EXHIBIT 2
CREDIT AGREEMENT
AMONG
PRIMROSE HOLDINGS, INC.,
PRIMROSE SCHOOL FRANCHISING COMPANY
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
AND
CANADIAN IMPERIAL BANK OF COMMERCE,
AS ADMINISTRATIVE AGENT AND A LENDER
DATED AS OF APRIL 6, 1999
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS
1.1 Defined Terms....................................................1
1.2 Other Definitional Provisions...................................18
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 Term Loan Commitments...........................................18
2.2 Term Notes......................................................19
2.3 Procedure for Term Loan Borrowing...............................19
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 Revolving Credit Commitments....................................20
3.2 Revolving Credit Notes..........................................20
3.3 Procedure for Revolving Credit Borrowing........................21
3.4 Commitment Fee..................................................21
3.5 Termination or Reduction of Revolving Credit Commitments........22
SECTION 4. LETTERS OF CREDIT
4.1 L/C Commitment..................................................22
4.2 Procedure for Issuance of Letters of Credit.....................23
4.3 Fees, Commissions and Other Charges.............................23
4.4 L/C Participations..............................................24
4.5 Reimbursement Obligations of the Borrower.......................25
4.6 Obligations Absolute............................................25
4.7 Letter of Credit Payments.......................................26
4.8 Application.....................................................26
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS
5.1 Interest Rates and Payment Dates................................26
5.2 Conversion and Continuation Options.............................26
5.3 Minimum Amounts and Maximum Number of Tranches..................27
5.4 Optional Prepayments............................................27
5.5 Mandatory Prepayments...........................................28
5.6 Computation of Interest and Fees................................29
5.7 Inability to Determine Interest Rate............................29
5.8 Pro Rata Treatment and Payments.................................30
5.9 Illegality......................................................31
5.10 Requirements of Law.............................................31
5.11 Taxes...........................................................32
5.12 Indemnity.......................................................34
5.13 Lending Offices; Change of Lending Office.......................34
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Financial Condition.............................................35
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6.2 No Change.......................................................37
6.3 Existence; Compliance with Law..................................37
6.4 Power; Authorization; Enforceable Obligations...................37
6.5 No Legal Bar....................................................38
6.6 No Material Litigation..........................................38
6.7 No Default......................................................38
6.8 Ownership of Property; Liens....................................38
6.9 Intellectual Property...........................................38
6.10 No Burdensome Restrictions......................................39
6.11 Taxes...........................................................39
6.12 Federal Regulations.............................................39
6.13 ERISA...........................................................39
6.14 Investment Company Act; Other Regulations.......................40
6.15 Subsidiaries; Stockholders......................................40
6.16 Security Documents..............................................40
6.17 Accuracy and Completeness of Information........................40
6.18 Labor Relations.................................................41
6.19 Insurance.......................................................41
6.20 Solvency........................................................41
6.21 Purpose of Loans................................................42
6.22 Environmental Matters...........................................42
6.23 Regulation H....................................................43
6.24 Year 2000 Compliance............................................43
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Initial Loans.....................................43
7.2 Conditions to Each Loan.........................................50
SECTION 8. AFFIRMATIVE COVENANTS
8.1 Financial Statements............................................50
8.2 Certificates; Other Information.................................51
8.3 Payment of Obligations..........................................52
8.4 Conduct of Business and Maintenance of Existence................52
8.5 Maintenance of Property; Insurance..............................53
8.6 Inspection of Property; Books and Records; Discussions..........53
8.7 Notices.........................................................53
8.8 Environmental Laws..............................................54
8.9 Additional Collateral; Additional Guarantors....................54
8.10 Year 2000 Covenants.............................................55
SECTION 9. NEGATIVE COVENANTS
9.1 Financial Condition Covenants...................................55
9.2 Limitation on Indebtedness......................................57
9.3 Limitation on Liens.............................................57
9.4 Limitation on Guarantee Obligations.............................58
9.5 Limitation on Fundamental Changes...............................58
9.6 Limitation on Sale of Assets....................................59
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9.7 Limitation on Leases............................................59
9.8 Limitation on Dividends.........................................59
9.9 Limitation on Capital Expenditures..............................60
9.10 Limitation on Investments, Loans and Advances...................60
9.11 Limitation on Optional Payments and Modifications of
Instruments.....................................................61
9.12 Limitation on Transactions with Affiliates......................61
9.13 Limitation on Sales and Leasebacks..............................61
9.14 Limitation on Changes in Fiscal Year............................61
9.15 Limitation on Negative Pledge Clauses...........................62
9.16 Limitation on Lines of Business.................................62
9.17 Governing Documents.............................................62
9.18 Limitation on Subsidiary Formation..............................62
9.19 Limitation on Securities Issuances..............................62
SECTION 10. EVENTS OF DEFAULT
SECTION 11. THE AGENT
11.1 Appointment.....................................................66
11.2 Delegation of Duties............................................66
11.3 Exculpatory Provisions..........................................66
11.4 Reliance by Administrative Agent................................66
11.5 Notice of Default...............................................67
11.6 Non-Reliance on Administrative Agent and Other Lenders..........67
11.7 Indemnification.................................................68
11.8 Administrative Agent in Its Individual Capacity.................68
11.9 Successor Administrative Agent..................................68
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers..........................................68
12.2 Notices.........................................................69
12.3 No Waiver; Cumulative Remedies..................................70
12.4 Survival of Representations and Warranties......................70
12.5 Payment of Expenses and Taxes...................................70
12.6 Successors and Assigns; Participations and Assignments..........71
12.7 Adjustments; Set-off............................................73
12.8 Counterparts....................................................74
12.9 Severability....................................................74
12.10 Integration.....................................................74
12.11 GOVERNING LAW...................................................74
12.12 Submission To Jurisdiction; Waivers.............................74
12.13 Acknowledgements................................................75
12.14 WAIVERS OF JURY TRIAL...........................................75
12.15 Confidentiality.................................................75
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SCHEDULES
Schedule 1.0 Lenders, Commitments, and Applicable Lending Offices
Schedule 2.2 Scheduled Term Loan Repayments
Schedule 6.2 Pre-Closing Distributions
Schedule 6.4 Consents and Filings
Schedule 6.8 Real Property Contracts
Schedule 6.15 Subsidiaries
Schedule 6.16 Filing Jurisdictions
Schedule 6.19 Insurance
Schedule 6.22 Environmental Matters
Schedule 7.1(e) Minimum EBITDA
Schedule 9.2(d) Permitted Existing Indebtedness
Schedule 9.3(f) Permitted Existing Liens
Schedule 9.4(a) Permitted Existing Guarantee Obligations
Schedule 9.10(c) Loans to Officers
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EXHIBITS
Exhibit A-1 Form of Term Note
Exhibit A-2 Form of Term Note Assumption Endorsement
Exhibit A-3 Form of Post-Assumption Term Note
Exhibit B-1 Form of Revolving Credit Note
Exhibit B-2 Form of Revolving Credit Note Assumption Endorsement
Exhibit B-3 Form of Post-Assumption Revolving Credit Note
Exhibit C Form of Borrower Assignment of Life Insurance
Exhibit D Form of Borrower Collateral Assignment of Lease
Exhibit E Form of Borrower Security Agreement
Exhibit F Form of Holdings Pledge Agreement
Exhibit G Form of Holdings Security Agreement
Exhibit H Form of Joinder and Assumption Agreement
Exhibit I Form of Subsidiaries Guarantee
Exhibit J Form of Subsidiaries Collateral Assignment of Lease
Exhibit K Form of Subsidiaries Security Agreement
Exhibit L Form of Non Bank Status Certificate
Exhibit M Form of Borrowing Certificate
Exhibit N-1 Form of Opinion of Counsel to the Loan Parties
Exhibit O Standard Form Franchise Agreement
Exhibit P Form of Assignment and Acceptance
ANNEX
Annex I Form of Notice of Borrowing
Annex II Form of Continuation/Conversion
Annex III Form of Notice of Prepayment
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of April 6, 1999, among PRIMROSE
HOLDINGS, INC., a Delaware corporation ("HOLDINGS"), from and after the
Assumption (as hereinafter defined) PRIMROSE SCHOOL FRANCHISING COMPANY, a
Georgia corporation (the "BORROWER"), the lenders from time to time parties to
this Agreement (the "LENDERS") and CANADIAN IMPERIAL BANK OF COMMERCE, as
administrative agent for the Lenders hereunder.
RECITALS
WHEREAS, Holdings has requested that (a) the Lenders make term loans
to Holdings in an aggregate principal amount of $13,150,000, the proceeds of
which term loans would be used in part to refinance certain existing
indebtedness of the Borrower, to finance the Acquisition (as defined below) on
the Closing Date and to pay fees and expenses incurred in connection therewith
and herewith, and (b) the Lenders make available to Holdings and, after the
effectiveness of the Assumption, the Borrower, revolving credit loans in an
aggregate principal amount at any one time outstanding not to exceed $2,500,000,
the proceeds of which would be used to finance the working capital requirements
of the Borrower and certain other subsidiaries of Holdings after the
consummation of the Acquisition in the ordinary course of business and to pay
fees and expenses incurred in connection herewith.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ACQUISITION": acquisition of all of the Capital Stock of the
Borrower, Metrocorp and Jewel by Holdings pursuant to the terms of the
Acquisition Documents.
"ACQUISITION DOCUMENTS": the Stock Purchase Agreement and all other
agreements, instruments and documents delivered in connection with the
consummation thereof (including, without limitation, any equity financing
documents related thereto).
"ADMINISTRATIVE AGENT": Canadian Imperial Bank of Commerce, together
with its affiliates, as the administrative agent for the Lenders under this
Agreement and the other Loan Documents.
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"CONTROL" of a Person (including, with its correlative meanings, "CONTROLLED BY"
and "UNDER COMMON CONTROL WITH") means the power, directly or indirectly, either
to (a) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"AGGREGATE OUTSTANDING RC EXTENSIONS OF CREDIT": as to any Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Credit Loans made by such Lender then outstanding and (b) such
Lender's Revolving Credit Commitment Percentage of the L/C Obligations then
outstanding.
"APPLICABLE LENDING OFFICE": for each Lender and for each Type of
Loan, the lending office of such Lender designated for such Type of Loan on
Schedule I hereto (or any other lending office from time to time notified to the
Administrative Agent by such Lender ) as the office at which its Loans of such
Type are to be made and maintained.
"APPLICABLE MARGIN":
(a) for any Term Loan of any Type at any time the Leverage Ratio, as
most recently determined pursuant to Section 8.2(b), is within any of the ranges
set forth below, the rate per annum set forth under the relevant column heading
opposite the applicable range below:
EURODOLLAR
LEVERAGE RATIO BASE RATE LOANS LOANS
-------------- --------------- ----------
Greater than or equal to 3.0 to 1 ............. 2.00% 3.50%
Less than 3.0 ................................. 1.50% 3.00%
PROVIDED that from the Closing Date to the first date on which the Leverage
Ratio is determined pursuant to Section 8.2(b), the highest rate per annum set
forth above.
(b) for any Revolving Credit Loan of any Type at any time the
Leverage Ratio, as most recently determined pursuant to Section 8.2(b), is
within any of the ranges set forth below, the rate per annum set forth under the
relevant column heading opposite the applicable range below:
EURODOLLAR
LEVERAGE RATIO BASE RATE LOANS LOANS
-------------- --------------- ----------
Greater than or equal to 3.0 to 1 ............. 2.00% 3.50%
Less than 3.0 ............................... 1.50% 3.00%
PROVIDED that from the Closing Date to the first date on which the Leverage
Ratio is determined pursuant to Section 8.2(b), the highest rate per annum set
forth above.
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"APPLICATION": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"APPROVED ESCROW ARRANGEMENT": an escrow arrangement, in form and
substance satisfactory to the Administrative Agent, between SCC and Holdings in
which funds of Holdings or its Subsidiaries that are paid to SCC pursuant to the
terms of the Tax Sharing Agreement are held for the sole purpose of (i) paying
any future tax liability of Holdings or its Subsidiaries; or (ii) returning such
funds to Holdings or its Subsidiaries, as the case may by.
"ARRANGER": CIBC Oppenheimer, as arranger.
"ASSIGNED POLICY": any life insurance policy assigned to the
Administrative Agent pursuant to an Assignment of Life Insurance.
"ASSIGNEE": as defined in Section 12.6(c).
"ASSIGNMENT AND ACCEPTANCE": as defined in Section 12.6(c).
"ASSIGNMENT OF LIFE INSURANCE": the Assignment of Life Insurance to
be executed and delivered by the Borrower substantially in the form of Exhibit
C, as the same may be amended, supplemented or otherwise modified from time to
time.
"ASSUMPTION": the assumption by the Borrower, immediately following
the consummation of the Acquisition, of the Obligations pursuant to the Joinder
and Assumption Agreement.
"AVAILABLE RC COMMITMENT": as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Revolving Credit
Commitment at such time OVER (b) the Aggregate Outstanding RC Extensions of
Credit by such Lender at such time.
"BASE RATE": for any day, the rate per annum (rounded upward, if
necessary, to the next 1/16 of 1%) 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%. For purposes hereof: "PRIME RATE" shall mean the rate of
interest publicly announced by CIBC in New York, New York from time to time as
its base rate (the base rate not being intended to be the lowest rate of
interest charged by CIBC in connection with extensions of credit to debtors).
"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BORROWER": as defined in the heading to this Agreement.
"BORROWER COLLATERAL ASSIGNMENT LEASE": each Collateral Assignment
of Tenant's Interest in Lease to be executed and delivered by the Borrower,
substantially in the form of Exhibit D, as the same may be amended, supplemented
or otherwise modified from time to time.
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"BORROWER SECURITY AGREEMENT": the Security Agreement to be executed
and delivered by the Borrower, substantially in the form of Exhibit F, as the
same may be amended, supplemented or otherwise modified from time to time.
"BORROWER SECURITY DOCUMENTS": the collective reference to the
Assignment of Life Insurance, the Borrower COLLATERAL ASSIGNMENT LEASEs and the
Borrower Security Agreement, and any pledge agreement entered into by the
Borrower pursuant to Section 8.9.
"BORROWING DATE": any Business Day specified in a notice pursuant to
Section 2.3 or 3.3 as a date on which the Borrower requests the Lenders to make
Loans hereunder.
"BUSINESS": as defined in Section 6.22.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, and, if such day relates to a borrowing of, a payment or prepayment of
principal of or interest on, or a Conversion of or into, or an Interest Period
for, a Eurodollar Loan or a notice by Holdings or the Borrower with respect to
any such borrowing, payment, prepayment, Conversion or Interest Period, which is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities with maturities of 90 days or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any Lender or of any commercial bank
having capital and surplus in excess of $500,000,000, (c) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of clause
(b) of this definition, having a term of not more than seven days with respect
to securities issued or fully guaranteed or insured by the United States
Government, (d) commercial paper of a domestic issuer rated at least A-1 or the
equivalent thereof by Standard and Poor's Ratings Group ("S&P") or P-1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc. ("MOODY'S") and in either
case maturing within 90 days after the day of acquisition, (e) securities with
maturities of 90 days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or A by Moody's, (f)
securities with maturities of 90 days or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition or (g) shares of
money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
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"CERTIFICATE RE NON-BANK STATUS:" as defined in Section
5.11(b)(i)(B)
"CIBC": Canadian Imperial Bank of Commerce.
"CIBC OPPENHEIMER": CIBC Xxxxxxxxxxx Inc.
"CLOSING DATE": the date on which the conditions precedent set forth
in Section 7.1 shall be satisfied.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all property and interests in property of the Loan
Parties, now owned or hereinafter acquired, upon which a Lien is purported to be
created by any Security Document.
"COLLATERAL ASSIGNMENTS": the collective reference to the Borrower
Collateral Assignment of Lease and the Subsidiaries Collateral Assignment of
Lease.
"COMMITMENTS": the collective reference to the Revolving Credit
Commitments and the Term Loan Commitments.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not
incorporated, which is under common control with Holdings or the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which includes
Holdings or the Borrower and which is treated as a single employer under Section
414 of the Code.
"CONSOLIDATED CURRENT ASSETS": with respect to any Person at a
particular date, all amounts which would, in conformity with GAAP, be included
under current assets on a consolidated balance sheet of such Person and its
Subsidiaries as at such date; PROVIDED, HOWEVER, that such amounts shall not
include (a) any amounts for any Indebtedness owing by an Affiliate of such
Person, unless such Indebtedness arose in connection with the sale of goods or
other property in the ordinary course of business and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by an
Affiliate of such Person, or (c) the cash surrender value of any life insurance
policy.
"CONSOLIDATED CURRENT LIABILITIES": with respect to any Person at a
particular date, all amounts which would, in conformity with GAAP, be included
under current liabilities on a consolidated balance sheet of such Person and its
Subsidiaries as at such date, but excluding to the extent otherwise included
therein the Revolving Credit Loans and the current portion of the Term Loans.
"CONSOLIDATED EBITDA": with respect to any Person for any period,
the sum for such period of (a) Consolidated Net Income of such Person for such
period, (b) to the extent deducted in calculating Consolidated Net Income, the
sum of provisions for such period for income taxes (including payments to SCC
under the Tax Sharing Agreement), interest expense, and depreciation and
amortization expense used in determining such Consolidated Net Income, (c)
amounts deducted in such period in respect of non-cash expenses of such Person
in accordance with GAAP, (d) the amount of any aggregate net loss (or minus the
amount of any
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gain) during such period arising from the sale, exchange or other disposition of
capital assets by such Person, (e) non-cash expenses of such Person deducted in
such period in connection with any earn-out agreements, stock appreciation
rights, "phantom" stock plans, employment agreements, non-competition
agreements, subscription and stockholders agreements and other incentive and
bonus plans and similar arrangements made in connection with acquisitions of
Persons or businesses by such Person or its Subsidiaries or the retention of
executives, officers or employees by such Person or its Subsidiaries, including
(but without duplication) any Person that has become a Subsidiary of such Person
during such period, and (f) to the extent deducted in calculating such
Consolidated Net Income, management fees paid under the Management Fee Agreement
which are subordinated to the Obligations in a manner satisfactory to the
Administrative Agent; PROVIDED, that Consolidated EBITDA of such Person shall in
any event exclude, from and after the Closing Date, (x) the effect of any
write-up of any assets acquired in the Acquisition and (y) the amount of any
non-cash income of such Person recognized during any period for which
Consolidated EBITDA is determined.
"CONSOLIDATED FIXED CHARGES": with respect to any Person for any
period, the sum of (i) the amounts deducted for the cash portion of Consolidated
Interest Expense in determining Consolidated Net Income of such Person for such
period, (ii) the amount of scheduled payments of principal of Indebtedness
during such period, (iii) all amounts of capital expenditures made during such
period (other than capital expenditures in respect of Financing Leases to the
extent the same are included in clauses (i) or (ii) of this definition) and (iv)
the amount of cash income taxes paid during such period, excluding payments made
to SCC pursuant to the Tax Sharing Agreement to the extent such payments are (A)
applied to the repayment of the Loans or (B) placed in escrow pursuant to an
Approved Escrow Arrangement.
"CONSOLIDATED INTEREST EXPENSE": with respect to any Person for any
period, the amount which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" or any like caption (including without
limitation, imputed interest included in payments under Financing Leases) on a
consolidated income statement of such Person and its Subsidiaries for such
period excluding the amortization of any original issue discount.
"CONSOLIDATED LEASE EXPENSE": with respect to any Person for any
period, the aggregate amount of fixed or contingent rentals payable by such
Person and its Subsidiaries, determined on a consolidated basis in accordance
with GAAP, for such period with respect to leases of real and personal property.
"CONSOLIDATED NET INCOME": with respect to any Person for any
period, the consolidated net income (or deficit) of such Person and its
Subsidiaries for such period (taken as a cumulative whole), determined in
accordance with GAAP; PROVIDED that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of such
Person or is merged into or consolidated with such Person or any Subsidiary of
such Person, (b) the income (or deficit) of any Person (other than a Subsidiary)
in which such Person or any Subsidiary of such Person has an ownership interest,
except to the extent that any such income has been actually received by such
Person or such Subsidiary in the form of dividends or similar distributions, (c)
the undistributed earnings of any Subsidiary of such Person to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual
Obligation, Governing
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Document or Requirement of Law applicable to such Subsidiary, (d) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of income accrued during such period,
(e) any aggregate net gain (but not any aggregate net loss) during such period
arising from the sale, exchange or other disposition of capital assets (such
term to include all fixed assets, whether tangible or intangible, all inventory
sold in conjunction with the disposition of fixed assets and all securities),
(f) any write-up of any asset, (g) any net gain from the collection of the
proceeds of life insurance policies, (h) any gain arising from the acquisition
of any securities, or the extinguishment, under GAAP, of any Indebtedness, of
such Person or any Subsidiary of such Person, (i) in the case of a successor to
such Person or any Subsidiary of such Person by consolidation or merger or as a
transferee of its assets, any earnings of the successor corporation prior to
such consolidation, merger or transfer of assets, and (j) any deferred credit
representing the excess of equity in any Subsidiary of such Person at the date
of acquisition over the cost of the investment in such Subsidiary.
"CONSOLIDATED TOTAL INDEBTEDNESS": with respect to any Person at any
time, the aggregate principal amount (including, with respect to any
Indebtedness originally issued at a discount, the accreted portion thereof) of
Indebtedness of such Person and its Subsidiaries at such time, determined on a
consolidated basis in accordance with GAAP.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation of a Eurodollar Loan from one Interest Period to the next Interest
Period.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONVERT", CONVERSION" and "CONVERTED" shall refer to a conversion
of Base Rate Loans into Eurodollar Loans or of Eurodollar Loans into Base Rate
Loans or Eurodollar Loans, which may be accompanied by the transfer by a Lender
(at its sole discretion) of a Loan from one Applicable Lending Office to
another.
"CP": Capital Partners, Inc., a Connecticut corporation.
"CREDIT EXPOSURE": as to any Lender at any time, the sum of (a) its
Revolving Credit Commitment (or, if the Revolving Credit Commitments shall have
expired or been terminated, the aggregate unpaid principal amount of its
Revolving Credit Loans) and (b) the unpaid principal amount of its Term Loan.
"CREDIT EXPOSURE PERCENTAGE": as to any Lender at any time, the
fraction (expressed as a percentage), the numerator of which is the Credit
Exposure of such Lender at such time and the denominator of which is the
aggregate Credit Exposures of all of the Lenders at such time.
"DEFAULT": any of the events specified in Section 10, whether or not
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"DOLLARS" and "$": dollars in lawful currency of the United States
of America.
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"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR BASE RATE": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum equal to the
corresponding rate appearing at page 3750 of the Dow Xxxxx Telerate Service at
or about 11:00 a.m., London time, two Business Days prior to the beginning of
such Interest Period, or if such rate no longer so appears, the rate per annum
at which CIBC is offered Dollar deposits at or about 10:00 a.m., New York City
time, two Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where the eurodollar and foreign currency and
exchange operations in respect of its Eurodollar Loans are then being conducted
for delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its Eurodollar
Loan to be outstanding during such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 10;
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"EXCESS CASH FLOW": as to any Person for each fiscal year:
(a) Consolidated EBITDA of such Person for such fiscal year;
PLUS (b) the decrease (if any) in the amount of the excess of
Consolidated Current Assets of such Person (excluding cash and cash equivalents)
over Consolidated Current
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Liabilities of such Person at the end of such fiscal year COMPARED TO the amount
of the excess of Consolidated Current Assets of such Person (excluding cash and
cash equivalents) over Consolidated Current Liabilities of such Person at the
end of the immediately preceding fiscal year of such Person;
MINUS (c) the sum of (i) the amount of all regularly scheduled
payments of principal of the Term Loan actually made during such fiscal
year and the amount of any voluntary prepayment of principal of the Term
Loans made during such fiscal year, (ii) the amount of all interest
payments actually made in cash during such fiscal year by such Person and
its consolidated Subsidiaries, (iii) management fees paid to CP pursuant
to the terms of the Management Fee Agreement during such fiscal year, (iv)
the amount of capital expenditures actually made during such fiscal year
to the extent permitted by Section 9.8, (v) cash income taxes actually
paid during such fiscal year pursuant to the Tax Sharing Agreement, and
(vi) the increase (if any) in the amount of the excess of Consolidated
Current Assets of such Person (excluding cash and cash equivalents) over
Consolidated Current Liabilities of such Person at the end of such fiscal
year compared to the amount of the excess of Consolidated Current Assets
of such Person (excluding cash and cash equivalents) over Consolidated
Current Liabilities of such Person at the end of the immediately preceding
fiscal year of such Person.
"EXISTING CREDITOR(S)": Citizens First Bank.
"EXISTING FINANCING DOCUMENTS": all credit agreements, indentures,
notes, guarantees and other financing documents, in each case as amended to the
extent permitted hereunder, evidencing or governing the Indebtedness listed on
Schedule 7.1(c).
"EXISTING INDEBTEDNESS": all Indebtedness of the Borrower,
Metrocorp, Jewel and their respective Subsidiaries outstanding immediately prior
to the Closing Date pursuant to the Existing Financing Documents.
"FEDERAL FUNDS EFFECTIVE RATE": 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 which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.
"FEE LETTER": that certain Fee Letter, dated March 16, 1999, among
CIBC, CIBC Xxxxxxxxxxx and CP, as amended, supplemented or otherwise modified
from time to time.
"FINANCING LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"GAAP": generally accepted accounting principles in the United
States of America in effect from time to time.
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"GOVERNING DOCUMENTS": as to any Person, its articles or certificate
of incorporation and by-laws, its partnership agreement, its certificate of
formation and operating agreement, and/or the other organizational or governing
documents of such Person.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the
"PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The terms "GUARANTEE"
and "GUARANTEED" used as a verb shall have a correlative meaning. The amount of
any Guarantee Obligation of any guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"GUARANTEES": the collective reference to the Subsidiaries Guarantee
and of other guarantees of the Obligations in favor of the Administrative Agent
executed in connection with this Agreement.
"GUARANTOR": any Person delivering a Guarantee pursuant to this
Agreement.
"HOLDINGS": as defined in the heading to this Agreement.
"HOLDINGS PLEDGE AGREEMENT": the Pledge Agreement to be executed and
delivered by Holdings, substantially in the form of Exhibit G as the same may be
amended, supplemented or otherwise modified from time to time.
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"HOLDINGS SECURITY AGREEMENT": the Security Agreement to be executed
and delivered by Holdings, substantially in the form of Exhibit H, as the same
may be amended, supplemented or otherwise modified from time to time.
"HOLDINGS SECURITY DOCUMENTS": the collective reference to the
Holdings Pledge Agreement and the Holdings Security Agreement.
"INDEBTEDNESS": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(b) any other indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person under
Financing Leases, (d) all obligations of such Person in respect of letters of
credit, acceptances or similar instruments issued or created for the account of
such Person and (e) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become liable
for the payment thereof. In any event, the term Indebtedness will not include
the Zero Coupon Convertible Preferred Stock.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan, the last day
of each March, June, September and December, (b) as to any Eurodollar Loan
having an Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period longer than
three months (i) each day which is three months or a whole multiple thereof,
after the first day of such Interest Period, and (ii) the last day of such
Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or Conversion
date, as the case may be, with respect to such Eurodollar Loan and ending one,
two, three or six months thereafter, as selected by the Borrower in its notice
of borrowing or notice of Conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending one,
two, three or six months thereafter, as selected by the Borrower by irrevocable
notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
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(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Termination Date or beyond the date final payment is due on
the Term Loans shall end on the Termination Date or such date
of final payment, as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end
on the last Business Day of a calendar month; and
(4) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during
an Interest Period for such Loan.
"ISSUING LENDER": CIBC, in its capacity as issuer of any Letter of
Credit and/or NationsBank, in its capacity as issuer of any Letter of Credit.
"JEWEL": The Jewel I, Inc., a Georgia corporation, d/b/a Country Day
School.
"JOINDER AND ASSUMPTION AGREEMENT": the Joinder and Assumption
Agreement to be made by the Borrower pursuant to Sections 2.1(b) and 3.1(b),
substantially in the form of Exhibit I, as the same may be amended, supplemented
or otherwise modified from time to time.
"KEY PERSON": Xx Xxxxxxxx and such other members of the management
of the Borrower as the Administrative Agent may designate from time to time.
"L/C COMMITMENT": $500,000.
"L/C FEE PAYMENT DATE": the last Business Day of each March, June,
September and December.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a)
the aggregate then undrawn amount of the then outstanding Letters of Credit and
(b) the aggregate amount of drawings under Letters of Credit which have not then
been reimbursed.
"L/C PARTICIPANTS": the collective reference to all the Lenders
other than the Issuing Lender.
"LETTERS OF CREDIT": as defined in Section 4.1(a).
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"LEVERAGE RATIO": for any period of twelve-consecutive calendar
months, the ratio of Consolidated Total Indebtedness of Holdings as of the last
day of such twelve-month period to Consolidated EBITDA of Holdings for such
twelve-month period.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any Financing Lease
having substantially the same economic effect as any of the foregoing), and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction in respect of any of the foregoing.
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Guarantees, the
Security Documents and the Joinder and Assumption Agreement.
"LOAN PARTIES": the Borrower, Holdings, Metrocorp, Jewel and each
Subsidiary of Holdings, the Borrower, Metrocorp or Jewel which is a party to a
Loan Document.
"MAJORITY LENDERS": at any time, Lenders the Credit Exposure
Percentages of which aggregate more than 50%.
"Management Fee Agreement": the Management Advisory Services
Agreement dated as of April 6, 1999 among Jewel, Metrocorp, the Borrower and
SCC.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of, (x) prior to the consummation of the Acquisition, any of Holdings, or the
Borrower, Metrocorp, and Jewel, taken as a whole, and (y) from and after the
consummation of the Acquisition, Holdings and its Subsidiaries taken as a whole
or (b) the validity or enforceability of this or any of the other Loan Documents
or the rights or remedies of the Administrative Agent or the Lenders hereunder
or thereunder.
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by the Borrower
and/or its Subsidiaries in excess of $50,000 for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"METROCORP": Metrocorp Properties, Inc., a Georgia corporation.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
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"NET PROCEEDS": (i) the aggregate cash consideration received by
Holdings, the Borrower, Metrocorp, Jewel or a Subsidiary of any thereof in
connection with any transaction referred to in Section 5.5(c) less (ii) the
expenses (including out-of-pocket expenses) incurred by such Person in
connection with such transaction (including, in the case of any issuance of debt
or equity securities, underwriters' commissions and fees) and the amount of any
federal and state taxes incurred in connection with such transaction, in each
case as certified by a Responsible Officer to the Administrative Agent at the
time of such transaction.
"NON-EXCLUDED TAXES": as defined in Section 5.11.
"NOTES": the collective reference to the Revolving Credit Notes and
the Term Notes.
"OBLIGATIONS": the unpaid principal amount of, and interest
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to Holdings or the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans, and all
other obligations and liabilities of the Loan Parties to the Administrative
Agent and the Lenders, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
or out of or in connection with this Agreement, the Notes, the Guarantees, the
Security Documents and any other Loan Documents and any other document made,
delivered or given in connection therewith or herewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of counsel
to the Administrative Agent or to the Lenders that are required to be paid by a
Loan Party pursuant to the terms of the Loan Documents) or otherwise.
"PARTICIPANT": as defined in Section 12.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGE AGREEMENTS": collectively, the Holdings Pledge Agreement and
any pledge agreement delivered pursuant to Section 8.9.
"PRO FORMA BALANCE SHEET": as defined in Section 6.1(b).
"PROPERTIES": as defined in Section 6.22.
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"REFINANCING": the refinancing of the credit facilities under the
Existing Financing Documents with the Loans and Commitments hereunder,
including, without limitation, the transactions described in Section 7.1 (c)
hereof.
"REGISTER": as defined in Section 12.6(d).
"REGULATION U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"REIMBURSEMENT OBLIGATION": the obligation of Holdings and the
Borrower to reimburse the Issuing Bank pursuant to Section 4.5(a) for amounts
drawn under a Letter of Credit.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period is
waived under Sections .21, .22, .23, .26, .27 or .28 of PBGC Xxx.xx. 4043.
"REQUIRED LENDERS": at any time, Lenders the Credit Exposure
Percentages of which aggregate at least 66 2/3 %.
"REQUIREMENT OF LAW": as to any Person, the certificate of
incorporation and by-laws or other organizational or Governing Documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer and the president
of Holdings or the Borrower, as applicable, or, with respect to financial
matters, the chief financial officer of Holdings or the Borrower, as applicable.
"RESTRICTED PAYMENTS": as defined in Section 9.8.
"REVOLVING CREDIT COMMITMENT": as to any Lender, the obligation of
such Lender to make Revolving Credit Loans to, prior to the effectiveness of the
Assumption, Holdings only and, after the effectiveness of the Assumption, the
Borrower only, pursuant to Section 3.1 and/or to issue or participate in Letters
of Credit issued on behalf of the Borrower hereunder in an aggregate principal
and/or face amount at any one time outstanding not to exceed the amount set
forth opposite such Lender's name on Schedule I under the caption "Revolving
Credit Commitment " or in an Assignment and Acceptance, as such amount may be
reduced from time to time in accordance with the provisions of this Agreement.
"REVOLVING CREDIT COMMITMENT PERCENTAGE": as to any Lender at any
time, the percentage which such Lender's Revolving Credit Commitment then
constitutes of the aggregate Revolving Credit Commitments (or, at any time after
the Revolving Credit Commitments shall have expired or terminated, the
percentage which the aggregate principal amount of such
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Lender's Revolving Credit Loans then outstanding constitutes of the aggregate
principal amount of the Revolving Credit Loans then outstanding).
"REVOLVING CREDIT COMMITMENT PERIOD": the period from and including
the date hereof to but not including the Termination Date or such earlier date
on which the Revolving Credit Commitments shall terminate as provided herein.
"REVOLVING CREDIT LOANS": as defined in Section 3.1.
"REVOLVING CREDIT NOTE": as defined in Section 3.2.
"REVOLVING CREDIT NOTE ASSUMPTION ENDORSEMENT": as defined in
Section 3.2.
"SCC": Security Capital Corporation, a Delaware corporation
"SECURITY AGREEMENTS": the collective reference to the Holdings
Security Agreement, the Borrower Security Agreement and the Subsidiaries
Security Agreement, and any security agreement delivered pursuant to Section
8.9.
"SECURITY DOCUMENTS": the collective reference to the Assignment of
Life Insurance, the Collateral Assignments, the Security Agreements, the Pledge
Agreements and all other security documents hereafter delivered to the
Administrative Agent granting a Lien on any asset or assets of any Person to
secure any of the Obligations or to secure any guarantee of any such
Obligations.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"STOCKHOLDERS AGREEMENT": the Stockholders Agreement dated as of
April 6, 1999 among Holdings, SCC, Xx Xxxxxxxx, Xxxxxx Xxxxxxxx and Xxxxxxx
Xxxxxx.
"STOCK OPTION PLAN": the Primrose Holdings, Inc. Stock Option Plan
as in effect on the Closing Date.
"SUBSIDIARIES COLLATERAL ASSIGNMENT OF LEASE": each Collateral
Assignment of Tenant's Interest in Lease to be executed and delivered by Jewel,
substantially in the form of Exhibit K, as the same may be amended, supplemented
or otherwise modified from time to time.
"SUBSIDIARIES GUARANTEE": the Guarantee to be executed and delivered
by Metrocorp, Jewel, any other Subsidiary of Holdings (except the Borrower), and
each Subsidiary thereof and of the Borrower, substantially in the form of
Exhibit J, as the same may be amended, supplemented or otherwise modified from
time to time.
"SUBSIDIARIES SECURITY AGREEMENT": the Security Agreement to be
executed and delivered by Metrocorp, Jewel, any other Subsidiary of Holdings
(except the Borrower), and each Subsidiary thereof and of the Borrower in favor
of the Administrative Agent, substantially in the form of Exhibit M, as the same
may be amended, supplemented or otherwise modified from time to time.
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"SUBSIDIARIES SECURITY DOCUMENTS": the collective reference to the
Subsidiaries Collateral Assignment of Lease and the Subsidiaries Security
Agreement.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of Holdings.
"SUBSIDIARY GUARANTOR": any Person party to the Subsidiaries
Guarantee as a guarantor.
"TAX SHARING AGREEMENT": the Consolidated Income Tax Sharing
Agreement dated May 17, 1996 among SCC and Possible Dreams, Ltd., as amended,
and, pursuant to the Tax Sharing Joinder Agreement dated as of April 6, 1999,
between SCC and Holdings, Holdings.
"TERMINATION DATE": April 6, 2005
"TERM LOAN": as defined in Section 2.1.
"TERM LOAN COMMITMENT": as to any Lender, its obligation to make a
Term Loan to Holdings pursuant to Section 2.1 in the amount set forth opposite
such Lender's name on Schedule I under the caption "Term Loan". The aggregate
principal amount of the Term Loan Commitment as of the Closing Date was
$13,150,000.
"TERM LOAN COMMITMENT PERCENTAGE": as to any Lender, the percentage
equal to the quotient of such Lender's Term Loan Commitment divided by the
aggregate Term Loan Commitments.
"TERM NOTE": as defined in Section 2.2.
"TERM NOTE ASSUMPTION ENDORSEMENT": as defined in Section 2.2.
"TRANCHE": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same date and
end on the same later date (whether or not such Loans shall originally have been
made on the same day);
"TRANSFEREE": as defined in Section 12.6(f).
"TYPE": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended from time to time.
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"WARRANT AGREEMENT": collectively, the Warrant Agreement, dated as
of the date hereof, made by Holdings in favor of CIBC Xxxxxxxxxxx and/or any of
its Affiliates or Subsidiaries, and the Warrant Agreement, dated as of the date
hereof, made by SCC in favor of CIBC Xxxxxxxxxxx and/or any of its Affiliates or
Subsidiaries, as the same may be amended, supplemented or otherwise modified
from time to time.
"WARRANTS": the warrants to purchase Capital Stock of Holdings or
SCC, as applicable issued pursuant to the Warrant Agreements.
"YEAR 2000 PROBLEM": the risk that computer applications used by the
Borrower and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to, and any date on or
after, December 31, 1999.
"ZERO COUPON CERTIFICATE OF DESIGNATIONS": the Certificate of Voting
Power, Designations, Preferences and Relative, Optional or Other Special Rights,
and Qualifications, Limitations or Restrictions thereof, of Zero Coupon
Convertible Preferred Stock of SCC, adopted April 6, 1999.
"ZERO COUPON CONVERTIBLE PREFERRED STOCK": the Zero Coupon
Convertible Preferred Stock, par value $0.01 per share, of Holdings.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in any Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in any Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to
Holdings, the Borrower and their respective Subsidiaries not defined in Section
1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF TERM LOAN COMMITMENTS
2.1 TERM LOAN COMMITMENTS.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make a term loan (a "TERM LOAN") to Holdings on the Closing
Date in an amount not to exceed the amount of the Term Loan Commitment of such
Lender then in effect; PROVIDED, that the
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Term Loan Commitments shall terminate at 3:00 p.m., New York City time, on April
6, 1999, if the Term Loans have not been made prior to that time.
(b) On the Closing Date, immediately upon the consummation of the
Acquisition, the Borrower shall assume and become directly liable for, pursuant
to the Joinder and Assumption Agreement, the Term Loans and all of the
Obligations with respect to the Term Loans, and thereupon Holdings and the
Borrower shall be jointly and severally liable therefor.
(c) The Term Loans may from time to time be (i) Eurodollar Loans,
(ii) Base Rate Loans, or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Sections
2.3 and 5.2.
2.2 TERM NOTES. The Term Loan of each Lender shall be evidenced by a
promissory note of Holdings, substantially in the form of Exhibit A-1 (or, with
respect to any Term Note issued after the effectiveness of the Assumption,
substantially in the form of Exhibit A-3) with appropriate insertions as to
payee, date and principal amount (each, including as the same may have been
amended by a Term Note Assumption Endorsement, a "Term Note"), payable to the
order of such Lender and representing the obligation of Holdings (or, after the
effectiveness of the Assumption and after giving effect to the applicable Term
Note Assumption Endorsement, Holdings and the Borrower, jointly and severally)
to pay the amount of the Term Loan made by such Lender. Concurrently with the
effectiveness of the Assumption, each of Holdings and the Borrower shall execute
and deliver to the Administrative Agent, for the account of each Lender, an
endorsement to each Term Note, substantially in the form of Exhibit A-2 with
appropriate insertions as to payee, date and principal amount (a "Term Note
Assumption Endorsement"). Each Lender is hereby authorized to record the date,
Type and amount of its Term Loan and the date and amount of each payment or
prepayment of principal thereof and each Conversion of all or a portion thereof
to another Type and, and in the case of Eurodollar Loans, the Interest Period
with respect thereto, on the schedule annexed to and constituting a part of its
Term Note, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, that the failure of such
Lender to make any such recordation shall not impair or otherwise affect the
validity or enforceability of its Term Note. Each Term Note shall (a) be dated
the Closing Date, (b) be stated to mature in installments in amounts equal to
such Lender's Term Loan Commitment Percentage of the amounts, and payable on the
dates, set forth on Schedule 2.2, and (c) bear interest for the period from the
date thereof on the unpaid principal amount thereof at the applicable interest
rates per annum specified in Section 5.1. Interest on the Term Notes shall be
payable on the dates specified in Section 5.1(e).
2.3 PROCEDURE FOR TERM LOAN BORROWING. Holdings shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 a.m., New York City time, (a) three Business
Days prior to the Closing Date, if all or any part of the Term Loans are to be
initially Eurodollar Loans, or (b) one Business Day prior to the Closing Date,
otherwise) requesting that the Lenders make the Term Loans on the Closing Date
and specifying (i) the Closing Date, (ii) the amount to be borrowed, (iii)
whether the Term Loans are to be initially Eurodollar Loans, Base Rate Loans, or
a combination thereof, and (iv) if the Term Loans are to be entirely or partly
Eurodollar Loans or, the respective amounts of each such Type of Loan and the
respective lengths of the initial
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Interest Periods therefor. Upon receipt of such notice the Administrative Agent
shall promptly notify each Lender thereof. Not later than 11:00 a.m. on the
Closing Date each Lender shall make available to the Administrative Agent at its
office specified in Section 12.2 the amount of such Lender's pro rata share of
such borrowing in immediately available funds. The Administrative Agent shall on
such date credit the account of Holdings on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders and in like funds as received by the
Administrative Agent.
SECTION 3. AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS
3.1 REVOLVING CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("REVOLVING CREDIT LOANS") to,
prior to the effectiveness of the Assumption, Holdings only, and from and after
the effectiveness of the Assumption, the Borrower only from time to time during
the Revolving Credit Commitment Period in an aggregate principal amount at any
one time outstanding not to exceed the amount of such Lender's Revolving Credit
Commitment then in effect; PROVIDED, that the Revolving Credit Commitments shall
terminate at 3:00 p.m., New York City time, on the Termination Date, if the Term
Loans have not been made prior to that time. During the Revolving Credit
Commitment Period Holdings or the Borrower, as applicable, may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof.
(b) On the Closing Date, immediately upon the consummation of the
Acquisition, the Borrower shall assume and become directly liable for, pursuant
to the Joinder and Assumption Agreement, the Revolving Credit Loans, the
Revolving Credit Commitments and all of the Obligations with respect to the
Revolving Credit Loans and the Revolving Credit Commitments, and thereupon
Holdings and the Borrower shall be jointly and severally liable therefor.
(c) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Base Rate Loans, or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 3.3 and 5.2, PROVIDED that no Revolving Credit Loan
shall be made as a Eurodollar Loan after the day that is one month, prior to the
Termination Date.
3.2 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each
Lender shall be evidenced by a promissory note of Holdings, substantially in the
form of Exhibit B-1 (or, with respect to any Revolving Credit Note issued after
the effectiveness of the Assumption, substantially in the form of Exhibit B-3)
with appropriate insertions as to payee, date and principal amount (each,
including as the same may have been amended by a Revolving Credit Note
Assumption Endorsement, a "Revolving Credit Note"), payable to the order of such
Lender and evidencing the obligation of Holdings (or, after the effectiveness of
the Assumption and after giving effect to the applicable Revolving Credit Note
Assumption Endorsement, Holdings and the Borrower, jointly and severally) to pay
a principal amount equal to the lesser of
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(a) the amount of the Revolving Credit Commitment of such Lender and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Lender. Concurrently with the effectiveness of the Assumption, each of Holdings
and the Borrower shall execute and deliver to the Administrative Agent, for the
account of each Lender, an endorsement to each Revolving Credit Note,
substantially in the form of Exhibit B-2 with appropriate insertions as to
payee, date and principal amount (a "Revolving Credit Note Assumption
Endorsement"). Each Lender is hereby authorized to record the date, Type and
amount of each Revolving Credit Loan made or Converted by such Lender, the date
and amount of each payment or prepayment of principal thereof, and, in the case
of Eurodollar Loans, the Interest Period with respect thereto, on the schedule
annexed to and constituting a part of its Revolving Credit Note, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Each Revolving Credit Note shall (x) be dated the
Closing Date, (y) be stated to mature on the Termination Date and (z) bear
interest on the unpaid principal amount thereof from time to time outstanding at
the applicable interest rate per annum determined as provided in Section 5.1.
Interest on each Revolving Credit Note shall be payable on the dates specified
in Section 5.1(e).
3.3 PROCEDURE FOR REVOLVING CREDIT BORROWING. Prior to the
effectiveness of the Assumption, Holdings, and after the effectiveness of the
Assumption, the Borrower, may borrow under the Revolving Credit Commitments
during the Revolving Credit Commitment Period on any Business Day in an
aggregate principal amount not exceeding the aggregate Available RC Commitments
then in effect, provided that Holdings or the Borrower, as applicable, shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 a.m., New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurodollar Loans or (b) one
Business Day prior to the requested Borrowing Date, otherwise), specifying (i)
the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the
borrowing is to be of Eurodollar Loans, Base Rate Loans, or a combination
thereof and (iv) if the borrowing is to be entirely or partly of Eurodollar
Loans or, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Periods therefor. Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $100,000 or a whole multiple thereof (or, if the then Available
RC Commitments are less than $100,000, such lesser amount) and (y) in the case
of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from Holdings or the Borrower, the
Administrative Agent shall promptly notify each Lender thereof. Each Lender will
make the amount of its pro rata share of each borrowing available to the
Administrative Agent for the account of Holdings or the Borrower, as applicable,
at the office of the Administrative Agent specified in Section 12.2 prior to
11:00 a.m., New York City time, on the Borrowing Date requested by Holdings or
the Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to Holdings or the Borrower, as
applicable, by the Administrative Agent crediting the account of Holdings or the
Borrower, as applicable, on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.
3.4 COMMITMENT FEE. Holdings and, after the effectiveness of the
Assumption, Holdings and the Borrower jointly and severally, agrees to pay to
the Administrative Agent for the account of each Lender a commitment fee for the
period from and
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including the first day of the Revolving Credit Commitment Period to the
Termination Date, computed at the rate of 1/2 of 1% per annum on the average
daily amount of the Available RC Commitment of such Lender during the period for
which payment is made, payable quarterly in arrears on the last day of each
March, June, September and December and on the Termination Date or such earlier
date as the Revolving Credit Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
3.5 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS. The
Borrower shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments;
provided, that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans made
on the effective date thereof, the Aggregate Outstanding RC Extensions of Credit
would exceed the Revolving Credit Commitments then in effect. Any such reduction
shall be in an amount equal to $100,000 or a whole multiple thereof and shall
reduce permanently the Revolving Credit Commitments then in effect.
SECTION 4. LETTERS OF CREDIT
4.1 L/C COMMITMENT.
(a) Subject to the terms and conditions hereof, the Issuing Lender,
in reliance on the agreements of the other Lenders set forth in Section 4.4(a),
agrees to issue letters of credit ("LETTERS OF CREDIT") for the account of the
Borrower on any Business Day during the Revolving Credit Commitment Period in
such form as may be approved from time to time by the Issuing Lender; PROVIDED
that the Issuing Lender shall have no obligation to issue any Letter of Credit
if, after giving effect to such issuance, (1) the L/C Obligations would exceed
the L/C Commitment or (2) the aggregate Available Commitments would be less than
zero.
(b) Each Letter of Credit shall:
(1) be denominated in Dollars and shall be a standby letter of
credit issued to support obligations of the Borrower,
Metrocorp, Jewel, and/or their respective Subsidiaries,
contingent or otherwise, (A) in respect of insurance
obligations, (B) to xxxxxxx'x compensation board or similar
Governmental Authority for xxxxxxx'x compensation liabilities
of the Borrower, Metrocorp, Jewel, and/or their respective
Subsidiaries, (C) in respect of performance bonds or to
otherwise support performance by the Borrower, Metrocorp,
Jewel, and/or their respective Subsidiaries under contracts
and (D) for such other purposes as may be approved by the
Issuing Lender and the Administrative Agent (such consent not
to be unreasonably withheld), and
(2) expire no later than the earlier of (i) five (5) Business Days
prior to the Termination Date and (ii) 364 days from the date
of issuance (subject to renewal).
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(c) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the
State of New York.
(d) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict
with, or cause the Issuing Lender or any L/C Participant to
exceed any limits imposed by, any applicable Requirement of
Law.
4.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower may
from time to time after the effectiveness of the Assumption request that the
Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at
its address for notices specified herein an Application therefor, completed to
the reasonable satisfaction of the Issuing Lender, and such other certificates,
documents and other papers and information as the Issuing Lender may reasonably
request. Upon receipt of any Application, the Issuing Lender will process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall promptly issue the Letter of Credit requested thereby (but
in no event shall the Issuing Lender be required to issue any Letter of Credit
earlier than three Business Days after its receipt of the Application therefor
and all such other certificates, documents and other papers and information
relating thereto) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the
Borrower. The Issuing Lender shall furnish a copy of such Letter of Credit to
the Borrower promptly following the issuance thereof and the Issuing Lender
shall notify the Administrative Agent of the issuance of such Letter of Credit
and the Administrative Agent will in turn provide notice to each L/C Participant
indicating the amount of such Letter of Credit to be allocated to such L/C
Participant.
4.3 FEES, COMMISSIONS AND OTHER CHARGES.
(a) Holdings and the Borrower shall, jointly and severally, pay to
the Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit, computed for the period from the date of such payment to the date upon
which the next such payment is due hereunder at a rate equal to the Applicable
Margin for Revolving Credit Loan Eurodollar Loans then in effect plus
one-quarter of one percent (0.25%), calculated on the basis of the actual days
elapsed over a 360 day year, of the aggregate amount available to be drawn under
such Letter of Credit on the date on which such fee is calculated. One-quarter
of one percent (0.25%) of such fee shall be payable to the Issuing Lender, and
the remainder of such fee shall be payable to the L/C Participants and the
Issuing Lender to be shared ratably among them in accordance with their
respective Revolving Credit Commitment Percentages. Such commissions shall be
payable in arrears on each L/C Fee Payment Date to occur after the issuance of
each Letter of Credit and shall be nonrefundable.
(b) In addition to the foregoing fees and commissions, Holdings and
the Borrower shall, jointly and severally, pay or reimburse the Issuing Lender
for such normal and customary costs and expenses as are incurred or charged by
the Issuing Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
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(c) The Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this subsection.
4.4 L/C PARTICIPATIONS.
(a) The Issuing Lender irrevocably agrees to grant and hereby grants
to each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk,
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrower in
accordance with the terms of this Agreement, such L/C Participant shall pay to
the Issuing Lender upon demand at the Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Commitment Percentage of the amount of such draft, or any part thereof, which is
not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 4.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (1) such amount, times (2) the daily average Federal
funds rate, as quoted by the Issuing Lender, during the period from and
including the date such payment is required (or, if such demand for payment from
such L/C Participant is made after 3:00 p.m. New York City time on such date,
the next Business Day) to the date on which such payment is immediately
available to the Issuing Lender, times (3) a fraction the numerator of which is
the number of days that elapse during such period and the denominator of which
is 360. If any such amount required to be paid by any L/C Participant pursuant
to Section 4.4(a) is not in fact made available to the Issuing Lender by such
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans hereunder. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 4.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
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4.5 REIMBURSEMENT OBLIGATIONS OF THE BORROWER.
(a) Holdings and the Borrower agree, jointly and severally, to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender or, if later, on each date on which such
draft is paid by the Issuing Lender for the amount of (1) such draft so paid and
(2) any taxes and any reasonable fees, charges or other costs or expenses
incurred by the Issuing Lender at its address for notices specified herein in
lawful money of the United States of America and in immediately available funds.
(b) Interest shall be payable on any and all amounts remaining
unpaid by Holdings and the Borrower under this Section from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue.
(c) Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Administrative Agent for a borrowing pursuant to
Section 4.3 of Base Rate Loans in the amount of such drawing. The Borrowing Date
with respect to such borrowing shall be the date of such drawing.
4.6 OBLIGATIONS ABSOLUTE.
(a) Holdings' and the Borrower's obligations under this Section 4
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which Holdings
or the Borrower may have or have had against the Issuing Lender or any
beneficiary of a Letter of Credit.
(b) Holdings and the Borrower also agree with the Issuing Lender
that the Issuing Lender shall not be responsible for, and Holdings' and the
Borrower's Reimbursement Obligations under Section 4.5(a) shall not be affected
by, among other things, (1) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (2) any dispute between or among Holdings or
the Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or (3) any claims whatsoever of
Holdings or the Borrower against any beneficiary of such Letter of Credit or any
such transferee.
(c) The Issuing Lender shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit, except for
errors or omissions caused by the Issuing Lender's gross negligence or willful
misconduct.
(d) Holdings and the Borrower agree that any action taken or omitted
by the Issuing Lender under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
Uniform Commercial Code of the State of New York, shall be binding on Holdings
and the Borrower and shall not result in any liability of the Issuing Lender to
Holdings or the Borrower.
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4.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to Holdings and the Borrower in connection with any draft presented for
payment under any Letter of Credit shall, in addition to any payment obligation
expressly provided for in such Letter of Credit, be limited to determining that
the documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are in conformity with such Letter of Credit.
4.8 APPLICATION. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 4, the provisions of this Section 4 shall apply.
SECTION 5. GENERAL PROVISIONS APPLICABLE TO LOANS
5.1 INTEREST RATES AND PAYMENT DATES.
(a) Each Eurodollar Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Eurodollar Rate determined for such day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) any principal of any Loan, (ii) any
interest payable thereon, (iii) any commitment fee or (iv) any other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), the principal of the Loans and any such overdue
interest, commitment fee or other amount shall bear interest at a rate per annum
which is (x) in the case of principal, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
or (y) in the case of any such overdue interest, commitment fee or other amount,
the rate described in paragraph (b) of this Section plus 2%, in each case from
the date of such non-payment until such overdue principal, interest, commitment
fee or other amount is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
5.2 CONVERSION AND CONTINUATION OPTIONS.
(a) Holdings or the Borrower, as applicable, may elect from time to
time to Convert Eurodollar Loans to Base Rate Loans by giving the Administrative
Agent at least two Business Days' prior irrevocable notice of such election,
PROVIDED that any such Conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. Holdings or the Borrower,
as applicable, may elect from time to time to Convert Base Rate Loans to
Eurodollar Loans by giving the Administrative Agent at least three Business
Days' prior irrevocable notice of such election. Any such notice of Conversion
to Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of
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any such notice the Administrative Agent shall promptly notify each Lender
thereof. All or any part of outstanding Eurodollar Loans and Base Rate Loans may
be Converted as provided herein, PROVIDED that (i) no Loan may be Converted into
a Eurodollar Loan when any Event of Default has occurred and is continuing and
the Administrative Agent has or the Required Lenders have determined that such a
Conversion is not appropriate, (ii) any such Conversion may only be made if,
after giving effect thereto, Section 5.3 shall not have been contravened, and
(iii) no Loan may be converted into a Eurodollar Loan after the date that is one
month prior to the Termination Date (in the case of Conversions of Revolving
Credit Loans) or the date of the final installment of principal (in the case of
Conversions of Term Loans).
(b) Any Eurodollar Loans may be Continued as such upon the
expiration of the then current Interest Period with respect thereto by Holdings
or the Borrower, as applicable, giving notice to the Administrative Agent, in
accordance with the applicable provisions of the term "Interest Period" set
forth in Section 1.1, of the length of the next Interest Period to be applicable
to such Loans, PROVIDED that no Eurodollar Loan may be Continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Required Lenders have determined that such a Continuation is
not appropriate, (ii) if, after giving effect thereto, Section 5.3 would be
contravened or (iii) after the date that is one month prior to the Termination
Date (in the case of Continuations of Revolving Credit Loans) or the date of the
final installment of principal (in the case of Continuations of Term Loans) and
PROVIDED, FURTHER, that if Holdings or the Borrower, as applicable, shall fail
to give such notice or if such Continuation is not permitted such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period.
5.3 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be equal to $400,000 or a
whole multiple of $100,000 in excess thereof. In no event shall there be more
than four (4) Eurodollar Tranches outstanding at any time.
5.4 OPTIONAL PREPAYMENTS. Holdings or the Borrower may on the last
day of any Interest Period with respect thereto, in the case of Eurodollar
Loans, or at any time and from time to time, in the case of Base Rate Loans,
prepay the Loans, in whole or in part, without premium or penalty, upon at least
four Business Days' irrevocable notice to the Administrative Agent, specifying
the date and amount of prepayment and whether the prepayment is of Eurodollar
Loans, Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each. Upon receipt of any such notice the
Administrative Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with any amounts payable pursuant to
Section 5.12 and, in the case of prepayments of the Term Loans only, accrued
interest to such date on the amount prepaid. Partial prepayments of the Term
Loans pursuant to this Section shall be applied to the installments of principal
thereof in the inverse order of their scheduled maturities. Amounts prepaid on
account of the Term Loans may not be reborrowed. Partial prepayments pursuant to
this Section shall be in an aggregate principal amount of $100,000 or a whole
multiple thereof.
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5.5 MANDATORY PREPAYMENTS.
(a) Subject to Section 5.12, if on any date the Aggregate
Outstanding Extensions of Credit exceeds the Revolving Credit Commitments,
Holdings and the Borrower shall, jointly and severally, immediately prepay the
Revolving Credit Loans and/or cash collateralize or replace Letters of Credit in
an amount equal to the amount of such excess.
(b) Unless the Required Lenders otherwise agree, Holdings and the
Borrower shall, jointly and severally, prepay the Loans and reduce the
Commitments in an amount equal to (i) 100% of the Net Proceeds of any sale or
issuance of debt securities, and 100% of the Net Proceeds of any sale or
issuance of any equity securities, in either case by Holdings, the Borrower,
Metrocorp, Jewel or any Subsidiary of any thereof, whether in a public offering,
a private placement or otherwise, (ii) 100% of the Net Proceeds of any sale,
lease, assignment, exchange or other disposition for cash of any asset or group
of assets (including, without limitation, but subject to clause (d) of this
Section 5.5, insurance proceeds paid as a result of any destruction, casualty or
taking of any property of Holdings, the Borrower, Metrocorp, Jewel or any
Subsidiary of any thereof), not made in the ordinary course of business, by
Holdings, the Borrower, Metrocorp, Jewel, or any Subsidiary of any thereof, and
(iii) 100% of the cash proceeds received in respect of any Assigned Policy upon
the death of any Key Person, but subject to clause (e) of this Section 5.5, in
any such case no later than three Business Days following receipt by Holdings,
the Borrower, Metrocorp, Jewel, or such Subsidiary of such proceeds, together
with accrued interest to such date on the amount prepaid. Amounts prepaid
pursuant to this Section 5.5(b) shall be applied FIRST to installments of
principal of the Term Loans until paid in full, and SECOND to the reduction of
the Revolving Credit Commitments and the prepayment of the Revolving Credit
Loans and/or to cash collateralize or replace Letters of Credit. Prepayments of
installments of Term Loans shall be applied in the inverse order of maturity and
such amounts so prepaid may not be reborrowed. Nothing in this Section 5.5(b)
shall be construed to derogate any restriction or limitation contained in any
Loan Document imposed on any transaction of the types described in this Section
5.5(b), including without limitation the restrictions set forth in Sections 9.2,
9.5 and 9.6 hereof.
(c) On or before the earlier of the date on which the financial
statements referred to in Section 8.1(a) are required to be delivered in respect
of a fiscal year of Holdings, beginning with the fiscal year ending December 31,
1999, and the date on which such financial statements are actually delivered,
Holdings and the Borrower shall, jointly and severally, prepay the Term Loans
and permanently reduce the Commitments in the amount of 75% of Excess Cash Flow
for the period between the Closing Date and December 31, 1999 and each fiscal
year thereafter covered by such financial statements, together with accrued
interest to such date on the amount prepaid. Amounts prepaid pursuant to this
Section 5.5(c) shall be applied FIRST to installments of principal of the Term
Loans until paid in full, and SECOND to the reduction of the Revolving Credit
Commitments and the prepayment of the Revolving Credit Loans and/or to cash
collateralize or replace Letters of Credit. Prepayments of installments of Term
Loans shall be applied in the inverse order of maturity and such amounts so
prepaid may not be reborrowed.
(d) Net Proceeds received by Holdings or any Subsidiary as proceeds
of insurance upon any destruction, casualty or taking with respect to any
property of Holdings or any Subsidiary need not be applied as set forth in
Section 5.5(b) to the extent that no Default or
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Event of Default has occurred and is continuing and such Net Proceeds are
applied to the repair, rebuilding or replacement of the property which was the
subject of such destruction, casualty or taking within 60 days after the receipt
of such Net Proceeds. If required by the Administrative Agent, such Net Proceeds
shall be held in a special collateral account, subject to the sole dominion and
control of the Administrative Agent and in a manner reasonably satisfactory to
the Administrative Agent, as additional Collateral for the Obligations and the
Guarantees, until such time as it is to be applied to such repair, rebuilding or
replacement.
(e) A portion of the cash proceeds received by Holdings or any
Subsidiary in respect of any Assigned Policy upon the death of any Key Person
not in excess of $500,000 need not be applied as set forth in Section 5.5(b) to
the extent that no Default or Event of Default has occurred and is continuing
and such portion of such cash proceeds are applied to the recruitment of an
officer to replace such deceased Key Person within 60 days after the receipt of
such cash proceeds. If required by the Administrative Agent, such cash proceeds
shall be held in a special collateral account, subject to the sole dominion and
control of the Administrative Agent and in a manner reasonably satisfactory to
the Administrative Agent, as additional Collateral for the Obligations and the
Guarantees, until such time as it is to be applied to the recruitment of such
replacement officer.
5.6 COMPUTATION OF INTEREST AND FEES.
(a) Commitment fees and, whenever it is calculated on the basis of
the Prime Rate, interest shall be calculated on the basis of a 365- (or 366-, as
the case may be) day year for the actual days elapsed; and, otherwise, interest
shall be calculated on the basis of a 360-day year for the actual days elapsed.
The Administrative Agent shall as soon as practicable notify the Borrower and
the Lenders of each determination of a Eurodollar Rate. Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective. The Administrative
Agent shall as soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on Holdings and the Borrower and the Lenders in the absence of manifest
error. The Administrative Agent shall, at the request of the Borrower, deliver
to the Borrower a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 5.1(a) or (c).
5.7 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon Holdings and the Borrower)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate or the for
such Interest Period, or
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(b) the Administrative Agent shall have received notice from the
Majority Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans, as the case may be, requested to be made on the
first day of such Interest Period shall be made as Base Rate Loans, (y) any
Loans that were to have been Converted on the first day of such Interest Period
to Eurodollar Loans, as the case may be, shall be Converted to or Continued as
Base Rate Loans and (z) any outstanding Eurodollar Loans, as the case may be,
shall be Converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans, as the case may be, shall be made or Continued as
such, nor shall Holdings or the Borrower have the right to Convert Loans to
Eurodollar Loans, as the case may be.
5.8 PRO RATA TREATMENT AND PAYMENTS.
(a) Each borrowing by Holdings or the Borrower from the Lenders
hereunder, each payment by Holdings or the Borrower on account of any commitment
fee hereunder and any reduction of the Term Loan Commitments or the Revolving
Credit Commitments of the Lenders shall be made pro rata according to the
respective Term Loan Commitment Percentages or Revolving Credit Commitment
Percentages, as applicable, of the Lenders. Each payment (including each
prepayment) by Holdings or the Borrower on account of principal of and interest
on the Term Loans or the Revolving Credit Loans shall be made pro rata according
to the respective outstanding principal amounts of the Term Loans or the
Revolving Credit Loans, as applicable, then held by the Lenders. All payments
(including prepayments) to be made by Holdings or the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without set-off or counterclaim and shall be made prior to 12:00 noon, New York
City time, on the due date thereof to the Administrative Agent, for the account
of the Lenders, at the Administrative Agent's office specified in Section 12.2,
in Dollars and in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month in which event such
payment shall be made on the immediately preceding Business Day.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its Term Loan Commitment Percentage or Revolving
Credit Commitment Percentage, as applicable, of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to Holdings or
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the Borrower, as applicable, a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this Section
shall be conclusive in the absence of manifest error. If such Lender's Term Loan
Commitment Percentage or Revolving Credit Commitment Percentage, as applicable,
of such borrowing is not made available to the Administrative Agent by such
Lender within three Business Days of such Borrowing Date, the Administrative
Agent shall also be entitled to recover such amount with interest thereon at the
rate per annum applicable to Base Rate Loans hereunder, on demand, from Holdings
and the Borrower.
5.9 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, Continue Eurodollar Loans as such and
Convert Domestic Dollar Loans to Eurodollar Loans shall forthwith be cancelled
and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall
be Converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such Conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, Holdings and the Borrower shall, jointly and severally, pay to such
Lender such amounts, if any, as may be required pursuant to Section 5.12.
5.10 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made
by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section
5.11 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar hereunder;
or
(iii) shall impose on such Lender any other condition;
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and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, Converting into,
Continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, Holdings and the Borrower
shall, jointly and severally, promptly pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduced amount
receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, Holdings and the Borrower shall, jointly
and severally, promptly pay to such Lender such additional amount or amounts as
will compensate such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrower (with a copy to
the Administrative Agent) of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
agreements in this Section shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
5.11 TAXES.
(a) All payments made by Holdings or the Borrower under this
Agreement and any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Note,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, PROVIDED, HOWEVER, that
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neither Holdings nor the Borrower shall be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by Holdings or the Borrower, as promptly as possible thereafter the
Borrower shall send to the Administrative Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by Holdings or the Borrower showing payment thereof.
If Holdings or the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence, Holdings and the
Borrower shall, jointly and severally, indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof shall:
(i) (A) if such Lender is a "bank" within the meaning of
Section 881(c)(3)(A) of the Code, deliver to the Borrower and the
Administrative Agent (x) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable
form, as the case may be, and (y) an Internal Revenue Service Form
W-8 or W-9, or successor applicable form, as the case may be, or (B)
if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224, deliver (x) a certificate substantially
in the form of Exhibit L (a "CERTIFICATE OF NON-BANK STATUS") and
(y) two completed and signed copies of Internal Revenue Service Form
W-8 or successor applicable form;
(ii) deliver to the Borrower and the Administrative Agent two
further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower; and
(iii) obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the
Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, (ii) in the
case of a Certificate of Non-Bank Status, that it is not a "bank" as such term
is defined in Section 881(c)(3)(A) of the
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Code, and (iii) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax. Each Person that shall
become a Lender or a Participant pursuant to Section 12.6 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms
and statements required pursuant to this Section, PROVIDED that in the case of a
Participant such Participant shall furnish all such required forms and
statements to the Lender from which the related participation shall have been
purchased.
5.12 INDEMNITY. Holdings and the Borrower agree, jointly and
severally, to indemnify each Lender and to hold each Lender harmless from any
loss or expense which such Lender may sustain or incur as a consequence of (a)
default by Holdings or the Borrower in making a borrowing of, Conversion into or
Continuation of Eurodollar Loans after Holdings or the Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement,
(b) default by Holdings or the Borrower in making any prepayment after Holdings
or the Borrower has given a notice thereof in accordance with the provisions of
this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, Converted or Continued, for the period from the date of such
prepayment or of such failure to borrow, Convert or Continue to the last day of
such Interest Period (or, in the case of a failure to borrow, Convert or
Continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
5.13 LENDING OFFICES; CHANGE OF LENDING OFFICE.
(a) Loans of each Type made by any Lender shall be made and
maintained at such Lender's Applicable Lending Office for Loans of such Type.
(b) Each Lender agrees that if it makes any demand for payment under
Section 5.10 or 5.11(a), or if any adoption or change of the type described in
Section 5.9 shall occur with respect to it, it will use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the making of such a
designation would reduce or obviate the need for Holdings and the Borrower to
make payments under Section 5.10 or 5.11(a), or would eliminate or reduce the
effect of any adoption or change described in Section 5.9.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans, Holdings and, from and after the
effectiveness of the Assumption, the Borrower hereby represents and warrants to
the Administrative Agent and each Lender that:
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6.1 FINANCIAL CONDITION.
(a) The balance sheet of the Borrower as at December 31, 1998 and
the related statements of income and of cash flows for the fiscal year ended on
such date, reported on by Xxxxx & Xxxxxx, P.C., copies of which have heretofore
been furnished to each Lender, are complete and correct and present fairly the
financial condition of the Borrower as at such date, and the results of its
operations and cash flows for the fiscal year then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). The Borrower did not have, at the date
of the most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
financial derivative, which is not reflected in the foregoing statements or in
the notes thereto. During the period from December 31, 1998 to and including the
date hereof there has been no sale, transfer or other disposition by the
Borrower of any material part of its business or property and no purchase or
other acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the financial condition of the
Borrower at December 31, 1998.
(b) The balance sheet of Metrocorp as at December 31, 1998 and the
related statements of income and of cash flows for the fiscal year ended on such
date, reported on by Xxxxx & Xxxxxx, P.C., copies of which have heretofore been
furnished to each Lender, present fairly the financial condition of Metrocorp as
at such date, and the results of its operations and cash flows for the fiscal
year then ended. All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants or Responsible Officer, as the case may be, and as disclosed
therein). Metrocorp did not have, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction or other financial derivative, which is not
reflected in the foregoing statements or in the notes thereto. During the period
from December 31, 1998 to and including the date hereof there has been no sale,
transfer or other disposition by Metrocorp of any material part of its business
or property and no purchase or other acquisition of any business or property
(including any Capital Stock of any other Person) material in relation to the
financial condition of Metrocorp at December 31, 1998.
(c) The balance sheet of Jewel as at December 31, 1998 and the
related statements of income and of cash flows for the fiscal year ended on such
date, reported on by Xxxxx & Xxxxxx, P.C., copies of which have heretofore been
furnished to each Lender, present fairly the financial condition of Jewel as at
such date, and the results of its operations and cash flows for the fiscal year
then ended. All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein). Jewel did
not have, at the date of the most recent balance sheet referred to above, any
material Guarantee Obligation, contingent liability or
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liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction or other financial derivative, which is not
reflected in the foregoing statements or in the notes thereto. During the period
from December 31, 1998 to and including the date hereof there has been no sale,
transfer or other disposition by Jewel of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any Capital Stock of any other Person) material in relation to the
financial condition of Jewel at December 31, 1998.
(d) The unaudited balance sheet of Holdings as at April 6, 1999,
copies of which have heretofore been furnished to each Lender, is complete and
correct and presents fairly the financial condition of Holdings as at such date.
Such balance sheet, including the related schedules and notes thereto, has been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants or Responsible Officer, as the
case may be, and as disclosed therein). Holdings did not have, at the date of
the balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes, or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other financial
derivative, which is not reflected in the foregoing statements or in the notes
thereto. During the period from April 6, 1999 to and including the date hereof
there has been no sale, transfer or other disposition by Holdings of any
material part of its business or property and no purchase or other acquisition
of any business or property (including any Capital Stock of any other Person)
material in relation to the financial condition of Holdings at April 6, 1999.
(e) The PRO FORMA consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at December 31, 1998, certified by a Responsible
Officer of Holdings (the "PRO FORMA BALANCE SHEET"), a copy of which has been
provided to the Administrative Agent and each Lender, is the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries
adjusted to give effect (as if such events had occurred on such date) to (i) the
Refinancing, (ii) the Acquisition, (iii) the making of the Term Loans, (iv) the
making of the Revolving Credit Loans to be made on the Closing Date, (v) the
application of the proceeds of the foregoing in accordance with the terms of the
Loan Documents, (vi) the Assumption and (vii) the payment of all fees and
expenses related to the foregoing transactions, as estimated in good faith as of
the date of the Pro Forma Balance Sheet. The Pro Forma Balance Sheet, together
with the notes thereto, presents fairly, on a pro forma basis, the consolidated
financial position of Holdings and its Subsidiaries as at December 31, 1998,
assuming that the events specified in the preceding sentence had actually
occurred on such date.
(f) The operating forecast and cash flow projections of Holdings and
its consolidated Subsidiaries, copies of which have heretofore been furnished to
the Lenders, have been prepared in good faith under the direction of a
Responsible Officer of Holdings, and in accordance with GAAP except that such
forecast and projections do not include footnotes and other disclosures which
may be required pursuant to GAAP. Neither Holdings nor, after the effectiveness
of the Assumption, the Borrower, has any reason to believe that as of the date
of delivery thereof such operating forecast and cash flow projections are
materially incorrect or misleading in any material respect, or omit to state any
material fact which would render them misleading in any material respect.
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(g) The Tax Sharing Agreement is in full force and effect, and has
not been modified except in accordance with Section 9.11. SCC has taken all
action, and has caused each of its Subsidiaries to take all action, necessary to
maintain the net operating loss carryforwards of SCC contemplated by the
business plan delivered to the Administrative Agent pursuant to Section 7.1(d).
None of SCC or any of its Subsidiaries has taken any action, or taken any
position, relative to its tax matters which would result in the disallowance or
restriction of, or which would be inconsistent with such maintenance and usage
of, such net operating loss carryforwards. Any escrow arrangement into which any
proceeds of any amount paid by Holdings, or paid to Holdings by SCC, pursuant to
the Tax Sharing Agreement, or any portion of any tax refund payable to Holdings
in accordance with the Tax Sharing Agreement, are deposited in an Approved
Escrow Arrangement.
6.2 NO CHANGE. (a) Since December 31, 1998, there has been no
development or event which has had or could have a Material Adverse Effect, and
(b) except as described on Schedule 6.2, during the period from December 31,
1998 to and including the date hereof no dividends or other distributions have
been declared, paid or made upon the Capital Stock of the Borrower, Metrocorp or
Jewel, nor has any of the Capital Stock of the Borrower, Metrocorp or Jewel,
been redeemed, retired, purchased or otherwise acquired for value by the
Borrower, Metrocorp or Jewel.
6.3 EXISTENCE; COMPLIANCE WITH LAW. Each of Holdings, the Borrower,
Metrocorp, Jewel and their respective Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, have a Material Adverse Effect.
6.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each of Holdings
and the Borrower has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and to
borrow hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Loan Documents to which
Holdings or the Borrower is a party other than those consents, authorizations,
filings, notices or other acts set forth on Schedule 6.4. This Agreement has
been, and each other Loan Document to which it is a party will be, duly executed
and delivered on behalf of Holdings. Upon the execution and delivery of the
Joinder and Assumption Agreement, each of this Agreement and the Joinder and
Assumption Agreement shall have been, and each other Loan Document to which it
is a party will be, duly executed and delivered on behalf of the Borrower. This
Agreement constitutes (or with respect to the Borrower will constitute, upon the
execution and delivery of the Joinder and Assumption Agreement), and each other
Loan Document to which it is a party when executed and delivered
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will constitute, a legal, valid and binding obligation of Holdings and the
Borrower enforceable against Holdings and the Borrower in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
6.5 NO LEGAL BAR. The execution, delivery and performance of the
Loan Documents to which Holdings or the Borrower is a party, the borrowings
hereunder and the use of the proceeds thereof will not violate any Requirement
of Law or Contractual Obligation of Holdings, the Borrower, Metrocorp, Jewel or
any of their respective Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their or their respective
properties or revenues pursuant to any such Requirement of Law or Contractual
Obligation (other than Liens created by the Security Documents in favor of the
Administrative Agent).
6.6 NO MATERIAL LITIGATION. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings and, after the effectiveness of the Assumption, the
Borrower, threatened by or against Holdings, the Borrower, Metrocorp, Jewel or
any of their respective Subsidiaries or against any of their or their respective
properties or business (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) which could have a
Material Adverse Effect.
6.7 NO DEFAULT. Neither Holdings, the Borrower, Metrocorp, Jewel nor
any of their respective Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which could have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
6.8 OWNERSHIP OF PROPERTY; LIENS. Each of Holdings, the Borrower,
Metrocorp, Jewel and their respective Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by Section 9.3. Except as set forth on Schedule 6.8, none of Holdings,
the Borrower, Metrocorp, Jewel or any of their respective Subsidiaries owns, or
is under any Contractual Obligation to acquire, any fee interest in real
property.
6.9 INTELLECTUAL PROPERTY. Each of Holdings, the Borrower,
Metrocorp, Jewel and each of their respective Subsidiaries owns, or is licensed
to use, all trademarks, tradenames, copyrights, technology, know-how and
processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which could not have a Material
Adverse Effect (the "Intellectual Property"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does Holdings or, after the effectiveness of the Assumption, the
Borrower, know of any valid basis for any such claim. The use of such
Intellectual Property by Holdings, the Borrower, Metrocorp, Jewel and their
respective Subsidiaries does not infringe on the rights of any Person, except
for such claims and infringements that, in the aggregate, do not have a Material
Adverse Effect.
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6.10 NO BURDENSOME RESTRICTIONS. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries has a Material
Adverse Effect.
6.11 TAXES. Each of Holdings, the Borrower, Metrocorp, Jewel and
their Subsidiaries has filed or caused to be filed all tax returns which, to the
knowledge of Holdings or, after the effectiveness of the Assumption, the
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower, Metrocorp, Jewel or their respective
Subsidiaries, as the case may be); no tax Lien has been filed, and, to the
knowledge of Holdings or, after the effectiveness of the Assumption, the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
6.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect, or for any purpose which violates, or which would be inconsistent
with, the provisions of the regulations of such Board of Governors. If requested
by any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
said Regulation U.
6.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and neither the
Borrower nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent. The
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits.
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6.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. Neither Holdings nor
the Borrower is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. Neither Holdings nor the Borrower is subject to regulation under any
Federal or State statute or regulation (other than Regulation X of the Board of
Governors of the Federal Reserve System) which limits its ability to incur
Indebtedness.
6.15 SUBSIDIARIES; STOCKHOLDERS. Schedule 6.15 sets forth the name
of each direct or indirect Subsidiary of Holdings, the Borrower, Metrocorp and
Jewel, its form of organization, its jurisdiction of organization, the total
number of issued and outstanding shares or other interests of Capital Stock
thereof, the classes and number of issued and outstanding shares or other
interests of Capital Stock of each such class, the name of each holder of
Capital Stock thereof and of Holdings, the Borrower, Metrocorp and Jewel (prior
to and after giving effect to the Acquisition and the other transactions
contemplated hereby), and the number of shares or other interests of such
Capital Stock held by each such holder and the percentage of all outstanding
shares or other interests of such class of Capital Stock held by such holders.
6.16 SECURITY DOCUMENTS.
(a) The provisions of each Security Document are effective to create
in favor of the Administrative Agent for the ratable benefit of the Lenders a
legal, valid and enforceable security interest in all right, title and interest
of the Loan Party party thereto in the "Collateral" described therein.
(b) (i) When financing statements have been filed in the offices in
the jurisdictions listed in Schedule 6.16, the Security Agreements shall each
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of Holdings, the Borrower, Metrocorp, Jewel and their
respective Subsidiaries in the "Collateral" described therein, which can be
perfected by such filing.
(ii) When certificates representing the Pledged Stock (as defined in
the Pledge Agreements) are delivered to the Administrative Agent, together
with stock powers endorsed in blank by a duly authorized officer of the
pledgors thereof, the Pledge Agreements shall constitute a fully perfected
first Lien on, and security interest in, all right, title and interest of
the pledgors parties thereto in the "Collateral" described therein.
(c) Neither Holdings, the Borrower, Metrocorp, Jewel nor any
Subsidiary of any thereof owns any property, or has any interest in any
property, that is not subject to a fully perfected first priority Lien on, or
security interest in, such property in favor of the Administrative Agent, other
than any such property having an aggregate fair market value at any one time not
exceeding $10,000.
6.17 ACCURACY AND COMPLETENESS OF INFORMATION.
(a) All factual information, reports and other papers and data with
respect to the Loan Parties and, prior to the effectiveness of the Assumption,
the Borrower, Metrocorp and Jewel (other than projections) furnished, and all
factual statements and representations made, to the Administrative Agent or the
Lenders by a Loan Party, or on behalf of a Loan Party, were, at
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the time the same were so furnished or made, when taken together with all such
other factual information, reports and other papers and data previously so
furnished and all such other factual statements and representations previously
so made, complete and correct in all material respects, to the extent necessary
to give the Administrative Agent and the Lenders true and accurate knowledge of
the subject matter thereof in all material respects, and did not, as of the date
so furnished or made, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances in which the same were
made.
(b) All projections with respect to the Loan Parties and prior to
the effectiveness of the Assumption, the Borrower, Metrocorp and Jewel,
furnished by or on behalf of a Loan Party to the Administrative Agent or the
Lenders were prepared and presented in good faith by or on behalf of such Loan
Party. No fact is known to a Loan Party which materially and adversely affects
or in the future is reasonably likely (so far as such Loan Party can reasonably
foresee) to have a Material Adverse Effect which has not been set forth in the
financial statements referred to in Section 6.1 or in such information, reports,
papers and data or otherwise disclosed in writing to the Administrative Agent or
the Lenders prior to the Closing Date.
6.18 LABOR RELATIONS. No Loan Party is, nor, prior to the
effectiveness of the Assumption, is the Borrower, Metrocorp or Jewel, engaged in
any unfair labor practice which could reasonably be expected to have a Material
Adverse Effect. There is (a) no unfair labor practice compliant pending or, to
the best knowledge of each Loan Party and each of the Subsidiaries, threatened
against a Loan Party or, prior to the effectiveness of the Assumption, the
Borrower, Metrocorp or Jewel, before the National Labor Relations Board which
could reasonably be expected to have a Material Adverse Effect and no grievance
or arbitration proceeding arising out of or under a collective bargaining
agreement is so pending or threatened; (b) no strike, labor dispute, slowdown or
stoppage pending or, to the best knowledge of each Loan Party, threatened
against a Loan Party or, prior to the effectiveness of the Assumption, the
Borrower, Metrocorp or Jewel; and (c) no union representation question existing
with respect to the employees of a Loan Party or, prior to the effectiveness of
the Assumption, the Borrower, Metrocorp or Jewel, and no union organizing
activities are taking place with respect to any thereof.
6.19 INSURANCE. Each Loan Party and, prior to the effectiveness of
the Assumption, each of the Borrower, Metrocorp and Jewel, has, with respect to
its properties and business, insurance covering the risks, in the amounts, with
the deductible or other retention amounts, and with the carriers, listed on
Schedule 6.19, which insurance meets the requirements of Section 8.5 hereof and
Section 5(m) of the Security Agreements of the date hereof and the Closing Date.
6.20 SOLVENCY. On the Closing Date, after giving effect to the
consummation of the Refinancing and the Acquisition, to the incurrence of all
indebtedness and obligations being incurred on or prior to such date in
connection herewith and therewith, and to the Assumption, (i) the amount of the
"present fair saleable value" of the assets of Holdings, the Borrower and of
Holdings and its Subsidiaries, taken as a whole, will, as of such date, exceed
the amount of all "liabilities of Holdings, the Borrower and of Holdings and its
Subsidiaries, taken as a whole, contingent or otherwise", as of such date, as
such quoted terms are determined in
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accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (ii) the present fair saleable value of the assets of
Holdings, the Borrower and of Holdings and its Subsidiaries, taken as a whole,
will, as of such date, be greater than the amount that will be required to pay
the liabilities of Holdings, the Borrower and of Holdings and its Subsidiaries,
taken as a whole, on their respective debts as such debts become absolute and
matured, (iii) neither Holdings, the Borrower nor Holdings and its Subsidiaries,
taken as a whole, will have, as of such date, an unreasonably small amount of
capital with which to conduct their respective businesses, and (iv) each of
Holdings, the Borrower and Holdings and its Subsidiaries, taken as a whole, will
be able to pay their respective debts as they mature. For purposes of this
Section 5.20, "debt" means "liability on a claim", "claim" means any (x) right
to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, and (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
6.21 PURPOSE OF LOANS. The proceeds of the Loans shall be used by
Holdings to partially finance the Acquisition and pay related transaction fees
and expenses and by the Borrower to support on-going working capital needs of
the Borrower, Metrocorp, Jewel and their respective Subsidiaries in the ordinary
course of their respective businesses.
6.22 ENVIRONMENTAL MATTERS. Except as set forth on Schedule 6.22:
(a) The facilities and properties owned, leased or operated by
Holdings or any of its Subsidiaries subject to a Collateral Assignment (the
"PROPERTIES") do not contain, and have not previously contained, any Materials
of Environmental Concern in amounts or concentrations which (i) constitute or
constituted a violation of, or (ii) could reasonably be expected to give rise to
liability under, any Environmental Law except in either case insofar as such
violation or liability, or any aggregation thereof, is not reasonably likely to
result in the payment of a Material Environmental Amount.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last three (3) years been in compliance, in all
material respects with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
Holdings or any of its Subsidiaries (the "BUSINESS") which could materially
interfere with the continued operation of the Properties or materially impair
the fair saleable value thereof.
(c) Neither Holdings nor any of its Subsidiaries has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does Holdings or the
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that is
or are reasonably likely to result in the payment of a Material Environmental
Amount.
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(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Holdings or the Borrower, threatened, under
any Environmental Law to which Holdings or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in the payment of a
Material Adverse Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of Holdings or any Subsidiary in connection with the Properties
or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could reasonably give rise to liability under Environmental
Laws except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, is not reasonably likely to result in the
payment of a Material Environmental Amount.
(g) To the best knowledge of Holdings or the Borrower, each of the
representations and warranties set forth in Sections 6.22(a) through (f) is true
and correct with respect to each parcel of real property owned or operated by
Holdings or any of its Subsidiaries (other than the Properties) except to the
extent that the facts and circumstances giving rise to any such failure to be so
true and correct is not reasonably likely to result in the payment of a Material
Environmental Amount.
6.23 REGULATION H. No Collateral Assignment encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968.
6.24 YEAR 2000 COMPLIANCE. Holdings and the Borrower believe that,
during the period from the Closing Date forward, the Year 2000 Problem could not
reasonably be expected to have a Material Adverse Effect on Holdings or its
Subsidiaries.
SECTION 7. CONDITIONS PRECEDENT
7.1 CONDITIONS TO INITIAL LOANS. The agreement of each Lender to
make the initial Loan requested to be made by it is subject to the satisfaction,
immediately prior to or
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concurrently with the making of such Loan on the Closing Date, of the following
conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have received
(or, with respect to clauses (vi) though (xiv), the Administrative Agent shall
have received concurrently with or immediately following the consummation of the
Acquisition):
(i) this Agreement, executed and delivered by a duly authorized
officer of Holdings, with a counterpart for each Lender,
(ii) for the account of each Lender having a Term Loan Commitment, a
Term Loan Note of Holdings conforming to the requirements hereof and
executed by a duly authorized officer of Holdings,
(iii) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note of Holdings conforming to the
requirements hereof and executed by a duly authorized officer of Holdings,
(iv) the Holdings Pledge Agreement, executed and delivered by a duly
authorized officer of Holdings, with a counterpart or a conformed copy for
each Lender,
(v) the Holdings Security Agreement, executed and delivered by a
duly authorized officer of Holdings, with a counterpart or a conformed
copy for each Lender,
(vi) the Joinder and Assumption Agreement, executed and delivered by
a duly authorized officer of the Borrower, with a counterpart or a
conformed copy for each Lender,
(vii) for the account of each Lender having a Term Loan Commitment,
a Term Note Assumption Endorsement of the Borrower conforming to the
requirements hereof and executed by a duly authorized officer of the
Borrower,
(viii) for the account of each Lender having a Revolving Credit
Commitment, a Revolving Credit Note Assumption Endorsement of the Borrower
conforming to the requirements hereof and executed by a duly authorized
officer of the Borrower,
(ix) the Subsidiaries Guarantee, executed and delivered by a duly
authorized officer of the party thereto, with a counterpart or a conformed
copy for each Lender,
(x) each of the Borrower Security Agreement and Subsidiaries
Security Agreement, each executed and delivered by a duly authorized
officer of the party thereto, with a counterpart or a conformed copy for
each Lender,
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(xi) each of the Memoranda of Security Interest in Trademarks
attached as exhibits to the Security Agreements, each executed and
delivered by a duly authorized officer of the parties thereto, with a
counterpart or a conformed copy for each Lender,
(xii) each of the Collateral Assignments, each executed and
delivered by a duly authorized officer of the party thereto, with a
counterpart or a conformed copy for each Lender,
(xiii) the Assignment of Life Insurance, executed and delivered by a
duly authorized officer of the party thereto, with a counterpart or a
conformed copy for each Lender, and
(b) RELATED AGREEMENTS. The Administrative Agent shall have
received, with a copy for each Lender, true and correct copies, certified as to
authenticity by Holdings, of the Acquisition Documents and such other documents
or instruments as may be reasonably requested by the Administrative Agent,
including, without limitation, a copy of any debt instrument, security agreement
or other material contract to which Holdings, the Borrower, Metrocorp, Jewel or
their respective Subsidiaries may be a party.
(c) CONCURRENT TRANSACTIONS.
(i) The Administrative Agent and the Arranger shall have
received evidence satisfactory to them that CP, SCC, the general
partners of CP, certain officers of the Borrower and certain other
stockholders of Holdings shall have collectively contributed at
least $13,000,000 in cash to the common equity of Holdings.
(ii) The Administrative Agent and the Arranger shall have
received evidence satisfactory to them that the consideration
payable to the existing stockholders of the Borrower pursuant to the
terms of the Acquisition Documents will consist of $24,650,000 in
cash at the closing of the Acquisition, and $5,000,000 aggregate
face amount of Zero Coupon Convertible Preferred Stock.
(iii) The Acquisition shall have been, shall be concurrently
with, or shall be immediately following, the making of the initial
Loans, consummated in accordance with the terms of Acquisition
Documents, without any amendment, modification or waiver thereof
except with the consent of the Administrative Agent and the Arranger
shall have received evidence satisfactory to it to that effect.
(iv) The Assumption shall have, concurrently with or
immediately following the consummation of the Acquisition, the
making of the initial Loans, become effective in accordance with the
terms of this Agreement and the Joinder and Assumption Agreement.
(v) All amounts owing to the Existing Creditors under the
Existing Financing Documents shall have been, or shall be
concurrently with the making
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of the initial Loans, repaid in full, and any Liens created pursuant
to the Existing Financing Documents shall have been or shall,
concurrently with the making of the initial Loans, released, and the
Existing Financing Documents shall terminate and be of no further
force and effect upon such repayment; in each case pursuant to such
payout letters, Lien releases, termination statements, mortgage
satisfactions and other documents as the Administrative Agent may
require, each of which shall be in form and substance satisfactory
to the Administrative Agent.
(d) BUSINESS PLAN. The Administrative Agent and the Arranger shall
have received a business plan of Holdings and its Subsidiaries for fiscal years
1998-2004 which is in form and substance satisfactory to the Administrative
Agent and the Arranger.
(e) MINIMUM EBITDA. The Consolidated EBITDA of the Borrower, as
adjusted by the revenue adjustments and expense items listed in Schedule 7.1(e),
for the period of twelve consecutive calendar months ended December 31, 1998
shall be at least $3,200,000.
(f) FEES AND EXPENSES. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in connection
with the Acquisition shall not exceed $1,250,000 in the aggregate.
(g) KEY PERSON LIFE INSURANCE. The Administrative Agent shall have
received satisfactory evidence that key person life insurance policies have been
established on the life of Xx Xxxxxxxx in an amount not less than $2,500,000.00
and on terms mutually satisfactory to the Administrative Agent and CP.
(h) EMPLOYMENT AGREEMENTS. The Administrative Agent shall have
received certified copies of the executed employment contracts and non-compete
agreements between Holdings, the Borrower, Metrocorp or Jewel and each member of
their senior management (as designated by the Administrative Agent) and each
such employment contract and non-compete agreement shall be in form and
substance satisfactory to the Administrative Agent.
(i) TAX SHARING AGREEMENT. The Administrative Agent shall have
received certified copies of the executed Tax Sharing Agreement and such Tax
Sharing Agreement shall be in form and substance satisfactory to the
Administrative Agent.
(j) MANAGEMENT FEE AGREEMENT. The Administrative Agent shall have
received certified copies of the Management Fee Agreement, and each other
management, consulting, investment banking or similar agreements between CP
and/or SCC and/or their respective Affiliates, on the one hand, and Holdings,
the Borrower, Metrocorp, Jewel and any of their respective Subsidiaries, on the
other hand, all of which agreements shall be satisfactory in form and substance
to the Administrative Agent and all management fees and other amounts payable to
CP, SCC and their respective Affiliates thereunder shall have been subordinated
to the Obligations in a manner, and pursuant to documentation, satisfactory in
form and substance to the Administrative Agent.
(k) HEADQUARTERS LEASE. The Borrower shall have entered into an
arm's-length lease for a minimum of two (2) years following the Closing Date for
the corporate
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offices of the Borrower located at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000, and such lease shall be in form and substance satisfactory to the
Administrative Agent and CP.
(l) BORROWING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each of Holdings
and the Borrower, dated the Closing Date, each substantially in the form of
Exhibit O, with appropriate insertions and attachments, satisfactory in form and
substance to the Administrative Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of each of Holdings and
the Borrower.
(m) CORPORATE PROCEEDINGS OF HOLDINGS. The Administrative Agent
shall have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of Holdings authorizing (i) the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party, (ii) the borrowings contemplated hereunder and (iii) the granting by it
of the Liens created pursuant to the Holdings Security Documents, certified by
the Secretary or an Assistant Secretary of Holdings as of the Closing Date,
which certificate shall be in form and substance satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded.
(n) HOLDINGS INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of Holdings,
dated the Closing Date, as to the incumbency and signature of the officers of
Holdings executing any Loan Document satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of Holdings.
(o) CORPORATE PROCEEDINGS OF THE BORROWER. The Administrative Agent
shall have received concurrently with or immediately following the effectiveness
of the Assumption, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative Agent, of
the Board of Directors of the Borrower authorizing (i) the execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party, (ii) the Assumption, (iii) the borrowings contemplated hereunder and (iv)
the granting by it of the Liens created pursuant to the Borrower Security
Documents, certified by the Secretary or an Assistant Secretary of the Borrower
as of the Closing Date, which certificate shall be in form and substance
satisfactory to the Administrative Agent and shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded.
(p) BORROWER INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received, concurrently with or immediately following the effectiveness of
the Assumption, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of the
officers of the Borrower executing any Loan Document satisfactory in form and
substance to the Administrative Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of the Borrower.
(q) CORPORATE PROCEEDINGS OF METROCORP. The Administrative Agent
shall have received concurrently with or immediately following the consummation
of the Acquisition, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory
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to the Administrative Agent, of the Board of Directors of Metrocorp authorizing
(i) the execution, delivery and performance of the Loan Documents to which
Metrocorp is a party and (ii) the granting by it of the Liens created pursuant
to Subsidiary Security Documents, certified by the Secretary or an Assistant
Secretary of Metrocorp as of the Closing Date, which certificate shall be in
form and substance satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(r) METROCORP INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received concurrently with or immediately following the consummation of the
Acquisition, with a counterpart for each Lender, a certificate of Metrocorp,
dated the Closing Date, as to the incumbency and signature of the officers of
Metrocorp executing any Loan Document satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of Metrocorp.
(s) CORPORATE PROCEEDINGS OF JEWEL. The Administrative Agent shall
have received concurrently with or immediately following the consummation of the
Acquisition, with a counterpart for each Lender, a copy of the resolutions, in
form and substance satisfactory to the Administrative Agent, of the Board of
Directors of Jewel authorizing (i) the execution, delivery and performance of
the Loan Documents to which Jewel is a party and (ii) the granting by it of the
Liens created pursuant to Subsidiary Security Documents, certified by the
Secretary or an Assistant Secretary of Jewel as of the Closing Date, which
certificate shall be in form and substance satisfactory to the Administrative
Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(t) JEWEL INCUMBENCY CERTIFICATE. The Administrative Agent shall
have received concurrently with or immediately following the consummation of the
Acquisition, with a counterpart for each Lender, a certificate of Jewel, dated
the Closing Date, as to the incumbency and signature of the officers of Jewel
executing any Loan Document satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and the
Secretary or any Assistant Secretary of Jewel.
(u) CORPORATE DOCUMENTS. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each of Holdings, the Borrower,
Metrocorp and Jewel, certified as of the Closing Date as complete and correct
copies thereof by the Secretary or an Assistant Secretary of the such Person.
(v) GOOD STANDING CERTIFICATES. The Administrative Agent shall have
received, with a copy for each Lender, certificates dated as of a recent date
from the Secretary of State or other appropriate authority, evidencing the good
standing of each Loan Party, the Borrower, Metrocorp and Jewel, (i) in the
jurisdiction of its organization and (ii) in each other jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires it to qualify as a foreign Person except, as to this subclause (ii),
where the failure to so qualify could not have a Material Adverse Effect.
(w) CONSENTS, LICENSES AND APPROVALS. The Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of a
Responsible Officer of Holdings
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(i) attaching copies of all consents, authorizations and filings referred to in
Section 5.4, and (ii) stating that such consents, licenses and filings are in
full force and effect, and each such consent, authorization and filing shall be
in form and substance satisfactory to the Administrative Agent.
(x) FEES. The Administrative Agent shall have received the fees to
be received on the Closing Date referred to in the Fee Letter.
(y) LEGAL OPINIONS. The Administrative Agent shall have received,
with a counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP,
counsel to Holdings, the Borrower, Metrocorp and Jewel,
substantially in the form of Exhibit P-1; and
(ii) the executed legal opinion of Brinson, Askew, Berry,
Seigler, Xxxxxxxxxx & Xxxxx, LLP, counsel to the Borrower,
Metrocorp, and Jewel, substantially in the form of Exhibit P-2.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(z) PLEDGED STOCK; STOCK POWERS. The Administrative Agent shall have
received the certificates representing the shares pledged pursuant to each of
the Pledge Agreements, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the pledgor
thereof. Each Issuer referred to in each Pledge Agreement shall have delivered
an acknowledgement of and consent to such Pledge Agreement, executed by a duly
authorized officer of such Issuer, in substantially the form appended to such
Pledge Agreement.
(aa) ACTIONS TO PERFECT LIENS. The Administrative Agent shall have
received evidence in form and substance satisfactory to it that all filings,
recordings, registrations and other actions, including, without limitation, the
filing of duly executed financing statements on form UCC-1, necessary or, in the
opinion of the Administrative Agent, desirable to perfect the Liens created by
the Security Documents shall have been completed.
(bb) LIEN SEARCHES. The Administrative Agent shall have received the
results of a recent search by a Person satisfactory to the Administrative Agent,
of the Uniform Commercial Code, judgment and tax lien filings which may have
been filed with respect to personal property of Holdings, the Borrower,
Metrocorp, Jewel and each other Loan Party, and the results of such search shall
be satisfactory to the Administrative Agent.
(cc) INSURANCE. The Administrative Agent shall have received
evidence in form and substance satisfactory to it that all of the requirements
of Section 8.5 hereof and Section 5(m) of the Security Agreements shall have
been satisfied.
(dd) STRUCTURE. The Administrative Agent shall be satisfied with the
corporate and capital structure of Holdings and its Subsidiaries following the
Acquisition, and all related legal matters, including, but not limited to, the
viability and applicability of SCC's net operating
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loss carry forwards and other tax attributes, and the structural insulation of
the Borrower, its operations and its assets from all existing subsidiaries and
businesses and each subsequently acquired or organized subsidiary or business,
if any, of SCC.
7.2 CONDITIONS TO EACH LOAN. The agreement of each Lender to make
any Loan requested to be made by it on any date (including, without limitation,
its initial Loan) is subject to the satisfaction of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Holdings, the Borrower and the other Loan Parties in or
pursuant to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the Loans requested to
be made on such date.
(c) ADDITIONAL MATTERS. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement, the other Loan Documents and the
Acquisition Documents shall be satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received such
other documents and legal opinions in respect of any aspect or consequence of
the transactions contemplated hereby or thereby as it shall reasonably request.
Each borrowing of Holdings or of the Borrower hereunder shall constitute a
representation and warranty by Holdings and, from and after the effectiveness of
the Assumption, the Borrower, as of the date thereof that the conditions
contained in this Section 7.2 have been satisfied.
SECTION 8. AFFIRMATIVE COVENANTS
Holdings and, from and after the effectiveness of the Assumption,
the Borrower, each hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, Holdings and the Borrower shall, and
(except in the case of delivery of financial information, reports and notices)
shall cause each of their respective Subsidiaries to:
8.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of Holdings, a copy of the consolidated balance sheet of
Holdings and its consolidated Subsidiaries as at the end of such year and the
related consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope of the
audit, Xxxxx & Xxxxxx, P.C. or independent certified public accountants of
nationally recognized standing or otherwise acceptable to the Administrative
Agent; and
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(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of Holdings, the unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of Holdings and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through the end of such quarter, setting forth in
each case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects (subject to
normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days
after the end of each calendar month, the unaudited consolidated and
consolidating balance sheet of Holdings, and its consolidated Subsidiaries as at
the end of such month and the related unaudited consolidated and consolidating
statements of income and retained earnings and of cash flows of Holdings and its
consolidated Subsidiaries for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements shall fairly present the financial condition of
Holdings and its consolidated Subsidiaries and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the periods
reflected therein and with prior periods (except as approved by such accountants
or officer, as the case may be, and disclosed therein).
8.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 8.1(a), (b) and (c), a certificate of a Responsible
Officer (i) stating that, to the best of such Officer's knowledge, Holdings and
the Borrower during such period have observed or performed all of their
covenants and other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to be observed, performed or satisfied by
them, and that such Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (ii) showing in detail the
calculations supporting such Officer's certification of Holdings' and the
Borrower's compliance with the requirements of Section 9.1(a) through 9.1(d);
(c) not later than thirty days prior to the end of each fiscal year
of Holdings, a copy of the projections by Holdings of the operating budget and
cash flow budget of Holdings and its Subsidiaries for the succeeding fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis of
sound financial planning practice and that such Officer has no reason to believe
they are incorrect or misleading in any material respect;
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(d) within five days after the same are sent, copies of all
financial statements and reports which Holdings sends to its stockholders, and
within five days after the same are filed, copies of all financial statements
and reports which Holdings may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental Authority;
(e) during the month of April in each calendar year, a report of a
reputable insurance broker with respect to the insurance maintained by Holdings
and its Subsidiaries in accordance with Section 8.5 of this Agreement and
Section 5(m) of each Security Agreement, and such supplemental reports as the
Administrative Agent may from time to time request; and
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
8.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
Holdings or its Subsidiaries, as the case may be.
8.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 9.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith would
not, in the aggregate, have a Material Adverse Effect.
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8.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business, which insurance shall name the Administrative Agent as lender
loss payee, in the case of property or casualty insurance, and as an additional
insured, in the case of liability insurance; and furnish to each Lender, upon
written request, full information as to the insurance carried.
8.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of Holdings and its
Subsidiaries with officers and employees of Holdings and its Subsidiaries and
with its independent certified public accountants.
8.7 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between Holdings or any
of its Subsidiaries and any Governmental Authority, which in either case, if not
cured or if adversely determined, as the case may be, could have a Material
Adverse Effect;
(c) any litigation or proceeding affecting Holdings or any of its
Subsidiaries in which the amount involved is $100,000 or more and not covered by
insurance or in which injunctive or similar relief is sought;
(d) of the acquisition by any Loan Party of any property or interest
in property (including, without limitation, real property), that is not subject
to a perfected Lien in favor of the Administrative Agent pursuant to the
Security Documents;
(e) of the occurrence of any transaction or occurrence referred to
in Section 5.5(d), and the receipt of any Net Proceeds or any insurance proceeds
as a result thereof (whether or not such Net Proceeds or proceeds are then
required to be applied to the repayment of Loans and reduction of Revolving
Credit Commitments as specified in Section 5.5(d));
(f) the following events, as soon as possible and in any event
within 30 days after Holdings or the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the
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Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan; and
(g) any material adverse change in the business, operations,
property, condition (financial or otherwise) or prospects of Holdings and its
Subsidiaries taken as a whole.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings or the Borrower proposes to take with respect
thereto.
8.8 ENVIRONMENTAL LAWS.
(a) Comply with, and ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that failure to do so could
not be reasonably expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
8.9 ADDITIONAL COLLATERAL; ADDITIONAL GUARANTORS.
(a) In the event that Holdings or any Subsidiary thereof acquires
any property or interest in property (including, without limitation, real
property) other than property made subject to a Lien permitted under Section
9.3(g), that is not subject to a perfected Lien in favor of the Administrative
Agent pursuant to the Security Documents, Holdings and the Borrower shall, and
shall cause each of their respective Subsidiaries to, take such action
(including, without limitation, the preparation and filing of mortgages or deeds
of trust in form and substance satisfactory to the Administrative Agent) as the
Administrative Agent shall request in order to create and/or perfect a Lien in
favor of the Administrative Agent on such property.
(b) In the event that any Loan Party is permitted to acquire or form
any additional Subsidiary, such Subsidiary shall execute a guarantee and a
security agreement, or supplements to the Subsidiaries Guarantee and the
Subsidiaries Security Agreement, and Holdings and/or any Subsidiary of Holdings
which is a holder of any Capital Stock of such Subsidiary shall execute such
pledge agreements or supplements to the Pledge Agreements, each in form and
substance satisfactory to the Administrative Agent, and shall take such other
action as shall be necessary or advisable (including, without limitation, the
execution of financing statements on form UCC-1) in order to perfect the Liens
granted by such Subsidiary in favor of the Administrative Agent for the benefit
of the Lenders and to effect and perfect the pledge of all of the Capital Stock
of such Subsidiary in favor of the Administrative Agent for the benefit of the
Lenders. Such Subsidiary shall thereupon become a Guarantor for all purposes
under the
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Loan Documents, including, without limitation, Section 8.9(a) of this Agreement.
The Administrative Agent shall be entitled to receive legal opinions of one or
more counsel to Holdings and such Subsidiary addressing such matters as the
Administrative Agent or its counsel may reasonably request, including, without
limitation, the enforceability of the guaranty and the security agreement to
which such Subsidiary becomes a party and the pledge of the Capital Stock of
such Subsidiary, and the creation, validity and perfection of the Liens so
granted by such Subsidiary and Holdings, the Borrower and/or other Subsidiaries
to the Administrative Agent for the benefit of the Lenders.
8.10 YEAR 2000 COVENANTS. No later than the Closing Date, Holdings
and its Subsidiaries shall review, and shall determine that the Borrower,
Metrocorp and Jewel shall have reviewed, the areas within their business and
operations which could be adversely affected by, and shall have developed or be
developing a program to address on a timely basis, the Year 2000 Problem, and
shall have made or be making related appropriate inquiry of material suppliers
and vendors. From time to time, at the request of the Administrative Agent,
Holdings and its Subsidiaries shall provide to the Administrative Agent such
updated information or documentation as is requested regarding the status of
their efforts to address the Year 2000 Problem.
SECTION 9. NEGATIVE COVENANTS
Holdings and, from and after the effectiveness of the Assumption,
the Borrower, each hereby agrees that, so long as any of the Commitments remain
in effect or any amount is owing to any Lender or the Administrative Agent
hereunder or under any other Loan Document, neither Holdings nor the Borrower
shall, nor (except with respect to Sections 9.1) shall permit any of their
respective Subsidiaries to, directly or indirectly:
9.1 FINANCIAL CONDITION COVENANTS.
(a) MAINTENANCE OF EBITDA. Permit Consolidated EBITDA of Holdings
for any period of twelve consecutive calendar months ending on the date set
forth below to be less than the amount set forth opposite such date below:
DATE EBITDA
---------------------- ----------------
6/30/99 .................................. $ 3,300,000.00
9/30/99 .................................. $ 3,300,000.00
12/31/99 ................................. $ 3,500,000.00
3/31/00 .................................. $ 3,700,000.00
6/30/00 .................................. $ 3,850,000.00
9/30/99 .................................. $ 4,100,000.00
12/31/00 ................................. $ 4,250,000.00
3/31/01 .................................. $ 4,500,000.00
6/30/01 .................................. $ 4,750,000.00
9/30/01 .................................. $ 5,000,000.00
12/31/01 ................................. $ 5,250,000.00
3/31/02 and at the end
of each fiscal quarter
thereafter ............................... $ 5,500,000.00
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(B) LEVERAGE RATIO. Permit the Leverage Ratio for any period of
twelve consecutive calendar months ending on the date set forth below to be
greater than the amount set forth opposite such date below:
DATE RATIO
---- -----
6/30/99 .................................................. 4.00
9/30/99 .................................................. 4.00
12/31/99 ................................................. 3.50
3/31/00 .................................................. 3.25
6/30/00 .................................................. 3.25
9/30/99 .................................................. 3.00
12/31/00 ................................................. 2.75
3/31/01 .................................................. 2.50
6/30/01 .................................................. 2.25
9/30/01 .................................................. 2.00
12/31/01 ................................................. 1.75
3/31/02 and at the end of
each fiscal quarter thereafter ........................... 1.50
(C) INTEREST COVERAGE. Permit, for (i) during the first four fiscal
quarters ended following the Closing Date, the period commencing on the Closing
Date and ended on the last day of a fiscal quarter during such four fiscal
quarter period thereafter, and (ii) thereafter, any period of four consecutive
fiscal quarters, in each case ending during any "Test Period" set forth below
the ratio of (x) Consolidated EBITDA of Holdings for such period to (y)
Consolidated Interest Expense of Holdings for such period to be less than the
ratio set forth opposite such period below:
TEST PERIOD RATIO
----------- -----
6/30/99 ................................................... 2.25
9/30/99 ................................................... 2.25
12/31/99 .................................................. 2.50
3/31/00 ................................................... 2.75
6/30/00 ................................................... 3.00
9/30/99 ................................................... 3.25
12/31/00 and at the end of
each fiscal quarter thereafter ............................ 3.50
(D) FIXED CHARGE COVERAGE. Permit, for (i) during the first four
fiscal quarters ended following the Closing Date, the period commencing on the
Closing Date and ended on the last day of a fiscal quarter during such four
fiscal quarter period thereafter, and (ii) thereafter, any period of four
consecutive fiscal quarters, in each case ending during any "Test Period" set
forth below the ratio of (x) Consolidated EBITDA of Holdings for such period to
(y) Consolidated Fixed Charges of Holdings for such period to be less than the
ratio set forth opposite such period below:
PERIOD RATIO
------ -----
9/30/99 ........................................... 1.00
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12/31/99 .......................................... 1.05
3/31/00 ........................................... 1.15
6/30/00 ........................................... 1.20
9/30/99 ........................................... 1.20
12/31/00 .......................................... 1.20
3/31/01 ........................................... 1.25
6/30/01 ........................................... 1.25
9/30/01 ........................................... 1.25
12/31/01 .......................................... 1.25
3/31/02 and at the end of
each fiscal quarter thereafter .................... 1.50
9.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of Holdings and the Borrower under this Agreement;
(b) Indebtedness of Holdings or the Borrower to any Subsidiary
Guarantor and of any Subsidiary Guarantor to Holdings or the Borrower or any
other Subsidiary Guarantor;
(c) Indebtedness of Holdings and any of its Subsidiaries incurred to
finance the acquisition of fixed or capital assets (whether pursuant to a loan,
a Financing Lease or otherwise) in an aggregate principal amount not exceeding
as to Holdings and its Subsidiaries $50,000 at any time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 9.2(d); and
(e) additional Indebtedness not exceeding $50,000 in aggregate
principal amount at any one time outstanding.
9.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of Holdings or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
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(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of Holdings
or such Subsidiary;
(f) Liens in existence on the date hereof listed on Schedule 9.3(f),
securing Indebtedness permitted by Section 9.2(d), PROVIDED that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of Holdings and its Subsidiaries
permitted by Section 9.2(c) incurred to finance the acquisition of fixed
or capital assets, PROVIDED that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other
than the property financed by such Indebtedness, (iii) the amount of
Indebtedness secured thereby is not increased and (iv) the principal
amount of Indebtedness secured by any such Lien shall at no time exceed
80% of the original purchase price of such property of such property at
the time it was acquired;
(h) Liens (not otherwise permitted hereunder) which secure
obligations not exceeding (as to Holdings and all Subsidiaries) $50,000 in
aggregate amount at any time outstanding; and
(i) Liens created pursuant to the Security Documents.
9.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations in existence on the date hereof and listed
on Schedule 9.4(a);
(b) guarantees made in the ordinary course of its business by
Holdings of obligations of any of its Subsidiaries, which obligations are
otherwise permitted under this Agreement; and
(c) the Guarantees.
9.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation
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or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose
of, all or substantially all of its property, business or assets, or make any
material change in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (PROVIDED that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more
wholly owned Subsidiaries of the Borrower (PROVIDED that a wholly owned
Subsidiary or Subsidiaries shall be the continuing or surviving
corporation); and
(b) any wholly owned Subsidiary of the Borrower may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any other wholly owned
Subsidiary of the Borrower.
9.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary of Holdings,
issue or sell any shares of such Subsidiary's Capital Stock to any Person other
than Holdings or any wholly owned Subsidiary of Holdings, except:
(a) the sale or other disposition of obsolete or worn out property
in the ordinary course of business; PROVIDED that the Net Proceeds of each
such transaction are applied to the prepayment of the Loans as provided in
Section 5.5(c);
(b) the sale of inventory in the ordinary course of business;
(c) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(d) as permitted by Section 9.5(b).
9.7 LIMITATION ON LEASES. Permit Consolidated Lease Expense for any
fiscal year of the Borrower to exceed $125,000.00.
9.8 LIMITATION ON DIVIDENDS. Declare or pay any dividend (other than
dividends payable solely in common stock of Holdings) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of Capital Stock of Holdings or any warrants or options to purchase
any such Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Holdings or any Subsidiary thereof, or make any
management fee, consulting fee, investment banking fee or similar payment to any
holder of any Capital Stock of Holdings or any Affiliate thereof (all such
declarations, payments, setting apart, purchases, redemptions, defeasances,
retirements, acquisitions, distributions and payments being herein called
"Restricted Payments"), except that:
(a) Holdings may repurchase or redeem the Warrants in accordance
with the terms thereof and of the Warrant Agreements;
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(b) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Holdings may make payments pursuant
to, and in accordance with, the Management Fee Agreement;
(c) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Holdings may make cash payments in
respect of any purchase, redemption, defeasance, retirement or other
acquisition of any shares of any class of Capital Stock of Holdings from
Management Stockholders (as defined in the Stockholders Agreement)
required pursuant to, and in accordance with the terms of, the
Stockholders Agreement, PROVIDED that the aggregate amount so paid in cash
during the term of this Agreement shall not exceed (i) $250,000 in the
case of all such purchases, redemptions, defeasances, retirements or other
acquisitions of such shares made at a purchase price per share equal to
the original cost therefor paid by such Management Stockholder and (ii)
$500,000 in the case of all such purchases, redemptions, defeasances,
retirements or other acquisitions of such shares made at a purchase price
per share equal to the Fair Market Value (as defined in the Stockholders'
agreement) thereof pursuant to Section 5 of the Stockholders' Agreement;
(d) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Holdings may distribute amounts to
SCC in respect of the portion of the combined tax liability of SCC and its
Subsidiaries attributable to Holdings and its Subsidiaries, after giving
effect to any net operating loss carryforwards available to SCC to reduce
any such tax liability, pursuant to and in accordance with the terms of
the Tax Sharing Agreement, PROVIDED that Holdings shall have provided to
the Administrative Agent a certificate of a Responsible Officer setting
forth the calculation of the amount of such dividend in reasonable detail;
and
(e) so long as no Default or Event of Default has occurred and is
continuing or would result therefrom, Holdings may distribute amounts to
SCC for the purpose of redeeming Zero Coupon Preferred Stock pursuant to
Sections G(a), (b), or (c) of the Zero Coupon Certificate of Designations,
in amounts not in excess of the redemption price therefor.
9.9 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any expenditure
in respect of the purchase or other acquisition of fixed or capital assets
(excluding any such asset acquired in connection with normal replacement and
maintenance programs properly charged to current operations) except for
expenditures in the ordinary course of business not exceeding $100,000 in the
aggregate for Holdings and its Subsidiaries during any fiscal year
9.10 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person, or
purchase or enter into any contract to purchase any interest in real property,
except :
(a) extensions of trade credit in the ordinary course of business;
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(b) investments in Cash Equivalents;
(c) loans to officers of Holdings listed on Schedule 9.10(c) in
aggregate principal amounts outstanding not to exceed the respective
amounts set forth for such officers on said Schedule;
(d) investments by Holdings or the Borrower in each other or in
Subsidiary Guarantors, and investments by such Subsidiary Guarantors in
Holdings or the Borrower and in other Subsidiary Guarantors; and
(e) purchases of and/or contracts to purchase interests in real
property for an aggregate consideration not to exceed $250,000.00 during
any fiscal year of Holdings.
9.11 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF
INSTRUMENTS.
(a) Make any optional payment or prepayment on or redemption or
purchase of any Indebtedness (other than the Loans), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to
any of the terms relating to the payment or prepayment or principal of or
interest on, any such Indebtedness (other than any such amendment,
modification or change which would extend the maturity or reduce the
amount of any payment of principal thereof or which would reduce the rate
or extend the date for payment of interest thereon), (c) amend any
Acquisition Document, or the Tax Sharing Agreement, the Management Fee
Agreement, the Stockholders Agreement, any Subordinated Promissory Note
(as defined in the Stockholders Agreement) or the Stock Option Plan, (d)
amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of any franchise agreement in
effect as of the Closing Date between the Borrower and any franchisee,
which amendment modification or change could result in a Material Adverse
Effect or would reduce in any material respect the amount of the fees to
be paid by any such franchisee to the Borrower; or (e) enter into any
franchise agreement with any franchisee or prospective franchisee in a
form other than substantially the form attached hereto as Exhibit P.
9.12 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of Holdings' or such Subsidiary's business and (c) upon fair and
reasonable terms no less favorable to Holdings or such Subsidiary, as the case
may be, than it would obtain in a comparable arm's length transaction with a
Person which is not an Affiliate.
9.13 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by Holdings or any Subsidiary of real
or personal property which has been or is to be sold or transferred by Holdings
or such Subsidiary to such Person or to any other Person to whom funds have been
or are to be advanced by such Person on the security of such property or rental
obligations of Holdings or such Subsidiary.
9.14 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
Holdings or the Borrower to end on a day other than December 31.
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9.15 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any
Person any agreement, other than (a) this Agreement, and (b) any industrial
revenue bonds, purchase money `s or Financing Leases permitted by this Agreement
(in which cases, any prohibition or limitation shall only be effective against
the assets financed thereby), which prohibits or limits the ability of Holdings
or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired.
9.16 LIMITATION ON LINES OF BUSINESS.
(a) With respect to the Borrower and the other Subsidiaries of
Holdings, enter into any business, either directly or through any Subsidiary,
except for those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or which are directly related thereto.
(b) With respect to Holdings, engage in any business other than
acquiring pursuant to the Acquisition and holding the Capital Stock of the
Borrower, Metrocorp and Jewel, and businesses incidental thereto.
9.17 GOVERNING DOCUMENTS. Amend its certificate of incorporation
(except to increase the number of authorized shares of common stock),
partnership agreement or other Governing Documents, without the prior written
consent of the Required Lenders, which shall not be unreasonably withheld or
delayed.
9.18 LIMITATION ON SUBSIDIARY FORMATION. Form any Subsidiaries
unless, immediately upon the formation of such Subsidiary, all requirements of
Section 8.9 shall have been satisfied.
9.19 LIMITATION ON SECURITIES ISSUANCES. (A) Permit any Subsidiary
to issue any shares of Capital Stock that are not "certificated securities" (as
defined inss.8-102 of the Uniform Commercial Code as in effect in the State of
New York on the date hereof) and are not pledged to the Administrative Agent
pursuant to a Pledge Agreement or (B) issue or permit any Subsidiary to issue
any shares of preferred stock.
SECTION 10. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Holdings or the Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms thereof or hereof; or Holdings or the
Borrower shall fail to pay any interest on any Loan, or any other amount payable
hereunder or under the other Loan Documents or the Fee Letter, within five days
after any such interest or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by Holdings,
the Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other statement
furnished by it at any time under or in
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connection with this Agreement or any such other Loan Document shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made; or
(c) Holdings, the Borrower or any other Loan Party shall default in
the observance or performance of any agreement contained in Section 9 of this
Agreement, any Collateral Assignment, Section 5 of any Pledge Agreement and
Section 5 of the any Security Agreement; or
(d) Holdings or the Borrower or any other Loan Party shall default
in the observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs (a)
through (c) of this Section), and such default shall continue unremedied for a
period of 30 days; or
(e) Holdings or the Borrower or any of the other Subsidiaries of
Holdings shall (i) default in any payment of principal of or interest of any
Indebtedness (other than the Loans) or in the payment of any Guarantee
Obligation, beyond the period of grace (not to exceed 30 days), if any, provided
in the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created, if the aggregate amount of the Indebtedness and/or
Guarantee Obligations in respect of which such default or defaults shall have
occurred is at least $50,000; or (ii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable; or
(f) (i) Holdings, the Borrower or any of the other Subsidiaries of
Holdings shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Holdings, the Borrower or any of the other
Subsidiaries of Holdings shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Holdings, the Borrower or
any of the other Subsidiaries of Holdings any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against Holdings, the Borrower or any of the other
Subsidiaries of Holdings any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) Holdings,
the Borrower or any of the other Subsidiaries of Holdings shall take any action
in furtherance of, or indicating its
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consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) Holdings, the Borrower or any of the other
Subsidiaries of Holdings shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of Holdings or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) Holdings or
any Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could have a Material
Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings or any of its Subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance) of $50,000 or more, and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or Holdings, the Borrower or any other Loan Party
which is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall cease to be enforceable and
of the same effect and priority purported to be created thereby; or
(j) Any Guarantee shall cease, for any reason, to be in full force
and effect or any Guarantor shall so assert; or
(k) (i) SCC or CP shall fail to own, directly and beneficially, the
greater of (A) the percentage of the outstanding Capital Stock of Holdings owned
by them immediately following the Closing Date (after giving effect to any
dilution resulting from the exercise of options in accordance with the Stock
Option Plan and the exercise of the Warrants) or (B) 80% of the outstanding
Capital Stock of Holdings, or (ii) Holdings shall fail to own, directly and
beneficially, 100% of the outstanding Capital Stock of each of the Borrower,
Metrocorp and Jewel, and of each other Subsidiary thereof, or (iii) any Person
or "group" (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended), other than SCC or CP (A) shall have acquired
beneficial ownership of 25% or more of any outstanding class of Capital Stock
having ordinary voting power in the election of directors of Holdings or (B)
shall obtain the power (whether or not exercised) to elect a majority of
Holdings' directors or (iv) the
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Board of Directors of Holdings shall not consist of a majority of Continuing
Directors; "CONTINUING DIRECTORS" shall mean the directors of Holdings on the
Closing Date and each other director, if such other director's nomination for
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) of this Section with respect to Holdings
or the Borrower, automatically the Commitments shall immediately terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to Holdings or the Borrower declare the Commitments to be
terminated forthwith, whereupon the Commitments shall immediately terminate; and
(ii) with the consent of the Required Lenders, the Administrative Agent may, or
upon the request of the Required Lenders, the Administrative Agent shall, by
notice to Holdings or the Borrower, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, Holdings and the Borrower shall, jointly
and severally, at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Holdings and the Borrower hereby grant to the
Administrative Agent, for the benefit of the Issuing Lender and the L/C
Participants, a security interest in such cash collateral to secure all
obligations of Holdings and the Borrower under this Agreement and the other Loan
Documents. Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of Holdings and the Borrower hereunder and under the Notes. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
Holdings and the Borrower hereunder and under the Notes shall have been paid in
full, the balance, if any, in such cash collateral account shall be returned to
the Borrower. Holdings and the Borrower shall execute and deliver to the
Administrative Agent, for the account of the Issuing Lender and the L/C
Participants, such further documents and instruments as the Administrative Agent
may request to evidence the creation and perfection of the within security
interest in such cash collateral account.
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SECTION 11. THE AGENT
11.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
11.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
11.3 EXCULPATORY PROVISIONS. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by Holdings, the
Borrower or any officer thereof contained in this Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of Holdings or the
Borrower to perform its obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of Holdings or the Borrower.
11.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to
Holdings or the Borrower or any other Loan Party), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative Agent shall be
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fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
11.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
Holdings or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
11.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
Holdings or the Borrower or any other Loan Party, shall be deemed to constitute
any representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of Holdings or the Borrower
and the other Loan Parties and made its own decision to make its Loans hereunder
and enter into this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of Holdings or the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
Holdings or the Borrower or any other Loan Party which may come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
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11.7 INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
Holdings or the Borrower and without limiting the obligation of Holdings and the
Borrower to do so), ratably according to their respective Credit Exposure
Percentages in effect on the date on which indemnification is sought, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against the Administrative Agent in any way relating to or arising out of, the
Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable hereunder.
11.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. The
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with Holdings and the Borrower and
the other Loan Parties as though the Administrative Agent were not the
Administrative Agent hereunder and under the other Loan Documents. With respect
to the Loans made by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
11.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by Holdings and the Borrower, whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and the
term "Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 10 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 AMENDMENTS AND WAIVERS. Neither this Agreement nor any other
Loan Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.1. The
Required Lenders may, or, with the written consent of the Required Lenders, the
Administrative Agent may, from time to time, (a)
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enter into with Holdings and, from and after the effectiveness of the
Assumption, the Borrower, written amendments, supplements or modifications
hereto and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner the
rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive,
on such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the aggregate amount or extend
the expiration date of any Lender's Commitments, in each case without the
consent of each Lender affected thereby, or (ii) amend, modify or waive any
provision of this Section 12.1 or reduce the percentage specified in the
definition of Required Lenders or Majority Lenders, or consent to the assignment
or transfer by Holdings or the Borrower of any of its rights and obligations
under this Agreement and the other Loan Documents or release all or
substantially all of the Collateral or release all or substantially all of the
Guarantors from their obligations under the Guarantees, in each case without the
written consent of each all of the Lenders, or (iii) amend, modify or waive any
provision of Section 10 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon Holdings, the
Borrower, the Lenders, the Administrative Agent and all future holders of the
Loans. In the case of any waiver, Holdings, the Borrower, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon.
12.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been electronically confirmed,
addressed as follows in the case of Holdings, the Borrower and the
Administrative Agent, and as set forth in Schedule I in the case of the other
parties hereto, or to such other address as may be hereafter notified by the
respective parties hereto:
Holdings: Primrose Holdings, Inc.
c/o Capital Partners, Inc.
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Fax: (203) 625 - 0423
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The Borrower: Primrose School Franchise Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xx Xxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
The Administrative Agent: Canadian Imperial Bank of Commerce
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, 3.3, 3.5, 5.2, 5.4 or 5.8(b) shall not
be effective until received.
12.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
12.5 PAYMENT OF EXPENSES AND TAXES. Holdings and, from and after the
effectiveness of the Assumption, the Borrower, agrees, jointly and severally (a)
to pay or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent, (b) to pay or
reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment,
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supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Administrative Agent harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents , the
Acquisition Documents or the use of the proceeds of the Loans in connection with
the Acquisition and the Refinancing and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower, any of its Subsidiaries, the Parent or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that neither Holdings nor the Borrower shall have any
obligation hereunder to the Administrative Agent or any Lender with respect to
indemnified liabilities arising from (i) the gross negligence or willful
misconduct of the Administrative Agent or any such Lender or (ii) legal
proceedings commenced against the Administrative Agent or any such Lender by any
security holder or creditor thereof arising out of and based upon rights
afforded any such security holder or creditor solely in its capacity as such.
The agreements in this Section shall survive repayment of the Loans and all
other amounts payable hereunder.
12.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of
Holdings, the Borrower, the Lenders, the Administrative Agent and their
respective successors and assigns, except that neither Holdings nor the Borrower
may assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("PARTICIPANTS") participating interests in any Loan
owing to such Lender, any Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents. In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and Holdings,
the Borrower and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. Holdings and the
Borrower agree that if amounts outstanding under this Agreement are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, PROVIDED that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 12.7(a) as
fully as if it were a Lender hereunder. Holdings and the Borrower also agree
that each Participant shall be entitled to the benefits of Sections 5.10, 5.11,
and 5.12 with respect to its participation in the Commitments and the Loans
outstanding from
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time to time as if it was a Lender; PROVIDED that, in the case of Section 5.11,
such Participant shall have complied with the requirements of said Section and
PROVIDED, FURTHER, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of
Holdings or the Borrower, so long as no Default or Event of Default has occurred
and is continuing, and the Administrative Agent (which in each case shall not be
unreasonably withheld), to an additional bank or financial institution (an
"ASSIGNEE") all or any part of its rights and obligations under this Agreement
and the other Loan Documents pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit Q, with appropriate completions (an
"ASSIGNMENT AND ACCEPTANCE"), executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof, by Holdings or the Borrower (if applicable) and the Administrative
Agent) and delivered to the Administrative Agent for its acceptance and
recording in the Register, PROVIDED that, in the case of any such assignment to
an additional bank or financial institution, the sum of the aggregate principal
amount of the Loans , the aggregate amount of the L/C Obligations and the
aggregate amount of the unused Available Commitments being assigned are not less
than $1,000,000 (or such lesser amount as may be agreed to by Holdings or the
Borrower and the Administrative Agent). Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder with Commitments as set forth
therein, and (y) the assigning Lender thereunder shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this paragraph (c) and paragraph (e) of this
Section, the consent of Holdings or the Borrower shall not be required, and,
unless requested by the Assignee and/or the assigning Lender, new Notes shall
not be required to be executed and delivered by the Borrower, for any assignment
which occurs at any time when any of the events described in Section 10(f) shall
have occurred and be continuing.
(d) The Administrative Agent, on behalf of the Borrower, shall
maintain at the address of the Administrative Agent referred to in Section 12.2
a copy of each Assignment and Acceptance delivered to it and a register (the
"REGISTER") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amounts of the Loans owing to, each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and Holdings, the Borrower, the Administrative Agent
and the Lenders may (and, in the case of any Loan or other obligation hereunder
not evidenced by a Note, shall) treat each Person whose name is recorded in the
Register as the owner of a Loan or other obligation hereunder as the owner
thereof for all purposes of this Agreement and the other Loan Documents,
notwithstanding any notice to the contrary. Any assignment of any Loan or other
obligation hereunder not evidenced by a Note shall be effective only upon
appropriate entries
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with respect thereto being made in the Register. The Register shall be available
for inspection by Holdings, the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by Holdings or the Borrower (if
applicable) and the Administrative Agent) together with payment to the
Administrative Agent of a registration and processing fee of $3,500, the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower.
(f) Holdings and the Borrower authorize each Lender to disclose to
any Participant or Assignee (each, a "TRANSFEREE") and any prospective
Transferee, subject to the provisions of Section 12.15, any and all financial
information in such Lender's possession concerning Holdings, the Borrower, their
Subsidiaries and their Affiliates which has been delivered to such Lender by or
on behalf of Holdings or the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Borrower in connection with
such Lender's credit evaluation of Holdings and the Borrower and their
Affiliates prior to becoming a party to this Agreement.
(g) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
12.7 ADJUSTMENTS; SET-OFF.
(a) If any Lender (a "BENEFITED LENDER") shall at any time receive
any payment of all or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 10(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans,
or interest thereon, such benefited Lender shall purchase for cash from the
other Lenders a participating interest in such portion of each such other
Lender's Loan, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
Holdings and the Borrower agree that each Lender so purchasing a portion of
another Lender's Loan may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.
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(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to Holdings or
the Borrower, any such notice being expressly waived by Holdings and the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower. Each Lender agrees promptly to notify Holdings or the Borrower and
the Administrative Agent after any such set-off and application made by such
Lender, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application.
12.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by facsimile transmission of signature pages hereto), and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
12.9 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of Holdings, the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
12.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.12 SUBMISSION TO JURISDICTION; WAIVERS. Holdings and the Borrower
each hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
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(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to Holdings or the
Borrower at its address set forth in Section 12.2 or at such other address of
which the Administrative Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
12.13 ACKNOWLEDGEMENTS. Holdings and the Borrower each hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Holdings the Borrower and the other Loan Parties, on one
hand, and Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated hereby
among the Lenders or among Holdings, the Borrower and the Lenders.
12.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.15 CONFIDENTIALITY. Each Lender agrees to keep confidential any
written or oral information (a) provided to it by or on behalf of Holdings, the
Borrower or any of the other Subsidiaries of Holdings pursuant to or in
connection with this Agreement or (b) obtained by such Lender based on a review
of the books and records of Holdings, the Borrower or any of the other
Subsidiaries of Holdings; provided that nothing herein shall prevent any Lender
from disclosing any such information (i) to the Administrative Agent or any
other Lender, (ii) to any Transferee which agrees to comply with the provisions
of this Section 12.15, (iii) to those employees, directors, agents, attorneys,
accountants and other professional advisors who have
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been advised of the confidential nature of such information, (iv) upon the
request or demand of any examiner or other Governmental Authority having
jurisdiction over such Lender, (v) in response to any order of any court or
other Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) which has been publicly disclosed other than in breach
of this Agreement, or (vii) in connection with the exercise of any remedy
hereunder.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
PRIMROSE HOLDINGS, INC.
By: /s/ XXXXXX XXXXXX
Name: Xxxxxx Xxxxxx
Title: President
CANADIAN IMPERIAL BANK
OF COMMERCE
as Administrative Agent
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: As Agent
CIBC, INC., as a Lender
By: /s/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: As Agent
Credit Agreement: Signature Page
SCHEDULE 1.0
LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES
--------------------------------------------------------------------------------
Tranche A Revolving Credit
Lender and Lending Offices Term Loan Loan
--------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce, Inc. $13,150,000.00 $2,500,000.00
Applicable Lending Offices:
Base Rate Loans:
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telephone: 212-885-
Telecopy: 000-000-0000
Eurodollar Loans:
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Telephone: 212-885-
Telecopy: 000-000-0000
--------------------------------------------------------------------------------
Total: $13,150,000.00 $2,500,000.00
============== =============
--------------------------------------------------------------------------------
SCHEDULE 2.2
SCHEDULED TERM LOAN REPAYMENTS
The Term Loans shall be repaid in 24 quarterly installments of
principal, payable on the last day of each March, June, September and December,
commencing June 30, 1999, in the amounts set forth below opposite such
installment (as the same may be reduced in accordance with the terms of this
Agreement):
INSTALLMENT AMOUNT
------------------ -----------
June 30, 1999 $437,500.00
September 30, 1999 $437,500.00
December 31, 1999 $437,500.00
March 31, 2000 $437,500.00
June 30, 2000 $500,000.00
September 30, 2000 $500,000.00
December 31, 2000 $500,000.00
March 31, 2001 $500,000.00
June 30, 2001 $562,500.00
September 30, 2001 $562,500.00
December 31, 2001 $562,500.00
March 31, 2002 $562,500.00
June 30, 2002 $625,000.00
September 30, 2002 $625,000.00
December 31, 2002 $625,000.00
March 31, 2003 $625,000.00
June 30, 2003 $687,500.00
September 30, 2003 $687,500.00
December 31, 2003 $687,500.00
March 31, 2004 $687,500.00
June 30, 2004 $475,000.00
September 30, 2004 $475,000.00
December 31, 2004 $475,000.00
March 31, 2005 $475,000.00
