Execution Copy
================================================================================
TERM LOAN CREDIT AGREEMENT
Dated as of May 25, 2007
Among
AAH HOLDINGS CORPORATION,
AMSCAN HOLDINGS, INC,
THE SUBSIDIARIES OF AMSCAN HOLDINGS, INC.
FROM TIME TO TIME PARTY HERETO,
THE FINANCIAL INSTITUTIONS PARTY HERETO
as the Lenders,
and
CREDIT SUISSE,
as Administrative Agent and Collateral Agent,
----------
CREDIT SUISSE SECURITIES (USA) LLC,
and
BANC OF AMERICA SECURITIES LLC,
as Joint Bookrunners and Joint Lead Arrangers,
BANC OF AMERICA SECURITIES LLC,
as Syndication Agent
and
XXXXXX COMMERCIAL PAPER INC.
as Documentation Agent
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms............................................. 5
Section 1.02. Classification of Loans and Borrowings.................... 33
Section 1.03. Terms Generally........................................... 33
Section 1.04. Effectuation of Transactions.............................. 34
Section 1.05. Accounting Terms; GAAP.................................... 34
Section 1.06. Timing of Payment of Performance.......................... 34
ARTICLE 2
THE CREDITS
Section 2.01. Commitments............................................... 34
Section 2.02. Loans and Borrowings...................................... 34
Section 2.03. Request for Borrowing on the Closing Date................. 35
Section 2.04. Funding of the Borrowing on the Closing Date.............. 36
Section 2.05. Type; Interest Elections.................................. 36
Section 2.06. Termination of Commitments................................ 38
Section 2.07. Repayment of Loans; Evidence of Debt...................... 38
Section 2.08. Optional Prepayment of Loans.............................. 39
Section 2.09. Mandatory Prepayment of Term Loans........................ 40
Section 2.10. Fees...................................................... 41
Section 2.11. Interest.................................................. 42
Section 2.12. Alternate Rate of Interest................................ 42
Section 2.13. Increased Costs........................................... 43
Section 2.14. Break Funding Payments.................................... 44
Section 2.15. Taxes..................................................... 44
Section 2.16. Payments Generally; Allocation of Proceeds; Sharing of
Set-offs............................................... 46
Section 2.17. Mitigation Obligations; Replacement of Lenders............ 48
Section 2.18. Illegality................................................ 48
Section 2.19. Incremental Term Loan Commitments......................... 49
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01. Organization; Powers...................................... 51
Section 3.02. Authorization; Enforceability............................. 51
Section 3.03. Governmental Approvals; No Conflicts...................... 51
Section 3.04. Financial Condition; No Material Adverse Change........... 51
Section 3.05. Properties................................................ 52
Section 3.06. Litigation and Environmental Matters...................... 53
Section 3.07. Compliance with Laws and Agreements; Licenses and
Permits................................................ 53
Section 3.08. Investment Company Status................................. 53
Section 3.09. Taxes..................................................... 53
Section 3.10. ERISA..................................................... 53
Section 3.11. Disclosure................................................ 54
Section 3.12. Material Contracts........................................ 54
Section 3.13. Solvency.................................................. 54
Section 3.14. Insurance................................................. 55
Section 3.15. Capitalization and Subsidiaries........................... 55
Section 3.16. Security Interest in Collateral........................... 55
Section 3.17. Labor Disputes............................................ 55
Section 3.18. Federal Reserve Regulations............................... 56
Section 3.19. Senior Debt............................................... 56
Section 3.20. Sanctioned Persons........................................ 56
ARTICLE 4
CONDITIONS
Section 4.01. Closing Date.............................................. 56
ARTICLE 5
AFFIRMATIVE COVENANTS
Section 5.01. Financial Statements and Other Reports.................... 59
Section 5.02. Existence................................................. 63
Section 5.03. Payment of Taxes and Claims............................... 63
Section 5.04. Maintenance of Properties................................. 63
Section 5.05. Insurance................................................. 64
Section 5.06. Inspections............................................... 64
Section 5.07. Lenders Meetings.......................................... 64
Section 5.08. Compliance with Laws...................................... 65
Section 5.09. Environmental............................................. 65
Section 5.10. Maintenance of Ratings.................................... 66
Section 5.11. Use of Proceeds........................................... 66
Section 5.12. Additional Collateral; Further Assurances................. 66
Section 5.13. Post-closing Items........................................ 67
ARTICLE 6
NEGATIVE COVENANTS
Section 6.01. Indebtedness.............................................. 68
Section 6.02. Liens..................................................... 71
Section 6.03. Equitable Lien............................................ 74
Section 6.04. No Further Negative Pledges............................... 74
ii
Section 6.05. Restricted Junior Payments................................ 75
Section 6.06. Restrictions on Subsidiary Distributions.................. 75
Section 6.07. Investments............................................... 76
Section 6.08. [Reserved]................................................ 78
Section 6.09. Fundamental Changes; Disposition of Assets; Acquisitions.. 78
Section 6.10. Disposal of Subsidiary Interests.......................... 81
Section 6.11. Sales and Lease-backs..................................... 81
Section 6.12. Transactions with Shareholders and Affiliates............. 81
Section 6.13. Conduct of Business....................................... 82
Section 6.14. Amendments or Waivers of Certain Related Agreements....... 82
Section 6.15. Amendments of or Waivers with Respect to Certain
Indebtedness........................................... 82
Section 6.16. Fiscal Year............................................... 82
Section 6.17. Permitted Activities of Holdings.......................... 82
ARTICLE 7
EVENTS OF DEFAULT
Section 7.01. Events of Default......................................... 83
ARTICLE 8
THE AGENTS
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices................................................... 88
Section 9.02. Waivers; Amendments....................................... 89
Section 9.03. Expenses; Indemnity; Damage Waiver........................ 92
Section 9.04. Successors and Assigns.................................... 93
Section 9.05. Survival.................................................. 98
Section 9.06. Counterparts; Integration; Effectiveness.................. 98
Section 9.07. Severability.............................................. 98
Section 9.08. Right of Setoff........................................... 98
Section 9.09. Governing Law; Jurisdiction; Consent to Service of
Process................................................ 99
Section 9.10. WAIVER OF JURY TRIAL...................................... 99
Section 9.11. Headings.................................................. 100
Section 9.12. Confidentiality........................................... 100
Section 9.13. Several Obligations; Violation of Law..................... 100
Section 9.14. USA PATRIOT Act........................................... 100
Section 9.15. Disclosure................................................ 101
Section 9.16. Appointment for Perfection................................ 101
Section 9.17. Interest Rate Limitation.................................. 101
Section 9.18. INTERCREDITOR AGREEMENT................................... 101
Section 9.19. Designation Of Subsidiaries............................... 102
iii
ARTICLE 10
LOAN GUARANTY
Section 10.01. Guaranty.................................................. 102
Section 10.02. Guaranty of Payment....................................... 102
Section 10.03. No Discharge or Diminishment of Loan Guaranty............. 102
Section 10.04. Defenses Waived........................................... 103
Section 10.05. Rights of Subrogation..................................... 104
Section 10.06. Reinstatement; Stay of Acceleration....................... 104
Section 10.07. Information............................................... 104
Section 10.08. Taxes..................................................... 104
Section 10.09. Maximum Liability......................................... 104
Section 10.10. Contribution.............................................. 105
Section 10.11. Liability Cumulative...................................... 105
Section 10.12. Release of Loan Guarantors................................ 106
SCHEDULES:
Schedule 1.01(a) -- Mortgaged Properties
Schedule 2.01 -- Commitment Schedule
Schedule 3.14 -- Insurance
Schedule 3.15 -- Capitalization and Subsidiaries
Schedule 4.01(b) -- Local Counsel
Schedule 6.01(i) -- Existing Indebtedness
Schedule 6.01(t) -- Corporate Leases Assigned/Sold/Transferred
Schedule 6.02 -- Existing Liens
Schedule 6.07 -- Existing Investments
Schedule 6.12 -- Transactions with Affiliates
Schedule 9.01 -- Borrower's Website Address for Electronic Delivery
EXHIBITS:
Exhibit A -- Form of Administrative Questionnaire
Exhibit B -- Form of Assignment and Assumption
Exhibit C -- Form of Compliance Certificate
Exhibit D -- Joinder Agreement
Exhibit E -- Form of Borrowing Request
Exhibit F -- Form of Promissory Note
Exhibit G -- Form of Interest Election Request
iv
Execution Copy
TERM LOAN CREDIT AGREEMENT dated as of May 25, 2007 (this "AGREEMENT"),
among AMSCAN HOLDINGS, INC., a Delaware corporation (the "BORROWER"), AAH
HOLDINGS CORPORATION, a Delaware corporation ("HOLDINGS"), each subsidiary of
the Borrower from time to time party hereto, the Lenders (as defined in Article
1), and CREDIT SUISSE, as administrative agent and collateral agent for the
Lenders hereunder (in such capacities, the "ADMINISTRATIVE AGENT").
The Borrower has requested the Lenders to extend credit in the form of Term
Loans on the Closing Date, in an aggregate principal amount not in excess of
$375,000,000. The proceeds of the Term Loans are to be used solely to finance
the Existing Debt Refinancing and the Transaction Costs.
The Lenders are willing to extend such credit to the Borrower and its
Subsidiaries on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
"ABL SECURITY DOCUMENTS" means any and all security agreements, pledge
agreements, mortgages and other agreements and documents pursuant to which any
Liens are granted by any Loan Party to secure any Indebtedness or other
obligations in respect of the Senior Secured Asset-Based Revolving Credit
Facility.
"ABR", when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"ADJUSTED LIBO RATE" means, for any Interest Period, the rate obtained by
dividing (a) the LIBO Rate for such Interest Period by (b) a percentage equal to
1 minus the stated maximum rate (stated as a decimal) of all reserves, if any,
required to be maintained against "Eurocurrency liabilities" as specified in
Regulation D (including any marginal, emergency, special or supplemental
reserves).
"ADMINISTRATIVE AGENT" has the meaning assigned to such term in the
preamble to this Agreement.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in the
form of Exhibit A.
"ADVERSE PROCEEDING" means any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration (whether or not purportedly on behalf of the Borrower or any of its
Subsidiaries) at law or in equity, or before or by any
Term Loan Credit Agreement
Governmental Authority, domestic or foreign (including any Environmental
Claims), whether pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its Subsidiaries.
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "CONTROL", (including, with
correlative meanings, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH"), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 10% or more of the Capital Stock having the
ordinary voting power for the election of directors of such Person or (ii) to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
but excluding any Person that would be an "Affiliate" solely because it is an
unrelated portfolio company of either Sponsor.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.
"APPLICABLE MARGIN" means, for any day (a) with respect to any LIBO Rate
Loan (other than Other Term Loans) 2.25%, (b) with respect to any ABR Loan
(other than Other Term Loans) 1.25%, and (c) with respect to any Other Term Loan
as specified in the appropriate Incremental Assumption Agreement.
"APPLICABLE PERCENTAGE" means, with respect to any Lender, a percentage
equal to a fraction the numerator of which is the aggregate outstanding
principal amount of the Loans (or, if no Loans are then outstanding, the
Commitment) of such Lender and the denominator of which is the aggregate
outstanding principal amount of the Loans (or, if no Loans are then outstanding,
the Commitments) of all Lenders.
"APPROVED FUND" means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course and that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.
"ARRANGERS" means Credit Suisse Securities (USA) LLC and Banc of America
Securities LLC.
"ASSET SALE" means the sale by Holdings or any of its Subsidiaries to any
Person other than the Borrower or any of its wholly-owned Subsidiaries of (i)
any of the Capital Stock of any of Holdings' Subsidiaries (including by issuance
of such Capital Stock), (ii) substantially all of the assets of any division or
line of business of the Borrower or any of its Subsidiaries, or (iii) any other
assets (whether tangible or intangible) of the Borrower or any of its
Subsidiaries (other
6
than (a) inventory sold in the ordinary course of business, (b) sales of Cash
Equivalents for the fair market value thereof, and (c) any such other assets to
the extent that (x) the aggregate value of such assets sold in any single
transaction or related series of transactions is equal to $2,500,000 or less and
(y) the aggregate value of such assets sold is equal to $10,000,000 or less in
any Fiscal Year).
"ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit B or any other form approved by the Administrative Agent and the
Borrower.
"BANKING SERVICES OBLIGATIONS" of the Loan Parties means any and all
obligations of the Loan Parties, whether absolute or contingent and however and
whenever created, arising, evidenced or acquired (including all renewals,
extensions and modifications thereof and substitutions therefor), in connection
with Banking Services.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as now and hereafter in effect, or any successor statute.
"BERKSHIRE" means Berkshire Partners LLC and shall include any fund
affiliated with Berkshire Partners LLC.
"BOARD" means the Board of Governors of the Federal Reserve System of the
United States of America.
"BORROWER" has the meaning assigned to such term in the preamble to this
Agreement.
"BORROWING" means any Loans of the same Type made, converted or continued
on the same date and, in the case of LIBO Rate Loans, as to which a single
Interest Period is in effect.
"BORROWING BASE" has the meaning set forth as of the Closing Date in the
Senior Secured Asset-Based Revolving Credit Agreement.
"BORROWING REQUEST" means a request by the Borrower for a Borrowing in
accordance with Section 2.03 and substantially in the form attached hereto as
Exhibit E, or such other form as shall be approved by the Administrative Agent.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a LIBO Rate Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL LEASE" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
7
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.
"CASH" means money, currency or a credit balance in any demand or Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after such date
and having, at the time of the acquisition thereof, a rating of at least A-2
from S&P or at least P-2 from Xxxxx'x; (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Xxxxx'x; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that has Tier 1 capital (as defined in
the regulations of its primary federal banking regulator) of not less than
$100,000,000 (each Lender and each commercial bank referred to herein as a "CASH
EQUIVALENT BANK"); (v) shares of any money market mutual fund that (a) has
substantially all of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $250,000,000, and (c) has the highest rating obtainable from either
S&P or Xxxxx'x; and (vi) with respect to Foreign Subsidiaries, investments of
the types described in clause (iv) above issued by a Cash Equivalent Bank or any
commercial bank of recognized international standing chartered in the country
where such Foreign Subsidiary is domiciled having unimpaired capital and surplus
of at least $250,000,000.
"CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.13(b), by any lending office of such Lender or by such Lender's
holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after
the date of this Agreement (other than any such request, guideline or directive
to comply with any law, rule or regulation that was in effect on the date of
this Agreement).
"CHANGE OF CONTROL" means, at any time, (i) if Sponsor shall cease to
beneficially own and control 51% or more of the combined voting power of all of
the Capital Stock of Holdings, (ii) any Person or "group" (within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor shall have
after the Closing Date obtained the power (whether or not exercised) to elect a
majority of the members of the board of directors (or similar governing body) of
Holdings, (iii) the majority of the seats (other than vacant seats) on the board
of directors (or similar governing body) of Holdings cease to be occupied by
Persons who either (a) were
8
members of the board of directors of Holdings on the Closing Date or (b) were
nominated for election by a majority of the board of directors of Holdings, who
were either (I) directors on the Closing Date or (II) whose election or
nomination for election was previously approved by a majority of such directors
or by Sponsor, (iv) Holdings shall cease to own 100% of the Capital Stock of the
Borrower or (v) any "change of control" or similar event under the Senior
Subordinated Note Indenture shall occur.
"CHARGES" has the meaning assigned to such term in Section 9.17.
"CHESTER DISTRIBUTION CENTER" means the distribution center located at 00
Xxxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxx.
"CHESTER DISTRIBUTION CENTER COLLATERAL" means the land and improvements
comprising the Chester Distribution Center.
"CHESTER DISTRIBUTION CENTER PERMANENT FINANCING" means Indebtedness of the
Borrower pursuant to that certain mortgage dated December 20, 2001 with the New
York Job Development Authority in an individual principal amount, as of the
Closing Date, of $7,916,919, the proceeds of which have been used by the
Borrower to finance a portion of the construction and development of the Xxxxxxx
Distribution Center.
"CLOSING DATE" means May 25, 2007, which is the date on which the
conditions specified in Article 4 are satisfied (or waived in accordance with
Section 9.02).
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" means any and all property of a Loan Party subject to a Lien
under the Collateral Documents and any and all other property of any Loan Party,
now existing or hereafter acquired, that is or becomes subject to a Lien
pursuant to the Collateral Documents in favor of the Collateral Agent, on behalf
of itself and the Lenders, to secure the Secured Obligations.
"COLLATERAL AGENT" has the meaning assigned to such term in the preamble to
this Agreement.
"COLLATERAL DOCUMENTS" means, collectively, the Pledge and Security
Agreement, the Mortgages and any other documents granting a Lien upon the
Collateral as security for payment of the Secured Obligations.
"COMMITMENT" means (a) with respect to each Lender, the commitment of such
Lender to make Loans as set forth in the Commitment Schedule or in the most
recent Assignment and Assumption executed by such Lender or in an Incremental
Assumption Agreement and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Loans (including Incremental Term Loans, if any), which
aggregate commitment shall be $375,000,000 on the Closing Date.
"COMMITMENT SCHEDULE" means Schedule 2.01 attached hereto.
"COMPLIANCE CERTIFICATE" means a Compliance Certificate substantially in
the form of Exhibit C.
9
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount determined
for Holdings and its Subsidiaries on a consolidated basis equal to the total of
(I) Consolidated Net Income for such period plus (II) the sum, without
duplication, of (to the extent deducted in calculating Consolidated Net Income)
the amounts of:
(a) Consolidated Interest Expense;
(b) taxes paid and provisions for taxes based on income or profits;
(c) total depreciation expense;
(d) total amortization expense;
(e) other non-cash items reducing Consolidated Net Income including without
limitation provisions for minority interests, and items resulting from marking
hedging obligations to market, purchase accounting, deferred rent and from
compensation charges due to stock awards or stock options (excluding any such
non-cash item to the extent that it represents (x) an accrual or reserve for
potential cash items in any future period, (y) amortization of a prepaid Cash
item that was paid in a prior period or (z) a reserve against or write down or
write-off of inventory in accordance with GAAP);
(f) Transaction Costs;
(g) any non-recurring or unusual Cash costs incurred in the relevant period
which are properly classified as such on the income statement of Holdings in
accordance with GAAP; provided that the aggregate amount of such non-recurring
or unusual Cash costs included in this clause (g) incurred during any Fiscal
Year shall not exceed $5,000,000;
(h) Management Fees accrued or paid in such period (excluding any
Management Fees paid in such period to the extent they represent an accrual in a
prior period); and
(i) any reasonable expenses or charges related to any issuance of Capital
Stock, Investments permitted under Section 6.07, Permitted Acquisitions, asset
sales permitted pursuant to Section 6.09(d), (p), (q) or (r) or Indebtedness
permitted to be incurred under Section 6.01 (or related to any similar event
occurring prior to the Closing Date to the extent such expenses or charges were
incurred in such period), in each case whether or not consummated; and
minus (III) non-cash items increasing Consolidated Net Income for such period.
Notwithstanding anything to the contrary, it is agreed, that for the
purpose of calculating the Interest Coverage Ratio, Leverage Ratio, Senior
Leverage Ratio or Senior Secured Leverage Ratio, for any period that includes
the Fiscal Quarter ended on September 30, 2006 or the Fiscal Quarter ended
December 31, 2006, Consolidated Adjusted EBITDA for the Fiscal Quarter ended on
September 30, 2006, shall be deemed to be $18,940,000 and Consolidated Adjusted
EBITDA for the Fiscal Quarter ended on December 31, 2006 shall be deemed to be
$60,785,000.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the aggregate of
all expenditures of Holdings and its Subsidiaries during such period determined
on a consolidated
10
basis that, in accordance with GAAP, are or should be included in "purchase of
property and equipment" or similar items reflected in the consolidated statement
of cash flows of Holdings and its Subsidiaries. Notwithstanding the foregoing,
Consolidated Capital Expenditures shall not include (i) any amounts reinvested
from Net Proceeds (determined without giving effect to the exclusions in the
definition of Asset Sale) or Net Insurance/Condemnation Proceeds, (ii)
expenditures made with tenant allowances received by the Borrower or any of its
Subsidiaries from landlords in the ordinary course of business and subsequently
capitalized, (iii) any amounts spent in connection with Investments permitted
pursuant to Section 6.07 and Permitted Acquisitions permitted pursuant to
Section 6.09(f), (iv) any additions to property and equipment and other capital
expenditures made with the proceeds of any Sponsor Equity Contribution (v)
expenditures that are accounted for as capital expenditures by the Borrower or
any Subsidiary and that actually are paid for by a Person other than the
Borrower or any Subsidiary to the extent neither the Borrower nor any Subsidiary
has provided or is required to provide or incur, directly or indirectly, any
consideration or obligation to such Person or any other Person (whether before,
during or after such period), (vi) any expenditures which are contractually
required to be, and are, advanced or reimbursed to the Loan Parties in cash by a
third party (including landlords) during such period of calculation, (vii) the
book value of any asset owned by the Borrower or any Subsidiary prior to or
during such period to the extent that such book value is included as a capital
expenditure during such period as a result of such Person reusing or beginning
to reuse such asset during such period without a corresponding expenditure
actually having been made in such period, provided that (A) any expenditure
necessary in order to permit such asset to be reused shall be included as a
capital expenditure during the period in which such expenditure actually is made
and (B) such book value shall have been included in capital expenditures when
such asset was originally acquired, or (viii) that portion of interest on
Indebtedness incurred for capital expenditures which is paid in cash and
capitalized in accordance with GAAP.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period, Consolidated
Interest Expense for such period, excluding any amount not payable currently in
cash.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Holdings and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Holdings and
its Subsidiaries, including (i) all commissions, discounts and other fees and
charges owed with respect to letters of credit and (ii) any commitment fees on
the unused portion of the revolving commitments as set forth in the Senior
Secured Asset-Based Revolving Credit Agreement. For avoidance of doubt,
Consolidated Interest Expense shall be net of payments made or received under
interest rate Hedge Agreements.
Notwithstanding anything to the contrary contained herein, for purposes of
determining Consolidated Interest Expense for any period ending prior to the
first anniversary of the Closing Date, Consolidated Interest Expense shall be an
amount equal to actual Consolidated Interest Expense from the Closing Date
through the date of determination multiplied by a fraction the numerator of
which is 365 and the denominator of which is the number of days from the Closing
Date through the date of determination.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or loss)
of Holdings and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period
11
determined in conformity with GAAP, provided that there shall be excluded,
without duplication, (a) the income (or loss) of any Person (other than a
Subsidiary of the Borrower and other than Amscan de Mexico, S.A. de C.V. for so
long as it is treated as a consolidated subsidiary of the Borrower in accordance
with GAAP) in which any other Person (other than Holdings or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Holdings or any of its
Subsidiaries by such Person during such period, (b) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Holdings or is
merged into or consolidated with Holdings or any of its Subsidiaries or that
Person's assets are acquired by Holdings or any of its Subsidiaries, (c) the
income of any Subsidiary of Holdings to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (d) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Plan, and (e) any
net extraordinary gains or net extraordinary losses.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Holdings and its
Subsidiaries determined on a consolidated basis in accordance with GAAP;
provided that (i) to the extent the aggregate amount of rental payments in
respect of all contingent obligations permitted by Section 6.01(t)(ii) exceeds
$30,000,000, the amount of such excess shall be included in "Consolidated Total
Debt" for purposes of the Leverage Ratio and the Senior Leverage Ratio and (ii)
up to $50 million of Indebtedness outstanding permitted under Section 6.01(w)
shall be excluded for purposes of determining the Leverage Ratio for purposes of
clause (ii) of the proviso to Section 6.05(e)
"CONTRACTUAL OBLIGATION" means, as applied to any Person, any provision of
any Security issued by that Person or of any material indenture, mortgage, deed
of trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.
"DECLINED PROCEEDS" has the meaning assigned to such term in Section
2.09(e).
"DEFAULT" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
"DERIVATIVE TRANSACTION" means (a) an interest-rate transaction, including
an interest-rate swap, basis swap, forward rate agreement, interest rate option
(including a cap, collar and floor), and any other instrument linked to interest
rates that gives rise to similar credit risks (including when-issued securities
and forward deposits accepted), (b) an exchange-rate transaction, including a
cross-currency interest-rate swap, a forward foreign-exchange contract, a
currency option, and any other instrument linked to exchange rates that gives
rise to similar credit risks, (c) an equity derivative transaction, including an
equity-linked swap, an equity-linked option, a forward equity-linked contract,
and any other instrument linked to equities that
12
gives rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks; provided that no phantom
stock or similar plan providing for payments only on account of services
provided by current or former directors, officers, employees or consultants of
Holdings or its subsidiaries shall be a Derivative Transaction.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, (i) matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable (other than for Qualified Capital Stock), pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof (other than for Qualified Capital Stock), in whole or in part, on
or prior to the first anniversary of the Maturity Date, (ii) is convertible into
or exchangeable (unless at the sole option of the issuer thereof) for (a) debt
securities or (b) any Equity Interests referred to in (i) above, in each case at
any time on or prior to the first anniversary of the Maturity Date, or (iii)
contains any repurchase obligation which may come into effect prior to payment
in full of all Obligations; provided, however, that any Capital Stock that would
not constitute Disqualified Capital Stock but for provisions thereof giving
holders thereof (or the holders of any security into or for which such Capital
Stock is convertible, exchangeable or exercisable) the right to require the
issuer thereof to redeem such Capital Stock upon the occurrence of a change in
control or an asset sale occurring prior to the first anniversary of the
Maturity Date shall not constitute Disqualified Capital Stock if such Capital
Stock provides that the issuer thereof will not redeem any such Capital Stock
pursuant to such provisions prior to the repayment in full of the Obligations.
"DOLLARS" or "$" refers to lawful money of the United States of America.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries incorporated or organized
under the laws of the United States of America, any State thereof or the
District of Columbia.
"ELIGIBLE ASSIGNEE" means (i) a Lender, (ii) a commercial bank, insurance
company, company or financial institution engaged in the business of
making,investing in or purchasing commercial loans or a commercial finance
company, which Person, together with its Affiliates, has a combined capital and
surplus in excess of $1,000,000,000, (iii) any Affiliate of a Lender under
common control with such Lender or (iv) an Approved Fund of a Lender, provided
that in any event, "Eligible Assignee" shall not include (w) any natural person,
(x) Holdings or the Borrower or any Affiliate thereof, or (y) the Sponsor or any
of their respective Affiliates.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was sponsored, maintained or contributed to
by, or required to be contributed by, the Borrower, any of its Subsidiaries or
any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice of violation,
claim, action, suit, proceeding, demand, abatement order or other order or
directive (conditional or otherwise), by any Governmental Authority or any other
Person, arising (i) pursuant to or in connection with any actual or alleged
violation of any Environmental Law; (ii) in connection
13
with any Hazardous Material or any actual or alleged Hazardous Materials
Activity; or (iii) in connection with any actual or alleged damage, injury,
threat or harm to health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future foreign or
domestic, federal or state (or any subdivision of either of them), statutes,
ordinances, orders, rules, regulations, judgments, Governmental Authorizations,
or any other requirements of Governmental Authorities and the common law
relating to (i) environmental matters, including those relating to any Hazardous
Materials Activity; (ii) the generation, use, storage, transportation or
disposal of Hazardous Materials; or (iii) occupational safety and health,
industrial hygiene, land use or the protection of human, plant or animal health
or welfare, in any manner applicable to the Borrower or any of its Subsidiaries
or any Facility.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"EQUITY ISSUANCE" shall mean any issuance or sale by Holdings or the
Borrower of any Capital Stock of Holdings or the Borrower, as applicable, or the
receipt by Holdings or the Borrower of any capital contribution, as applicable,
except in each case for (a) in the case of the Borrower, any issuance or sale
to, or any receipt of any capital contribution from, Holdings, (b) any issuance
of directors' qualifying shares and (c) sales or issuances of common stock of
Holdings, or the receipt by Holdings of any capital contribution from any direct
or indirect parent of Holdings in respect of any sales or issuances of common
stock of any direct or indirect parent of Holdings, to (i) management or
employees of Holdings, the Borrower or any Subsidiary under any employee stock
option or stock purchase plan or employee benefit plan in existence from time to
time in the ordinary course of business, (ii) the Sponsor, its Affiliates, or
the other investors in Holdings or in any direct or indirect parent thereof on
the Closing Date or (iii) any other Person to the extent the proceeds thereof
are applied within 30 days of receipt thereof to make a Permitted Acquisition, a
capital expenditure described in clause (iv) of the definition of Consolidated
Capital Expenditure, or an Investment permitted by Section 6.07(e), (f), (g),
(j) or (k).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
and (ii) any trade or business (whether or not incorporated) which is a member
of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member.
14
"ERISA EVENT" means (i) a "reportable event" within the meaning of Section
4043 of ERISA and the regulations issued thereunder with respect to any Pension
Plan (excluding those for which the 30-day notice period has been waived); (ii)
the failure to meet the minimum funding standard of Section 412 of the Code,
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability to the Borrower, any of its
Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or
4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which could reasonably
be expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Borrower, any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in
a complete or partial withdrawal (within the meaning of Sections 4203 and 4205
of ERISA) from any Multiemployer Plan if there is any potential liability
therefore, or the receipt by the Borrower, any of its Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or
that it intends to terminate or has terminated under Section 4041A or 4042 of
ERISA; (viii) the occurrence of an act or omission which could reasonably be
expected to give rise to the imposition on the Borrower, any of its Subsidiaries
or any of their respective ERISA Affiliates of fines, penalties, taxes or
related charges under Chapter 43 of the Internal Revenue Code or under Section
409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; or (ix) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with
respect to any Pension Plan.
"EVENT OF DEFAULT" has the meaning assigned to such term in Article 7.
"EXCESS CASH FLOW" means, for any period, an amount (if positive) equal to:
(i) the sum, without duplication, of the amounts for such period of
Consolidated Adjusted EBITDA, minus
(ii) the sum, without duplication, of the amounts for such period of:
(a) scheduled repayments of Consolidated Total Debt;
(b) Consolidated Capital Expenditures without giving effect to
the exclusions in the definition of such term herein (net of any
proceeds of (x) any related financings with respect to such
expenditures and (y) any sales of assets used to finance such
expenditures) but only to the extent that such proceeds are not
included in calculating Consolidated Net Income for the applicable
period);
(c) Consolidated Cash Interest Expense;
15
(d) expenditures during such period relating to Permitted
Acquisitions which are not paid for by borrowings or financed with
equity;
(e) Transaction Costs and any non-recurring or unusual Cash costs
to the extent they were added back to derive Consolidated Adjusted
EBITDA;
(f) taxes based on income or profits of Holdings and its
Subsidiaries payable in Cash with respect to such period; and
(g) Management Fees pursuant to clause (h) of the definition of
Consolidated Adjusted EBITDA.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"EXCLUDED TAXES" means, with respect to any Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower or any other Loan Party hereunder, (a) income or franchise taxes
imposed on (or measured by) its net income by the United States of America, or
by the jurisdiction under the laws of which such recipient is organized or in
which its principal office is located or, in the case of any Lender, in which
its applicable lending office is located, or in which such Lender is otherwise
subject to tax without regard to the transactions contemplated by this
Agreement, (b) any branch profits taxes imposed by the United States of America
or any similar tax imposed by any other jurisdiction in which the Borrower or
any other Loan Party is located and (c) in the case of a Foreign Lender (other
than an assignee pursuant to a request by the Borrower under Section 2.17(b)),
any withholding tax that is imposed on amounts payable to such Foreign Lender at
the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the Borrower or any
other Loan Party with respect to such withholding tax pursuant to Section
2.15(a) or is attributable to such Lender's failure to comply with Section
2.15(e).
"EXISTING CREDIT AGREEMENTS" means the First Lien Credit Agreement, dated
as of December 23, 2005, among AAH Holdings Corporation, Amscan Holdings, Inc.,
certain subsidiaries of Amscan Holdings, Inc., as guarantors, the several
lenders from time to time party thereto, Bank of America, N.A., as documentation
agent, Xxxxxxx Xxxxx Credit Partners L.P., as joint lead arranger, joint
bookrunner and syndication agent, Banc of America Securities LLC as joint lead
arranger and joint bookrunner, and General Electric Capital Corporation, as
administrative agent and collateral agent, and the Second Lien Credit Agreement,
dated as of December 23, 2005, among AAH Holdings Corporation, Amscan Holdings,
Inc., certain subsidiaries of Amscan Holdings, Inc., as guarantors, the several
lenders from time to time party thereto, Bank of America, N.A., as documentation
agent, and Xxxxxxx Sachs Credit Partners L.P., as joint lead arranger, joint
bookrunner, syndication agent, administrative agent and collateral agent and
Banc of America Securities LLC as joint lead arranger and joint bookrunner.
16
"EXISTING DEBT REFINANCING" means the payment in full of all amounts, if
any, due or owing under the Existing Credit Agreements, the termination of all
commitments thereunder and the release and discharge of all guarantees thereof
(if any) and all security therefor (if any).
"FACILITY" means any real property (including all buildings, fixtures or
other improvements located thereon) now, hereafter or, except with respect to
Articles 5 and 6, heretofore owned, leased, operated or used by the Borrower or
any of its Subsidiaries or any of their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
"FEE LETTER" means that certain Fee Letter dated as of April 18, 2007, by
and among the Borrower, the Administrative Agent, the Arrangers and Xxxxxx
Brothers Inc.
"FINANCIAL OFFICER" of any person means the chief financial officer,
treasurer, assistant treasurer, vice president of finance or controller of such
person.
"FINANCIAL OFFICER CERTIFICATION" means, with respect to the financial
statements for which such certification is required, the certification of the
chief financial officer of the Borrower that such financial statements fairly
present, in all material respects, the financial condition of the Borrower and
its Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes resulting
from audit and normal year-end adjustments.
"FINANCIAL PLAN" as defined in Section 5.01(i).
"FIRST PRIORITY" means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that such Lien is the only
Lien to which such Collateral is subject, other than any Permitted Lien.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Holdings and its Subsidiaries ending
on December 31 of each calendar year or the Saturday closest to December 31 of
each calendar year.
"FLOOD HAZARD PROPERTY" means any Real Estate Asset subject to a Mortgage
and located in an area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards.
"FOREIGN LENDER" means a Lender that is not a "United States person" within
the meaning of Section 7701(a)(30) of the Code.
"FOREIGN SUBSIDIARY" means any Subsidiary that is not a Domestic
Subsidiary.
17
"GAAP" means generally accepted accounting principles in the United States
of America in effect and applicable to that accounting period in respect of
which reference to GAAP is being made, subject to the provisions of Section
1.05.
"GOVERNMENTAL AUTHORITY" means any federal, state, municipal, national or
other government, governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state or locality of the United States, the
United States, or a foreign government.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any Governmental
Authority.
"GRANTING LENDER" has the meaning assigned to such term in Section 9.04(e).
"GUARANTEE" of or by any Person (the "GUARANTOR") means any obligation,
contingent or otherwise, of the Guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the Guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other monetary obligation or to purchase (or to advance
or supply funds for the purchase of) any security for the payment thereof, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other monetary obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness or other monetary obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or monetary obligation; provided,
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business, or customary and reasonable indemnity
obligations in effect on the Closing Date or entered into in connection with any
acquisition or disposition of assets permitted under this Agreement (other than
such obligations with respect to Indebtedness). The amount of any Guarantee
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.
"GUARANTEED OBLIGATIONS" has the meaning assigned to such term in Section
10.01.
"GUARANTOR PERCENTAGE" has the meaning assigned to such term in Section
10.10.
"HAZARDOUS MATERIALS" means any chemical, material, substance or waste, or
any constituent thereof, exposure to which is prohibited, limited or regulated
by any Environmental Law or any Governmental Authority or which may or could
pose a hazard to the health and safety or to the indoor or outdoor environment.
18
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Material,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Material, and any corrective action or response action with respect to any of
the foregoing.
"HEDGE AGREEMENT" means any agreement with respect to any Derivative
Transaction between the Borrower or any Subsidiary and any other Person.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under any Hedge Agreement, in each case designed to protect such
Person against fluctuations in currency exchange, interest rates or commodity
prices.
"HOLDINGS" has the meaning assigned to such term in the preamble to this
Agreement.
"IMMATERIAL SUBSIDIARY" means, as of any date, any Subsidiary whose total
assets, as of that date, are less than $100,000 and whose total revenues for the
most recent twelve-month period do not exceed $100,000; provided that the total
asset value and total revenues of all Subsidiaries designated as such shall not
exceed $500,000 in the aggregate.
"INCREMENTAL ASSUMPTION AGREEMENT" means an Incremental Assumption
Agreement in form and substance reasonably satisfactory to the Administrative
Agent, among the Borrower, the Administrative Agent and one or more Incremental
Term Lenders.
"INCREMENTAL TERM BORROWING" means a Borrowing comprised of Incremental
Term Loans.
"INCREMENTAL TERM FACILITY MATURITY DATE" means, with respect to any series
or tranche of Incremental Term Loans established pursuant to an Incremental
Assumption Agreement, the maturity date for as set forth in such Incremental
Assumption Agreement.
"INCREMENTAL TERM LENDER" means a Lender with an Incremental Term Loan
Commitment or an outstanding Incremental Term Loan.
"INCREMENTAL TERM LOAN COMMITMENT" means the commitment of any Lender,
established pursuant to Section 2.19, to make Incremental Term Loans to the
Borrower.
"INCREMENTAL TERM LOANS" means Term Loans made by one or more Lenders to
the Borrower pursuant to Section 2.01(b). Incremental Term Loans may be made in
the form of additional Term Loans or, to the extent permitted by Section 2.19
and provided for in the relevant Incremental Assumption Agreement, Other Term
Loans.
"INDEBTEDNESS", as applied to any Person, means, without duplication, (i)
all indebtedness for borrowed money; (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money; (iv) any obligation owed for all or any part of the deferred
19
purchase price of property or services (excluding any earn out obligation or
purchase price adjustment until such obligation becomes a liability on the
balance sheet in accordance with GAAP and any such obligations incurred under
ERISA), which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or twelve months in the case of
a bona fide trade payable or (b) evidenced by a note or similar written
instrument; (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person; (vi) the face amount of any letter of credit issued for the
account of that Person or as to which that Person is otherwise liable for
reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement
(otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another; (viii) any obligation of such Person the primary purpose
or intent of which is to provide assurance to an obligee that the obligation of
the obligor thereof will be paid or discharged, or any agreement relating
thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; (ix) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (b) to maintain the solvency or any balance sheet
item, level of income or financial condition of another if, in the case of any
agreement described under subclause (a) or (b) of this clause (ix), the primary
purpose or intent thereof is as described in clause (viii) above; and (x) all
net obligations of such Person in respect of any Derivative Transaction,
including, without limitation, any Hedging Agreement, whether or not entered
into for hedging or speculative purposes; provided in no event shall obligations
under any Hedge Agreement be deemed "Indebtedness" for any calculation of the
Leverage Ratio, the Interest Coverage Ratio, the Senior Leverage Ratio or the
Senior Secured Leverage Ratio under this Agreement.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INFORMATION" has the meaning set forth in Section 3.11(a).
"INFORMATION MEMORANDUM" means the Confidential Information Memorandum
dated May 2007, relating to the Borrower and the Transactions.
"INTERCREDITOR AGREEMENT" means the Lien Subordination and Intercreditor
Agreement dated the date hereof, among Holdings, the Borrower, the Subsidiaries
of the Borrower party from time to time thereto, the Collateral Agent and the
Revolving Facility Agent (as defined therein).
"INTEREST COVERAGE RATIO" means the ratio as of the last day of any Fiscal
Quarter of (i) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period
then ended, to (ii) Consolidated Cash Interest Expense for such four-Fiscal
Quarter period plus the product of (a) all dividends, whether paid or accrued
and whether or not in cash, on any series of preferred stock of the Borrower or
any of its Subsidiaries, other than dividends on Capital Stock payable solely in
Capital Stock of the Borrower (other than Disqualified Capital Stock) or to the
Borrower or a Subsidiary of the Borrower, times (b) a fraction, the numerator of
which is one
20
and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of the Borrower, expressed as a decimal, in
each case, determined on a consolidated basis in accordance with the GAAP.
"INTEREST ELECTION REQUEST" means a request by the Borrower in the form of
Exhibit G here or such other form reasonably acceptable to the Administrative
Agent to convert or continue a Borrowing in accordance with Section 2.05.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the last
Business Day of each March, June, September and December (commencing with the
last Business Day of September 2007) and the Maturity Date (or the Incremental
Term Facility Maturity Date in the case of Incremental Term Loans, if any) and
(b) with respect to any LIBO Rate Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
LIBO Rate Borrowing with an Interest Period of more than three months' duration,
each day that would have been an Interest Payment Date had successive Interest
Periods of three months' duration been applicable to such Borrowing.
"INTEREST PERIOD" means with respect to any LIBO Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, with the written consent of each Lender, nine or twelve months) thereafter,
as the Borrower may elect provided, that (i) if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"INVESTMENT" means (i) any direct or indirect purchase or other acquisition
by Holdings or any of its Subsidiaries of, or of a beneficial interest in, any
of the Securities of any other Person (other than the Borrower or a Subsidiary
Guarantor); (ii) any direct or indirect redemption, retirement, purchase or
other acquisition for value, by any Subsidiary of Holdings from any Person
(other than Holdings, the Borrower or any Subsidiary Guarantor), of any Capital
Stock of such Subsidiary; and (iii) any direct or indirect loan, advance (other
than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or
capital contribution by Holdings or any of its Subsidiaries to any other Person
(other than Holdings, the Borrower or any Subsidiary Guarantor), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"JOINDER AGREEMENT" has the meaning assigned to such term in Section
5.12(a).
21
"LENDERS" means the Term Lenders.
"LEVERAGE RATIO" means the ratio as of any date of determination of (i)
Consolidated Total Debt as of such date to (ii) Consolidated Adjusted EBITDA for
the four-Fiscal Quarter period ended on such date (or if such date of
determination is not the last day of a Fiscal Quarter, for the four-Fiscal
Quarter period ended as of the most recently concluded Fiscal Quarter).
"LIBO RATE" means, with respect to any Interest Period, (a) the rate per
annum determined by the Administrative Agent at approximately 11:00 a.m., London
time, on the day that is two (2) Business Days prior to the first day of such
Interest Period by reference to the British Bankers' Association Interest
Settlement Rates for deposits in Dollars (for delivery on the first day of such
Interest Period and as set forth by Telerate, or if Telerate is unavailable, any
service selected by the Administrative Agent that has been nominated by the
British Bankers' Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period and (b) if
such rate is not available at such time for any reason, an interest rate per
annum reasonably determined by the Administrative Agent in good faith to be the
average of the rates per annum at which deposits in Dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. two (2)
Business Days prior to the commencement of such Interest Period.
"LIEN" means (i) any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, and any
lease in the nature thereof) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing and (ii) in the
case of Securities, any purchase option, call or similar right of a third party
with respect to such Securities.
"LOAN DOCUMENTS" means this Agreement, any promissory notes issued pursuant
to the Agreement, the Collateral Documents and the Intercreditor Agreement. Any
reference in this Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto.
"LOAN GUARANTOR" means each Loan Party (other than the Borrower).
"LOAN GUARANTY" means Article 10 of this Agreement.
"LOAN PARTIES" means Holdings, the Borrower, each Domestic Subsidiary of
the Borrower, and any other Person who becomes a party to this Agreement as a
Loan Party pursuant to a Joinder Agreement, and their respective successors and
assigns.
"LOANS" means the Term Loans and the Incremental Term Loans, if any.
"MANAGEMENT AGREEMENT" means the management agreement by and among
Berkshire Partners LLC, Weston Presidio Service LLC and the Borrower dated April
30, 2004 and any amendments made thereto.
22
"MANAGEMENT FEES" means the fees paid by the Borrower to Berkshire Partners
LLC and Weston Presidio Service LLC under the Management Agreement in exchange
for services provided to the Borrower under the Management Agreement.
"MARGIN STOCK" shall have the meaning assigned to such term in Regulation
U.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse change in the
condition (business, financial or otherwise), assets or results of operations of
Holdings or any of its Subsidiaries, taken as a whole, or (ii) the impairment
(other than as a result of circumstances of the type described in clause (i)
above) in any material respect of the ability of the Loan Parties, taken as a
whole, to perform, or of the Administrative Agent, Collateral Agent or the
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which the
Borrower or any of its Subsidiaries is a party (other than the Loan Documents or
other agreements evidencing or relating to Indebtedness) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to
have a Material Adverse Effect.
"MATERIAL REAL ESTATE ASSET" means (i) any fee-owned Real Estate Asset
owned as of the Closing Date and (ii) any fee-owned Real Estate Asset acquired
by any Loan Party after the Closing Date having a fair market value in excess of
$2,000,000 as of the date of acquisition thereof shall be a "Material Real
Estate Asset".
"MATURITY DATE" means May 25, 2013.
"MAXIMUM LIABILITY" has the meaning assigned to such term in Section 10.09.
"MAXIMUM RATE" has the meaning assigned to such term in Section 9.17.
"MOODY'S" means Xxxxx'x Investors Service, Inc. and any successor to its
rating agency business.
"MORTGAGED PROPERTIES" means, initially, the owned real properties of the
Loan Parties specified on Schedule 1.01(a), and shall include each other parcel
of real property and improvements thereto with respect to which a Mortgage is
required to be granted pursuant to Section 5.12.
"MORTGAGES" means any mortgage, deed of trust or other agreement which
conveys or evidences a Lien in favor of the Collateral Agent, for the benefit of
the Collateral Agent and the Lenders, on owned real property of a Loan Party.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NARRATIVE REPORT" means, with respect to the financial statements for
which such narrative report is required, a narrative report describing the
operations of Holdings and its Subsidiaries in the form prepared for
presentation to senior management thereof for the
23
applicable Fiscal Quarter or Fiscal Year and for the period from the beginning
of the then current Fiscal Year to the end of such period to which such
financial statements relate.
"NET INSURANCE/CONDEMNATION PROCEEDS" means an amount equal to: (i) any
cash payments or proceeds (including Cash Equivalents) received by Holdings or
any of its Subsidiaries (a) under any casualty insurance policy in respect of a
covered loss thereunder of any assets of Holdings or any of its Subsidiaries or
(b) as a result of the taking of any assets of Holdings or any of its
Subsidiaries by any Person pursuant to the power of eminent domain, condemnation
or otherwise, or pursuant to a sale of any such assets to a purchaser with such
power under threat of such a taking, minus (ii) (a) any actual and reasonable
costs incurred by Holdings or any of its Subsidiaries in connection with the
adjustment, settlement or collection of any claims of Holdings or such
Subsidiary in respect thereof, (b) payment of the outstanding principal amount
of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the assets in question and that is required
to be repaid under the terms thereof as a result of such loss, taking or sale,
(c) amounts required to be prepaid pursuant to the mandatory prepayment
provisions under the Senior Secured Asset-Based Revolving Credit Agreement in
connection therewith, (d) in the case of a taking, the reasonable costs of
putting any affected property in a safe and secure position and (e) any bona
fide direct costs incurred in connection with any sale of such assets as
referred to in clause (i)(b) of this definition, including income taxes payable
as a result of any gain recognized in connection therewith; provided, however,
that, if the Borrower shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of receipt thereof setting forth the Borrower's
intent to reinvest such proceeds in productive assets of a kind then used or
usable in the business of the Borrower and its Subsidiaries (or to acquire all
of the Equity Interests of a Person substantially all of whose assets are used
or useful in the business of the Borrower and its Subsidiaries) within 365 days
of receipt of such proceeds, such proceeds shall not constitute Net
Insurance/Condemnation Proceeds except to the extent not so used at the end of
such 365 day period, at which time such proceeds shall be deemed to be Net
Insurance/Condemnation Proceeds.
"NET PROCEEDS" means (a) with respect to any Asset Sale, the cash proceeds
(including Cash Equivalents and cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net of (i)
selling costs and expenses (including reasonable broker's fees or commissions,
legal fees, transfer and similar taxes and the Borrower's good faith estimate of
income taxes paid or payable in connection with such sale), (ii) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Asset Sale (provided that, to the extent and at the time any such amounts
are released from such reserve, such amounts shall constitute Net Proceeds),
(iii) the principal amount, premium or penalty, if any, interest and other
amounts on any Indebtedness for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with such proceeds
(other than any such Indebtedness assumed by the purchaser of such asset), (iv)
cash escrows (until released from escrow to the Borrower or any of its
Subsidiaries) from the sale price for such Asset Sale and (v) amounts required
to be prepaid pursuant to the mandatory prepayment provisions of the Senior
Secured Asset-Based Revolving Credit Agreement resulting from such Asset Sale;
provided, however, that, if (x) the Borrower shall deliver a certificate of a
Financial
24
Officer to the Administrative Agent at the time of receipt thereof setting forth
the Borrower's intent to reinvest such proceeds in productive assets of a kind
then used or usable in the business of the Borrower and its Subsidiaries (or to
acquire all of the Equity Interests of a Person substantially all of whose
assets are used or useful in the business of the Borrower and its Subsidiaries)
within 365 days of receipt of such proceeds and (y) no Event of Default shall
have occurred and shall be continuing at the time of such certificate, such
proceeds shall not constitute Net Proceeds except to the extent not so used at
the end of such 365 day period, at which time such proceeds shall be deemed to
be Net Proceeds; and (b) with respect to any issuance or incurrence of
Indebtedness, the cash proceeds thereof, net of all taxes and customary fees,
commissions, costs, underwriting discounts and other expenses incurred in
connection therewith.
"NON-CONSENTING LENDER" has the meaning assigned to such term in Section
9.02(e).
"NON-PAYING GUARANTOR" has the meaning assigned to such term in Section
10.10.
"OBLIGATED PARTY" has the meaning assigned to such term in Section 10.02.
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, all accrued and unpaid fees and all
expenses, reimbursements, indemnities and other obligations of the Loan Parties
to the Lenders or to any Lender, the Agents or any indemnified party arising
under the Loan Documents.
"OFAC" has the meaning assigned to such term in Section 3.20.
"OFFICER" means the Chairman of the Board, the Chief Executive Officer, the
Chief Financial Officer, the President, any Executive Vice President, Senior
Vice President or Vice President, any Treasurer, Assistant Treasurer, Secretary,
Assistant Secretary or Manager of the Borrower.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer.
"ORGANIZATIONAL DOCUMENTS" means (i) with respect to any corporation, its
certificate or articles of incorporation or organization, as amended, and its
by-laws, as amended, (ii) with respect to any limited partnership, its
certificate of limited partnership, as amended, and its partnership agreement,
as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability company,
its articles of organization or certificate of formation, as amended, and its
operating agreement, as amended. In the event any term or condition of this
Agreement or any other Loan Document requires any Organizational Document to be
certified by a secretary of state or similar governmental official, the
reference to any such "Organizational Document" shall only be to a document of a
type customarily certified by such governmental official.
"OTHER INFORMATION" has the meaning assigned to such term in Section
3.11(b).
25
"OTHER TAXES" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement, but not including, for the
avoidance of doubt, the Excluded Taxes.
"OTHER TERM LOANS" has the meaning assigned to such term in Section 2.19.
"PARTICIPANT" has the meaning assigned to such term in Section 9.04.
"PAYING GUARANTOR" has the meaning assigned to such term in Section 10.10.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to Section 412 of the Internal Revenue Code or Section
302 of ERISA.
"PERFECTION CERTIFICATE" means a certificate in the form of Exhibit D to
the Pledge and Security Agreement or any other form approved by the Collateral
Agent.
"PERFECTION CERTIFICATE SUPPLEMENT" means a certificate supplement in the
form of Exhibit D-1 to the Pledge and Security Agreement or any other form
approved by the Collateral Agent.
"PERMITTED ACQUISITION" means any acquisition by the Borrower or any of its
Subsidiaries, whether by purchase, merger or otherwise, of all or substantially
all of the assets of, all or substantially all of the Capital Stock of, or a
business line or unit or a division or any operating stores of, any Person;
provided that
(i) immediately prior to, and after giving effect thereto, no Default or
Event of Default shall have occurred and be continuing or would result
therefrom; provided that this clause (i) shall not apply to any acquisition that
is less than $2,500,000;
(ii) all transactions in connection therewith shall be consummated, in all
material respects, in accordance with all applicable laws and in conformity with
all applicable Governmental Authorizations;
(iii) in the case of the acquisition of Capital Stock, all of the Capital
Stock (except for any such Securities in the nature of directors' qualifying
shares required pursuant to applicable law) acquired or otherwise issued by such
Person or any newly formed Subsidiary of the Borrower in connection with such
acquisition shall be owned by the Borrower or a Subsidiary thereof, and Company
shall have taken, or caused to be taken, as of the date such Person becomes a
Subsidiary of the Borrower, each of the actions set forth in Section 5.12, as
applicable;
(iv) the Borrower shall have delivered to the Administrative Agent at least
ten (10) Business Days prior to such acquisition, (A) all relevant financial
information with respect to such acquired assets, including, without limitation,
the aggregate consideration for such acquisition and any other information
required to demonstrate compliance with clause (iv) above and (B) an Officers'
Certificate stating that any related incurrence of Indebtedness is permitted
26
pursuant to this Agreement; provided that this clause (iv) shall not apply with
respect to any acquisition that is less than $5,000,000; and
(v) any Person or assets or division as acquired in accordance herewith
shall be in the same business or lines of business in which Holdings and/or its
Subsidiaries are engaged as of the Closing Date or similar or related
businesses.
"PERMITTED LIENS" means each Lien permitted pursuant to Section 6.02.
"PERSON" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or any other entity.
"PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and Security
Agreement, dated as of the date hereof, between the Loan Parties and the
Collateral Agent, for the benefit of the Collateral Agent and the Lenders.
"PREFERRED STOCK" means any Capital Stock with preferential rights of
payment of dividends or upon liquidation, dissolution, or winding up.
"PRIME RATE" means the rate of interest per annum determined from time to
time by Credit Suisse as its prime rate in effect at its principal office in New
York City and notified to the Borrower.
"PRO FORMA BASIS" means with respect to any determination of the Interest
Coverage Ratio, Leverage Ratio, Senior Leverage Ratio or Senior Secured Leverage
Ratio after giving effect to Permitted Acquisitions, Asset Sales or the
incurrence or assumption of any Indebtedness (each, a "Subject Transaction"),
Consolidated Adjusted EBITDA shall be calculated with respect to such period on
a pro forma basis (including pro forma adjustments arising out of events which
are directly attributable to such Subject Transactions or which are to be
implemented by the business subject to the Subject Transaction or by the
Borrower and its Subsidiaries as a result of the Subject Transaction, are
factually supportable and are expected to have a continuing impact, which would
include cost savings resulting from head count reduction, closure of facilities
and similar restructuring charges and raw material and other cost savings
expected to be realized in connection with the Subject Transaction, which pro
forma adjustments are certified by an Officers' Certificate and which are
determined (i) on a basis consistent with Article 11 of Regulation S-X
promulgated under the Securities Act and as interpreted by the staff of the
Securities and Exchange Commission or (ii) solely in the case of additional pro
forma adjustments to Consolidated Adjusted EBITDA not determined in a manner
consistent with clause (i) above (for all Subject Transactions during the period
of determination) not to exceed 5.0% of pro forma Consolidated Adjusted EBITDA
(as reformulated) and realizable within one year of the date of determination
for the period of determination, on such other basis as may be certified by
Officers' Certificate to be in compliance with the requirements of this
definition), using the historical financial statements of any business so
acquired or to be acquired or sold or to be sold and the consolidated financial
statements of the Borrower and its Subsidiaries which shall be reformulated as
if such Subject Transaction, and any Indebtedness incurred or repaid in
connection therewith, had been consummated or incurred or repaid at the
beginning of such period (and assuming that such Indebtedness bears interest
during any portion of the applicable
27
measurement period prior to the relevant acquisition at the weighted average of
the interest rates applicable to outstanding Loans incurred during such period).
For purposes of such calculations any Indebtedness incurred under Section
6.01(n) or otherwise incurred or assumed in connection with Permitted
Acquisitions subsequent to the beginning of the four quarter calculation period,
but on or prior to the date of calculation of the Leverage Ratio, Senior
Leverage Ratio or Senior Secured Leverage Ratio, shall be deemed to have been
incurred or assumed at the beginning of such four quarter calculation period. In
addition, Permitted Acquisitions that have been made or are being made by the
Borrower or any of its Subsidiaries during the four-quarter reference period or
subsequent to such reference period and on or prior to the calculation date
(including through mergers or consolidations and including any related financing
transactions) shall be deemed to have occurred on the first day of the
four-quarter reference period.
"PROJECTIONS" means the projections of the Borrower and the Subsidiaries
included in the Information Memorandum.
"QUALIFIED CAPITAL STOCK" of any Person means any Capital Stock of such
Person that is not Disqualified Capital Stock.
"REAL ESTATE ASSET" means, at any time of determination, any interest (fee,
leasehold or otherwise) in real property then owned by any Loan Party.
"REGISTER" has the meaning assigned to such term in Section 9.04.
"REGULATION T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"REGULATION U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"REGULATION X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof, and
any successor provision thereto.
"RELATED AGREEMENTS" means the Management Agreement and the Senior
Subordinated Notes Indenture.
"RELATED FUNDS" has the meaning assigned thereto in Section 9.04.
"RELATED PARTIES" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, trustees, employees,
agents and advisors of such Person and such Person's Affiliates.
"RELEASE" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of any Hazardous Material into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous
28
Material), including the movement of any Hazardous Material through the air,
soil, surface water or groundwater.
"REPAYMENT DATE" has the meaning assigned to such term in Section 2.07(a).
"REQUIRED LENDERS" means, at any time, Lenders having Loans outstanding,
that taken together, represent more than 50% of the sum of all Loans outstanding
at such time.
"REQUIREMENTS OF LAW" means, with respect to any Person, collectively, the
Organizational Documents of such Person and the common law and all federal,
state, local, foreign, multinational or international laws, statutes, codes,
treaties, standards, rules and regulations, guidelines, ordinances, orders,
judgments, writs, injunctions, decrees (including administrative or judicial
precedents or authorities) and the interpretation or administration thereof by,
and other determinations, directives, requirements or requests of, any
Governmental Authority, in each case whether or not having the force of law and
that are applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESPONSIBLE OFFICER" of any Person means the chief executive officer, the
president, any vice president, the chief operating officer or any Financial
Officer of such Person and any other officer or similar official thereof
responsible for the administration of the obligations of such Person in respect
of this Agreement, and, as to any document delivered on the Closing Date (but
subject to the express requirements set forth in Article 4), shall include any
secretary or assistant secretary of a Loan Party. Any document delivered
hereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Holdings
or the Borrower now or hereafter outstanding, except a dividend payable solely
in shares of that class of stock to the holders of that class; (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 Holdings or the Borrower now or hereafter outstanding; (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 Holdings or the Borrower
now or hereafter outstanding; (iv) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, Subordinated Indebtedness and (v) any payment of management or
similar fees to the Sponsor or any of its Affiliates.
"S&P" means Standard & Poor's Ratings Service, a division of the
XxXxxx-Xxxx Companies, Inc., and any successor to its rating agency business.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of any real or
tangible personal property,
29
which property has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person in contemplation of such leasing.
"SCHEDULED LOAN REPAYMENT" has the meaning assigned to such term in Section
2.07(a).
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any or all of its functions.
"SECURED HEDGING OBLIGATIONS" means all Hedging Obligations under each
Hedging Agreement that (a) is in effect on the Closing Date with a counterparty
that is the Administrative Agent or a Lender or an Affiliate of the
Administrative Agent or a Lender as of the Closing Date or (b) is entered into
after the Closing Date with any counterparty that is the Administrative Agent or
a Lender or an Affiliate of the Administrative Agent or a Lender at the time
such Hedging Agreement is entered into.
"SECURED INDEBTEDNESS" means any Indebtedness secured by a Lien.
"SECURED OBLIGATIONS" means all Obligations, together with all Secured
Hedging Obligations.
"SECURITIES" means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing; provided that "Securities" shall not
include any earnout agreement or obligation or any employee bonus or other
incentive compensation plan or agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SENIOR LEVERAGE RATIO" means the ratio as of any date of determination of
(i) Consolidated Total Debt as such date less Subordinated Indebtedness at such
date to (ii) Consolidated Adjusted EBITDA for the four-Fiscal Quarter period
ended on such date (or if such date of determination is not the last day of a
Fiscal Quarter, for the four-Fiscal Quarter period ended as of the most recently
concluded Fiscal Quarter).
"SENIOR SECURED ASSET-BASED REVOLVING CREDIT AGREEMENT" means the ABL
Credit Agreement dated as of the date hereof, among Holdings, the Borrower, the
subsidiaries of the Borrower from time to time party thereto, Credit Suisse, as
administrative agent, Bank of America, N.A., as collateral agent, and the
lenders from time to time party thereto, as the same may be amended, restated,
modified, refinanced, replaced, extended, renewed or supplemented from time to
time.
"SENIOR SECURED ASSET-BASED REVOLVING CREDIT FACILITY" means the credit
facility provided under the Senior Secured Asset-Based Revolving Credit
Agreement, including any
30
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and any amendments, supplements, modifications,
extensions, replacements, renewals, restatements, refundings or refinancings
thereof and any indentures or credit facilities or commercial paper facilities
with banks or other institutional lenders or investors that extend, replace,
refund, refinance, renew or defease any part of the loans, notes, other credit
facilities or commitments thereunder, including any such replacement, refunding
or refinancing facility or indenture that increases the amount borrowable
thereunder or alters the maturity thereof (provided that such increase in
borrowings is permitted under Section 6.01).
"SENIOR SECURED LEVERAGE RATIO" means the ratio as of any date of
determination of (i) Secured Indebtedness of the Borrower and its Subsidiaries
determined on a consolidated basis as of such date to (ii) Consolidated Adjusted
EBITDA for the Four-Fiscal Quarter period end or most recently ended prior to
such date.
"SENIOR SUBORDINATED NOTES" means the Borrower's 8.75% Senior Subordinated
Notes due 2014, in an original aggregate principal amount of $175,000,000.
"SENIOR SUBORDINATED NOTES INDENTURE" means the Indenture dated as of the
date hereof, among the Borrower, as issuer, certain of its subsidiaries and
Holdings, as guarantors, and The Bank of New York, as trustee, pursuant to which
the Senior Subordinated Notes are issued.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Notes
Indenture and all other instruments, agreements and other documents evidencing
the Senior Subordinated Notes or providing for any guarantee or other right in
respect thereof.
"SPC" has the meaning assigned to such term in Section 9.04(e).
"SPONSOR" means collectively Berkshire and Weston.
"SPONSOR EQUITY CONTRIBUTIONS" means equity contributions made on or after
the Closing Date by Sponsor or its Affiliates and any other stockholder of
Holdings on the Closing Date to Holdings.
"SUBORDINATED INDEBTEDNESS" means (i) Indebtedness of the Borrower
evidenced by the Senior Subordinated Notes and (ii) any other Indebtedness of
the Borrower expressly subordinated in right of payment to the Obligations
pursuant to documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other material terms
in form and substance satisfactory to the Administrative Agent and Required
Lenders.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or
31
controlled, directly or indirectly, by that Person or one or more of the other
subsidiaries of that Person of a combination thereof; provided, in determining
the percentage of ownership interests of any Person controlled by another
Person, no ownership interest in the nature of a "qualifying share" of the
former Person shall be deemed to be outstanding.
"SUBSIDIARY" means any subsidiary of Holdings other than an Unrestricted
Subsidiary.
"SUBSIDIARY GUARANTOR" means each Subsidiary of the Borrower that is a Loan
Party and that executes this Agreement as a Loan Guarantor on the Closing Date
and each other Subsidiary of the Borrower that thereafter guarantees the Secured
Obligations pursuant to the terms of this Agreement.
"TAXES" means any and all present and future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LENDERS" means the Persons listed on the Commitment Schedule as Term
Lenders and any other Person that shall have become a party hereto pursuant to
an Assignment and Assumption or an Incremental Assumption Agreement, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.
"TERM LOAN COMMITMENT" means, with respect to each Lender, the commitment
of such Lender to make Term Loans hereunder as set forth on Schedule 2.01.
"TERM LOAN FIRST LIEN COLLATERAL" has the meaning set forth in the
Intercreditor Agreement.
"TERM LOANS" means the term loans made to the Borrower pursuant to Section
2.01(a).
"TRANSACTION COSTS" means fees and expenses payable or otherwise borne by
Holdings, the Borrower and its subsidiaries in connection with the Transactions
and the transactions contemplated thereby.
"TRANSACTIONS" means, collectively, (a) the execution, delivery and
performance by the Loan Parties of the Loan Documents to which they are a party
and the making of the Borrowings hereunder, (b) the execution, delivery and
performance by Holdings, the Borrower and the Subsidiaries party thereto of the
Senior Secured Asset-Based Revolving Credit Facility and all other instruments,
agreements and other documents evidencing or governing the Senior Secured
Asset-Based Revolving Credit Facility or providing for any guarantee or other
right in respect thereof and the making of borrowings thereunder, (c) the
execution, delivery and performance by all parties thereto of the Intercreditor
Agreement, (d) the Existing Debt Refinancing and (e) the payment of the
Transaction Costs.
"TYPE", when used in reference to any Loan or Borrowing, refers to whether
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.
32
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are required to be
applied in connection with the issue of perfection of security interests.
"UNLIQUIDATED OBLIGATIONS" means, at any time, any Secured Obligations (or
portion thereof) that are contingent in nature or unliquidated at such time,
including any Secured Obligation that is: (i) an obligation to reimburse a bank
for drawings not yet made under a letter of credit issued by it; (ii) any other
obligation (including any guarantee) that is contingent in nature at such time;
or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations, but excluding unripened or contingent obligations related
to indemnification under Section 9.03 for which no written demand has been made.
"UNRESTRICTED SUBSIDIARY" means any subsidiary of the Borrower designated
by the board of directors of the Borrower as an Unrestricted Subsidiary pursuant
to Section 9.19 subsequent to the Closing Date.
"USA PATRIOT ACT" means The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)), as amended
or modified from time to time.
"WESTON" means Weston Presidio Service LLC and shall include any fund
affiliated with Weston Presidio Service LLC.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness, Disqualified Capital Stock or Preferred Stock, as the case may be,
at any date, the quotient obtained by dividing (1) the sum of the products of
the number of years from the date of determination to the date of each
successive scheduled principal payment of such Indebtedness or redemption or
similar payment with respect to such Disqualified Capital Stock or Preferred
Stock multiplied by the amount of such payment, by (2) the sum of all such
payments.
Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans may be classified and referred to by Type (e.g., a "LIBO RATE
LOAN" or a "LIBO RATE BORROWING").
Section 1.03. Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
amended and restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, amendment and restatements, supplements or
modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c) the words
"herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references
33
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e)
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including", the words "to and including"
and (f) the words "asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts and contract rights.
Section 1.04. Effectuation of Transactions. Each of the representations
and warranties of the Loan Parties contained in this Agreement (and all
corresponding definitions) are made after giving effect to the Transactions,
unless the context otherwise requires.
Section 1.05. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all financial statements to be delivered pursuant to this
Agreement shall be prepared in accordance with GAAP as in effect from time to
time and all terms of an accounting or financial nature that are used in
calculating the Interest Coverage Ratio, the Leverage Ratio, Senior Secured
Leverage Ratio or Senior Leverage Ratio shall be construed and interpreted in
accordance with GAAP, as in effect on the Closing Date unless otherwise agreed
to by the Borrower and the Required Lenders.
Section 1.06. Timing of Payment of Performance. When payment of any
obligation or the performance of any covenant, duty or obligation is stated to
be due or performance required on a day which is not a Business Day, the date of
such payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.
ARTICLE 2
THE CREDITS
Section 2.01. Commitments. Subject to the terms and conditions set forth
herein:
(a) each Term Lender agrees, severally and not jointly, to make a Term Loan
to the Borrower on the Closing Date, in a principal amount equal to its Term
Loan Commitment. Amounts prepaid or repaid in respect of Term Loans may not be
reborrowed.
(b) each Lender having an Incremental Term Loan Commitment agrees, subject
to the terms and conditions set forth in the applicable Incremental Assumption
Agreement, to make Incremental Term Loans to the Borrower, in an aggregate
principal amount equal to its Incremental Term Loan Commitment.
Section 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of
a Borrowing consisting of Loans of the same Type made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
34
(b) Subject to Section 2.12, each Borrowing shall be comprised entirely of
ABR Loans or LIBO Rate Loans as the Borrower may request in accordance herewith.
Each Lender at its option may make any LIBO Rate Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that (i)
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement, (ii) such LIBO
Rate Loan shall be deemed to have been made and held by such Lender, and the
obligation of the Borrower to repay such LIBO Rate Loan shall nevertheless be to
such Lender for the account of such domestic or foreign branch or Affiliate of
such Lender, (iii) the making of such LIBO Rate Loan by such domestic or foreign
branch or Affiliate of such Lender shall not result in any additional tax
liability to the Borrower, and (iv) in exercising such option, such Lender shall
use reasonable efforts to minimize any increase in the Adjusted LIBO Rate or
increased costs to the Borrower resulting therefrom (which obligation of such
Lender shall not require it to take, or refrain from taking, actions that it
determines would result in increased costs for which it will not be compensated
hereunder or that it otherwise determines would be disadvantageous to it and in
the event of such request for costs for which compensation is provided under
this Agreement, the provisions of Section 2.13 shall apply).
(c) At the commencement of each Interest Period for any LIBO Rate
Borrowing, such Borrowing shall comprise an aggregate principal amount that is
an integral multiple of $100,000 and not less than $1,000,000. Each ABR
Borrowing when made shall be in a minimum principal amount of $100,000; provided
that an ABR Borrowing may be maintained in a lesser amount equal to the
difference between the aggregate principal amount of all other Borrowings and
the total amount of Loans at such time outstanding. Borrowings of more than one
Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of ten (10) different Interest Periods in effect for
LIBO Rate Borrowings at any time outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to elect to convert or continue any Borrowing if the
Interest Period requested with respect thereto would end after the Maturity Date
(or the Incremental Term Facility Maturity Date with respect to Incremental Term
Loans, if any).
Section 2.03. Request for Borrowing on the Closing Date. (a) To request the
making of the Loans hereunder on the Closing Date, the Borrower shall notify the
Administrative Agent of such request either in writing by delivery of a
Borrowing Request (by hand or facsimile) signed by the Borrower or by telephone
not later than 12:00 noon, New York City time, two (2) Business Days before the
proposed Closing Date (or such later time as shall be acceptable to the
Administrative Agent). A telephonic Borrowing Request shall be irrevocable and
shall be confirmed promptly by hand delivery or facsimile to the Administrative
Agent of a written Borrowing Request signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.01:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of the Borrowing, which shall be a Business Day;
(iii) whether the Borrowing is to be an ABR Borrowing or a LIBO Rate
Borrowing;
35
(iv) in the case of a LIBO Rate Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "INTEREST PERIOD"; and
(v) the location and number of the Borrower's account or any other
designated account to which funds are to be disbursed.
(b) If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any LIBO Rate Borrowing, then the Borrower shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of the Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
Section 2.04. Funding of the Borrowing on the Closing Date. (a) Each Lender
shall make the Loan to be made by it hereunder on the Closing Date by wire
transfer of immediately available funds by 12:00 (noon), New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders, in an amount equal to such Lender's Applicable
Percentage of the aggregate principal amount of the Loans made on the Closing
Date.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the Closing Date that such Lender will not make available to the
Administrative Agent such Lender's share of the Borrowing on the Closing Date,
the Administrative Agent may assume that such Lender has made such share
available on the Closing Date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent
forthwith on demand (without duplication) such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrower, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in the Borrowing on the Closing Date.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its Commitment or to prejudice any rights which the Administrative Agent
or the Borrower or any Loan Party may have against any Lender as a result of any
default by such Lender hereunder.
Section 2.05. Type; Interest Elections. (a) The Loans initially shall be
of the Type specified in the Borrowing Request and, in the case of a LIBO Rate
Borrowing, shall have an initial Interest Period (not to exceed two (2) months'
duration) as specified in such Borrowing Request. Thereafter, the Borrower may
elect to convert all or any portion of any Borrowing (subject to the minimum
amounts for Borrowings of the applicable Type specified in Section 2.02(c)) to a
different Type or to continue such Borrowing and, in the case of a LIBO Rate
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrower
36
may elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent of such election by telephone (i) in the case of an
election to convert to or continue as a LIBO Rate Borrowing, not later than
12:00 noon, New York City time, three (3) Business Days before the date of the
proposed conversion or continuation or (ii) in the case of an election to
convert to or continue as an ABR Borrowing, not later than 12:00 noon, New York
City time, one Business Day prior to the date of the proposed conversion or
continuation. Each such telephonic Interest Election Request shall be
irrevocable and shall be confirmed promptly by hand delivery or facsimile to the
Administrative Agent of a written Interest Election Request in a form approved
by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the
following information in compliance with Section 2.02(c):
(i) the Borrowing to which such Interest Election Request applies and,
if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting Borrowing
(in which case the information to be specified pursuant to clauses (iii)
and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
LIBO Rate Borrowing; and
(iv) if the resulting Borrowing is a LIBO Rate Borrowing, the Interest
Period to be applicable thereto after giving effect to such election, which
shall be a period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a LIBO Rate Borrowing but
does not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one (1) month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a LIBO Rate Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the
37
Required Lenders, so notifies the Borrower, then, so long as an Event of Default
is continuing (i) no outstanding Borrowing may be converted to or continued as a
LIBO Rate Borrowing and (ii) unless repaid, each LIBO Rate Borrowing shall be
converted to an ABR Borrowing at the end of the then current Interest Period
applicable thereto.
Section 2.06. Termination of Commitments. The Term Loan Commitments shall
automatically terminate upon the making of the Term Loans on the Closing Date.
Section 2.07. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Lender the then unpaid principal amount of each Term Loan, if any, on the
Maturity Date and the then unpaid principal amount of each Other Term Loan on
the Incremental Term Facility Maturity Date. The Borrower shall pay to the
Administrative Agent, for the account of the Lenders, on the dates set forth
below, or if any such date is not a Business Day, on the next preceding Business
Day (each such date being called a "REPAYMENT DATE" and such payments being
called "SCHEDULED LOAN REPAYMENTS") a principal amount of the Term Loans (as
adjusted from time to time pursuant to Sections 2.08, 2.09(e) and 2.19(e) equal
to the amount set forth below for such date), together in each case with accrued
and unpaid interest on the principal amount to be paid to but excluding the date
of such payment:
REPAYMENT DATE AMOUNT
-------------- -----------
June 30, 2007 $937,500
September 30, 2007 $937,500
December 31, 2007 $937,500
March 31, 2008 $937,500
June 30, 2008 $937,500
September 30, 2008 $937,500
December 31, 2008 $937,500
March 31, 2009 $937,500
June 30, 2009 $937,500
September 30, 2009 $937,500
December 31, 2009 $937,500
March 31, 2010 $937,500
June 30, 2010 $937,500
September 30, 2010 $937,500
December 31, 2010 $937,500
March 31, 2011 $937,500
June 30, 2011 $937,500
September 30, 2011 $937,500
December 31, 2011 $937,500
March 31, 2012 $937,500
June 30, 2012 $937,500
September 30, 2012 $937,500
December 31, 2012 $937,500
March 31, 2013 $937,500
Maturity Date All amounts
outstanding
38
(b) In the event that any Incremental Term Loans are made on an Increased
Amount Date (as defined in Section 2.19), the Borrower shall repay such
Incremental Term Loans on the dates and in the amounts set forth in the
applicable Incremental Assumption Agreement.
(c) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(d) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period (if any) applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(e) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein (absent manifest error); provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any manifest error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
(f) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to such Lender and its registered
assigns and in substantially the form of Exhibit F hereto. Thereafter, the Loans
evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the payee named therein and its
registered assigns.
Section 2.08. Optional Prepayment of Loans. (a) Upon prior notice in
accordance with paragraph (b) of this Section, the Borrower shall have the right
at any time and from time to time to prepay any Borrowing in whole or in part
(but subject to Section 2.10(b) and Section 2.14).
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by facsimile) of any prepayment hereunder (i) in the case of
prepayment of a LIBO Rate Borrowing, not later than 12:00 noon, New York City
time, three (3) Business Days before the date of prepayment or (ii) in the case
of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City
time, one Business Day prior to the day of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided, that a notice of
prepayment delivered by the Borrower may state that such notice is conditioned
upon the effectiveness of other transactions, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied. Promptly
following receipt of any such notice relating to a prepayment, the
Administrative Agent shall advise the Lenders of
39
the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment made pursuant to this Section 2.08
shall be allocated pro rata among the Loans and shall be applied to the then
remaining Scheduled Loan Repayments as directed by the Borrower, provided that
any optional prepayment of Loans shall be applied first to ABR Loans to the full
extent thereof before application to any LIBO Rate Loans in a manner that
minimizes the amount of payments to be made by the Borrower pursuant to Section
2.14.
Section 2.09. Mandatory Prepayment of Term Loans. (a) No later than ten
(10) Business Days after the date on which the financial statements with respect
to each fiscal year of the Borrower are required to be delivered pursuant to
Section 5.01(a), commencing with the fiscal year ending on December 31, 2007,
the Borrower shall prepay outstanding Term Loans in an aggregate principal
amount equal to (A) 50% of Excess Cash Flow for the fiscal year then ended,
minus (B) the amount of any prepayments of Term Loans made pursuant to Section
2.08 during such fiscal year, except to the extent that such prepayments were
financed with the proceeds of other Indebtedness of the Borrower or its
Subsidiaries; provided that (i) such percentage of Excess Cash Flow shall be
reduced to 25% of such Excess Cash Flow if the Leverage Ratio at the end of such
fiscal year shall be equal to or less than 3.00 to 1.00, but greater than 2.00
to 1.00, and (ii) such prepayment shall not be required if the Leverage Ratio at
the end of such fiscal year shall be equal to or less than 2.00 to 1.00.
(b) (i) Not later than the third Business Day following the receipt of Net
Proceeds in respect of any Asset Sale, the Borrower shall apply an amount equal
to 100% of the Net Proceeds received with respect thereto to prepay outstanding
Term Loans in accordance with Section 2.09(e).
(ii) Not later than the third Business Day following the receipt of
Net Insurance/Condemnation Proceeds in excess of $2,500,000 arising from
any event or series of related events or in excess of $10,000,000 in any
Fiscal Year, the Borrower shall apply an amount equal to 100% of such Net
Insurance/Condemnation Proceeds to prepay outstanding Term Loans in
accordance with Section 2.09(e).
(c) In the event that any Loan Party or any Subsidiary of a Loan Party
shall receive Net Proceeds from the issuance or incurrence of Indebtedness for
money borrowed of any Loan Party or any Subsidiary of a Loan Party (other than
any cash proceeds from the issuance of Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously with
(and in any event not later than the third Business Day next following) the
receipt of such Net Proceeds by such Loan Party or such Subsidiary, apply an
amount equal to 100% of such Net Proceeds to prepay outstanding Term Loans in
accordance with Section 2.09(e).
(d) In the event and on each occasion that an Equity Issuance occurs, the
Borrower shall, substantially simultaneously with (and in any event not later
than the third Business Day next following) the occurrence of such Equity
Issuance, apply 50% of the Net Cash Proceeds therefrom to prepay outstanding
Terms Loans in accordance with Section 2.09(e); provided that (i) such
percentage of such Net Cash Proceeds shall be reduced to 25% of such Net Cash
Proceeds if the Leverage Ratio at the end of the twelve month period then most
recently ended
40
shall be equal to or less than 3.00 to 1.00, but greater than 2.00 to 1.00, and
(ii) such prepayment shall not be required if the Leverage Ratio at the end of
the twelve month period most recently ended shall be equal to or less than 2.00
to 1.00.
(e) All amounts required to be paid pursuant to this Section 2.09 shall be
applied to prepay outstanding Term Loans and Other Term Loans of the Lenders and
Incremental Term Lenders that accept the same (and pro rata among such Lenders
and Incremental Term Lenders), which prepayments any Lender or Incremental
Lender may elect, by notice to the Administrative Agent at or prior to the time
and in the manner specified by the Administrative Agent, prior to any prepayment
of Term Loans required to be made by the Borrower pursuant to this Section 2.09,
to decline all (but not a portion) of its pro rata share of such prepayment
(such declined amounts, the "DECLINED PROCEEDS"). Any Declined Proceeds shall be
offered to the Lenders and Incremental Lenders not so declining such prepayment
(with such Lenders or Incremental Lender having the right to decline any
prepayment with Declined Proceeds at the time and in the manner specified by the
Administrative Agent). All accepted prepayments shall be applied to the
repayment of the next four Scheduled Loan Repayments in forward order of
maturity and then to the remaining applicable Scheduled Loan Repayments on a pro
rata basis (and on a comparable basis to scheduled payments of Incremental Term
Loans) and with respect to such mandatory prepayment, the amount of such
mandatory prepayment shall be applied on a pro rata basis to the then
outstanding Loans being prepaid irrespective of whether such outstanding Loans
are ABR Term Loans or Adjusted LIBO Rate Term Loans; provided that if no Lenders
exercise their right to waive a given mandatory prepayment, the amount thereof
shall be applied first to ABR Term Loans to the full extent thereof before
application to LIBO Rate Term Loans in a manner that minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 2.14.
Thereafter, the remaining Declined Proceeds may be retained by the Borrower.
(f) The Borrower shall deliver to the Administrative Agent, at the time of
each prepayment required under this Section 2.09, (i) a certificate signed by a
Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent practicable,
at least three (3) Business Days' prior written notice of such prepayment. Each
notice of prepayment shall specify the prepayment date, the Type of each Term
Loan being prepaid and the principal amount of each Term Loan (or portion
thereof) to be prepaid. Prepayments shall be accompanied by accrued interest as
required by Section 2.11. All prepayments of Borrowings under this Section 2.09
shall be subject to Section 2.14, but shall otherwise be without premium or
penalty.
Section 2.10. Fees. (a) The Borrower agrees to pay to the Administrative
Agent, for its own account, the agency fees set forth in the Fee Letter, payable
in the amounts and at the times specified therein or as so otherwise agreed upon
by the Borrower and the Administrative Agent, or such agency fees as may
otherwise be separately agreed upon by the Borrower and the Administrative
Agent.
(b) Upon and as a condition to any optional prepayment of the Term Loans
pursuant to Section 2.08 (in whole or in part) any time prior to the first
anniversary of the Closing Date (other than with the proceeds of an underwritten
initial public offering of common stock of Holdings or the Borrower or an
optional prepayment of the Term Loan in full substantially
41
contemporaneous with a Change of Control), the Borrower shall pay a premium
equal to 1.00% of the principal amount prepaid.
Section 2.11. Interest. (a) The Loans comprising each ABR Borrowing shall
bear interest at the Alternate Base Rate plus the Applicable Margin.
(b) The Loans comprising each LIBO Rate Borrowing shall bear interest at
the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus
the Applicable Margin.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued pursuant
to paragraph (c) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan, accrued interest on the principal
amount repaid or prepaid shall be payable on the date of such repayment or
prepayment and (iii) in the event of any conversion of any LIBO Rate Loan prior
to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360
days, except that interest computed by reference to the Alternate Base Rate at
times when the Alternate Base Rate is based on the Prime Rate shall be computed
on the basis of a year of 365 days (or 366 days in a leap year), and in each
case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
Section 2.12. Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a LIBO Rate Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining their Loans included in such Borrowing for such Interest Period;
42
then the Administrative Agent shall promptly give notice thereof to the Borrower
and the Lenders by telephone or facsimile as promptly as practicable thereafter
and, until the Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist (which the
Administrative Agent agrees promptly to do), any Interest Election Request that
requests the conversion of any Borrowing to, or continuation of any Borrowing
as, a LIBO Rate Borrowing shall be ineffective and such Borrowing shall be
converted to an ABR Borrowing on the last day of the Interest Period applicable
thereof.
Section 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or LIBO Rate Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBO Rate Loan or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then, following delivery of the certificate contemplated
by paragraph (c) of this Section, the Borrower will pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered (except for any Taxes, which shall be dealt
with exclusively pursuant to Section 2.15); provided, however, that the Borrower
shall not be liable for such compensation if (i) the relevant Change in Law
occurs on a date prior to the date such Lender becomes a party hereto, or (ii)
the Lender invokes Section 2.18.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (other than due to Taxes, which shall be
dealt with exclusively pursuant to Section 2.15) (taking into consideration such
Lender's policies and the policies of such Lender's holding company with respect
to capital adequacy), then from time to time following delivery of the
certificate contemplated by paragraph (c) of this Section the Borrower will pay
to such Lender such additional amount or amounts as will compensate such Lender
or such Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate such Lender or its holding company as specified in paragraph (a)
or (b) of this Section and setting forth in reasonable detail the manner in
which such amount or amounts was determined shall be delivered to the Borrower
and shall be conclusive absent manifest error. The Borrower shall pay such
Lender the amount shown as due on any such certificate within ten (10) days
after receipt thereof.
43
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.
Section 2.14. Break Funding Payments. In the event of (a) the payment of
any principal of any LIBO Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default but
except as provided in Section 2.18), (b) the conversion of any LIBO Rate Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any LIBO Rate Loan on the date
specified in any notice delivered pursuant hereto, or (d) the assignment of any
LIBO Rate Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.17, then,
in any such event, the Borrower shall compensate each Lender for the loss, cost
and expense attributable to such event (other than loss of profit). In the case
of a LIBO Rate Loan, such loss, cost or expense to any Lender shall be deemed to
be the amount reasonably determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount of
such Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section and the basis
therefor and setting forth in reasonable detail the manner in which such amount
or amounts was determined shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within ten (10) Business Days after receipt
thereof.
Section 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of any Loan Party hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if a
Loan Party shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as applicable) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) such Loan Party shall make such deductions
and (iii) such Loan Party shall timely pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law. If at any
time a Loan Party is required by applicable law to make any deduction or
withholding from any sum payable hereunder, such Loan Party shall promptly
notify the relevant Lender or
44
Administrative Agent upon becoming aware of the same. In addition, each Lender
or the Administrative Agent shall promptly notify a Loan Party upon becoming
aware of any circumstances as a result of which a Loan Party is or would be
required to make any deduction or withholding from any sum payable hereunder.
(b) In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Each Loan Party shall indemnify each Agent and each Lender, within ten
(10) days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by such Agent or such Lender, as applicable, on or
with respect to any payment by or on account of any obligation of such Loan
Party hereunder (including Indemnified Taxes or Other Taxes imposed or asserted
on or attributable to amounts payable under this Section) and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority, provided that if the
Loan Party reasonably believes that such Taxes were not correctly or legally
asserted, the Agent, Lender or Issuing Bank, as applicable, will use reasonable
efforts to cooperate with the Loan Party to obtain a refund of such Taxes (which
shall be repaid to the Loan Party in accordance with Section 2.15(f)) so long as
such efforts would not, in the sole determination of such Agent, Lender or
Issuing Bank result in any additional costs, expenses or risks or be otherwise
disadvantageous to it; provided, further, that the Loan Party shall not be
required to compensate any Agent, Lender or Issuing Bank pursuant to this
Section 2.15 for any amounts incurred in any fiscal year or which such Agent,
Lender or Issuing Bank does not furnish notice of such claim within six months
from the end of such fiscal year; provided, further, that if the circumstances
giving rise to such claim have a retroactive effect (e.g., in connection with
the audit of a prior tax year), then the beginning of such six-month period
shall be extended to include such period of retroactive effect. A certificate as
to the amount of such payment or liability delivered to the Borrower by a
Lender, or by an Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by a Loan Party to a Governmental Authority, such Loan Party shall deliver
to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
(e) (i) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate.
(ii) Each Lender that is a "United States person" within the meaning
of Section 7701(a)(30) of the Code agrees to deliver to the Borrower a duly
completed and executed copy of Internal Revenue Service Form W-9 or
successor form establishing that
45
such U.S. Lender is a United States person that is not subject to U.S.
backup withholding tax.
(f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Indemnified Taxes or Other
Taxes as to which it has been indemnified by a Loan Party or with respect to
which such Loan Party has paid additional amounts pursuant to this Section 2.15,
it shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under
this Section 2.15, with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender (including any Taxes imposed with respect to such refund) as is
determined by the Administrative Agent or such Lender in good faith in its
reasonable discretion, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided, that
such Loan Party, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to such Loan Party (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to such Loan Party or any other Person.
Section 2.16. Payments Generally; Allocation of Proceeds; Sharing of
Set-offs. (a) Unless otherwise specified, the Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest or fees, or
of amounts payable under Sections 2.13, 2.14 or 2.15, or otherwise) prior to
1:30 p.m., New York City time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the Administrative Agent to
the applicable account designated to the Borrower by the Administrative Agent,
except that payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 may at the
Borrower's election be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it, except
as otherwise provided, for the account of any other Person to the appropriate
recipient promptly following receipt thereof. Unless otherwise specified, if any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in Dollars. Any
payment required to be made by the Administrative Agent hereunder shall be
deemed to have been made by the time required if the Administrative Agent shall,
at or before such time, have taken the necessary steps to make such payment in
accordance with the regulations or operating procedures of the clearing or
settlement system used by the Administrative Agent to make such payment.
(b) Subject in all respects to the provisions of the Intercreditor
Agreement, all proceeds of Collateral received by the Agents after an Event of
Default has occurred and is continuing and all or any portion of the Loans shall
have been accelerated hereunder pursuant to Article 7, shall upon election by
the Agents or at the direction of the Required Lenders be applied, first, to,
46
ratably, pay any fees, indemnities, or expense reimbursements then due to the
Agents, second, ratably, to pay any fees or expense reimbursements then due to
the Lenders from the Borrower, third, to pay interest due and payable in respect
of the Loans and any other Secured Obligations, ratably, fourth, to (i) payment
of that portion of the Obligations constituting unpaid principal of the Loans
and (ii) payment of breakage, termination and other amounts owing in respect of
any Secured Hedging Obligations between any Loan Party, on the one hand, and an
Agent or any Lender or any of their Affiliates, on the other hand, to the extent
such Secured Hedging Obligations are permitted hereunder, ratably, fifth, to the
payment of any other Secured Obligation due to the Agents or any Lender (or any
Affiliate thereof) by the Borrower, sixth, as provided for under the
Intercreditor Agreement, and seventh, to the Borrower or as the Borrower shall
direct.
(c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and accrued interest thereon than the
proportion received by any other Lender, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the Loans
of other Lenders at such time outstanding to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Sections 2.03(a), 2.16(c) or 9.03(c), then the Administrative Agent
may, in its discretion
47
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such unsatisfied
obligations are fully paid.
Section 2.17. Mitigation Obligations; Replacement of Lenders. (a) If any
Lender requests compensation under Section 2.13 or such Lender determines it can
no longer make or maintain LIBO Rate Loans pursuant to Section 2.18, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as
applicable, in the future and (ii) would not subject such Lender to any material
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender in any material respect. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(b) If any Lender requests compensation under Section 2.13 or such Lender
determines it can no longer make or maintain LIBO Rate Loans pursuant to Section
2.18, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.15 or such Lender determines it can no longer make or maintain LIBO Rate Loans
pursuant to Section 2.18, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, replace such Lender by
requiring such Lender to assign and delegate (and such Lender shall be obligated
to assign and delegate), without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written consent of the Administrative Agent (if such assignee is not an existing
Lender), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation or
payments. Each Lender agrees that if it is replaced pursuant to this Section
2.17, it shall execute and deliver to the Administrative Agent an Assignment and
Assumption to evidence such sale and purchase and shall deliver to the
Administrative Agent any Note (if the assigning Lender's Loans are evidenced by
Notes) subject to such Assignment and Assumption; provided that the failure of
any Lender replaced pursuant to this Section 2.17 to execute an Assignment and
Assumption shall not render such sale and purchase (and the corresponding
assignment) invalid.
Section 2.18. Illegality. If any Lender reasonably determines that any
Change in Law has made it unlawful, or that any Governmental Authority has
asserted after the Closing Date that it is unlawful, for such Lender or its
applicable lending office to make or maintain any LIBO Rate Loans, then, on
notice thereof by such Lender to the Borrower through the Administrative
48
Agent, any obligations of such Lender to make or continue LIBO Rate Loans or to
convert ABR Borrowings to LIBO Rate Borrowings shall be suspended until such
Lender notifies the Administrative Agent and the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
the Borrower shall upon demand from such Lender (with a copy to the
Administrative Agent), either convert all LIBO Rate Borrowings of such Lender to
ABR Borrowings, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such LIBO Rate Borrowings to such day,
or immediately, if such Lender may not lawfully continue to maintain such Loans
(in which case the Borrower shall not be required to make payments pursuant to
Section 2.14 in connection with such payment). Upon any such prepayment or
conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or converted. Each Lender agrees to designate a different lending office
if such designation will avoid the need for such notice and will not, in the
determination of such Lender, otherwise be disadvantageous to it.
Section 2.19. Incremental Term Loan Commitments. (a) The Borrower may, by
written notice to the Administrative Agent (signed by a Responsible Officer of
the Borrower) from time to time, request Incremental Term Loan Commitments, in
an aggregate amount not to exceed $100,000,000 from one or more Incremental Term
Lenders (which may include any existing Lender) willing to provide such
Incremental Term Loans in their own discretion. Such notice shall set forth (i)
the amount of the Incremental Term Loan Commitments being requested (which shall
be in an aggregate amount of not less than $10,000,000 and in integral multiples
of $1,000,000 in excess thereof), (ii) the date on which such Incremental Term
Loan Commitments are requested to become effective (the "INCREASED AMOUNT
DATE"), (iii) whether such Incremental Term Loan Commitments are to be
commitments to make additional Term Loans or commitments to make term loans with
pricing and/or amortization terms different from the Term Loans ("OTHER TERM
LOANS").
(b) The Borrower and each Incremental Term Lender shall execute and deliver
to the Administrative Agent an Incremental Assumption Agreement and such other
documentation as the Administrative Agent shall reasonably specify to evidence
the Incremental Term Loan Commitment of such Incremental Term Lender. Each
Incremental Assumption Agreement shall specify the terms of the applicable
Incremental Term Loans; provided that (i) the Other Term Loans shall rank pari
passu or junior in right of payment and of security with the Term Loans and,
except as to pricing, amortization and final maturity date, shall have (x) the
same terms as the Term Loans or (y) such other terms as shall be reasonably
satisfactory to the Administrative Agent, (ii) the final maturity date of any
Other Term Loans shall be no earlier than the Maturity Date, (iii) the terms
applicable to each series of Other Term Loans shall not require any prepayment
thereof in excess of the pro rata share of such series relative to all Term
Loans (including the Term Loans made on the Closing Date and all other Term
Loans) and (iv) the Weighted Average Life to Maturity of any Other Term Loans
shall be no shorter than the remaining Weighted Average Life to Maturity of the
Term Loans. If the Applicable Margin (which, for purposes of this sentence only,
shall be deemed to include all upfront or similar fees or original issue
discount payable to all Lenders providing such Term Loans, as applicable)
relating to any Incremental Term Loan Commitment exceeds the Applicable Margin
relating to the Term Loans immediately prior to the effectiveness of the
applicable Incremental Assumption Agreement by more than 0.50%, the Applicable
Margin relating to the Term Loans shall be
49
adjusted to be equal to the Applicable Margin relating to such Incremental Term
Loan Commitment minus 0.50%.
(c) Each of the parties hereto hereby agrees that, upon the effectiveness
of any Incremental Assumption Agreement, this Agreement shall be amended to the
extent (but only to the extent) necessary to reflect the existence and terms of
the Incremental Term Loan Commitments evidenced thereby as provided for in
Section 9.02(f). Any such deemed amendment may be memorialized in writing by the
Administrative Agent with the Borrower's consent (not to be unreasonably
withheld) and furnished to the other parties hereto.
(d) Notwithstanding the foregoing, no Incremental Term Loan Commitment
shall become effective under this Section 2.19 unless (i) the Administrative
Agent shall have received customary legal opinions, board resolutions and other
customary closing certificates and documentation as required by the relevant
Incremental Assumption Agreement and, to the extent required by the
Administrative Agent, consistent with those delivered on the Closing Date under
Section 4.01 and such additional customary documents and filings (including
amendments to the Mortgages and other Collateral Documents and title endorsement
bringdowns) as the Administrative Agent may reasonably require to assure that
the Incremental Term Loans are secured by the Collateral ratably with (or, to
the extent agreed by the applicable Incremental Term Lenders in the applicable
Incremental Assumption Agreement, junior to) the existing Term Loans, (ii) after
giving effect to such Incremental Term Loan Commitments and the Loans to be made
thereunder and the application of the proceeds therefrom as if made and applied
on such date, the Senior Secured Leverage Ratio would be no greater than 4.5 to
1.0 and (iii) both before and after giving effect to such Incremental Term Loan
Commitments and the Loans to be made thereunder and the application of the
proceeds therefrom as if made and applied on such date, no Default or Event of
Default shall have occurred and be continuing.
(e) Each of the parties hereto hereby agrees that the Administrative Agent
may take any and all action as may be reasonably necessary to ensure that (i)
all Incremental Term Loans (other than Other Term Loans) in the form of
additional Term Loans, when originally made, are included in each Borrowing of
outstanding Term Loans on a pro rata basis. The Borrower agrees that Section
2.16 shall apply to any conversion of LIBO Rate Loans to ABR Loans reasonably
required by the Administrative Agent to effect the foregoing. If any Incremental
Term Loan is to be allocated to an existing Interest Period for a LIBO Rate
Loan, then the interest rate thereon for such Interest Period and the other
economic consequences thereof shall be as set forth in the applicable
Incremental Assumption Agreement. In addition, to the extent any Incremental
Term Loans are not Other Term Loans, the scheduled amortization payments under
Section 2.07(a) required to be made after the making of such Incremental Term
Loans shall be ratably increased by the aggregate principal amount of such
Incremental Term Loans.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Lenders that:
50
Section 3.01. Organization; Powers. Each of the Loan Parties and each of
its Subsidiaries is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and, except where the failure to do so, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required.
Section 3.02. Authorization; Enforceability. The Transactions are within
each applicable Loan Party's corporate or other organizational powers and have
been duly authorized by all necessary corporate or other organizational action
of such Loan Party. Each Loan Document to which each Loan Party is a party has
been duly executed and delivered by such Loan Party and is a legal, valid and
binding obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and to general principles of equity.
Section 3.03. Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, except for filings necessary to
perfect Liens created pursuant to the Loan Documents and the ABL Security
Documents, (b) will not violate any Requirements of Law applicable to any Loan
Party or any of its Subsidiaries, (c) will not violate or result in a default
under any Contractual Obligation of any of the Loan Parties which could
reasonably be expected to result in a Material Adverse Effect, and (d) will not
result in the creation or imposition of any Lien on any asset of any Loan Party
or any of its Subsidiaries, except Liens created pursuant to the Loan Documents
and the ABL Security Documents.
Section 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and related consolidated statements of operations and cash flows and
stockholders' equity as of and for (i) the fiscal years ended December 31, 2005
and December 31, 2006, each reported on by Ernst & Young LLP, independent public
accountants, and (ii) the fiscal quarter ended on March 31, 2007, certified by
its chief financial officer. Such financial statements present fairly, in all
material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to the absence of footnotes and
normal year-end adjustments in the case of the statements referred to in clause
(ii) above.
(b) The Borrower has heretofore delivered to the Lenders its unaudited pro
forma consolidated balance sheet and related pro forma consolidated statements
of operations and cash flows and stockholders' equity as of March 31, 2007,
prepared giving effect to the Transactions as if they had occurred, with respect
to such balance sheet, on such date and, with respect to such other financial
statements, on the first day of the 12-month period ending on such date. Such
pro forma financial statements have been prepared in good faith by the Borrower,
based on the assumptions used to prepare the pro forma financial information
contained in the Information Memorandum (which assumptions are believed by the
Borrower on the Closing Date to be reasonable), are based on the best
information available to the Borrower as of the date of
51
delivery thereof, accurately reflect all adjustments required to be made to give
effect to the Transactions and present fairly in all material respects on a pro
forma basis the estimated consolidated financial position of the Borrower and
its consolidated Subsidiaries as of such date and for such period, assuming that
the Transactions had actually occurred at such date or at the beginning of such
period, as the case may be.
(c) No event, change or condition has occurred that has had, or would
reasonably be expected to have, a Material Adverse Effect, since December 31,
2006.
Section 3.05. Properties. (a) As of the date of this Agreement, the
Perfection Certificate sets forth the address of each parcel of real property
(or each set of parcels that collectively comprise one operating property) that
is owned or leased by each Loan Party.
(b) Each of the Borrower and each of the Subsidiaries has good fee simple
title to, or valid leasehold interests in, or easements or other limited
property interests in, all its Real Estate Assets (including any Mortgaged
Properties) and has good and marketable title to its personal property and
assets, in each case, except for defects in title that do not materially
interfere with its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes and except where
the failure to have such title would not reasonably be expected to have a
Material Adverse Effect. All such properties and assets are free and clear of
Liens, other than (i) Permitted Liens, (ii) Liens arising by operation of law
and (iii) minor defects in title that do not materially interfere with the
ability of Holdings and its Subsidiaries to conduct their businesses.
(c) As of the Closing Date, no Responsible Officer of Holdings, the
Borrower or any Subsidiary has received any written notice of, nor has any
knowledge of, any pending or contemplated condemnation proceeding affecting any
of the Mortgaged Properties or any sale or disposition thereof in lieu of
condemnation.
(d) To the knowledge of each Responsible Officer of the Borrower, as of the
Closing Date, none of the Borrower or any Subsidiary is obligated under any
right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any Mortgaged Property or any interest therein.
(e) To the knowledge of each Responsible Officer of the Borrower, each of
the Borrower and each of the Subsidiaries has complied with all obligations
under all leases to which it is a party, except where the failure to comply
would not reasonably be expected to have, a Material Adverse Effect, and all
such leases are in full force and effect, except leases in respect of which the
failure to be in full force and effect would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(f) Each of the Borrower and the Subsidiaries owns or possesses, or is
licensed to use, all patents, trademarks, service marks, trade names and
copyrights and all licenses and rights with respect to the foregoing, necessary
for the present conduct of its business, without any conflict with the rights of
others, and free from any burdensome restrictions on the present conduct of its
business, except where such failure to own, possess or hold pursuant to a
license or
52
such conflicts and restrictions would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened
against or affecting the Loan Parties or any of their Subsidiaries (i) which
would reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any Loan Documents or the
Transactions.
(b) Except for any matters that, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect (i) no Loan
Party nor any of its Subsidiaries has received notice of any claim with respect
to any Environmental Liability or knows of any basis for any Environmental
Liability and (ii) no Loan Party nor any of its Subsidiaries (A) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law or (B)
has become subject to any Environmental Liability.
Section 3.07. Compliance with Laws and Agreements; Licenses and Permits.
(a) Each Loan Party is in compliance with all Requirements of Law applicable to
it or its property and all indentures, agreements and other instruments binding
upon it or its property, except in each case where the failure to do so,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
(b) Each Loan Party and its Subsidiaries has obtained and holds in full
force and effect, all franchises, licenses, leases, permits, certificates,
authorizations, qualifications, easements, rights of way and other rights and
approvals which are necessary or advisable for the operation of its businesses
as presently conducted and as proposed to be conducted, except where the failure
to have so obtained or hold or to be in force, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect. No Loan
Party or any of its Subsidiaries is in violation of the terms of any such
franchise, license, lease, permit, certificate, authorization, qualification,
easement, right of way, right or approval, except where any such violation,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
Section 3.08. Investment Company Status. No Loan Party is an "investment
company" as defined in, or is required to be registered under, the Investment
Company Act of 1940.
Section 3.09. Taxes. Each Loan Party and its Subsidiaries has timely filed
or caused to be filed all Tax returns and reports required to have been filed
and has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which such Loan Party or such Subsidiary, as applicable, has
set aside on its books adequate reserves in accordance with GAAP or (b) to the
extent that the failure to do so, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
Section 3.10. ERISA. No ERISA Event has occurred in the five (5) year
period prior to the date on which this representation is made or deemed made and
is continuing or is reasonably
53
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect. Except as would not reasonably be expected
to have a Material Adverse Effect, the present value of all accumulated benefit
obligations under all Pension Plans (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Pension Plans, in the aggregate.
Section 3.11. Disclosure. (a) All written information (other than the
Projections and the pro forma financial statements and estimates and information
of a general economic nature) concerning Holdings, the Borrower, the
Subsidiaries, the Transactions and any other transactions contemplated hereby
included in the Information Memorandum or otherwise prepared by or on behalf of
the foregoing or their representatives and made available to any Lender or the
Administrative Agent in connection with the Transactions on or before the date
hereof (the "INFORMATION"), when taken as a whole, as of the date such
Information was furnished to the Lenders and as of the Closing Date, did not
contain any untrue statement of a material fact as of any such date or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were made.
(b) The Projections and pro forma financial statements prepared by or on
behalf of the Borrower or any of its representatives and that have been made
available to any Lenders or the Administrative Agent in connection with the
Transactions on or before the date hereof (the "OTHER INFORMATION") (i) have
been prepared in good faith based upon assumptions believed by the Borrower to
be reasonable as of the date thereof (it being understood that actual results
may vary materially from the Other Information), and (ii) as of the Closing
Date, have not been modified in any material respect by the Borrower.
Section 3.12. Material Contracts. No Loan Party is in default in any
material respect in the performance, observance or fulfillment of any of its
obligations contained in (i) any Material Contract to which it is a party or
(ii) any agreement or instrument to which it is a party evidencing or governing
Indebtedness, with an aggregate principal amount in excess of $10,000,000,
except, in any case, where any such default would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
Section 3.13. Solvency. (a) Immediately after the consummation of the
Transactions to occur on the Closing Date and immediately following the making
of each Loan and after giving effect to the application of the proceeds of each
Loan (i) the fair value of the assets of the Loan Parties on a consolidated
basis, at a fair valuation, will exceed the debts and liabilities, direct,
subordinated, contingent or otherwise, of the Loan Parties on a consolidated
basis; (ii) the present fair saleable value of the property of the Loan Parties
on a consolidated basis will be greater than the amount that will be required to
pay the probable liability of the Loan Parties on a consolidated basis, on their
debts and other liabilities, direct, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (iii) the Loan
Parties on a consolidated basis will be able to pay their debts and liabilities,
direct, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (iv) the Loan Parties on a consolidated basis
will not have unreasonably small capital with which to
54
conduct the businesses in which they are engaged as such businesses are now
conducted and are proposed to be conducted following the Closing Date.
(b) The Loan Parties do not intend to incur debts beyond their ability to
pay such debts as they mature, taking into account the timing and amounts of
cash to be received by the Loan Parties and the timing and amounts of cash to be
payable by the Loan Parties on or in respect of their Indebtedness.
Section 3.14. Insurance. Schedule 3.14 sets forth a true, complete and
correct description of all insurance maintained by or on behalf of the Loan
Parties and the Subsidiaries as of the Closing Date. As of the Closing Date, all
such insurance is in full force and effect and all premiums in respect of such
insurance have been duly paid. The Borrower believes that the insurance
maintained by or on behalf of the Borrower and the Subsidiaries is adequate and
is in accordance with normal industry practice for similar companies engaged in
the same business as the Borrower and its Subsidiaries located in similar
countries.
Section 3.15. Capitalization and Subsidiaries. Schedule 3.15 sets forth, in
each case as of the Closing Date, (a) a correct and complete list of the name
and relationship to the Borrower of each and all of the Borrower's Subsidiaries,
(b) a true and complete listing of each class of each of the Borrower's
authorized Capital Stock, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of record
by the Persons identified on Schedule 3.15, and (c) the type of entity of the
Borrower and each of its Subsidiaries. All of the issued and outstanding Capital
Stock of the Subsidiaries owned by any Loan Party have been (to the extent such
concepts are relevant with respect to such ownership interests) duly authorized
and issued and are fully paid and non-assessable free and clear of all Liens
(other than Liens created under the Loan Documents, the ABL Security Documents
and non-consensual Permitted Liens).
Section 3.16. Security Interest in Collateral. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral of the type in which a security interest can be created under Article
9 of the UCC in favor of the Collateral Agent, for the benefit of the Collateral
Agent and the Lenders; and upon the proper filing of UCC financing statements
required pursuant to paragraph (l) of Article 4 and any Mortgages with respect
to any Mortgaged Properties, such Liens constitute perfected and continuing
Liens on the Collateral (to the extent a security interest in such Collateral
and any proceeds of any item of Collateral can be perfected through the filing
of UCC financing statements), securing the Secured Obligations, enforceable
against the applicable Loan Party and all third parties, and having priority
over all other Liens on the Collateral except in the case of (a) Permitted
Liens, to the extent any such Permitted Liens would have priority over the Liens
in favor of the Collateral Agent pursuant to any applicable law, (b) Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Collateral Agent has not obtained or does not maintain
possession of such Collateral and (c) subject to and as provided for under the
terms of the Intercreditor Agreement, the Liens granted under the ABL Security
Documents.
Section 3.17. Labor Disputes. As of the Closing Date, except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect: (a) there are no strikes, lockouts or slowdowns against
any Loan Party pending or, to the knowledge of the
55
Borrower, threatened, (b) the hours worked by and payments made to employees of
the Loan Parties and the Subsidiaries have not been in violation of the Fair
Labor Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters and (c) all payments due from any Loan Party or any
Subsidiary, on account of wages and employee health and welfare insurance and
other benefits, have been paid or accrued as a liability on the books of the
Loan Party or such Subsidiary to the extent required by GAAP. Except as,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect, the consummation of the Transactions will not give rise
to a right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which Holdings, the Borrower or any
of the Subsidiaries (or any predecessor) is a party or by which Holdings, the
Borrower or any of the Subsidiaries (or any predecessor) is bound.
Section 3.18. Federal Reserve Regulations. (a) On the Closing Date, none of
the Collateral is Margin Stock.
(b) None of Holdings, the Borrower and the Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of buying or carrying Margin Stock.
(c) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any purpose
that entails a violation of, or that is inconsistent with, the provisions of
Regulation T, U or X.
Section 3.19. Senior Debt. The Obligations constitute "SENIOR DEBT" and
"DESIGNATED SENIOR DEBT" under and as defined in the Senior Subordinated Note
Documents.
Section 3.20. Sanctioned Persons. None of Holdings, the Borrower or any
Subsidiary nor, to the knowledge of the Borrower, any director, officer, agent,
employee or Affiliate of Holdings, the Borrower or any Subsidiary is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department ("OFAC"); and the Borrower will not
directly or indirectly use the proceeds of the Loans or otherwise make available
such proceeds to any person, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.
ARTICLE 4
CONDITIONS
Section 4.01. Closing Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) Credit Agreement and Loan Documents. The Administrative Agent (or its
counsel) shall have received (i) from each party hereto either (A) a counterpart
of this Agreement signed on behalf of such party or (B) written evidence
reasonably satisfactory to the Administrative Agent (which may include facsimile
transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement and (ii) duly executed copies of the
56
Loan Documents and such other certificates, documents, instruments and
agreements as the Administrative Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other Loan
Documents, including any promissory notes requested by a Lender at least three
(3) Business Days prior to the Closing Date pursuant to Section 2.07.
(b) Legal Opinions. The Administrative Agent shall have received, on behalf
of itself and the Lenders on the Closing Date, a favorable written opinion of
(i) Ropes & Xxxx LLP, counsel for Holdings and the Borrower, in form and
substance reasonably satisfactory to the Administrative Agent and (ii) local or
other counsel reasonably satisfactory to the Administrative Agent as specified
on Schedule 4.01(b), in each case (A) dated the Closing Date, (B) addressed to
the Agents and the Lenders and (C) in form and substance reasonably satisfactory
to the Administrative Agent and covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request.
(c) Financial Statements and Pro Forma Financial Statements. The
Administrative Agent shall have received the financial statements and pro forma
financial statements referred to in Section 3.04(a) and (b).
(d) Closing Certificates; Certified Certificate of Incorporation; Good
Standing Certificates. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Closing Date and executed by its
Secretary or Assistant Secretary, which shall (A) certify the resolutions of its
board of directors, members or other body authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, (B) identify by
name and title and bear the signatures of the officers of such Loan Party
authorized to sign the Loan Documents to which it is a party, and (C) contain
appropriate attachments, including the certificate or articles of incorporation
or organization of each Loan Party certified by the relevant authority of the
jurisdiction of organization of such Loan Party and a true and correct copy of
its by-laws or operating, management or partnership agreement, and (ii) a good
standing certificate as of a recent date for each Loan Party from its
jurisdiction of organization.
(e) No Default Certificate. The Administrative Agent shall have received a
certificate, signed by the chief financial officer or vice president of finance
of the Borrower, dated the Closing Date (i) stating that no Default has occurred
and is continuing and (ii) stating that the representations and warranties
contained in Article 3 are true and correct in all material respects as of such
date.
(f) Fees. The Agents shall have received all fees required to be paid by
the Borrower, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of legal counsel), on or before the Closing
Date.
(g) Lien and Judgment Searches. The Administrative Agent shall have
received the results of recent lien and judgment searches reasonably required by
the Administrative Agent, and such search shall reveal no material judgments and
no liens on any of the assets of the Loan Parties except for Permitted Liens or
Liens discharged on or prior to the Closing Date pursuant to a pay-off letter or
other documentation reasonably satisfactory to the Administrative Agent.
57
(h) Pay-Off Letter. The Administrative Agent shall have received a pay-off
letter reasonably satisfactory to it in respect of the repayment of all amounts
outstanding under or in respect of the Existing Credit Agreement, confirming
that all Liens upon any of the property of the Loan Parties constituting
Collateral arising under the Existing Credit Agreements, if any, have been or
will be terminated concurrently with such payment and all letters of credit
issued or guaranteed as part of such Indebtedness shall have been cash
collateralized or supported by a letter of credit issued under the Senior
Secured Asset-Based Revolving Credit Facility.
(i) Solvency. The Administrative Agent shall have received a customary
certificate from the chief financial officer or vice president of finance of the
Borrower certifying that Holdings and its Subsidiaries, on a consolidated basis
after giving effect to the Transactions to occur on the Closing Date, are
solvent (within the meaning of Section 3.13).
(j) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent shall
have received (i) the certificates representing the Capital Stock pledged
pursuant to the Pledge and Security Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized officer
of the pledgor thereof and (ii) each promissory note (if any) pledged to the
Collateral Agent pursuant to the Pledge and Security Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.
(k) Perfection Certificate; Filings, Registrations and Recordings. The
Administrative Agent shall have received a completed Perfection Certificate
dated the Closing Date and signed by a Responsible Officer of the Borrower,
together with all attachments contemplated thereby. Each document (including any
UCC financing statement) required by the Collateral Documents (except for the
Mortgages) or under law or reasonably requested by the Agents to be filed,
registered or recorded in order to create in favor of the Collateral Agent, for
the benefit of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than with
respect to Permitted Liens), shall be in proper form for filing, registration or
recordation. The Collateral Agent, on behalf of the Lenders, shall have a
security interest in the Collateral of the type and priority described in the
Collateral Documents (except for the Mortgages) (subject to Liens permitted by
Section 6.02 and, subject to the terms of the Intercreditor Agreement, the Liens
granted under the ABL Security Documents).
(l) Other Indebtedness. After giving effect to the Transactions and the
other transactions contemplated hereby, Holdings, the Borrower and the
Subsidiaries shall not have any outstanding Indebtedness or Preferred Stock
other than (i) the Obligations, (ii) Indebtedness under the Senior Secured
Asset-Based Revolving Credit Facility, (iii) the Senior Subordinated Notes, and
(iv) Indebtedness permitted under Section 6.01.
(m) Insurance. The Administrative Agent shall have received evidence of
insurance coverage in compliance with the terms of Section 5.05 hereof and
Section 4.10 of the Pledge and Security Agreement.
(n) Other Financing. The Borrower shall have obtained the Senior Secured
Asset-Based Revolving Credit Facility. The terms and conditions of the Senior
Secured Asset-Based Revolving Credit Facility shall be reasonably satisfactory
to the Administrative Agent.
58
(o) Intercreditor Agreement. The Intercreditor Agreement shall have been
duly executed and delivered by each party thereto, and shall be in full force
and effect.
(p) USA PATRIOT Act. The Administrative Agent shall have received all
documentation and other information reasonably requested by it that is required
by regulatory authorities under applicable "know your customer" and anti-money
laundering rules and regulations, including the USA PATRIOT Act.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document (other than contingent indemnification obligations for which no
claim has been made) have been paid in full in cash, the Loan Parties covenant
and agree, jointly and severally, with the Lenders that:
Section 5.01. Financial Statements and Other Reports. The Borrower will
deliver to the Administrative Agent for delivery to each Lender:
(a) Monthly Reports. As soon as available, and in any event within
thirty-five (35) days after the end of each fiscal month ending after the
Closing Date (or within forty-five (45) days after the end of each month (x)
which ends a Fiscal Quarter or (y) for the first six months after the Closing
Date), the consolidated balance sheet of the Borrower and its Subsidiaries as at
the end of such month and the related consolidated statements of income,
stockholders' equity and cash flows of the Borrower and its Subsidiaries for
such month and for the period from the beginning of the then current Fiscal Year
to the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal Year
and the corresponding figures from the Financial Plan for the current Fiscal
Year, to the extent prepared on a monthly basis, all in reasonable detail,
together with a Financial Officer Certification with respect thereto;
(b) Quarterly Financial Statements. As soon as available, and in any event
within forty-five (45) days after the end of each of the first three Fiscal
Quarters of each Fiscal Year (or any later date by which under applicable
Securities and Exchange Commission rules the Borrower is required to file its
Quarterly Report on Form 10-Q) the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated (including with respect to statements of income, a breakdown
between wholesale and retail operations) statements of income, stockholders'
equity and cash flows of the Borrower and its Subsidiaries for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in comparative form
the corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the Financial Plan for the current
Fiscal Year, all in reasonable detail, together with a Financial Officer
Certification and a Narrative Report with respect thereto;
(c) Annual Financial Statements. As soon as available, and in any event
within ninety (90) days after the end of each Fiscal Year (or any later date by
which under applicable
59
Securities and Exchange Commission rules the Borrower is required to file its
Annual Report on Form 10-K), (i) the consolidated balance sheet of the Borrower
and its Subsidiaries as at the end of such Fiscal Year and the related
consolidated (with respect to statements of income, a breakdown between
wholesale and retail operations) statements of income, stockholders' equity and
cash flows of the Borrower and its Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan for
the Fiscal Year covered by such financial statements, in reasonable detail,
together with a Financial Officer Certification and a Narrative Report with
respect thereto; and (ii) with respect to such consolidated financial statements
a report thereon of Ernst & Young LLP or other independent certified public
accountants of recognized national standing selected by the Borrower, and
reasonably satisfactory to the Administrative Agent (which report shall be
unqualified as to going concern and scope of audit, and shall state that such
consolidated financial statements fairly present, in all material respects, the
consolidated financial position of the Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for the
periods indicated in conformity with accounting principles generally accepted in
the United States and that the examination by such accountants in connection
with such consolidated financial statements has been made in accordance with
generally accepted auditing standards) together with a written statement by the
independent certified public accountants giving the report thereon (a) stating
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters, (b)
stating whether, in connection with their audit examination, any condition or
event that constitutes an Event of Default or Default has come to their
attention and, if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain knowledge of
any such Event of Default or Default that would not be disclosed in the course
of their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to believe
either or both that the information contained in the certificates delivered
therewith pursuant to this Section 5.01(c) above is not correct or that the
matters set forth in the Compliance Certificates delivered therewith pursuant to
Section 5.01(d) for the applicable Fiscal Year are not stated in accordance with
the terms of this Agreement;
(d) Compliance Certificate. Together with each delivery of financial
statements of the Borrower and its Subsidiaries (i) pursuant to Section 5.01(b)
and 5.01(c) a duly executed and completed Compliance Certificate demonstrating
in reasonable detail compliance during and at the end of the applicable
accounting periods with the restrictions contained in Article 6, in each case to
the extent compliance with such restrictions is required to be tested at the end
of the applicable accounting period and (ii) pursuant to Section 5.01(c) with
respect to any Net Proceeds received by the Borrower or any of its Subsidiaries
during the Fiscal Year covered by such financial statements, whether or not all
or any portion of such Net Proceeds have been re-invested or committed to be
re-invested pursuant to the definition of Net Proceeds;
(e) Statements of Reconciliation After Change in Accounting Principles. If,
as a result of any change in accounting principles and policies from those used
in the preparation of the consolidated financial statements of the Borrower and
its Subsidiaries for the Fiscal Year ended December 31, 2006, the consolidated
financial statements of the Borrower and its Subsidiaries
60
delivered pursuant to Section 5.01(b) or 5.01(c) will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then, together with the first delivery of
such financial statements after such change, one or more statements of
reconciliation in form and substance reasonably satisfactory to the
Administrative Agent;
(f) Notice of Default. Promptly upon any officer of Holdings or the
Borrower obtaining knowledge (i) of any condition or event that constitutes a
Default or an Event of Default or that notice has been given to the Borrower
with respect thereto; (ii) that any Person has given any notice to the Borrower
or any of its Subsidiaries or taken any other action with respect to any event
or condition set forth in Section 7.01(b); or (iii) of the occurrence of any
event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers Certificate specifying the
nature and period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of such
claimed Event of Default, Default, default, event or condition, and what action
the Borrower has taken, is taking and proposes to take with respect thereto;
(g) Notice of Litigation. Promptly upon any officer of Holdings or the
Borrower obtaining knowledge of (i) the institution of, or non-frivolous threat
of, any Adverse Proceeding not previously disclosed in writing by the Borrower
to the Lenders, or (ii) any material development in any Adverse Proceeding that,
in the case of either (i) or (ii) if adversely determined, could be reasonably
expected to have a Material Adverse Effect, or seeks to enjoin or otherwise
prevent the consummation of, or to recover any damages or obtain relief as a
result of, the transactions contemplated hereby, written notice thereof together
with such other information as may be reasonably available to the Borrower to
enable the Lenders and their counsel to evaluate such matters;
(h) ERISA. (i) Promptly upon becoming aware of the occurrence of any ERISA
Event, a written notice specifying the nature thereof, and (ii) upon reasonable
prior request and with reasonable promptness, copies of (1) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (2) all
notices received by the Borrower or any of its Subsidiaries from a Multiemployer
Plan sponsor or ERISA Affiliate concerning an ERISA Event; and (3) copies of
such other documents or governmental reports or filings relating to any Employee
Benefit Plan as the Administrative Agent shall reasonably request;
(i) Financial Plan. As soon as practicable and in any event no later than
forty-five (45) days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year and each Fiscal Year (or
portion thereof) through the final maturity date of the Loans (a "FINANCIAL
PLAN"), including (i) a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of the Borrower and its
Subsidiaries for each such Fiscal Year, together with pro forma Compliance
Certificates for each such Fiscal Year and an explanation of the assumptions on
which such forecasts are based, (ii) forecasted consolidated statements of
income and cash flows of the Borrower and its Subsidiaries for each month of the
first such Fiscal Year;
61
(j) Insurance Report. Together with the financial statements required by
Section 5.01(c) for each Fiscal Year, a report in form and substance
satisfactory to the Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by the Borrower and its
Subsidiaries and all material insurance coverage planned to be maintained by the
Borrower and its Subsidiaries in the immediately succeeding Fiscal Year;
(k) Notice of Change in Board of Directors. With reasonable promptness,
written notice of any change in the board of directors (or similar governing
body) of Holdings;
(l) Notice Regarding Material Contracts. Promptly, and in any event within
ten (10) Business Days after any Material Contract of the Borrower or any of its
Subsidiaries is terminated or amended in a manner that is materially adverse to
the Borrower or such Subsidiary, as the case may be;
(m) Information Regarding Collateral. The Borrower will furnish to the
Collateral Agent prompt written notice of any change (i) in any Loan Party's
corporate name, (ii) in any Loan Party's identity or corporate structure, (iii)
in any Loan Party's jurisdiction of organization (to the extent permitted by the
Pledge and Security Agreement) or (iv) in any Loan Party's Federal Taxpayer
Identification Number or organizational identification number. The Borrower
agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at all times
following such change to have a valid, legal and perfected security interest in
all the Collateral as contemplated in the Collateral Documents. The Borrower
also agrees promptly to notify the Collateral Agent if any material portion of
the Collateral is damaged or destroyed;
(n) Annual Collateral Verification. Each year, at the time of delivery of
annual financial statements with respect to the preceding Fiscal Year pursuant
to Section 5.01(c), the Borrower shall deliver to the Collateral Agent a
Perfection Certificate Supplement either confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Closing Date or the date of the most recent certificate
delivered pursuant to this Section and/or identifying such changes; and
(o) Other Information. (A) Promptly upon their becoming available, copies
of (i) all financial statements, reports, notices and proxy statements sent or
made available generally by the Borrower to its security holders acting in such
capacity or by any Subsidiary of the Borrower to its security holders other than
the Borrower or another Subsidiary of the Borrower, (ii) all regular and
periodic reports and all registration statements (other than on Form S-8 or
similar form) and prospectuses, if any, filed by the Borrower or any of its
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority, (iii) all press
releases and other statements made available generally by the Borrower or any of
its Subsidiaries to the public concerning material developments in the business
of the Borrower or any of its Subsidiaries, and (B) such other information and
data with respect to the Borrower or any of its Subsidiaries as from time to
time may be reasonably requested by the Administrative Agent or any Lender.
62
Documents required to be delivered pursuant to this Section 5.01 may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower's website on the Internet at the website
address listed on Schedule 9.01; (ii) on which such documents are posted on the
Borrower's behalf on IntraLinks/SyndTrak or another relevant website, if any, to
which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); or (iii) the date on which executed certificates or other documents are
faxed to the Administrative Agent (or electronically mailed to an address
provided by the Administrative Agent); provided that: (i) upon written request
by the Administrative Agent, the Borrower shall deliver paper copies of such
documents to the Administrative Agent for further distribution to each Lender
until a written request to cease delivering paper copies is given by the
Administrative Agent and (ii) the Borrower shall notify (which may be by
facsimile or electronic mail) the Administrative Agent of the posting of any
such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents.
Section 5.02. Existence. Except as otherwise permitted under Section 6.09,
each Loan Party will, and will cause each of its Subsidiaries to, at all times
preserve and keep in full force and effect its existence and all rights and
franchises, licenses and permits material to its business except to the extent
failure to do so could not reasonably be expected to result in a Material
Adverse Effect; provided, no Loan Party or any of its Subsidiaries shall be
required to preserve any such existence, right or franchise, licenses and
permits if such Person's board of directors (or similar governing body) shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of such Person, and that the loss thereof is not disadvantageous in
any material respect to such Person or to the Lenders.
Section 5.03. Payment of Taxes and Claims. Each Loan Party will, and will
cause each of its Subsidiaries to, pay all material Taxes imposed upon it or any
of its properties or assets or in respect of any of its income, businesses or
franchises before any penalty or fine accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, no such Tax or claim need be paid if
(i) it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (a) adequate reserve or other
appropriate provision, as shall be required in conformity with GAAP, shall have
been made therefor, and (b) in the case of a Tax or claim which has or may
become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such Tax or claim or (ii) failure to pay or discharge the same could not
reasonably be expected to result in a Material Adverse Effect. No Loan Party
will, nor will it permit any of its Subsidiaries to, file or consent to the
filing of any consolidated income tax return with any Person (other than
Holdings or any of its Subsidiaries).
Section 5.04. Maintenance of Properties. Each Loan Party will, and will
cause each of its Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear excepted, all
material properties used in the business of the Borrower and its Subsidiaries
and from time to time will make or cause to be made all
63
appropriate repairs, renewals and replacements thereof except where the failure
to maintain such properties could not reasonably be expected to have a Material
Adverse Effect.
Section 5.05. Insurance. Holdings will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of Holdings and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by Persons of
established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for such
Persons. Without limiting the generality of the foregoing, the Borrower will
maintain or cause to be maintained (a) flood insurance with respect to each
Flood Hazard Property that is located in a community that participates in the
National Flood Insurance Program, in each case in compliance with any applicable
regulations of the Board of Governors of the Federal Reserve System, and (b)
replacement value casualty insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times carried or maintained
under similar circumstances by Persons of established reputation engaged in
similar businesses. Each such policy of insurance shall (i) name the Collateral
Agent, on behalf of the Lenders as an additional insured thereunder as its
interests may appear and (ii) in the case of each casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to the Collateral Agent, that names the Collateral Agent, on behalf of the
Lenders as the loss payee thereunder for any covered loss in excess of
$1,500,000 and provides for at least thirty (30) days' prior written notice to
the Collateral Agent of any modification or cancellation of such policy.
Section 5.06. Inspections. Each Loan Party will, and will cause each of its
Subsidiaries to, permit any authorized representatives designated by any Agent
to visit and inspect any of the properties of any Loan Party and any of its
respective Subsidiaries, to inspect, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that the Borrower may, if it so chooses, be present at or participate
in any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested;
provided, that, excluding such visits and inspections during the continuation of
an Event of Default, only the Administrative Agent on behalf of the Lenders may
exercise the rights of the Administrative Agent and the Lenders under this
Section 5.06 and the Administrative Agent shall not exercise such rights more
often than two (2) times during any calendar year, absent the existence of an
Event of Default and only one (1) such time shall be at the Borrower's expense;
provided further that when an Event of Default exists, the Administrative Agent
or any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of the Borrower at any
time during normal business hours and upon reasonable advance notice.
Section 5.07. Lenders Meetings. The Borrower will, upon the request of the
Administrative Agent or Required Lenders, participate in a meeting of the
Administrative Agent and the Lenders once during each Fiscal Year to be held at
the Borrower's corporate offices (or
64
at such other location as may be agreed to by the Borrower and the
Administrative Agent) at such time as may be agreed to by the Borrower and the
Administrative Agent.
Section 5.08. Compliance with Laws. Each Loan Party will comply, and shall
cause each of its Subsidiaries and all other Persons, if any, on or occupying
any Facilities to comply, with the requirements of all applicable laws, rules,
regulations and orders of any Governmental Authority (including all
Environmental Laws), noncompliance with which could reasonably be expected to
have a Material Adverse Effect.
Section 5.09. Environmental.
(a) Environmental Disclosure. The Borrower will deliver to the
Administrative Agent and the Lenders:
(i) as soon as practicable following receipt thereof, copies of all
environmental audits, investigations, analyses and reports of any kind or
character, whether prepared by personnel of the Borrower or any of its
Subsidiaries or by independent consultants, governmental authorities or any
other Persons, with respect to significant environmental matters at any
Facility or with respect to any Environmental Claims that might reasonably
be expected to have a Material Adverse Effect;
(ii) promptly upon the occurrence thereof, written notice describing
in reasonable detail (1) any Release required to be reported by the
Borrower or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws,
(2) any remedial action taken by the Borrower or any of its Subsidiaries or
any other Persons of which the Borrower has knowledge in response to (A)
any Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a Material Adverse Effect, or (B) any
Environmental Claims that, individually or in the aggregate, have a
reasonable possibility of resulting in a Material Adverse Effect, and (3)
the Borrower's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that reasonably could
be expected to cause such Facility or any part thereof to be subject to any
material restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws;
(iii) as soon as practicable following the sending or receipt thereof
by the Borrower or any of its Subsidiaries, a copy of any and all written
communications with respect to (1) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (2) any Release required to be reported
by the Borrower or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency, and (3) any request made to the Borrower
or any of its Subsidiaries for information from any governmental agency
that suggests such agency is investigating whether the Borrower or any of
its Subsidiaries may be potentially responsible for any Hazardous Materials
Activity which is reasonably expected to have a Material Adverse Effect;
65
(iv) prompt written notice describing in reasonable detail (1) any
proposed acquisition of stock, assets, or property by the Borrower or any
of its Subsidiaries that could reasonably be expected to (A) expose the
Borrower or any of its Subsidiaries to, or result in, Environmental Claims
that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or (B) result in the Borrower or any
of its Subsidiaries failing to maintain in full force and effect all
material Governmental Authorizations required under any Environmental Law
for their respective operations and (2) any proposed action to be taken by
the Borrower or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject the Borrower or any of
its Subsidiaries to any additional material obligations or requirements
under any Environmental Law; and
(v) with reasonable promptness, such other documents and information
as from time to time may be reasonably requested by the Administrative
Agent in relation to any matters disclosed pursuant to this Section
5.09(a).
(b) Hazardous Materials Activities, Etc. Each Loan Party shall promptly
take, and shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental Laws by
such Loan Party or its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect, and (ii) make an appropriate response to any
Environmental Claim against such Loan Party or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where failure to
do so could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
Section 5.10. Maintenance of Ratings. Holdings and the Borrower shall use
their commercially reasonable efforts to (i) maintain a corporate rating of the
Borrower from S&P and a corporate family rating of the Borrower from Xxxxx'x and
(ii) cause the credit facility provided for herein to be continuously rated by
S&P and Xxxxx'x.
Section 5.11. Use of Proceeds. The proceeds of the Loans will be used only
for the purposes specified in the introductory statement to this Agreement. No
part of the proceeds of any Loan will be used, whether directly or indirectly,
for any purpose that would entail a violation of Regulations T, U or X.
Section 5.12. Additional Collateral; Further Assurances. (a) Subject to
applicable law, the Borrower and each Subsidiary that is a Loan Party shall
cause each of its Domestic Subsidiaries formed or acquired after the date of
this Agreement to become a Loan Party as promptly thereafter as reasonably
practicable by executing a Joinder Agreement in substantially the form set forth
as Exhibit D hereto (the "JOINDER AGREEMENT"). Upon execution and delivery
thereof, each such Person (i) shall automatically become a Loan Guarantor
hereunder and thereupon shall have all of the rights, benefits, duties, and
obligations in such capacity under the Loan Documents and (ii) will
simultaneously therewith or as soon as practicable thereafter grant Liens to the
Collateral Agent, for the benefit of the Collateral Agent and the Lenders and
each other Secured Party, in each case to the extent required by the terms
thereof, in any property (subject to the limitations with respect to Capital
Stock set forth in paragraph (b) of this Section 5.12, the limitations with
respect to real property set forth in paragraph (e) of this Section 5.12, and
any other limitations set forth in the Pledge and Security Agreement) of such
Loan Party
66
which constitutes Collateral, on such terms as may be required pursuant to the
terms of the Collateral Documents and in such priority as may be required
pursuant to the terms of the Intercreditor Agreement.
(b) The Borrower and each Subsidiary that is a Loan Party will cause (i)
100% of the issued and outstanding Equity Interests of each of its Domestic
Subsidiaries, other than any Domestic Subsidiary taxed as a partnership for
Federal income tax purposes that holds Capital Stock of a Foreign Subsidiary
whose Capital Stock pledged pursuant to clause (ii) below, and (ii) 65% of the
issued and outstanding Equity Interests entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity
Interests not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) in each Foreign Subsidiary directly owned by the Borrower or any
Subsidiary that is a Loan Party to be subject at all times to a first priority
(subject to Permitted Liens and the Intercreditor Agreement) perfected Lien in
favor of the Collateral Agent pursuant to the terms and conditions of the Loan
Documents or other security documents as the Agents shall reasonably request.
(c) Without limiting the foregoing, each Loan Party will, and will cause
each Subsidiary that is a Loan Party to, execute and deliver, or cause to be
executed and delivered, to the Agents such documents, agreements and
instruments, and will take or cause to be taken such further actions (including
the filing and recording of financing statements, fixture filings, mortgages,
deeds of trust and other documents and such other actions or deliveries of the
type required by Article 4, as applicable, which the Agents may, from time to
time, reasonably request) to carry out the terms and conditions of this
Agreement and the other Loan Documents and to ensure perfection and priority of
the Liens created or intended to be created by the Collateral Documents (to the
extent required therein), all at the expense of the Loan Parties.
(d) Subject to the limitations set forth or referred to in this Section
5.12, if any Material Real Estate Assets are acquired by any Loan Party after
the Closing Date (other than assets constituting Collateral under the Pledge and
Security Agreement that become subject to the Lien in favor of the Collateral
Agent upon acquisition thereof), the Borrower will notify the Administrative
Agent and the Lenders thereof, and, if requested by the Administrative Agent or
the Required Lenders, the Borrower will cause such assets to be subjected to a
Lien securing the Secured Obligations and will take, and cause the Loan Parties
that are Subsidiaries to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such Liens, including
actions described in paragraph (c) of this Section, all at the expense of the
Loan Parties.
(e) Notwithstanding anything to the contrary in this Section 5.12, real
property required to be mortgaged under this Section 5.12, shall be limited to
Material Real Estate Assets (provided that the cost of perfecting such Lien is
not unreasonable in relation to the benefits to the Lenders of the security
afforded thereby in the Administrative Agent's reasonable judgment after
consultation with the Borrower).
Section 5.13. Post-closing Items. Holdings and the Borrower shall, and the
Borrower shall cause each Subsidiary to, take all necessary actions to within 30
days following the Closing Date (or 90 days in the case of the Mortgage covering
the Xxxxxxx Distribution Center) cause the Mortgages to be recorded and in
connection therewith deliver title insurance policies (including
67
endorsements thereon), surveys, local counsel opinions and other documentation
that the Administrative Agent shall reasonably require.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees, expenses and other amounts payable under any
Loan Document (other than contingent indemnification obligations for which no
claim has been made) have been paid in full in cash, the Loan Parties covenant
and agree, jointly and severally, with the Lenders that:
Section 6.01. Indebtedness. No Loan Party shall, nor shall it permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty,
or otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except:
(a) the Obligations;
(b) (i) Indebtedness of any Subsidiary Guarantor to the Borrower or to any
other Subsidiary Guarantor, or of the Borrower to any Subsidiary Guarantor;
provided (ii) all such Indebtedness shall be evidenced by intercompany
promissory notes and all such notes shall be subject to a First Priority Lien
pursuant to the Pledge and Security Agreement, (iii) all such Indebtedness shall
be unsecured and subordinated in right of payment to the Obligations pursuant to
the terms of the applicable promissory notes or an intercompany subordination
agreement that in any such case is reasonably satisfactory to the Administrative
Agent and (iv) any Indebtedness owed by a Foreign Subsidiary to a Loan Party;
provided that (v) all such Indebtedness shall be evidenced by promissory notes
and all such notes shall be subject to a First Priority Lien pursuant the Pledge
and Security Agreement and (vi) the aggregate outstanding principal amount of
Indebtedness of, and the aggregate amount of Investments in, Foreign
Subsidiaries pursuant to this Section 6.01(b)(iv), Section 6.01(j), Section
6.01(q) and Section 6.07(g) shall not exceed $30,000,000;
(c) the Senior Subordinated Notes;
(d) Indebtedness incurred by the Borrower or any of its Subsidiaries
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations, contingent earnout obligations incurred in
connection with Asset Sales or other sales or purchases of assets, or from
guaranties or letters of credit, surety bonds or performance bonds securing the
performance of the Borrower or any such Subsidiary pursuant to such agreements,
in connection with Permitted Acquisitions or permitted dispositions of any
business, assets or Subsidiary of the Borrower or any of its Subsidiaries;
(e) Indebtedness which may be deemed to exist pursuant to any guaranties or
performance, surety, statutory, appeal or similar obligations incurred in the
ordinary course of business;
68
(f) Indebtedness in respect of Banking Service Obligations and other
netting services, overdraft protections and otherwise in connection with Deposit
Accounts;
(g) guaranties of the obligations of suppliers, customers, franchisees and
licensees by the Borrower and its Subsidiaries in the ordinary course of
business and consistent with past practice;
(h) guaranties by the Borrower of Indebtedness or other obligations of a
Subsidiary Guarantor or guaranties by a Subsidiary of the Borrower of
Indebtedness or other obligations of the Borrower or a Subsidiary Guarantor with
respect, in each case, to Indebtedness otherwise permitted to be incurred
pursuant to this Section 6.01 or obligations not prohibited by this Agreement;
(i) Indebtedness described in Schedule 6.01(i);
(j) the Borrower's Foreign Subsidiaries may become and remain liable with
respect to Indebtedness; provided that the aggregate outstanding principal
amount of Indebtedness of, and the aggregate amount of Investments in, Foreign
Subsidiaries pursuant to Section 6.01(b)(iv), this Section 6.01(j), Section
6.01(q) and Section 6.07(g) shall not exceed $30,000,000;
(k) Indebtedness of the Borrower and its Subsidiaries with respect to the
Xxxxxxx Distribution Center Permanent Financing;
(l) Indebtedness consisting of (i) the financing of insurance premiums or
(ii) take-or-pay obligations contained in supply arrangements, in each case, in
the ordinary course of business;
(m) Indebtedness with respect to Capital Leases and purchase money
Indebtedness, in each case incurred within 180 days of the acquisition or
completion of construction or installation of the assets acquired in connection
with the incurrence of such Indebtedness in an aggregate amount not to exceed at
any time $25,000,000 (including any Indebtedness acquired in connection with a
Permitted Acquisition); provided any such Indebtedness (i) shall be secured only
to the asset acquired in connection with the incurrence of such Indebtedness and
(ii) shall constitute not less than 50% of the aggregate consideration paid with
respect to such asset;
(n) Indebtedness of a Person that becomes a Subsidiary or other
Indebtedness assumed in connection with a Permitted Acquisition after the
Closing Date; provided that (i) such Indebtedness existed at the time such
Person became a Subsidiary and was not created in anticipation thereof and (ii)
the aggregate amount of such Indebtedness shall not exceed $25,000,000 at any
time outstanding;
(o) Indebtedness of Holdings owed to stockholders to repurchase stock or
options from such stockholders; provided that (i) such Indebtedness shall be
subordinated in right of payment to the Obligations on terms and conditions
satisfactory to the Administrative Agent and the Arrangers, (ii) matures after
the Maturity Date, (iii) requires no scheduled payment of principal or cash
interest payments prior to its maturity and (iv) the aggregate amount of such
69
Indebtedness shall not exceed $10,000,000 in any Fiscal Year and $25,000,000 in
the aggregate from the Closing Date to the date of determination;
(p) the Borrower and its Subsidiaries may become and remain liable for any
Indebtedness replacing or refinancing any Indebtedness permitted under clauses
(i), (k), (m), (n) and (v) of this Section 6.01; provided that (i) the principal
amount of such Indebtedness does not exceed the principal amount of the
Indebtedness being refinanced or replaced, (ii) such Indebtedness has a final
maturity on or later than the final maturity of the Indebtedness being
refinanced or replaced and a weighted average life to maturity equal to or
greater than the weighted average life to maturity of the Indebtedness being
refinanced or replaced, (iii) the interest rate (or, where applicable, interest
rate margin) and fees applicable to such Indebtedness are not higher than those
applicable to the Indebtedness being refinanced or replaced, (iv) the covenants,
defaults and prepayment provisions, taken as a whole, are not more burdensome or
restrictive on the Borrower and its Subsidiaries than those applicable to the
Indebtedness being refinanced or replaced, (v) such Indebtedness is secured only
by Liens permitted under Section 6.02 for the Indebtedness being refinanced or
replaced, (vi) such Indebtedness is incurred by the Borrower or the Subsidiary
that is the obligor on the Indebtedness being refinanced or replaced, (vii) if
the Indebtedness being refinanced or replaced is subordinated to the
Obligations, such Indebtedness is subordinated to the Obligations on terms not
less favorable to the Lenders than those applicable to the Indebtedness being
refinanced or replaced and (viii) Indebtedness of the Borrower or a Subsidiary
shall not refinance Indebtedness of an Unrestricted Subsidiary;
(q) Foreign Subsidiaries may become and remain liable with respect to
Indebtedness in respect of other commercial letters of credit obtained in the
ordinary course of business; provided that the aggregate outstanding principal
amount of Indebtedness of, and the aggregate amount of Investments in, Foreign
Subsidiaries pursuant to Section 6.01(b)(iv), Section 6.01(j), this Section
6.01(q) and Section 6.07(g) shall not exceed $30,000,000;
(r) guaranties by the Borrower of Indebtedness of a Foreign Subsidiary that
is permitted to be incurred pursuant to Section 6.01(j);
(s) Indebtedness under any Hedge Agreements entered into for the purpose of
hedging risks associated with Holdings' and its Subsidiaries' operations and not
for speculative purposes;
(t) contingent obligations in respect of corporate leases assigned, sold or
otherwise transferred to a franchisee (i) set forth on Schedule 6.01(t); and
(ii) incurred or created after the date hereof in connection with the sale of
retail stores; provided that in the case of clause (ii) above, (x) to the extent
the aggregate amount of all contingent obligations incurred thereunder exceeds
$30,000,000, the amount of such excess shall be included as Consolidated Total
Debt for purposes of the Leverage Ratio; and (y) all such contingent obligations
shall be unsecured and shall not permit a cross-default to this Agreement;
(u) other Indebtedness of the Borrower and its Subsidiaries in an aggregate
amount not to exceed at any time $30,000,000;
(v) other Indebtedness if the Interest Coverage Ratio is at least 2.00 to
1.00, determined on a Pro Forma basis after giving effect to the incurrence of
such other Indebtedness;
70
(w) Indebtedness incurred pursuant to the Senior Secured Asset-Based
Revolving Credit Facility by the Borrower or any Subsidiary; provided that
immediately after giving effect to any such incurrence, the aggregate principal
amount of all Indebtedness incurred under this clause (w) and then outstanding
does not exceed the greater of (A) $200,000,000 and (B) the Borrowing Base at
such time;
(x) Indebtedness incurred in connection with Sale-Leaseback Transactions
permitted pursuant to Section 6.11; and
(y) without duplications of any other Indebtedness, non-cash accruals of
interest, accretion or amortization of original issue discount and
payment-in-kind interest with respect to Indebtedness hereunder.
Section 6.02. Liens. No Loan Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Holdings or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the UCC of any State or under any similar recording or notice
statute, except:
(a) Liens granted pursuant to the Collateral Documents to secure the
Secured Obligations;
(b) Liens for Taxes not then due or if due obligations with respect to such
Taxes that are not at such time required to be paid pursuant to Section 5.03 or
which are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted;
(c) statutory Liens of landlords, banks (and rights of set-off), carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law (other than any such Lien imposed pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in
the ordinary course of business (i) for amounts not yet overdue or (ii) for
amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of thirty (30) days) are being contested in good faith by
appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts;
(d) Liens incurred (i) in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security, or (ii) in the ordinary course of business to secure the performance
of tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money or other Indebtedness), or (iii) pledges and deposits in the ordinary
course of business securing liability for reimbursement or indemnification
obligations of (including obligations in respect of letters of credit or bank
guarantees for the benefit of) insurance carriers providing property, casualty
or liability insurance to Holdings and its Subsidiaries;
71
(e) easements, rights-of-way, restrictions, encroachments, and other minor
defects or irregularities in title, in each case which do not and could not
reasonably be expected to have a Material Adverse Effect;
(f) any (i) interest or title of a lessor or sublessor under any lease of
real estate permitted hereunder, (ii) landlord liens permitted by the terms of
any lease; (iii) restriction or encumbrance that the interest or title of such
lessor or sublessor may be subject to or (iv) subordination of the interest of
the lessee or sublessee under such lease to any restriction or encumbrance
referred to in the preceding clause (iii);
(g) Liens solely on any xxxx xxxxxxx money deposits made by the Borrower or
any of its Subsidiaries in connection with any letter of intent or purchase
agreement permitted hereunder;
(h) purported Liens evidenced by the filing of precautionary UCC financing
statements relating solely to operating leases of personal property entered into
in the ordinary course of business;
(i) 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;
(j) any zoning, building or similar law or right reserved to or vested in
any governmental office or agency to control or regulate the use or dimensions
of any real property or structure thereon;
(k) (i) licenses of patents, trademarks and other intellectual property
rights granted by the Borrower or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of the Borrower or such Subsidiary and (ii) leases or
subleases granted by Holdings or any of its Subsidiaries to third parties in
respect of surplus property that the Borrower determines is not necessary to the
operation of the business in the ordinary course of business; provided that such
leases and subleases are on arm's-length commercial terms and are otherwise
satisfactory to the Administrative Agent;
(l) Liens described in Schedule 6.02 and any modifications, replacements,
renewals or extensions thereof; provided that (i) the Lien does not extend to
any additional property other than (A) after-acquired property that is affixed
or incorporated into the property covered by such Lien or financed by
Indebtedness permitted under Section 6.01, and (B) proceeds and products
thereof, and (ii) the renewal, extension or refinancing of the obligations
secured or benefited by such Liens is permitted by Section 6.01;
(m) Liens on the Xxxxxxx Distribution Center Collateral securing the
Xxxxxxx Distribution Center Permanent Financing; provided that (i) such Liens
attach only to the Xxxxxxx Distribution Center Collateral and (ii) such Liens
shall be on a second priority basis to any Liens granted to the Collateral Agent
on the Xxxxxxx Distribution Center Collateral;
72
(n) (i) Liens securing Indebtedness permitted pursuant to Sections 6.01(k),
(l) and (m); provided that any such Lien shall encumber only the asset acquired
with the proceeds of such Indebtedness; and (ii) Liens securing Indebtedness
permitted pursuant to Section 6.01(p) (solely with respect to the permitted
refinancing of Indebtedness permitted pursuant to Sections 6.01(k), (l) and
(m)); provided that any such Lien not extend to any asset not covered by the
Lien securing the Indebtedness that is refinanced;
(o) (i) Indebtedness incurred pursuant to Section 6.01(n) may be secured by
Liens on assets acquired or financed through the incurrence of such Indebtedness
or on the assets of the newly acquired Subsidiary; provided that such
Indebtedness was not created in contemplation of the acquisition of such
Subsidiary by the Borrower or one of its Subsidiaries; and (ii) Liens securing
Indebtedness incurred pursuant to Section 6.01(p) (solely with respect to the
permitted refinancing of Indebtedness permitted pursuant to Section 6.01(n));
provided that such Lien shall not extend to any asset not covered by the Lien
securing the Indebtedness that is refinanced;
(p) Liens that are contractual rights of setoff relating to the
establishment of depositary relations with banks not given in connection with
the issuance of Indebtedness;
(q) Liens on foreign assets securing Indebtedness permitted pursuant to
Section 6.01(j);
(r) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or similar
agreements entered into in the ordinary course of business of the Borrower and
its Subsidiaries;
(s) Liens disclosed in a title report delivered on the Closing Date with
respect to any Mortgaged Property reasonably acceptable to the Collateral Agent;
(t) Liens securing the Indebtedness incurred pursuant to Section 6.01(w)
and subject to the Intercreditor Agreement;
(u) other Liens on assets securing Indebtedness in an aggregate amount not
to exceed $7,500,000 at any time outstanding;
(v) Liens securing judgments for the payment of money not constituting an
Event of Default under Section 7.01(h);
(w) leases, licenses, subleases or sublicenses granted to others in the
ordinary course of business which do not (i) interfere in any material respect
with the business of Holdings and its Subsidiaries (other than an Immaterial
Subsidiary), or (ii) secure any Indebtedness;
(x) Liens on property (i) of any Foreign Subsidiary that is not a Loan
Party and (ii) that does not constitute Collateral, which Liens secure
Indebtedness of the applicable Foreign Subsidiary permitted under Section 6.01;
(y) Liens existing on property (other than Inventory and Accounts) at the
time of its acquisition or existing on the property of any Person at the time
such Person becomes a Subsidiary Guarantor in each case after the date hereof
(other than Liens on the Capital Stock of any Person that becomes a Subsidiary
Guarantor); provided that (i) such Lien was not created in
73
contemplation of such acquisition or such Person becoming a Subsidiary
Guarantor, and (ii) such Lien does not extend to or cover any other assets or
property (other than the proceeds or products thereof and accessions or
additions thereto);
(z) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for sale of goods entered into by Holdings or any of its
Subsidiaries in the ordinary course of business permitted by this Agreement; and
(aa) Liens placed on the Capital Stock of any non-wholly owned Subsidiary
in the form of a transfer restriction, purchase option, call or similar right of
a third party joint venture partner.
Section 6.03. Equitable Lien. If any Loan Party or any of its Subsidiaries
shall create or assume any Lien upon any of its properties or assets, whether
now owned or hereafter acquired, other than Permitted Liens, it shall make or
cause to be made effective provisions whereby the Obligations will be secured by
such Lien equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured; provided,
notwithstanding the foregoing, this covenant shall not be construed as a consent
by Required Lenders to the creation or assumption of any such Lien not otherwise
permitted hereby.
Section 6.04. No Further Negative Pledges. Except with respect to (a)
specific property encumbered to secure payment of particular Indebtedness or to
be sold pursuant to an executed agreement with respect to a permitted Asset
Sale; (b) restrictions contained in agreements with respect to Indebtedness
incurred by Foreign Subsidiaries in accordance with this Agreement (provided
that such restrictions are limited to the property or assets of such Foreign
Subsidiary and its Subsidiaries); (c) restrictions contained in the Senior
Subordinated Notes Indenture or the Senior Secured Asset Based Revolving Credit
Agreement; (d) restrictions by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets secured by such
Liens or the property or assets subject to such leases, licenses or similar
agreements, as the case may be); (e) Liens permitted to be incurred under
Section 6.02 and restrictions in the agreements relating thereto that limit the
right of the Borrower or any of its Subsidiaries to dispose of or transfer the
assets subject to such Liens; (f) provisions limiting the disposition or
distribution of assets or property in joint venture agreements, sale-leaseback
agreements, stock sale agreements and other similar agreements, which limitation
is applicable only to the assets that are the subject of such agreements; (g)
any encumbrance or restriction in connection with an acquisition of property, so
long as such encumbrance or restriction relates solely to the property so
acquired and was not created in connection with or in anticipation of such
acquisition; (h) restrictions imposed by customary provisions in partnership
agreements, limited liability company organizational governance documents, joint
venture agreements and other similar agreements that restrict the transfer of
ownership interests in such partnership, limited liability company, joint
venture or similar Person; and (i) restrictions on cash or other deposits
imposed by customers under contracts entered into in the ordinary course of
business, no Loan Party nor any of its Subsidiaries shall enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
74
Section 6.05. Restricted Junior Payments. No Loan Party shall, nor shall it
permit any of its Subsidiaries or Affiliates through any manner or means or
through any other Person to, directly or indirectly, declare, order, pay, make
or set apart, or agree to declare, order, pay, make or set apart, any sum for
any Restricted Junior Payment, except that (a) the Borrower may make regularly
scheduled payments of interest in respect of any Subordinated Indebtedness in
accordance with the terms of, and only to the extent required by, and subject to
the subordination provisions contained in, the indenture or other agreement
pursuant to which such Subordinated Indebtedness was issued as such indenture or
other agreement may be amended from time to time to the extent permitted under
Section 6.14; (b) so long as no Default or Event of Default shall have occurred
and be continuing or shall be caused thereby, the Borrower may make Restricted
Junior Payments (i) in an aggregate amount not to exceed $500,000 in any Fiscal
Year, to the extent necessary to permit Holdings to pay general administrative
costs and expenses and (ii) to the extent necessary to permit Holdings to
discharge the consolidated tax liabilities of Holdings and its Subsidiaries, in
each case so long as Holdings applies the amount of any such Restricted Junior
Payment for such purpose; (c) so long as no Default or Event of Default shall
have occurred and be continuing or be caused thereby, Holdings may repurchase
stock and options from any stockholder (x) in exchange for notes issued pursuant
to Section 6.01(o), (y) in exchange for Capital Stock of Holdings or (z) in
exchange for Cash and Cash Equivalents (and the Borrower may make Restricted
Junior Payments to Holdings) in an amount not to exceed $10,000,000 in any
Fiscal Year; $25,000,000 in the aggregate from the Closing Date to the date of
determination; (d) the Borrower may make payments in respect of Management Fees
not to exceed $2,500,000 in any fiscal year; and (e) the Borrower may make
Restricted Junior Payments (and Holdings may itself make Restricted Junior
Payments with any such Restricted Junior Payments received by it from the
Borrower); provided that at the time it is paid by the Borrower, (i) such
Restricted Junior Payment is permitted pursuant to Section 4.07(a)(3) or Section
4.07(b)(11) of the Senior Subordinated Notes Indenture (as in effect on the date
hereof and regardless of whether the obligations of the Borrower thereunder
shall have been satisfied or discharged at or prior to such time the Senior
Subordinated Notes Indenture shall be deemed to be in effect and binding on the
Borrower for purposes of this Section 6.04(e)) and (ii) the Senior Leverage
Ratio, on a Pro Forma Basis after giving effect to such Restricted Junior
Payment, is not greater than 4.0 to 1.0.
Section 6.06. Restrictions on Subsidiary Distributions. Except as provided
herein, in the Senior Subordinated Note Indenture, the Senior Secured Asset
Based Revolving Credit Agreement or (with respect to encumbrances or
restrictions on the ability of any Foreign Subsidiary only) in any documentation
evidencing the Indebtedness of Foreign Subsidiaries expressly permitted by
Section 6.01(j) and Section 6.01(q), no Loan Party shall, nor shall it permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary of the Borrower to (a) pay dividends or make any other
distributions on any of such Subsidiary's Capital Stock owned by the Borrower or
any other Subsidiary of the Borrower, (b) repay or prepay any Indebtedness owed
by such Subsidiary to the Borrower or any other Subsidiary of the Borrower, (c)
make loans or advances to the Borrower or any other Subsidiary of the Borrower,
or (d) transfer any of its property or assets to the Borrower or any other
Subsidiary of the Borrower other than restrictions (i) in agreements evidencing
Indebtedness permitted by Section 6.01(k), (l), (m), (n) or (p) (solely with
respect to the permitted refinancing of Indebtedness
75
permitted pursuant to Section 6.01(k), (l), (m), or (n)) or (w) that impose
restrictions on the property so acquired; (ii) by reason of customary provisions
restricting assignments, subletting or other transfers contained in leases,
licenses, joint venture agreements and similar agreements entered into in the
ordinary course of business; (iii) that are or were created by virtue of any
transfer of, agreement to transfer or option or right with respect to any
property, assets or Capital Stock not otherwise prohibited under this Agreement;
(iv) in any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Borrower or any of its Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness or Capital Stock was
incurred in connection with or in contemplation of such acquisition),which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired; provided that, in the case of Indebtedness, such
Indebtedness was permitted by Section 6.01 to be incurred; (v) in any agreement
for the sale or other disposition of a Subsidiary that restricts distributions
by that Subsidiary pending the sale or other disposition; and (vi) in provisions
in agreements or instruments which prohibit the payment of dividends or the
making of other distributions with respect to any class of Capital Stock of a
Person other than on a pro rata basis.
Section 6.07. Investments. No Loan Party shall, nor shall it permit any of
its Subsidiaries to, directly or indirectly, make or own any Investment in any
Person except:
(a) Cash Equivalents;
(b) equity Investments owned as of the Closing Date in any Subsidiary and
Investments made after the Closing Date in wholly-owned Subsidiaries of the
Borrower organized under the laws of the United States of America, any state
thereof or the District of Columbia;
(c) Investments in (i) any Securities received in satisfaction or partial
satisfaction thereof from financially troubled account debtors and (ii)
deposits, prepayments and other credits to suppliers, in each case received or
made in the ordinary course of business consistent with the past practices of
the Borrower and its Subsidiaries;
(d) intercompany loans to the extent permitted under Section 6.01(b)(i) and
intercompany guaranties to the extent permitted under Sections 6.01(h) and (r);
(e) Investments in any Person organized under the laws of the United States
of America, any state thereof or the District of Columbia of which at least 80%
of the capital stock and voting stock thereof will be owned by the Borrower or
any Subsidiary Guarantor after giving effect to such Investment; provided that
the amount of all such Investments does not exceed $20,000,000 in the aggregate
for all such Investments since the Closing Date;
(f) Investments made in connection with Permitted Acquisitions permitted
pursuant to Section 6.09;
(g) the Borrower and its wholly-owned Domestic Subsidiaries may make
additional Investments in their respective Foreign Subsidiaries; provided that
the aggregate outstanding principal amount of Indebtedness of, and the aggregate
amount of Investments in, Foreign
76
Subsidiaries pursuant to Section 6.01(b)(iv), Section 6.01(j) and Section
6.01(q) and this Section 6.07(g) shall not exceed $30,000,000;
(h) Investments described in Schedule 6.07 and Investments to the extent
permitted under Section 6.01(t)(ii);
(i) Investments received in lieu of Cash in connection with Asset Sales
expressly permitted by Section 6.09;
(j) Investments in any Person organized under the laws of the United States
of America, any state thereof or the District of Columbia in an aggregate amount
not to exceed at any time $25,000,000;
(k) Investments in Unrestricted Subsidiaries not to exceed $50,000,000 plus
amounts that at the time of the Investment thereof could have been paid as a
Restricted Junior Payment pursuant to Section 6.05 but were not so paid but were
used to make an Investment in an Unrestricted Subsidiary;
(l) loans or advances to officers, directors and employees of the Holdings
and its Subsidiaries (i) for reasonable and customary business-related travel,
entertainment, relocation and analogous ordinary business purposes and (ii) to
the extent permitted by Requirements of Law, in connection with such Person's
purchase of Capital Stock of Holdings, provided that the amount of such loans
and advances shall be contributed to the Borrower in cash as common equity, or
paid to the Borrower in connection with such purchase of Capital Stock, in an
aggregate principal amount outstanding not to exceed $5,000,000 at any one time
outstanding;
(m) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors and other
credits to suppliers in the ordinary course of business;
(n) Investments consisting of Indebtedness permitted under Section 6.01 or
Restricted Junior Payments permitted under Section 6.05;
(o) Investments in the ordinary course of business consisting of
endorsements for collection or deposit and customary trade arrangements with
customers consistent with past practices;
(p) Investments (including debt obligations and Capital Stock) received in
connection with the bankruptcy or reorganization of suppliers and customers or
in settlement of delinquent obligations of, or other disputes with, customers
and suppliers arising in the ordinary course of business or upon the foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment;
(q) advances of payroll payments to employees in the ordinary course of
business;
(r) Investments to the extent that payment for such Investments is made
solely with Capital Stock of Holdings not resulting in a Change of Control;
77
(s) Investments of a Subsidiary Guarantor acquired after the Closing Date
or of a Person merged into or amalgamated with the Borrower or merged,
amalgamated or consolidated with a Subsidiary Guarantor in accordance with
Section 6.08 after the Closing Date to the extent that such Investments were not
made in contemplation of or in connection with such acquisition, merger,
amalgamation, or consolidation and were in existence on the date of such
acquisition, merger, amalgamation, or consolidation; and
(t) Consolidated Capital Expenditures (without regard to the exclusions
listed in the definition thereof) permitted hereby.
Notwithstanding the foregoing, in no event shall any Loan Party make any
Investment which results in or facilitates in any manner any Restricted Junior
Payment not otherwise permitted under the terms of Section 6.05.
Section 6.08. [Reserved].
Section 6.09. Fundamental Changes; Disposition of Assets; Acquisitions. No
Loan Party shall, nor shall it permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sublease
(as lessor or sublessor), transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business, assets or property
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible, whether now owned or hereafter acquired, or acquire by purchase or
otherwise (other than purchases or other acquisitions of inventory, materials,
supplies and equipment in the ordinary course of business) the business,
property or fixed assets of, or stock or other evidence of beneficial ownership
of, any Person or any division or line of business or other business unit of any
Person, except:
(a) any Subsidiary of Holdings may be merged with or into the Borrower or
any Subsidiary Guarantor, or be liquidated, wound up or dissolved, or all or any
part of its business, property or assets may be conveyed, sold, leased,
transferred or otherwise disposed of, in one transaction or a series of
transactions, to the Borrower or any Subsidiary Guarantor; provided, in the case
of such a merger, the Borrower or such Subsidiary Guarantor, as applicable,
shall be the continuing or surviving Person and the Lien on and security
interest in such Collateral granted or to be granted in favor of the Collateral
Agent under the Collateral Documents shall be maintained or created in
accordance with Section 5.12;
(b) any Foreign Subsidiary of the Borrower may be merged with or into any
other Foreign Subsidiary of the Borrower, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions to the Borrower or any wholly-owned Subsidiary;
provided, in the case of such a merger, a wholly-owned Subsidiary shall be the
continuing or surviving Person; provided, further, in the case of a merger of a
Foreign Subsidiary with or into a Domestic Subsidiary, a Domestic Subsidiary
shall be the continuing or surviving Person;
(c) sales or other dispositions of assets that do not constitute Asset
Sales;
78
(d) Asset Sales, the proceeds of which (valued at the principal amount
thereof in the case of non-Cash proceeds consisting of notes or other debt
Securities and valued at fair market value in the case of other non-Cash
proceeds), when aggregated with the proceeds of all other Asset Sales permitted
only pursuant to this Section 6.09(d) within the same Fiscal Year, are less than
$15,000,000; provided (1) the consideration received for such assets shall be in
an amount at least equal to the fair market value thereof (determined in good
faith by the board of directors of the Borrower (or similar governing body)),
(2) no less than 75% thereof shall be paid in Cash or Cash Equivalents, and (3)
the Net Proceeds thereof shall be applied as required by Section 2.09(b)(i);
(e) disposals of obsolete, worn out or property and any assets acquired in
connection with the acquisition of another Person or a division or line of
business of such Person which the Borrower reasonably determines are surplus
assets;
(f) Permitted Acquisitions; provided that such Permitted Acquisitions shall
be financed in whole or in part with (i) Cash, Cash Equivalents and Indebtedness
in an amount not to exceed $100,000,000 in the aggregate in any Fiscal Year,
(ii) Qualified Capital Stock of Holdings (or in the case of a Foreign Subsidiary
that acquires all or any part of another foreign entity, the Capital Stock of
such Foreign Subsidiary) issued or transferred to the seller and/or (iii)
proceeds of additional cash Sponsor Equity Contributions to Holdings; provided
that the Interest Coverage Ratio on a Pro Forma Basis after giving effect to
such Permitted Acquisition shall be at least 2.0 to 1.0 as of the last day of
the four-Fiscal Quarter period ended as of the most recently concluded Fiscal
Quarter prior to the date of determination;
(g) other acquisitions, dispositions or expenditures that constitute
Investments that are permitted to be made pursuant to Section 6.07; and
(h) any Subsidiary Guarantor may merge or amalgamate with any other Person
in order to effect an Investment permitted pursuant to Section 6.07; provided
that the continuing or surviving Person shall be a Subsidiary Guarantor, which
shall have complied with the requirements of Section 5.12;
(i) to the extent that (i) such property is exchanged for credit against
the purchase price of similar replacement property or (ii) the proceeds of such
disposition are promptly applied to the purchase price of such replacement
property;
(j) to the Borrower or to a Subsidiary Guarantor; provided that if the
transferor of such property is a Loan Party the transferee thereof must either
be a Borrower or a Subsidiary Guarantor, in which event the Collateral Agent
shall retain its perfected Lien on the property so disposed of, subject to the
same priority as existed prior to such disposition;
(k) sales, discounting or forgiveness of accounts receivable in the
ordinary course of business or in connection with the collection or compromise
thereof;
(l) leases, subleases, licenses or sublicenses (including the provision of
software under an open source license), in each case in the ordinary course of
business and which (i) do not
79
materially interfere with the business of the Holdings and it Subsidiaries, or
(ii) relate to closed stores;
(m) termination of leases in the ordinary course of business;
(n) transfers of property subject to casualty, eminent domain or
condemnation;
(o) licenses for the conduct of licensed departments within the Loan
Parties' stores in the ordinary course of business;
(p) as long as no Event of Default hereof then exists or would arise
therefrom, bulk sales or other dispositions of the Loan Parties' inventory not
in the ordinary course of business in connection with store closings, at arm's
length, provided that (i) such store closures and related inventory dispositions
shall not exceed, in any Fiscal Year 10% of the number of the Loan Parties'
stores as of the beginning of such Fiscal Year (net of store relocations (i)
occurring substantially contemporaneously, but in no event later than 10
Business Days after the related store closure date, or (ii) wherein a binding
lease has been entered into prior to the related store closure date), and (ii)
as of any date after the Closing Date, the aggregate number of such store
closures since the Closing Date shall not exceed 20% of the greater of (x) the
number of the Loan Parties' stores in existence as of the Closing Date or (y)
the number of the Loan Parties' stores as of the first day of any Fiscal Year
beginning after the Closing Date (net of store relocations (i) occurring
substantially contemporaneously, but in no event later than 10 Business Days
after the related store closure date or (ii) wherein a binding lease has been
entered into prior to the related store closure date), provided that all sales
of Inventory in connection with store closings in a transaction or series of
related transactions shall be in accordance with liquidation agreements and with
professional liquidators reasonably acceptable to the Administrative Agent;
provided further that all Net Proceeds received in connection therewith are
applied to the Obligations, if then required in accordance with this Agreement;
(q) sales of non-core assets acquired in connection with a Permitted
Acquisition and sales of Real Estate Assets acquired in a Permitted Acquisition
which, within thirty days of the date of the acquisition, are designated in
writing to the Administrative Agent as being held for sale and not for the
continued operation of a store;
(r) exchanges or swaps, including, without limitation, transactions covered
by Section 1031 of the Code, of Real Estate Assets of the Loan Parties so long
as the exchange or swap is made for fair value and on an arm's length basis,
provided that upon the consummation of such exchange or swap, (x) the Collateral
Agent has a perfected Lien having the same priority as any Lien held on the Real
Estate Assets so exchanged or swapped and (y) the Net Proceeds, if any, received
in connection with any such exchange or swap are applied to the Obligations if
then required in accordance with this Agreement;
(s) Sale-Leaseback Transactions permitted by Section 6.10; and
(t) Restricted Payments permitted by Section 6.05.
80
Section 6.10. Disposal of Subsidiary Interests. Except for any sale of all
of its interests in the Capital Stock of any of its Subsidiaries in compliance
with the provisions of Section 6.09 and except for issuances of Capital Stock by
Foreign Subsidiaries to make Permitted Acquisitions pursuant to Section 6.09(f)
and except for Liens created under the Senior Secured Assed-Based Revolving
Credit Facility and subject to the Intercreditor Agreement, no Loan Party shall,
nor shall it permit any of its Subsidiaries to, directly or indirectly sell,
assign, pledge or otherwise encumber or dispose of any Capital Stock of any of
its Subsidiaries, except (i) to qualify directors if required by applicable law;
or (ii) to another Loan Party (subject to the restrictions on such disposition
otherwise imposed hereunder).
Section 6.11. Sales and Lease-backs. No Loan Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease of
any property (whether real, personal or mixed), whether now owned or hereafter
acquired, which such Loan Party (a) has sold or transferred or is to sell or to
transfer to any other Person (other than the Borrower or any of its
Subsidiaries), or (b) intends to use for substantially the same purpose as any
other property which has been or is to be sold or transferred by such Loan Party
to any Person (other than the Borrower or any of its Subsidiaries) in connection
with such lease; provided that a Sale and Lease-Back Transaction shall be
permitted so long as (a) such Sale and Lease-Back Transaction is either (x)
permitted by Section 6.01(m), or (y) (i) is made for cash consideration in an
amount not less than the fair value of the applicable property, (ii) is pursuant
to a lease on market terms, (iii) is consummated within two hundred and seventy
(270) days after such Loan Party acquires or completes the construction of the
applicable property and (iv) the net proceeds received from such Sale and
Lease-Back Transaction, (x) when combined with the net proceeds of all other
Sale and Lease-Back Transactions permitted hereunder, does not exceed
$15,000,000, and (y) are applied to repay the Term Loans to the extent required
by Section 2.09.
Section 6.12. Transactions with Shareholders and Affiliates. No Loan Party
shall, nor shall it permit any of its Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service) with any
Affiliate of the Borrower or of any such holder on terms that are less favorable
to the Borrower or that Subsidiary, as the case may be, than those that might be
obtained at the time from a Person who is not such a holder or Affiliate;
provided that the foregoing restriction shall not apply to (a) any transaction
between or among (x) the Borrower and/or one or more Subsidiary Guarantors or
(y) one or more Foreign Subsidiaries; (b) reasonable and customary fees paid to
members of the board of directors (or similar governing body) of Holdings and
its Subsidiaries; (c) compensation arrangements (including severance) for
officers and other employees of Holdings and its Subsidiaries entered into in
the ordinary course of business; (d) transactions permitted in Sections 6.01(o)
and 6.05(b), (c) and (d); (e) the transaction described on Schedule 6.12; (f)
commercial transactions between or among the Borrower and/or one or more
Subsidiaries in the ordinary course of business and consistent with past
practices; (g) the payment of fees and expenses relating to the Transaction,
including Transaction Expenses, (h) payments due pursuant to the Management
Agreement, (i) equity issuances, repurchases, retirements or other acquisitions
or retirements of Capital Stock of Holdings permitted under Section 6.05, (j)
loans and other transactions by the Loan Parties to the extent permitted under
this Article 6, (k) the payment of customary fees, compensation, and
81
reasonable out of pocket costs to, and indemnities provided on behalf of,
directors, officers and employees of the Loan Parties in the ordinary course of
business to the extent attributable to the ownership or operation of the Loan
Parties, (l) transactions pursuant to permitted agreements in existence on the
Closing Date and set forth on Schedule 6.12 or any amendment thereto to the
extent such an amendment is not adverse to the Lenders in any material respect;
and (m) dividends, redemptions and repurchases permitted under Section 6.05.
Section 6.13. Conduct of Business. From and after the Closing Date, no Loan
Party shall, nor shall it permit any of its Subsidiaries to, engage in any
material line of business other than (i) the businesses engaged in by any Loan
Party on the Closing Date and similar or related businesses and (ii) such other
lines of business as may be consented to by Required Lenders.
Section 6.14. Amendments or Waivers of Certain Related Agreements. Except
as set forth in Section 6.15, no Loan Party shall, nor shall it permit any of
its Subsidiaries to, agree to any material amendment, restatement, supplement or
other modification to, or waiver of, any of its material rights under any
Related Agreement, in each case in a manner that is materially adverse to the
Lenders, in each case after the Closing Date without in each case obtaining the
prior written consent of Required Lenders to such amendment, restatement,
supplement or other modification or waiver.
Section 6.15. Amendments of or Waivers with Respect to Certain
Indebtedness. No Loan Party shall, nor shall it permit any of its Subsidiaries
to, amend or otherwise change the terms of (i) any Subordinated Indebtedness, or
make any payment consistent with an amendment thereof or change thereto, if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, change (to earlier dates) any dates upon which
payments of principal or interest are due thereon, change any event of default
or condition to an event of default with respect thereto (other than to
eliminate any such event of default or increase any grace period related
thereto), change the redemption, prepayment or defeasance provisions thereof or
change the subordination provisions of such Subordinated Indebtedness (or of any
guaranty thereof), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any additional rights on the holders of
such Subordinated Indebtedness (or a trustee or other representative on their
behalf) which would be adverse to any Loan Party or the Lenders or (ii) the
Senior Secured Asset-Based Revolving Credit Facility other than in accordance
with the Intercreditor Agreement.
Section 6.16. Fiscal Year. No Loan Party shall, nor shall it permit any of
its Subsidiaries to, change its Fiscal Year-end to a date other than December 31
or the Saturday closest to December 31.
Section 6.17. Permitted Activities of Holdings. Holdings shall not (a)
incur, directly or indirectly, any Indebtedness or any other obligation or
liability whatsoever other than the Indebtedness and obligations under the
Related Agreements, the Senior Secured Term Loan Facility and as may be
permitted under Section 6.01; (b) create or suffer to exist any Lien upon any
property or assets now owned or hereafter acquired by it other than the Liens
created under the Collateral Documents or, subject to the Intercreditor
Agreement, the Senior Secured Term Loan Credit Facility to which it is a party
or permitted to it pursuant to Section 6.02; (c) engage
82
in any business or activity or own any assets other than (i) holding 100% of the
Capital Stock of the Borrower, (ii) performing its obligations and activities
incidental thereto under the Loan Documents and the Senior Secured Term Loan
Facility, and to the extent not inconsistent therewith, the Related Agreements
and (iii) making Restricted Junior Payments and Investments to the extent
permitted to it by this Agreement; (d) consolidate with or merge with or into,
or convey, transfer or lease all or substantially all its assets to, any Person;
(e) sell or otherwise dispose of any Capital Stock of the Borrower; (f) create
or acquire any Subsidiary or make or own any Investment in any Person other than
the Borrower; or (g) fail to hold itself out to the public as a legal entity
separate and distinct from all other Persons.
ARTICLE 7
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
Section 7.01. Events of Default. If any one or more of the following
conditions or events shall occur:
(a) Failure To Make Payments When Due. Failure by the Borrower to pay (i)
when due any installment of principal of any Loan, whether at stated maturity,
by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or (ii) any interest on any Loan or any fee or any other amount due
hereunder within five (5) days after the date due; or
(b) Default in Other Agreements. (i) Failure of any Loan Party or any of
their respective Subsidiaries to pay when due any principal of or interest on or
any other amount payable in respect of one or more items of Indebtedness (other
than Indebtedness referred to in (a) above) with an aggregate principal amount
of $10,000,000 or more, in each case beyond the grace period, if any, provided
therefor; or (ii) breach or default by any Loan Party with respect to any other
material term of (1) one or more items of Indebtedness in the individual or
aggregate principal amounts referred to in clause (i) above or (2) any loan
agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness, in each case beyond the grace period, if any, provided therefor,
if the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness (or a trustee on behalf of such holder or holders)
to cause, that Indebtedness to become or be declared due and payable (or
redeemable) prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be; provided that with respect to any of
Section 6.18 of the Senior Secured Asset-Based Revolving Credit Facility, such
breach or default shall constitute an Event of Default under this Agreement if
such failure, event or condition is not cured or waived within 60 days after the
occurrence of such breach or default; or
(c) Breach of Certain Covenants. Failure of any Loan Party to perform or
comply with any term or condition contained in Section 5.12 or Article 6; or
(d) Breach of Representations, Etc. Any representation, warranty,
certification or other statement made or deemed made by any Loan Party in any
Loan Document or in any statement or certificate at any time given by any Loan
Party or any of its Subsidiaries in writing pursuant
83
hereto or thereto or in connection herewith or therewith shall be false in any
material respect as of the date made or deemed made; or
(e) Other Defaults Under Loan Documents. Any Loan Party shall default in
the performance of or compliance with any term contained herein or any of the
other Loan Documents, other than any such term referred to in any other Section
of this Article 7, and such default shall not have been remedied or waived
within thirty (30) days after the earlier of (i) an executive officer of such
Loan Party becoming aware of such default or (ii) receipt by the Borrower of
notice from the Administrative Agent or any Lender of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) A court of
competent jurisdiction shall enter a decree or order for relief in respect of
Holdings or any of its Subsidiaries (other than an Immaterial Subsidiary) in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Holdings or any of its Subsidiaries (other than an Immaterial
Subsidiary) under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over Holdings or any of its Subsidiaries other than its Immaterial
Subsidiaries, or over all or a substantial part of its property, shall have been
entered; or there shall have occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Holdings or any of its Subsidiaries
other than its Immaterial Subsidiaries for all or a substantial part of its
property; or a warrant of attachment, execution or similar process shall have
been issued against any substantial part of the property of Holdings or any of
its Subsidiaries other than its Immaterial Subsidiaries, and any such event
described in this clause (ii) shall continue for sixty (60) days without having
been dismissed, bonded or discharged; or
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. (i) Holdings or any
of its Subsidiaries (other than an Immaterial Subsidiary) shall have an order
for relief entered with respect to it or shall commence a voluntary case under
the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Holdings or any of its
Subsidiaries (other than an Immaterial Subsidiary) shall make any assignment for
the benefit of creditors; or (ii) Holdings or any of its Subsidiaries (other
than an Immaterial Subsidiary) shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become due;
or the board of directors (or similar governing body) of Holdings or any of its
Subsidiaries (other than an Immaterial Subsidiary) (or any committee thereof)
shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to herein or in Section 7.01(f); or
(h) Judgments and Attachments. Any one or more money judgments, writs or
warrants of attachment or similar process involving in the aggregate at any time
an amount in excess of $10,000,000 (in either case to the extent not adequately
covered by insurance as to which a
84
solvent and unaffiliated insurance company has acknowledged coverage) shall be
entered or filed against the Borrower or any of its Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of sixty (60) days (or in any event later than five days prior to
the date of any proposed sale thereunder); or
(i) Dissolution. Any order, judgment or decree shall be entered against any
Loan Party decreeing the dissolution or split up of such Loan Party and such
order shall remain undischarged or unstayed for a period in excess of thirty
(30) days; or
(j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events
which individually or in the aggregate results in liability of Holdings or any
of its Subsidiaries in excess of $10,000,000 during the term hereof; or (ii)
there shall occur the imposition of a Lien or security interest under Section
412(n) of the Internal Revenue Code or under ERISA; or
(k) Change of Control. A Change of Control shall occur; or
(l) Guaranties, Collateral Documents and Other Loan Documents. At any time
after the execution and delivery thereof, (i) the Guaranty for any reason, other
than the satisfaction in full of all Obligations, shall cease to be in full
force and effect (other than in accordance with its terms) or shall be declared
to be null and void or any Guarantor shall repudiate its obligations thereunder,
(ii) this Agreement or any Collateral Document ceases to be in full force and
effect (other than by reason of a release of Collateral in accordance with the
terms hereof or thereof or the satisfaction in full of the Obligations in
accordance with the terms hereof or any other termination of such Collateral
Document in accordance with the terms thereof) or shall be declared null and
void, or the Collateral Agent shall not have or shall cease to have a valid and
perfected Lien in any Collateral purported to be covered by the Collateral
Documents with the priority required by the relevant Collateral Document, in
each case for any reason other than the failure of the Collateral Agent or any
Secured Party to take any action within its control or (iii) any Loan Party
shall contest the validity or enforceability of any Loan Document in writing or
deny in writing that it has any further liability, including with respect to
future advances by the Lenders, under any Loan Document to which it is a party;
or
(m) Subordination. The Obligations shall cease to constitute senior
indebtedness under the subordination provisions of any document or instrument
evidencing any permitted Subordinated Indebtedness (including the Indebtedness
under the Senior Subordinated Notes as evidenced by the Senior Subordinated Note
Documents) or such subordination provision shall be invalidated or otherwise
cease, for any reason, to be valid, binding and enforceable obligations of the
parties thereto; then, and in every such event (other than an event with respect
to any Loan Party described in clause (f) or (g) of this Article), and at any
time thereafter during the continuance of such event, the Administrative Agent
may, and at the request of the Required Lenders shall, by notice to the
Borrower, declare the Loans then outstanding to be due and payable in whole (or
in part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
provided that upon the occurrence of an event with respect to any Loan Party
85
described in clause (f) or (g) of this Article, the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower, without further action of the
Administrative Agent or any Lender. Upon the occurrence and the continuance of
an Event of Default, the Agents may, and at the request of the Required Lenders
shall, exercise any rights and remedies provided to the Agents under the Loan
Documents or at law or equity, including all remedies provided under the UCC.
ARTICLE 8
THE AGENTS
Each of the Lenders hereby irrevocably appoints the Administrative Agent
and the Collateral Agent as its agents and authorizes the Agents to take such
actions on its behalf, including execution of the other Loan Documents, and to
exercise such powers as are delegated to the Agents by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
Each Person serving as an Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not an Agent, and such Person and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Loan Parties or any subsidiary of a Loan Party or other Affiliate thereof as
if it were not an Agent hereunder.
The Agents shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) neither Agent shall be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b)
neither Agent shall have any duty to take any discretionary action or exercise
any discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the applicable Agent is required to
exercise in writing as directed by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth in the Loan
Documents, the Agents shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Loan Party
or any of its Subsidiaries that is communicated to or obtained by the Person
serving as an Agent or any of its Affiliates in any capacity. Neither Agent
shall be liable for any action taken or not taken by it with the consent or at
the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or willful misconduct.
Neither Agent shall be deemed to have knowledge of any Default unless and until
written notice thereof is given to such Agent by the Borrower or a Lender, and
the Agents shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
any Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or in connection with any Loan Document, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity,
86
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, (v) the creation, perfection or priority of
Liens on the Collateral or the existence of the Collateral, or (vi) the
satisfaction of any condition set forth in Article 4 or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Agents.
The Agents shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
Each Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by such Agent. Each
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of the Agents and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facility provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, each Agent may resign at any time by notifying the other
Agent, the Lenders and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, with the consent (not to be unreasonably withheld
or delayed) of the Borrower, to appoint a successor Agent; provided that, during
the existence and continuation of an Event of Default, no consent of the
Borrower shall be required. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the other Agent and the Lenders, appoint a successor
Agent which shall be a commercial bank or an Affiliate of any such commercial
bank reasonably acceptable to the Borrower. Upon the acceptance of its
appointment as an Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After an Agent's resignation hereunder,
the provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as an Agent.
Each Lender acknowledges that it has, independently and without reliance
upon either Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender
and based on such documents and information as it shall from time to time deem
87
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
The Arrangers, the joint bookrunners, the syndication agent and the
documentation agent shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Notices. (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by facsimile, as follows:
(i) if to any Loan Party, to the Borrower at:
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Chief Financial Officer
Fax: (000) 000-0000
with copy to:
Ropes & Xxxx LLP
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, III, Esq.
Fax: (000) 000-0000
(ii) if to the Administrative Agent, to Credit Suisse at:
Eleven Madison Avenue, OMA-2
New York, NY 10010
Attention: Agency Group
Facsimile No: (000) 000-0000
(iii) if to the Collateral Agent, to Credit Suisse at:
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Agency Group
Facsimile No: (000) 000-0000
88
(iv) if to any other Lender, to it at its address or facsimile number
set forth in its Administrative Questionnaire.
All such notices and other communications (i) sent by hand or overnight
courier service, or mailed by certified or registered mail, shall be deemed to
have been given when received or (ii) sent by facsimile shall be deemed to have
been given when sent and when receipt has been confirmed by telephone; provided
that if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient.
(b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Article 2 unless otherwise agreed by the Administrative Agent and
the applicable Lender. Each Agent or the Borrower (on behalf of the Loan
Parties) may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the
sender's receipt of an acknowledgement from the intended recipient (such as by
the "return receipt requested" function, as available, return e-mail or other
written acknowledgement), provided that if not given during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been given at the opening of business on the next Business Day for the
recipient, and (ii) posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (b)(i) of notification that such notice or
communication is available and identifying the website address therefor.
(c) Any party hereto may change its address or facsimile number for notices
and other communications hereunder by notice to the other parties hereto.
Section 9.02. Waivers; Amendments. (a) No failure or delay by any Agent or
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Agents and the Lenders hereunder and under any other Loan Document are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of any Loan Document or consent to
any departure by any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. Without limiting the generality of the foregoing, to
the extent permitted by law, the making of a Loan shall not be construed as a
waiver of any Default, regardless of whether any Agent or any Lender may have
had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except (i) in the case of
this Agreement, pursuant
89
to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders (or the Administrative Agent with the consent of the Required
Lenders) or (ii) in the case of any other Loan Document (other than any such
amendment to effectuate any modification thereto expressly contemplated by the
terms of such other Loan Documents), pursuant to an agreement or agreements in
writing entered into by the Administrative Agent and the Loan Party or Loan
Parties that are parties thereto, with the consent of the Required Lenders;
provided that no such agreement shall (A) increase the Commitment of any Lender
without the written consent of such Lender; it being understood that a waiver of
any condition precedent set forth in Article 4 or the waiver of any Default or
mandatory prepayment shall not constitute an increase of any Commitment of any
Lender, (B) reduce or forgive the principal amount of any Loan or reduce the
rate of interest thereon, or reduce or forgive any interest or fee payable
hereunder without the written consent of each Lender directly affected thereby;
provided that only the consent of the Required Lenders shall be necessary to
amend the provisions of Section 2.11(c) providing for the default rate of
interest, or to waive any obligations of the Borrower to pay interest at such
default rate, (C) postpone any scheduled date of payment of the principal amount
of any Loan or any date for the payment of any interest or other Obligations
payable hereunder, or reduce the amount of, waive or excuse any such payment,
without the written consent of each Lender directly affected thereby; provided
that only the consent of the Required Lenders shall be necessary to amend the
provisions of Section 2.11(c) providing for the default rate of interest, or to
waive any obligations of the Borrower to pay interest at such default rate, (D)
change Section 2.16(b) or (c) in a manner that would alter the manner in which
payments are shared, without the written consent of each Lender, (E) change any
of the provisions of this Section or the definition of "Required Lenders" or any
other provision of any Loan Document specifying the number or percentage of
Lenders required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender, (F) release all or substantially all of the value of the Loan
Guaranties (except as otherwise permitted herein or in the other Loan
Documents), without the written consent of each Lender, or (G) except as
provided in clauses (c) and (d) of this Section or in any Collateral Document,
release all or substantially all of the Collateral, without the written consent
of each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of any Agent hereunder without the prior
written consent of such Agent. The Administrative Agent may also amend the
Commitment Schedule to reflect assignments entered into pursuant to Section
9.04.
(c) The Lenders hereby irrevocably agree that the Liens granted to the
Collateral Agent by the Loan Parties on any Collateral shall be automatically
released (i) upon the payment and satisfaction in full in cash of all Secured
Obligations (other than Unliquidated Obligations) in a manner satisfactory to
the Agents, (ii) upon the sale or other disposition of the property constituting
such Collateral (including as part of or in connection with any other sale or
other disposition permitted hereunder) to any Person other than another Loan
Party, to the extent such sale or other disposition is made in compliance with
the terms of this Agreement (and the Agents may rely conclusively on a
certificate to that effect provided to it by any Loan Party upon its reasonable
request without further inquiry), (iii) provided that such release would not
result in a release of all or substantially all of the Collateral, if the
release of such Lien is approved, authorized or ratified in writing by the
Required Lenders, (iv) to the extent the property constituting such Collateral
is owned by any Loan Guarantor, upon the release of such Loan
90
Guarantor from its obligations under its Loan Guaranty in accordance with the
provisions of this Agreement, (v) as required to effect any sale or other
disposition of such Collateral in connection with any exercise of remedies of
the Agents and the Lenders pursuant to the Collateral Documents or (vi) as
required pursuant to the terms of the Intercreditor Agreement. Any such release
shall not in any manner discharge, affect, or impair the Obligations or any
Liens (other than those expressly being released) upon (or obligations of the
Loan Parties in respect of) all interests retained by the Loan Parties,
including the proceeds of any sale, all of which shall continue to constitute
part of the Collateral to the extent required under the provisions of the Loan
Documents.
(d) Notwithstanding anything to the contrary contained in this Section
9.02, pledge agreements and related documents (if any) executed by Foreign
Subsidiaries in connection with this Agreement may be in a form reasonably
determined by the Administrative Agent and may be amended and waived with the
consent of the Administrative Agent at the request of the Borrower without the
need to obtain the consent of any other Lenders if such amendment or waiver is
delivered in order (i) to comply with local law or advice of local counsel, (ii)
to cure ambiguities or defects or (iii) to cause such pledge agreement or other
document to be consistent with this Agreement and the other Loan Documents.
(e) If, in connection with any proposed amendment, waiver or consent
requiring the consent of "each Lender" or "each Lender directly affected
thereby", the consent of the Required Lenders is obtained, but the consent of
other necessary Lenders is not obtained (any such Lender whose consent is
necessary but not obtained being referred to herein as a "NON-CONSENTING
LENDER"), then the Borrower may elect to replace a Non-Consenting Lender as a
Lender party to this Agreement; provided that, concurrently with such
replacement, (i) another bank or other entity which is a Lender or is reasonably
satisfactory to the Borrower and the Administrative Agent shall agree, as of
such date, to purchase for cash the Loans and other Obligations due to the
Non-Consenting Lender pursuant to an Assignment and Assumption and to become a
Lender for all purposes under this Agreement and to assume all obligations of
the Non-Consenting Lender to be terminated as of such date and to comply with
the requirements of Section 9.04(b), (ii) the Borrower or replacement Lender
shall pay the processing and recordation fee referred to in Section
9.04(b)(ii)(C), if applicable in accordance with the terms of such Section,
(iii) the replacement Lender shall grant its consent with respect to the
applicable proposed amendment, waiver or consent and (iv) the Borrower shall pay
to such Non-Consenting Lender in same day funds on the day of such replacement
(1) all interest, fees and other amounts then accrued but unpaid to such
Non-Consenting Lender by the Borrower hereunder to and including the date of
termination, including without limitation payments due to such Non-Consenting
Lender under Section 2.13 and 2.15, and (2) an amount, if any, equal to the
payment which would have been due to such Lender on the day of such replacement
under Section 2.14 had the Loans of such Non-Consenting Lender been prepaid on
such date rather than sold to the replacement Lender. Each Lender agrees that if
it is replaced pursuant to this Section 9.02(e), it shall execute and deliver to
the Administrative Agent an Assignment and Assumption to evidence such sale and
purchase and shall deliver to the Administrative Agent any Note (if the
assigning Lender's Loans are evidenced by Notes) subject to such Assignment and
Assumption; provided that the failure of any Lender replaced pursuant to this
Section 9.02(e) to execute an Assignment and Assumption shall not render such
sale and purchase (and the corresponding assignment) invalid.
91
(f) Notwithstanding the foregoing provisions of this Section 9.02,
technical and conforming modifications to the Loan Documents may be made with
the consent of the Borrower and the Administrative Agent to the extent necessary
to integrate any Incremental Term Loan Commitments on substantially the same
basis as the Term Loans.
Section 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their
Affiliates, including the reasonable fees, charges and disbursements of Xxxxx
Xxxx & Xxxxxxxx, counsel for the Agents, in connection with the syndication and
distribution (including, without limitation, via the Internet or through a
service such as Intralinks) of the credit facilities provided for herein, the
preparation of the Loan Documents and related documentation, (ii) all reasonable
out-of-pocket expenses incurred by the Agents and their Affiliates, including
the reasonable fees, charges and disbursements of one outside legal counsel to
the Agents, in connection with any amendments, modifications or waivers of the
provisions of any Loan Documents (whether or not the transactions contemplated
thereby shall be consummated), (iii) all reasonable out-of-pocket expenses
incurred by the Agents or the Lenders, including the reasonable fees, charges
and disbursements of any counsel for the Agents and for one law firm retained by
the Lenders (unless the interests of any Lender or group of Lenders are
sufficiently divergent, in which case one additional counsel for each such
Lender or group of Lenders may be retained), in connection with the enforcement,
collection or protection of its rights in connection with the Loan Documents,
including its rights under this Section, or in connection with the Loans made
hereunder, including all such reasonable out-of-pocket expenses incurred during
any workout, restructuring or related negotiations in respect of such Loans, and
(iv) subject to any other provisions of this Agreement, of the Loan Documents or
of any separate agreement entered into by the Borrower and the Administrative
Agent with respect thereto, all reasonable out-of-pocket expenses incurred by
the Administrative Agent in the administration of the Loan Documents. Expenses
reimbursable by the Borrower under this Section include, without limiting the
generality of the foregoing, subject to any other applicable provision of any
Loan Document, reasonable out-of-pocket costs and expenses incurred in
connection with:
(v) lien and title searches and title insurance; and
(vi) taxes, fees and other charges for recording the Mortgages, filing
financing statements and continuations, and other actions to perfect,
protect, and continue the Collateral Agent's Liens.
Other than to the extent required to be paid on the Closing Date, all
amounts due under this paragraph (a) shall be payable by the Borrower within ten
(10) Business Days of receipt of an invoice relating thereto and setting forth
such expenses in reasonable detail.
(b) The Borrower shall indemnify each Agent and each Lender, and each
Related Party of any of the foregoing Persons (each such Person being called an
"INDEMNITEE") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, penalties, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of the Loan Documents or any agreement
or instrument contemplated thereby, the performance by the parties hereto of
their respective obligations
92
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries or to any property owned or operated by the
Borrower or any of its Subsidiaries, or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto (and regardless of whether such matter is
initiated by a third party or by the Borrower, any other Loan Party or any of
their respective Affiliates); provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
penalties, liabilities or related expenses are determined by a court of
competent jurisdiction by final and non-appealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnitee or, to the
extent such judgment finds such Indemnitee in breach of the Loan Documents and
the proceeding was initiated by Holdings, the Borrower or any of the Borrower's
Subsidiaries directly against such Indemnitee for breach of the Loan Documents.
(c) To the extent that the Borrower fails to pay any amount required to be
paid by it to an Agent under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to such Agent such Lender's Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, penalty, liability or related expense, as
the case may be, was incurred by or asserted against such Agent in its capacity
as such.
(d) To the extent permitted by applicable law, no party to this Agreement
shall assert, and each hereby waives, any claim against any other party hereto
or any Related Party thereof, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.
(e) All amounts due under this Section shall be paid promptly after written
demand therefor.
Section 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that (i) the Borrower
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void) and
(ii) no Lender may assign or otherwise transfer its rights or obligations
hereunder except in accordance with this Section (any attempted assignment or
transfer not complying with the terms of this Section shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby, Participants (to the extent provided in paragraph (c)
of this Section) and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agents and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this
93
Agreement (including all or a portion of its Commitment or the Loans at the time
owing to it) with the prior written consent (such consent not to be unreasonably
withheld or delayed) of:
(A) the Borrower; provided that no consent of the Borrower shall
be required for an assignment to another Lender, an Affiliate of a
Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other Eligible Assignee and provided further that
no consent of the Borrower shall be required for an assignment during
the primary syndication of the Loans to Persons identified in writing
by the Administrative Agent to the Borrower on or prior to the Closing
Date and reasonably acceptable to the Borrower; and
(B) the Administrative Agent.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to another Lender, an
Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender's Commitment or Loans,
the amount of the Commitment or the principal amount of Loans of the
assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent and determined on an aggregate
basis in the event of concurrent assignments to Related Funds or by
Related Funds (as defined below)) shall not be less than $1,000,000
unless each of the Borrower and the Administrative Agent otherwise
consent;
(B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and
obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption via an
electronic settlement system acceptable to the Administrative Agent
(or, if previously agreed with the Agent, manually), and shall pay to
the Administrative Agent a processing and recordation fee of $3,500
(which fee may be waived or reduced in the sole discretion of the
Administrative Agent); and
(D) the assignee, if it shall not be a Lender, shall deliver on
or prior to the effective date of such assignment, to the
Administrative Agent (1) an Administrative Questionnaire and (2) if
applicable, any Internal Revenue Service forms required under Section
2.15.
The term "Related Funds" shall mean with respect to any Lender that is an
Approved Fund, any other Approved Fund that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.
94
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of Sections 2.13,
2.14, 2.15 and 9.03 with respect to facts and circumstances occurring on or
prior to the effective date of such assignment). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not
comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders and their respective
successors and assigns, and the Commitment of, or principal amount of and
interest on the Loans owing to, each Lender pursuant to the terms hereof
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, absent manifest error, and the Borrower, the Agents and the
Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire and tax certifications required by Section
9.04(b)(ii)(D)(2) (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b)
of this Section, if applicable, and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent
promptly shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the
assigning Lender or the assignee shall have failed to make any payment
required to be made by it pursuant to Sections 2.04(a), 2.16(c) or 9.03(c),
the Administrative Agent shall have no obligation to accept such Assignment
and Assumption and record the information therein in the Register unless
and until such payment shall have been made in full, together with all
accrued interest thereon. No assignment shall be effective for purposes of
this Agreement unless it has been recorded in the Register as provided in
this paragraph.
(vi) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (A) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding
95
balances of its Loans, in each case without giving effect to assignments
thereof which have not become effective, are as set forth in such
Assignment and Assumption, (B) except as set forth in (A) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished pursuant
hereto; (C) such assignee represents and warrants that it is an Eligible
Assignee, legally authorized to enter into such Assignment and Assumption;
(D) such assignee confirms that it has received a copy of this Agreement
and the Intercreditor Agreement, together with copies of the most recent
financial statements referred to in Section 3.04(a) or delivered pursuant
to Section 5.01 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Assumption; (E) such assignee will independently and without
reliance upon the Agents, such assigning Lender 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 decisions in taking or not taking
action under this Agreement; (F) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to such Agent, by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(G) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "PARTICIPANT") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment or the Loans
owing to it); provided that (A) such Lender's obligations under this Agreement
shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender; provided such Participant agrees to be subject to
Section 2.16(c) as though it were a Lender.
96
(ii) A Participant shall not be entitled to receive any greater
payment under Sections 2.13, 2.14 and 2.15 than the applicable Lender would
have been entitled to receive with respect to the participation sold to
such Participant, unless the sale of the participation to such Participant
is made with the Borrower's prior written consent. A Participant that would
be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.15 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.15(e) as though it were a
Lender.
(d) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
(e) Notwithstanding anything to the contrary contained herein, any Lender
(a "GRANTING LENDER") may grant to a special purpose funding vehicle (an "SPC"),
identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower, the option to provide to the Borrower all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Borrower pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and (ii) if an
SPC elects not to exercise such option or otherwise fails to provide all or any
part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall
utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of such option
shall increase the costs or expenses or otherwise increase or change the
obligations of the Borrower under this Agreement (including its obligations
under Sections 2.13, 2.14 and 2.15) and no SPC shall be entitled to any greater
amount under Sections 2.13, 2.14 and 2.15 or any other provision of this
Agreement or any other Loan Document that the Granting Lender would have been
entitled to receive, (ii) no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender) and (iii) the Granting Lender shall for all purposes
including approval of any amendment, waiver or other modification of any
provision of the Loan Documents, remain the Lender of record hereunder. In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against, or
join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any state thereof; provided, however, that (i) in
the case of the Borrower, such SPC's Granting Lender is in compliance in all
material respects with its obligations to the Borrower hereunder and (ii) each
Lender designating any SPC hereby agrees to indemnify, save and hold harmless
each other party hereto for any loss, cost, damage or expense arising out of its
inability to institute such a proceeding against such SPC during such period of
forbearance. In addition, notwithstanding anything to the contrary
97
contained in this Section 9.04, any SPC may (i) with notice to, but without the
prior written consent of, the Borrower or the Administrative Agent and without
paying any processing fee therefor, assign all or a portion of its interests in
any Loans to the Granting Lender or to any financial institutions (consented to
by the Borrower and Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any nonpublic information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC.
Section 9.05. Survival. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that an Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid and so long as the Commitments
have not expired or terminated. The provisions of Sections 2.13, 2.14 and 2.15
and 9.03 and Article 8 shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof.
Section 9.06. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and the Fee Letter and any separate letter agreements with
respect to fees payable to the Agents constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Article 4, this Agreement shall become effective
when it shall have been executed by the Agents and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 9.07. Severability. To the extent permitted by law, any provision
of any Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions thereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
Section 9.08. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time
98
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Lender or Affiliate to
or for the credit or the account of the Borrower or any Loan Guarantor against
any of and all the Secured Obligations held by such Lender, irrespective of
whether or not such Lender shall have made any demand under the Loan Documents
and although such obligations may be unmatured. The applicable Lender shall
notify the Borrower and the Administrative Agent of such set-off or application,
provided that any failure to give or any delay in giving such notice shall not
affect the validity of any such set-off or application under this Section. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
Section 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT
AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(b) Each party hereto hereby irrevocably and unconditionally submits, for
itself and its property, to the exclusive jurisdiction of any U.S. Federal or
New York State court sitting in the Borough of Manhattan, New York, New York in
any action or proceeding arising out of or relating to any Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(c) Each party hereto hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) To the extent permitted by law, each party to this Agreement hereby
irrevocably waives personal service of any and all process upon it and agrees
that all such service of process may be made by registered mail (return receipt
requested) directed to it at its address for notices as provided for in Section
9.01. Nothing in this Agreement or any other Loan Document will affect the right
of any party to this Agreement to serve process in any other manner permitted by
law.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
99
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
Section 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 9.12. Confidentiality. Each Agent and each Lender agrees (and each
Lender agrees to cause its SPC, if any) to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent required by any regulatory, governmental or
administrative authority, (c) to the extent required by law or by any subpoena
or similar legal process; provided, that unless specifically prohibited by
applicable law, reasonable efforts shall be made to notify the Borrower of any
such request, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement, including, without limitation,
any SPC, (ii) any pledgee referred to in Section 9.04(d) or (iii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Loan Parties and their obligations, (g) with the prior written
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section by such
Person or (ii) becomes available to an Agent or any Lender on a nonconfidential
basis other than as a result of a breach of this Section from a source other
than the Borrower. For the purposes of this Section, "INFORMATION" means all
information received from any Loan Party relating to the Loan Parties or their
businesses, the Sponsor or the Transactions other than any such information that
is available to any Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party.
Section 9.13. Several Obligations; Violation of Law. The respective
obligations of the Lenders hereunder are several and not joint and the failure
of any Lender to make any Loan or perform any of its obligations hereunder shall
not relieve any other Lender from any of its obligations hereunder. Anything
contained in this Agreement to the contrary notwithstanding, the Lender shall be
obligated to extend credit to the Borrower in violation of any Requirement of
Law.
Section 9.14. USA PATRIOT Act. Each Lender that is subject to the
requirements of the USA PATRIOT Act hereby notifies the Borrower that pursuant
to the requirements of the USA
100
PATRIOT Act, it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the
Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the USA PATRIOT Act.
Section 9.15. Disclosure. Each Loan Party and each Lender hereby
acknowledges and agrees that the Agents and/or their Affiliates from time to
time may hold investments in, make other loans to or have other relationships
with any of the Loan Parties and their respective Affiliates. In addition, each
Loan Party and each Lender hereby acknowledges that the Administrative Agent or
its Affiliate may be a lender under the Senior Secured Asset-Based Revolving
Credit Facility.
Section 9.16. Appointment for Perfection. Each Lender hereby appoints each
other Lender as its agent for the purpose of perfecting Liens, for the benefit
of the Collateral Agent and the Lenders, in assets which, in accordance with
Article 9 of the UCC or any other applicable law can be perfected only by
possession. Should any Lender (other than the Collateral Agent) obtain
possession of any such Collateral, such Lender shall notify the Collateral Agent
thereof, and, promptly upon the Collateral Agent's request therefor shall
deliver such Collateral to the Collateral Agent or otherwise deal with such
Collateral in accordance with the Collateral Agent's instructions.
Section 9.17. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the "CHARGES"), shall exceed the maximum
lawful rate (the "MAXIMUM RATE") which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
Section 9.18. INTERCREDITOR AGREEMENT. REFERENCE IS MADE TO THE
INTERCREDITOR AGREEMENT. EACH LENDER HEREUNDER (A) CONSENTS TO THE SUBORDINATION
OF LIENS PROVIDED FOR IN THE INTERCREDITOR AGREEMENT, (B) AGREES THAT IT WILL BE
BOUND BY AND WILL TAKE NO ACTIONS CONTRARY TO THE PROVISIONS OF THE
INTERCREDITOR AGREEMENT AND (C) AUTHORIZES AND INSTRUCTS THE COLLATERAL AGENT TO
ENTER INTO THE INTERCREDITOR AGREEMENT AS TERM LOAN AGENT AND ON BEHALF OF SUCH
LENDER. THE FOREGOING PROVISIONS ARE INTENDED AS AN INDUCEMENT TO THE LENDERS
UNDER THE SENIOR SECURED ASSET-BASED REVOLVING CREDIT AGREEMENT TO EXTEND CREDIT
AND SUCH LENDERS ARE INTENDED THIRD PARTY BENEFICIARIES OF SUCH PROVISIONS AND
THE PROVISIONS OF THE INTERCREDITOR AGREEMENT.
101
Section 9.19. Designation Of Subsidiaries. (a) The board of directors of
the Borrower may at any time designate any subsidiary of the Borrower as an
Unrestricted Subsidiary or any Unrestricted Subsidiary as a Subsidiary; provided
that (i) immediately before and after such designation, no Default shall have
occurred and be continuing, (ii) the Borrower may not be designated as an
Unrestricted Subsidiary, (iii) no subsidiary may be designated as an
Unrestricted Subsidiary if it is a "Subsidiary" for the purpose of the Senior
Secured Asset Based Revolving Credit Facility, (iv) no Subsidiary may be
designated as an Unrestricted Subsidiary if it was previously designated an
Unrestricted Subsidiary, (v) no Unrestricted Subsidiary shall own any Capital
Stock in the Borrower or its Subsidiaries, (vi) no Unrestricted Subsidiary shall
hold any Indebtedness of, or any Lien on any property of, the Borrower or its
Subsidiaries, (vii) the holder of any Indebtedness of any Unrestricted
Subsidiary shall not have any recourse to the Borrower or its Subsidiaries with
respect to such Indebtedness except as permitted pursuant to this Agreement,
(viii) no Unrestricted Subsidiary shall be a party to any transaction or
arrangement with the Borrower or its Subsidiaries that would not be permitted by
Section 6.11, and (ix) none of Holdings or any of its Subsidiaries shall have
any obligation to subscribe for additional Capital Stock of any Unrestricted
Subsidiary or to preserve or maintain the financial condition of any
Unrestricted Subsidiary if such obligation would result in a Default. The
designation of any subsidiary as an Unrestricted Subsidiary shall constitute an
Investment by the Borrower therein at the date of designation in an amount equal
to the net book value of the Borrower's investment therein (and such designation
shall only be permitted to the extent such Investment is permitted under Section
6.07). The designation of any Unrestricted Subsidiary as a Subsidiary shall
constitute the incurrence at the time of designation of any Indebtedness or
Liens of such Subsidiary existing at such time.
ARTICLE 10
LOAN GUARANTY
Section 10.01. Guaranty. Each Loan Guarantor hereby agrees that it is
jointly and severally liable for, and, as primary obligor and not merely as
surety, and absolutely and unconditionally guarantees to the Lenders the prompt
payment when due, whether at stated maturity, upon acceleration or otherwise,
and at all times thereafter, of the Secured Obligations (collectively the
"GUARANTEED OBLIGATIONS"). Each Loan Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed in whole or in part without
notice to or further assent from it, and that it remains bound upon its
guarantee notwithstanding any such extension or renewal.
Section 10.02. Guaranty of Payment. This Loan Guaranty is a guaranty of
payment and not of collection. Each Loan Guarantor waives any right to require
any Agent or any Lender to xxx the Borrower, any Loan Guarantor, any other
guarantor, or any other Person obligated for all or any part of the Guaranteed
Obligations (each, an "OBLIGATED PARTY"), or otherwise to enforce its rights in
respect of any collateral securing all or any part of the Guaranteed
Obligations.
Section 10.03. No Discharge or Diminishment of Loan Guaranty. (a) Except as
otherwise provided for herein, the obligations of each Loan Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation,
impairment or
102
termination for any reason (other than the payment in full in cash of the
Guaranteed Obligations), including: (i) any claim of waiver, release, extension,
renewal, settlement, surrender, alteration, or compromise of any of the
Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the
corporate existence, structure or ownership of the Borrower or any other
guarantor of or other Person liable for any of the Guaranteed Obligations; (iii)
any insolvency, bankruptcy, reorganization or other similar proceeding affecting
any Obligated Party, or their assets or any resulting release or discharge of
any obligation of any Obligated Party; or (iv) the existence of any claim,
setoff or other rights which any Loan Guarantor may have at any time against any
Obligated Party, any Agent, any Lender, or any other Person, whether in
connection herewith or in any unrelated transactions.
(b) Except for termination of a Loan Party's obligations hereunder or as
expressly permitted by Section 10.12, the obligations of each Loan Guarantor
hereunder are not subject to any defense or setoff, counterclaim, recoupment, or
termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any
provision of applicable law or regulation purporting to prohibit payment by any
Obligated Party, of the Guaranteed Obligations or any part thereof.
(c) Further, the obligations of any Loan Guarantor hereunder are not
discharged or impaired or otherwise affected by: (i) the failure of any Agent or
any Lender to assert any claim or demand or to enforce any remedy with respect
to all or any part of the Guaranteed Obligations; (ii) any waiver or
modification of or supplement to any provision of any agreement relating to the
Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any
indirect or direct security for the obligations of the Borrower for all or any
part of the Guaranteed Obligations or any obligations of any other guarantor of
or other Person liable for any of the Guaranteed Obligations; (iv) any action or
failure to act by any Agent or any Lender with respect to any collateral
securing any part of the Guaranteed Obligations; or (v) any default, failure or
delay, willful or otherwise, in the payment or performance of any of the
Guaranteed Obligations, or any other circumstance, act, omission or delay that
might in any manner or to any extent vary the risk of such Loan Guarantor or
that would otherwise operate as a discharge of any Loan Guarantor as a matter of
law or equity (other than the payment in full in cash of the Guaranteed
Obligations).
Section 10.04. Defenses Waived. To the fullest extent permitted by
applicable law, and except for termination of a Loan Party's obligations
hereunder or as expressly permitted by Section 10.12, each Loan Guarantor hereby
waives any defense based on or arising out of any defense of the Borrower or any
Loan Guarantor or the unenforceability of all or any part of the Guaranteed
Obligations from any cause, or the cessation from any cause of the liability of
the Borrower or any Loan Guarantor, other than the payment in full in cash of
the Guaranteed Obligations. Without limiting the generality of the foregoing,
each Loan Guarantor irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any Obligated Party, or any other Person. The Collateral Agent
may, at its election, foreclose on any Collateral held by it by one or more
judicial or nonjudicial sales, accept an assignment of any such Collateral in
lieu of foreclosure or otherwise act or fail to act with respect to any
collateral securing all or a part of the Guaranteed Obligations, and the
Administrative Agent may, at its election, compromise or adjust any part of the
Guaranteed
103
Obligations, make any other accommodation with any Obligated Party or exercise
any other right or remedy available to it against any Obligated Party, without
affecting or impairing in any way the liability of such Loan Guarantor under
this Loan Guaranty except to the extent the Guaranteed Obligations have been
fully paid in cash. To the fullest extent permitted by applicable law, each Loan
Guarantor waives any defense arising out of any such election even though that
election may operate, pursuant to applicable law, to impair or extinguish any
right of reimbursement or subrogation or other right or remedy of any Loan
Guarantor against any Obligated Party or any security.
Section 10.05. Rights of Subrogation. No Loan Guarantor will assert any
right, claim or cause of action, including, without limitation, a claim of
subrogation, contribution or indemnification that it has against any Obligated
Party, or any collateral, until payment in full in cash of the Guaranteed
Obligations (other than contingent indemnification obligations for which no
claim has been made).
Section 10.06. Reinstatement; Stay of Acceleration. If at any time any
payment of any portion of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, or
reorganization of the Borrower or otherwise, each Loan Guarantor's obligations
under this Loan Guaranty with respect to that payment shall be reinstated at
such time as though the payment had not been made. If acceleration of the time
for payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of the Borrower, all such amounts otherwise subject
to acceleration under the terms of any agreement relating to the Guaranteed
Obligations shall nonetheless be payable by the Loan Guarantors forthwith on
demand by the Administrative Agent.
Section 10.07. Information. Each Loan Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks that
each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that
none of the Agents nor any Lender shall have any duty to advise any Loan
Guarantor of information known to it regarding those circumstances or risks.
Section 10.08. Taxes. All payments of the Guaranteed Obligations will be
made by each Loan Guarantor free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if any Loan Guarantor shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the applicable Agent or Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Loan Guarantor shall make such deductions and (iii) such Loan
Guarantor shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
Section 10.09. Maximum Liability. The provisions of this Loan Guaranty are
severable, and in any action or proceeding involving any state corporate law, or
any state, Federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any Loan
Guarantor under this Loan Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such
104
Loan Guarantor's liability under this Loan Guaranty, then, notwithstanding any
other provision of this Loan Guaranty to the contrary, the amount of such
liability shall, without any further action by the Loan Guarantors or the
Lenders, be automatically limited and reduced to the highest amount that is
valid and enforceable as determined in such action or proceeding (such highest
amount determined hereunder being the relevant Loan Guarantor's "MAXIMUM
LIABILITY". This Section with respect to the Maximum Liability of each Loan
Guarantor is intended solely to preserve the rights of the Lenders to the
maximum extent not subject to avoidance under applicable law, and no Loan
Guarantor nor any other Person or entity shall have any right or claim under
this Section with respect to such Maximum Liability, except to the extent
necessary so that the obligations of any Loan Guarantor hereunder shall not be
rendered voidable under applicable law. Each Loan Guarantor agrees that the
Guaranteed Obligations may at any time and from time to time exceed the Maximum
Liability of each Loan Guarantor without impairing this Loan Guaranty or
affecting the rights and remedies of the Lenders hereunder, provided that,
nothing in this sentence shall be construed to increase any Loan Guarantor's
obligations hereunder beyond its Maximum Liability.
Section 10.10. Contribution. In the event any Loan Guarantor (a "PAYING
GUARANTOR") shall make any payment or payments under this Loan Guaranty or shall
suffer any loss as a result of any realization upon any collateral granted by it
to secure its obligations under this Loan Guaranty, each other Loan Guarantor
(each a "NON-PAYING GUARANTOR") shall contribute to such Paying Guarantor an
amount equal to such Non-Paying Guarantor's "GUARANTOR PERCENTAGE" of such
payment or payments made, or losses suffered, by such Paying Guarantor. For
purposes of this Article 10, each Non-Paying Guarantor's "Guarantor Percentage"
with respect to any such payment or loss by a Paying Guarantor shall be
determined as of the date on which such payment or loss was made by reference to
the ratio of (i) such Non-Paying Guarantor's Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder) or, if such Non-Paying Guarantor's Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Guarantor from the Borrower after the date hereof (whether by loan,
capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date
(without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any Loan Guarantor, the aggregate amount of all monies received
by such Loan Guarantors from the Borrower after the date hereof (whether by
loan, capital infusion or by other means). Nothing in this provision shall
affect any Loan Guarantor's several liability for the entire amount of the
Guaranteed Obligations (up to such Loan Guarantor's Maximum Liability). Each of
the Loan Guarantors covenants and agrees that its right to receive any
contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the
Guaranteed Obligations. This provision is for the benefit of the Agents, the
Lenders and the Loan Guarantors and may be enforced by any one, or more, or all
of them in accordance with the terms hereof.
Section 10.11. Liability Cumulative. The liability of each Loan Party as a
Loan Guarantor under this Article 10 is in addition to and shall be cumulative
with all liabilities of each Loan Party to the Agents and the Lenders under this
Agreement and the other Loan Documents to which such Loan Party is a party or in
respect of any obligations or liabilities of
105
the other Loan Parties, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability specifically
provides to the contrary.
Section 10.12. Release of Loan Guarantors. Notwithstanding anything in
Section 9.02(b) to the contrary a Subsidiary Guarantor shall automatically be
released from its obligations hereunder and its Loan Guaranty shall be
automatically released (A) upon the consummation of any transaction permitted
hereunder if as a result thereof such Loan Guarantor would no longer be required
to provide a guarantee of the Obligations pursuant to Section 5.12 or (B) upon
the termination of the Commitments and payment and satisfaction in full in cash
of all Secured Obligations (other than Unliquidated Obligations). In connection
with any such release, the Agents shall promptly execute and deliver to any Loan
Guarantor that is a Subsidiary, at such Loan Guarantor's expense, all documents
that such Loan Guarantor shall reasonably request to evidence termination or
release. Any execution and delivery of documents pursuant to the preceding
sentence of this Section 10.12 shall be without recourse to or warranty by the
Agents.
106
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AMSCAN HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
AAH HOLDINGS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
AMSCAN INC.
PA ACQUISITION CORP.
PARTY AMERICA FRANCHISING, INC.
PARTY CITY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
ANAGRAM INTERNATIONAL HOLDINGS, INC.
ANAGRAM INTERNATIONAL, INC.
JCS PACKAGING, INC.
M&D INDUSTRIES, INC.
SSY REALTY CORP.
TRISAR, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Treasurer
107
AM-SOURCE, LLC
ANAGRAM EDEN PRAIRIE PROPERTY HOLDINGS
LLC
By: Amscan Holdings, Inc., Sole Member
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
ANAGRAM INTERNATIONAL, LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
Term Loan Credit Agreement
CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
individually and as Administrative
Agent, Issuing Bank and Swingline
Lender
By: /s/ Xxx Xxxxxx
------------------------------------
Name: Xxx Xxxxxx
Title: Vice President
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Associate
CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as
Collateral Agent
By: /s/ Xxx Xxxxxx
------------------------------------
Name: Xxx Xxxxxx
Title: Vice President
Term Loan Credit Agreement
COMMITMENT SCHEDULE
TERM LOAN COMMITMENTS
LENDER COMMITMENT
------ ----------
Credit Suisse $375,000,000
Total $375,000,000
2
