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EXECUTION COPY
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BRIDGE LOAN AGREEMENT
dated as of
August 25, 1998
among
PCA INTERNATIONAL, INC.,
as Borrower
the Guarantors listed on
the signature pages hereto,
as Guarantors
THE LENDERS named herein,
NationsBanc Xxxxxxxxxx Securities LLC, as Arranger
and
NationsBridge, L.L.C., as Administrative Agent
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TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS........................................................1
SECTION 1.1. DEFINED TERMS....................................................1
SECTION 1.2. INTERPRETATION..................................................19
ARTICLE II. THE CREDIT FACILITY..............................................20
SECTION 2.1. COMMITMENTS TO MAKE BRIDGE LOANS................................20
SECTION 2.2. CONVERSION TO TERM LOANS........................................20
SECTION 2.3. INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT INTEREST..........20
SECTION 2.4. MANDATORY PREPAYMENT............................................21
SECTION 2.5. OPTIONAL PREPAYMENT.............................................22
SECTION 2.6. BREAKAGE COSTS; INDEMNITY.......................................22
SECTION 2.7. EFFECT OF NOTICE OF PREPAYMENT..................................22
SECTION 2.8. PAYMENTS........................................................22
SECTION 2.9. TAXES...........................................................24
SECTION 2.10. RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.....................26
SECTION 2.11. CERTAIN FEES...................................................27
ARTICLE III. REPRESENTATIONS AND WARRANTIES..................................27
SECTION 3.1. REPRESENTATIONS AND WARRANTIES IN THE CREDIT FACILITY AND
THE MERGER AGREEMENT............................................27
SECTION 3.2. ORGANIZATION; POWERS............................................27
SECTION 3.3. DUE AUTHORIZATION AND ENFORCEABILITY............................28
SECTION 3.4. NO CONFLICTS....................................................28
SECTION 3.5. NO VIOLATIONS; MATERIAL CONTRACTS...............................29
SECTION 3.6. CAPITAL STOCK; SUBSIDIARIES.....................................29
SECTION 3.7. LIENS...........................................................30
SECTION 3.8. NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF
FEDERAL RESERVE SYSTEM..........................................30
SECTION 3.9. GOVERNMENTAL REGULATIONS........................................30
SECTION 3.10. FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES...............30
SECTION 3.11. FULL DISCLOSURE................................................31
SECTION 3.12. PRIVATE OFFERING; RULE 144A MATTERS............................31
SECTION 3.13. ABSENCE OF PROCEEDINGS.........................................32
SECTION 3.14. TAXES..........................................................32
SECTION 3.15. FINANCIAL CONDITION; SOLVENCY..................................32
SECTION 3.16. NO MATERIAL ADVERSE CHANGE.....................................32
SECTION 3.17. YEAR 2000 COMPLIANCE...........................................32
ARTICLE IV. COVENANTS........................................................32
SECTION 4.1. FINANCIAL STATEMENTS............................................32
SECTION 4.2. CERTIFICATES; OTHER INFORMATION.................................33
SECTION 4.3. NOTICES.........................................................34
SECTION 4.4. COMPLIANCE WITH LAW.............................................35
SECTION 4.5. PAYMENT OF OBLIGATIONS..........................................35
SECTION 4.6. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE................35
SECTION 4.7. MAINTENANCE OF PROPERTY; INSURANCE..............................36
SECTION 4.8. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS..........36
SECTION 4.9. ENVIRONMENTAL LAWS..............................................36
SECTION 4.10. FINANCIAL COVENANTS............................................37
SECTION 4.11. FEE LETTER.....................................................38
SECTION 4.12. ADDITIONAL GUARANTIES AND STOCK PLEDGES........................38
SECTION 4.13. OWNERSHIP OF SUBSIDIARIES......................................38
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SECTION 4.14. USE OF PROCEEDS................................................38
SECTION 4.15. YEAR 2000 COMPLIANCE...........................................38
SECTION 4.16. INDEBTEDNESS...................................................38
SECTION 4.17. LIENS..........................................................39
SECTION 4.18. NATURE OF BUSINESS.............................................39
SECTION 4.19. CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS,
CAPITAL EXPENDITURES, ETC......................................39
SECTION 4.20. ADVANCES, INVESTMENTS AND LOANS................................40
SECTION 4.21. TRANSACTIONS WITH AFFILIATES...................................40
SECTION 4.22. OWNERSHIP OF EQUITY INTERESTS..................................40
SECTION 4.23. FISCAL YEAR....................................................40
SECTION 4.24. PREPAYMENTS OF INDEBTEDNESS, ETC...............................40
SECTION 4.25. RESTRICTED PAYMENTS............................................41
SECTION 4.26. SALE LEASEBACKS................................................41
SECTION 4.27. LICENSE AGREEMENTS.............................................41
SECTION 4.28. EXCHANGE OF TERM NOTES.........................................41
SECTION 4.29. CHANGE OF CONTROL..............................................42
ARTICLE V. CONDITIONS........................................................42
SECTION 5.1. CORPORATE AND OTHER PROCEEDINGS.................................42
SECTION 5.2. CONCURRENT TRANSACTIONS.........................................44
SECTION 5.3. NO MATERIAL ADVERSE CHANGE......................................44
SECTION 5.4. NO EVENT OF DEFAULT.............................................44
SECTION 5.5. LITIGATION; RESTRAINING ORDERS..................................44
SECTION 5.6. NO CHANGES IN FINANCIAL MARKETS.................................44
SECTION 5.7. CORPORATE STRUCTURE.............................................45
SECTION 5.8. NO CONFLICTS....................................................45
SECTION 5.9. DELIVERY OF OPINIONS............................................45
SECTION 5.10. SOLVENCY.......................................................45
SECTION 5.11. PAYMENT OF FEES................................................45
SECTION 5.12. NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT
LETTER OR FEE LETTER...........................................45
SECTION 5.13. CONSENTS AND APPROVALS.........................................45
SECTION 5.14. REPAYMENT OF INDEBTEDNESS......................................46
SECTION 5.15. CLOSING........................................................46
SECTION 5.16. DEBT REGISTRATION RIGHTS AGREEMENT.............................46
ARTICLE VI. TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH
LOANS AND THE SECURITIES; REPRESENTATIONS OF LENDERS;
PARTICIPATIONS...................................................46
SECTION 6.1. TRANSFER OF LOANS, THE INSTRUMENTS EVIDENCING SUCH
LOANS AND THE SECURITIES........................................46
SECTION 6.2. PERMITTED ASSIGNMENTS...........................................47
SECTION 6.3. PERMITTED PARTICIPANTS; EFFECT..................................47
SECTION 6.4. DISSEMINATION OF INFORMATION....................................48
SECTION 6.5. TAX TREATMENT...................................................48
SECTION 6.6. REPLACEMENT SECURITIES UPON TRANSFER OR EXCHANGE................48
SECTION 6.7. LOAN REGISTER...................................................48
ARTICLE VII. EVENTS OF DEFAULT...............................................48
SECTION 7.1. EVENTS OF DEFAULT...............................................48
SECTION 7.2. ACCELERATION....................................................50
SECTION 7.3. RIGHTS AND REMEDIES CUMULATIVE..................................50
SECTION 7.4. DELAY OR OMISSION NOT WAIVER....................................51
SECTION 7.5. WAIVER OF PAST DEFAULTS.........................................51
SECTION 7.6. RIGHTS OF LENDERS TO RECEIVE PAYMENT............................51
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ARTICLE VIII. PERMANENT SECURITIES...........................................51
SECTION 8.1. PERMANENT SECURITIES............................................51
ARTICLE IX. TERMINATION......................................................52
SECTION 9.1. TERMINATION.....................................................52
SECTION 9.2. SURVIVAL OF CERTAIN PROVISIONS..................................52
ARTICLE X. SUBORDINATION.....................................................52
SECTION 10.1. AGREEMENT TO SUBORDINATE.......................................52
SECTION 10.2. CERTAIN DEFINITIONS............................................52
SECTION 10.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY...........................53
SECTION 10.4. DEFAULT ON DESIGNATED SENIOR DEBT..............................53
SECTION 10.5. ACCELERATION OF SECURITIES.....................................54
SECTION 10.6. WHEN DISTRIBUTION MUST BE PAID OVER............................54
SECTION 10.7. NOTICE BY THE BORROWER.........................................54
SECTION 10.8. SUBROGATION....................................................54
SECTION 10.9. RELATIVE RIGHTS................................................55
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER AND
THE GUARANTORS................................................55
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE......................55
SECTION 10.12. RIGHTS OF ADMINISTRATIVE AGENT................................55
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.........................56
SECTION 10.14. AMENDMENTS....................................................56
ARTICLE XI. GUARANTEE........................................................56
SECTION 11.1. THE GUARANTEE..................................................56
SECTION 11.2. SUBORDINATION OF GUARANTEE.....................................57
SECTION 11.3. LIMITATION ON LIABILITY........................................57
SECTION 11.4. STAY OF ACCELERATION...........................................58
SECTION 11.5. RELEASE OF GUARANTORS..........................................58
ARTICLE XII. INDEMNITY.......................................................58
SECTION 12.1. INDEMNIFICATION................................................58
SECTION 12.2. INDEMNITY NOT AVAILABLE........................................59
SECTION 12.3. SETTLEMENT OF CLAIMS...........................................59
SECTION 12.4. APPEARANCE EXPENSES............................................60
SECTION 12.5. INDEMNITY FOR TAXES, RESERVES AND EXPENSES.....................60
SECTION 12.6. SURVIVAL OF INDEMNIFICATION....................................61
SECTION 12.7. LIABILITY NOT EXCLUSIVE; PAYMENTS..............................61
ARTICLE XIII. THE ADMINISTRATIVE AGENT; THE ARRANGERS........................61
SECTION 13.1. APPOINTMENT....................................................61
SECTION 13.2. DELEGATION OF DUTIES...........................................61
SECTION 13.3. EXCULPATORY PROVISIONS.........................................61
SECTION 13.4. RELIANCE BY THE ADMINISTRATIVE AGENT...........................61
SECTION 13.5. NOTICE OF DEFAULT..............................................62
SECTION 13.6. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS.....62
SECTION 13.7. INDEMNIFICATION................................................63
SECTION 13.8. ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES.............63
SECTION 13.9. SUCCESSOR ADMINISTRATIVE AGENT.................................63
SECTION 13.10. ARRANGERS....................................................63
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ARTICLE XIV. MISCELLANEOUS...................................................64
SECTION 14.1. EXPENSES; DOCUMENTARY TAXES....................................64
SECTION 14.2. NOTICES........................................................64
SECTION 14.3. CONSENT TO AMENDMENTS AND WAIVERS..............................65
SECTION 14.4. PARTIES........................................................65
SECTION 14.5. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.....................................................66
SECTION 14.6. REPLACEMENT NOTES..............................................66
SECTION 14.7. MARSHALLING; RECAPTURE.........................................66
SECTION 14.8. LIMITATION OF LIABILITY........................................66
SECTION 14.9. INDEPENDENCE OF COVENANTS......................................67
SECTION 14.10. CURRENCY INDEMNITY............................................67
SECTION 14.11. WAIVER OF IMMUNITY............................................67
SECTION 14.12. FREEDOM OF CHOICE............................................67
SECTION 14.13. SUCCESSORS AND ASSIGNS.......................................67
SECTION 14.14. MERGER.......................................................67
SECTION 14.15. SEVERABILITY CLAUSE..........................................68
SECTION 14.16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY.............................................68
SCHEDULE 1.1(a) NON-RECURRING EXPENSES
SCHEDULE 3.5(a) MATERIAL ADVERSE EFFECT CONTRACTS
SCHEDULE 3.5(b) MATERIAL CONTRACTS
SCHEDULE 3.6(a) SUBSIDIARIES
SCHEDULE 3.6(b) OUTSTANDING COMMITMENTS
SCHEDULE 3.7 EXISTING LIENS
SCHEDULE 3.10 FINANCIAL STATEMENTS
SCHEDULE 3.13 LITIGATION
SCHEDULE 4.2(b) FORM OF OFFICER'S COMPLIANCE CERTIFICATE
SCHEDULE 4.7 INSURANCE
SCHEDULE 4.12 FORM OF JOINDER AGREEMENT
SCHEDULE 4.16 EXISTING INDEBTEDNESS
SCHEDULE 4.20 EXISTING INVESTMENTS
SCHEDULE 4.21 TRANSACTIONS WITH AFFILIATES
EXHIBIT A. FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B. FORM OF BRIDGE NOTE
EXHIBIT C. FORM OF DEBT REGISTRATION RIGHTS AGREEMENT
EXHIBIT D. FORM OF EXCHANGE NOTE INDENTURE
EXHIBIT E-1. OPINION OF XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX
EXHIBIT E-2. OPINION OF XXXXXXXX, XXXXXXXX & XXXXXX, P.A.
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THIS BRIDGE LOAN AGREEMENT, dated as of August 25, 1998 (as amended,
restated and/or otherwise modified from time to time, this "Agreement"), is by
and among:
(a) PCA International, Inc., a North Carolina corporation (the
"Borrower"),
(b) the Guarantors listed on the signature pages hereto as
Guarantors,
(c) NationsBridge, L.L.C., as Administrative Agent,
(d) NationsBanc Xxxxxxxxxx Securities LLC, as Arranger, and
(e) the other financial institutions party hereto, as Lenders.
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date by execution of a Joinder Agreement.
"Administrative Agent" means NationsBridge, L.L.C., acting as agent
pursuant to Article XIII or any successor or replacement Administrative Agent,
acting in such capacity.
"Affected Party" means any Lender, any Lender's Eurodollar Lending
Office, any beneficial owner of any Lender, and their respective successors and
assigns.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person or (ii) directly or indirectly owning or holding
five percent (5%) or more of the equity interest in such Person. For purposes of
this definition, "control" when used with respect to any Person means the power
to direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" has the meaning specified in the preamble to this
Agreement.
"Applicable Margin " means:
(i) with respect to Bridge Loans that are Base Rate Loans, 325
basis points per annum at all times through and including the date that
is 180 days subsequent to the Closing Date, 425 basis points per annum
at all times after the date that is 180 days subsequent to the Closing
Date and prior to the date that is 270 days subsequent to the Closing
Date and increasing by 50 basis points per annum on the date that is
270 days subsequent to the Closing Date and by an additional 50 basis
points per annum on the last day of each 90-day period thereafter for
so long as any Bridge Loans are outstanding; and
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(ii) with respect to Bridge Loans that are Eurodollar Loans,
425 basis points per annum at all times through and including the date
that is 180 days subsequent to the Closing Date, 525 basis points per
annum at all times after the date that is 180 days subsequent to the
Closing Date and prior to the date that is 270 days subsequent to the
Closing Date and increasing by 50 basis points per annum on the date
that is 270 days subsequent to the Closing Date and by an additional 50
basis points per annum on the last day of each 90-day period thereafter
for so long as any Bridge Loans are outstanding.
"Arranger" has the meaning specified in the preamble to this Agreement.
"Asset Disposition" means (i) the sale, lease or other disposition of
any property or asset by the Borrower or any Subsidiary of the Borrower, other
than (A) any such sale permitted by Sections 4.19(c)(i) and 4.19(c)(ii) and (B)
any such sale permitted by Section 4.19(c)(iii) to the extent the aggregate
proceeds received from such sales in any fiscal year are less than $5,000,000,
and (ii) receipt by the Borrower or any Subsidiary of the Borrower of any cash
insurance proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to any of
their property or assets in an amount in excess of $1,000,000.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in the form of Exhibit A or such other form as shall be approved by the
Administrative Agent and the Borrower.
"Bank Financing" means the financing provided by the Credit Facility.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence of
any of the following with respect to such Person: (i) a court or governmental
agency having jurisdiction in the premises shall enter a decree or order for
relief in respect of such Person in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its Property
or ordering the winding up or liquidation of its affairs; or (ii) there shall be
commenced against such Person an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or any
case, proceeding or other action for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the winding up or liquidation
of its affairs, and such involuntary case or other case, proceeding or other
action shall remain undismissed, undischarged or unbonded for a period of sixty
(60) consecutive days; or (iii) such Person shall commence a voluntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or consent to the entry of an order for relief in an
involuntary case under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) of such Person or for any substantial part of its Property
or make any general assignment for the benefit of creditors; or (iv) such Person
shall be unable to, or shall admit in writing its inability to, pay its debts
generally as they become due.
"Bankruptcy Law" means (i) Title 11 of the U.S. Code or (ii) any other
law of the United States, any political subdivision thereof or any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
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"Base Rate" means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the greater of
(a) the Federal Funds Rate in effect on such day plus 1/2 of 1% or (b) the Prime
Rate in effect on such day. If for any reason the Administrative Agent shall
have determined (which determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal Funds Rate for any
reason, including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Base Rate shall
be determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means a Bridge Loan or a Term Loan at any time that
the interest rate thereon is computed with reference to the Base Rate.
"beneficial owner" and "beneficial ownership" each has the meaning as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"Board" means the Board of Governors of the Federal Reserve System of
the United States or any successor.
"Borrower" has the meaning specified in the preamble to this Agreement.
"Bridge Loan" means a loan made by any Lender to the Borrower pursuant
to Section 2.1.
"Bridge Note" means a promissory note of the Borrower in the form
attached as Exhibit B hereto evidencing the Bridge Loan and Term Loan of any
Lender.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina are authorized or
required by law to close, and when used in connection with a Eurodollar Loan,
such day shall also be a day on which dealings between banks are carried on in
U.S. dollar deposits in London, England, Charlotte, North Carolina and New York,
New York.
"Capital Lease" means, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Lease Obligations" means the capital lease obligations
(including without limitation the payment of rent or other amounts) relating to
a Capital Lease determined in accordance with GAAP.
"Capital Markets Transaction" has the meaning specified in Section
2.4(a).
"Cash Equivalents" means (a) 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 twelve months from the date of acquisition, (b) U.S. dollar denominated
time deposits and certificates of deposit of any domestic commercial bank of
recognized standing (y) having capital and surplus in excess of $500,000,000 and
(z) whose short-term commercial paper rating from S&P is at least A-2 or the
equivalent thereof or from Xxxxx'x is at least P-2 or the equivalent thereof
(any such bank being an "Approved
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Bank"), in each case with maturities of not more than 270 days from the date of
acquisition, (c) commercial paper and variable or fixed rate notes issued by any
Approved Bank (or by the parent company thereof) and maturing within six months
of the date of acquisition, (d) repurchase agreements entered into by a Person
with a bank or trust company or recognized securities dealer having capital and
surplus in excess of $500,000,000 for direct obligations issued by or fully
guaranteed by the United States of America in which such Person shall have a
perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100% of
the amount of the repurchase obligations, (e) obligations of any State of the
United States or any political subdivision thereof, the interest with respect to
which is exempt from federal income taxation under Section 103 of the Code,
having a long term rating of at least AA- or Aa-3 by S&P or Moody's,
respectively, and maturing within three years from the date of acquisition
thereof, (f) Investments in municipal auction preferred stock (i) rated AAA (or
the equivalent thereof) or better by S&P or Aaa (or the equivalent thereof) or
better by Moody's and (ii) with dividends that reset at least once every 365
days and (g) Investments, classified in accordance with GAAP as current assets,
in money market investment programs registered under the Investment Company Act
of 1940, as amended, which are administered by reputable financial institutions
having capital of at least $100,000,000 and the portfolios of which are limited
to Investments of the character described in the foregoing subdivisions (a),
(b), (c), (e) and (f).
"Change of Control" means any of the following events: (a) prior to a
Qualifying IPO, (1) Jupiter shall fail to own beneficially, directly or
indirectly, at least 51% of the outstanding capital stock of the Borrower or (2)
a person or any group, and any affiliate of any such person other than Jupiter
shall beneficially own, directly or indirectly, an amount of the outstanding
capital stock of the Borrower entitled to 25% or more of the voting power of all
the outstanding capital stock of the Borrower, (b) after a Qualifying IPO, (1)
Jupiter shall own beneficially, directly or indirectly, less than 30% of the
outstanding capital stock of the Borrower or (2) a person or any group, and any
affiliate of any such person other than Jupiter shall beneficially own, directly
or indirectly, an amount of the outstanding capital stock of the Borrower
entitled to 25% or more of the voting power of all the outstanding capital stock
of the Borrower, (c) during any period of up to 24 consecutive months,
commencing after the Closing Date, individuals who at the beginning of such 24
month period were directors of the Borrower (together with any new director
whose election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at least a
majority of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of the Borrower then in office or (d) the occurrence of a "Change of
Control" under and as defined in the Exchange Note Indenture.
"Change of Control Fee" means a fee equal to 1% of the principal amount
of the Loans prepaid pursuant to the Change of Control Offer.
"Change of Control Offer" has the meaning specified in Section 4.29.
"Change of Control Payment" has the meaning specified in Section 4.29.
"Change of Control Payment Date" has the meaning specified in Section
4.29.
"Chase" means The Chase Manhattan Bank.
"Closing" has the meaning specified in Section 5.15.
"Closing Date" has the meaning specified in Section 5.15.
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"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations issued
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed also to refer to any successor sections.
"Commitment" means, with respect to any Lender, the amount set forth
opposite such Lender's signature on the signature pages of this Agreement.
"Commitment Letter" means the Bridge Commitment Letter (including the
Summaries of Indicative Terms and Conditions incorporated by reference therein),
dated April 20, 1998, by and among Jupiter, the Administrative Agent, Chase and
CSI.
"Consolidated Capital Expenditures" means for any period for the
Borrower and its Subsidiaries on a consolidated basis, all capital expenditures
for such period, as determined in accordance with GAAP.
"Consolidated Cash Taxes" means for any period, the aggregate of all
federal, state or other domestic or foreign taxes upon the income and profits of
the Borrower and its Subsidiaries on a consolidated basis, for such period, as
determined in accordance with GAAP, to the extent the same are paid in cash
during such period.
"Consolidated EBITDA" means for any period for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (i) Consolidated Net Income for
such period plus (ii), without duplication, an amount which, in the
determination of Consolidated Net Income for such period has been deducted for
(A) Consolidated Interest Expense, (B) total federal, state or other domestic
and foreign income taxes, (C) depreciation and amortization, (D) non-recurring
expenses set forth on Schedule 1.1(a) hereto to the extent accrued during the
period in question, (E) Consolidated Non-Cash Charges and (F) all photography
studio closure costs offset by cash reimbursement payments received in
connection therewith, plus (iii) any extraordinary gains for such period minus
(iv) any extraordinary losses for such period, in each case on a consolidated
basis determined in accordance with GAAP applied on a consistent basis. Except
as expressly provided otherwise, the applicable period shall be for the four
consecutive quarters ending as of the date of determination.
"Consolidated Excess Cash Flow" means for any period for the Borrower
and its Subsidiaries on a consolidated basis, the sum of Consolidated Net Income
for such period plus the non-cash portion of Consolidated Interest Expense for
such period plus depreciation, amortization and other non-cash charges minus
Consolidated Capital Expenditures for such period minus the aggregate amount of
all regularly scheduled payments of principal on Funded Debt minus the cash
portion of federal, state, local and foreign income, value added and similar
taxes paid (to the extent not deducted in determining Consolidated Net Income),
in each case on a consolidated basis determined in accordance with GAAP applied
on a consistent basis.
"Consolidated Fixed Charge Coverage Ratio" means for any period, the
ratio of (i) Consolidated EBITDA for such period minus Consolidated Maintenance
Capital Expenditures for such period minus Consolidated Cash Taxes for such
period to (ii) Consolidated Fixed Charges for such period.
"Consolidated Fixed Charges" means for any period for the Borrower and
its Subsidiaries on a consolidated basis, the sum of the cash portion of
Consolidated Interest Expense plus scheduled maturities of Funded Debt paid
during such period, in each case on a consolidated basis
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determined in accordance with GAAP applied on a consistent basis. Except as
expressly provided otherwise, the applicable period shall be for the four
consecutive quarters ending as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP applied
on a consistent basis.
"Consolidated Group" means the Borrower and its Subsidiaries.
"Consolidated Interest Coverage Ratio" means for any period, the ratio
of Consolidated EBITDA for such period to the cash portion of Consolidated
Interest Expense for such period.
"Consolidated Interest Expense" means for any period for the Borrower
and its Subsidiaries on a consolidated basis, all interest expense, including
the amortization of debt discount and premium and the interest component under
Capital Leases and the implied interest component under Synthetic Leases, in
each case on a consolidated basis determined in accordance with GAAP applied on
a consolidated basis. Except as expressly provided otherwise, the applicable
period shall be for the four consecutive quarters ending as of the date of
determination.
"Consolidated Leverage Ratio" means, as of the last day of any fiscal
quarter, the ratio of Consolidated Funded Debt on such date to Consolidated
EBITDA for the period of four consecutive fiscal quarters ending as of such day.
"Consolidated Maintenance Capital Expenditures" means, for purposes of
calculating the Consolidated Fixed Charge Coverage Ratio, the greater of (i)
$4,000,000 or (ii) the sum of $2,000 multiplied by the number of photography
studios under operation by the Borrower and its Subsidiaries as of the last day
of the period for which the Consolidated Fixed Charge Coverage Ratio is being
calculated.
"Consolidated Net Income" means for any period, the net income of the
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with GAAP applied on a consistent basis, but excluding any extraordinary gains
or losses and any taxes on such excluded gains and any tax deductions or credits
on account of any such excluded gains and any tax deductions or credits on
account of any such excluded losses.
"Consolidated Non-Cash Charges" means for any period for the Borrower
and its Subsidiaries on a consolidated basis, determined in accordance with
GAAP, all non-cash charges for such period (excluding any non-cash charges that
require an accrual or reserve for cash charges for any future period).
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any material agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Conversion Date" means the Maturity Date.
"Conversion Default" means any one or more of the following: (i) the
occurrence of any Default or Event of Default, (ii) any fees due to the Lenders
and/or their Affiliates shall not have been paid in full, or (iii) any order,
decree, injunction or judgment enjoining the issuance of any Loans shall be in
effect.
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"Conversion Rate" means, as of any date, the sum of (i) the then
applicable Conversion Spread, plus (ii) the greatest of the following (expressed
as a percentage per annum), calculated as of the Conversion Date:
(a) the sum of (1) the yield (expressed as a percentage per
annum) in effect on the Conversion Date for United States Treasury
Notes with a remaining maturity closest to seven years from the
Conversion Date (provided, however, that if the remaining term of the
Term Loans is not equal to the constant maturity of a United States
Treasury Note for which a weekly average yield is given, such yield on
United States Treasury Notes shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such
yields are given), plus (2) 650 basis points, and
(b) the Eurodollar Rate plus 625 basis points.
"Conversion Spread" means zero basis points during the 90-day period
commencing on the Conversion Date, increasing by 50 basis points at the
beginning of each subsequent 90-day period.
"Credit Facility" means that certain Credit Agreement, dated as of the
date hereof, by and among the Borrower, the Guarantors, the lenders party
thereto and NationsBank, N.A. as agent, and the other lenders party thereto,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time.
"Credit Parties" means a collective reference to the Borrower and the
Guarantors, and "Credit Party" means any one of them.
"Custodian" means any receiver, interim receiver, receiver and manager,
trustee, assignee, liquidator, sequestrator, custodian or similar official under
any Bankruptcy Law.
"Debt Registration Rights Agreement" means the registration rights
agreement, dated as of August 25, 1998, among the Borrower, the Guarantors and
the Administrative Agent pursuant to which the Exchange Notes are required to be
registered for public sale, in the form attached as Exhibit C.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Designated Senior Debt" has the meaning specified in Section 10.2.
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiary" means (i) any Subsidiary which is incorporated or
organized under the laws of any State or territory of the United States or the
District of Columbia or (ii) any Subsidiary which is not so incorporated or
organized but is treated as a partnership or a division (or a branch office) for
United States federal income tax purposes, as a result of an election under the
so-called "check the box" regulations.
"Engagement Letter" means the engagement letter, dated as of April 20,
1998, by and among Jupiter, the Administrative Agent, Chase, CSI and NMS.
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"Environmental Laws" means any and all lawful and applicable Federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"Equity Financing" means the issuance and sale to Jupiter, certain of
its Affiliates, certain members of management of the Borrower and certain other
persons arranged by Jupiter of not less than $65.0 million of common stock of
the Borrower having terms and conditions acceptable to the Lenders (of which at
least $50.5 million shall be issued for cash and up to $14.5 million may consist
of the rollover of equity or of options).
"Equity Interests" has the meaning specified in Section 4.22.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common control with
any Credit Party within the meaning of Section 4001(a)(14) of ERISA, or is a
member of a group which includes the Borrower and which is treated as a single
employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of a
Reportable Event or the substantial cessation of operations (within the meaning
of Section 4062(e) of ERISA); (ii) the withdrawal by the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate or the
actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual termination of a
Plan by the PBGC under Section 4042 of ERISA; (v) any event or condition which
could reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan;
(vi) the complete or partial withdrawal of the Borrower, any Subsidiary of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; (vii) the conditions
for imposition of a lien under Section 302(f) of ERISA exist with respect to any
Plan; or (vii) the adoption of an amendment to any Plan requiring the provision
of security to such Plan pursuant to Section 307 of ERISA.
"Eurodollar Lending Office" means, with respect to any Lender, the
office, if any, of such Lender specified from time to time as its "Eurodollar
Lending Office" in a written notice to the Borrower.
"Eurodollar Loan" means any Loan bearing interest at a rate determined
by reference to the Eurodollar Rate.
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"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions, extensions
and renewals), a per annum interest rate determined pursuant to the following
formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation
D, as such regulation may be amended from time to time or any successor
regulation, as the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special, or marginal reserves) applicable
with respect to "Eurocurrency liabilities" as that term is defined in Regulation
D (or against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is determined), whether
or not Lender has any Eurocurrency liabilities subject to such reserve
requirement at that time. Eurodollar Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without benefits of credits for proration, exceptions or offsets
that may be available from time to time to a Lender. The Eurodollar Rate shall
be adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" means any event specified in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Note Indenture" means, the indenture relating to the Exchange
Notes, among the Borrower, as issuer, the Guarantors, as guarantors and the
Exchange Note Trustee, in the form attached as Exhibit D.
"Exchange Note Trustee" means, on any date of determination, the
trustee under the Exchange Note Indenture.
"Exchange Notes" has the meaning specified in Section 4.28.
"Exchange Request" has the meaning specified in Section 4.28.
"Extension of Credit" means, as to any Lender, the making of, extension
or conversion of, or participation in, a Loan by such Lender.
"Federal Funds Rate" means, for any day, the rate of interest per annum
(rounded upwards, if necessary, to the nearest whole multiple of 1/100 of 1%)
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (A) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (B) if no such rate is
so published on such next preceding Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to the Administrative Agent on such
day on such transactions as determined by the Administrative Agent.
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"Fee Letter" means that certain Amended and Restated Fee Letter
Agreement, dated as of August 24, 1998, among Jupiter, the Administrative Agent,
Chase, CSI and NMS.
"Foreign Subsidiary" means, with respect to any Person, a Subsidiary of
such Person which is not a Domestic Subsidiary.
"Funded Debt" means, with respect to any Person, without duplication,
(i) all Indebtedness of such Person for borrowed money, (ii) all purchase money
Indebtedness of such Person, including without limitation the principal portion
of all obligations of such Person under Capital Leases, (iii) all Guaranty
Obligations of such Person with respect to Funded Debt of another Person, (iv)
all Funded Debt of another Person secured by a Lien on any Property of such
Person, whether or not such Funded Debt has been assumed, provided that for
purposes hereof the amount of such Funded Debt shall be limited to the greater
of (A) the amount of such Funded Debt as to which there is recourse to such
Person and (B) the fair market value of the property which is subject to the
Lien, (v) all obligations of such Person issued or assumed as the deferred
purchase price of Property or services purchased by such Person (other than
trade debt incurred in the ordinary course of business and due within twelve
months of the incurrence thereof) and (vi) the principal balance outstanding
under any synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product to which such Person is a party,
where such transaction is considered borrowed money indebtedness for tax
purposes but is classified as an operating lease in accordance with GAAP. The
Funded Debt of any Person shall include the Funded Debt of any partnership or
joint venture in which such Person is a general partner or joint venturer, but
only to the extent to which there is recourse to such Person for the payment of
such Funded Debt.
"GAAP" means with respect to the financial statements or other
financial information of any Person, generally accepted accounting principles in
the United States which are in effect from time to time.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.
"Guarantee" means the guarantee by each of the Guarantors pursuant to
Article XI hereof.
"Guaranteed Obligations" has the meaning specified in Section 11.1.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any Property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
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"Guarantors" means the Guarantors listed on the signature pages hereto
as Guarantors and each Additional Credit Party, together with their successors
and assigns.
"Hedging Agreements" means, with respect to any Person, the agreements
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or foreign currency exchange rates.
"Indebtedness" of any Person means (i) all obligations of such Person
for borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments are
customarily made, (iii) all obligations of such Person under conditional sale or
other title retention agreements relating to Property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (iv) all obligations
of such Person issued or assumed as the deferred purchase price of Property or
services purchased by such Person (other than trade debt incurred in the
ordinary course of business and due within twelve months of the incurrence
thereof) which would appear as liabilities on a balance sheet of such Person,
(v) all obligations of such Person under take-or-pay or similar arrangements or
under commodities agreements, (vi) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, Property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, provided that for purposes hereof
the amount of such Indebtedness shall be limited to the greater of (A) the
amount of such Indebtedness as to which there is recourse to such Person and (B)
the fair market value of the property which is subject to the Lien, (vii) all
Guaranty Obligations of such Person, (viii) the principal portion of all
obligations of such Person under Capital Leases, (ix) all obligations of such
Person in respect of interest rate protection agreements, foreign currency
exchange agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements (including, but not
limited to, the Hedging Agreements), (x) the maximum amount of all standby
letters of credit issued or bankers' acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (xi) all preferred stock issued by such Person and
required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, by a fixed date and (xii) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product to which
such Person is a party, where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an operating lease in
accordance with GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, but only to the extent to which there is
recourse to such Person for payment of such Indebtedness.
"Indemnified Parties" has the meaning specified in Section 12.1.
"Indemnifying Parties" has the meaning specified in Section 12.1.
"Interbank Offered Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the rate of
interest, determined by the Administrative Agent on the basis of the offered
rates for deposits in dollars for a period of time corresponding to such
Interest Period (and commencing on the first day of such Interest Period),
appearing on Telerate Page 3750 (or, if, for any reason, Telerate Page 3750 is
not available, the Reuters Screen LIBO Page) as of approximately 11:00 A.M.
(London time) two (2) Business Days before
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the first day of such Interest Period. As used herein, "Telerate Page 3750"
means the display designated as page 3750 by Dow Xxxxx Telerate, Inc. (or such
other page as may replace such page on that service for the purpose of
displaying the British Bankers Association London interbank offered rates) and
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Interest Payment Date" means (i) the last day of each November,
February, May and August after the Closing Date, (ii) the Maturity Date and
(iii) the date of any prepayment of all or any portion of the principal of the
Loans.
"Interest Period" means, in respect of any Eurodollar Loan, (i) in the
case of the first Interest Period (if any) applicable to the Bridge Loans, the
period commencing on and including the Closing Date and ending on the
numerically corresponding date in the month thereafter, and (ii) in the case of
each subsequent Interest Period, the period beginning on the last day of the
prior Interest Period and ending on the numerically corresponding date in the
month thereafter; provided, however, that if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended until the
next succeeding Business Day unless the next Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Notwithstanding the foregoing, no Interest Period in
respect of the Bridge Loans may extend beyond the Maturity Date and each
Interest Period that would otherwise commence before and end after the Maturity
Date shall end on the Maturity Date.
"Investment Banks" means, collectively, NMS and CSI.
"Investments" means (i) any loan or advance to any Person, (ii) any
purchase or other acquisition of any capital stock, warrants, rights, options,
obligations or other securities of, or equity interest in, any Person, (iii) any
capital contribution to any Person or any other investment in such Person,
including, without limitation, any Guaranty Obligation incurred for the benefit
of such Person.
"Joinder Agreement" means a Joinder Agreement substantially in the form
of Schedule 4.12 hereto, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 4.12.
"Jupiter" means Jupiter Partners II L.P., a Delaware limited
partnership.
"Kmart License Agreement" means the Agreement, dated May 10, 1996,
between Kmart Corporation and the Borrower, as amended, modified or supplemented
from time to time.
"Lenders" shall mean (a) each financial institution that has executed a
counterpart to this Agreement (other than any such financial institution that
has ceased to be a party hereto pursuant to an Assignment and Acceptance) and
(b) any financial institution that has become a party hereto pursuant to an
Assignment and Acceptance.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give any
of the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the Uniform Commercial Code
as
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adopted and in effect in the relevant jurisdiction or other similar recording or
notice statute, and any lease in the nature thereof).
"Liquidated Damages" means any and all liquidated damages then owing
pursuant to any of the Loan Documents.
"Loan" means a Bridge Loan or a Term Loan.
"Loan Documents" means this Agreement, the Bridge Notes and the Related
Documents.
"Loan Register" means the register maintained by the Administrative
Agent on behalf of the Borrower pursuant to Section 6.7.
"Material Contracts" has the meaning specified in Section 3.4(a).
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets, liabilities or
prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Credit Parties taken as a whole to perform any material
obligation under the Loan Documents to which it is a party or (iii) the rights
and remedies of the Lenders under the Loan Documents.
"Maturity Date" means August 25, 1999.
"Merger" means that certain merger of Jupiter Acquisition Corp., a
North Carolina corporation with and into the Borrower pursuant to the terms and
conditions of the Merger Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger by
and between the Borrower and Jupiter Acquisition Corp., a North Carolina
corporation dated as of April 20, 1998, as amended or modified from time to
time.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate and at least one employer
other than the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its successors.
"NationsBridge" means NationsBridge, L.L.C.
"Net Proceeds" means gross cash proceeds (including any cash received
by way of deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received in connection with a Capital
Markets Transaction, net of (i) reasonable transaction costs, including in the
case of a transaction described in Section 2.4(a)(i), underwriting discounts and
commissions and in the case of an Asset Disposition occurring in connection with
a claim under an
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insurance policy, costs incurred in connection with adjustment and settlement of
the claim, (ii) estimated taxes payable in connection therewith, and (iii) in
the case of a Capital Markets Transaction described in clause (ii) or (iii) of
Section 2.4(a), any amounts payable in respect of Indebtedness (other than the
Loans) (x) under the Credit Facility or (y) which is secured by any property or
asset which is the subject thereof to the extent that such Indebtedness and any
payments in respect thereof are paid with a portion of the proceeds therefrom.
"NMS" means NationsBanc Xxxxxxxxxx Securities LLC.
"Obligations" means all now existing and hereafter arising obligations
and liabilities of any of the Borrower and the Guarantors to any and all of the
Lenders arising under or in connection with the Loan Documents, whether absolute
or contingent, and whether for principal, interest, penalties, premium, fees,
indemnifications, reimbursements, damages (including, if applicable, Liquidated
Damages), or otherwise and specifically including post-petition interest
(whether or not an allowable claim).
"Offering Documents" means an offering memorandum or prospectus
together with such other documents, instruments and agreements as the Investment
Banks may request in their sole discretion in connection with the issuance of
the Permanent Securities.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operation Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of either
the Borrower or any Guarantor by an Officer of the Borrower or any Guarantor, as
the case may be, who must be the principal executive officer, a vice chairman,
the principal financial officer, the treasurer or the principal accounting
officer of the Borrower or any Guarantor, as the case may be.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee at
any time) of any Property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease in which that Person is the lessor.
"Opinion of Counsel" means an opinion from legal counsel of the
Borrower or any Guarantor, which legal counsel is reasonably acceptable to the
Administrative Agent.
"Other Taxes" has the meaning specified in Section 2.9(b).
"Participations" has the meaning specified in Section 6.3.
"Payment Blockage Notice" has the meaning specified in Section 10.4.
"Payment Default" means any Default or Event of Default under Section
7.1(a) or any matured or unmatured default under the analogous provisions of the
documents governing the Credit Facility.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its functions under ERISA.
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"Permanent Securities" means any debt securities issued by the Borrower
which may be guaranteed by the Guarantors which have either been registered with
the SEC and sold pursuant to a registration statement in a public offering or
privately placed or otherwise sold in an offering exempt from registration with
the SEC to refinance the Loans.
"Permitted Investments" means Investments which are either (i) cash and
Cash Equivalents; (ii) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of stock, obligations,
securities or other property received in settlement of accounts receivable
(created in the ordinary course of business) from bankrupt or insolvent
obligors; (iv) Investments existing as of the Closing Date and set forth in
Schedule 4.20; (v) Guaranty Obligations permitted by Section 4.16; (vi) loans to
employees, directors or officers in connection with the award of convertible
bonds or stock under a stock incentive plan, stock option plan or other
equity-based compensation plan or arrangement in the aggregate not to exceed
$500,000 (calculated on the exercise price for any such shares) in the aggregate
at any time outstanding; (vii) other advances or loans to employees, directors,
officers or agents not to exceed $750,000 in the aggregate at any time
outstanding; (viii) advances or loans to customers or suppliers that do not
exceed $1,000,000 in the aggregate at any one time outstanding; (ix) Investments
by one Credit Party in and to another Credit Party; (x) loans, advances and
investments in Foreign Subsidiaries in an amount not to exceed $15,000,000 in
the aggregate at any time outstanding and (xi) other loans, advances and
investments of a nature not contemplated in the foregoing subsections in an
amount not to exceed $1,000,000 in the aggregate at any time outstanding.
"Permitted Junior Securities" has the meaning specified in Section
10.2.
"Permitted Liens" means:
(i) Liens in favor of the Administrative Agent on behalf of the
Lenders;
(ii) Liens (other than Liens created or imposed under ERISA) for taxes,
assessments or governmental charges or levies not yet due or Liens for taxes
being contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and as to
which the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and suppliers and other Liens imposed by law or pursuant
to customary reservations or retentions of title arising in the ordinary course
of business, provided that such Liens secure only amounts not yet due and
payable or, if due and payable, are unfiled and no other action has been taken
to enforce the same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in accordance with GAAP have
been established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA) incurred
or deposits made by the Borrower and its Subsidiaries 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, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
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(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within 30
days after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 30 days after the
expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of the
encumbered Property for its intended purposes;
(vii) Liens securing purchase money Indebtedness (including Capital
Leases) to the extent permitted under Section 4.16(d), provided that any such
Lien attaches only to the Property financed and such Lien attaches thereto
concurrently with or within 90 days after the acquisition thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of any member of the Consolidated Group;
(ix) any interest of title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases permitted by the Credit Facility;
(x) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xi) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 4.20;
(xii) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xiii) Liens on assets of any of the Credit Parties securing
Obligations under the Credit Facility whether now existing or hereafter arising;
and
(xiv) Liens existing as of the Closing Date and set forth on Schedule
3.7; provided that (a) no such Lien shall at any time be extended to or cover
any Property other than the Property subject thereto on the Closing Date and (b)
the principal amount of the Indebtedness secured by such Liens shall not be
extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
(whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
ERISA) which is covered by ERISA and with respect to which the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Prepayment Date" has the meaning specified in Section 2.7.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by NationsBank as its prime rate in effect at its principal
office in Charlotte, North Carolina, with
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each change in the Prime Rate being effective on the date such change is
publicly announced as effective (it being understood and agreed that the Prime
Rate is a reference rate used by NationsBank in determining interest rates on
certain loans and is not intended to be the lowest rate of interest charged on
any extension of credit by NationsBank to any debtor).
"Pro Forma" means, with respect to any event, that such event shall be
deemed to have occurred as of the first day of the twelve-month period ending as
of the last day of the most recent fiscal quarter for which the Lenders have
received the financial information required by Section 4.1(a) or 4.1(b)(ii), as
applicable.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Purchasers" has the meaning specified in Section 6.2.
"Qualifying IPO" means an underwritten primary public offering (other
than a public offering pursuant to a registration statement on Form S-8) of the
common capital stock of the Borrower (i) pursuant to an effective registration
statement filed with the SEC in accordance with the Securities Act (whether
alone or in connection with a secondary public offering) and (ii) resulting in
proceeds to the Borrower of at least $25 million.
"Rate Selection Notice" has the meaning specified in Section 2.3(a).
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Related Documents" means the Exchange Notes, the Exchange Note
Indenture, the Debt Registration Rights Agreements, the Engagement Letter and
the Fee Letter (including the exhibits thereto), each Joinder Agreement, and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the notice requirement has been
waived by regulation.
"Representative" has the meaning specified in Section 10.2.
"Required Lenders" means, at any time, Lenders holding at least 66.67%
of the then aggregate unpaid principal balance of the Loans, or, if no such
principal amount is then outstanding, Lenders having at least a majority of the
total Commitments; provided that, for purposes hereof, neither the Borrower nor
any of its Affiliates shall be included in (i) the Lenders holding such amount
of the Loans or having such amount of the Commitments or (ii) determining the
aggregate unpaid principal amount of the Loans or the total Commitments.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its material property.
"Responsible Officer" means the President, the Chief Financial Officer,
the Controller and any Vice President.
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"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of any member
of the Consolidated Group now or hereafter outstanding, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of any member of
the Consolidated Group now or hereafter outstanding and (iii) any payment made
to retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of stock of any member of the
Consolidated Group now or hereafter outstanding.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc., or any successor or assignee of the business of such division in the
business of rating securities.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Exchange Notes and all other "Securities" (as
defined in the Securities Act) issued, or required to be issued, under any Loan
Document.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" has the meaning specified in Section 10.2.
"Single Employer Plan" means any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Solvent" or "Solvency" means, with respect to any Person as of a
particular date, that on such date (i) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (ii) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person's Property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged or is to engage, (iv) the fair value of the Property of
such Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the present fair
saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"Subsidiary" means, as to any Person, (a) any corporation more than 50%
of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time owned by such Person directly or indirectly
through Subsidiaries, and (b) any partnership, association, joint venture or
other entity in which such Person directly or indirectly through Subsidiaries
has more than 50% of the voting interests at any time. Unless otherwise
identified, "Subsidiary" or "Subsidiaries" shall mean Subsidiaries of the
Borrower.
"Taxes" has the meaning specified in Section 2.9(a).
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"Term Loan" means a loan made on the Conversion Date, if any, by a
Lender to the Borrower pursuant to Section 2.2 to refinance a Bridge Loan.
"Transactions" means, collectively, the Merger, the related financing
transactions and each of the other transactions contemplated by the Transaction
Documents.
"Transaction Documents" means the Loan Documents, the Credit Facility
and the Merger Agreement.
"Transferee" has the meaning specified in Section 6.4.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Voting Stock" means, with respect to any Person, capital stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
"Wal-Mart License Agreement" means the agreement, dated July 29, 1992,
between Wal-Mart Stores, Inc. and American Studios, Inc., as the same may be
amended, modified or supplemented from time to time and any other agreements
entered into from time to time between the Borrower (or its Subsidiaries) and
Wal-Mart Stores, Inc. granting the Borrower or its Subsidiaries the right to
operate retail portrait photography studios in Wal-Mart stores in the United
States and Canada.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
whose Voting Stock or other equity interests is at the time owned by such Person
directly or indirectly through other Wholly Owned Subsidiaries.
"Year 2000 Compliant" has the meaning specified in Section 3.17.
"Year 2000 Problem" has the meaning specified in Section 3.17.
Section 1.2. Interpretation. In this Agreement, the singular includes
the plural and the plural includes the singular; words implying any gender
include the other genders; references to any section, exhibit or schedule are to
sections, exhibits or schedules hereto unless otherwise indicated; references to
statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; "including" following a word or phrase shall not be
construed to limit the generality of such word or phrase. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis. All
calculations made for the purposes of determining compliance with this Credit
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with the most recent annual or
quarterly financial statements delivered pursuant to Section 4.1 hereof (or,
prior to the delivery of the first financial statements pursuant to Section 4.1
hereof, consistent with the annual audited financial statements referenced in
Section 3.10); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) the Administrative Agent or the Required Lenders shall so
object in writing within 30 days
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after delivery of such financial statements, then such calculations shall be
made on a basis consistent with the most recent financial statements delivered
by the Borrower to the Lenders as to which no such objection shall have been
made.
ARTICLE II.
THE CREDIT FACILITY
Section 2.1. Commitments to Make Bridge Loans. In reliance upon the
representations and warranties of the Borrower set forth herein and subject to
the terms and conditions herein set forth, each of the Lenders severally agrees
to make a Bridge Loan to the Borrower on the Closing Date in the amount of such
Lender's Commitment. The proceeds of each Bridge Loan shall be disbursed by wire
transfer on the Closing Date as provided in written instructions delivered by
the Borrower to each of the Lenders on the Business Day prior to the Closing
Date. Each Bridge Loan will mature on the Maturity Date.
Section 2.2. Conversion to Term Loans. If, on the Maturity Date: (i)
all principal and interest in respect of the Bridge Loans has not been paid in
full, (ii) no Conversion Default exists and is continuing, (iii) no order,
decree, injunction or judgment enjoining the conversion of Bridge Loans to Term
Loans shall be in effect and (iv) the Administrative Agent receives an Officers'
Certificate from the Borrower certifying to the foregoing and requesting a
conversion of the Bridge Loans to Term Loans, each of the Lenders hereby commits
that, on the Maturity Date, such Lender will convert its Bridge Loan (including,
without limitation, any Bridge Loans resulting from the capitalization of
interest pursuant to Section 2.3(e) below), to a Term Loan maturing on the
seventh anniversary of the original Maturity Date (and the Maturity Date shall
be deemed to have been automatically extended to such seventh anniversary date).
Section 2.3. Interest; Payment in Kind Option; and Default Interest.
(a) Interest Rate Applicable to Bridge Loans. The Bridge Loans shall be
Base Rate Loans until the Borrower shall irrevocably specify in a written notice
(a "Rate Selection Notice") delivered to the Administrative Agent, or otherwise
agree with the Lenders, that the Bridge Loans shall be Eurodollar Loans. Subject
to Sections 2.3(d), (e) and (f) below:
(i) If the Bridge Loans are Base Rate Loans (prior to a Rate
Selection Notice or pursuant to Section 2.8(b) or (c)), the unpaid
principal balance thereof shall bear interest until paid at a rate per
annum equal to the sum of the Base Rate plus the Applicable Margin,
changing when and as the Base Rate and/or the Applicable Margin
changes, and
(ii) If the Bridge Loans are Eurodollar Loans, the unpaid
principal balance thereof shall bear interest until paid at a rate per
annum equal to the sum of the Eurodollar Rate plus the Applicable
Margin, changing when and as the Eurodollar Rate and/or the Applicable
Margin changes.
(b) Interest on Term Loans. Subject to Sections 2.3(d), (e) and (f)
below, interest on the unpaid principal balance of the Term Loans of each Lender
will accrue at a rate per annum equal to the Conversion Rate, changing when and
as the Conversion Spread changes.
(c) Basis of Computation of Interest; Payment of Interest. All interest
shall be calculated for actual days elapsed on the basis of a 360-day year (or a
365-day year in the case of Base
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Rate Loans) and shall be payable in arrears not later than 12:00 noon (New York
City time) on each Interest Payment Date, commencing on November 30, 1998, by
wire transfer of immediately available funds in accordance with Section 2.8.
(d) Maximum Interest Rate. Notwithstanding anything contained in
Section 2.3(a) or 2.3(b), but subject to Section 2.3(f), in no event shall the
interest rate on the Loans for any Interest Period exceed an annual rate equal
to the lesser of (i) 16% and (ii) the maximum interest rate permitted by law.
(e) Option to Capitalize Certain Interest. Subject to Section 2.3(f),
to the extent that the interest rate on the Bridge Loans or the Term Loans for
any Interest Period exceeds a rate equal to 14% per annum, the Borrower shall
have the option to pay to each Lender, pro rata, all or a portion of the
interest payable for such Interest Period in excess of the amount of interest
that would have been payable on such date at an interest rate of 14% per annum,
by capitalizing such excess interest and adding it to the aggregate principal
amount of outstanding Bridge Loans or Term Loans, as the case may be, held by
such Lender, effective as of the applicable Interest Payment Date. The Borrower
shall give the Administrative Agent an irrevocable notice that it will exercise
such right at least three Business Days prior to any Interest Payment Date as to
which such right is to be exercised.
(f) Default Interest. (i) If an Event of Default shall have occurred
and be continuing, the Borrower shall pay interest, to the extent permitted by
law, on such defaulted amount to but excluding the date of actual payment (after
as well as before judgment) to the extent lawful, at a rate per annum equal to
200 basis points in excess of the otherwise applicable interest rate on the
Loans. The Borrower shall pay such default interest and all interest accruing on
any overdue Obligation in cash on demand from time to time.
Section 2.4. Mandatory Prepayment.
(a) The Borrower shall prepay the Loans ratably in accordance with the
aggregate outstanding principal balances thereof, with the Net Proceeds of: (i)
any direct or indirect public offering or private placement of the Permanent
Securities, or any other debt or equity securities of the Borrower, any
Guarantor or any direct or indirect parent holding company of the Borrower
issued after the Closing Date other than (A) any issuance of directors'
qualifying shares, (B) any issuance or sale of common stock (or common stock
equivalents) or options to purchase common stock (or common stock equivalents)
of the Borrower to officers and employees under employee benefit or compensation
plans, (ii) the incurrence of any other Indebtedness by the Borrower, any of its
Subsidiaries or any direct or indirect parent holding company of the Borrower
(excluding Jupiter) after the Closing Date (other than (x) Indebtedness
permitted to be incurred under the Credit Facility pursuant to Section 4.16(a)
and (y) Indebtedness of the Borrower owed to and held by a Wholly Owned
Subsidiary of the Borrower and Indebtedness of a Wholly Owned Subsidiary of the
Borrower owed to and held by the Borrower or another Wholly Owned Subsidiary of
the Borrower) and (iii) any Asset Disposition by the Borrower or any of its
Subsidiaries after the Closing Date (other than an Asset Disposition permitted
under Section 4.19(c)) (each of the transactions in the foregoing clauses (i),
(ii) and (iii), a "Capital Markets Transaction"). The Borrower shall, not later
than the fourth Business Day following any Capital Markets Transaction, apply
such Net Proceeds to prepay the Loans pursuant to this Section 2.4, without
premium or penalty, by paying to each Lender an amount equal to 100% of such
Lender's pro rata share of the aggregate principal amount of the Loans to be
prepaid, plus accrued and unpaid interest thereon to the Prepayment Date.
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(b) Subject to and in accordance with Section 4.29, in the event of any
Change of Control, the Borrower shall offer to prepay the Loans pursuant to
Section 4.29.
Section 2.5. Optional Prepayment. The Borrower may, upon three Business
Days' prior written notice to each of the Lenders, prepay the Loans at any time,
in whole or in part, on a pro rata basis, by paying to each applicable Lender an
amount equal to 100% of such Lender's pro rata share of the aggregate principal
amount of Loans to be prepaid, plus accrued and unpaid interest thereon to the
Prepayment Date.
Section 2.6. Breakage Costs; Indemnity. The Borrower agrees to
indemnify and hold each Affected Party harmless from and against any loss or
expense which such Affected Party sustains or incurs as a consequence of:
(a) the failure by the Borrower to borrow Eurodollar Loans on
the Closing Date after the Borrower has given a notice with respect
thereof in accordance with Section 5.15, unless such failure by the
Borrower is due exclusively to a Lender's gross negligence or willful
action or omission,
(b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions
of Section 2.4 or 2.5, as applicable, or
(c) the mandatory or optional prepayment of Eurodollar Loans
on a day that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the excess, if any of (i)
such Affected Party's actual loss and expenses incurred (excluding lost profits)
in connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Bridge Loans not so made or the principal amount of Loans so
prepaid from the date of such proposed issuance or prepayment in the case of a
failure to make Bridge Loans, to the last day of the Interest Period that would
have commenced on the proposed date of funding, or in the case of any such
prepayment, to the last day of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (B) the amount of interest (as reasonably determined by such
Affected Party) which would have accrued to such Affected Party on such amount
by placing such amount on deposit for a period comparable to such Interest
Period with leading banks in the interbank Eurodollar market. A certificate as
to any amounts payable pursuant to this Section 2.6 submitted to the Borrower by
any Affected Party shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
Section 2.7. Effect of Notice of Prepayment. The Borrower shall notify
the Lenders in writing at their addresses shown in the Loan Register of any date
set for prepayment (each such day, a "Prepayment Date") of Loans. Once such
notice is received, the Loans to be prepaid shall become due and payable on the
Prepayment Date set forth in such notice. Such notice may not be conditional.
Section 2.8. Payments.
(a) Wire Transfer. Except as provided in Section 2.3(e) with respect to
the payment of certain interest by capitalizing it and adding it to the
principal of outstanding Loans, the principal of, fees, premium, if any, and
interest on each Loan and all other Obligations arising under the
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Loan Documents shall be payable by wire transfer in immediately available funds
(in United States dollars) to the respective accounts of the Lenders set forth
below their signatures on the signature pages of this Agreement or otherwise
designated in the Loan Register from time to time to the Borrower by any Lender
at least three Business Days prior to the due date therefor.
(b) Change in Costs. If prior to the first day of any Interest Period
with respect to a Eurodollar Loan, any Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower and the
Guarantors absent manifest error) that: (i) by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, or (ii) the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lender or its Eurodollar Lending Office of
maintaining its Eurodollar Loan during such Interest Period, then such Lender
shall give facsimile or telephone notice thereof to the Borrower as soon as
practicable thereafter. If such notice is given, the interest rate on each
Bridge Loan for such Interest Period and for each subsequent Interest Period
until such conditions or circumstances no longer exist shall equal the sum of
the Base Rate plus the Applicable Margin.
(c) Change in Law. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Borrower that subsequent to the date
hereof the introduction of, or any change in the interpretation of, any law or
regulation makes it unlawful, or any Governmental Authority asserts that it is
unlawful, for such Lender or its Eurodollar Lending Office to make or maintain
Eurodollar Loans hereunder, (i) the obligation of such Lender to make or
maintain Eurodollar Loans shall be suspended until such Lender shall notify the
Borrower that the circumstances causing such suspension no longer exist and (ii)
any Eurodollar Loan then outstanding from such Lender shall immediately be
converted into a Base Rate Loan Any such lender shall notify the Borrower
promptly after such time as the circumstances causing such suspension cease to
exist.
(d) Payments on Business Days. If any payment to be made hereunder or
under any Bridge Note shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment);
provided, however, that if such succeeding Business Day falls in the next
calendar month, such payment shall be made on the next preceding Business Day.
(e) Partial Prepayments and Redemptions. All partial prepayments and
redemptions of the outstanding principal balance of the Loans shall be made
ratably amongst the applicable Lenders in accordance with their respective
shares of the aggregate outstanding principal balance of the Loans eligible for
prepayment or redemption.
(f) No Defense. To the fullest extent permitted by law, the Borrower
and the Guarantors shall make all payments hereunder and under the Bridge Notes
regardless of any defense or counterclaim.
(g) Allocation. Any money paid to, received by, or collected by the
Administrative Agent or any Lender pursuant to this Agreement or any other Loan
Document, shall be applied in the following order, at the date or dates fixed by
the Administrative Agent:
First: to any unpaid fees and reimbursement or unpaid expenses
of the Administrative Agent hereunder and under the Fee Letter;
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Second: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
Third: to the indefeasible payment of all accrued interest to
the date of such payment or collection;
Fourth: to the indefeasible payment of the amounts then due
and unpaid under this Agreement, the Bridge Notes or any other Loan
Document for principal, in respect of which or for the benefit of which
such money has been paid or collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Bridge Notes for principal; and
Fifth: the balance, if any, to the Person lawfully entitled
thereto.
Section 2.9. Taxes. (a) Taxes. Any and all payments by the Borrower and
each Guarantor hereunder or under the Bridge Notes, the Exchange Notes or any
other Loan Document shall be made, in accordance with Section 2.8 or the other
applicable provision of the applicable Loan Document, free and clear of and
without deduction or withholding for or on account of any and all present or
future taxes, levies, imports, deductions, charges or withholdings, additions to
tax, interest, penalties and all other liabilities with respect thereto,
excluding net income or franchise taxes (imposed in lieu of net income tax)
imposed or levied on the Administrative Agent or the Lenders as a result of a
present or former connection between the Administrative Agent or the Lenders and
the jurisdiction of the governmental authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lenders
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement) (all such non-excluded taxes, levies,
imports, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"); provided, however, that the Borrower shall not be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States or a state thereof with respect to
any Taxes that are imposed on amounts payable to such Lender at the time such
Lender becomes a party to this Agreement (taking into account any reductions
under applicable treaties) or that are attributable to such Lender's failure to
comply with the requirements under Section 2.9(f) hereof. If the Borrower or any
Guarantor shall be required by law to deduct or withhold any Taxes from, or in
respect of, any sum payable hereunder or under the Bridge Notes, the Exchange
Notes or any other Loan Document to the Administrative Agent or the Lenders or
any of their respective Affiliates who may become a Lender: (i) the sum payable
thereunder shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section 2.9) the Administrative
Agent or the Lenders or any of their respective Affiliates receives an amount
equal to the sum it would have received had no such deductions or withholdings
been made; (ii) the Borrower or such Guarantor, as the case may be, shall make
such deductions or withholdings; and (iii) the Borrower or such Guarantor, as
the case may be, shall pay the full amount deducted to the relevant tax
authority or other authority in accordance with applicable laws.
(b) Other Taxes. In addition, the Borrower and each of the Guarantors
agrees to pay any present or future stamp, mortgage recording or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under a Bridge Note, Exchange Note or
other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or the other Loan Documents
(hereinafter referred to as "Other Taxes") and hold the Administrative Agent and
each Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such Other Taxes.
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(c) Indemnity. The Borrower and the Guarantors will indemnify the
Administrative Agent and any Lender for the full amount of Taxes or Other Taxes
arising in connection with payments made under this Agreement or any other Loan
Document (including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.9) paid by the
Administrative Agent or any Lender or any of their respective Affiliates and any
liability (including penalties, additions to tax interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes are
correctly or legally asserted. Payment under this indemnification shall be made
within fifteen days from the date the Administrative Agent or any Lender or any
of their respective Affiliates makes written demand therefor. Any such demand
submitted by the Administrative Agent or any Lender in good faith to the
Borrower shall, absent manifest error, be final, conclusive and binding on all
parties. After the Lender or the Administrative Agent (as the case may be)
receives written notice of the imposition of the Taxes or Other Taxes which are
subject to this Section 2.9(c), such Lender and Administrative Agent will act in
good faith to promptly notify the Borrower and the Guarantors of their
respective obligations hereunder; provided, however, that the failure to so act
shall not, standing alone, affect the rights of the Administrative Agent or the
Lenders under this Section 2.9(c).
(d) Furnish Evidence to Administrative Agent. The Borrower will use its
best efforts to obtain certified copies of tax receipts evidencing the payment
of any Taxes so deducted or withheld from each taxing authority imposing such
Taxes. The Borrower will furnish to the Lenders, within 60 days after the date
the payment of any Taxes so deducted or withheld is due pursuant to applicable
law, original or certified copies of tax receipts evidencing such payment by the
Borrower.
(e) Survival. Without prejudice to the survival of any other agreement
of the Borrower or any Guarantor hereunder, the agreements and obligations of
the Borrower and the Guarantors contained in this Section 2.9 shall survive the
payment in full of all amounts due hereunder and under the Bridge Notes.
(f) Certification of Exemption. Each Lender, Assignee and Participant
that is not a citizen or resident of the United States of America, a
corporation, partnership created or organized in or under the laws of the United
States, any estate that is subject to U.S. federal income taxation regardless of
the source of its income or any trust which is subject to the supervision of a
court within the United States and the control of a United States person as
described in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Borrower and the Administrative Agent, and if applicable, the assigning
Lender (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) on or before the date on which it
becomes a party to this Agreement (or, in the case of a Participant, on or
before the date on which such Participant purchases the related participation)
either:
(A) two duly completed and signed copies of either Internal
Revenue Service Form 1001 relating to such Non-U.S. Lender or Form
4224, or successor and related applicable forms, as the case may be,
certifying that such Non-U.S. Lender is entitled to receive payments
under this Agreement or other Loan Documents without withholding or
deduction of United States federal income taxes or that such
withholding is imposed at a reduced rate; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
to the effect that such Non-U.S. Lender is eligible for a complete
exemption from withholding of U.S. Taxes under Code Section 871(h) or
881(c), and (y) two
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duly completed and signed copies of Internal Revenue Service Form W-8
or successor and related applicable form.
Further, each Non-U.S. Lender agrees, upon request by the Borrower or
the Administrative Agent or the Lender, as the case may be, (i) to deliver to
the Borrower and the Administrative Agent, and if applicable, the assigning
Lender (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) two further duly completed and signed
copies of such Forms 1001 or 4224, as the case may be, or successor and related
applicable forms, on or before the date that any such form expires or becomes
obsolete and promptly after the occurrence of any event requiring a change from
the most recent form(s) previously delivered by it to the Borrower (or, in the
case of a Participant, to the Lender from which the related participation shall
have been purchased) in accordance with applicable U.S. laws and regulations and
(ii) in the case of a Non-U.S. Lender that delivers a statement pursuant to this
Section 2.9(f)(B) above, to deliver to the Borrower and the Administrative
Agent, and if applicable, the assigning Lender, such renewed or additional
statements and forms before the statements or forms previously delivered expires
or becomes obsolete or as shall be reasonably requested by the Borrower from
time to time, unless, in any such case, any change in law or regulation has
occurred subsequent to the date such Lender became a party to this Agreement (or
in the case of a Participant, the date on which such Participant purchased the
related participation) which renders all such forms inapplicable or which would
prevent such Lender (or Participant) from properly completing and executing any
such form with respect to it and such Lender promptly notifies the Borrower and
the Administrative Agent (or, in the case of a Participant, the Lender from
which the related participation shall have been purchased) if it is no longer
able to deliver, or if it is required to withdraw or cancel, any form or
statement previously delivered by it pursuant to this Section 2.9(f)(B). A
Non-U.S. Lender shall not be required to deliver any form or statement pursuant
to the immediately preceding sentences in this Section 2.9(f) that such Non-U.S.
Lender is not legally able to deliver.
Section 2.10. Right of Set Off; Sharing of Payments, Etc.
(a) Right of Set-Off. 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 any Event of
Default or if the Borrower becomes insolvent, however evidenced, the Borrower
authorizes each Lender at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower 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, time or demand,
provisional or final, whether or not collected or available) in any currency and
any other indebtedness at any time held or owing by such Lender or any of its
Affiliates (including, without limitation, by branches and agencies of such
Lender wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations of the Borrower to such Lender under
this Agreement or under any of the other Loan Documents, including, without
limitation, all interests in or participation in the Obligations purchased by
such Lender, and all other claims of any nature or description arising out of or
in connection with this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand hereunder and although the
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. A Lender may exercise such rights notwithstanding that the amounts
concerned may be expressed in different currencies and each Lender is authorized
to effect any necessary conversions at a market rate of exchange selected by it.
A Lender exercising its rights under this Section 2.10(a) shall provide prompt
notice to the Borrower following such exercise.
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(b) Sharing. If any Lender shall obtain from the Borrower payment of
any principal of or interest on any Loan owing to it or payment of any other
amount under this Agreement, a Loan Document or any Bridge Note held by it
though the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent as provided
herein) and, as a result of such payment, such Lender shall have received a
greater percentage of the principal of or interest on the Loans or such other
amounts then due to such Lender by the Borrower than the percentage received by
any other Lenders, it shall promptly purchase from such other Lenders
participation in (or, if and to the extent specified by such Lender, direct
interests in) the Loans or such other amounts, respectively, owing to such other
Lenders (or any interest due thereon, as the case may be) in such amounts, and
make such other adjustments from time to time as shall be equitable, to the end
that all the Lenders shall share the benefit of such excess payment (net of any
expenses which may be incurred by such Lender in obtaining or preserving such
excess payment) pro rata in accordance with the unpaid principal of and/or
interest on the Loans or such other amounts, respectively, owing to each of the
Lenders. To such end all the Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.
(c) No Requirement. Nothing in this Agreement shall require any Lender
to exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower. If, under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 2.10 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in manner
consistent with the rights of the Lenders entitled under this Section 2.10 to
share in the benefits of any recovery on such secured claim.
Section 2.11. Certain Fees. The Borrower agrees to pay to the
Administrative Agent and Chase, each for its own account, with respect to the
Bridge Loans, Term Loans and Exchange Notes, amounts for their expenses incurred
hereunder and all other amounts owing under this Agreement and the other Loan
Documents.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date, the Borrower and each
of the Guarantors hereby jointly and severally agrees with, and represents and
warrants to, the Lenders that each of the following representations and
warranties is true and will be true after giving pro forma effect to the
Transactions:
Section 3.1. Representations and Warranties in the Credit Facility and
the Merger Agreement. The representations and warranties of the Borrower
contained in the Credit Facility and the Merger Agreement (without giving effect
to any waivers thereof or amendments thereto) are true and correct in all
material respects.
Section 3.2. Organization; Powers. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing (to
the extent such concept exists) under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except where the failure so
to qualify would not reasonably be expected to result in a Material Adverse
Effect and (d) has the power and authority to execute, deliver and perform its
obligations under each of the
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Transaction Documents and each other agreement or instrument contemplated hereby
to which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
Section 3.3. Due Authorization and Enforceability.
(a) Each of the Transaction Documents: (i) has been duly authorized,
executed and delivered by Borrower and each of its Subsidiaries (to the extent
each is a party thereto) and (ii) constitutes a valid and binding obligation of
Borrower and each of its Subsidiaries (to the extent each is a party thereto)
enforceable against each such Person in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer and other similar laws affecting
the enforceability of creditors' rights generally and by general principles of
equity (whether arising under a proceeding at law or in equity).
(b) The Loans, the Bridge Notes and the Exchange Notes have been duly
authorized by the Borrower and each of the Guarantees and the guarantees by the
Guarantors of the Borrower's obligations under the Exchange Notes have been duly
authorized by the Borrower and each Guarantor, as applicable. When the Bridge
Notes and the Exchange Notes have been executed and delivered pursuant to the
terms of this Agreement or the Exchange Note Indenture, as applicable, each of
the Loans, the Bridge Notes, the Exchange Notes, and the Guarantees and the
guarantees by the Guarantors of the Borrower's obligations under the Exchange
Notes will be valid and binding obligations of the Borrower and each Guarantor,
as applicable, enforceable against it in accordance with their terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer and other similar
laws affecting the enforceability of creditors' rights generally and by general
principles of equity (whether arising under a proceeding at law or in equity).
Section 3.4. No Conflicts.
(a) Neither the execution and delivery of any of the Transaction
Documents nor the consummation of any of the transactions contemplated hereby or
thereby nor compliance with the terms and provisions hereof or thereof (i)
violates or will violate any material law or regulation or any order or decree
of any court or Governmental Authority applicable to the Borrower or any of its
Subsidiaries or by which any of their respective properties or assets may be
bound, (ii) constitutes or will constitute a breach or a violation of, any of
the terms or provisions of, or a default under, the organizational documents
(including any certificate of incorporation or bylaws) or any other corporate
restriction of any of the Borrower or any of its Subsidiaries or (iii) conflicts
with or will result in the breach of, or constitutes a default under, any
material contract, lease, indenture, loan agreement (including, without
limitation, the Credit Facility), mortgage, deed of trust or other agreement or
instrument (each, a "Material Contract") to which the Borrower or any of its
Subsidiaries is a party or to which any of them may be subject or by which any
of them or any of their respective assets is or may be bound (except to the
extent that such violations, breaches, conflicts or defaults, singly or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect).
(b) No consent, approval, authorization or order of, or any
registration or filing with, any Governmental Authority is or will be required
in connection with the execution and delivery of any of the Transaction
Documents by the Borrower or any of its Subsidiaries (to the extent each is a
party thereto) or the consummation of the transactions contemplated hereby or
thereby other than those which have been obtained and filings with the SEC to
fulfill reporting requirements.
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Section 3.5. No Violations; Material Contracts.
(a) There does not exist (i) any violation of any law or regulation or
any order or decree of any court or Governmental Authority applicable to the
Borrower or any of its Subsidiaries, which violation would reasonably be
expected to have a Material Adverse Effect or (ii) any conflict or violation of
any terms or provisions of the organizational documents (including any articles
or certificate of incorporation or bylaws) of the Borrower or any of its
Subsidiaries.
(b) Except as set forth on Schedule 3.5(a), neither the Borrower nor
any of its Subsidiaries is a party to any agreement or instrument or subject to
any corporate or other restriction that, individually or in the aggregate, has
had or could have a Material Adverse Effect. Each Material Contract to which the
Borrower or any of its Subsidiaries is a party or by which the Borrower or any
of its Subsidiaries or any of their respective properties or assets are or may
be bound as of the Closing Date is listed on Schedule 3.5(b), and true and
correct copies of all such Material Contracts have been delivered to the
Administrative Agent.
(c) As of the Closing Date, except as could not reasonably be expected
to have a Material Adverse Effect, (i) each Material Contract is in all material
respects valid, binding and in full force and effect and is enforceable by the
Borrower and each of its Subsidiaries (to the extent that each is a party
thereto) in accordance with its terms (except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity, whether arising under a proceeding at law or in equity), (ii) the
Borrower and each of its Subsidiaries (to the extent each is a party thereto)
has performed in all material respects all obligations required to be performed
by it to date under all of its Material Contracts and is not (with or without
the lapse of time or the giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of the Borrower and each of
its Subsidiaries, no other party to any of the Material Contracts is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any material respect thereunder, (iii) neither the Borrower or any of its
Subsidiaries, nor, to the knowledge of the Borrower and each of its
Subsidiaries, any other party to any Material Contract, has given notice of
termination of, or taken any action inconsistent with the continuation of, any
Material Contract, and (iv) none of such other parties has any presently
exercisable or future right to terminate any Material Contract except as
provided in any such Material Contract, including any right to terminate any
Material Contract on account of the execution, delivery or performance of any of
the Transaction Documents.
Section 3.6. Capital Stock; Subsidiaries.
(a) All shares of capital stock and other Equity Interests of the
Borrower are duly authorized, validly issued, fully paid and non-assessable. All
shares of capital stock and other Equity Interests of each Subsidiary of the
Borrower are duly authorized, validly issued, fully paid and non-assessable and
owned directly or indirectly by the Borrower beneficially and of record, free
and clear of any Lien other than the Liens to be created under the Credit
Facility (other than (x) directors' qualifying shares and (y) shares required by
applicable law to be held by another Person in an amount not to exceed one-tenth
of one percent of the outstanding shares). Schedule 3.6(a) sets forth, (i) as of
the date hereof (and without giving effect to the Transactions) a list of all
direct and indirect Subsidiaries of the Borrower and the percentage ownership
(direct and indirect) of the Borrower therein and (ii) as of the Closing Date
(after giving effect to the Transactions), a list of all direct Subsidiaries of
the Borrower and each Guarantor and the percentage Equity Interests of the
Borrower and each such Guarantor, as applicable, therein. All such shares of
capital stock or other ownership interest are duly authorized,
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validly issued, fully paid and non-assessable and owned by the Borrower or each
Guarantor, as the case may be, free and clear of all Liens other than Permitted
Liens.
(b) Except as set forth on Schedule 3.6(b), there are (i) no
outstanding subscriptions, warrants, options, calls or commitments of any
character related to or entitling any Person to purchase or otherwise acquire
any shares of the capital stock or other Equity Interests of the Borrower or any
of its Subsidiaries, (ii) no obligations or securities convertible into or
exchangeable for shares of any capital stock or other Equity Interests of the
Borrower or any of its Subsidiaries or any commitments of any character relating
to or entitling any Person to purchase or otherwise acquire any such obligations
or securities and (iii) no preemptive or similar rights to subscribe for or to
purchase any capital stock or other Equity Interests of the Borrower or any of
its Subsidiaries granted to any Person.
Section 3.7. Liens. There are no Liens on any assets of the Borrower or
any of its Subsidiaries except Permitted Liens.
Section 3.8. No Violation of Regulations of Board of Governors of
Federal Reserve System. None of the transactions contemplated by this Agreement
(including without limitation the use of the proceeds from the Loans and
Permanent Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any rule or regulation issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board.
Section 3.9. Governmental Regulations. None of the Borrower or any of
its Subsidiaries is required to register as an "investment company" under the
Investment Company Act of 1940, as amended, is a "public utility" or a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or is subject to any other statute, rule or regulation limiting its
ability to incur Indebtedness for borrowed money.
Section 3.10. Financial Statements; No Undisclosed Liabilities.
(a) The consolidated balance sheets of the Borrower and each of its
Subsidiaries that are attached hereto as Schedule 3.10 fairly present the
consolidated financial position of the Borrower and each of its Subsidiaries as
of the dates set forth therein, in each case in accordance with GAAP
consistently applied (except as otherwise specifically indicated therein),
subject to normal year-end adjustments. The consolidated statements of income
and cash flows of the Borrower and each of its Subsidiaries that are attached
hereto as Schedule 3.10 have been prepared in conformity with GAAP applied on a
consistent basis through all the periods involved (except as otherwise
specifically indicated therein) and fairly present the consolidated results of
operations of the Borrower and each of its Subsidiaries for the periods
indicated, subject to normal year-end adjustments. The pro forma consolidated
statements of income and cash flows included in Schedule 3.10 fairly present the
estimated consolidated income and cash flows of the Borrower and its
Subsidiaries assuming the consummation of the Merger as if it had occurred on
the date set forth therein, and the pro forma consolidated balance sheet of the
Borrower included in Schedule 3.10 fairly presents the consolidated financial
condition of the Borrower and its Subsidiaries on the Closing Date (after giving
effect to all simultaneous transactions to occur on such date). The historical
and pro forma financial statements attached hereto as Schedule 3.10 comply as to
form with the requirements applicable to such financial statements in, and
constitute all of the financial statements required by, Regulation S-X of the
Securities Act for a Form S-1 registration statement
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(b) Neither the Borrower nor any of its Subsidiaries (prior to giving
effect to the consummation of the Transactions) has any liability (absolute or
contingent) except (i) those shown on the most recent audited balance sheets
described in Section 3.10(a), (ii) those incurred under the Transaction
Documents and (iii) those that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 3.11. Full Disclosure. No information, report, financial
statement or certificate delivered or to be delivered to the Lenders in
connection with the Transactions contains or will contain any untrue statement
of material fact or omitted or omits or will omit to state a material fact
necessary to make such statements not misleading in light of the circumstances
in which such statements were made; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, the Borrower represents only that it acted
in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
Section 3.12. Private Offering; Rule 144A Matters.
(a) Based in part on the accuracy of the representations and warranties
of, and compliance with the covenants and agreements by, the Lenders in Section
6.1, the making of the Loans hereunder and the issuance of the instruments
evidencing such Loans and the Securities are and will be exempt from the
registration and prospectus delivery requirements of the Securities Act. Neither
the Borrower nor any Guarantor has issued or sold Loans, the instruments
evidencing such Loans or the Securities or equity securities to anyone other
than the Lenders. No securities of the same class as the Loans, the instruments
evidencing such Loans or the Securities have been issued or sold by the Borrower
or any Guarantor within the six-month period immediately prior to the date
hereof. The Borrower and each of the Guarantors agrees that neither it, nor
anyone acting on its behalf (other than the Lenders, as to whom the Borrower and
each of the Guarantors makes no representation), will (i) offer the Loans, the
instruments evidencing such Loans or the Securities so as to subject the making,
issuance and/or sale of the Loans, the instruments evidencing such Loans or the
Securities, to the registration or prospectus delivery requirements of the
Securities Act or (ii) offer any similar securities for issuance or sale to, or
solicit any offer to acquire any of the same from, or otherwise approach or
negotiate with respect to the same with, anyone if the issuance or sale of the
Loans, the instruments evidencing such Loans, the Securities and any such
securities would be integrated as a single offering for the purposes of the
Securities Act, including without limitation, Regulation D thereunder, in such a
manner as would require registration under the Securities Act thereof. Each
Security shall have a legend setting forth the restrictions on the
transferability thereof imposed by the Securities Act for so long as such
restrictions apply.
(b) In the case of each offer, sale or issuance of the Loans, the
instruments evidencing such loans or the Securities, no form of general
solicitation or general advertising was or will be used by the Borrower or any
Guarantor or their representatives (other than the Lenders, as to whom the
Borrower and each of the Guarantors makes no representation), including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising.
(c) The Securities will be eligible for resale pursuant to Rule 144A
under the Securities Act. When the Securities are issued and delivered pursuant
to the Transaction Documents, they will not be of the same class (within the
meaning of Rule 144A(d) (3) under the Securities Act) as
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any other security of the Borrower or any Guarantor that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system. Neither the
issuance of the Exchange Notes nor the execution, delivery and performance of
the Transaction Documents (other than the Debt Registration Rights Agreement)
will require the qualification of an indenture under the Trust Indenture Act.
Section 3.13. Absence of Proceedings. Except with respect to the
matters disclosed in Schedule 3.13, there is not pending or threatened any
action, suit or proceeding to which the Borrower or any of its Subsidiaries is a
party, before or by any court or other Governmental Authority or body (domestic
or foreign), that would reasonably be expected to cause a Material Adverse
Effect.
Section 3.14. Taxes. The Borrower and its Subsidiaries have duly and
timely filed all required tax returns and reports and paid all taxes,
assessments, and governmental levies due prior to the date hereof except (i)
those being contested in good faith and by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of the Borrower and its Subsidiaries and (ii) where the failure to file or
make payment would not reasonably be expected to have a Material Adverse Effect.
Section 3.15. Financial Condition; Solvency. The Borrower and each of
the Guarantors is, and immediately after giving effect to the consummation of
the Transactions will be, Solvent.
Section 3.16. No Material Adverse Change. There has been no material
adverse change (including any event which is likely to result in such a material
adverse change) in the business, assets, liabilities, revenues, operations,
condition (financial or otherwise), value, management or prospects of the
Borrower and its Subsidiaries, taken as a whole, since February 1, 1998.
Section 3.17. Year 2000 Compliance. The Borrower has (i) initiated a
review and assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers, vendors and
customers) that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by the Borrower or any of its
Subsidiaries (or suppliers, vendors and customers) may be unable to recognize
and perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
the Borrower believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant"), except to the extent
that a failure to do so would not reasonably be expected to have Material
Adverse Effect.
ARTICLE IV.
COVENANTS
So long as any Commitment shall remain outstanding or any Obligation
shall remain unpaid, the Borrower and each of the Guarantors covenants and
agrees with the Lenders as follows:
Section 4.1. Financial Statements. To furnish, or cause to be
furnished, to the Administrative Agent and to each of the Lenders:
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(a) Audited Financial Statements. As soon as available, but in any
event within 90 days after the end of each fiscal year, an audited consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the fiscal
year and the related consolidated statements of income, retained earnings,
shareholders' equity and cash flows for the year, audited by KPMG Peat Marwick
LLP, or other firm of independent certified public accountants of nationally
recognized standing reasonably acceptable to the Administrative Agent, setting
forth in each case in comparative form the figures for the previous year,
reported without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to permit
such independent certified public accountants to certify such financial
statements without such qualification.
(b) Company-Prepared Financial Statements. As soon as available, but in
any event
(i) within 30 days after the end of each month, a
company-prepared unaudited consolidated and consolidating balance sheet
of the Borrower and its Subsidiaries as of the end of such month and
related company-prepared consolidated and consolidating statements of
income for such monthly period and for the fiscal year to date;
(ii) within 45 days after the end of each of the first three
fiscal quarters, the company-prepared unaudited consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and related company-prepared consolidated and
consolidating statements of income, retained earnings, shareholders'
equity and cash flows for such quarterly period and for the fiscal year
to date or, in lieu thereof, the Borrower's report on Form 10-Q filed
with the SEC for such period;
(iii) within 45 days following the end of each fiscal year, an
annual business plan and budget for the members of the Consolidated
Group, containing, among other things, pro forma financial statements
for the then current fiscal year,
in each case setting forth in comparative form the consolidated and
consolidating figures for the corresponding period or periods of the
preceding fiscal year or the portion of the fiscal year ending with
such period, as applicable, in each case subject to normal recurring
year-end audit adjustments and the absence of notes required by GAAP.
All such financial statements shall be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and shall be prepared in reasonable detail and, in
the case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein) and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, any change in the application of accounting principles.
Section 4.2. Certificates; Other Information. To furnish, or cause to
be furnished, to the Administrative Agent and to each of the Lenders:
(a) Accountant's Certificate and Reports. Concurrently with the
delivery of the financial statements referred to in subsection 4.1(a) above, a
certificate of the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate.
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(b) Officer's Certificate. Concurrently with the delivery of the
financial statements referred to in Sections 4.1(a) and 4.1(b)(ii) above, a
certificate of a Responsible Officer (i) demonstrating compliance with the
financial covenants in Section 4.10 by calculation thereof as of the end of each
such fiscal period and (ii) stating that, to the best of such Responsible
Officer's knowledge and belief, (A) the financial statements fairly present in
all material respects the financial condition of the parties covered by such
financial statements, (B) during such period the members of the Consolidated
Group have observed or performed in all material respects the covenants and
other agreements hereunder and under the other Loan Documents relating to them,
and satisfied in all material respects the conditions, contained in this
Agreement to be observed, performed or satisfied by them and (C) in each case
such Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate. A form of Officer's Certificate
is attached as Schedule 4.2(b).
(c) Accountants' Reports. Promptly upon receipt, a copy of any final
(as distinguished from a preliminary or discussion draft) "management letter" or
other similar report submitted by independent accountants or financial
consultants to any member of the Consolidated Group in connection with any
annual, interim or special audit.
(d) Public Information. Within ten days after the same are sent, copies
of all reports (other than those otherwise provided pursuant to subsection 4.1)
and other financial information which any member of the Consolidated Group sends
to its public stockholders, and within ten days after the same are filed, copies
of all financial statements and non-confidential reports which any member of the
Consolidated Group may make to, or file with, the SEC or any successor or
analogous Governmental Authority.
(e) Studio Closings. Concurrently with the delivery of the financial
statements referred to in Sections 4.1(a) and 4.1(b)(ii), a report containing
information as to the number of photography studios closed by the Borrower or
any of its Subsidiaries during the applicable fiscal quarter period and the
number of studios remaining open at the end of such fiscal quarter.
(f) Other Information. Promptly, such additional financial and other
information as the Administrative Agent, at the request of any Lender, may from
time to time reasonably request.
Section 4.3. Notices. To give notice to the Administrative Agent (which
shall promptly transmit such notice to each Lender) of:
(a) Defaults. Immediately (and in any event within five Business Days)
after a Responsible Officer of any Credit Party knows of, the occurrence of any
Default or Event of Default.
(b) Contractual Obligations. Promptly, the occurrence of any default or
event of default under any Contractual Obligation of any member of the
Consolidated Group which would reasonably be expected to have a Material Adverse
Effect.
(c) Legal Proceedings. Promptly, the initiation of any litigation, or
any investigation or proceeding (including without limitation, any environmental
proceeding) known to any Responsible Officer of a member of the Consolidated
Group, or any material development in respect thereof, against any member of the
Consolidated Group which, if adversely determined, would in the opinion of
management of the Borrower reasonably be expected to have a Material Adverse
Effect (and in any event, where compensation, reimbursement, damages or relief
is sought in excess of $1,000,000 in any instance and such liability is not
covered by insurance).
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(d) ERISA. Promptly, after any Responsible Officer of the Borrower
knows of (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, an ERISA Event;
(ii) with respect to any Multiemployer Plan, the receipt of notice as prescribed
in ERISA or otherwise of any withdrawal liability assessed against any of their
ERISA Affiliates, or of a determination that any Multiemployer Plan is in
reorganization or insolvent (both within the meaning of Title IV of ERISA);
(iii) the failure to make full payment on or before the due date (including
extensions) thereof of all amounts which the members of the Consolidated Group
or any ERISA Affiliate are required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in ERISA
and the Code with respect; or (iv) any change in the funding status of any Plan
that reasonably would be expected to have a Material Adverse Effect; together
with a description of any such event or condition or a copy of any such notice
and a statement by the chief financial officer of the Borrower briefly setting
forth the details regarding such event, condition, or notice, and the action, if
any, which has been or is being taken or is proposed to be taken by the Credit
Parties with respect thereto. Promptly upon request, the members of the
Consolidated Group shall furnish the Administrative Agent and the Lenders with
such additional information concerning any Plan as may be reasonably requested,
including, but not limited to, copies of each annual report/return (Form 5500
series), as well as all schedules and attachments thereto required to be filed
with the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the meaning of
Section 3(39) of ERISA).
(e) Other. Promptly, any other development or event which a Responsible
Officer determines would reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the relevant Credit Parties propose to take with respect
thereto.
Section 4.4. Compliance with Law. To comply with all laws, rules,
regulations and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if noncompliance
with any such law, rule, regulation, order or restriction would reasonably be
expected to have a Material Adverse Effect.
Section 4.5. Payment of Obligations. To pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, in accordance with prudent business practice (subject, where applicable, to
specified grace periods) all material obligations of each member of the
Consolidated Group of whatever nature (including without limitation all taxes,
assessments and governmental charges or levies imposed on it, or upon its income
or profits and all lawful claims which, if unpaid, might give rise to a Lien
upon any of its properties) and any additional costs that are imposed as a
result of any failure to so pay, discharge or otherwise satisfy such
obligations; provided, however, that no member of the Consolidated Group shall
be required to pay any such tax or other obligation which is being contested in
good faith by appropriate proceedings and as to which adequate reserves therefor
have been established in accordance with GAAP, unless the failure to make any
such payment (i) could give rise to an immediate right to foreclose on a Lien
securing such amounts or (ii) would reasonably be expected to have a Material
Adverse Effect.
Section 4.6. Conduct of Business and Maintenance of Existence. To
continue to engage in business of the same general type as now conducted by it
on the date hereof, and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges, licenses and franchises necessary or desirable in the normal conduct
of its business;
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and comply with all Contractual Obligations and Requirements of Law applicable
to it except to the extent that failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.7. Maintenance of Property; Insurance. To keep all material
property useful and necessary in its business in reasonably good working order
and condition (ordinary wear and tear excepted); maintain with financially sound
and reputable insurance companies casualty, liability and such other insurance
(which may include plans of self-insurance) with such coverage and deductibles,
and in such amounts as may be consistent with prudent business practice and in
any event consistent with normal industry practice; maintain at all times an
aggregate of at least $5,000,000 in the key man life insurance insuring Xxxx
Xxxxxx, Xxxx Xxxxxxx and Xxxxx Xxxxxx; and furnish to the Administrative Agent,
upon written request, full information as to the insurance carried. The
Administrative Agent shall be named as loss payee or mortgagee, and/or as
additional insured with respect to any such insurance, and each provider of any
such insurance shall agree, by endorsement upon the policy or policies issued by
it or by independent instruments furnished to the Administrative Agent, that it
will give the Administrative Agent thirty days prior written notice before any
such policy or policies shall be altered or canceled, and that no act or default
of the Borrower or any of its Subsidiaries or any other Person shall affect the
rights of the Administrative Agent or the Lenders under such policy or policies.
The present insurance coverage of the Borrower and its Subsidiaries is outlined
as to carrier, policy number, expiration date, type and amount on Schedule 4.7,
as Schedule 4.7 may be amended from time to time by written notice to the
Administrative Agent.
Section 4.8. Inspection of Property; Books and Records; Discussions.
(a) To keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable notice
by any Lender, any such Lender to visit and inspect any of its properties and
examine and make abstracts (including photocopies) from any of its books and
records (other than materials protected by the attorney-client privilege and
materials which the Credit Parties may not disclose without violation of a
confidentiality obligation binding upon them) at any reasonable time, and to
discuss the business, operations, properties and financial and other condition
of the members of the Consolidated Group with officers and employees of the
members of the Consolidated Group and with their independent certified public
accountants. The cost of the inspection referred to in the preceding sentence
shall be for the account of the Lenders unless an Event of Default has occurred
and is continuing, in which case the cost of such inspection shall be for the
account of the Credit Parties.
(b) In addition to the foregoing subsection (a), to permit the
Administrative Agent to have agents or representatives to conduct a "field
audit" of its inventory and accounts, including inspection of the inventory and
account records and a right to examine and make abstracts (including
photocopies) from its books and records relating to its inventory and accounts
once in each fiscal year, and more frequently after the occurrence of an Event
of Default.
Section 4.9. Environmental Laws.
(a) To comply in all material respects with, and take reasonable
actions to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and take reasonable actions
to ensure that all tenants and subtenants obtain and comply in all material
respects
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with and maintain, any and all licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws except to the extent that
failure to do so would not reasonably be expected to have a Material Adverse
Effect;
(b) To conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the failure to do so or the pendency of such
proceedings would not reasonably be expected to have a Material Adverse Effect;
and
(c) To defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the members of the Consolidated Group or the
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this paragraph shall survive
repayment of the Loans and all other amounts payable hereunder and termination
of the Commitments.
Section 4.10. Financial Covenants.
(a) Consolidated Leverage Ratio. There shall be maintained, as of the
end of each fiscal quarter to occur during the periods shown, a Consolidated
Leverage Ratio of not greater than:
October 31, 1998 through
January 29, 2000 6.75 to 1.0
January 30, 2000 through
January 27, 2001 6.50 to 1.0
January 28, 2001 through
February 2, 2002 6.00 to 1.0
February 3, 2002 through
February 1, 2003 5.50 to 1.0
February 2, 2003 through
January 31, 2004 5.00 to 1.0
February 1, 2004 and
thereafter 4.50 to 1.0
(b) Consolidated Fixed Charge Coverage Ratio. There shall be
maintained, as of the end of each fiscal quarter, a Consolidated Fixed Charge
Coverage Ratio of at least .95 to 1.0.
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(c) Consolidated Interest Coverage Ratio. There shall be maintained, as
of the end of each fiscal quarter to occur during the periods shown, a
Consolidated Interest Coverage Ratio of at least:
October 31, 1998 through
January 29, 2000 1.35 to 1.0
January 30, 2000 through
February 2, 2002 1.50 to 1.0
February 3, 2002 through
January 31, 2004 1.75 to 1.0
February 1, 2004 and
thereafter 2.00 to 1.0
(d) Capital Expenditures. The aggregate amount of Consolidated Capital
Expenditures for the Consolidated Group will not exceed $12,500,000 during any
fiscal year. The unused portion of Consolidated Capital Expenditures permitted
but not used in any fiscal year may be carried over and used in the next fiscal
year (one year carry-over); provided, however, the Consolidated Group must use
the amount of Consolidated Capital Expenditures permitted in any given fiscal
year before utilizing the amount carried over from the preceding year.
Section 4.11. Fee Letter. To comply with the other agreements provided
for in the Fee Letter.
Section 4.12. Additional Guaranties and Stock Pledges. At any time any
Person becomes a Domestic Subsidiary, the Borrower will promptly notify the
Administrative Agent thereof and within 30 days of such event, cause such
Domestic Subsidiary to become a Guarantor hereunder by (i) execution of a
Joinder Agreement and (ii) delivery of supporting resolutions, incumbency
certificates, corporation formation and organizational documentation and
opinions of counsel as the Administrative Agent may reasonably request.
Section 4.13. Ownership of Subsidiaries. Except to the extent otherwise
permitted in Section 4.22 and except as set forth on Schedule 3.6, the Borrower
shall, directly or indirectly, own at all times 100% of the Voting Stock of each
of its Subsidiaries (other than (x) directors' qualifying shares and (y) shares
required by applicable law to be held by another Person in an amount not to
exceed one-tenth of one percent of the outstanding shares).
Section 4.14. Use of Proceeds. Extensions of Credit will be used solely
for the purpose of financing, in part, the Merger and the payment of related
fees and expenses.
Section 4.15. Year 2000 Compliance. Each Credit Party will promptly
notify the Administrative Agent in the event such Credit Party discovers or
determines that any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 Compliant, except to the extent
that such failure would not reasonably be expected to have a Material Adverse
Effect.
Section 4.16. Indebtedness. Not to contract, create, incur, assume or
permit to exist any Indebtedness, except:
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(a) Indebtedness of the Credit Parties arising or existing under the
Credit Facility in an aggregate principal amount not exceeding $150.0 million
less the aggregate amount of all principal repayments with respect to Term Loans
made under the Credit Facility since the Closing Date;
(b) Indebtedness under the Loan Documents;
(c) Indebtedness set forth in Schedule 4.16, and renewals, refinancings
and extensions thereof on terms and conditions no less favorable than for such
existing Indebtedness;
(d) Capital Lease Obligations and Indebtedness incurred, in each case,
to provide all or a portion of the purchase price or costs of construction of an
asset, provided that (i) such Indebtedness when incurred shall not exceed the
purchase price or cost of construction of such asset, (ii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing, and (iii) the total amount
of all such Indebtedness shall not exceed $5,000,000 at any time outstanding;
(e) Indebtedness and obligations of the Borrower in respect of Hedging
Agreements entered into in the ordinary course of business to manage existing or
anticipated risks and not for speculative purposes;
(f) (i) unsecured intercompany Indebtedness owing by one Credit Party
to another Credit Party and (ii) unsecured intercompany Indebtedness owing by a
Credit Party to a Subsidiary of the Borrower which is not a Credit Party, in
each case to the extent permitted under Section 4.20 hereof; and
(g) Guaranty Obligations of Indebtedness permitted under this Section
4.16.
Section 4.17. Liens. Not to contract, create, incur, assume or permit
to exist any Lien with respect to any of their respective property or assets of
any kind (whether real or personal, tangible or intangible), whether now owned
or hereafter acquired, except for Permitted Liens.
Section 4.18. Nature of Business. Not to engage in any business other
than the business conducted by such member of the Consolidated Group on the
Closing Date and any businesses reasonably related thereto.
Section 4.19. Consolidation, Merger, Sale or Purchase of Assets,
Capital Expenditures, etc.
(a) Not to dissolve, liquidate or wind up their affairs, except for the
dissolution and liquidation of a wholly-owned Subsidiary of a Credit Party where
the parent company Credit Party receives the assets of such Subsidiary;
(b) Not to enter into any transaction of merger or consolidation;
provided, however, that, so long as no Default or Event of Default would be
directly or indirectly caused as a result thereof, a member of the Consolidated
Group may merge or consolidate with another member of the Consolidated Group,
provided that (A) if the Borrower is a party thereto, the Borrower shall be the
surviving corporation and (B) if one of the parties thereto is a Credit Party,
such Credit Party shall be the surviving corporation;
(c) Not to sell, lease, transfer or otherwise dispose of any Property
(including without limitation pursuant to any sale/leaseback transaction or
securitization transaction ) other than (i)
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the sale of inventory in the ordinary course of business for reasonable
consideration, (ii) the sale or disposition of machinery and equipment no longer
used or useful in the conduct of such Person's business, and (iii) other sales
of assets (other than inventory), provided that (A) after giving effect to such
sale or other disposition, the aggregate book value of assets sold or otherwise
disposed of pursuant to this clause (iii) in any given fiscal year does not
exceed an amount equal to $5,000,000 and (B) the proceeds from any such
disposition are, within 360 days from the date of such disposition, reinvested
in an asset similar to the type transferred or disposed of pursuant to this
Section 4.19(c)(iii); or
(d) Except as otherwise permitted by Section 4.19(b) and Section 4.20
hereof, not to (i) acquire all or any portion of the capital stock or securities
of any other Person or (ii) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any substantial part of
the Property of any other Person.
Section 4.20. Advances, Investments and Loans. Not to lend money or
extend credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, or otherwise make an Investment in, any Person except for
Permitted Investments.
Section 4.21. Transactions with Affiliates. Not to enter into or permit
to exist any transaction or series of transactions with any officer, director,
shareholder, Subsidiary or Affiliate other than (i) transactions permitted by
this Agreement, (ii) customary fees and expenses paid to directors and (iii)
where such transactions are on terms and conditions substantially as favorable
as would be obtainable in a comparable arm's-length transaction with a Person
other than an officer, director, shareholder or Affiliate.
Section 4.22. Ownership of Equity Interests. Not to Issue, sell,
transfer, pledge or otherwise dispose of any partnership interests, shares of
capital stock or other equity or ownership interests ("Equity Interests") in any
member of the Consolidated Group, except (i) issuance, sale or transfer of
Equity Interests to a Credit Party by a Subsidiary of such Credit Party, (ii) in
connection with a transaction permitted by Section 4.19, (iii) as needed to
qualify directors under applicable law and (iv) subject to the terms hereof, the
sale of Equity Interests in the Borrower to any Person.
Section 4.23. Fiscal Year. Not to (i) change its fiscal year end from
the Sunday falling closest to January 31st of each year, or (ii) amend, modify
or change its articles of incorporation (or corporate charter or other similar
organizational document) or bylaws (or similar document) in any manner that
would reasonably be likely to adversely affect the rights of the Lenders.
Section 4.24. Prepayments of Indebtedness, etc.
(a) After the issuance thereof, not to amend or modify (or permit the
amendment or modification of), the terms of any other Indebtedness in a manner
adverse to the interests of the Lenders (including specifically shortening any
maturity or average life to maturity or requiring any payment sooner than
previously scheduled or increasing the interest rate or fees applicable thereto
or changing any subordination provisions thereof);
(b) Not to make any prepayment, redemption, defeasance or acquisition
for value of (including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the purpose of
paying when due), or refund, refinance or exchange of any Funded Debt other than
so long as no Default or Event of Default is in existence or would be caused as
a result
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thereof (i) intercompany Indebtedness permitted hereunder, (ii) regularly
scheduled payments of principal and interest on such Funded Debt and (iii)
prepayments of Indebtedness under the Credit Facility, as in effect on the date
hereof.
Section 4.25. Restricted Payments. Not to make or permit any Restricted
Payments.
Section 4.26. Sale Leasebacks. Not to directly or indirectly become or
remain liable as lessee or as guarantor or other surety with respect to 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
such Person has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (ii) which such Person intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Person to any other Person in connection with
such lease.
Section 4.27. License Agreements. Not to:
(a) terminate, cancel or permit to expire the Kmart License Agreement
or the Wal-Mart License Agreement; or
(b) permit the Consolidated Group to close a material number (as
determined by the Administrative Agent in its sole discretion or as determined
by the Borrower) of individual photography studios located in the United States
in any single fiscal year unless, after giving effect to such closings and any
such prior closings or other studio closings, determined as of the end of the
next succeeding fiscal quarter, the Borrower is able to establish to the
satisfaction of the Administrative Agent that the Borrower will be in compliance
on a Pro Forma basis with each of the financial covenants contained in Section
4.10 hereof.
Section 4.28. Exchange of Term Notes. The Borrower will, on the 5th
Business Day following the written request (the "Exchange Request") of the
holder of any Term Loan:
(a) Execute and deliver, cause each Guarantor to execute and deliver,
and cause the Exchange Note Trustee to execute and deliver, the Exchange Note
Indenture substantially in the form of Exhibit D attached hereto, if such
Exchange Note Indenture has not previously been executed and delivered; and
(b) Execute and deliver to such holder or beneficial owner in
accordance with the Exchange Note Indenture a note in the form attached to the
Exchange Note Indenture (the "Exchange Notes") bearing interest at a fixed rate
equal to the rate per annum borne by the Term Loan on the date of the Exchange
Request dated the date of the issuance of such Exchange Note, payable to the
order of such holder or owner, as the case may be, in the same principal amount
as such Term Loan (or portion thereof) being exchanged, and cause each Guarantor
to endorse its guarantee thereon.
The Exchange Request shall specify the principal amount of the Term
Loans to be exchanged pursuant to this Section 4.28 which shall be at least
$5,000,000 and integral multiples of $100,000 in excess thereof. Term Loans
delivered to the Borrower under this Section 4.28 in exchange for Exchange Notes
shall be canceled by the Borrower and the corresponding amount of the Term Loan
deemed repaid and the Exchange Notes shall be governed by and construed in
accordance with the terms of the Exchange Note Indenture.
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The Exchange Note Trustee shall at all times be a corporation organized
and doing business under the laws of the United States or the State of New York,
in good standing and having its principal offices in the Borough of Manhattan,
in The City of New York, which is authorized under such laws to exercise
corporate trust powers and is subject to supervision or examination by Federal
or State authority and which has a combined capital and surplus of not less than
$50,000,000.
Section 4.29. Change of Control.
(a) Upon the occurrence of a Change of Control, each Lender will have
the right to require the Borrower to prepay all or any part the principal amount
of such Lender's Loans pursuant to the offer described below (the "Change of
Control Offer") at a prepayment price in cash equal to the aggregate principal
amount thereof plus (i) accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of prepayment and (ii) the Change of Control Fee
(collectively, the "Change of Control Payment"). Within 10 days following any
Change of Control, the Borrower will mail a notice to each Lender describing the
transaction or transactions that constituted the Change of Control and offer to
repay the Loans on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 45 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures set
forth below.
(b) Notice of a Change of Control Offer shall be mailed by the Borrower
to the Lenders at their addresses set forth in the Loan Register. The Change of
Control Offer shall remain open from the time of mailing until the Change of
Control Payment Date. The notice shall contain all instructions and materials
necessary to enable such Lenders to elect to be prepaid pursuant to the Change
of Control Offer.
(c) On the Change of Control Payment Date, the Borrower shall (i) repay
all Loans or portions thereof of each Lender that properly elected repayment
thereof pursuant to the Change of Control Offer, (ii) pay the Change of Control
Payment for each such Loan (or portion thereof) elected to be repaid and (iii)
deliver to each such Lender a new Bridge Note equal in principal amount
(excluding premiums, if any) to the unpurchased portion of the corresponding
Bridge Note surrendered, if any. The Borrower will notify the remaining Lenders
of the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
ARTICLE V.
CONDITIONS
The obligation of each of the Lenders to make Bridge Loans is subject
to (i) the representations and warranties in Article III and the representations
and warranties of the Borrower and each Guarantor, as the case may be, in the
Credit Facility and the Merger Agreement being true, correct and complete in all
material respects on and as of the Closing Date to the same extent as though
made on and as of that date, (ii) on or prior to the Closing Date, the Borrower
and each Guarantor, as the case may be, having performed and complied with all
covenants and conditions to be performed and observed by it on or prior to the
Closing Date and (iii) the prior or concurrent satisfaction of each of the
following conditions:
Section 5.1. Corporate and Other Proceedings. On or before the Closing
Date, all corporate and other proceedings taken or to be taken in connection
with the Transactions and all documents incidental thereto not previously found
acceptable by the Administrative Agent
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shall be reasonably satisfactory in form and substance to the Administrative
Agent, and the Administrative Agent shall have received on behalf of the Lenders
the following items, each of which shall be in form and substance reasonably
satisfactory to the Administrative Agent and, unless otherwise noted, dated the
Closing Date:
(a) a certified copy of the Borrower's and each of the Guarantor's
charter, in each case, together with a certificate of good standing or like
certificate with respect to the Borrower and each Guarantor issued by the
appropriate government officials of the jurisdiction of its respective formation
and of each jurisdiction in which the Borrower or such Guarantor owns any
material assets or carries on any material business, each to be dated a recent
date prior to the Closing Date;
(b) a copy of the Borrower's and each of the Guarantor's bylaws, in
each case, certified as of the Closing Date by its Secretary or one of its
Assistant Secretaries;
(c) resolutions of the Borrower's and each of the Guarantor's Board of
Directors, in each case, approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Transaction Documents and any
other documents, instruments and certificates required to be executed by the
Borrower or such Guarantor in connection herewith or therewith and approving and
authorizing the execution, delivery and payment of the Bridge Notes, the
Exchange Notes and the consummation of the Transactions, each certified as of
the Closing Date by its respective Secretary or one of its Assistant Secretaries
as being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the Borrower's and each of
the Guarantor's Officers executing this Agreement and the Bridge Notes and any
other documents executed in connection therewith;
(e) executed copies of this Agreement and the Bridge Notes, drawn to
the order of the Lenders;
(f) a notation of Guarantee, executed and delivered by each Guarantor,
dated the date of this Agreement, substantially in the form of Exhibit B hereto,
as applicable;
(g) an Officers' Certificate from the Borrower and each of the
Guarantors in form and substance satisfactory to the Administrative Agent to the
effect that (i) the representations and warranties in Article III and the
representations and warranties of the Borrower and such Guarantor, as the case
may be, in the Credit Facility are true, correct and complete in all material
respects on and as of the Closing Date to the same extent as though made on and
as of that date, (ii) on or prior to the Closing Date, the Borrower and such
Guarantor, as the case may be, has performed and complied in all material
respects with all covenants and conditions to be performed and observed by it on
or prior to the Closing Date and (iii) all conditions to the consummation of the
Transactions have been satisfied on the terms set forth in the documentation
relating thereto and have not been waived or amended without the Administrative
Agent's prior written consent;
(h) true and correct copies of the final form of each of: (i) the
Merger Agreement, which shall be satisfactory in form and substance to each of
the Lenders and which shall provide for an aggregate Merger consideration of
$233.5 million; (ii) the Credit Facility, which shall be satisfactory in form
and substance to each of the Lenders; and (iii) the agreements relating to the
Equity Financing, which shall be satisfactory in form and substance to each of
the Lenders;
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(i) true and correct copies of each of the other Transaction Documents,
each of which shall be satisfactory in form and substance to each of the Lenders
in their sole discretion;
(j) a copy of all closing documents relating to the Merger and all such
counterpart originals or certified copies of such documents, instruments,
certificates, opinions and reliance letters as the Administrative Agent may
reasonably request;
(k) a copy of all closing documents relating to the Credit Facility and
all such counterpart originals or certified copies of such documents,
instruments, certificates, reliance letters and opinions as the Administrative
Agent may reasonably request (including, without limitation, a reliance letter,
addressed to the Lenders, from counsel to the Borrower, entitling the Lenders to
rely on the opinions issued by such counsel in connection with the Credit
Facility);
(l) a copy of all closing documents relating to the other Transactions
and all such counterpart originals or certified copies of such documents,
instruments, certificates, reliance letters and opinions as the Administrative
Agent may reasonably request; and
(m) all authorizations, consents and approvals required by Section
5.13.
Section 5.2. Concurrent Transactions. Either prior to or concurrently
with the making of the Bridge Loans by the Lenders: (i) the Equity Financing and
the Bank Financing shall have been consummated on terms satisfactory to each of
the Lenders and all conditions precedent to the consummation of the Equity
Financing and the Bank Financing shall have been satisfied or, with the prior
approval of each of the Lenders, waived; and (ii) the Merger shall have been
consummated on terms satisfactory to each of the Lenders pursuant to the
provisions of the Merger Agreement delivered pursuant to 5.1(h) above in
compliance with applicable law and regulatory approvals and such Merger
Agreement shall not have been materially altered, amended or otherwise changed
or supplemented or any material condition therein waived, without the prior
written consent of the Lenders, and all conditions precedent to consummation of
the Merger shall have been satisfied or, with the prior approval of each of the
Lenders, waived.
Section 5.3. No Material Adverse Change. No material adverse change
(including any event which, in the reasonable opinion of any Lender, is likely
to result in such a material adverse change) in the business, assets,
liabilities, revenues, operations, condition (financial or otherwise), value,
management or prospects of the Borrower and its Subsidiaries, taken as a whole,
shall have occurred since February 1, 1998, and no material inaccuracy in such
financial statements shall exist.
Section 5.4. No Event of Default. No event shall have occurred and be
continuing or would result from the consummation of the Transactions that would
constitute an Event of Default.
Section 5.5. Litigation; Restraining Orders. There shall not exist (A)
any order, decree, judgment, ruling or injunction which restrains the
consummation of the Transactions in the manner contemplated by the Merger
Agreement and (B) any pending or threatened action, suit, investigation or
proceeding which, if adversely determined, could materially adversely affect the
ability of the Borrower or any Guarantor to perform any of their respective
obligations under the Loan Documents or the ability of the Lenders to exercise
their rights thereunder.
Section 5.6. No Changes in Financial Markets. No material adverse
change in the financial or capital markets shall have occurred which, in the
judgment of any Lender, would make it
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impractical or inadvisable to proceed with the funding of the Loans or the sale
of the Permanent Securities, and a banking moratorium shall not have been
declared by Federal or New York State banking officials.
Section 5.7. Corporate Structure. The corporate, capital and ownership
structure (including articles of incorporation and by-laws), shareholders'
agreements and management of the Borrower and its Subsidiaries (after giving
effect to the Transactions), including, without limitation, the execution of
employment contracts with and key-man life insurance with respect to, management
of the Borrower and each of the other key employees of the Borrower, shall be
satisfactory to each of the Lenders in all respects.
Section 5.8. No Conflicts. The execution, delivery and performance of
the documentation relating to the various aspects of the Transactions and the
consummation of all the transactions contemplated hereby and thereby will not
conflict with, constitute a default under or violate (A) any of the terms,
conditions or provisions of the certificate of incorporation or by-laws of the
Borrower or any of its Subsidiaries, (B) any of the terms, conditions or
provisions of any material document, agreement or other instrument to which the
Borrower or any of its Subsidiaries is bound, (C) any foreign, federal, state or
local statute, rule or regulation, (D) any judgment, writ, injunction, decree,
order or ruling of any court or governmental authority binding on the Borrower
or any of its Subsidiaries, where such conflict, default or violation would have
a Material Adverse Effect on the Borrower and its Subsidiaries, taken as a
whole.
Section 5.9. Delivery of Opinions. The Administrative Agent shall have
received originally executed copies of one or more favorable written opinions of
(i) Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, counsel for the Borrower and the
Guarantors, in the form of Exhibit E-1 hereto and addressed to the Lenders, (ii)
Xxxxxxxx, Xxxxxxxx & Xxxxxx, P.A., special North Carolina counsel for the
Borrower and the Guarantors, in the form of Exhibit E-2 hereto and addressed to
the Lenders and (iii) such other opinions of counsel and such certificates or
opinions of accountants, appraisers or other professionals as the Administrative
Agent shall have reasonably requested.
Section 5.10. Solvency. Each Lender shall have received a certificate
from Valuation Research, in form and substance satisfactory to each Lender,
certifying that, on the date of and immediately after giving effect to the
consummation of the Transactions, the Borrower and each of its Subsidiaries will
be Solvent.
Section 5.11. Payment of Fees. On or before the Closing Date, the
Borrower shall have paid to the Lenders and their Affiliates the fees payable on
the Closing Date pursuant to Section 2.11.
Section 5.12. No Breach Under Engagement Letter, Commitment Letter or
Fee Letter. Neither the Borrower nor any Guarantor shall be in breach or
violation of any of its obligations under the Engagement Letter, the Commitment
Letter or the Fee Letter and each of the Engagement Letter and the Fee Letter
shall be in full force and effect.
Section 5.13. Consents and Approvals. On or before the Closing Date,
all governmental, shareholder and third-party consents (including
Xxxx-Xxxxx-Xxxxxx clearance) and approvals necessary or desirable in connection
with the Transactions and the other transactions contemplated hereby shall have
been obtained; all such consents and approvals shall be in full force and
effect; and all applicable waiting periods shall have expired without any action
being taken by any
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authority that could restrain, prevent or impose any material adverse conditions
on the Transactions or such other transactions or that could seek or threaten
any of the foregoing. Copies of all such authorizations, consents and approvals
shall have been delivered to the Administrative Agent on the Closing Date.
Section 5.14. Repayment of Indebtedness. On or before the Closing Date,
all existing Indebtedness of the Borrower and its Subsidiaries shall be repaid
in full and all commitments thereunder shall be terminated.
Section 5.15. Closing. Upon satisfaction of the conditions set forth
herein, each of the Lenders shall disburse the proceeds of its Bridge Loan by
wire transfer of immediately available funds to the account designated by the
Borrower in New York, New York, against delivery to the Lenders in Bridge Notes
in the names and denominations specified by the Lenders (the "Closing"). The
Borrower shall give the Lenders at least three Business Days' notice of the
expected date of such Closing (the "Closing Date"). The Closing shall take place
at such place as shall be agreed upon by the Lenders and the Borrower.
Section 5.16. Debt Registration Rights Agreement. The Borrower, each of
the Guarantors and the Administrative Agent shall have entered into the Debt
Registration Rights Agreement and a fully executed copy of the Debt Registration
Rights Agreement shall have been delivered to each of the Lenders.
ARTICLE VI.
TRANSFER OF THE LOANS, THE INSTRUMENTS EVIDENCING SUCH LOANS AND
THE SECURITIES; REPRESENTATIONS OF LENDERS; PARTICIPATIONS
Section 6.1. Transfer of Loans, the instruments evidencing such Loans
and the Securities. Each Lender acknowledges that none of the Loans, the
instruments evidencing such Loans or any of the Securities have been registered
under the Securities Act and represents and agrees that it is acquiring the
Loans, the instruments evidencing such Loans and the Securities for its own
account and that it will not, directly or indirectly, transfer, sell, assign,
pledge or otherwise dispose of its Loans, the instruments evidencing such Loans
or the Securities (or any interest therein) unless such transfer, sale,
assignment, pledge or other disposition is made (i) pursuant to an effective
registration statement under the Securities Act or (ii) pursuant to an available
exemption from registration under, and otherwise in compliance with, the
Securities Act. Each Lender represents and warrants to and covenants and agrees
with the Borrower and each Guarantor that it is either (i) a qualified
institutional buyer within the meaning of Rule 144A under the Securities Act
acting for its own account or the account of one or more other qualified
institutional buyers, and is aware that the Borrower and each Guarantor may rely
upon the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A thereunder or (ii) an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
Each of the Lenders acknowledges that the instruments evidencing the Loans and
the Securities will bear a legend restricting the transfer thereof in accordance
with the Securities Act.
Subject to the provisions of the previous paragraph, the Borrower and
each of the Guarantors agrees that, with the consent of the Administrative
Agent, each Lender will be free to sell or transfer all or any part of the
Loans, the instruments evidencing the Loans or the Securities (including,
without limitation, participation interest in the Loans) to any third party who
(1) acknowledges the matters set forth in the first sentence of the immediately
preceding paragraph and (2) represents and warrants to and covenants and agrees
with the Borrower and each Guarantor the matters set forth in
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clauses (i) and (ii) of the second sentence of the immediately preceding
paragraph and to pledge any or all of the Securities to any commercial bank or
other institutional lender; provided, however, that (i) NationsBridge agrees not
to sell the voting interest with respect to at least 30.1% of the Bridge Loans
issued on the Closing Date and (ii) Chase and CSI agree not to sell the voting
interest with respect to at least 20.0% of the Bridge Loans issued on the
Closing Date.
Section 6.2. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities who (1) acknowledge the matters set forth
in the first sentence of the first paragraph of Section 6.1 hereof and (2)
represent and warrant to and covenant and agree with the Borrower and each
Guarantor the matters set forth in clauses (i) and (ii) of the second sentence
of the first paragraph of Section 6.1 hereof ("Purchasers") all or any part of
its rights and obligations hereunder and under the Loan Documents. Such
assignment shall be substantially in the form of Exhibit A or in such other form
as may be agreed to by the parties thereto. The consent of the Borrower and the
Administrative Agent shall be required prior to an assignment becoming effective
with respect to a Purchaser which is not a Lender or an Affiliate thereof;
provided, however, that if a Default has occurred and is continuing, the consent
of the Borrower shall not be required. Such consent shall not be unreasonably
withheld or delayed.
Section 6.3. Permitted Participants; Effect.
(a) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities who (1) acknowledge the matters set forth in the first sentence of the
first paragraph of Section 6.1 hereof and (2) represent and warrant to and
covenant and agree with the Borrower and each Guarantor the matters set forth in
clauses (i) and (ii) of the second sentence of the first paragraph of Section
6.1 hereof ("Participants") participating interests in any Loan owing to such
Lender, any Bridge Note held by such Lender, any Commitment of such Lender or
any other interest of such Lender under the Loan Documents. In the event of any
such sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the owner of its Loans and the holder
of any Note issued to it in evidence thereof for all purposes under the Loan
Documents, all amounts payable by the Borrower under this Agreement shall be
determined as if such Lender had not sold such participating interests, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
the Loan Documents.
(b) Each Lender shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or waiver
with respect to any Loan or Commitment in which such Participant has an interest
which forgives principal, interest or fees or reduces the interest rate or fees
payable with respect to any such Loan or Commitment, extends the Maturity Date,
postpones any date fixed for any regularly scheduled payment of principal of, or
interest or fees on, any such Loan or Commitment or releases any guarantor of
any such Loan.
(c) The Borrower agrees that each Participant shall be deemed to have
the right of setoff provided in Section 2.10 in respect of its participating
interest in amounts owing under the Loan Documents to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of setoff
provided in Section 2.10 with respect to the amount of participating interests
sold to each Participant. The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in
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Section 2.10, agrees to share with each Lender, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in accordance
with Section 2.10 as if each Participant were a Lender.
Section 6.4. Dissemination of Information. The Borrower authorizes each
Lender to disclose to any Participant or Purchaser or any other Person acquiring
an interest in the Loan Documents by operation of law (each a "Transferee") and
any prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports.
Section 6.5. Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 2.9.
Section 6.6. Replacement Securities Upon Transfer or Exchange. Upon
surrender of any Securities by any Lender in connection with any transfer or
exchange permitted by this Agreement, the Borrower will execute and deliver in
exchange therefor a new Security or Securities of the same aggregate tenor and
principal amount, payable to the order of such Persons and in such denominations
as such Lender may request. The Borrower may require payment by such Lender of a
sum sufficient to cover any stamp tax or governmental charge imposed in respect
of any such transfer.
Section 6.7. Loan Register. The Administrative Agent on behalf of the
Borrower shall maintain a register of the principal amount of the Loans held by
each Lender and any interest due and payable with respect thereto. The entries
in the Loan Register shall be conclusive, in the absence of manifest error, and
the Borrower, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Loan Register as the owner of a Loan or other
Securities hereunder as the owner thereof for all purposes of this Agreement and
the other Related Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other Securities shall be effective only upon
appropriate entries with respect thereto being made in the Loan Register. The
Administrative Agent will allow any Lender to inspect and copy such register at
the Administrative Agent's principal place of business during normal business
hours.
ARTICLE VII.
EVENTS OF DEFAULT
Section 7.1. Events of Default. An Event of Default shall exist upon
the occurrence and during the continuation of any of the following specified
events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans, whether or not prohibited by the subordination provisions of
Article X hereof, or
(ii) default, and such defaults shall continue for three or
more Business Days, in the payment when due of any interest on the
Loans, or of any fees or other amounts owing
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hereunder, under any of the other Loan Documents or in connection
herewith or therewith, whether or not prohibited by the subordination
provisions of Article X hereof; or
(b) Representations. Any representation, warranty or statement made or
deemed to be made herein, in any of the other Loan Documents, or in any
statement or certificate delivered or required to be delivered pursuant hereto
or thereto shall prove untrue in any material respect on the date as of which it
was deemed to have been made; or
(c) Covenants.
(i) Default in the due performance or observance of any term,
covenant or agreement contained in Section 4.3(a), 4.10, 4.14 or 4.16
through 4.29, inclusive, or
(ii) Default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) of this Section 7.1) contained in this
Agreement and such default shall continue unremedied for a period of at
least 30 days after the earlier of a Responsible Officer of a Credit
Party having knowledge of such default or notice thereof by the
Administrative Agent; or
(d) Other Loan Documents. (i) Any Credit Party shall default in the due
performance or observance of any material term, covenant or agreement in any of
the other Loan Documents (subject to applicable grace or cure periods, if any),
or (ii) any Loan Document shall fail to be in full force and effect or to give
the Administrative Agent and/or the Lenders any material part of the rights,
powers and privileges purported to be created thereby or any Credit Party shall
assert the same; or
(e) Guaranties. Except as to a Credit Party which is dissolved, merged
or consolidated out of existence as the result of or in connection with a
dissolution, merger or consolidation permitted by Section 4.19(a) or Section
4.19(b), the guaranty given by any Guarantor hereunder or any material provision
thereof shall cease to be in full force and effect, or any Guarantor hereunder
or any Person acting by or on behalf of such Guarantor shall deny or disaffirm
such Guarantor's obligations under such guaranty, or any 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 guaranty beyond any applicable
grace period; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
any member of the Consolidated Group; or
(g) Defaults under Other Agreements.
(i) There shall occur a default (beyond the applicable grace
period with respect thereto, if any) under either the Kmart License
Agreement or the Wal-Mart License Agreement, which default could
reasonably be expected to have a Material Adverse Effect; or
(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Agreement) in excess of $1,000,000 in the
aggregate for the Consolidated Group taken as a whole, (A) any member
of the Consolidated Group shall (1) default in any payment (beyond the
applicable grace period with respect thereto, if any) with respect to
any such Indebtedness, or (2) default in the observance or performance
relating to such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
or condition
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shall occur or condition exist, the effect of which default or other
event or condition is (after the giving of notice or lapse of time if
required) to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to cause
any such Indebtedness to become due prior to its stated maturity and
such default shall continue unremedied for a period of at least 30
days; or (B) any such Indebtedness shall be declared due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall have been entered
against one or more of the members of the Consolidated Group involving a
liability of $500,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days from the
entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event or
condition could reasonably be expected to have a Material Adverse Effect: (1)
any "accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of a member of the
Consolidated Group or any ERISA Affiliate in favor of the PBGC or a Plan; (2) an
ERISA Event shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (3) an ERISA Event
shall occur with respect to a Multiemployer Plan or Multiple Employer Plan,
which is, in the reasonable opinion of the Administrative Agent, likely to
result in (i) the termination of such Plan for purposes of Title IV of ERISA, or
(ii) a member of the Consolidated Group or any ERISA Affiliate incurring any
liability in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency of (within the meaning of
Section 4245 of ERISA) such Plan; or (4) any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject a member of the
Consolidated Group or any ERISA Affiliate to any liability under Sections 406,
409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which a member of the Consolidated
Group or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
Section 7.2. Acceleration. If any Event of Default specified in Section
7.1(a) occurs and is continuing, the Lenders holding at least 25% in aggregate
principal amount of the then outstanding Loans may, by written notice to the
Borrower, declare the unpaid principal of and any accrued and unpaid interest
and fees on all of the Loans to be immediately due and payable. If any Event of
Default (other than an Event of Default specified in Section 7.1(a) or 7.1(f))
occurs and is continuing, the Lenders holding at least a majority in aggregate
principal amount of the then outstanding Loans may, by written notice to the
Borrower, declare the unpaid principal of and any accrued and unpaid interest
and fees on all of the Loans to be immediately due and payable. Upon such
declaration, all Obligations in respect of the Loans shall become immediately
due and payable immediately. If an Event of Default specified in Section 7.1(f)
occurs, all Obligations in respect of the Loans shall ipso facto become and be
immediately due and payable without any declaration, notice or other act on the
part of any Lender.
Section 7.3. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Lenders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
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assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent or subsequent assertion or employment of any other
appropriate right or remedy.
Section 7.4. Delay or Omission Not Waiver. No delay or omission by any
Lender to exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this Article
VII or by law to the Lenders may be exercised from time to time, and as often as
may be deemed expedient, by the Lenders.
Section 7.5. Waiver of Past Defaults. Subject to Section 11.3, the
Required Lenders by written notice to the Borrower may rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
Section 7.6. Rights of Lenders To Receive Payment. Notwithstanding
anything to the contrary contained in this Agreement, the right of any Lender to
receive payment of principal of, premium and interest on the Loans and Bridge
Notes held by such Lender, on or after the respective due dates expressed in
this Agreement or the Bridge Notes, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Lender.
ARTICLE VIII.
PERMANENT SECURITIES
Section 8.1. Permanent Securities. The Borrower and each of the
Guarantors shall use their best efforts to do all things required in the
reasonable opinion of the Investment Banks in connection with the sale of the
Permanent Securities, including, but not limited to (i) commencing the
preparation of a Rule 144A offering memorandum or registration statement under
the Securities Act with respect to the Permanent Securities, and other
documentation (including an indenture), all as deemed reasonably necessary by
the Investment Banks and the Borrower, to effect the offering of Permanent
Securities, (ii) no later than 45 Business Days following the Closing Date,
delivering to the Investment Banks such unaudited consolidated and pro forma
financial information, projections as to future operations and such other
financial information relating to the Borrower and its Subsidiaries and their
respective businesses and any probable or recently completed acquisition as may
be reasonably requested by the Investment Banks, (iii) no later than 45 Business
Days following the Closing Date, finalizing the Offering Documents in form and
substance reasonably satisfactory to the Investment Banks, the Borrower and the
Guarantors, including, if applicable, filings of a registration statement under
the Securities Act, (iv) no later than 45 Business Days following the Closing
Date, making appropriate Officers of the Borrower and its Subsidiaries available
to the Investment Banks for meetings with prospective purchasers of the
Permanent Securities and preparing and presenting to potential investors road
show material in a manner consistent with other new issuances of high yield debt
securities and (v) executing an underwriting or purchase agreement substantially
in the form of NMS' standard underwriting or purchase agreement, as the case may
be, modified as appropriate to reflect the terms of the transactions
contemplated thereby and containing such terms, covenants, conditions,
representations, warranties and indemnities as are customary in similar
transactions and providing for the delivery of legal opinions, comfort letters,
and Officers' Certificates, all in form and substance reasonably satisfactory to
the Investment Banks and their counsel, as well as such other terms and
conditions as the Investment Banks and their counsel may in their reasonable
discretion consider appropriate in light of
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then prevailing market conditions applicable to similar financings or in light
of any aspect of the transactions contemplated hereby that requires such other
terms or conditions. The proceeds from the issuance of the Permanent Securities
shall be used to prepay the Loans pursuant to Section 2.4.
ARTICLE IX.
TERMINATION
Section 9.1. Termination. The Lenders, by notice to the Borrower, may
terminate this Agreement at any time after the earlier of (i) the termination of
the Merger Agreement, (ii) the consummation of the Merger without the making of
any Bridge Loans and (iii) October 31, 1998.
Section 9.2. Survival of Certain Provisions. If this Agreement is
terminated pursuant to this Article IX, such termination shall be without
liability of any party to any other party, except that, whether or not the
transactions contemplated by this Agreement are consummated, (i) the Obligations
of the Borrower and the Guarantors to reimburse the Lenders for all of their
out-of-pocket expenses pursuant to Section 13.1 and the Fee Letter and (ii) the
indemnity provisions contained in Article XII shall, in each case, remain
operative and in full force and effect.
ARTICLE X.
SUBORDINATION
Section 10.1. Agreement to Subordinate.
The Borrower and the Guarantors agree, and each Lender agrees, that the
Indebtedness evidenced by the Loans is subordinated in right of payment, to the
extent and in the manner provided in this Article X, to the prior payment in
full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
Section 10.2. Certain Definitions.
"Designated Senior Debt" means any Senior Debt outstanding under the
Credit Facility.
"Permitted Junior Securities" means Equity Interests in the Borrower or
any Guarantor or debt securities that are subordinated to all Senior Debt (and
any debt securities issued in exchange for Senior Debt) to substantially the
same extent as, or to a greater extent than, the Loans are subordinated to
Senior Debt pursuant to this Agreement.
"Representative" means the agent or representative for any Senior Debt.
"Senior Debt" means (i) all Indebtedness outstanding under the Credit
Facility and (ii) all Obligations with respect to any of the foregoing.
Notwithstanding anything to the contrary in the foregoing, (i) Senior Debt shall
not include (x) any Indebtedness of the Borrower or the Guarantors to any of its
Subsidiaries or other Affiliates, (y) any Indebtedness incurred for the purchase
of goods or materials or for services obtained in the ordinary course of
business (other than with the proceeds of revolving credit borrowings permitted
hereby) and (z) any Indebtedness that is incurred in violation of this Agreement
and (ii) the aggregate amount of Senior Debt shall not exceed $150.0 million.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
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Section 10.3. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Borrower or the Guarantors in
a liquidation or dissolution of the Borrower or such Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Borrower or such Guarantor or its property, in an assignment for
the benefit of creditors or any marshalling of the Borrower's or such
Guarantor's assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt) before any Lender
shall be entitled to receive any payment with respect to its Loan
(except that Lenders may receive Permitted Junior Securities); and
(2) until all Obligations with respect to Senior Debt (as
provided in subsection (1) above) are paid in full, any distribution to
which Lenders would be entitled but for this Article X shall be made to
holders of Senior Debt (except that Lenders may receive Permitted
Junior Securities), as their interests may appear.
Section 10.4. Default on Designated Senior Debt.
The Borrower and the Guarantors may not make any payment or
distribution to the Administrative Agent or any Lender in respect of Obligations
with respect to the Loans and may not acquire from the Administrative Agent or
any Lender any Loans for cash or property (other than Permitted Junior
Securities) until all principal and other Obligations with respect to the Senior
Debt have been paid in full if:
(i) a default in the payment of any principal or other
Obligations with respect to Designated Senior Debt occurs and is
continuing beyond any applicable grace period in the agreement,
indenture or other document governing such Designated Senior Debt; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that permits holders of the
Designated Senior Debt to accelerate its maturity and the
Administrative Agent receives a notice of the default (a "Payment
Blockage Notice") from a Person who may give it pursuant to Section
10.12 hereof. If the Administrative Agent receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section 10.4 unless and until (i) at
least 360 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Loans that
have come due have been paid in full in cash. No nonpayment default
that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the Administrative Agent shall be, or be made, the
basis for a subsequent Payment Blockage Notice.
The Borrower and the Guarantors may and shall resume payments on and
distributions in respect of the Loans and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.4(ii) hereof,
179 days pass after notice is received if the maturity of such Designated Senior
Debt has not been accelerated,
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if this Article X otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
Section 10.5. Acceleration of Securities.
If payment of the Loans is accelerated because of an Event of Default,
the Borrower shall promptly notify holders of Senior Debt of the acceleration.
Section 10.6. When Distribution Must Be Paid Over.
In the event that the Administrative Agent or any Lender receives any
payment of any Obligations with respect to the Loans at a time when the
Administrative Agent or such Lender, as applicable, has actual knowledge that
such payment is prohibited by Section 10.4 hereof, such payment shall be held by
the Administrative Agent or such Lender, in trust for the benefit of, and shall
be paid forthwith over and delivered, upon written request, to, the holders of
Senior Debt as their interests may appear or their Representative under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt.
With respect to the holders of Senior Debt, the Administrative Agent
undertakes to perform only such obligations on the part of the Administrative
Agent as are specifically set forth in this Article X, and no implied covenants
or obligations with respect to the holders of Senior Debt shall be read into
this Agreement against the Administrative Agent. The Administrative Agent shall
not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall
not be liable to any such holders if the Administrative Agent shall pay over or
distribute to or on behalf of Lenders, the Borrower, the Guarantors or any other
Person money or assets to which any holders of Senior Debt shall be entitled by
virtue of this Article X, except if such payment is made as a result of the
willful misconduct or gross negligence of the Administrative Agent.
Section 10.7. Notice by the Borrower.
The Borrower and the Guarantor shall promptly notify the Administrative
Agent of any facts known to the Borrower or any Guarantor that would cause a
payment of any Obligations with respect to the Loans to violate this Article X,
but failure to give such notice shall not affect the subordination of the Loans
to the Senior Debt as provided in this Article X.
Section 10.8. Subrogation.
After all Senior Debt is paid in full and until the Loans are paid in
full, the Lenders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Loans) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Lenders have been applied to the payment
of Senior Debt. A distribution made under this Article X to holders of Senior
Debt that otherwise would have been made to the Lenders is not, as between the
Borrower and the Guarantors, on one hand, and the Lenders, on the other hand, a
payment by the Borrower and the Guarantors on the Loan.
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Section 10.9. Relative Rights.
This Article X defines the relative rights of the Lenders and holders
of Senior Debt. Nothing in this Agreement shall:
(a) impair, as between the Borrower and the Guarantors, on one hand,
and the Lenders, on the other hand, the obligation of the Borrower and the
Guarantors, which is absolute and unconditional, to pay principal of and
interest on the Loans in accordance with their terms;
(b) affect the relative rights of the Lenders and creditors of the
Borrower and the Guarantors other than their rights in relation to holders of
Senior Debt; or
(c) prevent the Administrative Agent or any Lender from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Debt to receive distributions and payments otherwise payable
to the Lenders.
If the Borrower and the Guarantors fail because of this Article X to
pay principal of or interest on a Loan on the due date, the failure is still a
Default or Event of Default.
Section 10.10. Subordination May Not Be Impaired by the Borrower and
the Guarantors.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Loans shall be impaired by any act or failure
to act by the Borrower and the Guarantors or any Lender or by the failure of the
Borrower and the Guarantors or any Lender to comply with this Agreement.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Borrower or any
Guarantor referred to in this Article X, the Administrative Agent and the
Lenders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Administrative Agent or to the Lenders for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Borrower and the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.
Section 10.12. Rights of Administrative Agent.
Notwithstanding the provisions of this Article X or any other provision
of this Agreement, the Administrative Agent shall not be charged with knowledge
of the existence of any facts that would prohibit the making of any payment or
distribution by the Administrative Agent, and the Administrative Agent may
continue to make payments on the Loans, unless the Administrative Agent shall
have received at the address set forth in Section 14.2 hereof at least five
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Loans to violate
this Article X. Only a Representative may give the notice. Nothing in this
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Article X shall impair the claims of, or payments to, the Administrative Agent
under or pursuant to Article XIII hereof.
The Administrative Agent in its individual or any other capacity may
hold Senior Debt with the same rights it would have if it were not
Administrative Agent. Any agent may do the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Lender, authorizes and directs the Administrative Agent on such
Lender's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article X, and appoints the
Administrative Agent to act as such Lender's attorney-in-fact for any and all
such purposes.
Section 10.14. Amendments.
The provisions of this Article X and Section 11.2 shall not be amended
or modified without the written consent of the holders of all Senior Debt.
ARTICLE XI.
GUARANTEE
Section 11.1. The Guarantee.
(a) Each Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the principal of and interest, fees and premium
(if any) on the Loans and the Bridge Notes, and the full and punctual payment of
all other Obligations of the Borrower under this Agreement, the Bridge Notes and
the other Loan Documents, including all reasonable costs of collection and
enforcement thereof and interest thereon which would be owing by the Borrower
but for the effect of any Bankruptcy Law (collectively, the "Guaranteed
Obligations"). Each Guarantor understands, agrees and confirms that each of the
Lenders may enforce this Guarantee up to the full amount guaranteed by each
Guarantor hereunder against each Guarantor without proceeding against any other
obligor or against any security for the Guaranteed Obligations. All payments
made by each Guarantor under this Guarantee shall be paid at the place and in
the manner specified in Section 2.8. Each Guarantor agrees that this is a
continuing Guarantee of payment and not merely a Guarantee of collection.
(b) The obligations of each Guarantor hereunder shall be unconditional
and absolute and, without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the Borrower under this
Agreement, the Bridge Notes or any other Loan Document, by operation of
law or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, the Bridge Notes or any of the other Loan Documents;
(iii) any release, non-perfection or invalidity of any direct
or indirect security for, or any other Person's guarantee of, any of
the Guaranteed Obligations;
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(iv) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of the Borrower's
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or any obligor or any of
their respective assets or any resulting release or discharge of any
Obligation of the Borrower contained in the Loan Documents;
(v) the existence of any claim, set-off or other rights which
any obligor may have at any time against the Borrower or any other
Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower for any reason of this Agreement, the Bridge Notes or any
other Loan Document, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of the principal of,
interest, premium or fees on the Loans or any other amount payable by
the Borrower under this Agreement, the Bridge Notes or any of the other
Loan Documents; or
(vii) any other act or omission to act or delay of any kind by
the Borrower or any other Person or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of Guaranteed Obligations hereunder.
(c) Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Borrower, any right to require a proceeding first against the Borrower or
another obligor, protest, notice and all demands whatsoever and covenants that,
subject to this Article X, this Guarantee shall not be discharged except by
complete payment and performance of all Guaranteed Obligations.
(d) If any Lender is required by any court or otherwise to return to
the Borrower or any Guarantor, or any Custodian for the Borrower or any of the
other obligors or their respective assets, any amount paid to any Lender, this
Guarantee, to the extent of the amount so returned, shall be reinstated in full
force and effect.
(e) Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Lenders in respect of any Guaranteed Obligations
until payment in full of all Guaranteed Obligations. Each Guarantor further
agrees that (i) the maturity of the Guaranteed Obligations may be accelerated as
provided in Section 7.2 notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Guaranteed
Obligations and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Section 7.2, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by each
Guarantor for the purpose of this Guarantee.
Section 11.2. Subordination of Guarantee. The obligations of each
Guarantor under its Guarantee pursuant to this Article 11 shall be junior and
subordinated to the Senior Debt under the Credit Facility on the same basis as
the Loans are junior and subordinated to Senior Debt of the Borrower under the
Credit Facility.
Section 11.3. Limitation on Liability. Each Guarantor and, by its
acceptance of any Bridge Note, each Lender, hereby confirms that it is the
intention of all such parties that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
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Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
law to the extent applicable to this Guarantee. To effectuate the foregoing
intention, the Lenders and the Guarantors hereby irrevocably agree that the
Obligations of each Guarantor under this Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of each Guarantor that are relevant under such
laws, result in the Obligations of each Guarantor under the Guarantee not
constituting a fraudulent transfer or conveyance.
Section 11.4. Stay of Acceleration. In the event that acceleration of
the time for payment of any Guaranteed Obligation is stayed upon insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of this Agreement and the Bridge Notes shall
nonetheless by payable by the Guarantors forthwith on demand by any Lender.
Section 11.5. Release of Guarantors. In the event of a sale or other
disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Guarantee;
provided that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of this Agreement, including without
limitation Section 4.19(c). Upon delivery by the Borrower to the Administrative
Agent of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Borrower in accordance with the
applicable provisions of this Agreement, including without limitation Section
4.19(c) hereof, the Administrative Agent shall execute any documents reasonably
required in order to evidence the release of any Guarantor from its Obligations
under its Guarantee.
Any Guarantor not released from its Obligations under its Guarantee
shall remain liable for the full amount of principal of and interest on the
Loans and for the other obligations of any Guarantor under this Agreement as
provided in this Article XI.
ARTICLE XII.
INDEMNITY
Section 12.1. Indemnification. In the event that the Lenders or any of
their respective affiliates or any of their respective directors, officers,
employees or agents (the "Indemnified Parties") becomes involved in any capacity
in any action, proceeding or investigation in connection with any matter
contemplated by the Commitment Letter, the Credit Parties (and any successors
thereto), (collectively, the "Indemnifying Parties"), will reimburse such
Indemnified Party for its legal and other expenses (including the cost of any
investigation and preparation) as they are incurred. The Indemnifying Parties
also agree to indemnify and hold harmless each Indemnified Party from and
against any and all losses, claims, damages and liabilities, joint or several,
related to or arising out of any matters contemplated by the Commitment Letter,
unless (and only to the extent that) it shall be finally judicially determined
that such losses, claims, damages or liabilities resulted primarily from the
gross negligence or willful misconduct of such Indemnified Party. The
Indemnified Parties will promptly notify the Indemnifying Parties upon receipt
of written notice of any claim or threat to institute a claim; provided that any
failure by the Indemnified Parties to give such notice shall not relieve the
Indemnifying Parties from the obligation to indemnify the Indemnified Parties,
except to the extent that the Indemnifying Parties are materially prejudiced
thereby.
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If any action, claim, investigation or other proceeding is instituted
or threatened against any Indemnified Parties in respect of which indemnity may
be sought hereunder, the Indemnifying Parties shall be entitled to assume the
defense thereof with counsel selected by the Indemnifying Parties (which counsel
shall be reasonably satisfactory to such Indemnified Parties) and after notice
from the Indemnifying Parties to such Indemnified Parties of their election so
to assume the defense thereof, the Indemnifying Parties will not be liable to
such Indemnified Parties hereunder for any legal or other expenses subsequently
incurred by such Indemnified Parties in connection with the defense thereof
other than reasonable costs of investigation and such other expenses as have
been approved in advance; provided that (i) if counsel for such Indemnified
Parties determines in good faith that there is a conflict which requires
separate representation for the Indemnifying Parties, on the one hand, and such
Indemnified Parties, on the other hand, or (ii) the Indemnifying Parties fail to
assume or proceed in a timely and reasonable manner with the defense of such
action or fail to employ counsel reasonably satisfactory to such Indemnified
Parties in any such action, then, in either such event, such Indemnified Parties
shall be entitled to select one primary counsel (in addition to any necessary
local counsel) of their own choice to represent such Indemnified Parties, and
the Indemnifying Parties shall not, or shall no longer, be entitled to assume
the defense thereof on behalf of such Indemnified Parties and such Indemnified
Parties shall be entitled to indemnification for their expenses (including fees
and expenses of such counsel) to the extent provided in the preceding paragraph.
Such counsel shall, to the fullest extent consistent with its professional
responsibilities, cooperate with the Indemnifying Parties and any counsel
designated by the Indemnifying Parties. Nothing contained herein shall preclude
any Indemnified Parties, at their own expense, from retaining additional counsel
to represent such Indemnified Parties in any action with respect to which
indemnity may be sought from the Indemnifying Parties hereunder. The
Indemnifying Parties shall not be liable under this agreement for any settlement
made by any Indemnified Parties without the Indemnifying Parties' prior written
consent, and the Indemnifying Parties agree to indemnify and hold harmless any
Indemnified Parties from and against any loss or liability by reason of the
settlement of any claim or action with the consent of the Indemnifying Parties.
The Indemnifying Parties shall not settle any such claim or action without the
prior written consent of the Indemnified Parties unless such settlement provides
for a full release of claims against the Indemnified Parties.
Section 12.2. Indemnity not Available. If the indemnification provided
for herein is unavailable to an Indemnified Party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then the
Indemnifying Parties, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and expenses (i) in such portion as
is appropriate to reflect the relative benefits received by the Indemnifying
Parties, on the one hand, and such Indemnified Party, on the other, from the
Transaction and the other transactions contemplated by the Bridge Commitment
Letter (whether or not consummated) or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Indemnifying Parties, on the one hand,
and such Indemnified Party, on the other, in connection with the actions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations.
Section 12.3. Settlement of Claims. The Borrower and each Guarantor
agree that, neither it nor any of its Subsidiaries will settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding in respect of which indemnification or contribution could be
sought under Section 12.1 or 12.2 (whether or not any Indemnified Party is an
actual or potential party to such claim, action or proceeding), unless such
settlement, compromise or
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consent includes an unconditional release of each Indemnified Party from all
liability arising out of such claim, action or proceeding.
Section 12.4. Appearance Expenses. If an Indemnified Party is requested
or required to appear as a witness in any action brought by or on behalf of or
against the Borrower, any Guarantor or any Affiliate thereof in which such
Indemnified Party is not named as a defendant, each Credit Party agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
Section 12.5. Indemnity for Taxes, Reserves and Expenses. If, after the
date hereof, the adoption of any law or guideline or any amendment or change in
the administration, interpretation or application of any existing or future law
or guideline by any Governmental Authority charged with the administration,
interpretation or application thereof, or the compliance with any request or
directive of any Governmental Authority (whether or not having the force of
law):
(a) subjects any Affected Party to any tax of any kind with respect to
this Agreement or the Bridge Notes or changes the basis of taxation of payments
of amounts due hereunder or thereunder or with respect to this Agreement or any
of the other Loan Documents, (including, without limitation, any sales, gross
receipts, general corporate, personal property, privilege or license taxes, and
including claims, losses and liabilities arising from any failure to pay or
delay in paying any such tax, but excluding such net income or franchise taxes
that are specifically excluded under Section 2.9(a));
(b) imposes, modifies or deems applicable any reserve (including,
without limitation, any reserve imposed by the Board), special deposit or
similar requirement against assets of the Borrower and the Guarantors held by,
credit to the Borrower and the Guarantors extended by, deposits of the Borrower
and the Guarantors with or for the account of, or other acquisition of funds of
the Borrower and the Guarantors by, any Affected Party;
(c) shall change the amount of capital maintained or requested or
directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or expense
(including, without limitation, (i) loss of margin and (ii) attorneys' fees and
expenses, expenses incurred by officers or employees of an Affected Party (or
any successor thereto) and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement or any of the
other Loan Documents or the purchase, maintenance or funding of the Loans by an
Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Indemnifying Party of the amount of such increase, reduction, or imposition,
and the Indemnifying Parties hereby jointly and severally agree to pay to the
Affected Party the amount the Affected Party deems necessary to compensate the
Affected Party for such increase, reduction or imposition which determination
shall be conclusive. Such amounts shall be due and payable by the Indemnifying
Parties 15 days after such notice is given.
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Section 12.6. Survival of Indemnification. The provisions contained in
this Article XII shall remain in full force and effect whether or not any of the
transactions contemplated hereby are consummated and notwithstanding the
termination of this Agreement or the payment in full of all Obligations
hereunder.
Section 12.7. Liability Not Exclusive; Payments. The agreements of each
Indemnifying Party in this Article XII shall be in addition to any liability
that each may otherwise have. All amounts due under this Article XII shall be
payable as incurred upon written demand therefor.
ARTICLE XIII.
THE ADMINISTRATIVE AGENT; THE ARRANGERS
Section 13.1. Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
Section 13.2. Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
Section 13.3. Exculpatory Provisions. Neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any of its
Subsidiaries or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement, opinion or other
document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of the Borrower
or any of its Subsidiaries to perform its obligations hereunder or thereunder.
The Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
Section 13.4. Reliance by the Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Bridge Note, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made
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by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower or any of its
Subsidiaries), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
the Bridge Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
Section 13.5. Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender, the Borrower or any of its Subsidiaries 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 Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative 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
Lenders.
Section 13.6. Non-Reliance on the Administrative Agent and Other
Lenders. Each Lender expressly acknowledges that neither the Administrative
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates has made any representations or warranties to it and that no act
by the Administrative Agent hereafter taken, including any review of the affairs
of the Borrower or any of its Subsidiaries, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any material or other information provided by the
Administrative Agent (which, if so furnished, are acknowledged by the Lenders to
be for informational purposes only and without representation or warranty) or
any other Lenders, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender confirms
that it is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries
62
68
which may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 13.7. Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrower or any of its Subsidiaries and without limiting the obligation of
the Borrower and any of its Subsidiaries to do so), ratably according to their
respective Commitments in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (include, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any other Loan Document or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing, provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other Obligations
payable hereunder.
Section 13.8. Administrative Agent, in Its Individual Capacities. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Administrative Agent were not acting in such capacities hereunder and under the
other Loan Documents. With respect to the Loans made or renewed by it and the
Bridge Note issued to it the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
Section 13.9. Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent (provided
that it shall have been approved by the Borrower), shall succeed to the rights,
powers and duties of the Administrative Agent, hereunder. Effective upon such
appointment and approval, the term "Administrative Agent" shall mean and include
such successor agent, and the former Administrative Agent's rights, powers and
duties as Administrative Agent shall be terminated, without any other or further
act or deed on the part of such former Administrative Agent any of the parties
to this Agreement or any holders of the Loans. After any retiring Administrative
Agent's resignation as Administrative Agent the provisions of this Article XIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement and the other Loan
Documents.
Section 13.10. Arrangers. Except as expressly set forth herein, the
Arrangers, in their capacity as such, shall have no duties or responsibilities,
and shall incur no liabilities, under this Agreement or the other Loan
Documents.
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ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Expenses; Documentary Taxes. The Borrower and the
Guarantors hereby jointly and severally agree to pay (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses incurred in
connection with due diligence of the Lenders) associated with the preparation,
execution and delivery, administration, waiver, enforcement or modification and
enforcement of the documentation contemplated hereby and (b) the reasonable fees
and disbursements of legal counsel to the Lenders in connection with the
transactions contemplated herein, including in each case those incurred prior to
the date hereof. The Borrower and the Guarantors hereby jointly and severally
agree to indemnify the Lenders against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of the
execution and delivery, or the terms, of this Agreement or any of the other Loan
Documents.
Section 14.2. Notices. All notices and other communications pertaining
to this Agreement or any Bridge Note shall be in writing and shall be delivered
(a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), or (c) by
overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
NationsBridge, L.L.C.
NationsBank Corporate Center
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
(ii) If to any Lender, to it at its address set forth on
the signature pages hereto:
(iii) If to the Borrower or any Guarantor, to it at:
PCA International, Inc.
000 Xxxxxxxx-Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
64
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with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section.
Section 14.3. Consent to Amendments and Waivers.
(a) Except as provided in Section 14.3(b), this Agreement and the
Bridge Notes may be amended or supplemented with the consent of the Borrower,
each Guarantor and the Required Lenders and any existing default or compliance
with any provision of this Agreement or the Bridge Notes may be waived with the
consent of the Required Lenders. Bridge Notes held by the Borrower or any of its
Affiliates will not be deemed to be outstanding for purposes of this Section
14.3.
(b) Notwithstanding the provisions of Section 14.3(a), without the
consent of each Lender affected thereby, an amendment or waiver may not: (i)
reduce the principal amount of any Loan, (ii) change the fixed maturity of any
Loan, (iii) reduce the rate of or change the time for payment of interest on any
Loan, (iv) waive a Default or Event of Default in the payment of principal of or
premium, or interest, if any, on the Loans or an other amounts payable under any
of the Loan Documents, (v) make any Loan payable in money other than that stated
in the applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, or premium, fees or interest, if any, or fees or interest on,
the Loans, (vii) make any change to the provisions of Article VIII that would
adversely affect the rights of any Lender, (viii) release any Guarantor from its
Guarantee except as provided herein, (ix) amend the provisions of Article X
hereof if such amendment would adversely affect the rights of any Lenders or
(ix) make any change in the foregoing amendment and waiver provisions.
(c) The Borrower shall not and shall not permit any of its Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Lender for or as an inducement to
any consent, waiver or amendment permitted by Section 14.3(a) unless such
consideration is offered to be paid and is paid to all Lenders that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or amendment.
Section 14.4. Parties. This Agreement shall inure to the benefit of and
be binding upon the Borrower, each Guarantor, the Affected Parties and each of
their respective successors and assigns. Except as expressly in this Agreement,
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other Person any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. Except
as expressly provided in this Agreement, this Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Affected Parties and their respective successors and assigns, and for the
benefit of no other Person. The Obligations of the Credit Parties hereunder
shall be joint and several obligations of each of them.
65
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Section 14.5. New York Law; Submission to Jurisdiction; Waiver of Jury
Trial. THIS AGREEMENT AND THE BRIDGE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE BORROWER, EACH GUARANTOR
AND EACH OF THE LENDERS HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THE BRIDGE
NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE BORROWER, EACH GUARANTOR AND EACH OF THE LENDERS
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER, EACH GUARANTOR
AND EACH OF THE LENDERS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE BRIDGE NOTES, THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 14.6. Replacement Notes. If any Bridge Note becomes mutilated
and is surrendered by the applicable Lender to the Borrower, or if any Lender
claims that any of its Bridge Notes has been lost, destroyed or wrongfully
taken, the Borrower shall execute and deliver to such Lender a replacement
Bridge Note, upon the delivery by such Lender of an indemnity to the Borrower to
save it and any agent of it harmless in respect of such loss, destruction or
wrongful taking with respect to such Bridge Note.
Section 14.7. Marshalling; Recapture. Neither the Administrative Agent
nor any Lender shall be under any obligation to xxxxxxxx any assets in favor of
the Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent any Lender receives any payment by or on behalf of
the Borrower, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
the Borrower or its estate, trustee, receiver, custodian or any other party
under any Bankruptcy Law, state or federal law, common law or equitable cause,
then, to the extent of such payment or repayment, the obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of Borrower to such Lender as of the date such initial payment, reduction or
satisfaction occurred.
Section 14.8. Limitation of Liability. No claim may be made by the
Borrower any Guarantor or any other Person against the Administrative Agent or
any Lender or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any theory of
liability arising out of or related to the transactions contemplated by this
Agreement or the other Loan Documents, or any act, omission or event occurring
in connection therewith; and the Borrower and each Guarantor hereby waive,
release and agree not to xxx and shall cause each of its respective Subsidiaries
to waive, release or agree not to xxx (if required), upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
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72
Section 14.9. 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 limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
Section 14.10. Currency Indemnity. The Borrower acknowledges and agrees
that this is a credit transaction where specification of dollars is of the
essence and dollars shall be the currency of account and payment in all events.
If, pursuant to a judgment or for any other reason, payment shall be made in
another currency and such payment, after prompt conversion to dollars and
transfer to New York City in accordance with normal banking procedures, falls
short of the sum due the Lenders in dollars, the Borrower shall pay the Lender
such shortfall and the Lenders shall have a separate cause of action for such
amount.
Section 14.11. Waiver of Immunity. To the extent that the Borrower or
any Guarantor has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction in
which the Borrower or any Guarantor owns or leases property or assets
or (ii) the United States, the State of New York or any political
subdivision thereof; or
(b) from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect
of any thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document to the extent such waiver is permitted by law.
Section 14.12. Freedom of Choice. The submission to the jurisdiction of
the courts referred to in this Article XIV shall not (and shall not be construed
so as to) limit the right of any Lender to take proceedings against the Borrower
or any Guarantor in the courts of any country in which the Borrower or such
Guarantor has assets or in any other court of competent jurisdiction nor shall
the taking of proceedings in any one or more jurisdictions preclude the taking
of proceedings in any other jurisdiction (whether concurrently or not) if and to
the extent permitted by applicable law.
Section 14.13. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants and agreements of
the Borrower and each Guarantor in this Agreement shall bind their respective
successors and assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (by operation of law or
otherwise) without the prior written consent of the Required Lenders.
Section 14.14. Merger. This Agreement constitutes the entire contract
among the parties relating to the subject matter hereof and supersedes any and
all previous agreements among the parties relating to the subject matter hereof,
except for those provisions in the Fee Letter (including the exhibits thereto)
and the Engagement Letter that are in addition to the provisions contained
herein.
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Section 14.15. Severability Clause. In case any provision in this
Agreement or any Bridge Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
Section 14.16. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Bridge
Notes.
[signature pages follow]
68
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
BORROWER: PCA INTERNATIONAL, INC.,
a North Carolina corporation
By: /s/ Xxxx Xxxxxx
--------------------------------
Name:
Title:
GUARANTORS: PCA PHOTO CORPORATION OF CANADA, INC.,
a North Carolina corporation
PCA SPECIALTY RETAIL PHOTO
CORPORATION, INC.,
a North Carolina corporation
PHOTO CORPORATION OF AMERICA,
a North Carolina corporation
PCA NATIONAL, INC.,
a North Carolina corporation
AMERICAN STUDIOS, INC.
a North Carolina corporation
By: /s/ Xxxx Xxxxxx
------------------------------
Name:
------------------------------
Title: President of each of the
above-named Guarantors
NATIONSBRIDGE, L.L.C., as
Administrative Agent
By: /s/ X.X. Xxxxx
---------------------------
Name:
Title:
75
Lender: NationsBridge, L.L.C.
Commitment Amount:
$60,000,000 NATIONSBRIDGE, L.L.C.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
Wire Transfer Instructions
Name of Bank: NationsBank, National
Association
ABA#:
For the account of
Account No.:
Reference:
Attention:
Telephone:
Lender: The Chase Manhattan Bank
Commitment Amount:
$40,000,000 THE CHASE MANHATTAN BANK
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Wire Transfer Instructions
Name of Bank: The Chase Manhattan Bank
ABA#: 000000000
For the account of
Commercial Loan Operations
Account No.: Dept IC5 9420
Reference: PCA International, Inc.
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
76
Exhibit A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Loan Agreement, dated as of August 25,
1998 (as amended, supplemented or otherwise modified from time to time, the
"Bridge Loan Agreement"), by and among PCA International, Inc., a North Carolina
corporation (the "Borrower"), the Guarantors named on the signature pages
thereto as guarantors (each a "Guarantor" and, collectively, the "Guarantors")
and NationsBanc Xxxxxxxxxx Securities LLC, as Arranger (the "Arranger"),
NationsBridge, L.L.C., as Administrative Agent (in such capacity, the
"Administrative Agent") and the lenders named on the signature pages thereto
(the "Lenders"). Unless otherwise defined herein, terms defined in the Bridge
Loan Agreement and used herein shall have the meanings given to them in the
Bridge Loan Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and the
Assignee identified on Schedule I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the percentage interest described in Schedule
1 hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Bridge Loan Agreement (the "Assigned Facilities"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Bridge Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Bridge Loan Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim: (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Bridge Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Bridge Notes
held by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Bridge
Notes for a new Bridge Note or Bridge Notes payable to the Assignee and (ii) if
the Assignor has retained any interest in the Assigned Facility, requests that
the Administrative Agent exchange the attached Bridge Notes for a new Bridge
Note or Bridge Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which are effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Bridge Loan Agreement, and all schedules and exhibits
thereto together with copies of the financial information delivered pursuant to
subsection 4.4 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (c) agrees that it will, independently and without
reliance upon the Assignor, the Administrative Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its
77
own credit decisions in taking or not taking action under the Bridge Loan
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (d) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Bridge Loan Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by' the terms thereof,
together with such powers as are incidental thereto; (e) agrees that it will be
bound by the provisions of the Bridge Loan Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Bridge
Loan Agreement are required to be performed by it as a Lender; and (f) agrees
that it shall have no recourse against the Assignor with respect to any matters
relating to the Bridge Loan Agreement, the other Loan Documents or any others
instrument or documents furnished pursuant hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its rights and
obligations under the Fee Letter with respect to the Assigned Interest.
5. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule I hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to Section 6.7 of the Bridge Loan Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee shall be a party
to the Bridge Loan Agreement and the Fee Letter and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Bridge Loan Agreement and the Fee Letter.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
2
78
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
3
79
Schedule 1
to Assignment and Acceptance
Name of Assignor: _______________________________
Name of Assignee: _______________________________
Effective Date of Assignment: ___________________
Principal Commitment
Credit Facility Assigned Amount Assigned Commitment Percentage Assigned(1)
------------------------ --------------- ---------------------------------
$---------------- ----- . ---------%
------------
(1) Calculate the Commitment Percentage that is assigned to at least 9
decimal places and show as a percentage of the aggregate commitments of
all Lenders.
80
[Name of Assignee] [Name of Assignor]
By: _________________________________ By:_______________________________
Title: Title:
Accepted:
NATIONSBRIDGE, L.L.C.
as Administrative Agent
By: _____________________________________
Title:
81
Exhibit B
THE SECURITY EVIDENCED OR CONSTITUTED HEREBY HAS BEEN ACQUIRED FOR INVESTMENT
AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
SECURITY MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT (OR AN EXEMPTION THEREFROM) HAVE BEEN
COMPLIED WITH.
No. __ New York, New York
$______________ ______________, 1998
SENIOR SUBORDINATED INCREASING RATE BRIDGE NOTE
FOR VALUE RECEIVED, the undersigned, PCA International, Inc., a North
Carolina corporation (the "Company"), promises to pay to the order of
_______________________________, or its registered assigns (the "Holder"), the
principal sum of the aggregate of (i) __________________ Dollars ($_______) and
(ii) the aggregate amount by which the principal amount of this Bridge Note is
increased pursuant to Section 2.3(e) of the Bridge Loan Agreement referred to
below, and to pay interest from the date hereof on the unpaid principal amount
hereof from time to time outstanding, at the rates per annum and on the dates
specified in that certain Bridge Loan Agreement, dated as of August 25, 1998 (as
amended, restated and/or otherwise modified from time to time, the "Bridge Loan
Agreement"), by and among the Company, the Guarantors named on the signature
pages thereto as guarantors (each a "Guarantor" and, collectively, the
"Guarantors"), NationsBanc Xxxxxxxxxx Securities LLC, as Arranger (the
"Arranger"), NationsBridge, L.L.C., as Administrative Agent (in such capacity,
the "Administrative Agent") and the lenders named on the signature pages thereto
(the "Lenders"). Terms used herein and not otherwise defined have the meanings
assigned to them in the Bridge Loan Agreement. In the event the principal amount
of this Bridge Note is increased in accordance with Section 2.3(e) of the Bridge
Loan Agreement, the Holder may exchange this Bridge Note for a Bridge Note
definitively stating the aggregate principal amount hereof pursuant to Section
6.2 of the Bridge Loan Agreement.
The unpaid principal balance of this Bridge Note, together with all
accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date unless the Conversion Date occurs, in which case the unpaid
principal balance hereof, together with all accrued and unpaid interest thereon,
shall become due and payable on the date that is eight years after the Closing
Date.
The Company promises to pay interest on demand, to the extent permitted
by law, on any overdue principal and interest from their due dates at the rate
per annum as specified in Section 2.3 of the Bridge Loan Agreement.
All payments of the principal of and premium and interest on this
Bridge Note shall be made in money of the United States of America that at the
time of payment is legal tender for the payment of public and private debts, by
transfer of immediately available funds into a bank account designated by the
Holder in writing to the Company. Interest on this Bridge Note shall accrue at
the rate and in the manner provided in Section 2.3 of the Bridge Loan Agreement.
The Company agrees to pay, upon demand, all reasonable out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of legal counsel to the Holder) associated with the waiver, enforcement or
modification of the Bridge Loan Agreement or this Bridge Note.
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This Bridge Note is entitled to the benefits of a joint and several
unconditional and irrevocable guarantee (the "Note Guarantee") of, inter alia,
the due and punctual payment of the principal of, premium (if any) and interest
on this Bridge Note as set forth the Bridge Loan Agreement. Each of the
Guarantors has acknowledged its liability under the Note Guarantee by signing
this Bridge Note.
The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the Holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This Bridge Note is one of the Bridge Notes referred to in the Bridge
Loan Agreement, which Agreement, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment in full of the principal hereof prior to
maturity and for the amendment or waiver of certain provisions of the Bridge
Loan Agreement, all upon the terms and conditions therein specified. In the
event of any conflict between the provisions of this Bridge Note and the Bridge
Loan Agreement, the provisions of the Bridge Loan Agreement shall govern.
THIS BRIDGE NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Company has caused this Bridge Note to be
signed in its corporate name by its duly authorized officer and to be dated as
of the day and year first above written.
PCA INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
Acknowledgment of Note Guarantee:
PCA PHOTO CORPORATION OF
CANADA, INC., a North Carolina corporation
PCA SPECIALTY RETAIL PHOTO
CORPORATION, INC.,
a North Carolina corporation
PHOTO CORPORATION OF AMERICA,
a North Carolina corporation
PCA NATIONAL, INC.,
a North Carolina corporation
AMERICAN STUDIOS, INC.
a North Carolina corporation
By:
Name: ____________________________________
Title: ____________________________________
President of each of the above-named
Guarantors
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[Back of Bridge Note]
OPTION OF HOLDER TO ELECT PURCHASE UPON CHANGE OF CONTROL
If you want to elect to have this Bridge Note purchased by the Company
pursuant to Section 4.29 of the Bridge Loan Agreement check the box below.
[ ] Please purchase the entire amount of this Bridge Note
If you want to elect to have only part of this Bridge Note purchased by
the Company pursuant to Section 4.29 of the Bridge Loan Agreement, state the
amount you elect to have purchased: $_____________.
Date: ________________________
Your Signature:
------------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No. ____________________
Signature Guarantee:
----------------------------
