrower hereunder shall be determined as if such Bank had not sold
such participation; provided that such participant shall be considered
to be a "Bank" for purposes of Sections 11.02 and 11.06(b).
11.05. No Waiver; Remedies Cumulative. No failure or delay on
the part of the Agent or any Bank in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of dealing between
any Credit Party and the Agent or any Bank shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power, or privilege
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Agent or any
Bank would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the Agent
or the Banks to any other or further action in any circumstances without notice
or demand.
11.06. Payments Pro Rata. (a) The Agent agrees that promptly
after its receipt of each payment from or on behalf of any Credit Party in
respect of any Obligations of such Credit Party, it shall distribute such
payment to the Banks pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
113
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to any related sum or sums that are
received by other Banks is proportionately greater as measured (immediately
prior to receipt of all related amounts) relative to the total of such
Obligations then owed and due to such Bank to the total of such Obligations then
owed and due to all of the Banks, then such Bank receiving such excess amount
shall promptly purchase for cash without recourse or warranty from the other
Banks an interest in the Obligations of the respective Credit Party to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in such excess amount pro rata in accordance with their respective
shares of the Obligations with respect to which such amount was received;
provided that if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
11.07. Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be made and
prepared in accordance with GAAP consistently applied throughout the periods
involved (except as set forth in the notes thereto or as otherwise disclosed in
writing by Borrower to the Banks); provided that, except as otherwise
specifically provided herein, all computations determining compliance with
Section 7 and all definitions used herein for any purpose shall utilize
accounting principles and policies in effect at the time of the preparation of,
and in conformity with those used to prepare, the historical financial
statements delivered to the Banks pursuant to Section 4.01(i).
(b) All computations of interest and fees hereunder shall be
made on the actual number of days elapsed over a year of 365 days; provided,
however, that all computations of interest on Commitment Commission shall be
made on the actual number of days elapsed over a year of 360 days.
11.08. Governing Law; Submission to Jurisdiction; Venue. (a)
This Agreement and the rights and obligations of the parties hereunder shall be
construed and enforced in accordance with and be governed by the laws of the
State of New York applicable to contracts made and to be performed wholly
therein. Any legal action or proceeding with respect to this Agreement or any
other Credit Document may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by execution
and delivery of this Agreement, each Credit Party and its respective
114
Subsidiaries hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts. Each Credit Party and its respective Subsidiaries further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to CT Corporation System, 0000
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, its agent for service of process, such
service to become effective 30 days after such mailing. Each Credit Party and
its respective Subsidiaries hereby irrevocably appoints CT Corporation System to
serve as its agent for service of process in respect of any such action or
proceeding. Nothing herein shall affect the right of the Agent or any Bank to
serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any Credit Party or its respective
Subsidiaries in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Agreement or any other Credit Document brought in the courts referred to in
clause (a) above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
11.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Agent.
11.10. Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") and at the time (the "Effective Time") on which
the Borrower and each of the Banks shall have signed a copy hereof (whether the
same or different copies) and shall have delivered the same to the Agent at the
Agent's Office or, in the case of the Banks, shall have given to the Agent
telephonic (confirmed in writing), written, telex or telecopy notice (actually
received) at such office that the same has been signed and mailed to it. The
Agent will give the Borrower and each Bank prompt written notice of the
occurrence of the Effective Date.
11.11. Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
115
11.12. Amendment or Waiver. Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated (other than pursuant to the terms hereof) unless such
change, waiver, discharge or termination is in writing signed by the Required
Banks; provided that no such change, waiver, discharge or termination shall,
without the consent of each Bank and the Agent, (i) extend the scheduled final
maturity date of any Loan, or any portion thereof, or reduce the rate or extend
the time of payment of interest thereon or fees or reduce the principal amount
thereof, or increase the Commitments of any Bank or the Total Commitments, in
each case over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default shall not constitute a change in the
terms of any Commitment of any Bank), (ii) release all or substantially all of
the Collateral or Guarantees (except as expressly permitted by the Credit
Documents), (iii) amend, modify or waive any provision of Section 1.08, 3.04,
10.07, 11.01, 11.02, 11.04, 11.06, 11.07(b) or 11.12, (iv) reduce any percentage
specified in, or otherwise modify, the definition of Required Banks, (v) modify
the definition of Scheduled A Term Loans Principal Payments or Scheduled B Term
Loans Principal Payments or (vi) consent to the assignment or transfer by any
Credit Party of any of its rights and obligations under this Agreement. No
provision of Section 10 may be amended without the consent of the Agent.
11.13. Survival. All indemnities set forth herein including,
without limitation, in Section 1.08, 3.04, 10.07 or 11.01 shall survive the
execution and delivery of this Agreement and the making of the Loans, the
repayment of the Obligations and the termination of the Total Commitments.
11.14. Each Bank may transfer and carry its Loans at, to or
for the account of any branch office, Subsidiary or Affiliate of such Bank.
11.15. Waiver of Jury Trial. Each of the parties to this
Agreement hereby irrevocably waives all right to a trial by jury in any action,
proceeding or counterclaim arising out of or relating to this Agreement, the
Credit Documents or the transactions contemplated hereby or thereby.
11.16. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be permitted by
an exception to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of a Default or an Event of Default if such
action is taken or condition exists.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed, all as of the date first written above.
STYLING TECHNOLOGY CORPORATION
By:/s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
----------------------------
Title: Chief Financial Officer
---------------------------
117
Credit Agreement among Styling Technology Corporation, Credit
Agricole Indosuez and the Banks listed herein.
CREDIT AGRICOLE INDOSUEZ,
as Agent and Collateral
Agent and as a Bank
By:/s/ Xxxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxxx Xxxxxxx
----------------------------
Title: First Vice President
---------------------------
By:/s/ X. Xxxxxx Xxxxxxx
------------------------------
Name: X. Xxxxxx Xxxxxxx
----------------------------
Title: Vice President
---------------------------
A Term Loan Commitment: $6,500,000
B Term Loan Commitment: $5,000,000
Revolving Loan Commitment: $2,500,000
118
BANKBOSTON
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Managing Director
---------------------------
A Term Loan Commitment: $6,500,000
B Term Loan Commitment: $5,000,000
Revolving Loan Commitment: $2,500,000
ANNEX I
List of Banks
Credit Agricole Indosuez
BankBoston
ANNEX II
Bank Addresses
Credit Agricole Indosuez
1211 Avenue of the Xxxxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
