EXHIBIT 10.1
CREDIT AGREEMENT
$150,000,000
among
CONVERSE INC.,
as Borrower,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 13.6 HEREOF,
as Lenders,
and
BT COMMERCIAL CORPORATION,
as Agent
Dated as of May 21, 1997
TABLE OF CONTENTS
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ARTICLE PAGE
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1 Definitions............................................................. 1
1.1 General Definitions............................................ 1
1.2 Accounting Terms and Determinations............................ 29
1.3 Other Definitional Terms....................................... 29
2 Conditions Precedent.................................................... 30
2.1 Initial Loans.................................................. 30
2.2 All Loans...................................................... 31
3 The Loans............................................................... 31
3.1 Commitment and Delivery of Revolving Notes..................... 31
3.1.2 ............................................................... 32
3.2 Determination of Borrowing Base................................ 32
3.3 Borrowings; Notices of Borrowings.............................. 33
3.4 Alternate Periodic Settlements Among Lenders................... 34
3.5 Mandatory Payment; Voluntary Reductions of Commitments......... 37
3.6 Payments and Computations...................................... 38
3.7 Maintenance of Account......................................... 40
3.8 Loan Disbursement Account...................................... 40
3.9 Statement of Account........................................... 40
3.10 Taxes.......................................................... 41
3.11 Sharing of Payments............................................ 43
4 Letters of Credit, Foreign Exchange Contracts and Acceptances........... 43
4.1 Letter of Credit Issuances..................................... 43
4.2 Foreign Exchange Contracts..................................... 45
4.2.1 Acceptances.................................................... 46
4.3 Lenders' Participation......................................... 50
4.4 Definition of Obligations...................................... 50
4.5 Indemnification................................................ 51
4.6 Certain Waivers................................................ 51
4.7 Limitation on Liability; Authority of Lender................... 52
4.8 Covenants of Borrower.......................................... 52
4.9 Rights and Remedies of Lenders................................. 53
5 Representations and Warranties.......................................... 53
5.1 Corporate Existence; Qualification; Power; Licenses and Permits 53
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5.2 Corporate and Governmental Authorization; Contravention........ 54
5.3 Binding Effect................................................. 54
5.4 Information.................................................... 54
5.5 No Material Adverse Change..................................... 55
5.6 Litigation and Judgments....................................... 55
5.7 Compliance with ERISA.......................................... 55
5.8 Taxes.......................................................... 56
5.9 Subsidiaries................................................... 57
5.10 Not an Investment Company...................................... 57
5.11 No Conflicting Requirements.................................... 57
5.12 Debt........................................................... 58
5.13 Title to Properties and Assets; Collateral..................... 58
5.14 Compliance with Law............................................ 60
5.15 Compliance with Environmental Laws............................. 60
5.16 Security Interests and Liens; Inventory and Equipment.......... 61
5.17 Labor Relations................................................ 61
5.18 UCC Filing Information......................................... 62
5.19 Solvency....................................................... 62
5.20 Fictitious Business Names...................................... 63
5.21 Use of Proceeds................................................ 63
5.22 Margin Security................................................ 63
5.23 No Event of Default............................................ 63
5.24 Status of Accounts............................................. 63
5.25 Survival of Representations.................................... 63
5.26 Affiliate Transactions......................................... 63
5.27 Accuracy and Completeness of Information....................... 63
5.28 Representations Upon Execution................................. 64
6 Affirmative Covenants................................................... 64
6.1 Information.................................................... 64
6.2 Payment of Obligations......................................... 68
6.3 Maintenance of Property: Insurance............................. 68
6.4 Compliance with Laws........................................... 70
6.5 Inspection of Property, Books and Records; Change of Name,
Principal Place of Business, Location of Collateral, Etc....... 70
6.6 Compliance with Credit Documents............................... 71
6.7 Covenant to Mortgage After-Acquired Property................... 71
6.8 Corporate Existence............................................ 72
6.9 ERISA.......................................................... 72
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6.10 Environmental Matters.......................................... 74
6.11 Collateral Records............................................. 75
6.12 Security Interests............................................. 75
6.13 Taxes.......................................................... 76
6.14 Use of Proceeds................................................ 76
6.15 Collection of Accounts......................................... 77
6.16 Notice; Credit Memoranda; and Returned Goods................... 77
6.17 Trademarks..................................................... 77
6.18 Patents........................................................ 77
7 Negative Covenants and Financial Covenants.............................. 78
7.1 Debt and Guarantees............................................ 78
7.2 Restricted Payments............................................ 79
7.3 Investments.................................................... 80
7.4 Negative Pledge................................................ 80
7.5 Consolidations, Mergers and Sales of Assets.................... 81
7.6 Capital Expenditures........................................... 83
7.7 Interest Coverage Ratio........................................ 83
7.8 Transactions with Affiliates................................... 83
7.9 Restrictions on Foreign Subsidiary Support..................... 84
7.10 Environmental Matters.......................................... 84
7.11 [INTENTIONALLY OMITTED]........................................ 85
7.12 [INTENTIONALLY OMITTED]........................................ 85
7.13 [INTENTIONALLY OMITTED]........................................ 85
7.14 [INTENTIONALLY OMITTED]........................................ 85
7.15 Amendments to Certificates of Incorporation and By-Laws........ 85
7.16 No Prohibited Transactions Under ERISA......................... 85
7.17 No Additional Bank Accounts.................................... 86
7.18 No Additional Subsidiaries..................................... 86
7.19 [INTENTIONALLY OMITTED]........................................ 86
8 Interest, Fees and Expenses............................................. 86
8.1 Interest on LIBOR Rate Loans................................... 86
8.2 Interest on Prime Rate Loans................................... 87
8.3 Notice of Rollover and Notice of Conversion.................... 87
8.4 Interest After Event of Default................................ 89
8.5 Reimbursement of Expenses...................................... 90
8.6 [INTENTIONALLY OMITTED]........................................ 90
8.7 Unused Line Fee................................................ 90
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8.8 Letter of Credit Fees; Foreign Exchange Fees................... 91
8.9 [INTENTIONALLY OMITTED]........................................ 94
8.10 Collateral Management Fees; Expenses........................... 94
8.11 Authorization to Charge Account................................ 94
8.12 Indemnification in Certain Events.............................. 94
9 Powers of Attorney...................................................... 95
9.1 Appointment as Attorney-in-Fact................................ 95
9.2 Limitation on Exercise of Power................................ 96
10 Events of Default and Remedies.......................................... 96
10.1 Events of Default.............................................. 96
10.2 Acceleration................................................... 99
10.3 Remedies.......................................................100
11 Termination of the Revolving Commitments................................101
12 The Agent...............................................................102
12.1 Appointment of Agent...........................................102
12.2 Nature of Duties of Agent......................................102
12.3 Lack of Reliance on Agent......................................103
12.4 Certain Rights of the Agent....................................103
12.5 Reliance by Agent..............................................103
12.6 Indemnification of Agent.......................................104
12.7 The Agent in its Individual Capacity...........................104
12.8 Holders of Notes...............................................104
12.9 Successor Agent................................................104
12.10 Collateral Matters.............................................105
12.11 Actions with Respect to Defaults...............................107
12.12 Delivery of Information........................................107
13 Miscellaneous...........................................................108
13.1 Waivers........................................................108
13.2 JURY TRIAL.....................................................108
13.3 GOVERNING LAW..................................................108
13.4 VENUE; SERVICE OF PROCESS; WAIVER OF DAMAGES...................108
13.5 Notices........................................................110
13.6 Assignability..................................................110
13.7 [INTENTIONALLY OMITTED]........................................113
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13.8 Information....................................................113
13.9 Indemnification................................................113
13.10 Entire Agreement; Successors and Assigns.......................114
13.11 Amendments, Etc................................................114
13.12 [INTENTIONALLY OMITTED]........................................115
13.13 Nonliability of Agent and Lenders..............................115
13.14 Independent Nature of Lenders' Rights..........................115
13.15 Counterparts...................................................116
13.16 Effectiveness..................................................116
13.17 Severability...................................................116
13.18 Headings Descriptive...........................................116
13.19 Maximum Rate...................................................116
13.20 Right of Setoff................................................117
13.21 Confidentiality................................................117
ANNEXES
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Annex I - List of Lenders and Commitment Amounts
EXHIBITS
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Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Assumption Agreement
Exhibit C - Form of Letter of Credit Request
Exhibit D - Form of Patent Security Agreement
Exhibit E - Form of Pledge Agreement
Exhibit F - Form of Revolving Note
Exhibit G - Form of Security Agreement
Exhibit H - Form of Trademark Security Agreement
Exhibit I - Form of Opinions of Borrower's General and Special Counsel
Exhibit J - Form of Notice of Borrowing
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Concentration Account Agreement
Exhibit M - Form of Compliance Certificate
Exhibit N - Form of Borrowing Base Certificate
Exhibit O - Form of Notice of Rollover
Exhibit P - Form of Notice of Conversion
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Exhibit Q - Form of Remote Letter of Credit Customer Agreement
SCHEDULES
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Schedule A - Closing Document List
Schedule B - Outstanding Letters of Credit
Schedule C - Proprietary Rights Schedule
Schedule D - Disclosure Schedule
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is entered into as of May 21, 1997, among CONVERSE
INC., a Delaware corporation ("Borrower"), and each of those financial
institutions identified as Lenders on Annex I hereto (together with each of
their successors and assigns, referred to individually as a "Lender" and
collectively as the "Lenders") and BT COMMERCIAL CORPORATION ("BTCC"), acting in
the manner and to the extent described in Article 12 hereof (in such capacity,
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the "Agent").
W I T N E S S E T H:
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WHEREAS, the Borrower wishes to obtain a revolving credit facility to
refinance certain of Borrower's existing indebtedness and to provide financing
for the Borrower's ongoing working capital, letter of credit, foreign exchange
contracts, acceptances, and general corporate needs; and
WHEREAS, upon the terms and subject to the conditions set forth herein, the
Lenders are willing to make loans and advances to the Borrower;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
ARTICLE 1
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Definitions
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1.1 General Definitions. As used herein, the following terms shall have
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the meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
Acceptance shall mean a draft of the Borrower accepted by an Accepting Bank
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pursuant to Article 4 hereof.
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Acceptance Commission shall mean, with respect to any Acceptance, the fees
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and commissions payable to the Agent for the benefit of the Lenders by the
Borrower under and pursuant to Section 8.8 hereof.
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Acceptance Date shall have the meaning given to it in Section 13.6(c)
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hereof.
Acceptance Letter of Credit shall mean a Letter of Credit providing for the
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payment of the Borrower's reimbursement obligations arising upon a drawing
thereunder by the creation and discounting of an Acceptance by an Accepting
Bank.
Acceptance Obligations shall mean, at any time, without duplication, (i)
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the sum of the face amount of all Acceptances outstanding as of such time plus
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(ii) the aggregate amount of all payments made by each Lender to an Accepting
Bank with respect to its participation in Acceptances as provided in Article 4
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for which the Borrower is obligated to and has not at such time reimbursed the
Lenders whether by payment to the Lenders (as contemplated by Section 4.2.1
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hereof) or otherwise.
Accepting Bank shall mean Bankers Trust Company or any other bank or
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financial institution approved by the Agent in writing to create Acceptances for
the account of the Borrower.
Accounts shall mean all of the Borrower's accounts, whether now existing or
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existing in the future, including, without limitation, all (i) accounts
receivable (whether or not specifically listed on schedules furnished to the
Agent), including, without limitation, all accounts created by or arising from
all of the Borrower's sales of goods or rendition of services made under any of
the Borrower's trade names or styles, or through any of the Borrower's
divisions; (ii) unpaid or unexercised seller's rights (including any right of
rescission, replevin, reclamation and stopping in transit) relating to the
foregoing or arising therefrom; (iii) rights to any goods represented by any of
the foregoing, including returned or repossessed goods; (iv) reserves and credit
balances held by the Borrower with respect to any such accounts receivable or
account debtors; (v) guarantees or collateral for any of the foregoing; (vi)
insurance policies; or (vii) rights relating to any of the foregoing.
Acknowledgement Agreement shall mean any acknowledgement agreement required
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to be delivered by the Borrower to the Agent pursuant to which any mortgagee or
lessor of property on which Collateral is stored or otherwise located, or
pursuant to which any warehouseman, filler, processor or packer of any Inventory
acknowledges the Liens and security interests of the Agent and, in the case of
any real property leased by the Borrower or subject to a mortgage executed by
the Borrower, provides the Agent access to such real property for a reasonable
period of time to assemble, complete and sell any Collateral located thereon.
Additional Permitted Debt shall have the meaning given to such term in
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Section 7.1 hereof.
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Adjusted LIBOR Rate shall mean, with respect to each Interest Period for
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any LIBOR Rate Loan, the rate obtained by dividing (i) the LIBOR Rate for such
Interest Period by (ii) a percentage equal to 1 minus the stated maximum rate
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(stated as a decimal) of all reserves required
2
to be maintained against Eurocurrency liabilities as specified in Regulation D
(or against any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined or any
category of extensions of credit or other assets which includes loans by a non-
United States office of any Lender to United States residents).
Affiliate shall mean (i) a Controlling Person or any Person which is
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controlled by or is under common control with a Controlling Person and (ii) any
other Person who is a director, officer or member of management of the Borrower,
any of its Subsidiaries or any Controlling Person. For purposes of this Credit
Agreement, control of a Person shall mean the power, direct or indirect, (a) to
vote 20% or more of the outstanding stock or other ownership interests having
ordinary voting power for the election of directors of such Person or (b) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
After-Acquired Personal Property shall have the meaning given to it in
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Section 12.10(d) hereof.
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After-Acquired Real Property shall have the meaning given to it in Section
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12.10(d) hereof.
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Agent shall mean BTCC as provided in the preamble to this Credit Agreement
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or any successor to BTCC.
Ancillary Documents shall mean any Proprietary Rights Collateral Documents,
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any Security Agreements, any Pledge Agreements, any Mortgages and any Collateral
Assignments.
Apollo shall mean Apollo Advisors, L.P. and Lion Advisors, L.P., both
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Delaware limited partnerships.
Applicable Lending Office shall mean, with respect to each Lender, such
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Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
Asset Disposition shall mean any sale, transfer, lease, assignment or other
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disposition of any asset by the Borrower or any Subsidiary thereof (other than a
disposition to any other Subsidiary of the Borrower), excluding, however, any
sale or disposition by a Borrower or Subsidiary in the ordinary course of
business of Inventory.
Assignment and Acceptance shall mean an assignment and acceptance agreement
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entered into by an assigning Lender and an assignee Lender, and accepted by the
Agent, in accordance with Section 13.6 hereof, in the form attached hereto as
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Exhibit A.
3
Auditors shall mean a nationally-recognized firm of independent public
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accountants selected by the Borrower and satisfactory to the Agent in its
reasonable discretion. For purposes of this Credit Agreement, any of the
current so-called "Big Six" firms of independent public accountants shall be
deemed to be satisfactory to the Agent.
Beneficial Owner is used as defined in Rule 13d-3 promulgated by the
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Securities and Exchange Commission under the Securities Exchange Act of 1934.
Benefit Plan shall mean a defined benefit plan as defined in Section 3(35)
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of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
Borrower shall mean Converse Inc.
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Borrowing Base shall mean an amount equal to the sum of
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(A) eighty-five percent (85%) of the then Eligible Accounts
Receivable, plus
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(B) the sum of (1) sixty-five percent (65%) of the then Eligible
Inventory; plus (2) an amount equal to sixty-five percent (65%) of the face
amount of any letter of credit (including Letters of Credit) issued to
support the purchase of finished goods Inventory which, in the
determination of the Agent in the exercise of its Permitted Discretion,
would constitute Eligible Inventory when title thereto passes to the
Borrower ("Eligible L/C Inventory"); provided, however, that during the
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months of April, May, June and July of each year during the term hereof,
the advance rate with respect to Eligible Inventory and Eligible L/C
Inventory shall be seventy percent (70%), plus
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(C) sixty percent (60%) of the then Eligible Retail Inventory, plus
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(D) $10,000,000 during the period from the date hereof, through and
including September 30, 1997; thereafter, on the first Business Day of each
October, January, April and July of each year during the term hereof, such
amount shall automatically reduce by $360,000; provided, however, that such
amount shall automatically be reduced from time to time during the term
hereof by an amount equal to (i) the Net Cash Proceeds in excess of
$1,000,000 from any Asset Disposition of any fixed asset during any fiscal
year during the term hereof, or (ii) the Net Cash Proceeds of any Funded
Debt secured by any fixed assets as permitted by Section 7.1(v) hereof,
plus
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(E) the lesser of (i) $15,000,000, or (ii) sixty-five percent (65%) of
Borrower's annual Royalty Income, based on a rolling twelve month period.
4
Borrowing Base Certificate shall have the meaning given to such term in
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Section 6.1 hereof.
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BT Account shall have the meaning given to such term in Section 3.6 hereof.
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Business Day shall mean: (a) for all portions of the Loans on which
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interest accrues based upon the Prime Lending Rate, any day other than a
Saturday, Sunday or public holiday or the equivalent for banks in Chicago,
Illinois, and (b) for portions of the Loans on which interest accrues based upon
the LIBOR Rate, the days described in the immediately preceding subclause (a)
for the definition of Business Day, but excluding therefrom any day on which
commercial banks are not open for dealing in Dollar deposits in the London
(England, U.K.) interbank market.
Capital Lease shall mean any lease of property, real or personal, the
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obligation of the lessee in respect of which is required in accordance with GAAP
to be capitalized on the balance sheet of the lessee.
Cash Equivalents shall mean, as to any Person, (i) direct obligations of
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the United States or any agency thereof, or obligations guaranteed by the United
States or any agency thereof, (ii) commercial paper rated in the highest grade
by a nationally recognized credit rating agency, (iii) time deposits with,
including certificates of deposit issued by, the Agent or any office located in
the United States of any bank or trust company the senior debt securities of
which are rated in one of the two highest categories by a nationally recognized
credit rating agency, provided in each case that such securities or other
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obligations described in subsections (i), (ii) and (iii) above mature within one
year from the date of acquisition thereof by the Borrower or a Subsidiary, (iv)
repurchase obligations with a term of not more than ten (10) days of underlying
securities of the type described in clause (i) entered into with any bank of the
type described in clause (iii), (v) investments in money market funds that are
registered under the Investment Company Act of 1940, which have net assets of at
least $100,000,000 and at least eighty-five percent (85%) of whose assets
consist of securities and other obligations of the type described in clauses (i)
through (iv) above, and (vi) investments in any other money market mutual fund
the underlying assets of which are rated at least AAA or the equivalent by
Standard & Poor's Corporation or at least Aaa or the equivalent thereof by
Xxxxx'x Investors Service, Inc., including, without limitation, any such mutual
fund managed or advised by the Agent or any Lender. All such Cash Equivalents
must be denominated solely for payment in U.S. Dollars.
Casualty Loss shall have the meaning given to such term in Section 6.3
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hereof.
Change in Control shall mean the occurrence of any of the following: (i)
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the sale or other transfer of all or substantially all of the assets of the
Borrower to any person other than Apollo, any account managed by Apollo for so
long as it exercises power of disposition and voting with
5
respect thereto (a "Controlled Account"), or an Affiliate of Apollo or of a
Controlled Account, (ii) any transaction (including a merger or consolidation)
the result of which is that any "person" or "group" (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) becomes the "beneficial owner" (within the meaning of Rule
13d-3 under the Exchange Act) of more than thirty-five percent (35%) (calculated
on a fully diluted basis) of the voting power of all classes of Voting Stock of
the Borrower and/or warrants or options to acquire such Voting Stock and, at
such time, such person or group is the beneficial owner of a greater percentage
of the voting power of the Voting Stock of the Borrower than that which is then
beneficially owned (calculated on a fully diluted basis) by Apollo or a
Controlled Account or an Affiliate of Apollo or of a Controlled Account, (iii)
the adoption of a plan relating to the liquidation or dissolution of the
Borrower, and (iv) the first day on which a majority of the members of the Board
of Directors of the Borrower cease to be Continuing Directors (meaning the
directors of the Borrower on the date hereof and each other director, if such
director's nomination for election to the Board of Directors of the Borrower is
recommended by a majority of the Continuing Directors at the time of such
nomination or election)
Closing shall mean the execution of this Credit Agreement and the other
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documents identified on Part I of the Closing Documents List, and the
satisfaction of the other conditions precedent to the Initial Credit Event set
forth in Article 2 hereof.
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Closing Date shall mean the date on which the Closing occurs.
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Closing Documents List shall mean the Closing Documents List attached
----------------------
hereto as Schedule A.
Code shall have the meaning given to it in Section 1.3 hereof.
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Collateral shall mean any and all assets and rights and interests in or to
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property of the Borrower pledged from time to time as security for the
Obligations pursuant to the Ancillary Documents whether now owned or hereafter
acquired, including, without limitation, (i) all of the Accounts, Inventory,
Equipment, Intellectual Property, Intangibles and Real Estate of the Borrower,
as defined in any Security Agreement, any Mortgage, any Pledge Agreement or any
Proprietary Rights Collateral Document (excluding any property expressly
excluded from the pledge or grant under any Ancillary Document) and (ii) all of
the rights and interest of the Borrower assigned to the Agent for the benefit of
the Lenders pursuant to the Collateral Assignments, if any.
Commitments of any Lender shall mean the Revolving Credit Commitment of
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such Lender.
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Compliance Certificate shall have the meaning given to such term in Section
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6.1(c) hereof.
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Concentration Account shall have the meaning given to such term in Section
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3.6 hereof.
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Concentration Account Agreement shall have the meaning given to such term
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in Section 3.6 hereof.
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Consolidated Capital Expenditures shall mean, for any period, the additions
---------------------------------
to property, plant and equipment and other capital expenditures of the Borrower
and its Consolidated Subsidiaries for such period, as the same are (or, in
accordance with GAAP, would be) set forth in the consolidated statement of cash
flows of the Borrower and its Consolidated Subsidiaries for such period.
Consolidated Interest Expense shall mean, for any period, the sum of (i)
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the aggregate amount of interest (except as hereinafter provided, including Fees
payable in connection with this Credit Agreement except to the extent any such
Fees are amortized by Borrower in accordance with GAAP, but excluding non-cash
interest, non-cash financing fee amortization and amortization of discount), in
each case, whether or not paid or payable, accrued or paid (without duplication)
by the Borrower and its Consolidated Subsidiaries during such period which is
treated as interest in accordance with GAAP and (ii) dividends paid or declared
in cash or other property (other than in stock) on preferred stock during such
period, less (iii) the aggregate amount of cash interest income during such
period.
Consolidated Net Income shall mean, for any period, the consolidated net
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income (or loss) of the Borrower and its Consolidated Subsidiaries for such
period, excluding (i) gains or losses from dispositions of assets, (ii) any
extraordinary items, and (iii) other non-recurring items not related to
operations.
Consolidated Subsidiary of any Person shall mean at any date any Subsidiary
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or other entity the accounts of which in accordance with GAAP would be
consolidated with those of such Person in its consolidated financial statements
as of such date.
Contractual Obligations shall mean, with respect to any Person, any term or
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provision of any securities issued by such Person, or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement to
which such Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
Controlling Person means any Person that is in control of the Borrower or
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any of its Subsidiaries (such control being the power to direct or cause the
direction of the management and
7
policies of the Borrower or any such Subsidiary, whether through the ownership
of voting stock, by contract or otherwise).
Convert, Conversion and Converted each shall refer to a conversion of Loans
---------------------------------
of one Type into Loans of another Type pursuant to Section 8.3 hereof.
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Credit Agreement shall mean this credit agreement, dated as of the date
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hereof, as the same may be modified, amended, extended, restated or supplemented
from time to time.
Credit Documents shall mean, collectively, this Credit Agreement, the
----------------
Notes, each of the Ancillary Documents, the Fee Letter, and all other documents,
agreements, instruments, opinions and certificates executed and delivered in
connection herewith or therewith, as the same may be modified, amended,
extended, restated or supplemented from time to time.
Credit Parties shall mean, collectively, the Borrower and any other parties
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to the Credit Documents (other than the Lenders and the Agent).
Debt shall mean of any Person at any date, without duplication, (a) all
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obligations of such Person and its Consolidated Subsidiaries for borrowed money,
(b) all obligations of such Person and its Consolidated Subsidiaries evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person and its Consolidated Subsidiaries to pay the deferred purchase price
of property or services, except non-intercompany trade accounts payable arising
in the ordinary course of business representing the deferred purchase price of
property or services and having a maturity equal to or less than 360 days, (d)
all obligations of such Person and its Consolidated Subsidiaries under Capital
Leases, (e) all contingent or non-contingent obligations of such Person and its
Consolidated Subsidiaries to reimburse any Person in respect of amounts paid or
payable (currently or in the future, on a contingent or non-contingent basis)
under a letter of credit or similar instrument, (f) all Debt of others secured
by a Lien on any asset of such Person or a Consolidated Subsidiary, and (g) all
Debt of others Guaranteed by such Person or a Consolidated Subsidiary.
Default shall mean an event, condition or default which with the giving of
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notice, the passage of time or both would be an Event of Default.
Defaulting Lender shall have the meaning given to such term in Section
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3.4(b) hereof.
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Depositary Account shall have the meaning given to such term in Section 3.6
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hereof.
Discount Rate shall mean, with respect to any Acceptance, the applicable
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discount rate of the applicable Accepting Bank (determined by such Accepting
Bank on the date of discount prior
8
to 12:00 noon, Chicago time) for bankers acceptances having maturities
comparable to the maturity of such Acceptance and with face amounts equal to the
face amount thereof.
DOL shall mean the United States Department of Labor and any successor
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department or agency.
Domestic Lending Office shall mean, with respect to any Lender, the office
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of such Lender specified by such Lender to the Borrower and the Agent as its
"Domestic Lending Office" from time to time.
EBITDA with respect to any period, shall mean Consolidated Net Income for
------
such period before payment or provision of taxes measured by income plus,
----
without duplication, all interest charges (to the extent deducted in computing
Consolidated Net Income), all Fees payable in connection with this Credit
Agreement, amortization and depreciation expense (including any amortization and
depreciation associated with "fresh start accounting") and other non-cash items
reducing Consolidated Net Income for such period, in each case determined on a
consolidated basis for the Borrower and its Consolidated Subsidiaries.
Eligible Accounts Receivable shall mean the aggregate face amount of such
----------------------------
Borrower's Accounts that conform to the warranties contained herein and at all
times continue to be acceptable to the Agent in its Permitted Discretion, less
the aggregate amount of all returns, discounts, claims, credits, charges and
allowances of any nature (whether issued, owing, granted or outstanding), and
less the aggregate amount of all reserves established or required to be
established by the Agent from time to time for slow paying accounts, foreign
sales, xxxx and hold (or deferred shipment) transactions and the Lenders'
charges as set forth in this Credit Agreement. Unless otherwise approved in
writing by the Agent, no Account shall be deemed to be an Eligible Account
Receivable if:
(a) it arises out of a sale made by the Borrower to an Affiliate
(other than an Affiliate of Apollo which would not otherwise be an
Affiliate of Borrower but for the relationship to Apollo); or
(b) the Account is unpaid more than 60 days after the original due
date specified in the related invoice or the Account is unpaid more than
120 days after the initial date of such invoice, based on Borrower's
reasonable estimate thereof, and subject to reserves established by the
Agent with respect thereto in its Permitted Discretion; or
(c) the Account, when aggregated with all other Accounts of such
account debtor, exceeds fifteen percent (15%) in face value of all Accounts
of the Borrower then outstanding, to the extent of such excess, unless such
Account is supported by an irrevocable letter of credit or other form of
financial support in form and substance
9
satisfactory to the Agent, issued by a financial institution satisfactory
to the Agent and which, following any request therefor by Agent, has been
endorsed in blank and delivered to the Agent; or
(d) (i) the account debtor is also a creditor of the Borrower or of
its Subsidiaries, in each case to the extent of the amount owed by the
Borrower or such Subsidiary to the account debtor, (ii) the account debtor
has disputed its liability on, or the account debtor has made any claim
with respect to, such Account, in each case which has not been resolved,
but the subject Account shall be excluded from Eligible Accounts Receivable
only to the extent of any amount with respect to which the account debtor
has disputed its liability or has made a claim or (iii) the Account
otherwise is or may become subject to any right of setoff by the account
debtor, to the extent of the amount of such setoff; or
(e) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or made
an assignment for the benefit of creditors, or if a decree or order for
relief has been entered by a court having jurisdiction in the premises in
respect to the account debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or if any other
petition or other application for relief under the federal bankruptcy laws
has been filed by or against the account debtor, or if the account debtor
has failed, suspended business, ceased to be solvent, or consented to or
suffered a receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or affairs; or
(f) the sale is to an account debtor outside of the United States,
Canada or Puerto Rico, unless the account debtor thereon has supplied the
Borrower with an irrevocable letter of credit or other form of financial
support in form and substance satisfactory to the Agent, issued by a
financial institution satisfactory to the Agent and which, following any
request therefor by the Agent, has been endorsed in blank and delivered to
the Agent; or
(g) the sale to the account debtor is on a xxxx-and-hold, guaranteed
sale, sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or return;
or
(h) the Agent believes, in its Permitted Discretion, that collection
of such Account is insecure or that such Account may not be paid by reason
of the account debtor's financial inability to pay; or
(i) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower duly
assigns its rights to payment
10
of such Account to the Agent pursuant to the Assignment of Claims Act of 1940,
as amended (31 U.S.C. sec. 3727 et seq.); or
-- ---
(j) the goods giving rise to such Account have not been shipped and
delivered to and accepted by the account debtor or the services giving rise
to such Account have not been performed by the Borrower and accepted by the
account debtor or the Account otherwise does not represent a final sale; or
(k) the Account exceeds a credit limit determined by the Agent, in its
Permitted Discretion, to the extent such Account exceeds such limit; or
(l) fifty percent (50%) or more, in face amount, of other Accounts
from the same account debtor are not deemed Eligible Accounts Receivable
hereunder; or
(m) the Account does not comply with all applicable legal
requirements, including, without limitation, applicable provisions of the
Federal Consumer Credit Protection Act, the Federal Truth in Lending Act
and Regulation Z of the Board of Governors of the Federal Reserve System,
in each case as amended; or
(n) the Account is not owned by the Borrower free and clear of any
Liens (other than Liens in favor of the Agent) or is one in which the Agent
does not have a first prior perfected security interest; or
(o) the Account does not constitute a valid and binding obligation of
the applicable account debtor in accordance with its terms; or
(p) the Agent, in the exercise of its Permitted Discretion, determines
it to be ineligible.
In addition to the foregoing, Eligible Accounts Receivable shall include
such Accounts for which Borrower shall request approval and that the Agent
approves in advance, in writing, and in its Permitted Discretion, which approval
shall not prevent the Agent from time to time from revoking such approval in the
exercise of its Permitted Discretion.
Eligible Inventory shall mean:
------------------
(a) the gross amount of the Borrower's Inventory, valued at the lower
of cost (on a FIFO basis) or market, which (i) is owned solely by the
Borrower and with respect to which the Borrower has good, valid and
marketable title; (ii) is either (A) stored on property that is not a
retail location of the Borrower and that is either (x) owned or leased by
the Borrower or (y) owned or leased by a warehouseman that has contracted
with the
11
Borrower to store Inventory on such warehouseman's property or by a filler,
processor or packer of the Borrower (provided that, with respect to
--------
Inventory stored on property leased by the Borrower, the Borrower shall
have delivered in favor of the Agent an Acknowledgement Agreement, except
that no Acknowledgement Agreement shall be required with respect to the
Charlotte, North Carolina warehouse leased by the Borrower (the "Charlotte
Warehouse") as a prerequisite to the inclusion of the Inventory therein as
"Eligible Inventory" so long as (1) Borrower has notified the landlord of
the Charlotte Warehouse of the Lender's security interest in the Collateral
at such facility and directed such landlord to send all notices with
respect to the Charlotte Warehouse, including without limitation, notices
of non-payment, late payment or default under the lease, to Agent, and
provided Agent with proof of such notice and (2) the rent on such location
is paid at least two (2) months in advance and, upon request, evidence of
such rental payments is provided to Agent, and, with respect to Inventory
stored on property owned or leased by a warehouseman, filler, processor or
packer, the Borrower shall have delivered to the Agent Acknowledgement
Agreements executed by the warehouseman) or (B) finished goods in transit
to a domestic location of Borrower, and which are being imported (or have
been imported) by Borrower for which payment is to be effected by either
(1) the presentment of a Letter of Credit issued (or deemed issued)
pursuant to this Agreement or (2) such other method agreed to between the
Borrower and the seller thereof pursuant to an open account purchase order,
so long as, (x) the Agent is named as consignee on the applicable xxxx of
lading or other similar document of title, (y) such xxxx of lading or
document has been delivered to the Agent (or a Person designated by the
Agent to act as its agent for such purpose) and (z) the Inventory is
covered by insurance acceptable to the Agent; (iii) is subject to a valid,
enforceable and perfected first priority Lien in favor of the Agent except,
with respect to Eligible Inventory stored at sites described in clause
(ii)(A)(y) above, for Liens for normal and customary warehouseman filler,
packer and processor charges and provided such Eligible Inventory is not
subject to any other Lien or consignment arrangement; other than Liens in
favor of the Agent; (iv) is located in the United States, Canada or Puerto
Rico or, with respect to Inventory described in (ii)(B) above, is in
transit to a domestic location; (v) is not obsolete, damaged, defective,
slow moving, unmerchantable, work-in-process, unsalable or otherwise
capable of sale only at a price materially less than the original cost of
such item and which otherwise conforms to the warranties contained herein
and which at all times continues to be acceptable to the Agent in its
Permitted Discretion; and (vi) is not financed by letters of credit
(including Letters of Credit),
(b) less any goods otherwise included in Eligible Inventory pursuant
----
to the preceding paragraph (a) that are returned or rejected by the
Borrower's customers and goods in transit to third parties (other than to
the Borrower's agents, warehouses, fillers, processors or packers that
comply with clause (a)(ii)(B) above),
12
(c) less any Inventory otherwise included in Eligible Inventory
----
pursuant to the preceding paragraph (a) that the Agent determines in its
Permitted Discretion to be a no charge or sample item,
(d) less any reserves required by the Agent in its Permitted
----
Discretion for special order goods and market value declines, and
(e) less any Inventory that the Agent determines in its Permitted
----
Discretion to be ineligible.
In addition to the foregoing, Eligible Inventory shall include such items
of Borrower's Inventory for which the Borrower shall request approval and that
the Agent approves in advance, in writing, and in its Permitted Discretion,
which approval shall not prevent the Agent from time to time from revoking such
approval in the exercise of its Permitted Discretion.
Eligible Retail Inventory shall mean Borrower's Inventory which would
-------------------------
otherwise constitute Eligible Inventory but for the fact that it is located at a
retail location of the Borrower; provided, however, that no Acknowledgement
Agreement shall be required with respect to retail locations leased by Borrower
as a prerequisite to the inclusion of the inventory thereon as Eligible Retail
Inventory.
Environmental Law shall mean any federal, state or local law, statute,
-----------------
ordinance, or regulation pertaining to health, industrial hygiene, or the
environmental conditions on, under or about any real property owned, operated or
leased by the Borrower or any Subsidiary thereof.
Equity Offering Proceeds shall mean the aggregate amount of cash received
------------------------
by the Borrower from a public offering or private placement of equity securities
(including, without limitation, common stock, preferred stock and warrants and
options to acquire the same) of such Borrower minus, but without duplication,
-----
all underwriting discounts and commissions, placement fees and other
professional fees, expenses and taxes incurred in connection with such offering
or placement. For purposes of this definition, if any such discounts,
commissions, fees, expenses or taxes payable in connection with such offering or
placement are not known as of the date of the distribution of the proceeds
thereof, then such discounts, commissions, fees, expenses or taxes shall be
estimated in good faith by the Borrower and such estimated amounts shall be
deducted from the calculation of Equity Offering Proceeds.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and any successor statute thereto and all final or
temporary regulations promulgated thereunder, and all published, generally
applicable rulings entitled to precedential effect.
13
ERISA Affiliate shall mean any (i) corporation which is or was at any time
---------------
during the immediately preceding six years a member of the same controlled group
of corporations (within the meaning of Section 414(b) of the Internal Revenue
Code) as the Borrower; (ii) partnership or other trade or business (whether or
not incorporated) at any time during the immediately preceding six years under
common control (within the meaning of Section 414(c) of the Internal Revenue
Code) with the Borrower; and (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Borrower, any corporation described in clause (i) above, or any partnership or
trade or business described in clause (ii) above.
Event(s) of Default shall have the meaning provided for in Article 10 of
------------------- ----------
this Credit Agreement.
Excess Consolidated Net Income shall mean, for any fiscal year, fifty
------------------------------
percent (50%) of the amount of the Borrower's Consolidated Net Income in excess
of the amounts set forth below for the corresponding fiscal year:
1997 $13,000,000
1998 $20,000,000
1999 and each fiscal $30,000,000
year thereafter during
the term hereof
Excluded Taxes shall mean income, franchise and branch profits taxes
--------------
(including any privilege or intangible taxes to the extent measured by income or
calculated in a manner similar to franchise or branch profits taxes) imposed on
the Agent (or Bankers Trust Company) or any Lender (or an office, branch or
agency of the Agent or a Lender) by any governmental authority in a jurisdiction
in which the Agent or any Lender is organized or has its principal or registered
office or is acting for purposes of this Credit Agreement (other than any
jurisdiction in which the Agent or such Lender has become subject to taxation as
a result of entering into or performing its obligations under this Credit
Agreement).
Expenses shall mean all present and future expenses reasonably incurred by
--------
or on behalf of the Agent in connection with this Credit Agreement or any of the
other Credit Documents or any of the transactions contemplated hereby or
thereby, whether incurred heretofore or hereafter, which expenses shall include,
without being limited to, the cost of record searches, reasonable counsel fees,
all costs and expenses incurred by the Agent in opening bank accounts,
depositing checks, receiving and transferring funds, and any charges imposed on
the Agent due to "insufficient funds" of deposited checks and the Agent's
standard fee relating thereto, costs of the Agent (including internal and
external collateral examination staff) in conducting field examinations,
reasonable fees and expenses of accountants, appraisers or other experts or
advisors retained by the Agent, title insurance search fees (but not including
any premiums for title
14
insurance except in connection with enforcement of the Agent's Liens), real
estate survey costs, fees and taxes relative to the filing of financing
statements, costs of preparing and recording Collateral Assignments, Proprietary
Rights Collateral Documents, Mortgages, the Security Agreement and all expenses,
costs and fees set forth in Article 8 of this Credit Agreement.
---------
Expiration Date shall mean May 21, 2002.
---------------
Federal Funds Rate shall mean, for any period, a fluctuating interest rate
------------------
per annum equal, for each day during such period, to 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
Fees shall mean the Unused Line Fee, the Foreign Exchange Fees, the Letter
----
of Credit Fees, the Acceptance Commissions and the Collateral Management Fee
payable hereunder, and the fees payable for the account of the Agent pursuant to
the letter dated April 29, 1997 between Borrower and Agent (the "Fee Letter").
Filing Assets shall mean all property and assets comprising Collateral
-------------
which constitute Inventory, Accounts, equipment (excluding motor vehicles and
other equipment covered by a certificate of title or similar statute), general
intangibles or chattel paper other than any of the foregoing located outside of
the United States.
Financials shall have the meaning given to it in Section 5.4 hereof.
---------- -----------
Financial Statements shall mean the consolidated and consolidating balance
--------------------
sheets, consolidated and consolidating statements of operations, consolidated
statements of changes in cash flows and consolidated statements of changes in
stockholders' equity of the Borrower and its Consolidated Subsidiaries for the
period specified prepared in accordance with GAAP and consistent with prior
practices.
Foreign Exchange Contract shall mean any contract (other than spot
-------------------------
contracts) between a Foreign Exchange Guarantor and the Borrower requested by
the Borrower and executed pursuant to the terms of Article 4 hereof that
---------
requires payment or delivery of a currency other than U.S. Dollars.
Foreign Exchange Exposure shall mean, with respect to any Foreign Exchange
-------------------------
Contract, an amount equal to the product of (i) the U.S. Dollar equivalent (as
determined by the Agent from time to time) of the foreign currency obligation
under such Foreign Exchange Contract and (ii) a
15
percentage determined by the applicable Foreign Exchange Guarantor, which
percentage shall be the percentage reasonably determined by such Foreign
Exchange Guarantor with respect to the applicable Foreign Exchange Contract.
Foreign Exchange Facing Fees shall have the meaning given to it in Section
---------------------------- -------
8.8 hereof.
---
Foreign Exchange Fees shall mean the fees payable to the Agent for the
---------------------
benefit of the Lenders by the Borrower under and pursuant to Section 8.8 hereof.
-----------
Foreign Exchange Guarantor shall mean Bankers Trust Company or any other
--------------------------
bank or financial institution approved by the Agent in writing to enter into
Foreign Exchange Contracts.
Foreign Exchange Obligations shall mean, at any time, the sum of, without
----------------------------
duplication, (i) the outstanding Foreign Exchange Exposure under Foreign
Exchange Contracts at such time, plus (ii) the aggregate amount of all payments
----
under Foreign Exchange Contracts for which the Foreign Exchange Guarantor is
entitled to be and has not at such time been reimbursed, plus (iii) the
----
aggregate amount of all payments made by each Lender to the Foreign Exchange
Guarantor with respect to the participation in Foreign Exchange Contracts as
provided in Article 4 for which the Borrower is obligated to and has not at such
---------
time reimbursed the Lenders, whether by payment to the Lenders, by way of a
Revolving Loan (as contemplated by Section 4.2 hereof) or otherwise.
-----------
Foreign Lender shall mean any Lender organized under the laws of a
--------------
jurisdiction outside of the United States.
Foreign Subsidiary shall mean any Subsidiary of a Person not incorporated
------------------
in or having material assets or operations in the United States.
Funded Debt shall mean, with respect to any Person, all Debt of such Person
-----------
which by the terms of the agreement governing, or instrument evidencing, such
Debt matures more than one year from, or is directly or indirectly renewable or
extendable at the option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year from, the date of creation thereof, including current
maturities of long-term Debt, revolving credit and short-term Debt extendable
beyond one year at the option of the debtor and, in respect of the Borrower,
including the Loans outstanding hereunder, but excluding Acceptances, Foreign
Exchange Contracts and Letters of Credit.
Funding Bank shall have the meaning given to such term in Section 8.12
------------ ------------
hereof.
GAAP shall mean generally accepted accounting principles in the United
----
States of America, as in effect from time to time.
16
Guarantee by any Person shall mean any obligation, contingent or otherwise,
---------
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided that the term
--------
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
Hazardous Substance shall mean those substances included within the
-------------------
definitions of "hazardous substances", "hazardous materials", "toxic
substances", or "solid waste" under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.,
-- ---
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. (S)(S) 6901 et
--
seq. and the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 1801 et
--- --
seq., and in the regulations promulgated pursuant to said laws, and such other
---
substances, materials and wastes which are or become regulated under applicable
local, state or federal law, or which are classified as hazardous or toxic under
federal, state or local laws or regulations.
Highest Lawful Rate shall mean, at any given time during which any
-------------------
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness under this Credit
Agreement, under the laws of the State of Illinois (or the law of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Credit Agreement and the other Credit Documents), or under
applicable federal laws which may presently or hereafter be in effect and which
allow a higher maximum nonusurious interest rate than under Illinois (or such
other jurisdiction's) law, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Credit Agreement and any other Credit Documents executed in connection herewith,
and any available exemptions, exceptions and exclusions.
Initial Credit Event shall have the meaning given to it in Section 2.1
-------------------- -----------
hereof.
Insurance Proceeds shall mean the proceeds of any insurance or any
------------------
judgments or settlements made in lieu thereof resulting from a casualty with
respect to the Collateral or any part thereof.
Interest Period shall mean for any LIBOR Rate Loan the period commencing on
---------------
the date of such borrowing and ending on the last day of the period selected by
the Borrower pursuant to
17
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, in each case as the Borrower may, in an appropriate
Notice of Borrowing, Notice of Rollover or Notice of Conversion, select;
provided, however, that the Borrower may not select any Interest Period that
-------- -------
ends after the Expiration Date. Whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the last day of such
Interest Period shall be extended to occur on the next succeeding Business Day,
provided, that if such extension would cause the last day of such Interest
-------- ----
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day.
Interim Advances shall have the meaning given to it in Section 3.2 hereof.
---------------- -----------
Interim Advance Period shall have the meaning given to it in Section 3.2
---------------------- -----------
hereof.
Internal Revenue Code shall mean the Internal Revenue Code of 1986, as
---------------------
amended from time to time, and any successor statute thereto and all final or
temporary regulations promulgated thereunder and published, and generally
applicable rulings entitled to precedential effect to the extent such
regulations or rulings by their effective dates are applicable hereto.
Internal Revenue Service shall mean the Internal Revenue Service and any
------------------------
successor agency.
Inventory shall mean all of the Borrower's inventory, including without
---------
limitation: (i) all raw materials, work in process, parts, components,
assemblies, supplies and materials used or consumed in the Borrower's business;
(ii) all goods, wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of service; and
(iii) all goods returned or repossessed by the Borrower.
Investment shall mean any investment in any Person, whether by means of
----------
share purchase, capital contribution, loan, advance, time deposit or otherwise.
Issuing Bank shall mean Bankers Trust Company or any other bank or
------------
financial institution approved by the Agent in writing to issue Letters of
Credit for the account of the Borrower.
Judgment shall have the meaning given to it in Section 10.1(g) hereof.
-------- ---------------
L/C Facing Fee shall have the meaning given to it in Section 8.8 hereof.
-------------- -----------
Leased Real Property shall mean all of the real property leased by the
--------------------
Borrower at any time, including, without limitation, all of the material real
property leased by the Borrower as of the date of this Credit Agreement as set
forth on Schedule D hereto.
18
Leases shall have the meaning given to such term in Section 5.13 hereof.
------ ------------
Lender shall have the meaning provided in the preamble to this Credit
------
Agreement.
Letter of Credit Fees shall mean the fees payable to the Agent for the
---------------------
benefit of the Lenders by the Borrower under and pursuant to Section 8.8 hereof.
-----------
Letter of Credit Obligations shall mean, at any time, the sum of, without
----------------------------
duplication, (i) the aggregate undrawn amount of all Letters of Credit
outstanding at such time, plus (ii) the aggregate amount of all drawings under
----
Letters of Credit for which the Issuing Bank is entitled to be and has not at
such time been reimbursed, plus (iii) the aggregate amount of all payments made
----
by each Lender to the Issuing Bank with respect to its participation in Letters
of Credit as provided in Article 4 for which the Borrower is obligated to and
------- -
have not at such time reimbursed the Lenders, whether by payment to the Lenders,
by way of a Revolving Loan (as contemplated by Section 4.1 hereof) or otherwise.
-----------
Letter of Credit Request shall mean a request for the issuance of a Letter
------------------------
of Credit executed by the Borrower in the form of Exhibit C hereto.
Letters of Credit shall mean all letters of credit (whether commercial or
-----------------
stand-by and whether for the purchase of inventory, equipment or otherwise)
issued by any Issuing Bank for the account of the Borrower in accordance with
Article 4 hereof.
---------
LIBOR Lending Office shall mean, with respect to any Lender, such office or
--------------------
such affiliate of such Lender as such Lender may specify from time to time to
the Borrower and the Agent (or, if no such office is specified, its Domestic
Lending Office).
LIBOR Rate shall mean, with respect to the Interest Period for each LIBOR
----------
Rate Loan comprising part of the same borrowing, an interest rate per annum
equal to the rate (rounded upward to the nearest whole multiple of one-sixteenth
(1/16) of one percent (1%) per annum, if such rate is not such a multiple) of
the offered quotation, if any, to first class banks in the LIBOR market by
Bankers Trust Company for U.S. dollar deposits of amounts in immediately
available funds comparable to the principal amount of the LIBOR Rate Loan for
which the LIBOR Rate is being determined with maturities comparable to the
Interest Period for which such LIBOR Rate will apply as of approximately 10:00
a.m. (New York time) two (2) Business Days prior to the commencement of such
Interest Period.
LIBOR Rate Loan shall mean a Loan that bears interest as provided in
---------------
Section 8.1 hereof.
-----------
LIBOR Rate Margin shall mean the percentage set forth in the schedule
-----------------
below, determined as follows:
19
Prior to the delivery by Borrower of the financial reports with respect to
the fiscal quarter ending September 27, 1997, the LIBOR Rate Margin shall
be two and fifty hundredths percent (2.50%) per annum. Thereafter, if the
ratio of Borrower's EBITDA to Consolidated Interest Expense as at the end
of any fiscal quarter, commencing with the fiscal quarter ending September
27, 1997, measured on the basis of the period consisting of the three (3)
fiscal quarters ending September 27, 1997 and the four (4) fiscal quarters
ending with any subsequent fiscal quarter (the "Measurement Period"), shall
fall within any of the ranges set forth in the schedule below, based on
such financial reports delivered by Borrower to Agent sufficient to Agent's
satisfaction confirming such fact, and so long as no Default or Event of
Default then exists and subject to the additional terms hereof, effective
on the first day of the month (the "Effective Date") immediately following
such confirmation by Agent, the LIBOR Rate Margin for any LIBOR Rate Loan
outstanding at any time during the period of three calendar months
commencing with the Effective Date, shall be the percentage set forth below
opposite the applicable range:
Range of Ratio LIBOR Rate Margin
-------------- -----------------
less than 2.50 to 1 2.50%
2.50 to 1 or greater, but 2.25%
less than 2.75 to 1
2.75 to 1 or greater, but 2.00%
less than 3.0 to 1
3.0 to 1 or greater, but 1.75%
less than 3.25 to 1
3.25 to 1 or greater 1.50%
In the event that Borrower shall receive any Equity Offering Proceeds
during the term hereof, Borrower's Consolidated Interest Expense shall be
calculated on a proforma basis as if such Equity Offering Proceeds were used on
a daily basis from the beginning of such Measurement Period until the date such
Equity Offering Proceeds were received to permanently reduce the Revolving Loans
outstanding on each day thereof in an amount equal to the lesser of such
Revolving Loans then outstanding or such Equity Offering Proceeds.
Notwithstanding the foregoing, (1) any change in the LIBOR Rate Margin to
which Borrower is otherwise entitled to hereunder shall nonetheless be limited
to not more than (a) twenty five hundredths percent (.25%) reduction based on
Borrower's performance hereunder measured as at the end of the first full fiscal
quarter occurring after the date hereof, (b) fifty
20
hundredths percent (.50%) reduction based on Borrower's performance hereunder
measured as at the end of the second full fiscal quarter occurring after the
date hereof, and (c) seventy five hundredths percent (.75%) reduction based on
Borrower's performance hereunder measured as at the end of the third full fiscal
quarter occurring after the date hereof (provided, however, that the limitations
of the preceding subsections (b) and (c) shall not apply if Borrower shall be
entitled to a greater reduction in the LIBOR Rate Margin by reason of the
receipt of Equity Offering Proceeds), and (2) if a Default or Event of Default
shall occur at any time during the term hereof in which Borrower is otherwise
entitled to the benefit of a LIBOR Rate Margin of less than 2.50%, the LIBOR
Rate Margin shall revert to not less than 2.50% during the pendency of any such
Default or Event of Default (subject to the provisions of Section 8.4 hereof).
-----------
Lien shall mean, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind in respect of such asset.
For the purposes of this Credit Agreement, the Borrower or any Subsidiary shall
be deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to such
asset.
Loan Account shall have the meaning given to it in Section 3.7 hereof.
------------ -----------
Loans shall mean the Revolving Loans made from time to time hereunder.
-----
Lockbox Agreements shall have the meaning given to such term in Section 3.6
------------------ -----------
hereof.
Lockbox Bank shall have the meaning given to such term in Section 3.6
------------ -----------
hereof.
Lockboxes shall have the meaning given to such term in Section 3.6 hereof.
--------- -----------
Material Adverse Change shall mean a material adverse change (i) in the
-----------------------
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Borrower and its Consolidated Subsidiaries taken
as a whole, or (ii) in the value of a material portion of the Inventory or
Accounts or in the value of the Collateral taken as a whole or the amount which
the Agent and the Lenders would be likely to receive (after giving consideration
to delays in payment and costs of enforcement) in the liquidation of such
Collateral.
Material Adverse Effect shall mean a material adverse effect on (i) the
-----------------------
business, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of the Borrower and its Consolidated Subsidiaries taken
as a whole, (ii) the value of a material portion of the Inventory or Accounts or
the value of the Collateral taken as a whole or the amount which the Agent and
the Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral, (iii)
the Borrower's ability
21
to perform its obligations under the Credit Documents, or (iv) the rights and
remedies of the Agent or the Lenders hereunder.
Mortgage shall mean, with respect to real property owned by the Borrower,
--------
each mortgage or deed of trust executed and delivered on the date hereof or
hereafter delivered from time to time pursuant to the terms hereof, and with
respect to real property leased by the Borrower, each leasehold mortgage or
leasehold deed of trust, if any, executed and delivered on the date hereof or
hereafter delivered from time to time pursuant to the terms hereof, as any of
the same may be amended, modified, supplemented, extended or renewed from time
to time.
Multiemployer Plan shall mean a "multiemployer plan" as defined in Section
------------------ -------
4001(a)(3) of ERISA and (i) which is, or within the immediately preceding six
----------
(6) years was, contributed to by the Borrower or any ERISA Affiliate or (ii)
with respect to which the Borrower or any ERISA Affiliate may incur any
liability.
Net Cash Proceeds shall mean, with respect to the sale or disposition of
-----------------
any asset, the aggregate amount of cash received by the Borrower (including cash
payments received in respect of deferred payment pursuant to any note or
installment receivable or otherwise and state or federal income tax refunds
attributable to such sale or disposition, but in each case only as and when
received) in respect of such sale or disposition minus (i) all fees,
-----
commissions, expenses and taxes incurred in connection with such sale or
disposition, (ii) the principal amount of Debt of the Borrower which is senior
(in lien priority) to the Debt hereunder and which by its terms is required to
be and is repaid, and (iii) any amount considered appropriate by the Borrower,
in good faith, to provide reserves for payment of indemnities or liabilities
that may be incurred in connection with such sale or disposition. For purposes
of this definition, if taxes or other expenses payable in connection with the
sale or disposition of any asset are not known as of the date of such sale or
disposition, then such fees, commissions, expenses or taxes shall be estimated
by the Borrower, in good faith, and such estimated amounts shall be deducted
therefrom.
Notes shall mean the Revolving Notes.
-----
Notice of Borrowing shall have the meaning given to such term in Section
------------------- -------
3.3 hereof.
---
Notice of Conversion shall have the meaning given to such term in Section
-------------------- -------
8.3 hereof.
---
Notice of Rollover shall have the meaning given to such term in Section 8.3
------------------ -----------
hereof.
Obligations shall mean the Loans, any other loans and advances or
-----------
extensions of credit made or to be made by any Lender to the Borrower, or to
others for the Borrower's account pursuant to the terms and provisions of this
Credit Agreement, together with interest thereon (including interest which would
be payable as post-petition interest in connection with any
22
bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrower on account of Letters of
Credit and Foreign Exchange Contracts (including, without limitation, the Letter
of Credit Obligations and the Foreign Exchange Obligations), any amounts payable
under or in respect of the Acceptances (including, without limitation the
Acceptance Obligations), and any and all indebtedness, liabilities and
obligations which may at any time be owing by the Borrower to any Lender
pursuant to this Credit Agreement or any other Credit Document, whether now in
existence or incurred by the Borrower from time to time hereafter, whether
unsecured or secured by pledge, Lien upon or security interest in any of the
Borrower's assets or property or the assets or property of any other Person,
whether such indebtedness is absolute or contingent, joint or several, matured
or unmatured, direct or indirect and whether the Borrower is liable to such
Lender for such indebtedness as principal, surety, endorser, guarantor or
otherwise. Obligations shall also include any other indebtedness owing to any
Lender by the Borrower under this Credit Agreement, the Credit Documents, the
Borrower's liability to any Lender pursuant to this Credit Agreement as maker or
endorser of any promissory note or other instrument for the payment of money,
the Borrower's liability to any Lender pursuant to this Credit Agreement or any
other Credit Document under any instrument of guaranty or indemnity, or arising
under any guaranty, endorsement or undertaking which any Lender may make or
issue to others for the Borrower's account pursuant to this Credit Agreement or
any other Credit Document, including any accommodation extended with respect to
applications for Letters of Credit, or any Lender's acceptance of drafts or
endorsement of notes or other instruments for the Borrower's account and
benefit.
OSHA shall mean the Occupational Safety and Health Act, as amended from
----
time to time, and any successor statute thereto and all final or temporary
regulations promulgated thereunder, and all published, generally applicable
rulings entitled to precedential effect.
Other Taxes shall have the meaning given to such term in Section 3.10
------------ ------------
hereof.
Owned Real Property shall mean the real property owned by the Borrower at
-------------------
any time, including, without limitation, all of the material real property owned
by the Borrower as of the date of this Credit Agreement as set forth on Schedule
D hereto.
Patent Security Agreements shall mean, collectively, the Patent Security
--------------------------
Agreements executed by the Borrower in favor of the Agent in the form attached
hereto as Exhibit D.
PBGC shall mean the Pension Benefit Guaranty Corporation and any Person
----
succeeding to the functions thereof.
Permitted Discretion shall mean the Agent's judgment exercised in good
--------------------
faith and not in an irrational manner based upon its consideration of any factor
which the Agent believes in good faith could affect the value of any Inventory
or Accounts or the amount which the Agent and the
23
Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral. In
exercising such judgment, the Agent may consider such factors which are already
included in or tested by the definition of Eligible Accounts Receivable,
Eligible Inventory, or Eligible Retail Inventory, as well as any of the
following: (i) changes in collection history and dilution with respect to the
Accounts, (ii) changes in levels of backlog of firm purchase orders and demand
for, and pricing of, Inventory, (iii) changes in any concentration of risk with
respect to Accounts and Inventory, and (iv) any other factors that change the
credit risk of lending to the Borrower on the security of the Accounts and
Inventory.
Permitted Investments shall mean (i) Cash Equivalents, (ii) interest-
---------------------
bearing demand or time deposits (including certificates of deposit) which are
insured by the Federal Deposit Insurance Corporation ("FDIC") or a similar
federal insurance program; provided, however, that the Borrower may, in the
-------- -------
ordinary course of its business, maintain in the Loan Disbursement Account from
time to time amounts in excess of then applicable FDIC or other program
insurance limits, (iii) securities distributed in connection with the
confirmation of a plan of reorganization following the bankruptcy of any Person
indebted to the distributee at the time such bankruptcy is filed, (iv) any
reinvestment of dividends paid by a Foreign Subsidiary or a foreign Affiliate in
such Foreign Subsidiary or such foreign Affiliate and (v) such other investments
as the Agent may approve in its sole discretion.
Permitted Liens shall mean, without duplication:
---------------
(a) Liens for taxes, assessments, governmental charges or levies not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Borrower or the appropriate Subsidiary, as the case may be, in
accordance with GAAP;
(b) statutory Liens of landlords and carriers', or other
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 and
by appropriate proceedings in a manner which will not jeopardize or
diminish the interest of the Lenders or the Agent in any of the Collateral
subject to the Ancillary Documents or interfere with the ordinary conduct
of the business of the Borrower or any Subsidiary;
(c) pledges or deposits and Liens (other than any Lien imposed by
ERISA) under bonds required in connection with workers compensation,
unemployment insurance and other social security legislation;
(d) Liens (other than any Lien imposed by ERISA or by Environmental
Laws) incurred on deposits to secure the performance of tenders, bids,
trade contracts (other than
24
for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance and return-of-money 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 do not
substantially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(f) Liens affecting assets existing at the time such assets are
acquired provided that such Liens are not created in contemplation of such
-------- ----
acquisition;
(g) Liens affecting the assets of any of the Borrower's Subsidiaries
at the time such Subsidiaries are acquired provided such Liens are not
created in contemplation of such acquisition; and
(h) Liens affecting the assets of any Foreign Subsidiary.
Person shall mean any individual, sole proprietorship, partnership, joint
------
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and, as applicable, the successors, heirs and assigns of
each.
Plan shall mean any "employee benefit plan" as defined in Section 3(3) of
----
ERISA, maintained or contributed to by the Borrower or with respect to which the
Borrower may incur liability.
Pledge Agreement shall mean, collectively, the Pledge Agreements executed
----------------
by the Borrower in favor of the Agent, in the form attached hereto as Exhibit E.
Prime Lending Rate shall mean the rate which Bankers Trust Company
------------------
announces from time to time as its prime lending rate, as in effect from time to
time. The Prime Lending Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. Bankers
Trust Company may make commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
Prime Rate Loan shall mean a Loan that bears interest as provided in
---------------
Section 8.2 hereof.
-----------
Proportionate Share shall mean, with respect to any Lender, a fraction
-------------------
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Revolving Credit Commitment and the denominator of which shall be the
Total Revolving Loan Commitments.
25
Proprietary Rights shall have the meaning given to such term in Section
------------------ -------
5.13 hereof.
----
Proprietary Rights Collateral Documents shall mean the Trademark Security
---------------------------------------
Agreements and the Patent Security Agreements.
Real Estate shall mean, collectively, the Owned Real Property and the
-----------
Leased Real Property.
Register shall have the meaning given to it in Section 13.6(e) hereof.
-------- ---------------
Regulation G shall mean Regulation G of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
Regulation U shall mean Regulation U of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
Regulation X shall mean Regulation X of the Board of Governors of the
------------
Federal Reserve System, as in effect from time to time.
Rentals of any Person shall mean at any date, without duplication, (i) all
-------
obligations of such Person under any lease (excluding any Capital Lease) having,
as of such date, an unexpired term (including any renewals at the option of the
lessor) of one year or more, plus (ii) all Rentals of others Guaranteed by, or
----
secured by a Lien on any asset of, such Person.
Reportable Event shall mean any of the events described in Section 4043 of
---------------- ------------
ERISA and the regulations thereunder.
Required Lenders shall mean, at any time, subject to the provisions set
----------------
forth in Section 13.11 hereof, Lenders holding more than fifty percent (50%) of
-------------
the then aggregate unpaid principal amount of the Revolving Notes or, if no such
principal amount is then outstanding, Lenders having more than fifty percent
(50%) of the Total Commitments.
Retiree Health Plan shall mean an "employee welfare benefit plan" within
-------------------
the meaning of Section 3(1) of ERISA that provides health care benefits to
persons after termination of employment, other than as required by Section 601
of ERISA.
Revolving Credit Commitment of any Lender shall mean the amount set forth
---------------------------
opposite such Lender's name on Annex I hereto, as such annex may be amended from
time to time, under the heading Revolving Credit Commitment, as such amount may
be reduced from time to time pursuant to the terms of this Credit Agreement.
26
Revolving Loans shall have the meaning given to such term in Section 3.2
--------------- -----------
hereof, which Loan may be a LIBOR Rate Loan or a Prime Rate Loan.
Revolving Note shall mean a promissory note of the Borrower payable to the
--------------
order of any Lender, in the form of Exhibit F hereto, evidencing the aggregate
indebtedness of the Borrower to such Lender resulting from the Revolving Loans
made by such Lender (including any Revolving Loans made pursuant to Section 4.1
-----------
hereof to reimburse any Issuing Bank for drawings under any Letter of Credit,
Revolving Loans made pursuant to Section 4.2 hereof to reimburse a Foreign
-----------
Exchange Guarantor for payments under any Foreign Exchange Contract, and
Revolving Loans made pursuant to Section 4.2.1 hereof to repay an Accepting Bank
-------------
with respect to any Acceptance) or acquired by such Lender from another Lender
pursuant to Section 13.6 hereof.
------------
Rollover shall have the meaning given to such term in Section 8.3 hereof.
-------- -----------
Royalty Income shall mean the amount of royalty income earned by Borrower,
--------------
determined in accordance with GAAP, as reflected on Borrower's monthly income
statements, paid to Borrower by licensees of certain of Borrower's registered
trademarks, pursuant to license agreements between Borrower and such licensees,
and which agreements shall be assigned to Agent pursuant to the Trademark
Security Agreement.
Security Agreement shall mean the Security Agreement between the Agent and
------------------
the Borrower, in the form attached hereto as Exhibit G.
Settlement Period shall have the meaning given to such term in Section 3.4
----------------- -----------
hereof.
Structures shall mean all plants, offices, manufacturing facilities,
----------
warehouses, administration buildings and related facilities of the Borrower
located at the Owned Real Property.
Subordinated Note Indenture shall mean that certain Indenture dated May 21,
---------------------------
1997 by and between Borrower and First Union National Bank, as trustee,
governing the issuance of the Subordinated Notes, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
Subordinated Notes shall mean those certain 7% Convertible, Subordinated
------------------
Notes in the aggregate principal amount of not less than $60,000,000, due June
1, 2004, issued by Borrower pursuant to the Subordinated Note Indenture.
Subsidiary shall mean, with respect 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 persons performing similar
27
functions are at the time, directly or indirectly through one or more
intermediaries, or both, owned or controlled, by such Person. Unless otherwise
expressly indicated to the contrary herein, all references to a "Subsidiary" or
to "Subsidiaries" in this Credit Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
Taxes shall mean any federal, state, local or foreign income, sales, use,
-----
transfer, payroll, property, occupancy, franchise or other tax, levy, impost,
fee, imposition, assessment or similar charge, together with any interest
thereon.
Termination Event shall mean (i) a Reportable Event with respect to any
-----------------
Benefit Plan or Multiemployer Plan which is likely to constitute grounds for
termination of such Benefit Plan or Multiemployer Plan; (ii) the withdrawal
(within the meaning of Section 4063 of ERISA) of the Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which such entity was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan; (v) any
event or condition (a) described in Section 4042(a) of ERISA and which could
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (b) described in Section 4041A(a) of ERISA and that
could reasonably be expected to result in termination of a Multiemployer Plan
pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any
ERISA Affiliate from a Multiemployer Plan.
Total Commitments shall mean the aggregate of the Revolving Credit
-----------------
Commitments of all Lenders from time to time.
Trademark Security Agreements shall mean, collectively, each of the
-----------------------------
Trademark Security Agreements executed by the Borrower in favor of the Agent in
the form attached hereto as Exhibit H.
Type shall mean, with respect to any Loan, whether such Loan is a LIBOR
----
Rate Loan or a Prime Rate Loan.
Unrestricted Debt Proceeds shall mean the sum of (i) that portion of the
--------------------------
proceeds of any Debt permitted pursuant to Section 7.1(v) hereof, and (ii) that
--------------
portion of the proceeds of any Additional Permitted Debt, each which are not
required to be applied to the repayment of the Loans pursuant to Section 3.5
-----------
hereof.
Unrestricted Equity Proceeds shall mean that portion of Equity Offering
----------------------------
Proceeds which are not required to be applied to the repayment of the Loans
pursuant to Section 3.5 hereof. Upon
-----------
28
final determination of all discounts, commissions, fees, expenses and taxes paid
or payable in connection with any transaction giving rise to any Unrestricted
Equity Proceeds, to the extent such discounts, commissions, fees, expenses and
taxes shall exceed the amounts estimated by the Borrower in good faith in
connection with such transaction, the amount of Unrestricted Equity Proceeds
shall be reduced by such excess.
Unrestricted Proceeds shall mean the sum of (i) Unrestricted Debt Proceeds
---------------------
and (ii) Unrestricted Equity Proceeds.
Unused Line Fee shall mean that fee payable by the Borrower to the Agent
---------------
for the Account of the Lenders pursuant to Section 8.7 hereof.
-----------
Voting Stock shall mean stock of the Borrower of the class or classes
------------
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors of the Borrower (irrespective of whether or
not at the time stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
1.2 Accounting Terms and Determinations. Unless otherwise defined or
-----------------------------------
specified herein, all accounting terms shall be construed herein and all
accounting determinations for purposes of determining compliance with Sections
--------
7.6, 7.7, and 7.11 hereof and otherwise to be made under this Credit Agreement
--- --- ----
shall be made in accordance with GAAP, applied on a basis consistent with the
most recent audited consolidated financial statements of the Borrower and its
Consolidated Subsidiaries for the fiscal year ended December 28, 1996. All
Financial Statements required to be delivered hereunder from and after the
Closing Date and all financial records shall be maintained in accordance with
GAAP. The parties hereto agree, however, that in the event that any change in
accounting principles from those used in the preparation of the most recent
audited financial statements of the Borrower and its Consolidated Subsidiaries
for the fiscal year ended December 28, 1996 is hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or Accounting Principles Board of
the American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and results in any change in the method of
calculation of financial covenants, standards or terms found in this Credit
Agreement, such financial covenants, standards or terms (other than in respect
of Financial Statements to be delivered hereunder) shall be computed without
giving effect to such change in accounting principles, and the certificates
required to be delivered pursuant to Section 6.1 hereof demonstrating compliance
-----------
with the covenants contained herein shall include calculations setting forth the
adjustments necessary to demonstrate how the Borrower is in compliance with the
financial covenants without giving effect to such change in accounting
principles. If the Borrower shall change its method of inventory accounting
from the first-in-first-out method to the last-in-first-out method, all
calculations necessary to determine compliance with the covenants contained
herein shall be made as if such method of inventory accounting had not been so
changed.
29
1.3 Other Definitional Terms. Terms not otherwise defined herein which
------------------------
are defined in the Uniform Commercial Code as in effect in the State of Illinois
(the "Code") shall have the meanings given them in the Code. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Credit Agreement shall refer to this Credit Agreement as a whole and not to any
particular provision of this Credit Agreement, and references to Article,
Section, Annex, Schedule, Exhibit and like references are references to this
Credit Agreement unless otherwise specified.
ARTICLE 2
---------
Conditions Precedent
--------------------
2.1 Initial Loans. The obligation of the Lenders to make the initial
-------------
Loans, or, if earlier, to cause the initial issuance of Letters of Credit
hereunder or the execution of a Foreign Exchange Contract hereunder (the first
one to occur being hereinafter referred to as the "Initial Credit Event") is
subject to the satisfaction of, or waiver of, immediately prior to or
concurrently with the making of such Loans or such issuance, the following
conditions precedent:
(a) Not less than $60,000,000 in gross proceeds shall be generated by
Borrower's issuance of its Subordinated Notes and the Agent shall have
received copies of the Subordinated Note Indenture, and any and all
agreements, registration statements and opinions executed and delivered or
filed in connection therewith.
(b) Borrower shall have demonstrated to the satisfaction of Agent that
Borrower has in place accounts receivable and inventory financing
facilities for its Foreign Subsidiaries and foreign factory support in
amounts and subject to such terms as are acceptable to Agent in its sole
discretion;
(c) The Initial Credit Event shall have occurred on or before June 30,
1997.
(d) The Lenders shall have received (i) on or prior to the Closing
Date each of the documents and certificates set forth in Section I of the
Closing Documents List and (ii) on or prior to the Initial Credit Event
each of the documents and certificates set forth in Section II of the
Closing Documents List.
(e) The Lenders shall have received on the Closing Date the opinions
of counsel to the Borrower reasonably satisfactory to the Agent, dated the
Closing Date in substantially the form of Exhibit I.
30
(f) The Agent and the Lenders shall have received payment in full of
the Fees (as applicable), the Expenses and all other fees and expenses (or
an irrevocable authorization to pay such fees out of the proceeds of the
Loans) referred to in Article 8 hereof which are payable to them on or
---------
before the date of the Initial Credit Event.
(g) The Borrower shall have executed and delivered to the Agent all
documents which the Agent determines are reasonably necessary to consummate
the lending arrangements contemplated hereby.
2.2 All Loans. On the date of the making of any Loan, the issuance of any
---------
Letter of Credit, the execution of any Foreign Exchange Contract, or the
creation of any Acceptance (including the Initial Credit Event), both before and
after giving effect thereto and to the application of the proceeds therefrom,
the following statements shall be true to the satisfaction of the Agent (and
each request for borrowing under the Revolving Loan, request for a Letter of
Credit, request for a Foreign Exchange Contract, and request for an Acceptance
and the acceptance by the Borrower of the proceeds of such Loan, the issuance of
such Letter of Credit, the execution of such Foreign Exchange Contract, or the
creation of an Acceptance shall constitute a representation and warranty by the
Borrower that on the date of such Loan, such issuance of such Letter of Credit,
such execution of such Foreign Exchange Contract, or such creation of such
Acceptance before and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true):
(a) the representations and warranties contained in this Credit
Agreement and the other Credit Documents are true and correct in all
material respects on and as of the date of such Loan, such issuance of such
Letter of Credit, such execution of such Foreign Exchange Contract, or such
creation of such Acceptance as though made on and as of such date, except
to the extent that such representations expressly relate solely to an
earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);
(b) no event, condition or default has occurred and is continuing, or
would result from such Loan, the issuance of any Letter of Credit, the
execution of any Foreign Exchange Contract or the creation of such
Acceptance or the application of the proceeds thereof, which would
constitute a Default or an Event of Default under this Credit Agreement;
and
(c) no Material Adverse Change, or event or development which could
reasonably be expected to have a Material Adverse Effect shall have
occurred.
31
ARTICLE 3
---------
The Loans
---------
3.1 Commitment and Delivery of Revolving Notes. On the terms and
------------------------------------------
conditions set forth in this Credit Agreement, each of the Lenders severally
agrees to lend to the Borrower, at any time or from time to time on or after the
Closing Date and before the Expiration Date, such Lender's Proportionate Share
of the Revolving Loans as may be requested by the Borrower. The Borrower hereby
agrees to execute and deliver to each of the Lenders a Revolving Note to
evidence the maximum Revolving Loan which may be extended to the Borrower by
such Lender. The actual principal amount outstanding under the Revolving Notes
at any time shall equal and be determined in accordance with the then
outstanding principal balance of the Revolving Loans as set forth in the Loan
Account of the Borrower.
3.1.2 INTENTIONALLY OMITTED.
3.2 Determination of Borrowing Base.
-------------------------------
(a) The Lenders severally agree, subject to the terms and conditions
of this Credit Agreement, from time to time, to make revolving loans and
advances to the Borrower. Such loans and advances to the Borrower (each a
"Revolving Loan" and collectively the "Revolving Loans") shall not in the
aggregate exceed the lesser of (i) the Total Commitments then in effect,
minus the aggregate Letter of Credit Obligations, minus the aggregate
----- -----
Foreign Exchange Obligations, minus the aggregate Acceptance Obligations,
-----
and (ii) an amount equal to the Borrowing Base, minus the aggregate Letter
-----
of Credit Obligations, minus the aggregate Foreign Exchange Obligations,
-----
minus the aggregate Acceptance Obligations. The Agent at any time shall be
-----
entitled to establish reserves against the Eligible Accounts Receivable,
the Eligible Inventory and the Eligible Retail Inventory of the Borrower in
the exercise of its Permitted Discretion to reflect the Agent's assessment
of the performance of the Collateral and general credit considerations then
affecting the Borrower.
(b) No Lender shall be obligated at any time to make available to
the Borrower its Proportionate Share of any requested Revolving Loan if
such amount plus its Proportionate Share of all Revolving Loans, its
----
Proportionate Share of all Letter of Credit Obligations, its Proportionate
Share of all Foreign Exchange Obligations and its Proportionate Share of
all Acceptance Obligations then outstanding would exceed such Lender's
Revolving Credit Commitment at such time. The aggregate balance of
Revolving Loans outstanding, plus the aggregate amount of all Letter of
----
Credit Obligations outstanding, plus the aggregate amount of all Foreign
----
Exchange Obligations, plus the aggregate amount of all Acceptance
----
Obligations shall not at any time exceed the lesser of
32
(i) the Borrowing Base and (ii) the Total Commitments. No Lender shall be
obligated to make available, nor shall the Agent make available, any
Revolving Loans to the Borrower to the extent such Revolving Loan when
added to the then outstanding Revolving Loans, all Letter of Credit
Obligations of the Borrower, all Foreign Exchange Obligations of the
Borrower and all Acceptance Obligations of the Borrower would cause the
aggregate outstanding Revolving Loans, all Letter of Credit Obligations of
the Borrower, all Foreign Exchange Obligations of the Borrower and all
Acceptance Obligations of the Borrower to exceed the lesser of the (i)
Borrowing Base and (ii) the Total Commitments. The Borrower shall promptly
repay to the Lenders from time to time the full amount of the excess, if
any, of (i) the amount of all Revolving Loans, Letter of Credit Obligations
outstanding, Foreign Exchange Obligations outstanding and Acceptance
Obligations outstanding over (ii) the lesser of (A) the Total Commitments
and (B) the Borrowing Base.
(c) Notwithstanding the provisions of subsection (b) above to the
contrary, in the event the Borrower is unable to comply with (i) the
Borrowing Base limitations set forth in Section 3.2(a) or (ii) the
conditions precedent to the making of a Loan, the issuance of a Letter of
Credit or the execution of a Foreign Exchange Contract set forth in Section
2.1, the Lenders authorize the Agent in its sole discretion, to make
advances ("Interim Advances") to the Borrower for a period commencing on
the date Agent first receives a Notice of Borrowing requesting an Interim
Advance until the earlier of (i) the seventh (7th) Business Day after such
date, (ii) the date the Borrower is again able to comply with the Borrowing
Base limitations and the conditions precedent set forth in Section 2.1, or
obtains an amendment or waiver with respect thereto, or (iii) the date the
Required Lenders instruct the Agent to cease making Interim Advances (in
each case, the "Interim Advance Period"). The Agent shall not, in any
event, make any Interim Advance if at such time the aggregate amount of all
such Interim Advances outstanding would exceed $5,000,000. An Interim
Advance shall cease to be an Interim Advance if the unsatisfied conditions
or events which cause such advance to be an Interim Advance shall
thereafter be satisfied.
3.3 Borrowings; Notices of Borrowings.
---------------------------------
(a) Each Revolving Loan of each Lender shall be made pursuant to a
single borrowing which borrowing shall, unless otherwise specifically
provided herein, consist entirely of Loans of the same Type; provided,
--------
however, that the Borrower may, at its option, request more than one
-------
borrowing of a Revolving Loan on a single day; and provided, further, that
-------- -------
the right of the Borrower to choose LIBOR Rate Loans is subject to the
provisions of Section 8.3(c) hereof.
--------------
(b) Each request for borrowings hereunder shall be made on notice in
the form attached hereto as Exhibit J from the Borrower to the Agent (the
"Notice of Borrowing"),
33
given not later than 12:00 p.m. (Chicago time) on the Business Day on which
the proposed borrowing consisting of Prime Rate Loans is requested to be
made and on the third Business Day prior to the date of any proposed
borrowing consisting of LIBOR Rate Loans is requested to be made. Each
Notice of Borrowing shall be given by either telephone, telecopy, telex, or
cable, and, if requested by the Agent, confirmed in writing if by
telephone, specifying (i) the requested date of such borrowing, (ii) the
Type of Loans comprising such borrowing, (iii) the aggregate amount of such
requested borrowing and (iv) in the case of a borrowing consisting of LIBOR
Rate Loans, the Interest Period for each Loan comprising such borrowing,
all of which shall be specified in such manner as is necessary to comply
with all limitations on Revolving Loans outstanding hereunder (including,
without limitation, availability under the Borrowing Base). Each Notice of
Borrowing shall be irrevocable by and binding on the Borrower. Unless the
provisions of Section 3.4 hereof are applicable, the Agent shall give to
-----------
each Lender prompt notice of each Notice of Borrowing by telecopy, telex or
cable. Unless the provisions of Section 3.4 hereof are applicable, no later
-----------
than 2:00 p.m. (Chicago time) on the date of borrowing specified in each
Notice of Borrowing (unless such Notice of Borrowing specifies the Closing
Date as the date of any such borrowing, in which case no later than 12:00
p.m. (Chicago time) on the Closing Date), each Lender will make available
for the account of its Applicable Lending Office to the Agent at the
address of the Agent set forth on Annex I hereto, in immediately available
funds, its Proportionate Share of such borrowing requested to be made.
Unless the Agent shall have been notified by any Lender prior to the date
of borrowing that such Lender does not intend to make available to the
Agent its portion of the borrowing to be made on such date, the Agent may
assume that such Lender will make such amount available to the Agent at
such time or at the end of the Settlement Period (as defined below) to the
extent that the provisions of Section 3.4 hereof are applicable and the
-----------
Agent may, in reliance upon such assumption, make available the amount of
the borrowing to be provided by such Lender. Upon fulfillment of the
conditions set forth in Article 2 hereof for such borrowing, the Agent will
---------
make such funds available to the Borrower by depositing such funds into the
Loan Disbursement Account.
3.4 Alternate Periodic Settlements Among Lenders.
--------------------------------------------
(a) In order to administer the Prime Rate Loans in an efficient manner
and to minimize the transfer of funds between the Agent and the Lenders,
the Lenders hereby instruct the Agent, and the Agent may (but is not
obligated to) (i) make available, on behalf of the Lenders, the full amount
of all Prime Rate Loans requested by the Borrower without giving each
Lender prior notice of the proposed borrowing, of such Lender's
Proportionate Share thereof or the other matters covered by the Notice of
Borrowing and without requiring that the Borrower give the Agent a written
Notice of Borrowing prior to such borrowing, and (ii) if the Agent has made
any such amounts available as provided in clause (i), upon repayment of
Prime Rate Loans by the Borrower, apply such amounts
34
repaid directly to the amounts made available by the Agent in accordance
with clause (i) and not yet settled as described below; provided that the
--------
Agent shall not advance funds as described in clause (i) above if the Agent
has actually received prior to such borrowing (x) an officers' certificate
from the Borrower pursuant to and in accordance with Section 6.1 that a
-----------
Default or Event of Default is in existence or (y) a Notice of Borrowing
from the Borrower wherein the certification provided therein states that
the conditions to the making of the requested Loans have not been satisfied
(which certification shall be given in the event such conditions are not
satisfied) or (z) a written notice from any Lender that the conditions to
such borrowing have not been satisfied, which officers' certificate, Notice
of Borrowing or notice, in each case, shall not have been rescinded. If the
Agent advances Prime Rate Loans on behalf of the Lenders, as provided in
the immediately preceding sentence, the amount of each Lender's
Proportionate Share of Prime Rate Loans shall be computed weekly rather
than daily and shall be adjusted upward or downward on the basis of the
amount of outstanding Prime Rate Loans as of 4:00 p.m. (Chicago time) on
the Business Day immediately preceding the date of each computation;
provided, however, that the Agent retains the absolute right at any time or
-------- -------
from time to time to make the aforedescribed adjustments at intervals more
frequent than weekly. The Agent shall deliver to each of the Lenders after
the end of each week, or such lesser period or periods as the Agent shall
determine, a summary statement of the amount of outstanding Prime Rate
Loans for such period (such week or lesser period or periods being
hereafter referred to as a "Settlement Period"). If the summary statement
is sent by the Agent and received by the Lenders prior to 11:00 a.m.
(Chicago time) each Lender shall make the transfers described in the next
succeeding sentence no later than 2:00 p.m. (Chicago time) on the day such
summary statement was sent; and if such summary statement is sent by the
Agent and received by the Lenders after 11:00 a.m. (Chicago time), each
Lender shall make such transfers no later than 2:00 p.m. (Chicago time) on
the next succeeding Business Day. If in any Settlement Period, the amount
of a Lender's Proportionate Share of the Prime Rate Loans is more than such
Lender's Proportionate Share of the Prime Rate Loans for the previous
Settlement Period, such Lender shall forthwith (but in no event later than
the time set forth in the next preceding sentence) transfer to the Agent by
wire transfer in immediately available funds the amount of the increase;
and, on the other hand, if the amount of a Lender's Proportionate Share of
the Prime Rate Loans in any Settlement Period is less than the amount of
such Lender's Proportionate Share of Prime Rate Loans for the previous
Settlement Period, the Agent shall forthwith (but in no event later than
the time set forth in the next preceding sentence) transfer to such Lender
by wire transfer in immediately available funds the amount of the decrease.
The obligation of each of the Lenders to transfer such funds shall be
irrevocable and unconditional and without recourse to or warranty by the
Agent. Each of the Agent and the Lenders agree to xxxx their respective
books and records at the end of each Settlement Period to show at all times
the dollar amount of their respective Proportionate Shares of the
outstanding Prime Rate Loans. Because the Agent on behalf of the Lenders
may be advancing and/or may be
35
repaid Prime Rate Loans prior to the time when the Lenders will actually
advance and/or be repaid Prime Rate Loans, interest with respect to Prime
Rate Loans shall be allocated by the Agent to each Lender (including the
Agent) in accordance with the amount of Prime Rate Loans actually advanced
by and repaid to each Lender (including the Agent) during each Settlement
Period and shall accrue from and including the date such Loans are advanced
by the Agent to but excluding the date such Loans are repaid by the
Borrower in accordance with Section 3.5 hereof or, if later, actually
-----------
settled by the applicable Lender as described in this Section 3.4.
-----------
(b) If the amounts described in Section 3.3 hereof or this Section 3.4
----------- -----------
are not in fact made available to the Agent by a Lender (such Lender being
hereinafter referred to as a "Defaulting Lender") and the Agent has made
such amount available to the Borrower, the Agent shall be entitled to
recover such corresponding amount on demand from such Defaulting Lender.
If such Defaulting Lender does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent shall promptly notify the
Borrower and the Borrower shall immediately (but in no event later than
five Business Days after such demand) pay such corresponding amount to the
Agent. The Agent shall also be entitled to recover from such Defaulting
Lender and the Borrower, (x) interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to either (i)
if paid by such Defaulting Lender, the overnight Federal Funds Rate or (ii)
if paid by the Borrower, the then applicable rate of interest, calculated
in accordance with Section 8.1 or Section 8.2 hereof, plus (y) in each
----------- ----------- ----
case, an amount equal to any costs (including legal expenses) and losses
incurred as a result of the failure of such Defaulting Lender to provide
such amount as provided in this Credit Agreement. Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its commitments
hereunder or to prejudice any rights which the Borrower may have against
any Lender as a result of any default by such Lender hereunder, including,
without limitation, the right of the Borrower to seek reimbursement from
any Defaulting Lender for any amounts paid by the Borrower under clause (y)
above on account of such Defaulting Lender's default.
(c) The failure of any Lender to make the Revolving Loan to be made by
it as part of any borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Revolving Loan on the date of
such borrowing, but no Lender shall be responsible for the failure of any
other Lender to make the Loan to be made by such other Lender on the date
of any borrowing.
(d) The Revolving Loans made by each Lender shall be evidenced by
Revolving Notes with appropriate insertions as to the date and principal
amount, payable to the order of each Lender.
36
(e) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with Article 8
---------
hereof, on outstanding Revolving Loans which it has funded to the Agent.
(f) Notwithstanding the obligation of the Borrower to send written
confirmation of a Notice of Borrowing made by telephone if and when
requested by the Agent, in the event that the Agent agrees to accept a
Notice of Borrowing made by telephone, such telephonic Notice of Borrowing
shall be binding on the Borrower whether or not written confirmation is
sent by the Borrower or requested by the Agent. The Agent may act prior to
the receipt of any requested written confirmation, without any liability
whatsoever, based upon telephonic notice believed by the Agent in good
faith to be from the Borrower or its agents. The Agent's records of the
terms of any telephonic Notices of Borrowing shall be conclusive on the
Borrower in the absence of gross negligence or willful misconduct on the
part of the Agent in connection therewith.
3.5 Mandatory Payment; Voluntary Reductions of Commitments.
------------------------------------------------------
(a) The aggregate balance of Revolving Loans, plus all Letter of
----
Credit Obligations outstanding, plus all Foreign Exchange Obligations, plus
---- ----
all Acceptance Obligations at any time in excess of the lesser of (i) the
Borrowing Base and (ii) the Total Commitments shall be immediately due and
payable without the necessity of any demand.
(b) On the Expiration Date, the Revolving Credit Commitment of each
Lender shall automatically reduce to zero and may not be reinstated.
(c) If the Borrower shall make any Asset Disposition, Borrower shall
make a prepayment of the Revolving Loans in an amount equal to the lesser
of (A) such Revolving Loans then outstanding, and (B) the Net Cash Proceeds
received in connection therewith.
Any such prepayments of Revolving Loans required to be made under this
subsection (c) shall not constitute a permanent reduction of the Total
Commitments; but shall, to the extent set forth in the definition of the term
Borrowing Base, constitute a permanent reduction of the amount available to
Borrower pursuant to subsection (D) of the defined term Borrowing Base.
(d) (i) If the Borrower shall receive any Equity Offering
Proceeds, the Borrower shall make a prepayment of the
Revolving Loans in an amount equal to the lesser of (1)
the Revolving Loans then outstanding, and (2)(y) twenty-
five percent (25%) of such Equity Offering Proceeds if
received from the issuance of common stock (or warrants or
options to acquire the same), and (z) fifty percent (50%)
of such Equity Offering Proceeds if received from the
37
issuance of preferred stock (or warrants or options to
acquire the same).
(ii) If the Borrower shall receive proceeds from any Debt
permitted by Section 7.1(v) hereof, the Borrower shall
make a prepayment of the Revolving Loans then outstanding
in an amount equal to the lesser of (1) the Revolving
Loans then outstanding, and (2) the net amount of such
proceeds after deduction for fees, taxes, costs and
expenses reasonably incurred in connection therewith.
(iii) If the Borrower shall receive proceeds from any Additional
Permitted Debt (other than purchase money financing or
Capital Leases), the Borrower shall make a prepayment of
the Revolving Loans in an amount equal to the lesser of
(1) the Revolving Loans then outstanding, and (2) seventy-
five percent (75%) of the net amount of such proceeds
after deduction for fees, taxes, costs and expenses
reasonably incurred in connection therewith.
Any such prepayments of Revolving Loans required to be made under this
subsection (d) shall not constitute a permanent reduction of the Total
Commitments, but any such payments required to be made pursuant to subsection
(d)(ii) shall, to the extent set forth in the definition of the term Borrowing
Base, constitute a permanent reduction of the amount available to Borrower
pursuant to subsection (D) of the defined term Borrowing Base.
(e) The Borrower may reduce or terminate the Total Commitments at any
time and from time to time in whole or in part without premium or penalty;
provided, however, that the minimum amount and increments of any such
-------- -------
reduction shall be equal to $1,000,000 and provided further that once
reduced the amount of any such reductions in the Total Commitments may not
be reinstated.
3.6 Payments and Computations.
-------------------------
(a) The Borrower shall make each payment hereunder and under the Notes
not later than 12:00 noon (Chicago time) on the day when due. Unless
otherwise agreed to in writing, all payments which the Borrower is required
to make hereunder or under any other Credit Document shall be added to the
outstanding amount of Revolving Loans. Payments made directly by the
Borrower shall be in U.S. Dollars to the Agent at its address referred to
in Section 13.5 hereof in immediately available funds. Not later than one
------------
Business Day after such payment has been made, the Agent will cause to be
distributed like funds relating to the payment of principal, interest, or
Fees (other than amounts payable to the Agent to reimburse the Agent, the
Issuing Bank, the Foreign Exchange
38
Guarantor and the Accepting Bank for Expenses and other fees and expenses
payable solely to them pursuant to Article 8 hereof) ratably to the
---------
Lenders, and like funds relating to the payment of any other amount payable
to such Lender, in each case to be distributed and applied in accordance
with the terms of this Section 3.6. The Borrower's obligations to the
-----------
Lenders with respect to such payments shall be discharged by making such
payments to the Agent pursuant to this Section 3.6 or if not timely paid,
-----------
may be added to the principal amount of the Revolving Loans outstanding.
(b)(i)
From and after the Closing Date the Borrower shall have
established and maintain lockboxes (the "Lockboxes") and
depositary accounts, and shall instruct all account debtors
on the Accounts (other than present or future account
debtors located in Canada with respect to Accounts arising
from Borrower's Canadian operations as currently conducted)
to remit all payments to its Lockboxes or shall deposit all
receipts into its depositary accounts. All receipts held in
the Lockboxes at the end of each day and all other amounts
received by the Borrower from any account debtor (other than
present or future account debtors located in Canada with
respect to Accounts arising from Borrower's Canadian
operations as currently conducted), in addition to all other
cash received from any other source, including, without
limitation, Asset Dispositions, upon receipt, shall be
deposited into a depositary account opened in the name of
the Agent (a "Depositary Account") at each Lockbox Bank (as
hereinafter defined).
(ii) Prior to the Closing Date, the Borrower, the Agent and the
financial institutions selected by the Borrower and
acceptable to the Agent (the "Lockbox Banks") shall enter
into a three party agreement in the form of Exhibit K hereto
(the "Lockbox Agreement"), providing, among other things,
the matters described in subsection (b)(i) above.
(iii) The Borrower may close Lockboxes and/or open new Lockboxes
with the prior written consent of the Agent and subject to
prior execution and delivery to the Agent of Lockbox
Agreements consistent with the provisions of this Section
-------
3.6 and in form and substance satisfactory to the Agent and
---
its counsel.
39
(c) Upon the terms and subject to the conditions set forth in the
Lockbox Agreements, all available amounts held in the Depositary Accounts
shall be wired each Business Day into an account (the "Concentration
Account") established pursuant to a concentration account agreement entered
into among the Borrower, the Agent and Bankers Trust Company substantially
in the form of Exhibit L (the "Concentration Account Agreement"). Subject
to the terms and conditions of the Concentration Account Agreement, all
available funds in the Concentration Account shall be transferred on every
Business Day to an account (the "BT Account") maintained by the Agent at
Bankers Trust Company. All such amounts shall be credited against the
Obligations then outstanding, with the balance, if any, being deposited in
the Loan Disbursement Account.
(d) All amounts received by the Agent for distribution hereunder shall
be distributed and applied in the following order: first, to the payment
-----
of any Fees, Expenses or other Obligations due and payable to the Agent
under any of the Credit Documents, including amounts advanced by the Agent
on behalf of the Lenders pursuant to Section 3.4(a); second, to the payment
-------------- ------
of any Fees, Expenses or other Obligations due and payable to the Issuing
Bank under any of the Credit Documents; third, to the ratable payment of
-----
any Fees, Expenses or other Obligations due and payable to the Lenders
under any of the Credit Documents other than those Obligations specifically
referred to in this Section 3.6(d); fourth, to the ratable payment of
-------------- ------
interest due on the Revolving Loans; fifth, to the extent required under
-----
Section 3.5 hereof, to the ratable payment of principal on the Revolving
-----------
Loans; and, sixth, to the ratable payment of principal due on the Revolving
-----
Loans; with the balance, if any, to be made available to Borrowers. Any
payment received hereunder as a distribution in any proceeding referred to
in Section 10.1(d) hereof shall, unless paid with respect to amounts
specifically owing to the Agent or an Accepting Bank, an Issuing Bank or a
Foreign Exchange Guarantor, be distributed and applied to the payment of
the amounts due hereunder and under the Revolving Notes ratably in
accordance with such amounts (or, if a court of competent jurisdiction
shall otherwise specify, as specified by such court).
3.7 Maintenance of Account. The Agent shall maintain an account on its
----------------------
books in the name of the Borrower (the "Loan Account") and in which the
Borrower will be charged with all loans and advances made by the Lenders to the
Borrower or for the Borrower's account, including the Revolving Loans, the
Letter of Credit Obligations, the Foreign Exchange Obligations, the Acceptance
Obligations and with any other Obligations, including any and all interest,
Fees, costs, expenses and attorney's fees which the Agent may incur in
connection with the exercise by or for the Lenders of any of the rights or
powers herein conferred upon the Agent (other than in connection with any
assignments or participations by any Lender) or in the prosecution or defense of
any action or proceeding by or against the Borrower or the Lenders concerning
any matter arising out of, connected with, or relating to this Credit Agreement
or the Accounts, or any
40
Obligations owing to the Lenders by any Borrower. The Borrower will be credited
with all amounts received by the Lenders from the Borrower or from others for
the Borrower's account. In no event shall prior recourse to any Accounts or
other Collateral be a prerequisite to the Agent's right to demand payment of any
Obligation upon its maturity. Further, it is understood that the Agent shall
have no obligation whatsoever to perform in any respect any of the Borrower's
contracts or obligations relating to the Accounts.
3.8 Loan Disbursement Account. The Borrower has requested, and the Agent
-------------------------
and the Lenders have agreed, that the Loans and any proceeds of each Acceptance
discounted pursuant to Section 4.2.1 will be advanced to account no. 00-000-000
-------------
maintained at Bankers Trust Company, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 in the name of the Borrower (the "Loan Disbursement Account").
3.9 Statement of Account. After the end of each month the Agent shall
--------------------
send the Borrower a statement showing the accounting for the charges, loans,
advances and other transactions occurring between the Lenders and the Borrower
during that month. Absent manifest error, the monthly statements shall be
deemed correct and binding upon the Borrower and shall constitute an account
stated among the Borrower and the Lenders unless the Agent receives a written
statement of the Borrower's exceptions within sixty (60) days after same is
mailed to the Borrower.
3.10 Taxes.
-----
(a) All payments by the Borrower hereunder or under the Notes to or
for the benefit of any Lender shall be made, in accordance with Section 3.6
-----------
hereof, free and clear of and without deduction, hold back or other
reduction for all present or future Taxes, deductions, charges or
withholdings by or for the benefit of any governmental taxing authority and
all liabilities with respect thereto, excluding, in the case of each such
Lender and the Agent, Excluded Taxes. If the Borrower shall be required by
law to deduct any Taxes (other than Excluded Taxes) from or in respect of
any sum payable hereunder or under any Note to or for the benefit of any
Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions of Taxes (including
deductions of Taxes applicable to additional sums payable under this
Section 3.10) such Lender or the Agent, as the case may be, receives an
------------
amount equal to the sum it would have received had no such deductions been
made (based solely on the applicable rate of tax for the computation of
such reduction), (ii) the Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount so deducted to the relevant taxing
authority or other authority in accordance with applicable law; provided,
--------
however, that the Borrower shall be under no obligation to increase the sum
-------
payable to any Foreign Lender by an amount equal to the amount of the
United States Tax required to be withheld under United States law from the
sums paid to such Foreign Lender, (aa) if such
41
withholding is caused by the failure of such Foreign Lender to be engaged
in the active conduct of a trade or business in the United States, (bb) if
all amounts of interest and fees to be paid to such Foreign Lender
hereunder are not effectively connected with such trade or business within
the meaning of United States Treasury Regulation 1.864-4(a) or (cc) as
provided in Section 3.10(e) hereof.
---------------
(b) In addition, the Borrower agrees to pay any present or future
stamp, documentary, privilege, intangible or similar taxes or any other
excise or property taxes, charges or similar levies (other than Excluded
Taxes) that arise at any time or from time to time (i) from any payment
made under all Credit Documents, or (ii) from the execution or delivery by
the Borrower or any Subsidiary of, or from the filing or recording or
maintenance of, or otherwise with respect to, all Credit Documents
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Agent for the full
amount of the Taxes or Other Taxes (other than Excluded Taxes) (including,
without limitation and without duplication, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.10,
------------
subject to the provisions of the proviso set forth in Section 3.10(a)) paid
---------------
by such Lender or the Agent (on its own behalf or on behalf of any Lender),
as the case may be, in respect of payments made or to be made hereunder,
and any liability (including penalties, interest and expenses) arising
solely therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were correctly or legally asserted. Payment of this
indemnification shall be made within thirty (30) days from the date such
Lender or the Agent, as the case may be, makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes, the Borrower shall, upon request of the Agent, furnish to the
Agent, at its address referred to in Section 13.5 hereof, the original or
------------
certified copy of a receipt evidencing payment thereof.
(e) For any period with respect to which any Lender has failed to
provide the Borrower with the appropriate form described in Section 3.10(f)
---------------
(other than if such failure is due to a change in law occurring subsequent
to the date on which a form originally was required to be provided, or if
such form otherwise is not required under Section 3.10(f)), such Lender
---------------
shall not be entitled to indemnification under Section 3.10(a) or (c) with
--------------- ---
respect to Taxes imposed by the United States; provided, however, that
-------- -------
should any Lender become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such
Taxes.
42
(f) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that it will deliver to the
Borrower and the Agent prior to the Closing Date (or in the case of an
assignee Lender of an assigning Lender listed on the signature pages hereof
prior to the date of such assignment) (i) two duly completed copies of the
United States Internal Revenue Service Form 1001 or United States Internal
Revenue Service Form 4224 or successor applicable form, as the case may be,
and (ii) an Internal Revenue Service Form W-8 or W-9 or successor
applicable form. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive all payments under this Credit
Agreement without deduction or withholding of any United States federal
income taxes or specifying (in such Form or otherwise) the amount of any
required deduction or withholding and (ii) 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 such Lender also agrees to deliver to the Borrower
and the Agent (but only so long as such Lender is lawfully able to do so)
two further copies of the said Form 1001 or 4224 and Form W-8 and W-9, or
successor applicable forms or other manner of certification, as the case
may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the
most recent form previously delivered by it to the Borrower.
(g) Within 30 days after the date that any Lender or the Agent
receives a refund of any Taxes or Other Taxes (other than Excluded Taxes)
for which it has been indemnified by the Borrower pursuant to the
provisions of this Section 3.10, such Lender or the Agent, as the case may
------------
be, shall pay to the Borrower such refund of Taxes or Other Taxes.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 3.10 shall survive the payment in full of all
------------
Obligations hereunder and under the Notes.
3.11 Sharing of Payments. If any Lender shall obtain any payment (whether
-------------------
voluntary, involuntary, through the exercise of any right of set-off or
otherwise) on account of the Loans made by it or its participation in Letters of
Credit, Foreign Exchange Contracts or Acceptances in excess of its Proportionate
Share of payments on account of the Loans, Letters of Credit, Foreign Exchange
Contracts or Acceptances obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in the Loans made
by them or in their participation in Letters of Credit, Foreign Exchange
Contracts or Acceptances as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them; provided, however, that
-------- -------
if all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and each
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount
43
of such Lender's required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect to the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 3.11 may, to the fullest extent permitted by law,
------------
exercise all of its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
ARTICLE 4
---------
Letters of Credit, Foreign Exchange Contracts and Acceptances
-------------------------------------------------------------
4.1 Letter of Credit Issuances.
--------------------------
(a) Subject to and upon the terms and conditions of this Credit
Agreement, upon the delivery by the Borrower to the Agent of a Letter of
Credit Request at least four (4) Business Days prior to the date of the
proposed issuance of any standby Letter of Credit and at least one (1)
Business Day prior to the date of the proposed issuance of any commercial
Letter of Credit (or, in each case, such shorter period of time to which
the Agent and the Issuing Bank may agree), the Agent will, from time to
time on or after the Closing Date, cause an Issuing Bank to issue one or
more Letters of Credit in an aggregate undrawn amount at such time
outstanding not to exceed, together with the then aggregate unpaid
principal amount of Revolving Loans, all then outstanding Letter of Credit
Obligations, all then outstanding Foreign Exchange Obligations and all then
outstanding Acceptance Obligations, an amount equal to the lesser of (i)
the Borrowing Base and (ii) the Total Commitments; provided, however, in no
-------- -------
event shall the Agent cause an Issuing Bank to issue a Letter of Credit if
the original undrawn amount thereof, together with all of the then
outstanding Letter of Credit Obligations plus the then outstanding Foreign
Exchange Obligations, plus the then outstanding Acceptance Obligations
----
shall exceed $80,000,000. Each Letter of Credit shall (i) be in form, scope
and substance satisfactory to the Agent and the applicable Issuing Bank and
(ii) if a commercial letter of credit, have an expiration date not later
than 180 days after its date of issuance (except to the extent the Agent
and the Borrower may otherwise agree) and if a standby letter of credit,
have an expiration date not later than 360 days after its date of issuance
and all Letters of Credit issued hereunder shall expire on a date that is
no later than 5 days prior to the Expiration Date and all Acceptance
Letters of Credit shall expire on a date which, when taking into
consideration the maturity of the Acceptance to be issued thereunder, will
not result in such maturity being later than 5 days prior to the Expiration
Date; provided, however, that any Issuing Bank may, but shall not be
-------- -------
obligated to, issue Letters of Credit having a term not exceeding 90 days
beyond the Expiration Date provided that such Letters
-------- ----
44
of Credit are collateralized by cash in an amount equal to 110% of the face
amount of such Letters of Credit as of the date of issuance. Each payment
by an Issuing Bank with respect to drawings under Letters of Credit shall
be promptly reimbursed by the Borrower together with interest thereon at
the rate applicable to Prime Rate Loans set forth in Article 8 hereof, and
---------
if not so reimbursed each Lender shall, without regard to any other
provision of this Credit Agreement, any defense that the Borrower may have
to such Borrower's obligation to reimburse such Issuing Bank in connection
with such drawing or any defense the Agent or any Lender may have in
connection with any participation under Section 4.3(a) hereof in such
obligations in connection with any such Letter of Credit, honor its
Proportionate Share of the Agent's and the Lenders' obligations to
reimburse such Issuing Bank pursuant to this Section 4.1(a), together with
--------------
interest thereon in accordance with the provisions of Article 8 hereof, and
---------
any such payments so made by the Lenders shall be deemed to be Revolving
Loans.
For purposes of this Credit Agreement, those currently outstanding
letters of credit described on Schedule B hereof shall be deemed to be
Letters of Credit requested by the Borrower under the terms hereof.
(b) The Borrower may request that a Letter of Credit be denominated
in, and payable in a currency other than U.S. Dollars. For purposes of
calculating facility usage and Letter of Credit Fees under this Credit
Agreement, the original face amount of such Letter of Credit shall be equal
to the U.S. Dollar equivalent (as determined by the Agent) of the face
amount of such Letter of Credit on the date of issuance. Thereafter, so
long as such Letter of Credit shall remain outstanding, the amount of such
Letter of Credit for such purposes shall be recalculated on the first day
of each month based upon the U.S. Dollar equivalent (as determined by the
Agent) of the undrawn amount of such Letter of Credit. In addition to the
foregoing, the Agent shall establish an additional reserve against the
Borrowing Base in an amount equal to 10% of the U.S. Dollar equivalent of
the outstanding face amount of any such Letter of Credit as of the date of
determination thereof at the times specified in the two immediately
preceding sentences.
(c) In order to facilitate the issuance of Letters of Credit, the
Borrower and Bankers Trust Company shall enter into a Remote Letter of
Credit Customer Agreement substantially in the form of Exhibit Q hereto
providing for the Borrower's use of Bankers Trust Company's Remote L/C
service. Each request for the issuance of a Letter of Credit made pursuant
to and in accordance with the procedures described in such agreement shall
constitute the delivery to the Agent of a Letter of Credit Request and the
Borrower shall be deemed to have made the representations and warranties
set forth in a Letter of Credit Request. The issuance of any such Letter
of Credit shall be subject to and upon the terms and conditions of this
Credit Agreement.
45
4.2 Foreign Exchange Contracts.
--------------------------
(a) Subject to and upon the terms and conditions of this Credit
Agreement, the Borrower may request, and the Agent will, from time to time
on or after the Closing Date, cause a Foreign Exchange Guarantor to enter
into one or more Foreign Exchange Contracts; provided that in no event
-------- ----
shall the Agent cause a Foreign Exchange Guarantor to execute a Foreign
Exchange Contract if any of (i) the Foreign Exchange Exposure thereunder,
together with the then aggregate unpaid principal amount of the Revolving
Loans, all then outstanding Letter of Credit Obligations, all then
outstanding Foreign Exchange Obligations and all then outstanding
Acceptance Obligations, shall exceed an amount equal to the lesser of (A)
the Borrowing Base or (B) the Total Commitments, (ii) the U.S. Dollar
equivalent (as determined by the Agent from time to time) of the aggregate
amount of all payments and deliveries to be made by all Foreign Exchange
Guarantors under the Foreign Exchange Contracts shall exceed $50,000,000,
or (iii) the Foreign Exchange Exposure thereunder plus the aggregate amount
----
of all Letter of Credit Obligations plus all Foreign Exchange Obligations
----
plus all Acceptance Obligations shall exceed $80,000,000 hereof. The
----
Borrower shall give the Agent written notice thereof no later than 11:00
a.m. (Chicago time) at least two (2) Business Days prior to entering into
such Foreign Exchange Contract (or such shorter period of time to which the
Agent may agree), together with a summary of all material provisions of
such Foreign Exchange Contract and the date on which such Foreign Exchange
Contract is to be executed. Each Foreign Exchange Contract shall (i) be in
form, scope and substance satisfactory to the Agent and the applicable
Foreign Exchange Guarantor and have an expiration date not later than the
Expiration Date. Each payment by a Foreign Exchange Guarantor with respect
to or under a Foreign Exchange Contract shall be promptly reimbursed by the
Borrower together with interest thereon at the rate applicable to Prime
Rate Loans set forth in Article 8 hereof, and if not so reimbursed each
---------
Lender shall, without regard to any other provision of this Credit
Agreement, any defense that the Borrower may have to its obligation to
reimburse such Foreign Exchange Guarantor in connection with such payment
or any defense the Agent or any Lender may have in connection with any
participation under Section 4.3(b) hereof in such obligations in favor of
--------------
such Foreign Exchange Guarantor in connection with such Foreign Exchange
Contract, honor its Proportionate Share of the Agent's and the Lenders'
obligations to reimburse such Foreign Exchange Guarantor pursuant to this
Section 4.2, together with interest thereon in accordance with the
-----------
provisions of Article 8 hereof, and any such payments so made by the
---------
Lenders shall be deemed to be Revolving Loans.
(b) For purposes of calculating facility usage and Foreign Exchange
Fees under this Credit Agreement, the original Foreign Exchange Exposure
with respect to any Foreign Exchange Contract shall be as determined by the
Agent on the date of execution of the Foreign Exchange Contract.
Thereafter, so long as such Foreign Exchange Contract
46
shall remain in effect, the Foreign Exchange Exposure for such purposes
shall be recalculated on the first day of each month. In addition to the
foregoing, the Agent shall establish an additional reserve against the
Borrowing Base in an amount equal to 10% of the Foreign Exchange Exposure
under each Foreign Exchange Contract at the times specified in the two
immediately preceding sentences.
(c) Each request for the execution of a Foreign Exchange Contract made
pursuant to and in accordance with the procedures described herein shall
constitute a representation and warranty by the Borrower that all
conditions precedent to the execution thereof have been satisfied. The
execution of any such Foreign Exchange Contract shall be subject to and
upon the terms and conditions of this Credit Agreement.
4.2.1 Acceptances.
-----------
(a) Subject to and upon the terms and conditions of this Credit
Agreement and in accordance with the terms of the related Acceptance Letter
of Credit, the Agent will, from time to time on or after the Closing Date,
cause an Accepting Bank to create one or more Acceptances in an aggregate
amount at such time outstanding not to exceed, together with the then
aggregate unpaid principal amount of Revolving Loans, all then outstanding
Letter of Credit Obligations, all then outstanding Foreign Exchange
Obligations and all then outstanding Acceptance Obligations, an amount
equal to the lesser of (i) the Borrowing Base or (ii) the Total
Commitments; provided, however, in no event shall the Agent cause an
-------- -------
Accepting Bank to create an Acceptance if the amount thereof, together with
all of the then outstanding Letter of Credit Obligations plus the then
----
outstanding Foreign Exchange Obligation, plus the then outstanding
----
Acceptance Obligations shall exceed $80,000,000. Each Acceptance (or group
of related Acceptances) (i) shall be in a face amount not greater than an
amount which, when discounted and net of all Fees payable at the time of
creation, would generate net proceeds equal to the reimbursement obligation
owing with respect to the Acceptance Letter of Credit providing for the
creation of such Acceptance and (ii) shall have a maturity of not more than
120 days after such Acceptance is created nor in any event later than the
Expiration Date.
(b) To enable the applicable Accepting Bank to create Acceptances, the
Borrower shall supply the Agent, prior to or concurrently with each Letter
of Credit Request requesting the issuance of an Acceptance Letter of
Credit, with drafts satisfactory to such Accepting Bank, duly executed and
endorsed (if necessary) by the Borrower. Each such Accepting Bank is
hereby authorized by the Borrower to complete such drafts at the request of
the Borrower acting through the Agent, including the payee, amount, date
and maturity date thereof, in accordance with the applicable Acceptance
Letter of Credit. In case any authorized signatory of the Borrower whose
signature shall appear on any draft shall cease to have such authority
before the creation of an Acceptance with respect to such
47
draft, the obligations of the Borrower hereunder and under such Acceptance
shall nevertheless be valid for all purposes as if such authority had
remained in force until such creation.
(c) On the date of the creation of an Acceptance by an Accepting Bank,
the Agent shall cause such Accepting Bank to (i) duly accept the draft(s)
of the Borrower supplied thereby, (ii) discount such Acceptance(s), (iii)
give the Borrower and the Agent telephonic notice (confirmed in writing,
which may include communication by telex or telecopier) of its creation of
such Acceptance, specifying the date, face amount and maturity thereof, and
of its discount thereof, specifying the Discount Rate applicable to such
Acceptance and the amount to be credited to the account of the Borrower,
and (iv) pay directly to the applicable Issuing Bank an amount equal to the
proceeds of the discount of such Acceptance (but not in excess of the
reimbursement obligations owed to such Issuing Bank in connection with the
related Acceptance Letter of Credit). The Accepting Bank shall notify the
Borrower by telephone of the Discount Rate applicable to any Acceptance no
later than 1:00 P.M., Chicago time, on the date of discount thereof. The
Borrower shall have the right not to accept such discount rate concurrently
upon being so notified, and any such refusal thereby to accept such
Discount Rate shall be deemed to be a withdrawal of its request for
acceptance of such Acceptance. An Accepting Bank may, in its sole
discretion, create any number of Acceptances aggregating the amount of
Acceptances so requested.
(d) The Borrower hereby unconditionally agrees, to pay to the Agent,
for the account of the applicable Accepting Bank, the face amount of each
Acceptance created by such Accepting Bank hereunder, on the maturity date
of such Acceptance (the payment obligation of the Borrower under this
Section 4.2.1(d) with respect to each Acceptance being the "Acceptance
----------------
Obligation" with respect to such Acceptance) by making payment to the
Agent, for the account of the Accepting Bank, not later than 12:00 noon
(Chicago time), on the due date thereof, and if not so paid each Lender
shall, without regard to any other provision of this Credit Agreement, any
defense that the Borrower may have to its obligation to make such payment
in connection with such Acceptance or any Lender may have in connection
with any participation with any such Acceptance, honor its Proportionate
Share of the Agent's and the Lenders' obligations to make such payment to
the Accepting Bank pursuant to this Section 4.2.1(d), together with
----------------
interest in accordance with the provisions of Article 8 hereof, and any
---------
such payments so made by the Lenders shall be deemed to be Revolving Loans.
Acceptance Obligations may not be prepaid except as may be required by the
terms of this Credit Agreement.
(e) (i) The Borrower represents and warrants with respect to each
Acceptance accepted and discounted at its request, that
prior to any request by it that any Accepting Bank accept
and
48
discount Acceptances, the Borrower shall have entered into
one or more bona fide contracts specifically providing for
the transactions to which such Acceptances relate having an
aggregate value not less than the face amount of such
Acceptances; that completion of such transactions is
anticipated to occur on or before the maturity date of such
Acceptances; that the maturity of such Acceptances will be
consistent with the period usually and reasonably necessary
to finance transactions of such kind; that the Borrower will
not have outstanding any other financing of such
transactions; that such Acceptances satisfy the requirements
for eligibility for discount under the Federal Reserve Act;
and that the proceeds from the discounting of such
Acceptance will be used to reimburse an Issuing Bank for
drawings under Acceptance Letters of Credit issued by such
Issuing Bank. The Borrower hereby agrees to indemnify and
hold harmless each Accepting Bank, the Agent and each Lender
with respect to any obligation or liability imposed on such
Accepting Bank, the Agent or any Lender (including, without
limitation, the amount of any penalties and charges and the
cost of maintaining reserves) if any Acceptance created by
such Accepting Bank or participated in by any Lender is
determined not to be eligible for discount by the Federal
Reserve pursuant to Section 13 of the Federal Reserve Act,
as amended. The determination of the Accepting Bank, the
Agent or such Lender, as applicable, made in good faith, as
to the amount of any such obligation or liability, shall be
conclusive absent manifest error.
(ii) In the event that an Accepting Bank or any Lender shall have
determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties
hereto but, with respect to clause (A) below, may be made
only by the applicable Accepting Bank):
(A) at any time, that any draft accepted pursuant to the
terms hereof will be ineligible for purchase or for discount
(or if already purchased or discounted, should have been
ineligible for purchase or discount) by Federal Reserve
Banks; or
49
(B) at any time, that the creation or continuance of, or
participation in, any Acceptances has become unlawful by
compliance by an Accepting Bank or such Lender in good faith
with any law, governmental rule, regulation, guideline or
order, or that any of the drafts accepted or participated in
by it, at any time after their respective executions and
deliveries and for any reason, has ceased to be in full
force and effect or has been declared to be null and void by
a court of competent jurisdiction or a regulatory agency
(other than, in the case of a draft, by payment);
then, and in any such event, such Accepting Bank or such Bank shall on such
date give notice (by telephone confirmed in writing) to the Borrower and to
the Agent of such determination. Thereafter the Borrower shall either (x)
if the affected Acceptance is then being created or is required to be
created pursuant to an Acceptance Letter of Credit, agree to pay the
reimbursement obligations with respect to such Acceptance Letter of Credit
upon any drawings thereunder as if such Letter of Credit was not an
Acceptance Letter of Credit, or (y) if the affected Acceptance or
Acceptances are then outstanding, in the case of clause (A), indemnify the
Accepting Bank and each affected Lender as provided in Section 4.2.1(e)(i)
and, in the case of clause (B), prepay in full the face amount of each
Acceptance so affected.
(f) Notwithstanding anything to the contrary contained herein, (i) an
Accepting Bank shall in no event be required to create an Acceptance unless
(A) such Accepting Bank, in its sole discretion, determines that the
creation of such Acceptance complies with all applicable regulations of the
Board of Governors of the Federal Reserve System of the United States
governing banker's acceptances and shall (if accepted and endorsed by a
member bank of the Federal Reserve System or a bank authorized to create
eligible acceptances) be eligible under such regulations for purchase or,
if such Acceptance has a maturity at the time of discount of not more than
120 days sight, exclusive of days of grace, for discount by the Federal
Reserve Banks and (B) the Agent and the applicable Accepting Bank, in their
individual discretion, determine that the creation, discount and rediscount
or sale of such Acceptance is commercially reasonable under current market
conditions and would not subject the Agent or such Accepting Bank to
conditions or restrictions (including reserve or capital adequacy
requirements) which the Agent or such Accepting Bank considers undesirable
and would otherwise be in all respects in compliance with all laws, rules
and regulations; and (ii) such Accepting Bank shall in no event create any
Acceptance if, prior to the time of the Borrower's request therefor, the
Agent shall notify the Borrower that, in such Accepting Bank's
determination, the creation of an Acceptance would or might cause such Bank
to exceed its limits for aggregate acceptance liability provided for in
Section 13 of the Federal Reserve Act or otherwise be in violation
50
of any law, rule or regulation. In the event that the limitations set forth
in this clause (f) would excuse Bankers Trust Company from creating an
Acceptance requested by the Borrower, the Agent shall be relieved of any
obligation which it may have to cause an Accepting Bank to create such an
Acceptance.
4.3 Lenders' Participation.
----------------------
(a) Immediately upon the issuance or amendment by an Issuing Bank of a
Letter of Credit in accordance with the procedures set forth in this
Article 4, each Lender shall be deemed to have irrevocably and
---------
unconditionally purchased and received from such Issuing Bank, without
recourse or warranty, an undivided interest and participation therein to
the extent of such Lender's Proportionate Share (including, without
limitation, all obligations of the Borrower with respect thereto).
(b) Immediately upon the execution of a Foreign Exchange Contract by a
Foreign Exchange Guarantor in accordance with the procedures set forth in
this Article 4, each Lender shall be deemed to have irrevocably and
---------
unconditionally purchased and received from such Foreign Exchange
Guarantor, without recourse or warranty, an undivided interest and
participation therein to the extent of such Lender's Proportionate Share
(including, without limitation, all obligations of the Borrower with
respect thereto).
(c) Immediately upon the creation of any Acceptance by an Accepting
Bank in accordance with the procedures set forth in this Article 4, each
---------
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from such Accepting Bank, without recourse or warranty, an
undivided interest and participation therein to the extent of such Lender's
Proportionate Share (including, without limitation, all obligations of the
Borrower with respect thereto).
4.4 Definition of Obligations. Any indebtedness, liability or obligation
-------------------------
of any sort whatsoever, however arising, whether present or future, fixed or
contingent, secured or unsecured, due or to become due, paid or incurred,
arising or incurred in connection with any Letters of Credit or any deferred
payment obligations, participations, drafts or acceptances thereunder, under any
Foreign Exchange Contract or arising or incurred in connection with any
Acceptance (herein part of the "Obligations" heretofore defined) shall be
incurred solely as an accommodation to the Borrower and for the Borrower's
account. Obligations shall include, without being limited to: all amounts due or
which may become due under any Letters of Credit or any drafts or acceptances
thereunder; all amounts due or which may become due under any Foreign Exchange
Contracts; all amounts due or which may become due under any Acceptance; all
amounts charged or chargeable to the Borrower or to the Lenders by the
applicable Issuing Bank in respect of any Letter of Credit, or any correspondent
bank which opens, issues or is involved with such Letters of Credit; all amounts
charged or chargeable to the Borrower or to the
51
Lenders by the applicable Foreign Exchange Guarantor in respect of any Foreign
Exchange Contract; all amounts charged or chargeable to the Borrower or to the
Lenders by the applicable Accepting Bank in respect of any Acceptance; any other
bank charges; fees and commissions, duties and taxes, costs of insurance, and
all such other charges and expenses which may pertain to such Letters of Credit,
drafts, acceptances, deferred payment obligations or to the goods or documents
relating thereto, to any Foreign Exchange Contract or to any Acceptance. The
Agent shall have the right, at any time and without notice to the Borrower, to
charge the Loan Account with the amounts of any and all such Obligations. Any
debit balance which may exist at any time or from time to time in the Borrower's
account shall accrue interest (i) at the rates provided in Section 8.1 or
-----------
Section 8.2 hereof, as applicable, prior to the occurrence and continuance of an
-----------
Event of Default and (ii) on and after the occurrence and continuance of an
Event of Default specified in Section 10.1(a) or following written notice to the
---------------
Borrower of the occurrence of any other Event of Default, to and including the
date that such Event of Default is waived, at the rate provided in Section 8.4
-----------
hereof.
4.5 Indemnification. The Borrower hereby agrees to unconditionally
---------------
indemnify each Lender, each Issuing Bank, each Foreign Exchange Guarantor and
each Accepting Bank and hold each of them harmless from any and all loss, claim
or liability arising from any transactions or occurrences relating to Letters of
Credit, the Foreign Exchange Contracts, the Acceptances, the Collateral relating
thereto and any drafts or acceptances thereunder, and all Obligations
thereunder, including any such loss or claims due to any action taken by any
Issuing Bank, the Foreign Exchange Guarantor, or any Accepting Bank, except
where such loss, claim or liability is due to the gross negligence or willful
misconduct of the Person seeking indemnification. The Borrower's unconditional
obligation to the Lenders hereunder shall not be modified or diminished for any
reason or in any manner whatsoever. The Borrower agrees that, as among the
Borrower and the Lenders, any charges incurred by the Lenders for the Borrower's
account by an Issuing Bank, a Foreign Exchange Guarantor or an Accepting Bank
shall be conclusive on the Borrower and may be charged to the Loan Account (in
the absence of manifest error).
4.6 Certain Waivers. Neither any Issuing Bank, any Accepting Bank nor the
---------------
Lenders shall be responsible to the Borrower for: the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be represented by any documents; any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from that expressed in the documents; the validity, sufficiency or genuineness
of any documents or of any endorsements thereon, even if such documents should
in fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged; the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or the documents relating thereto; any
deviation from instructions; delay, default, or fraud by the shipper or anyone
else in connection with the Collateral or the shipping thereof; or any breach of
contract between the shipper or vendors and the Borrower. None of the Lenders
nor the Agent in their capacity as a Lender or the Agent under
52
this Credit Agreement shall be responsible to the Borrower for any action or
inaction by any Issuing Bank, by any Foreign Exchange Guarantor or by any
Accepting Bank. Furthermore, without being limited by the foregoing, neither the
Lenders, the Agent nor any Issuing Bank shall be responsible for any act or
omission with respect to or in connection with any goods referred to in the
Letters of Credit.
4.7 Limitation on Liability; Authority of Lender. The Borrower agrees
--------------------------------------------
that any action taken by the Lenders, or any action taken by any Issuing Bank,
under or in connection with the Letters of Credit, the guaranties, the drafts or
acceptances, or the Collateral, or taken by any Foreign Exchange Guarantor under
or in connection with any Foreign Exchange Contract, or taken by any Accepting
Bank in connection with any Acceptance shall be binding on the Borrower and no
resulting liability shall attach to the Lenders, any such Issuing Bank, any such
Foreign Exchange Guarantor or any Accepting Bank other than with respect to any
actions taken by such Lender, any such Issuing Bank, any such Foreign Exchange
Guarantor or any such Accepting Bank that constitute gross negligence or willful
misconduct with respect to its own actions. In determining whether to pay under
any Letter of Credit, the Issuing Bank thereon shall have no obligation relative
to the Lenders other than to confirm that any documents required to be delivered
under such Letter of Credit appear to have been delivered and that they appear
to comply on their face with the requirements of such Letter of Credit. In
furtherance thereof, the Agent shall have the full right and authority to:
clear and resolve any questions of non-compliance of documents; give any
instructions as to acceptance or rejection of any documents or goods; execute
any and all steamship or airway guaranties (and applications therefor),
indemnities or delivery orders; grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents;
and agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in the Agent's sole name (but for
the account of the Lenders), and the applicable Issuing Bank shall be entitled
to comply with and honor any and all such documents or instruments executed by
or received solely from the Agent, all without any notice to or any consent from
the Borrower.
4.8 Covenants of Borrower.
---------------------
(a) Without the Agent's prior approval, the Borrower agrees not to:
clear and resolve any questions of non-compliance of documents; give any
instructions as to acceptance or rejection of any non-complying documents
or goods; execute any applications for steamship or airway guaranties,
indemnities or delivery orders; grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances or
documents; or agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances.
53
(b) The Borrower agrees that any necessary import, export or other
licenses or certificates for the import or handling of the Collateral will
have been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or
the financing thereof will have been promptly and fully complied with in
all material respects; and copies of any certificates in that regard that
the Agent may at any time reasonably request will be promptly furnished.
In this connection, the Borrower represents and warrants that all shipments
made under any such Letters of Credit are in all material respects in
accordance with the laws and regulations of the countries in which the
shipments originate and terminate, and are not prohibited in any material
respect by any such laws and regulations. The Borrower assumes all risk,
liability and responsibility for, and agrees to pay and discharge, all
present and future local, state, federal or foreign taxes, duties, or
levies in respect of any Letters of Credit and the Collateral relating
thereto. Any embargo, restrictions, laws, customs or regulations of any
country, state, city, or other political subdivision, where the Collateral
is or may be located, or wherein payments are to be made, or wherein drafts
may be drawn, negotiated, accepted, or paid, shall, as among the Borrower
and the Lenders, be solely the Borrower's risk, liability and
responsibility.
4.9 Rights and Remedies of Lenders. Any rights, remedies, duties or
------------------------------
obligations granted or undertaken by the Borrower to any Issuing Bank, to any
Foreign Exchange Guarantor or to any Accepting Bank in any application for
Letters of Credit, or any standing agreement relating to Letters of Credit, any
Foreign Exchange Contract, any Acceptance or otherwise, shall be deemed to have
been granted to the Lenders and apply in all respects to the Lenders and shall
be in addition to any rights, remedies, duties or obligations contained herein.
ARTICLE 5
---------
Representations and Warranties
------------------------------
In order to induce the Lenders to enter into this Credit Agreement and to
make available the credit facilities contemplated hereby, the Borrower hereby
represents and warrants to the Agent and the Lenders as follows:
5.1 Corporate Existence; Qualification; Power; Licenses and Permits. The
---------------------------------------------------------------
Borrower (i) is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and is authorized to do business and is in good standing in every
jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect, (iii) has all corporate power and
authority required to own its properties and assets and to carry on its business
as now conducted and (iv) has all licenses, authorizations, consents, approvals,
franchises, leases, permits,
54
certificates, qualifications, easements, rights of way and other rights required
to carry on its business as now conducted which the failure to so have could
reasonably be expected to have a Material Adverse Effect. The Borrower is not in
violation of the terms of any such license, authorization, consent, approval,
franchise, lease, permit, certificate, qualification, easement, right of way or
other right in any such case which would have a Material Adverse Effect.
5.2 Corporate and Governmental Authorization; Contravention. The
-------------------------------------------------------
execution, delivery and performance by the Borrower of this Credit Agreement and
the other Credit Documents executed in connection herewith or therewith and the
consummation by Borrower of the transactions contemplated hereby and thereby,
(i) are within the Borrower's corporate powers, (ii) have been duly authorized
by all necessary corporate action, (iii) except as provided in the Ancillary
Documents, require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of any applicable law, statute, ordinance,
regulation, rule, order or other governmental restriction or of the Articles or
Certificates of Incorporation or By-Laws of the Borrower, (v) do not contravene,
or constitute a default under, any agreement, judgment, injunction, order,
decree, indenture, contract, lease, instrument or other commitment to which the
Borrower is a party or by which the Borrower or any of its assets are bound and
which could reasonably be expected to have a Material Adverse Effect, and (vi)
will not result in the creation or imposition of any material Lien upon any
asset of the Borrower under any existing indenture, mortgage, deed of trust,
loan or credit agreement or other agreement or instrument to which the Borrower
is a party or by which it or any of its assets may be bound or affected (except
as contemplated herein).
5.3 Binding Effect. The Credit Agreement is and, when executed and
--------------
delivered in accordance with the terms of this Credit Agreement, all of the
other Credit Documents are or will be the legal, valid and binding obligations
of the Borrower, and are or will be enforceable against the Borrower in
accordance with their terms.
5.4 Information. The Borrower has furnished to the Lenders as of the date
-----------
of this Credit Agreement the following financial statements (the "Financials")
of the Borrower: (i) combined balance sheets as of, and combined statements of
earnings, changes in consolidated shareholders' equity and changes in
consolidated cash flow for the fiscal year ended December 1, 1996 audited by
independent certified public accountants, and (ii) unaudited combined balance
sheets as of the end of the most recent fiscal quarter ending prior to the
Closing Date and the related unaudited combined statements of earnings, changes
in shareholders' equity and changes in combined cash flow for the three months
then ended. The Financials are and the historical financial statements to be
furnished to the Lenders in accordance with Section 6.1 hereof will be in
-----------
accordance with the books and records of the Borrower and fairly present the
financial condition of the Borrower at the dates thereof and the results of
operations for the periods indicated (subject, in the case of unaudited
financial statements, to normal year-end adjustments), and such financial
55
statements have been and will be prepared in conformity with GAAP consistently
applied throughout the periods involved.
5.5 No Material Adverse Change. Since December 28, 1996, there has been
--------------------------
no Material Adverse Change.
5.6 Litigation and Judgments. Except as set forth on Schedule D, there is
------------------------
no (i) injunction, stay, decree, judgment, writ or order issued and outstanding
by any court or arbitrator or any governmental body, agency or official against
the Borrower or any of its Subsidiaries or (ii) action, suit, proceeding,
litigation, contested claim, investigation or arbitration pending, or to the
knowledge of the Borrower threatened, against or affecting the Borrower or any
of its Subsidiaries which, in either case, could reasonably be expected to have
a Material Adverse Effect, or which in any manner impairs the validity of this
Credit Agreement or any of the other Credit Documents.
5.7 Compliance with ERISA. As of the date of this Credit Agreement, and
---------------------
except as set forth on Schedule D, neither the Borrower nor any ERISA Affiliate
maintains or contributes to any Benefit Plan. Each Plan has been and is being
maintained and funded in all material respects in accordance with its terms and
in compliance with all provisions of ERISA and the Internal Revenue Code
applicable thereto. The Borrower and each ERISA Affiliate has fulfilled in all
material respects its obligations related to the minimum funding standards of
ERISA and the Internal Revenue Code for each Plan, is in compliance in all
material respects with the currently applicable provisions of ERISA and of the
Internal Revenue Code relating to the qualification with respect to each Plan
intended to be so qualified and has not incurred any material liability (other
than routine liability for premiums) under Title IV of ERISA. No Termination
Event has occurred which has resulted in liability which either has not been
satisfied or is not reflected on the Borrower's financial statements nor has any
other event occurred that is likely to result in a Termination Event which could
reasonably be expected to have a Material Adverse Effect. No event or events
have occurred in connection with which the Borrower, any ERISA Affiliate, or any
Plan, directly or indirectly, is likely to be subject to any liability under
ERISA, the Internal Revenue Code or any other law, regulation or governmental
order or under any agreement, instrument, statute, rule of law or regulation
pursuant to or under which any such entity has agreed to indemnify or is
required to indemnify any person against liability incurred under, or for a
violation or failure to satisfy the requirements of, any such statute,
regulation or order which could reasonably be expected to have a Material
Adverse Effect. True, correct and complete copies of the following documents
have been made available to the Agent as of the date of this Credit Agreement:
(i) each Plan (or, where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof and
written descriptions thereof that have been distributed to employees or former
employees of the Borrower or the ERISA Affiliates, (ii) the most recent
Revenue Service with respect to each Plan,
56
(iii) for the three most recent plan years, Annual Reports on Form 5500 Series
required to be filed with any governmental agency for each Plan, (iv) all
actuarial reports prepared for the last three plan years for each Benefit Plan,
(v) a listing of all Multiemployer Plans, with the aggregate amount of the most
recent annual contributions required to be made by the Borrower or any ERISA
Affiliate to each such plan and copies of the collective bargaining agreements
requiring such contributions, (vi) any information that has been provided to the
Borrower or any ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan and (vii) the aggregate amount of the most recent annual
payments made to former employees of the Borrower or any ERISA Affiliate under
any Retiree Health Plan.
5.8 Taxes.
-----
(a) Except as set forth on Schedule D, the Borrower and its
Subsidiaries have timely filed (inclusive of any permitted extensions) with
the appropriate taxing authorities all United States Federal income tax
returns and except as set forth on Schedule D all other material tax
returns (including, without limitation, information returns and other
material information) in respect of Taxes required to be filed through the
date hereof. The information filed is complete and accurate in all
material respects. All material deductions taken by the Borrower and its
Subsidiaries as reflected in such income tax returns have been taken in
accordance with applicable laws and regulations.
(b) Except as set forth on Schedule D, all Taxes, in respect of
periods beginning prior to the date hereof, have been timely paid, except
where the same are being contested in good faith by appropriate proceedings
and appropriate reserves therefor have been established and maintained in
accordance with GAAP for the accrual thereof as reflected on the audited
financial statements for the Borrower's fiscal year ended December 28,
1996, and, to the extent such reserves are maintained for periods after
December 28, 1996, consistent with the Borrower's past practice.
(c) Except as set forth in Schedule D, (i) no material deficiencies
for Taxes have been claimed, proposed or assessed by any taxing or other
governmental authority against the Borrower or any of its Subsidiaries
other than such deficiencies of which the Agent has been notified in
writing and which are being contested in good faith by appropriate
proceedings, and appropriate reserves therefor have been established and
maintained as reflected on the audited financial statements for the
Borrower's fiscal year ended December 28, 1996 and in accordance with GAAP,
and, to the extent such reserves are maintained for periods after December
28, 1996, consistent with the Borrower's past practice and (ii) no material
tax liens have been filed against any of the Collateral other than Liens
permitted under Section 7.4 of this Credit Agreement of which the Agent has
-----------
been notified in writing, and which are being contested in good faith by
appropriate proceedings, and appropriate reserves therefor have been
established and maintained as
57
reflected on the audited financial statements for the Borrower's fiscal
year ended December 28, 1996 in accordance with GAAP and, to the extent
such reserves are maintained for periods after December 28, 1996,
consistent with the Borrower's past practice, and to the extent such liens
have been bonded in a manner reasonably satisfactory to the Agent. Except
as set forth in Schedule D or as otherwise disclosed to the Agent in
writing, there are no pending or, to the best of the Borrower's knowledge,
threatened audits, investigations or claims for or relating to any material
liability in respect of Taxes, and there are no matters under discussion
with any governmental authorities with respect to Taxes which are likely to
result in a material additional liability for Taxes. Except as set forth on
Schedule D, for all years up to and including the fiscal year ended
February 23, 1991, either the period during which any assessments may be
made by the Internal Revenue Service have expired without waiver or
extension or the federal income tax returns of the Borrower and its
Subsidiaries have been audited by the Internal Revenue Service and such
audits have been closed.
5.9 Subsidiaries. The only respective direct or indirect Subsidiaries of
------------
the Borrower as of the date of this Credit Agreement are those listed on
Schedule D attached hereto. Except as set forth on such Schedule, the Borrower
is the record and beneficial owner of all of the shares of capital stock of each
of its Subsidiaries listed on such Schedule as being owned by such Borrower
(other than directors' qualifying shares), there are no proxies, irrevocable or
otherwise, with respect to such shares, and no equity securities of any of the
Subsidiaries are or may become required to be issued by reason of any options,
warrants, scrips, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Subsidiary is or may
become bound to issue additional shares of its capital stock or securities
convertible or exchangeable for such shares. All of such respective shares so
owned by Borrower are owned by them free and clear of any Liens, and all such
shares are validly issued, fully paid and non-assessable (except for statutory
rights of assessment for wages owed).
5.10 Not an Investment Company. Neither the Borrower nor any of its
-------------------------
Subsidiaries is (i) an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, (ii) a "holding company" or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "Subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (iii) subject to any other law which purports to
regulate or restrict its ability to borrow money or to consummate the
transactions contemplated by this Credit Agreement or the other Credit Documents
or to perform its obligations hereunder or thereunder.
5.11 No Conflicting Requirements. Neither the Borrower nor any of its
---------------------------
Subsidiaries is in default under any term or provision of any charter, by-law,
mortgage, indenture, agreement,
58
instrument, statute, rule, regulation, judgment, decree, order, writ,
injunction, contract, lease or other commitment to which any of them is a party
or by which any of them is bound such that such violations or defaults in the
aggregate could reasonably be expected to have a Material Adverse Effect. The
Borrower knows of no dispute regarding any indenture, contract, lease,
agreement, instrument or other commitment which would individually, or when
aggregated with other such disputes, be reasonably likely to have a Material
Adverse Effect.
5.12 Debt. The Borrower has no Debt that is senior, pari passu or
---- ---- -----
subordinated in right of payment to its Debt to Lenders hereunder, except for
Debt permitted pursuant to Section 7.1 of this Credit Agreement.
-----------
5.13 Title to Properties and Assets; Collateral.
------------------------------------------
(a) Except for (i) Liens permitted pursuant to Section 7.4 hereof and
-----------
(ii) such imperfections of title that represent imperfections of title or
easements of record, if any, which do not materially detract from the value
or interfere with the use of the properties subject thereto or affected
thereby, or otherwise materially impair business operations, the Borrower
has (a) good and marketable fee simple title to the Owned Real Property
material to its business and the Owned Real Property on which a Lien has
been granted to the Agent and valid leasehold interests in all of its
Leased Real Property material to its business and (b) good and marketable
title to all of its other material property and assets owned by the
Borrower at any time (including, without limitation, all of its accounts
and inventory), other than properties disposed of in any manner permitted
under this Credit Agreement. The Borrower enjoys peaceful and undisturbed
possession of all its material Real Estate and there is no pending or, to
the best of its knowledge, threatened condemnation proceeding relating to
any Real Estate which could reasonably be expected to have a Material
Adverse Effect. The leases with respect to the Leased Real Property, are
referred to collectively as the "Leases." No default exists under any
Lease which could reasonably be expected to have a Material Adverse Effect.
All of the Structures and other tangible assets owned, leased or used by
the Borrower in the conduct of its business are (a) insured as required by
the terms of this Credit Agreement and the other Credit Documents, (b)
sufficient for the operation of the business of the Borrower and its
Subsidiaries as presently conducted and (c) in conformity with all
applicable laws, ordinances, orders, regulations and other requirements
(including applicable zoning, environmental, motor vehicle safety,
occupational safety and health laws and regulations) relating thereto,
except where the failure to conform could not reasonably be expected to
have a Material Adverse Effect.
(b) The Borrower possesses adequate assets, licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications
and tradenames to continue to conduct its business as presently conducted.
Schedule C
59
attached hereto sets forth as of the date of this Credit Agreement (i) all
of the federal, state and foreign registrations of the registered
trademarks of the Borrower and all pending applications for any such
registrations and (ii) all of the patents of the Borrower and all pending
applications therefor (collectively, together with all service marks and
other marks and all applications therefor, tradenames and other trade
rights of the Borrower, the "Proprietary Rights"). As of the date of this
Credit Agreement, the Borrower is the owner of each of the trademarks and
patents listed on Schedule C as indicated on such schedule and except as
set forth on such Schedule and, except pursuant to licenses granted in the
ordinary course of business, no other Person has the right to exploit such
patents or use any of such marks in commerce either in the identical form
or in such near resemblance thereto as may be likely to cause confusion or
to cause mistake or to deceive. As of the date of this Credit Agreement
each of the trademarks listed on Schedule C is a valid and subsisting
federally registered trademark of the Borrower having the registration
number and issue date set forth on Schedule C and each of the patents
listed on Schedule C is a valid and subsisting patent of the Borrower
having the patent number and issue date set forth on Schedule C. As of the
date of this Credit Agreement except as disclosed on Schedule C, no Person
has a right to receive any material royalty or similar payment from the
Borrower in respect of any such registered Propriety Rights. As of the date
of this Credit Agreement the Borrower has not granted any material license
except as disclosed on Schedule C hereto or such licenses as were granted
in the ordinary course of the Borrower's business, or sold or otherwise
transferred any interest in any of the Proprietary Rights to any other
person. The Borrower is not aware that the use of any of the material
Proprietary Rights by the Borrower is infringing upon or otherwise
violating the rights of any third party in or to such Proprietary Rights
which violation or infringement could reasonably be expected to result in a
material liability to the Borrower, and no proceeding has been instituted
against or notice received by the Borrower that are presently outstanding
alleging that the use of any of the material Proprietary Rights infringes
upon or otherwise violates the rights of any third party in or to any of
the material Proprietary Rights which, if successful, could reasonably be
expected to materially adversely affect the fair market value of any such
material Proprietary Rights or the rights granted therein to the Agent
including, without limitation, the validity, priority or perfection of the
security interest granted therein to the Agent under the Ancillary
Documents or the remedies of the Agent therein or in this Credit Agreement.
All of the material Proprietary Rights of the Borrower and the Subsidiaries
are valid and enforceable rights of the Borrower and the Subsidiaries and
will not cease to be valid and in full force and effect by reason of the
execution and delivery of this Credit Agreement or the Credit Documents or
the consummation of the transactions contemplated hereby or thereby.
(c) The capital stock of each Subsidiary, (including, without
limitation, each Foreign Subsidiary provided that, for any Foreign
Subsidiary which constitutes a "Controlled Foreign Corporation" within the
meaning of Section 951 of the Internal
60
Revenue Code, Borrower shall not be required to pledge hereunder or under
the other Credit Documents more than 65% of the combined voting power of
all classes of capital stock of such Foreign Subsidiary entitled to vote),
in each case which is owned directly or indirectly by the Borrower, has
been delivered and pledged to the Agent under the Pledge Agreements;
excluding, however, the capital stock of any Subsidiary owned directly or
indirectly by a Subsidiary of the Borrower one hundred percent (100%) of
which is not owned directly or indirectly by the Borrower. The owners of
all such capital stock are parties as pledgors under the Pledge Agreements.
5.14 Compliance with Law. Neither the Borrower nor any of its Subsidiaries
-------------------
has violated or failed to comply with any statute, law, ordinance, regulation,
rule or order of any foreign, federal, state or local government or any other
governmental department or agency or any self regulatory organization, or any
judgment, decree or order of any court, applicable to its business or operations
except where the aggregate of all such violations or failures to comply would
not have a Material Adverse Effect. The conduct of the businesses of the
Borrower and each of its Subsidiaries is in conformity with all securities,
commodities, energy, public utility, zoning, building code, health, OSHA and
environmental requirements and all other foreign, federal, state and local
governmental and regulatory requirements and requirements of any self regulatory
organizations, except where the aggregate of all such non-conformities could not
reasonably be expected to have a Material Adverse Effect. Neither the Borrower
nor any of its Subsidiaries has received any notice to the effect that, or
otherwise been advised that, it is not in compliance with, and neither the
Borrower nor any of its Subsidiaries has any reason to anticipate that any
presently existing circumstances are likely to result in the violation of, any
such statute, law, ordinance, regulation, rule, judgment, decree or order which
failure or violation could reasonably be expected to have a Material Adverse
Effect.
5.15 Compliance with Environmental Laws.
----------------------------------
(a) The Borrower and each of its Subsidiaries have complied with and
are currently in compliance with any Environmental Laws, except where
noncompliance could not reasonably be expected to have a Material Adverse
Effect.
(b) No solid or hazardous or toxic wastes or hazardous substances (as
defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resources Conservation and Recovery Act and the
Superfund Amendments and Reauthorization Act of 1986, as amended or under
any successor or similar law or any applicable state or local law), are
processed, discharged, stored, treated, disposed of, or managed at any
facility owned, leased or operated by the Borrower or any Subsidiary
thereof or, at the request or behest of the Borrower or any Subsidiary
thereof, at any adjoining site, so as to require a license, permit or
authorization of any type from any governmental authority, other than
licenses, permits and authorizations which have been
61
obtained and are in full force and effect or where the failure to obtain
such a license, permit or authorization could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule D hereto,
as of the date of this Credit Agreement no governmental or private actions
to enforce environmental or pollution control laws are pending against the
Borrower or any Subsidiary thereof, or against or with respect to any
facility owned, operated or leased by the Borrower or any Subsidiary
thereof. Except as disclosed on Schedule D and except where any of the
following, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (i) neither the Borrower nor
any of its Subsidiaries has received any complaint, notice of violation,
alleged violation, investigation or advisory action or of potential
liability or of potential responsibility regarding environmental protection
matters or permit compliance, and (ii) neither the Borrower nor any of its
Subsidiaries have any contingent liability of which the Borrower has
knowledge in connection with any release of any hazardous or toxic waste,
substance or constituent, or other substance into the environment, nor has
the Borrower or any Subsidiary received any notice, letter or other
indication of potential liability arising from the disposal of any
hazardous or toxic waste, substance or constituent or other substance into
the environment.
(c) Except as disclosed on Schedule D and other than any pending
workers' compensation claims which individually and in the aggregate are
not significant to the Borrower, no action, suit or proceeding brought by
any employee of the Borrower or any Subsidiary thereof or any other Person
involving (i) a claim for damages in excess of $100,000 or (ii) claims for
damages under $100,000 and which, in either such case, in the aggregate
could reasonably be expected to have a Material Adverse Effect, in each
case based on alleged damage to health caused by any such hazardous or
toxic substance or by any waste or by-product thereof, is pending before
any court or arbitrator or any governmental body, agency or official.
5.16 Security Interests and Liens; Inventory and Equipment. There are no
-----------------------------------------------------
Liens in favor of third parties with respect to any of the Collateral,
including, without limitation, with respect to the Inventory, wherever located,
other than Liens permitted pursuant to Section 7.4 hereof. To the best of the
-----------
Borrower's knowledge, no lessor, warehouseman, filler, processor or packer of
the Borrower or any of its Subsidiaries (other than Foreign Subsidiaries) has
granted any Lien with respect to the Inventory maintained by the Borrower or any
of its Subsidiaries (other than Foreign Subsidiaries) at the property of any
such lessor, warehousemen, filler, processor or packer. Upon the proper filing
of financing statements and the proper recordation of other applicable documents
with the appropriate filing or recordation offices in each of the necessary
jurisdictions, the security interests granted pursuant to the Credit Documents
on the Filing Assets and the Real Estate with respect to which Mortgages have
been filed constitute and shall at all times constitute the valid and
enforceable first, prior and perfected Liens on such Collateral, subject only to
prior Liens existing on the Closing Date and set forth on Schedule D hereto and
62
Liens permitted pursuant to Section 7.4 hereof. The Borrower is or will be at
-----------
the time additional Collateral is acquired by it, the absolute owners of the
Collateral with full right to pledge, sell, consign, transfer and create a Lien
therein, free and clear of any and all Liens in favor of third parties, except
for Liens permitted pursuant to Section 7.4 hereof. No consents, filings or
-----------
recordings are required in order to perfect the security interests created by
the Pledge Agreements.
5.17 Labor Relations. The Borrower is not engaged in any material unfair
---------------
labor practices which could reasonably be expected to result in a material
liability to the Borrower, materially increase the costs of operations or
materially decrease the revenue generated from the Borrower's operations or
which could otherwise reasonably be expected to have a Material Adverse Effect.
There is (i) no unfair labor practice complaint pending against the Borrower or,
to the best knowledge of the Borrower, threatened against it, before the
National Labor Relations Board, and no material grievance or significant
arbitration proceeding arising out of or under collective bargaining agreements
is so pending against the Borrower or, to the best knowledge of the Borrower,
threatened against it, (ii) no strike, labor dispute, slowdown or stoppage
pending against the Borrower or, to the best knowledge of the Borrower,
threatened against it which, in the case of the items described in the preceding
clauses (i) and (ii) could reasonably be expected to result in a material
liability to the Borrower, materially increase the costs of the Borrower's
operations or materially decrease the revenue generated from the Borrower's
operations or which could otherwise reasonably be expected to have a Material
Adverse Effect, and (iii) no union representation question with respect to the
employees of the Borrower and no union organizing activities which
representation question or organizing activity could reasonably be expected to
have a Material Adverse Effect. There are no controversies pending or, to the
best knowledge of the Borrower, threatened between the Borrower and any of its
employees, other than (i) employee grievances and other controversies arising in
the ordinary course of business which could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect and (ii) employee grievances and
other controversies arising outside the ordinary course of business of which the
Agent has received written notice and could not reasonably be expected to have a
Material Adverse Effect.
5.18 UCC Filing Information. As of the date of this Credit Agreement the
----------------------
chief executive office and principal place of business of the Borrower is as set
forth on Schedule D, which office is the place where the Borrower is "located"
for the purposes of Section 9-103(3)(d) of the UCC. As of the date of this
-------------------
Credit Agreement the places where the Borrower keeps its books, chattel paper
and records concerning its respective Accounts or regularly keeps any Inventory
are also identified on Schedule D. As of the date of this Credit Agreement
there is no jurisdiction located in the United States in which the Borrower or
any of its Subsidiaries have any assets, equipment or Inventory (except for
vehicles, Inventory in transit for processing in the ordinary course of
business, or immaterial items) other than those jurisdictions listed on Schedule
D. Schedule D is a true, correct and complete list as of the date of this
Credit Agreement of (i) the address of all offices where records and books of
account of the Borrower
63
and each of its Subsidiaries are kept, and (ii) to the best knowledge of
Borrower, the legal names and addresses of each warehouseman, filler, processor
and packer at which Inventory is stored as of the date of this Credit Agreement.
None of the receipts received by the Borrower from any warehouseman, filler,
processor or packer states that the goods covered thereby are to be delivered to
bearer or to the order of a named person or to a named person and such named
person's assignees.
5.19 Solvency. On and at all times after the Closing Date the fair
--------
saleable value of the Borrower's assets exceeds all probable liabilities,
including those to be incurred pursuant to this Credit Agreement. On and at all
times after the Closing Date, the Borrower (i) does not have unreasonably small
capital in relation to the business in which it is or proposes to be engaged and
(ii) has not incurred, and does not believe that it will incur after giving
effect to the transactions contemplated by this Credit Agreement, debts beyond
its ability to pay such debts as they become due.
5.20 Fictitious Business Names. Neither the Borrower nor any of its
-------------------------
Subsidiaries has conducted any material amount of business on or after August 3,
1992 under any corporate or fictitious name other than the corporate name shown
on its or such Subsidiary's Articles or Certificate of Incorporation, as
disclosed on Schedule D or as disclosed to the Agent in writing from time to
time.
5.21 Use of Proceeds. All proceeds of the Loans and all proceeds from the
---------------
discount of the Acceptances have been used only in accordance with Section 6.14
------------
hereof.
5.22 Margin Security. The Borrower does not own any margin security and
---------------
none of the loans advanced hereunder have been used for the purpose of
purchasing or carrying any margin securities of for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase any margin
securities or for any other purpose not permitted by Regulation G, U or X of the
Board of Governors of the Federal Reserve System.
5.23 No Event of Default. No Default or Event of Default has occurred and
-------------------
is continuing.
5.24 Status of Accounts. The Borrower confirms to the Lenders that any
------------------
and all taxes or fees relating to its business, its sales, the Accounts or the
goods relating thereto, are their sole responsibility and that all such material
taxes will be paid by the Borrower when due (unless duly contested and
adequately reserved for) and that none of said taxes or fees (including any
immaterial taxes or fees) is or will become a lien (other than a Permitted Lien)
on or claim against the Accounts. The Borrower's books and records are marked
to reflect the Lenders' interest in the Accounts.
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5.25 Survival of Representations. All representations made by the Borrower
---------------------------
in this Credit Agreement and in any other Credit Document executed and delivered
in connection herewith shall survive the execution and delivery hereof and
thereof.
5.26 Affiliate Transactions. Except as set forth on Schedule D hereto,
----------------------
neither the Borrower nor any Subsidiary is a party to or bound by any agreement
or arrangement (whether oral or written) to which any Affiliate of the Borrower
or any Subsidiary is a party except as permitted pursuant to Section 7.8 hereof.
-----------
5.27 Accuracy and Completeness of Information. All factual information
----------------------------------------
heretofore, contemporaneously or hereafter furnished by or on behalf of the
Borrower or any of its Subsidiaries in writing to the Agent, any Lender, or the
Auditors for purposes of or in connection with this Credit Agreement or any
Credit Documents, or any transaction contemplated hereby or thereby is or will
be true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information not misleading at such time.
There is no fact now known to any officer of the Borrower or any of its
Subsidiaries which has, or would have, a Material Adverse Effect which fact has
not been set forth herein, in the Financial Statements, or some certificate,
opinion or other written statement made or furnished by the Borrower to the
Agent.
5.28 Representations Upon Execution. The Borrower hereby represents and
------------------------------
warrants as of the date of this Credit Agreement that (i) the execution and
delivery of this Credit Agreement (A) are within the Borrower's corporate
powers, (B) have been duly authorized by all necessary corporate action, (C)
require no further action or order by or in respect of or filing with any
governmental body, agency or official, (D) do not contravene or constitute a
default under any provision of any applicable law, statute, ordinance,
regulation, rule, order or other governmental restriction or of the Articles or
Certificates of Incorporation or By-laws of the Borrower, (E) do not cause a
violation of any agreement, judgment, injunction, order, decree, indenture,
contract, lease, instrument or other commitment to which the Borrower is a party
or by which the Borrower or any of its assets are bound and (F) will not result
in the creation or imposition of any Lien upon any asset of the Borrower under
any existing indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Borrower is a party or by which the
Borrower or any of its assets may be bound and (ii) this Credit Agreement is the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.
65
ARTICLE 6
---------
Affirmative Covenants
---------------------
Until termination of the Commitments and payment and satisfaction of all
Obligations due hereunder (other than Letter of Credit Obligations with respect
to Letters of Credit expiring after the Expiration Date which have been cash
collateralized pursuant to Section 4.1), the Borrower agrees that, unless the
-----------
Agent shall have certified to the Borrower that the Required Lenders shall have
otherwise consented in writing:
6.1 Information. The Borrower will deliver:
-----------
(a) to each of the Lenders, (i) as soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower,
consolidated and consolidating balance sheets of the Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of earnings, changes in
consolidated shareholders equity and changes in consolidated cash flow for
such fiscal year, setting forth in the case of each consolidated financial
statement in comparative form the figures for the previous fiscal year,
including the previous fiscal year budget; all (except for the
consolidating statements) accompanied by an opinion of the Auditors
unqualified as to scope of audit and stating that such financial statements
present fairly in all material respects the financial position of the
Borrower and its Consolidated Subsidiaries and the results of their
operations and cash flows for such fiscal year in conformity with generally
accepted accounting principles and otherwise reported on in a manner
acceptable to the Securities and Exchange Commission, accompanied by a
written statement signed by the Auditors as to whether in the course of
such firm's audit anything of a financial or accounting nature has come to
its attention to cause it to believe that any Default or Event of Default
existed on the date of such statements and stating whether anything has
come to its attention to cause it to believe the calculations set forth in
the officers certificate delivered pursuant to subsection (c) below were
not prepared in accordance with the terms hereof and (ii) as soon as
available and in any event within 180 days after the end of each fiscal
year of the Borrower, a copy of the Auditors' Management Letter to the
Borrower relating to financial statements for such fiscal year delivered
pursuant to clause (i) above;
(b) to each of the Lenders, as soon as available and in any event
within 45 days after the end of each of the first three quarters of each
fiscal year of the Borrower, consolidated and consolidating balance sheets
of the Borrower and its Consolidated Subsidiaries as of the end of such
quarter and the related consolidated and consolidating statements of
earnings, changes in consolidated shareholders equity and changes in
consolidated cash flow for such quarter and for the portion of the
Borrower's fiscal year
66
ended at the end of such quarter, setting forth in the case of each
consolidated financial statement in comparative form the figures for the
corresponding quarter and the corresponding portion of the Borrower's
previous fiscal year, including the previous fiscal year budget, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by the chief financial officer or the
chief accounting officer of the Borrower;
(c) to each of the Lenders, simultaneously with the delivery of
each set of financial statements referred to in subsections (a) and (b)
--------------- ---
above (i) a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth in reasonable detail any
calculations required to establish whether the Borrower was in compliance
with the requirements of Sections 7.6, 7.7 and 7.11 hereof on the date of
------------ --- ----
such financial statements, and (ii) a compliance certificate in the form of
Exhibit M attached hereto (the "Compliance Certificate");
(d) to each of the Lenders, as soon as available and in any event
within 30 days after the end of each of the first two months of each fiscal
quarter (45 days in the case of the last month of each fiscal year of the
Borrower), statements of earnings and consolidated and consolidating
balance sheets of the Borrower and its Consolidated Subsidiaries as of the
end of such month, and related changes in consolidated cash flow for such
month and for the portion of the Borrower's fiscal year ended at the end of
such month, all certified (subject to normal year-end adjustments) as to
fairness of presentation, GAAP and consistency by the chief financial
officer or chief accounting officer of the Borrower;
(e) to each of the Lenders, as soon as available and in any event
no later than 60 days after the last day of each fiscal year of the
Borrower, copies of annual budgets and other similar materials prepared by
or for the Borrower and any of its Subsidiaries, which budgets and other
information shall be presented on a monthly basis for the then current
fiscal year and on an annual basis for each subsequent fiscal year;
(f) to each of the Lenders, within three Business Days of any
officer of the Borrower obtaining knowledge of any Event of Default or any
Default, if such Default is then continuing, a certificate of the chief
financial officer or the chief accounting officer of the Borrower setting
forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto;
(g) to each of the Lenders, promptly upon the mailing thereof to
the shareholders of the Borrower generally, copies of all financial
statements, reports and proxy statements so mailed;
67
(h) to each of the Lenders, promptly upon the filing thereof,
copies of all registration statements (other than the exhibits thereto
unless the securities covered thereby are held or distributed by the
Borrower, other than any registration statement on Form S-3 to the extent
that it relates to a secondary offering, and other than any registration
statement on Form S-8 or its equivalent), and reports on Form 10-K, 10-Q
and 8-K (or their equivalents) which the Borrower shall have filed with the
Securities and Exchange Commission;
(i) to each of the Lenders, if and when any ERISA Affiliate (i)
gives or is required to give notice to the PBGC of any Reportable Event
with respect to any Plan which could reasonably be expected to constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such
Reportable Event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA,
a copy of such notice; or (iii) receives notice from the PBGC under Title
IV of ERISA of an intent to terminate or appoint a trustee to administer
any Plan, a copy of such notice;
(j) to each of the Lenders, within three Business Days of any
officer of the Borrower obtaining knowledge of (i) any litigation or
proceeding affecting the Borrower or any Subsidiary in which the amount
involved is $3,000,000 or more and is not covered by insurance or in which
injunctive or similar relief is sought, or (ii) any order, judgment or
decree in excess of $1,000,000 which shall have been entered against the
Borrower or any Subsidiary or any of their respective properties or assets,
a certificate of the chief financial officer or accounting officer of the
Borrower setting forth details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(k) to each of the Lenders, (i) forthwith upon the occurrence of
(A) any Change in Control or (B) any receipt of Net Cash Proceeds in excess
of $2,500,000 from any single Asset Disposition, a certificate of the chief
financial officer or the chief accounting officer of the Borrower setting
forth, with respect to any Change in Control, the details thereof and the
action which the Borrower is taking or proposes to take with respect
thereto and with respect to the receipt of any Net Cash Proceeds, the
details of the bases for calculation and the sources thereof; and (ii)
forthwith upon becoming aware thereof, notice that a tender offer, exchange
offer or market purchase program or proxy solicitation has been announced
or is pending or has been consummated which, if consummated or otherwise
successful, could result in a Change in Control;
(l) to each of the Lenders, prompt notice of any notification of a
violation of any law or regulation received by the Borrower or any
Subsidiary from any local, state,
68
federal or foreign governmental authority or agency which violation could
reasonably be expected to have a Material Adverse Effect;
(m) to each of the Lenders, prompt notice of any material change in
the Borrower's credit and collection policy;
(n) to each of the Lenders, prompt notice, in reasonable detail, of
any material change relating to the type, quantity or quality of the
Inventory, Accounts or any other material portion of the Collateral, or any
event which could have a material adverse effect on the value of such
Collateral or any event affecting the validity or priority of the security
interests granted to the Agent and the Lenders in such Collateral;
(o) to each of the Lenders, weekly, before 12:00 noon on the second
Business Day of each week, and monthly within ten (10) Business Days of the
last Business Day of each month, and at any other time reasonably requested
by the Agent, a borrowing base certificate (the "Borrowing Base
Certificate") in substantially the form of Exhibit N hereto, duly
completed, detailing the Borrower's Eligible Accounts Receivable, Eligible
Inventory and Eligible Retail Inventory, as of the last day of, as
applicable, such preceding week or month (or as of the date reasonably
requested by the Agent), as applicable, and, in each case, certified by the
Borrower's chief executive officer, chief financial officer, controller or
other senior financial officer. In addition, each monthly Borrowing Base
Certificate shall have attached to it as exhibits the summary accounts
receivable aged trial balance for such month and a summary schedule of
Inventory owned by the Borrower. The Agent may, but shall not be required
to, rely on each Borrowing Base Certificate delivered hereunder as
accurately setting forth the available Borrowing Base for all purposes of
this Credit Agreement (including, without limitation, Sections 3.2 and 3.3
------------ ---
hereof) until such time as a new Borrowing Base Certificate is delivered to
the Agent in accordance herewith. In the event at any time the Agent's
calculation of the Borrower's Eligible Accounts Receivable, Eligible
Inventory and Eligible Retail Inventory is materially less than the
calculations of the Borrower set forth on the most recent Borrowing Base
Certificate delivered to the Agent, the Agent shall notify the Borrower of
such fact; provided that the Agent shall incur no liability to the Borrower
-------- ----
if the Agent fails to give such notice;
(p) to each of the Lenders, within three Business Days of the chief
executive officer, chief financial officer, chief accounting officer,
controller or other senior financial officer of the Borrower obtaining
knowledge of any Material Adverse Change, a certificate of the chief
financial officer or accounting officer of the Borrower setting forth
details thereof and the action which the Borrower is taking or proposes to
take with respect thereto; and
69
(q) to the Agent, from time to time such additional information
regarding the financial position or business of the Borrower or any
Subsidiary as the Agent, at the request of any Lender, may reasonably
request.
6.2 Payment of Obligations. The Borrower will pay and discharge, and will
----------------------
cause each of its Subsidiaries to pay and discharge, at or before maturity, all
of their respective material obligations and liabilities, including, without
limitation, tax liabilities, except where the same may be contested in good
faith by appropriate proceedings, and will maintain, and will cause each of its
Subsidiaries to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
6.3 Maintenance of Property: Insurance.
----------------------------------
(a) The Borrower will keep, and will cause each of its Subsidiaries
(other than Foreign Subsidiaries) to keep, all material property useful and
necessary in their businesses in good working order and condition (ordinary
wear and tear, casualty and condemnation excepted) and not commit or suffer
any waste with respect to any of its material properties.
(b) The Borrower agrees to maintain, and to cause each of its
Subsidiaries (other than Foreign Subsidiaries) to maintain, public
liability insurance, third party property damage and replacement cost
insurance on the Collateral under such policies of insurance, with such
insurance companies, in such amounts and covering such risks as are at all
times satisfactory to the Agent in its commercially reasonable judgment.
Such insurance may include levels of self insurance comparable to those in
place on the date of this Credit Agreement or otherwise satisfactory to the
Agent in its commercially reasonable judgment. All policies covering the
Collateral are to name the Borrower and the Agent as additional insureds
and loss payees in case of loss, as their interests may appear, and are to
contain such other provisions as the Agent may reasonably require to fully
protect the Agent's interest in the Collateral and to any payments to be
made under such policies. Certificates of all insurance policies are to be
delivered to the Agent (with true copies of such policies to be made
available to the Agent) on or prior to the Closing Date, and such policies
shall have all premiums with respect thereto currently paid and contain
loss payable endorsements in the Agent's favor, and shall provide for not
less than ten (10) days prior written notice to the Agent, of the exercise
of any right of cancellation. In the event the Borrower or any of its
Subsidiaries (other than Foreign Subsidiaries) fail to respond in a timely
and appropriate manner (as determined by the Agent in its reasonable
discretion) with respect to collecting under any insurance policies
required to be maintained under this Section 6.3, the Agent shall have the
-----------
right, in the name of the Agent, the Borrower or any Subsidiary (other than
a Foreign Subsidiary) of the Borrower, to file claims under such insurance
policies, to receive and give acquittance for any payments that may be
payable thereunder, and to execute any and all endorsements, receipts,
releases,
70
assignments, reassignments or other documents that may be necessary to
effect the collection, compromise or settlement of any claims under any
such insurance policies. The Borrower shall provide written notice to the
Agent of the occurrence of any of the following events within five (5)
Business Days after the occurrence of such event: any material asset or
property owned or used by any Borrower or any of the Borrower's
Subsidiaries (other than a Foreign Subsidiary) (i) is damaged or destroyed,
or suffers any other loss, or (ii) is, or the Borrower receives notice of
the institution of any proceeding pursuant to which any such asset or
property could reasonably be expected to be, condemned, confiscated or
otherwise taken, in whole or in part, or the use thereof is otherwise
diminished so as to render impracticable or unreasonable the use of such
asset or property for the purposes to which such asset or property were
used immediately prior to such condemnation, confiscation or taking, by
exercise of the powers of condemnation or eminent domain or otherwise, and
in either case the amount of the damage, destruction, loss or diminution in
value is in excess of $1,000,000 (collectively, a "Casualty Loss"). The
Borrower shall diligently file and prosecute its claim or claims for any
award or payment in connection with a Casualty Loss. In the event of a
Casualty Loss with respect to any of the Collateral, the Borrower shall pay
to the Agent or deposit in the Concentration Account, promptly upon receipt
thereof, any and all insurance proceeds and payments received by the
Borrower or any of its Subsidiaries (other than Foreign Subsidiaries) on
account of damage, destruction, loss, condemnation or eminent domain
proceedings. So long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may use such proceeds and payments to
repair, replace or rebuild the asset or property or portion thereof that
was the subject of the Casualty Loss or, if such asset or property is not
material to the operations of Borrower, may use such proceeds and payments
as otherwise permitted pursuant to the terms of this Credit Agreement and
after the occurrence and during the continuance of any Default or Event of
Default the Agent may, at its election in its sole discretion either (a)
apply the proceeds realized from Casualty Losses to payment of accrued and
unpaid interest or outstanding principal under the Loans or (b) pay such
proceeds to the Borrower to be used to repair, replace or rebuild the asset
or property or portion thereof that was the subject of the Casualty Loss.
After the occurrence and during the continuance of an Event of Default, (i)
no settlement on account of any such Casualty Loss shall be made without
the consent of the Agent and (ii) the Agent may participate in any such
proceedings and the Borrower shall deliver to the Agent such documents as
may be requested by the Agent to permit such participation and shall
consult with the Agent, its attorneys and agents in the making and
prosecution of such claim or claims. The Borrower hereby irrevocably
authorizes and appoints the Agent its attorney-in-fact, after the
occurrence and continuance of an Event of Default, to collect and receive
for any such award or payment and to file and prosecute such claim or
claims, which power of attorney shall be irrevocable and shall be deemed to
be coupled with an interest, and the Borrower shall, upon demand of the
Agent, make, execute and deliver any and all assignments and other
instruments sufficient for the purpose of
71
assigning any such award or payment to the Agent for the benefit of the
Lenders, free and clear of any encumbrances of any kind or nature
whatsoever.
6.4 Compliance with Laws. The Borrower will comply, and cause each of its
--------------------
Subsidiaries to comply with all acts, regulations, orders, directions and
ordinances of any legislative, administrative or judicial body or official,
applicable to the Collateral or any part thereof, or to the operation of their
business (including, without limitation ERISA and the rules and regulations
thereunder) except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect.
6.5 Inspection of Property, Books and Records; Change of Name, Principal
--------------------------------------------------------------------
Place of Business, Location of Collateral, Etc. The Borrower will keep, and
----------------------------------------------
will cause each of its Subsidiaries to keep, proper books of record and account
in which full, true and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to their businesses and activities;
the Borrower shall make no significant change in its accounting practices except
as permitted or required by GAAP. The Borrower shall have the right, however,
to change its fiscal year on one occasion, provided, however, as a condition
-------- -------
precedent thereto, the Borrower shall, at the request of the Agent, enter into
an amendment of this Credit Agreement, in form and substance reasonably
satisfactory to the Required Lenders, sufficient to make this Credit Agreement
(and the terms contained herein), after effectuation of such proposed change in
fiscal year, financially and economically equivalent to this Credit Agreement as
it existed prior to the effectuation of such proposed change. The Borrower
agrees that the Agent or its agents may enter upon the premises of the Borrower
or any of its Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable prior notice, and at any time at all and
without notice on and after the occurrence and during the continuance of an
Event of Default, for the purpose of (i) inspecting the Collateral, (ii)
inspecting and/or copying (at Borrower's expense) any and all records pertaining
thereto, (iii) discussing the affairs, finances and business of the Borrower
with any officers, employees and directors of the Borrower or with the Auditors
and (iv) verifying Eligible Accounts Receivable and/or Eligible Inventory. Any
Lender may accompany the Agent on any such visit at such Lender's own expense.
The Borrower agrees to afford the Agent ten (10) Business Days prior written
notice of (a) any new or additional location of any Collateral at which location
Collateral having an aggregate value in excess of $1,000,000 will be located,
(b) any change in the location of its chief executive office or any new or
additional places of business (other than new retail locations for which the
Borrower shall give Agent written notice within fifteen (15) days after the
opening thereof) from the locations specified in Schedule D, and (c) any change
in its corporate name and, in each such case, the Borrower further agrees to
execute in advance of such addition or change and cause to be filed and/or
delivered to the Agent any financing statements or other documents required by
the Agent, all in form and substance satisfactory to the Agent.
72
6.6 Compliance with Credit Documents. The Borrower will comply, and will
--------------------------------
cause each of its Subsidiaries to comply, with the terms of each of the Credit
Documents.
6.7 Covenant to Mortgage After-Acquired Property. With respect to any real
--------------------------------------------
property, acquired and held in fee or owned by the Borrower at any time after
the date hereof, and having a gross cost individually in excess of $2,500,000,
as soon as possible and in no event later than 90 days after the relevant
acquisition date and/or construction completion date, whichever is later, the
Borrower shall grant to the Agent, for the benefit of the Lenders, a Lien on all
such property, subject to the Permitted Liens, upon the terms set forth in the
Security Documents, as appropriate, and satisfactory in form and substance to
the Agent; provided, however, that in the event (i) such real property is
-------- -------
encumbered with a purchase money mortgage permitted pursuant to Section 7.4(f)
--------------
hereof or any extensions, modifications and replacements thereof permitted
pursuant to Section 7.4(i), (ii) the holder of such Lien and the Agent have
--------------
entered into an intercreditor agreement reasonably satisfactory to the Agent
permitting the Agent access to such real property for a reasonable period of
time to the extent necessary to assemble, complete and sell any Collateral
located thereon (or, in the event an acceptable intercreditor agreement can not
be obtained, any such Collateral is excluded from the Borrowing Base calculation
hereunder) and (iii) no Event of Default shall have occurred and be continuing,
the Borrower shall not be required to grant the Agent a Lien on such real
property. The Borrower, at its own expense, shall execute, acknowledge and
deliver, or cause the execution, acknowledgement and delivery of, and thereafter
register, file or record in the appropriate governmental office, any document or
instrument reasonably deemed by the Agent to be necessary or desirable for the
creation and perfection of the foregoing Liens.
6.8 Corporate Existence. The Borrower (i) except as otherwise permitted
-------------------
pursuant to Section 7.5, shall maintain its corporate existence, shall maintain
-----------
in full force and effect all material licenses, bonds, franchise, leases,
qualifications to do business, trademarks, patents, contracts and other rights
necessary for the conduct of its businesses, (ii) shall continue in, and limit
its operations to, the same general lines of business as that presently
conducted by it and reasonable extensions thereof and (iii) shall comply with
all applicable laws and regulations of any federal, state or local governmental
authority, except in each case when noncompliance with the foregoing would not,
in the aggregate, have a Material Adverse Effect.
6.9 ERISA. The Borrower shall deliver to the Agent, at the Borrower's
-----
expense, the following information at the times specified below:
(a) within twenty (20) Business Days after the Borrower or any
ERISA Affiliate knows that a Termination Event has occurred which could
reasonably be expected to result in a liability to the Borrower of
$1,000,000 or more, a written statement of the chief financial officer of
the Borrower describing such Termination Event and the action, if any,
which the Borrower or any other entities have taken, are taking or propose
to take with
73
respect thereto, and when known, any action taken or threatened by the
Internal Revenue Service, DOL or PBGC with respect thereto;
(b) within sixty (60) Business Days after the Borrower or any ERISA
Affiliate knows that a prohibited transaction (as defined in Sections 406
of ERISA and 4975 of the Internal Revenue Code) has occurred which could
reasonably be expected to result in a liability to the Borrower of
$1,000,000 or more, a statement of the chief financial officer of the
Borrower describing such transaction and the action which the Borrower or
other such entities have taken, are taking or propose to take with respect
thereto;
(c) at any time that Agent may reasonably request, copies of each
annual report (form 5500 series), including Schedule B thereto, filed with
respect to each Benefit Plan;
(d) at any time that Agent may reasonably request, copies of each
actuarial report for any Benefit Plan or Multiemployer Plan and each annual
report for any Multiemployer Plan;
(e) within three (3) Business Days after the filing thereof with
the Internal Revenue Service, a copy of each funding waiver request filed
with respect to any Benefit Plan with respect to any funding of $1,000,000
or more and all communications received by the Borrower or any ERISA
Affiliate with respect to such request;
(f) within twenty (20) Business Days upon the occurrence thereof,
notification of any increase in the benefits of any existing Plan or the
establishment of any new Plan or the commencement of contributions to any
Plan to which any Borrower or any ERISA Affiliate was not previously
contributing, in either case, which could reasonably be expected to result
in an increase in the annual contributions necessary to satisfy the minimum
funding requirements of ERISA or the terms of such Plan to any of the
Borrower of $1,000,000 or more;
(g) within three (3) Business Days after receipt by the Borrower or
any ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or
to have a trustee appointed to administer a Benefit Plan, in either case
which could reasonably be expected to result in a liability to the Borrower
of $1,000,000 or more, copies of each such notice;
(h) within ten (10) Business Days after receipt by the Borrower or
any ERISA Affiliate of any unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Plan under
Section 401(a) of the Internal Revenue Code which could reasonably be
expected to result in a liability to the Borrower of $1,000,000 or more,
copies of each such letter;
74
(i) within ten (10) Business Days after receipt by the Borrower or
any ERISA Affiliate of a notice regarding the imposition of withdrawal
liability of $1,000,000 or more under Section 4203, 4204 or 4205 of ERISA,
copies of each such notice;
(j) within ten (10) Business Days after the Borrower or any ERISA
Affiliate fails to make a required installment or any other required
payment of $1,000,000 or more under Section 412 of the Internal Revenue
Code on or before the due date for such installment or payment, a
notification of such failure; and
(k) within ten (10) Business Days after the Borrower or any ERISA
Affiliate knows (a) a Multiemployer Plan has been terminated, (b) the
administrator or plan sponsor of a Multiemployer Plan intends to terminate
a Multiemployer Plan, or (c) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan,
in any such case, which could reasonably be expected to result in a
liability to the Borrower of $1,000,000 or more, a written statement
setting forth any such event or information.
For purposes of this Section 6.9, the Borrower and any ERISA Affiliate
-----------
shall be deemed to know all facts known by the administrator of any Plan of
which such entity is the plan sponsor.
The Borrower shall establish, maintain and operate all Plans to comply with
the applicable provisions of ERISA, Internal Revenue Code, and all other
applicable laws, other than to the extent that the Borrower is in good faith
contesting by appropriate proceedings the validity or application of any such
provision or law, except to the extent failure to so comply could not reasonably
be expected to result in the Borrower incurring a liability, individually or in
the aggregate equal to or in excess of $2,500,000.
6.10 Environmental Matters.
---------------------
(a) The Borrower will use its best efforts to conduct its business
and the businesses of each of its Subsidiaries so as to comply with all
Environmental Laws in all jurisdictions in which any of them is or may at
any time be doing business, except to the extent that the Borrower or any
of its Subsidiaries are contesting, in good faith by appropriate legal
proceedings, any such Environmental Law or interpretation thereof or
application thereof and except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect; provided,
--------
further, that the Borrower and each of its Subsidiaries shall comply with
-------
the order of any court or other governmental body or applicable
jurisdiction relating to such Environmental Laws unless the Borrower or
Subsidiary shall currently be prosecuting an appeal or proceedings for
review and shall have secured a stay of enforcement or execution or other
arrangement postponing enforcement or execution pending such appeal or
proceedings for review. If the Borrower
75
or any Subsidiary of the Borrower shall (a) receive notice that any
violation of any Environmental Law may have been committed or is about to
be committed by the Borrower or any such Subsidiary, (b) receive notice
that any administrative or judicial complaint or order has been filed or is
about to be filed against the Borrower or any such Subsidiary alleging
violations of any Environmental Law or requiring the Borrower or any such
Subsidiary to take any action in connection with the release of Hazardous
Substances into the environment or (c) receive any notice from a federal,
state, or local governmental agency or private party alleging that the
Borrower or Subsidiary may be liable or responsible for costs associated
with a response to or cleanup of a release of a Hazardous Substance into
the environment or any damages caused thereby, the Borrower shall provide
the Agent with a copy of such notice within thirty (30) days after the
receipt thereof by the Borrower or such Subsidiary. The Borrower shall
promptly take all actions necessary to prevent the imposition of any Liens
on any of its properties or any of the properties of any of its
Subsidiaries arising out of or related to any environmental matters.
(b) In the event that any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any
kind or nature (the "Remedial Work") with respect to any real property
owned, operated or leased by the Borrower or any of its Subsidiaries is
required to be performed by the Borrower or any of the Subsidiaries under
any applicable local, state or federal law or regulation, any judicial
order, or by any governmental or nongovernmental entity or Person because
of, or in connection with, the current or future presence, suspected
presence, release or suspected release of a Hazardous Substance in or into
the air, soil, groundwater, surface water or soil vapor on, about, under or
within the Property (or any portion thereof), the Borrower or such
Subsidiary shall within 30 days after written demand for performance
thereof by the Agent (or such shorter period of time as may be required
under any applicable law, regulation, order or agreement), commence and
thereafter diligently prosecute to completion, all such Remedial Work
unless the requirement to perform such Remedial Work is being contested in
good faith by the Borrower and to the reasonable satisfaction of the Agent.
6.11 Collateral Records. The Borrower agrees to promptly execute and
------------------
deliver, and to cause each of its Subsidiaries to execute and deliver, to the
Agent, from time to time, solely for the Agent's convenience in maintaining a
record of the Collateral, such written statements and schedules as the Agent may
reasonably require, including without limitation those described in Section 6.1
-----------
of this Credit Agreement, designating, identifying or describing the Collateral
pledged to the Lenders hereunder. The Borrower's or any of its Subsidiaries'
failure, however, to promptly give the Agent such statements or schedules shall
not affect, diminish, modify or otherwise limit the Agent's security interests
in the Collateral. In addition, upon the Agent's reasonable request, the
Borrower will make available to the Agent copies of agreements with, or purchase
orders from, the customers of the Borrower and its Subsidiaries, and copies of
invoices to customers, proof of shipment or delivery and such other
documentation and information relating
76
to said Collateral as the Agent may reasonably require. Failure to provide the
Agent with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interests granted herein. The Borrower hereby
authorizes the Agent to regard its or any of its Subsidiaries' printed name or
rubber stamp signature on assignment schedules or invoices as the equivalent of
a manual signature by such Person's authorized officers or agents.
6.12 Security Interests. The Borrower will defend the Collateral against
------------------
all claims and demands of all Persons at any time claiming the same or any
interest therein which claims or demands are in excess of $500,000 or otherwise
affect a material portion of the Collateral (provided, however, that the failure
-------- -------
to be successful in such defense shall only be an Event of Default hereunder to
the extent set forth in Section 10.1(g) below). The Borrower agrees to comply,
---------------
and to cause each of its Subsidiaries to comply, with the requirements of all
state and federal laws in order to grant to the Agent and the Lenders valid and
perfected first security interests in the Collateral (other than Collateral
located outside the United States and, except as required by the Security
Agreement, motor vehicles and other equipment covered by a certificate of title
statute), subject only to prior Liens permitted pursuant to Section 7.4(a),
--------------
Section 7.4(e), Section 7.4(f), Section 7.4(i) and Permitted Liens prior to the
-------------- -------------- --------------
Agent's security interest by operation of law and other Liens permitted pursuant
to Section 7.4 hereof, and except to the extent the Agent's Lien in cash held by
-----------
the Borrower as xxxxx cash or till cash in the ordinary course of its business
consistent with past practice shall not remain perfected. Without limiting the
generality of the foregoing, the Borrower shall promptly, upon the request of
any Lender, at the Borrower's expense, execute, acknowledge and deliver, or
cause the execution, acknowledgement and delivery of, and thereafter register,
file or record, or cause to be registered, filed or recorded, in an appropriate
governmental office, any document or instrument supplemental to or confirmatory
of the Ancillary Documents or otherwise deemed by the Agent necessary or
reasonably desirable for the continued validity, perfection and priority of the
Liens on the Collateral covered thereby to the extent required by the
immediately preceding sentence. The Agent is hereby authorized by the Borrower
to file any financing statements covering the Collateral whether or not the
Borrower's signatures appear thereon. The Borrower agrees to do, and to cause
each of its Subsidiaries to do, whatever the Agent may reasonably request, from
time to time, by way of: filing notices of liens, financing statements, fixture
filings and amendments, renewals and continuations thereof; cooperating with the
Agent's custodians; keeping stock records; using best efforts to obtain waivers
from landlords and mortgagees and from warehousemen, fillers, processors and
packers and their respective landlords and mortgagees; paying claims, which
might if unpaid, become a Lien on the Collateral; and performing such further
acts as the Agent may reasonably require in order to effect the purposes of this
Credit Agreement and the other Credit Documents. Any and all fees, costs and
expenses, of whatever kind and nature (including any Taxes, attorneys' fees or
costs for insurance of any kind), which the Agent may incur with respect to the
Collateral or the Obligations; in filing public notices; in preparing or filing
documents; making title examinations or rendering opinions; in protecting,
maintaining, or preserving the Collateral or its interest therein; in enforcing
or foreclosing the
77
Liens hereunder, whether through judicial procedures or otherwise; or in
defending or prosecuting any actions or proceedings arising out of or relating
to its transactions with the Borrower or any of its Subsidiaries under this
Credit Agreement or any other Credit Document, shall be borne and paid by the
Borrower. If same are not promptly paid by the Borrower, the Agent may pay same
on the Borrower's behalf, and the amount thereof shall be an Obligation secured
hereby and due to the Agent on demand.
6.13 Taxes. The Borrower agrees to pay, when due, and to cause each of its
-----
Subsidiaries to pay when due, all Taxes lawfully levied or assessed against the
Borrower, any of its Subsidiaries or any of the Collateral; provided, however,
-------- -------
that, unless such Taxes have become a federal tax or ERISA Lien on any of the
assets of such Person, no such Tax need be paid if the same is being contested,
in good faith, by appropriate proceedings promptly instituted and diligently
conducted and if an adequate reserve or other appropriate provision shall have
been made therefor as reflected on the audited financial statements for the
fiscal year ended December 28, 1996 in accordance with GAAP, and, to the extent
such reserves shall be taken thereafter, consistent with the Borrower's past
practice.
6.14 Use of Proceeds. The initial advances made to the Borrower under this
---------------
Credit Agreement shall be used by the Borrower to repay certain indebtedness, to
pay the costs and expenses contemplated hereby which are due and payable on the
Closing Date, including without limitation the Fees and Expenses pursuant to
Article 8 hereof, and for working capital and general corporate purposes of the
---------
Borrower; and the proceeds of any subsequent advances made hereunder shall be
used by the Borrower solely for working capital and general corporate purposes.
In addition, Borrower shall not use any portion of the proceeds of any Loans for
the purpose of purchasing or carrying any "margin stock" (as defined in
Regulation G of the Board of Governors of the Federal Reserve System) or for any
other purpose which violates the provisions of Regulation G, U or X of said
Board of Governors or for any other purpose in violation of any applicable
statute or regulation, or of the terms and conditions of this Credit Agreement.
The Borrower shall use the proceeds of each Acceptance solely to reimburse the
Issuing Bank of each Acceptance Letter of Credit for obligations owing to such
Issuing Bank on account of drawings thereunder.
6.15 Collection of Accounts. Unless an Event of Default has occurred and
----------------------
shall not have been waived, the Borrower may and will enforce and collect in
accordance with its credit and collection policy, all amounts owing on the
Accounts, for the Lenders' benefit and on the Lenders' behalf, but at the
Borrower's expense in accordance with the provisions of Section 8.5 hereof; such
-----------
privilege shall terminate automatically, however, upon the occurrence and during
the continuance of any Event of Default after notice from the Agent. Any
checks, cash, notes or other instruments or property received by the Borrower or
any Subsidiary with respect to any Accounts shall be immediately deposited into
the collection and concentration accounts maintained pursuant
78
to Section 3.6 hereof. No checks, drafts or other instruments received by the
-----------
Agent shall constitute final payment unless and until such instruments have
actually been collected.
6.16 Notice; Credit Memoranda; and Returned Goods. The Borrower agrees to
--------------------------------------------
issue credit memos promptly (with copies made available to the Agent upon its
request) upon accepting returns or granting allowances, and may continue to do
so until after the occurrence and during the continuance of an Event of Default
and notice from the Agent. After the occurrence and during the continuance of
an Event of Default and notice from the Agent, the Borrower agrees that all
returned, reclaimed or repossessed merchandise or goods shall be set aside by
the Borrower, marked with the Agent's and the Lenders' name and held by the
Borrower for the Agent's and the Lenders' account as owner and assignee.
6.17 Trademarks. The Borrower shall do and cause to be done all things
----------
necessary to preserve and keep in full force and effect all registrations of
trademarks, service marks and other marks, trade names or other trade rights
unless any of the foregoing is no longer in use or is of immaterial value.
Promptly after obtaining any federal registration of any trademark, trade name
or other trade right or the filing of any application therefor, the Borrower
shall deliver to the Agent for the benefit of the Lenders an undated Trademark
Security Agreement, executed in blank, with respect to each such registration
and application.
6.18 Patents. The Borrower shall do and cause to be done all things
-------
necessary to preserve and keep in full force and effect all patents and patent
applications unless any of the foregoing is no longer in use or of immaterial
value. Promptly after obtaining any federal registration of any patent or the
filing of any application therefor, the Borrower shall deliver to the Agent for
the benefit of the Lenders an undated Patent Security Agreement, executed in
blank, with respect to each such registration or application.
ARTICLE 7
---------
Negative Covenants and Financial Covenants
------------------------------------------
Until termination of the Commitments and payment and satisfaction of all
Obligations due hereunder (other than Letter of Credit Obligations with respect
to Letters of Credit expiring after the Expiration Date which have been cash
collateralized pursuant to Section 4.1), the Borrower agrees that, unless the
-----------
Agent shall have certified to the Borrower that the Required Lenders shall have
otherwise consented in writing:
79
7.1 Debt and Guarantees.
-------------------
The Borrower shall not create, incur, assume or permit to be
outstanding any Debt of Borrower (excluding in any event, for purposes of
this Section 7.1, any Debt of Foreign Subsidiaries) other than:
-----------
(i) Debt incurred pursuant to this Credit Agreement;
(ii) Debt outstanding on the Closing Date and identified on
Schedule D;
----------
(iii) [INTENTIONALLY OMITTED]
(iv) Debt consisting of Guarantees of the Debt of any Foreign
Subsidiaries;
(v) Funded Debt secured by Borrower's headquarters facility
located at Xxx Xxxxxxx Xxxx, Xxxxx Xxxxxxx, Xxxxxxxxxxxxx,
so long as the terms and conditions thereof are commercially
reasonable; Agent hereby agrees to provide all necessary
releases of Liens necessary to effect any such financing;
(vi) Any other Funded Debt not described in clauses (i) through
(v) above (the "Additional Permitted Debt") which, when
aggregated with the Funded Debt of Borrower under clauses
(i), (ii) and (v) above then outstanding, shall not exceed
the sum of $225,000,000;
(vii) Debt created in connection with the refinancing of any
Debt permitted under clauses (i) through (iii) and clauses
----------- ----- -------
(v) and (vi) above in an amount not greater than the amount
--- ----
required to pay the Debt so refinanced, provided such Debt
shall contain terms substantially equivalent to (or more
favorable to the Borrower than) the terms of the Debt being
refinanced; provided, that, any such Debt created to
-------- ----
refinance any Debt subordinated to the Obligations (or any
part thereof) shall be expressly subordinated to the
Obligations and contain subordination terms and such other
terms and conditions which, in each case in the opinion of
the Agent, are substantially equivalent (or more favorable
to
80
the Agent and the Lenders) to those contained in the Debt
being refinanced. Any Debt originally permitted under
clause (vi) above which is subsequently refinanced as
permitted by this clause (vii) will constitute usage of the
dollar amount limitations provided in such clause and, will,
but only to the extent and in the amounts outstanding,
reduce the amounts otherwise permitted thereunder; and
(viii) To the extent that any Subsidiary shall become a Borrower
pursuant to Section 7.18(ii) hereof, Debt of any Borrower to
----------------
any other Borrower.
7.2 Restricted Payments. The Borrower will not, directly or indirectly,
-------------------
(i) except with (a) unused Unrestricted Proceeds, and (b) cumulative unused
Excess Consolidated Net Income and so long as no Default or Event of Default
shall have occurred and be continuing, declare or pay any dividend or make any
distribution on its capital stock or to the holders of its capital stock (other
than (x) dividends or distributions payable in its capital stock or rights to
acquire its capital stock and (y) so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom, cash dividends
on preferred stock), (ii) except with (a) unused Unrestricted Proceeds and (b)
cumulative unused Excess Consolidated Net Income and so long as no Default or
Event of Default shall have occurred and be continuing, redeem, repurchase or
otherwise acquire or retire for value, or permit any Subsidiary (other than a
Foreign Subsidiary) to, directly or indirectly, redeem, purchase or otherwise
acquire or retire for value, any such capital stock (except shares acquired upon
the conversion thereof into other shares of capital stock or rights to acquire
such capital stock, odd lot shares, and except for the repurchase or acquisition
of such capital stock held by directors, officers or employees of the Borrower
or any domestic Subsidiary upon death, disability, retirement or termination of
employment not to exceed $1,500,000 in the aggregate in any fiscal year) or
rights to acquire such capital stock or (iii) except with (a) unused
Unrestricted Proceeds, and (b) cumulative unused Excess Consolidated Net Income,
so long as no Default or Event of Default shall have occurred and be continuing,
redeem, repurchase, defease or otherwise acquire or retire for value, or permit
any Subsidiary (other than a Foreign Subsidiary) to, directly or indirectly,
redeem, repurchase, defease or otherwise acquire or retire for value, prior to
any scheduled or mandatory maturity, scheduled or mandatory repayment or
scheduled sinking fund payment (after giving effect to the exercise of any and
all unconditional (other than as to the giving of notice) options to extend the
maturity), Debt of the Borrower or any of such Subsidiaries (other than Debt
pursuant to this Credit Agreement and the refinancing of Debt permitted by
Section 7.1 (vii) hereof); provided, however that so long as any of the
-----------------
Obligations remain outstanding hereunder neither Borrower nor any Subsidiary
shall be permitted to, directly or indirectly, redeem, repurchase, defease or
otherwise acquire or retire for value, any of the Subordinated Notes.
81
7.3 Investments. The Borrower will not, and will not permit any of its
-----------
Subsidiaries (other than Foreign Subsidiaries) to, make or acquire any
Investment in any Person other than:
(a) Investments in Subsidiaries existing on the Closing Date and
disclosed on Schedule D and Investments in Subsidiaries in the form of
loans and advances permitted under Section 7.1(viii) hereof;
-----------------
(b) Permitted Investments;
(c) Investments consisting of purchase money notes received in
connection with the sale or disposition of any asset, provided such sale or
disposition was made in accordance with the terms of this Credit Agreement;
(d) Financial support permitted pursuant to Section 7.9 hereof; and
-----------
(e) Investments in new Subsidiaries, including new Foreign
Subsidiaries created after the date hereof, in an aggregate amount not to
exceed, at any one time, the sum of (i) $7,000,000 plus, without
duplication, (ii) unused Unrestricted Proceeds, and (iii) unused Excess
Consolidated Net Income.
7.4 Negative Pledge. Neither the Borrower nor any Subsidiary (other than a
---------------
Foreign Subsidiary) will create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except:
(a) Liens existing on the Closing Date and listed in Schedule D hereto
----------
securing Debt outstanding on the Effective Date;
(b) any Lien arising pursuant to any order of attachment, distraint or
similar legal process arising in connection with court proceedings so long
as the execution or other enforcement thereof is effectively stayed and the
claims secured thereby are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP have been set
aside;
(c) any Lien on an asset of a Subsidiary, securing Debt owed to the
Borrower;
(d) Liens created by and existing under the Ancillary Documents;
(e) Liens securing Debt incurred pursuant to Section 7.1(v);
--------------
(f) Liens securing Debt incurred pursuant to Section 7.1(vi) incurred
---------------
or assumed, in either case, for the purpose of financing all or any part of
the cost of acquiring
82
an asset (other than Inventory), provided that such Lien attaches only to
-------- ----
such asset and attaches concurrently with or within 90 days after the
acquisition thereof;
(g) [INTENTIONALLY OMITTED];
(h) any Permitted Liens; and
(i) any extension, renewal or substitution of or for any of the
foregoing Liens described in clauses (a), (e), (f), and (h) above or this
clause (i); provided in each case that (i) the Debt or other obligation or
--------
liability secured by the applicable Lien shall not exceed the Debt or other
obligation or liability existing immediately prior to such extension,
renewal or substitution and (ii) the Lien securing such Debt or other
obligation or liability shall be limited to the property which, immediately
prior to such extension, renewal or substitution, secured such Debt or
other obligation or liability, and improvements on or additions to such
property.
7.5 Consolidations, Mergers and Sales of Assets.
-------------------------------------------
(a) The Borrower may sell, convey, lease or otherwise transfer, or
cause or permit to be sold, conveyed, leased or otherwise transferred,
directly or indirectly, in whole or in part, any assets, including (i)
Inventory in the ordinary course of business, (ii) surplus, obsolete or
worn out property disposed of in the ordinary course of business (iii)
Accounts supported by letters of credit discounted on a commercially
reasonable basis, (iv) Cash Equivalents in the ordinary course of business,
(v) fixed assets valued at up to $100,000 per year for less than fair
consideration, and (vi) other assets, provided that (a) such dispositions
of other assets under clause (vi) shall be for fair value and (b) the Net
Cash Proceeds thereof shall be used to repay the Loans. The Borrower will
not, however, sell, convey, lease or otherwise transfer, or cause or permit
to be sold, conveyed, leased or otherwise transferred, directly or
indirectly, in whole or in part, any assets, other than Inventory in the
ordinary course of business, if by reason of, or after giving effect to
such transaction, (i) the Borrowing Base limitations under Section 3.2
-----------
hereof shall not be complied with, or (ii) at such time as there shall be
an Event of Default hereunder or if either by reason of, or after giving
effect to such transaction a Default or an Event of Default (including
failure to make payments required by Section 3.5(c)) shall exist.
--------------
(b) The Borrower shall continue to maintain the operating integrity of
its business and shall continue to operate only in the same general types
of businesses as now conducted thereby and reasonable extensions thereof,
and shall continue to preserve, renew and keep in full force and effect,
its corporate existence and all material rights, privileges and franchises
necessary or desirable in the normal conduct of its business, provided,
--------
however, that asset sales, mergers, consolidations and liquidations shall
-------
be allowed as
83
permitted under Sections 7.5(a) and (c) (so long as such Borrower shall
---------------
continue to be operated only in the same general types of businesses as now
conducted and reasonable extensions thereof).
(c) The Borrower will not and will not permit any Subsidiary (except
as otherwise permitted herein and excluding, in any case, a Foreign
Subsidiary) to consolidate or merge with or into any other Person, provided
--------
that (i) the Borrower may merge with or into another Subsidiary if the
----
Borrower is the corporation surviving such merger, (ii) any Subsidiary may
merge with or into any other Person provided that (x) following the merger
-------- ----
the surviving corporation shall be a wholly-owned Subsidiary of the
Borrower engaged in the same or similar general type of business as
conducted by such Subsidiary prior to such merger, (y) if such Person shall
be the corporation surviving such merger, and such Person is required by
Section 7.18 hereof to become a Borrower, such person executes an
------------
Assumption Agreement in form and substance reasonably acceptable to the
Agent whereby such Person becomes a co-obligor on the Obligations and a
Borrower hereunder and the Agent holds a perfected Lien on its assets
(including a first priority Lien on its Accounts and Inventory), and (z)
prior to completing the merger the Agent receives such Acknowledgement
Agreements as the Agent may reasonably request from any mortgagee or lessor
of property on which any Collateral is stored or otherwise located or any
warehouseman, filler, processor or packer at which any Collateral is stored
or otherwise located, and (iii) any Subsidiary may liquidate and transfer
substantially all its assets to, or consolidate with, or merge into, the
Borrower (so long as the provisions of Section 7.5(b) shall be observed);
--------------
and provided further, however, that no such consolidations or mergers may
-------- -------
be done at such time as there shall be an Event of Default hereunder or if
either by reason of, or after giving effect to such transaction there would
be a Default or an Event of Default. In the event of any such permitted
consolidation or merger, the Agent shall be given at least (i) ten (10)
Business Days' advance notice for any consolidation or merger of the
Borrower into any other Person and (ii) notice within five (5) Business
Days of any other consolidation or merger, and the Borrower shall, in
connection with any such consolidation or merger, execute, record and file
such instruments and certificates, if any, as may be necessary to continue
the perfection and relative priorities of the Liens of the Agent and the
Lenders in the Collateral (including the assets being acquired by the
Borrower by virtue of such merger). In addition, the assets of any
Subsidiary becoming a Borrower under Section 7.18 hereof may be disposed of
------------
through a merger or consolidation of such Subsidiary with and into another
Person that is not an Affiliate of such Subsidiary or by a sale of 100% of
the capital stock of any such Subsidiary to another such Person, if, and
only if the disposition of assets resulting from such merger, consolidation
or stock sale, if completed as an asset sale, would be permitted pursuant
to Section 7.5(a) hereof, including, to the extent applicable, compliance
--------------
with the requirements for a permitted asset sale set forth therein.
84
(d) Subject to any other applicable provision of this Credit
Agreement, the Borrower will not and will not permit any Subsidiary to
purchase or otherwise acquire all or substantially all of the assets of any
Person or all or substantially all of the capital stock or other ownership
interests of any Person if at such time there shall be an Event of Default
hereunder or if either by reason of, or after giving effect to, any such
transaction there would be a Default or Event of Default.
7.6 Capital Expenditures. Consolidated Capital Expenditures shall not,
--------------------
for any fiscal year of the Borrower, exceed $11,000,000, subject to the
additional provisions of this Section 7.6. To the extent Consolidated Capital
------------
Expenditures in any fiscal year are less than the maximum permitted amount of
Consolidated Capital Expenditures determined pursuant to this Section 7.6 for
-----------
such fiscal year, the amount of such difference may be carried forward and used
to determine the maximum permitted amount of Consolidated Capital Expenditures
in succeeding fiscal years of the Borrower, provided that the maximum amount
-------- ----
carried forward to any fiscal year pursuant hereto shall not exceed an amount
equal to 50% of the amount of the maximum Consolidated Capital Expenditures so
determined for the immediately preceding fiscal year.
As an addition to the maximum permissible amounts of Consolidated Capital
Expenditures for each fiscal year as set forth above, the Borrower and its
Consolidated Subsidiaries may incur additional Consolidated Capital Expenditures
out of any Insurance Proceeds, unused Unrestricted Proceeds, and unused Excess
Consolidated Net Income from the preceding fiscal year. The Borrower may also
incur additional Consolidated Capital Expenditures not to exceed the aggregate
amount of $2,500,000 during the term hereof for or in connection with costs of
compliance or remediation measures relating to Environmental Laws.
7.7 Interest Coverage Ratio. Borrower shall not permit the ratio of
-----------------------
EBITDA to Consolidated Interest Expense to be less than 1.6 to 1 during the term
hereof. Borrower's compliance with this Section 7.7 shall be tested at the end
-----------
of the fiscal quarter ending September 1997 for the immediately preceding three
(3) fiscal quarters, and at the end of each fiscal quarter thereafter for the
immediately preceding four (4) fiscal quarters.
7.8 Transactions with Affiliates. The Borrower will not, and will not
----------------------------
permit any of its Subsidiaries to, directly or indirectly, pay any funds to or
for the account of, make any Investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any other transaction
with, or render to or receive any service from, any Affiliate provided, however,
-------- -------
that the foregoing provisions of this Section 7.8 shall not prohibit, (a) the
-----------
Borrower or any Subsidiary from making sales to or purchases from any Affiliate
and, in connection therewith, extending credit or making payments, or from
making payments for services rendered by any Affiliate, or from effecting any
other transactions with an
85
Affiliate, if such sales or purchases are made or such services are rendered, or
such other transactions are effected, on terms and conditions at least as
favorable and reasonable to the Borrower or such Subsidiary as the terms and
conditions which would apply in a similar transaction on an arm's length basis
with a Person not an Affiliate and will not have a material adverse effect on
the Collateral taken as a whole or the Accounts and Inventory, (b) the
preparation and filing of one or more registration statements with respect to
securities of the Borrower owned by Interco or Apollo or a Controlled Account or
an Affiliate of Apollo or of a Controlled Account, and the payment of reasonable
expenses associated therewith other than underwriting discounts and commissions
so long as no Default or Event of Default shall have occurred and be continuing,
(c) the Borrower or any Subsidiary from participating in, or effecting, any
other transaction in connection with, any joint enterprise or other joint
arrangement with, any Affiliate if the Borrower or such Subsidiary participates
on a basis no less advantageous than the basis on which such Affiliate
participates on terms and conditions which would apply in a similar transaction
on an arm's length basis with a Person not an Affiliate, (d) payment of fees in
the aggregate amount not to exceed $1,000,000 to Apollo, a Controlled Account,
an Affiliate of Apollo or of a Controlled Account and Interco in any fiscal year
in respect of services rendered provided such fees are approved by the Board of
Directors of the Borrower and no Default or Event of Default shall have occurred
and be continuing on the date of such payment or occasioned thereby; and (e)
payments due to Interco with respect to the Tax Sharing Agreement dated as of
November 17, 1994, so long as no Default or Event of Default shall have occurred
and be continuing on the date of such payment or occasioned thereby. For
purposes of this Section 7.8, the term "Affiliate" shall not include
-----------
Subsidiaries of the Borrower.
The foregoing restrictions shall not apply to reasonable fees paid to and
indemnity provided on behalf of the Directors and officers of the Borrower or
any of its Subsidiaries in the ordinary course of business and consistent with
past practices.
7.9 Restrictions on Foreign Subsidiary Support. The Borrower will not
------------------------------------------
permit to exist any open account sales, transfers by the Borrower of goods of
any kind, or any other financial support, to any Foreign Subsidiary, if, when
aggregated with the then outstanding open account sales, transfers of goods, or
other financial support by the Borrower to all Foreign Subsidiaries, the fair
value thereof, as reasonably determined by the Borrower and reasonably approved
by the Agent, would exceed $110,000,000 at any one time.
7.10 Environmental Matters. The Borrower, will not, and will not permit
---------------------
any of the Subsidiaries to, use, generate, manufacture, produce, store, release,
discharge or dispose of, on, under or about any real property owned, operated or
leased by the Borrower or any of its Subsidiaries, or transport to or from any
such property, any Hazardous Substance, or (to the extent within the Borrower's
or any such Subsidiary's control) permit any other person to do so, where such
could reasonably be expected to have a Material Adverse Effect.
86
7.11 [INTENTIONALLY OMITTED].
7.12 [INTENTIONALLY OMITTED]
7.13 [INTENTIONALLY OMITTED]
7.14 [INTENTIONALLY OMITTED]
7.15 Amendments to Certificates of Incorporation and By-Laws. The Borrower
-------------------------------------------------------
shall not, nor shall it permit any of its Subsidiaries to, alter or modify their
respective Articles or Certificate of Incorporation or By-Laws in any manner
which could reasonably be expected to have a Material Adverse Effect. The
Borrower shall not change its corporate name, mailing address, principal place
of business or structure, unless it shall have complied with the requirements of
Section 6.5 hereof.
-----------
7.16 No Prohibited Transactions Under ERISA. The Borrower shall not do any
--------------------------------------
of the following if such action could reasonably be expected to result in the
Borrower incurring a liability, individually or in the aggregate equal to or in
excess of $2,500,000:
(a) Engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction which could result in a civil penalty or excise tax described
in Sections 502(i) of ERISA or 4975 of the Internal Revenue Code for which
a statutory or class exemption is not available or a private exemption has
not been previously obtained from the DOL;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA and 412 of the
Internal Revenue Code), whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any Benefit
Plan;
(e) fail, or permit any ERISA Affiliate to fail, to make any required
contribution or payment to any Multiemployer Plan;
(f) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other
payment;
87
(g) amend, or permit any ERISA Affiliate to amend, a Benefit Plan
resulting in an increase in current liability for the plan year such that
any Borrower or any ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue Code; or
(h) withdraw, or permit any ERISA Affiliate to withdraw, from any
Multiemployer Plan.
7.17 No Additional Bank Accounts. The Borrower will not, and shall not
---------------------------
permit any of its domestic Subsidiaries to, directly or indirectly, open,
maintain or otherwise have any checking, savings or other accounts at any bank
or other financial institution, or any other account where money is or may be
deposited or maintained with any Person, other than the Loan Disbursement
Account and the accounts set forth on Schedule D, except to the extent the
Borrower shall give the Agent prior written notice thereof.
7.18 No Additional Subsidiaries. The Borrower will not, and shall
--------------------------
not permit any of its Subsidiaries (other than Foreign Subsidiaries) to,
directly or indirectly, form or acquire any new Subsidiaries, including Foreign
Subsidiaries, unless, and subject to the limitations of Section 7.3 hereof, (i)
-----------
with respect to Foreign Subsidiaries, the capital stock thereof owned by the
Borrower shall be pledged as part of the Collateral except in the case of
Foreign Subsidiaries constituting "Controlled Foreign Corporations" as
referenced in Section 5.13(c) hereof, in which case Borrower shall not be
required to pledge hereunder or under the other Credit Documents more than 65%
of the total combined voting power of all classes of capital stock of such
Foreign Subsidiary entitled to vote, and (ii) with respect to all other
Subsidiaries, the capital stock thereof shall be pledged as part of the
Collateral and to the extent the Investment of the Borrower shall exceed
$500,000, such newly-formed Subsidiary shall execute an Assumption Agreement in
form and substance similar to that attached hereto and make a part hereof as
Exhibit B pursuant to which such Subsidiary shall become a co-obligor of the
Revolving Notes and a Borrower hereunder and shall pledge its assets to secure
the Obligations.
7.19 [INTENTIONALLY OMITTED]
ARTICLE 8
---------
Interest, Fees and Expenses
---------------------------
8.1 Interest on LIBOR Rate Loans. Subject to the provisions of Section
---------------------------- -------
8.4 hereof, interest on LIBOR Rate Loans shall be payable at the end of each
---
applicable Interest Period with respect to such LIBOR Rate Loan (or, in the case
of Interest Periods in excess of three months,
on the ninetieth (90th) and the last day of such Interest Period), at the date
of Conversion of such LIBOR Rate Loan (or a portion thereof) to a Prime Rate
Loan and at maturity of such LIBOR Rate
88
Loan at an interest rate per annum equal during the Interest Period for such
LIBOR Rate Loan to the Adjusted LIBOR Rate for the Interest Period in effect for
such LIBOR Rate Loan plus the LIBOR Rate Margin. The Agent upon determining the
----
Adjusted LIBOR Rate for any Interest Period shall promptly notify the Borrower
and the Lenders by telephone (confirmed promptly in writing) or in writing
thereof. Each determination by the Agent of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
8.2 Interest on Prime Rate Loans. Subject to the provisions of Section
---------------------------- -------
8.4 hereof, interest on Prime Rate Loans shall be payable monthly in arrears as
---
of the end of each month at an interest rate per annum equal to the Prime
Lending Rate plus one percent (1.00%). In the event of any change in said Prime
----
Lending Rate, the rate hereunder shall change, effective as of the day the Prime
Lending Rate changes. The rate hereunder shall be calculated based on a 360-day
year for the actual number of days elapsed.
8.3 Notice of Rollover and Notice of Conversion.
-------------------------------------------
(a) With respect to any borrowing consisting of LIBOR Rate Loans, the
Borrower may, subject to the provisions of Section 8.3(c) and provided that
--------------
no Default or Event of Default has occurred and is continuing, elect to
maintain such borrowing or any portion thereof as consisting of LIBOR Rate
Loans by selecting a new Interest Period for such borrowing, which new
Interest Period shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period (a "Rollover")
shall constitute a borrowing and shall be made by notice given not later
than 12:00 p.m. (New York time) on the third Business Day prior to the date
of any such Rollover relating to LIBOR Rate Loans, by the Borrower to the
Agent. Such notice by the Borrower of a Rollover (a "Notice of Rollover")
shall be by telephone, telecopy, telex or cable, confirmed immediately in
writing if by telephone, in substantially the form of Exhibit O hereto,
specifying (i) the date of such Rollover, (ii) the Type of Loans subject to
such Rollover, (iii) the aggregate amount of Loans subject to such Rollover
and (iv) the duration of the selected Interest Period, all of which shall
be specified in such manner as is necessary to comply with all limitations
on Loans outstanding hereunder. The Borrower may elect to maintain more
than one borrowing consisting of LIBOR Rate Loans by combining such
borrowings into one borrowing and selecting a new Interest Period pursuant
to this Section 8.3(a); provided, however, that each of the borrowings so
-------------- -------- -------
combined shall consist of Loans having Interest Periods ending on the same
date. If the Borrower shall fail to select a new Interest Period for any
borrowing consisting of LIBOR Rate Loans in accordance with this Section
-------
8.3(a), or if at the end of any applicable Interest Period a Default or
------
Event of Default shall exist, the Agent will forthwith so notify the
Borrower and the Lenders, and such Loans will automatically, on the last
day of the then existing Interest Period therefor, convert into Prime Rate
Loans.
89
(b) The Borrower may on any Business Day (provided that no Default or
Event of Default has occurred and is continuing), upon notice (each such
notice, a "Notice of Conversion") given by the Borrower to the Agent, and
subject to the provisions of Section 8.3(c), convert the entire amount of
--------------
or a portion of all Loans of one Type comprising the same borrowing into
Loans of another Type; provided, however, that any conversion of any LIBOR
-------- -------
Rate Loans into Loans of another Type shall be made on, and only on, the
last day of an Interest Period for such LIBOR Rate Loans and, upon
conversion of any Prime Rate Loans into Loans of another Type, the Borrower
shall pay accrued interest to the date of conversions on the principal
amount converted. Each such Notice of Conversion shall be given not later
than 12:00 p.m. (New York time) on the Business Day prior to the date of
any proposed conversion into Prime Rate Loans and on the third Business Day
prior to the date of any proposed Conversion into LIBOR Rate Loans.
Subject to the restrictions specified above, each Notice of Conversion
shall be by telephone, telecopy, telex or cable confirmed immediately in
writing if by telephone in substantially the form of Exhibit P hereto
specifying (i) the requested date of such Conversion, (ii) the Type of
Loans to be converted, (iii) the portion of such Type of Loan to be
converted, (iv) the Type of Loan such Loans are to be converted into and
(v) if such Conversion is into LIBOR Rate Loans, the duration of the
Interest Period of such Loan. Each Conversion shall be in an aggregate
amount for the Loans of all Lenders of not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof. The Borrower may elect
to convert the entire amount of or a portion of all Loans of one Type
comprising more than one borrowing into Loans of another Type by combining
such borrowings into one borrowing consisting of Loans of another Type;
provided, however, that if the borrowings so combined consist of LIBOR Rate
-------- -------
Loans, such Loans shall have Interest Periods ending on the same date.
(c) Anything in subsections (a) and (b) above to the contrary,
(i) if the Agent is unable to determine the LIBOR Rate for LIBOR
Rate Loans comprising any requested borrowing, Rollover or
Conversion, the right of the Borrower to select or maintain
LIBOR Rate Loans for such borrowing or any subsequent
borrowing shall be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such
suspension no longer exists, and each Loan comprising such
borrowing shall be a Loan of a Type that is unaffected by such
circumstances, as selected by the Borrower pursuant to this
Credit Agreement;
(ii) if (A) any Lender shall notify the Agent that it has
determined that maintenance of one or more LIBOR Rate
90
Loans would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, or (B) the
Required Lenders shall, at least one Business Day before the
date of any requested borrowing, Rollover or Conversion,
notify the Agent that deposits of a type and maturity
appropriate to match fund any borrowing of LIBOR Loans are not
available, then the right of the Borrower to select LIBOR Rate
Loans for such borrowing shall be suspended until the Agent
shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and
each Loan comprising such borrowing shall be a Loan of a Type
that is unaffected by such circumstances, as selected by the
Borrower pursuant to this Credit Agreement. The Agent shall
give the Borrower notice when the circumstances causing such
suspension no longer exist; and
(iii) the Borrower may not choose LIBOR Rate Loans for any
borrowing, Rollover or Conversion before the ninetieth (90th)
day following the Initial Credit Event without the Agent's
consent (which consent shall not require the approval of the
Required Lenders).
(d) The Agent shall give to each Lender prompt notice of any Notice of
Rollover or Notice of Conversion by telecopy, telex or cable. Each Notice
of Rollover and Notice of Conversion shall be irrevocable by and binding on
the Borrower. In the case of any borrowing, Rollover or Conversion that
the related Notice of Borrowing, Notice of Rollover or Notice of Conversion
specifies is to be comprised of LIBOR Rate Loans, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill, on or before the date for
such borrowing, Rollover or Conversion specified in such Notice of
Borrowing, Notice of Rollover or Notice of Conversion, the applicable
conditions set forth in Article 2, including, without limitation, any loss
---------
(including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or re-employment of deposits or other funds acquired by
such Lender to fund the Loan to be made by such Lender as part of such
borrowing, Rollover or Conversion.
8.4 Interest After Event of Default. Interest on any amount of matured
-------------------------------
principal under the Loans, and interest on the amount of principal under the
Loans outstanding as of the date an Event of Default specified in Section
-------
10.1(a) hereof occurs or following the date written notice to the Borrower of
-------
the occurrence of any other Event of Default is received by the Borrower, and at
all times thereafter until the earlier of the date upon which (i) all
Obligations have been paid and
91
satisfied in full or (ii) such Event of Default shall have been waived, shall be
payable on demand at a rate equal to the rate at which the Loans are bearing
interest pursuant to Section 8.1 or Section 8.2 above, as applicable, plus two
----------- ----------- ----
percent (2%). In the event of any change in said applicable interest rate, the
rate hereunder shall change, effective as of the day the applicable interest
rate changes, so as to remain two (2%) percent above the then applicable
interest rate. The rate hereunder shall be calculated based on a 360-day year
for the actual number of days elapsed.
8.5 Reimbursement of Expenses.
-------------------------
(a) On the Closing Date, the Borrower shall reimburse the Agent for
all Expenses incurred by the Agent on or prior to the Closing Date. From
and after the Closing Date, the Borrower shall promptly reimburse the Agent
for all Expenses of the Agent as the same are incurred by the Agent and
upon receipt of invoices therefor and, if requested by the Borrower, such
reasonable backup materials and information as the Borrower shall
reasonably request. In addition, the Borrower shall reimburse the Agent,
any Issuing Bank, any Foreign Exchange Guarantor, any Accepting Bank and
each Lender upon demand for all costs and expenses (including, without
limitation, reasonable attorneys' fees) of each of the Lenders in
connection with (i) the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Credit Agreement and the other Credit
Documents and (ii) any action or proceeding relating to a court order,
injunction or other process or decree restraining or seeking to restrain
the Agent, any Issuing Bank and the Lenders, or any of them, from paying
any amount under any Letter of Credit.
(b) If any payment of principal of, or Conversion or Rollover of, any
LIBOR Rate Loan is made other than on the last day of the Interest Period
for such Loan as a result of a payment, prepayment, Conversion or Rollover
of such Loan or acceleration of the maturity of the Notes pursuant to
Article 10 hereof or for any other reason, the Borrower shall, upon demand
----------
by any Lender (with a copy of such demand to the Agent), pay to the Agent
for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses which it may reasonably
incur as a result of such payment, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by
any Lender to fund or maintain such Loan.
8.6 [INTENTIONALLY OMITTED].
8.7 Unused Line Fee. The Borrower shall pay to the Agent for the account
---------------
of the Lenders an unused line fee (the "Unused Line Fee") in an amount equal to
fifty hundredths of one percent (.50%) per annum on the average unused portion
of the Total Commitments, accruing
92
from the first day after the Closing Date and calculated on the basis of a 360-
day year for the actual number of days elapsed. The Unused Line Fee shall be
payable monthly in arrears on the last Business Day of each month after the
Closing Date and on the Expiration Date. For purposes of calculating the Unused
Line Fee, the aggregate amount of the then outstanding (i) Revolving Loans, (ii)
Letter of Credit Obligations, (iii) Foreign Exchange Obligations, and (iv)
Acceptance Obligations shall constitute usage.
8.8 Letter of Credit Fees; Foreign Exchange Fees.
--------------------------------------------
(a) The Borrower agrees to pay to the Agent for the account of the
Lenders in the case of each Letter of Credit, a Letter of Credit fee (the
"Letter of Credit Fees") (i) based on the undrawn and outstanding face
amount of any such documentary or commercial Letter of Credit at a rate per
annum equal to 1.25% and (ii) based on the undrawn and outstanding face
amount of any such standby Letter of Credit at a rate per annum determined
in accordance with Section 8.8(g) hereof, in all cases calculated on the
--------------
basis of a 360-day year for the actual number of days elapsed. In
addition, the Borrower agrees to pay to the Agent for the account of the
Agent a facing fee equal to .5% on the initial face amount of each such
stand-by Letter of Credit (the "L/C Facing Fee"). The Letter of Credit
Fees shall be payable monthly in arrears on the last Business Day of each
month after the issuance of such Letter of Credit during the term of such
Letter of Credit and on the expiration date of such Letter of Credit. The
L/C Facing Fee owing with respect to any stand-by Letters of Credit shall
be payable at the time of issuance thereof. Notwithstanding the foregoing,
all Letter of Credit Fees shall be payable on demand and shall increase to
a rate which is 2% above the Letter of Credit Fee rate that is otherwise
applicable to any such Letters of Credit if (i) an Event of Default set
forth in Section 10.1(a) hereof occurs or (ii) the Agent gives written
---------------
notice to the Borrower of any other Event of Default set forth in Section
-------
10.1, and such increased rate shall remain in effect until such Event of
----
Default is waived.
(b) The Borrower agrees to pay to the Agent for the account of the
Lenders as and when incurred by the Agent or any Lender, any charges, fees,
costs and expenses charged to the Agent or any Lender for the Borrower's
account by the Issuing Bank (other than any fees charged to the Agent or
any Lender which would be duplicative of the Letter of Credit Fees and the
L/C Facing Fee paid to the Agent for the benefit of the Lenders) in
connection with the issuance of any Letters of Credit by the Issuing Bank.
The Borrower further agrees to pay to the Agent upon demand for its own
account, the Issuing Bank's customary issuing, administrative and
negotiating fees and the Agent shall pay the charges owing to such Issuing
Bank upon receipt of such amounts from the Borrower.
93
(c) The Borrower agrees to pay to the Agent for the account of the
Lenders in the case of each Foreign Exchange Contract, a Foreign Exchange
fee (the "Foreign Exchange Fees") based on the Foreign Exchange Exposure of
such Foreign Exchange Contract at a rate per annum determined in accordance
with Section 8.8(g) hereof on the basis of a 360-day year for the actual
--------------
number of days elapsed. In addition, the Borrower agrees to pay to the
Agent for the account of the Agent a facing fee equal to .5% on the initial
face amount of each such Foreign Exchange Contract (the "Foreign Exchange
Facing Fee"). The Foreign Exchange Fees shall be payable monthly in arrears
on the last Business Day of each month after the execution of such Foreign
Exchange Contract during the term of such Foreign Exchange Contract and on
the expiration date of such Foreign Exchange Contract. The Foreign Exchange
Facing Fee owing with respect to any Foreign Exchange Contract shall be
payable at the time of issuance thereof. Notwithstanding the foregoing, all
Foreign Exchange Fees shall be payable on demand and shall increase to a
rate which is 2% above the Foreign Exchange Fee rate that is otherwise
applicable to any such Foreign Exchange Contract if (i) an Event of Default
set forth in Section 10.1(a) hereof occurs or (ii) the Agent gives written
---------------
notice to the Borrower of any other Event of Default set forth in Section
-------
10.1, and such interest rate shall remain in effect until such Event of
----
Default is waived.
(d) The Borrower agrees to pay to the Agent for the account of the
Lenders as and when incurred by the Agent or any Lender, any charges, fees,
costs and expenses charged to the Agent or any Lender for the Borrower's
account by the Foreign Exchange Guarantor (other than any fees charged to
the Agent or any Lender which would be duplicative of the Foreign Exchange
Fees and the Foreign Exchange Facing Fee paid to the Agent for the benefit
of the Lenders) in connection with the execution of any Foreign Exchange
Contract by a Foreign Exchange Guarantor. The Borrower further agrees to
pay to the Agent upon demand for its own account, the Foreign Exchange
Guarantor's customary issuing, administrative and negotiating fees and the
Agent shall pay the charges owing to such Foreign Exchange Guarantor upon
receipt of such amounts from the Borrower.
(e) The Borrower agrees to pay to the Agent for the account of the
Lenders in the case of each Acceptance, an Acceptance commission (the
"Acceptance Commission") based on the face amount of such Acceptance for
the period from the date of acceptance to maturity at a rate per annum
determined in accordance with Section 8.8(g) hereof on the basis of a 360-
--------------
day year for the actual number of days elapsed. The Acceptance Commissions
shall be payable monthly in arrears on the last Business Day of each month
after the creation of such Acceptance during the term of such Acceptance
and on the maturity of such Acceptance. Notwithstanding the foregoing, all
Acceptance Commissions shall be payable on demand and shall increase to a
rate which is 2% above the Acceptance Commission rate that is otherwise
applicable to any such Acceptance if (i) an Event of
94
Default set forth in Section 10.1(a) hereof occurs or (ii) the Agent gives
---------------
written notice to the Borrower of any other Event of Default set forth in
Section 10.1 and such increased rate shall remain in effect until such
------------
Event of Default is waived.
(f) The Borrower agrees to pay to the Agent for the account of the
Lenders as and when incurred by the Agent or any Lender, any charges, fees,
costs and expenses charged to the Agent or any Lender for the Borrower's
account by the Accepting Bank (other than any fees charged to the Agent or
any Lender which would be duplicative of the Acceptance Commissions paid to
the Agent for the benefit of the Lenders) in connection with the creation
or discount of any Acceptance by the Accepting Bank. The Borrower further
agrees to pay to the Agent upon demand for its own account, the Accepting
Bank's customary creation, discounting, administrative and negotiating fees
and the Agent shall pay the charges owing to such Accepting Bank upon
receipt of such amounts from the Borrower.
(g) Prior to the delivery by Borrower of the financial reports with
respect to the fiscal quarter ending September 27, 1997, the applicable
Letter of Credit Fee for standby Letters of Credit, Foreign Exchange Fee
for Foreign Exchange Contracts, and Acceptance Commission for Acceptances,
shall be one and seventy five hundredths percent (1.75%). Thereafter, if
the ratio of Borrower's EBITDA to Consolidated Interest Expense as at the
end of any fiscal quarter, commencing with the fiscal quarter ending
September 27, 1997 measured on the basis of the period consisting of the
three (3) fiscal quarters ending September 27, 1997 and the four (4) fiscal
quarters ending with any subsequent fiscal quarter (the "LFA Measurement
Period") shall fall within any of the ranges set forth in the schedule
below, based on such financial reports delivered by Borrower to Agent
sufficient to Agent's satisfaction confirming such fact, and so long as no
Default or Event of Default then exists and subject to the additional terms
hereof, the applicable Letter of Credit Fee for standby Letters of Credit,
Foreign Exchange Fee for Foreign Exchange Contracts, and Acceptance
Commission for Acceptances shall each be the percentage set opposite such
range in the schedule below, effective on the first day of the month
immediately following such confirmation by Agent and continuing for a
period of three (3) calendar months:
Range of Ratio Percentage
-------------- ----------
less than 2.75 to 1 1.75%
2.75 to 1 or greater, but 1.50%
less than 3.25 to 1
3.25 to 1 or greater 1.25%
95
In the event that Borrower shall receive any Equity Offering Proceeds
during the term hereof, Borrower's Consolidated Interest Expense shall be
calculated on a proforma basis as if such Equity Offering Proceeds were
used on a daily basis from the beginning of such LFA Measurement Period
until the date such Equity Offering Proceeds were received to permanently
reduce the Revolving Loans outstanding on each day thereof in an amount
equal to the lesser of such Revolving Loans then outstanding, or such
Equity Offering Proceeds.
Notwithstanding the foregoing, (1) any change in the fees and commissions
to which Borrower is otherwise entitled to hereunder shall be limited to
not more than a twenty-five hundredths percent (.25%) reduction based on
Borrower's performance hereunder measured as at the end of each of the
first three (3) full fiscal quarters occurring after the date hereof
(provided, however, that no such limitation shall apply with respect to
Borrower's performance hereunder for the second and third full fiscal
quarters if Borrower shall be entitled to a greater reduction in such fees
and commissions by reason of the receipt of Equity Offering Proceeds), and
(2) if a Default or Event of Default shall occur at any time during the
term hereof in which Borrower is otherwise entitled to fees and commission
at a rate less than 1.75%, such fees and commissions shall revert to not
less than 1.75%, and be subject to increase pursuant to the applicable
provisions of Sections 8.8(a)(ii), (c) and (e) hereof during the pendency
------------------- --- ---
of any such Default or Event of Default.
8.9 [INTENTIONALLY OMITTED].
8.10 Collateral Management Fees; Expenses. The Borrower agrees to pay to
------------------------------------
the Agent for its sole account fees in such amounts and at such times as
follows:
(a) as a Collateral Management Fee, an amount equal to $100,000
payable on the Closing Date and on each anniversary thereof during the term
hereof; and
(b) upon demand by the Agent after the incurrence thereof, all
reasonable costs and Expenses of the Agent incurred in connection with the
audits, inspection and examination of the Collateral described in this
Credit Agreement and the other Credit Documents, and all reasonable legal
fees and Expenses of the Agent in connection with the management of the
loan facility as contemplated hereunder, excluding, however, the internal
overhead costs of Agent associated with the monitoring and internal
management of the Collateral during the ordinary course administration of
this Credit Agreement.
8.11 Authorization to Charge Account. The Borrower hereby authorizes the
-------------------------------
Agent to charge the Borrower's Loan Account with the amount of all payments and
Fees and Expenses
96
due hereunder as and when such payments become due. The Borrower confirms that
any charges which the Agent may so make to the Borrower's Loan Account as herein
provided will be made as an accommodation to the Borrower and solely at the
Agent's discretion.
8.12 Indemnification in Certain Events. If after the Closing Date, either
---------------------------------
(i) any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve requirements,
applicable to Bankers Trust Company, Bankers Trust (Delaware) or any other
banking or financial institution from whom any of the Lenders borrow funds or
obtain credit (a "Funding Bank") or any of the Lenders, or (ii) a Funding Bank
or any of the Lenders complies with any future guideline or request from any
central bank or other governmental authority or (iii) a Funding Bank or any of
the Lenders determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or a
Funding Bank or any of the Lenders complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any of the
Lenders' capital as a consequence of its obligations hereunder to a level below
that which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank's or Lenders' policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any of the
Lenders of funding or maintaining any such Lender's Commitments, then the
Borrower shall from time to time upon demand by the Agent (which demand shall be
made by the Agent upon the request of any such Lender), pay to the Agent
additional amounts sufficient to indemnify the Lenders against such increased
cost. A certificate as to the amount of such increased cost shall be submitted
to the Borrower by the Lender requesting such additional amount or increased
cost and shall be conclusive absent manifest error.
ARTICLE 9
---------
Powers of Attorney
------------------
9.1 Appointment as Attorney-in-Fact. The Borrower hereby irrevocably
-------------------------------
authorizes and appoints the Agent or any Person or agent the Agent may designate
as such Borrower's attorney-in-fact, at the Borrower's cost and expense, to
exercise, subject to the limitations set forth in Section 9.2 hereof, all of the
-----------
following powers, which being coupled with an interest, shall be irrevocable
until all of the Obligations to the Lenders have been paid and satisfied in
full:
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(a) To receive, take, endorse, sign, assign and deliver, all in the
name of the Agent, the Lenders or the Borrower, any and all checks, notes,
drafts, and other documents or instruments relating to the Collateral;
(b) To receive, open and dispose of all mail addressed to the Borrower
and to notify postal authorities to change the address for delivery thereof
to such address as the Agent may designate;
(c) To request at any time from customers indebted on Accounts, in the
name of the Agent, the Lenders or the Borrower or that of the Agent's or
Lenders' designee, information concerning the Accounts and the amounts
owing thereon;
(d) To give customers indebted on Accounts notice of the Lenders'
interest therein, and/or to instruct such customers to make payment
directly to the Agent for the Borrower's account;
(e) To take or bring, in the name of the Agent, the Lenders or the
Borrower, all steps, actions, suits or proceedings deemed by the Agent
necessary or desirable to enforce or effect collection of the Accounts; and
(f) To revise, update, amend and otherwise complete the Trademark
Security Agreements and the Patent Security Agreements as the Agent may
determine to be necessary or desirable to, and file, record and register
any or all of the Trademark Security Agreements and the Patent Security
Agreements with the United States Patent and Trademark Office in order to,
assign and transfer the trademarks and patents covered thereby to any
Person, including, without limitation, the Agent or any of the Lenders.
9.2 Limitation on Exercise of Power. Notwithstanding anything hereinabove
-------------------------------
to the contrary, the powers set forth in subparagraphs (b), (d), (e) and (f)
above may only be exercised by the Agent on and after the occurrence of an Event
of Default which has not been waived by the Agent. The powers set forth in
subparagraphs (a) and (c) above may be exercised by the Agent at any time.
ARTICLE 10
----------
Events of Default and Remedies
------------------------------
10.1 Events of Default. The occurrence of any of the following events
-----------------
shall constitute an Event of Default hereunder:
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(a) failure of the Borrower to pay (i) any interest, Fees or Expenses
or other Obligations (other than principal) when due, or if the amount in
the Borrower's accounts and the Borrower's Borrowing Base is insufficient
to permit such payment when due, then within three (3) Business Days of
when due, in each case whether at stated maturity, by acceleration, or
otherwise, or (ii) any principal when due, whether at stated maturity, by
acceleration or otherwise;
(b) (i) failure of the Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it contained
in Sections 6.14, 7.1, 7.2, 7.4, 7.5, 7.6, 7.7, 7.8, or
-------- ---- --- --- --- --- --- --- ---
7.9;
---
(ii) failure of the Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it in
Section 6.1(f), (j), (k)(i)(A), (k)(ii), or (p) and the
------- ------ --- --------- ------- ---
failure shall continue unremedied until two (2) Business
Days after a senior officer of the Borrower knowledgeable
of the requirements of this Credit Agreement (including,
without limitation, the chief financial officer or
controller or chief accounting officer of the Borrower)
knows of such failure (provided that this clause (ii)
-------- ----
shall not be deemed to place any additional obligations
on any such officer to be so knowledgeable);
(iii) failure of the Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it in
Section 6.1 (other than a provision of Section 6.1
------- --- -----------
covered by subparagraph (ii) above), 6.3, 6.9, 6.12, or
--- --- ----
7.3 and the failure shall continue unremedied until two
---
(2) Business Days after the Agent's delivery of notice to
the Borrower of such failure;
(iv) failure of the Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it in
Articles 6 or 7 hereof (other than a provision covered by
---------- -
subparagraphs (i), (ii) or (iii) above) and the failure
shall continue unremedied until ten (10) Business Days
after the Agent's delivery of notice to the Borrower of
such failure;
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(c) breach by the Borrower of any representation or warranty, or
failure to comply with any covenant, contained in this Credit Agreement
(other than under a provision covered by subsection (a) or (b) above), the
other Credit Documents or any other agreement, document, instrument or
certificate among the Borrower, the Agent and the Lenders or executed by
the Borrower in favor of the Agent or the Lenders, which breach or failure
shall continue unremedied more than ten (10) Business Days after the
Agent's delivery of notice to the Borrower of such breach (such grace
period to apply only to the extent such breach or failure is curable within
such ten (10) Business Day period);
(d) (i) the Borrower or any of its Subsidiaries 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 or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any of its Subsidiaries shall make a general
assignment for the benefit of creditors; or (ii) there shall be commenced
against the Borrower or any of its Subsidiaries 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 60 days after the
entry thereof; or (iii) there shall be commenced against the Borrower or
any of its Subsidiaries 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 for 60 days;
(e) a Change in Control shall have occurred;
(f) the Borrower or any of its Subsidiaries shall (i) default in any
payment of principal of or interest on any Debt or in the payment of any
Guarantee the aggregate principal amount of the series of Debt under which
such Debt is issued and the aggregate principal amount of the obligation
guaranteed by such Guarantee equals or exceeds $3,000,000; or (ii) default
in the observance or performance of any other agreement or condition
relating to any such Debt or Guarantee 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 Debt
or beneficiary or beneficiaries of such Guarantee (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 Debt to become due prior to its
stated
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maturity or such Guarantee to become due prior to its stated maturity or
such Guarantee to become payable;
(g) (i) any material covenant, agreement or obligation of any party
contained in or evidenced by any of the Credit Documents shall cease to be
enforceable in accordance with its terms, or any party (other than the
Agent or the Lenders) to any Credit Document shall deny or disaffirm it
obligations under any of the Credit Documents, or any Credit Document shall
be cancelled, terminated, revoked or rescinded without the express prior
written consent of the Agent, (ii) any of the Credit Documents shall cease
for any reason to be in full force and effect (other than in accordance
with the terms hereof or thereof) or any action or proceeding shall have
been commenced by any Person (other than the Agent or any Lender) seeking
to cancel, revoke, rescind or disaffirm the obligations of any party to any
Credit Document, (iii) any court or other governmental authority shall
issue a final judgment, order, decree or ruling for the payment of money (a
"Judgment") and such Judgment is in an amount (determined after an
allowance for the application of any insurance proceeds to such Judgment)
in excess of $1,000,000 and enforcement proceedings shall have been
commenced upon any such Judgment or any such Judgment shall remain unpaid
after a period of ten (10) consecutive days during which a stay of such
enforcement of any such Judgment, including, without limitation, by reason
of a pending appeal or otherwise, shall not be in effect, or (iv) any
security interest or lien purported to be created by the Ancillary
Documents shall cease to be valid and (to the extent required by the
Ancillary Documents) perfected or the Borrower shall so have asserted,
except that the failure of any security interest or lien purported to be
created by the Ancillary Documents to be valid and perfected shall not in
itself constitute a default hereunder if the value of the Collateral
purported to be covered thereby is, in the aggregate, not in excess of
$1,000,000.
10.2 Acceleration. Upon the occurrence of an Event of Default which has
------------
not been waived by the Agent at the direction of the Required Lenders, the Agent
shall, upon the written, telecopied or telex request of the Required Lenders,
and by delivery of written notice to the Borrower from the Agent, take any or
all of the following actions, without prejudice to the rights of the Agent, any
Lender or the holder of any Note to enforce its claims against the Borrower:
(a) declare all or any part of the Obligations to be immediately due and payable
(except with respect to any Event of Default set forth in Section 10.1(d)
---------------
hereof, in which case all Obligations shall automatically become immediately due
and payable without the necessity of any notice or other demand) without
presentment, demand, protest or any other action or obligation of the Agent or
any Lender; and/or (b) immediately terminate or reduce the Commitments under
this Credit Agreement.
In addition, upon demand by the Agent or the Required Lenders after the
occurrence of any Event of Default unless such Event of Default is waived, the
Borrower shall deposit with the
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Agent for the benefit of the Lenders with respect to each Letter of Credit then
outstanding, each Foreign Exchange Contract then in effect and each Acceptance
then outstanding promptly upon such demand, cash or Cash Equivalents in an
amount equal to 110% of the greatest amount for which such Letter of Credit may
be drawn, 110% of the Foreign Exchange Exposure under each such Foreign Exchange
Contract and 110% of the face amount of each outstanding Acceptance. Such
deposit shall be held by the Agent for the benefit of the Issuing Banks, the
Foreign Exchange Guarantors, the Accepting Banks and the other Lenders as
security for, and to provide for the payment of, outstanding Letters of Credit,
the Foreign Exchange Obligations and the Acceptance Obligations.
If at any time after acceleration of the maturity of the Loans, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Credit Agreement) and all
Events of Default and Defaults (other than nonpayment of principal of and
accrued interest on the Loans and other Obligations due and payable solely by
virtue of acceleration) shall be remedied or waived, then by written notice to
the Borrower, the Required Lenders may elect, in the sole discretion of such
Required Lenders, to rescind and annul the acceleration and its consequences;
but such action shall not affect any subsequent Default or Event of Default or
impair any right or remedy consequent thereon. The provisions of the preceding
sentence are intended merely to bind the Lenders to a decision which may be made
at the election of the Required Lenders; they are not intended to benefit the
Borrower and do not give the Borrower the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.
10.3 Remedies. Immediately upon the occurrence of any Event of Default
--------
which has not been waived by the Agent at the direction of the Required Lenders,
the Agent may: (a) remove from any premises where same may be located any and
all documents, instruments, files and records (including the copying of any
computer records), and any receptacles or cabinets containing same, relating to
the Accounts, or the Agent may use (at the expense of the Borrower) such of the
supplies or space of the Borrower at the Borrower's place of business or
otherwise, as may be necessary to properly administer and control the Accounts
or the handling of collections and realizations thereon; (b) bring suit, in the
name of the Borrower or the Lenders and generally shall have all other rights
respecting said Accounts, including without limitation the right to: accelerate
or extend the time of payment, settle, compromise, release in whole or in part
any amounts owing on any Accounts and issue credits in the name of the Borrower
or the Lenders; (c) sell, assign and deliver the Accounts and any returned,
reclaimed or repossessed merchandise, with or without advertisement, at public
or private sale, for cash, on credit or otherwise, at the Agent's sole option
and discretion, and any Lender may bid or become a purchaser at any such sale,
free from any right of redemption, which right is hereby expressly waived by the
Borrower; (d) foreclose the security interests created pursuant to the Credit
Documents by any available judicial procedure, or to take possession of any or
all of the Inventory and equipment without
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judicial process and enter any premises where any Inventory and equipment may be
located for the purpose of taking possession of or removing the same; and (e)
revise, update, amend and otherwise complete the Trademark Security Agreements
as the Agent may determine to be necessary or desirable to, and file, record and
register any or all of the Trademark Security Agreements and Patent Security
Agreements with the United States Patent and Trademark Office in order to,
assign and transfer the trademarks and patents covered thereby to any Person,
including, without limitation, the Agent or any of the Lenders. The Agent shall
have the right, without notice of advertisement, to sell, lease, or otherwise
dispose of all or any part of the Inventory and equipment, whether in its then
condition or after further preparation or processing, in the name of the
Borrower or the Lenders, or in the name of such other party as the Agent may
designate, either at public or private sale or at any broker's board, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such other terms and conditions as the Agent in its sole discretion may
deem advisable, and the Agent or any other Lender shall have the right to
purchase at any such sale. If any Inventory and equipment shall require
rebuilding, repairing, maintenance or preparation, the Agent shall have the
right, at its option, to do such of the aforesaid as is necessary, for the
purpose of putting the Inventory and equipment in such saleable form as the
Agent shall deem appropriate. The Borrower agrees, at the request of the Agent,
to assemble the Inventory and equipment and to make it available to the Agent at
places which the Agent shall select, whether at the premises of the Borrower or
elsewhere, and to make available to the Agent the premises and facilities of the
Borrower or any Pledgor for the purpose of the Agent's taking possession of,
removing or putting the Inventory and equipment in saleable form. However, if
notice of intended disposition of any Collateral is required by law, it is
agreed that five (5) days notice shall constitute reasonable notification and
full compliance with the law. The Agent shall be entitled to use all Proprietary
Rights and computer software programs and data bases used by the Borrower in
connection with their respective businesses or in connection with the
Collateral. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights (after deducting all charges, costs and expenses, including
reasonable attorneys' fees) shall be applied by the Agent to the payment of the
Borrower's Obligations to the Lenders, whether due or to become due, in such
order as the Agent may elect. The Borrower shall remain liable to the Lenders
for any deficiencies, and the Lenders in turn agree to remit to the Borrower or
its successors or assigns, any surplus resulting therefrom. The enumeration of
the foregoing rights is not intended to be exhaustive and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall be
cumulative.
ARTICLE 11
----------
Termination of the Revolving Commitments
----------------------------------------
Except as otherwise provided in Article 10 hereof, the Revolving Credit
----------
Commitments made hereunder shall terminate on the Expiration Date and all then
outstanding Loans and
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Acceptance Obligations shall be immediately due and payable in full, all
outstanding Letters of Credit and all Foreign Exchange Contracts shall
immediately terminate except as otherwise provided in Section 4.1 hereof. Unless
------- ---
sooner demanded, all Obligations shall become due and payable as of any such
termination hereunder or under Article 10 hereof. All of the Agent's and the
----------
Lenders' rights, liens and security interests relating to any cash collateral
securing any outstanding Letters of Credit, Foreign Exchange Obligations or
Acceptance Obligations provided for in Section 4.1 and Article 10 hereof shall
----------- ----------
continue after any termination of the Commitments until all Obligations relating
to such Letters of Credit, all Obligations relating to such Foreign Exchange
Contracts and all Obligations relating to such Acceptances have been paid and
satisfied in full.
ARTICLE 12
----------
The Agent
---------
12.1 Appointment of Agent.
--------------------
(a) Each Lender hereby designates BTCC as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of
any Note, by the acceptance of such Note, shall be deemed irrevocably to
authorize the Agent to take such action on its behalf under the provisions
of this Credit Agreement and the Notes and any other instruments and
agreements referred to herein and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers
as are reasonably incidental thereto including, without limitation, the
execution, delivery and performance by the Agent of any application in
favor of an Issuing Bank in connection with the issuance of any Letter of
Credit, the execution, delivery and performance by the Agent of any Foreign
Exchange Contract or the execution, delivery and performance of an
application for the creation of an Acceptance or an Acceptance. The Agent
shall hold all Collateral and all payments of principal, interest, Fees,
charges and Expenses received pursuant to this Credit Agreement or any
other Credit Document for the ratable benefit of the Lenders. The Agent
may perform any of its duties hereunder by or through its agents or
employees.
(b) The provisions of this Article 12 are solely for the benefit of
----------
the Agent and the Lenders, and none of the Credit Parties shall have any
rights as a third party beneficiary of any of the provisions hereof (other
than Section 12.9 and 12.10). In performing its functions and duties under
------------ -----
this Credit Agreement, the Agent shall act solely as agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Credit Party.
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12.2 Nature of Duties of Agent. The Agent shall have no duties or
-------------------------
responsibilities except those expressly set forth in this Credit Agreement.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Credit Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Credit Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Credit Agreement except as
expressly set forth herein.
12.3 Lack of Reliance on Agent.
-------------------------
(a) Independently and without reliance upon the Agent, each Lender,
to the extent it deems appropriate, has made and shall continue to make (i)
its own independent investigation of the financial or other condition and
affairs of each Credit Party in connection with the taking or not taking of
any action in connection herewith and (ii) its own appraisal of the
creditworthiness of each Credit Party, and, except as expressly provided in
this Credit Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Credit
Agreement or the Notes or the financial or other condition of any Credit
Party. The Agent shall not be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Credit Agreement or the Notes, or the financial
condition of any Credit Party, or the existence or possible existence of
any Default or Event of Default, unless specifically requested to do so in
writing by any Lender.
12.4 Certain Rights of the Agent. The Agent shall have the right to
---------------------------
request instructions from the Required Lenders by notice to each of the Lenders.
If the Agent shall request instructions from the Required Lenders with respect
to any act or action (including the failure to act) in connection with this
Credit Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions from the
Required Lenders, and the Agent shall not incur liability to any Person by
reason of so refraining. Without limiting the foregoing, no Lender shall have
any right of action whatsoever against the Agent as a result of the Agent acting
or refraining from acting hereunder in accordance with the instructions
105
of the Required Lenders. The Agent may give any notice required under Article 10
----------
hereof without the consent of any of the Lenders unless otherwise directed by
the Required Lenders in writing and will, at the direction of the Required
Lenders, give any such notice required under Article 10.
----------
12.5 Reliance by Agent. The Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person. The Agent may consult with legal counsel (including
counsel for the Borrower with respect to matters concerning the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
12.6 Indemnification of Agent. To the extent the Agent is not reimbursed
------------------------
and indemnified by the Borrower, each Lender will reimburse and indemnify the
Agent, in proportion to its respective Commitment, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in performing its duties hereunder, in any way relating to or
arising out of this Credit Agreement, provided that no Lender shall be liable
-------- ----
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or willful misconduct.
12.7 The Agent in its Individual Capacity. With respect to its obligation
------------------------------------
to lend under this Credit Agreement, the Loans made by it and the Notes issued
to it, and its participation in Letters of Credit, Acceptances created pursuant
hereto issued hereunder and Foreign Exchange Contracts executed pursuant hereto,
the Agent shall have the same rights and powers hereunder as any other Lender or
holder of a Note or participation interests and may exercise the same as though
it was not performing the duties specified herein; and the terms "Lenders,"
"Required Lenders," "holders of Notes," or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory or other business with the Borrower or any Affiliate of the Borrower as
if it were not performing the duties specified herein, and may accept fees and
other consideration from the Borrower for services in connection with this
Credit Agreement and otherwise without having to account for the same to the
Lenders.
12.8 Holders of Notes. The Agent may deem and treat the payee of any Note
----------------
as the owner thereof for all purposes hereof unless and until a written notice
of the assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any
106
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
12.9 Successor Agent.
---------------
(a) The Agent may, upon five (5) Business Days' notice to the
Lenders and the Borrower, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this Section
-------
12.9) by giving written notice thereof to the Lenders and the Borrower.
----
Upon any such resignation, the Required Lenders shall have the right, upon
five (5) days' notice and approval by the Borrower (which approval shall
not be unreasonably withheld or delayed), to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Required Lenders and
accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation, then, upon five (5) days' notice
and approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be a bank or a trust company or
other financial institution which maintains an office in the United States,
or a commercial bank organized under the laws of the United States of
America or of any State thereof, or any Affiliate of such bank or trust
company or other financial institution which is engaged in the banking
business, having a combined capital and surplus of at least $50,000,000.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Credit Agreement. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article 12 shall
----------
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Credit Agreement.
(c) In the event BTCC resigns as Agent it shall refund to the
Borrower a pro rata portion of the Collateral Management Fee paid to BTCC
in respect of the year in which such resignation occurs equal to the
percentage of such year remaining prior to the next anniversary of the
Closing Date.
12.10 Collateral Matters.
------------------
(a) Each Lender authorizes and directs the Agent to enter into the
Ancillary Documents for the benefit of the Lenders. Each Lender hereby
agrees, and each holder of any Note by the acceptance thereof will be
deemed to agree, that, except as otherwise set forth herein, any action
taken by the Required Lenders in accordance with the provisions of this
Credit Agreement or the Ancillary Documents, and the exercise by the
107
Required Lenders of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all of the Lenders. The Agent is hereby authorized on
behalf of all of the Lenders, without the necessity of any notice to or
further consent from any Lender, from time to time prior to an Event of
Default, to take any action with respect to any Collateral or Ancillary
Documents which may be necessary to perfect and maintain perfected the
security interest in and liens upon the Collateral granted pursuant to the
Ancillary Documents.
(b) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any Lien granted to or held by the Agent upon any
Collateral (i) upon termination of the Commitments and payment and
satisfaction of all of the Obligations at any time arising under or in
respect of this Credit Agreement or the Credit Documents or the
transactions contemplated hereby or thereby or (ii) if approved, authorized
or ratified in writing by the Required Lenders, unless such release is
required to be approved by all of the Lenders hereunder. Upon request by
the Agent at any time, the Lenders will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to
this Section 12.10.
-------------
(c) The Lenders hereby agree that the Lien granted to the Agent and
the Lenders in any property sold or disposed of in accordance with the
provisions of Section 7.5 hereof shall, if no Default or Event of Default
-----------
shall then exist, be automatically released except to the extent a signed
release of the Agent is required pursuant to Section 7.5; provided, however
----------- -------- -------
that Agent's Lien shall attach to and continue in the proceeds and products
of such property arising from any such sale or disposition and provided,
--------
further, that the proceeds from any such sale or disposition by the
-------
Borrower shall be paid to the Agent for application to the then outstanding
Loans.
(d) The Lenders hereby agree that the Agent shall release (or
subordinate to the extent permitted by the provider of purchase money
financing referred to below, in the discretion of such provider) any Lien
granted to or held by the Agent and the Lenders on any personal property
other than Accounts and Inventory acquired or owned by any Borrower at any
time after the Effective Date (the "After-Acquired Personal Property")
which is located on any real property acquired and held in fee or owned by
the Borrower at any time after the Effective Date (the "After-Acquired Real
Property") so long as such After-Acquired Real Property on which the After-
Acquired Personal Property is located is (i) financed with a purchase money
mortgage permitted pursuant to Section 7.4(f) hereof and (ii) not required
--------------
to become subject to a Lien of the Agent pursuant to Section 6.7 hereof.
-----------
Such release or subordination shall be given by the Agent only upon the
request of the Borrower.
108
(e) To the extent, pursuant to the provisions of Section 12.10(b),
-----------------
(c), and (d) hereof, the Agent's execution of a release is required to
---
release its Lien upon any sale and transfer of Collateral which is
expressly permitted pursuant to the terms of this Credit Agreement, or
consented to in writing by the Required Lenders or all of the Lenders, as
applicable, and upon at least five (5) Business Days' prior written request
by the Borrower, the Agent shall (and is hereby irrevocably authorized by
the Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of the Lenders
herein or pursuant hereto upon the Collateral that was sold or transferred;
provided that (i) the Agent shall not be required to execute any such
-------- ----
document on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty and (ii) such release
shall not in any manner discharge, affect or impair the Obligations or any
Liens upon (or obligations of the Borrower in respect of) all interests
retained by the Borrower or any Subsidiary of any Borrower, including
(without limitation) the proceeds of the sale, all of which shall continue
to constitute part of the Collateral. In the event of any sale or transfer
of Collateral, or any foreclosure with respect to any of the Collateral,
the Agent shall be authorized to deduct all of the Expenses reasonably
incurred by the Agent from the proceeds of any such sale, transfer or
foreclosure.
(f) The Agent shall have no obligation whatsoever to the Lenders or
to any other Person to assure that the Collateral exists or is owned by the
Borrower or is cared for, protected or insured or that the Liens granted to
the Agent herein or pursuant hereto have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise or to continue exercising at all or in
any manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and powers granted or available to the Agent in this
Section 12.10 or in any of the Ancillary Documents, it being understood and
-------------
agreed that in respect of the Collateral, or any act, omission or event
related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interest in the Collateral as
one of the Lenders and that the Agent shall have no duty or liability
whatsoever to the Lenders, except for its gross negligence or willful
misconduct. The Agent agrees to conduct or cause to be conducted at least
two audits of the Collateral during each year that this Credit Agreement
shall remain in effect.
12.11 Actions with Respect to Defaults. In addition to the Agent's right
--------------------------------
to take actions on its own accord as permitted under this Credit Agreement, the
Agent shall take such action with respect to a Default or Event of Default as
shall be directed by the Required Lenders; provided that until the Agent shall
-------- ----
have received such directions, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable and in the best interests
of the Lenders.
109
12.12 Delivery of Information. The Agent shall not be required to deliver
-----------------------
to any Lender originals or copies of any documents, instruments, notices,
communications or other information received by the Agent from the Borrower, any
Subsidiary of the Borrower, the Required Lenders, any Lender or any other Person
under or in connection with this Credit Agreement or any other Credit Document
except (i) as specifically provided in this Credit Agreement or any other Credit
Document and (ii) as specifically requested from time to time in writing by any
Lender with respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
ARTICLE 13
----------
Miscellaneous
-------------
13.1 Waivers. The Borrower hereby waives due diligence, demand,
-------
presentment and protest and any notices thereof as well as notice of nonpayment.
No delay or omission of the Agent or the Lenders to exercise any right or remedy
hereunder, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by the Agent or the
Lenders of any right or remedy shall preclude any other or further exercise
thereof, or preclude any other right or remedy.
13.2 JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS EACH HEREBY
----------
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY
COUNTERCLAIM) ARISING OUT OF THIS CREDIT AGREEMENT, THE CREDIT DOCUMENTS OR ANY
OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
13.3 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
-------------
CREDIT AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
13.4 VENUE; SERVICE OF PROCESS; WAIVER OF DAMAGES.
--------------------------------------------
(A) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS CREDIT
AGREEMENT, THE CREDIT DOCUMENTS, OR ANY OTHER DOCUMENT RELATING HERETO OR
THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN
XXXX COUNTY, OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT
OF
110
ILLINOIS, AND, BY EXECUTION AND DELIVERY OF THIS CREDIT AGREEMENT, THE
BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE BORROWER HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH ACTION
OR PROCEEDING, (1) ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (2) THE RIGHT TO
INTERPOSE ANY NONCOMPULSORY SETOFF, COUNTERCLAIM OR CROSS-CLAIM. THE
BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT THE ADDRESS SET FORTH IN SECTION 13.5 HEREOF. NOTHING HEREIN
------------
SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN EACH
INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
(B) THE BORROWER (1) AGREES THAT NEITHER THE AGENT NOR ANY LENDER
SHALL HAVE ANY LIABILITY TO THE BORROWER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE BORROWER IN CONNECTION
WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS CREDIT AGREEMENT OR
ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING
IN CONNECTION HEREWITH OR THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT
OF A COURT THAT IS BINDING ON THE AGENT OR SUCH LENDER, AS THE CASE MAY BE
(WHICH JUDGMENT SHALL BE FINAL AND NOT SUBJECT TO REVIEW ON APPEAL), THAT
SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE AGENT
OR SUCH LENDER, AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AND (2) WAIVES, RELEASES AND AGREES NOT TO XXX UPON ANY
CLAIM AGAINST THE AGENT OR ANY LENDER (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE), EXCEPT A CLAIM BASED UPON GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS
SUBJECT TO THE WAIVER EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS
111
EFFECTIVE, NEITHER THE AGENT NOR ANY LENDER SHALL HAVE ANY LIABILITY WITH
RESPECT TO, AND THE BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO XXX
UPON ANY CLAIM FOR, ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN
ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP
ESTABLISHED BY THIS CREDIT AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS,
OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION HEREWITH OR
THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT OF A COURT THAT IS BINDING
ON THE AGENT OR SUCH LENDER, AS THE CASE MAY BE (WHICH JUDGMENT SHALL BE
FINAL AND NOT SUBJECT TO REVIEW ON APPEAL), THAT SUCH DAMAGES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF THE AGENT OR SUCH LENDER, AS THE
CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
13.5 Notices. Except as otherwise provided herein, all notices and
-------
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to the Agent, then to BT Commercial Corporation,
Xxxxx Xxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Credit Department,
Xxxxx X. Xxxxxxx, and if to the Borrower, then to (i) Borrower at Xxx Xxxxxxx
Xxxx, Xxxxx Xxxxxxx, XX 00000-0000, Attention: Xxxxx Xxxxxx, or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent, at (000) 000-0000, and if to the Borrower at (000) 000-0000. All such
notices and correspondence to any of the Lenders shall be sent and confirmed in
a similar manner to the addresses set forth on the signature pages hereto. All
such notices and correspondence shall be deemed given (i) if sent by certified
or registered mail, three (3) Business Days after being postmarked, (ii) if sent
by overnight delivery service, when received at the above stated addresses or
when delivery is refused and (iii) if sent by facsimile transmission, when
receipt of such transmission is acknowledged; provided that notices to the Agent
-------- ----
shall not be effective until received.
13.6 Assignability.
-------------
(a) The Borrower shall not have the right to assign this Credit
Agreement or any interest therein except with the prior written consent of
the Agent and the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs
to the Borrower (including, without limitation, any increased costs under
Section 3.10 hereof).
------------
112
(c) Each Lender may, with the consent of the Agent which consent
shall not be unreasonably withheld, but without the consent of any other
Lender, assign to one or more banks or other financial institutions all or
a portion of its rights and obligations under this Credit Agreement and the
Notes; provided that (i) for each such assignment, the parties thereto
-------- ----
shall execute and deliver to the Agent, for its acceptance and recording in
the Register (as defined below), an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $2,500 to be paid by the assignee, (ii) no such
assignment shall be for less than $10,000,000 of the Commitments (except
any assignment made pursuant to Section 13.7 hereof), and (iii) any such
------------
assignment shall include such Lender's pro rata interest in all Loans
hereunder. Upon such execution and delivery of the Assignment and
Acceptance to the Agent, from and after the date specified as the effective
date in the Assignment and Acceptance (the "Acceptance Date"), (x) the
assignee thereunder shall be a party hereto, and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, such assignee shall have the rights and
obligations of a Lender hereunder and (y) the assignor thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other
than any rights it may have pursuant to Section 13.9 hereof which will
------------
survive) and be released from its obligations under this Credit 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 Credit Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance, the
assignee thereunder confirms and agrees as follows: (i) other than as
provided in such Assignment and Acceptance, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the Notes or
any other instrument or document furnished pursuant hereto, (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or
any other Credit Parties or the performance or observance by the Borrower
or any other Credit Parties of any of its obligations under this Credit
Agreement or any other instrument or document furnished pursuant hereto,
(iii) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the financial statements referred to in
Section 6.1 hereof and such other documents and information as it has
-----------
deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance, (iv) such assignee will, independently
and without reliance upon the Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this
113
Credit Agreement, (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under
this Credit Agreement as are delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto and (vi)
such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement are
required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section
-------
13.5 hereof a copy of each Assignment and Acceptance delivered to and
----
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount of
the Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Credit Agreement. The Register and
copies of each Assignment and Acceptance shall be available for inspection
by the Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with the Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit A hereto, (i) accept
such Assignment and Acceptance and (ii) record the information contained
therein in the Register. Within five (5) Business Days after the Agent's
acceptance and recordation of any of such Assignment and Acceptance, the
Borrower shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes a new Note or Notes to the order of the assignee
in an amount equal to the Commitment or Commitments assumed by it pursuant
to such Assignment and Acceptance and, if the assigning Lender has retained
a Commitment or Commitments hereunder, a new Note or Notes to the order of
the assigning Lender in an amount equal to the Commitment or Commitments
retained by it hereunder. Such new Note or Notes shall re-evidence the
indebtedness outstanding under the old Note or Notes and shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the Closing Date and shall
otherwise be in substantially the form of the Note or Notes subject to such
assignments.
(g) Each Lender may sell participations (without the consent of the
Agent, the Borrower or any other Lender) to one or more parties in or to
all or a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Commitments, the
Loans owing to it and the Note or Notes held by it); provided that (i) such
-------- ----
Lender's obligations under this Credit Agreement (including, without
limitation, its Commitments to the Borrower hereunder) shall remain
unchanged, (ii) such Lender
114
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder
of any such Note for all purposes of this Credit Agreement, (iv) the
Borrower, the Agent, and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Credit Agreement and (v) such Lender shall not
transfer, grant, assign or sell any participation under which the
participant shall have rights to approve any amendment or waiver of this
Credit Agreement except to the extent such amendment or waiver would (A)
extend the final maturity date or the date for the payments of any
installment of fees or principal or interest of any Loans or Letter of
Credit reimbursement obligations, or Foreign Exchange Obligations or
Acceptance Obligations in which such participant is participating, (B)
reduce the amount of any installment of principal of the Loans or Letter of
Credit reimbursement obligations or Foreign Exchange Obligations or
Acceptance Obligations in which such participant is participating, (C)
except as otherwise expressly provided in this Credit Agreement, reduce the
interest rate applicable to the Loans, or Letter of Credit reimbursement
obligations or Foreign Exchange Obligations or Acceptance Obligations in
which such participant is participating, or (D) except as otherwise
expressly provided in this Credit Agreement, reduce any Fees payable
hereunder.
(h) Each Lender agrees that, without the prior written consent of
the Borrower and the Agent, it will not make any assignment hereunder in
any manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan, Note or other
Obligation under the securities laws of the United States of America or of
any jurisdiction.
(i) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may disclose
any information in its possession regarding the Borrower.
13.7 [INTENTIONALLY OMITTED].
13.8 Information. The Borrower hereby agrees that the Agent and the
-----------
Lenders may exchange any information concerning the Borrower, including, without
limitation, information relating to the creditworthiness of the Borrower in the
possession or control of the Agent or the Lenders, as the case may be; (i) with
any of their respective affiliates; provided, however, that any such exchange,
-------- -------
and the nature, manner and extent thereof shall be limited pursuant to any
written confidentiality agreement governing the obligations of the Agent or the
Lenders or such affiliate, as the case may be, with respect to such information;
provided, further, that neither the Agent nor any of the Lenders shall in any
-------- -------
event furnish any such information to any competitor of the Borrower or any
customer of the Borrower or any Person known by the Agent or any Lender to be
contemplating an acquisition of any capital stock or assets of the Borrower or
any agent or
115
affiliate of any of the foregoing, except with the prior written consent of the
Borrower or as required by applicable law or judicial order; (ii) to any
regulatory authority having jurisdiction over the Lender, (iii) to any other
person, in connection with the exercise of the Lender's rights hereunder or
under any of the other Credit Documents.
13.9 Indemnification. The Borrower shall and hereby agrees to indemnify,
---------------
defend and hold harmless the Agent and each of the Lenders and their respective
directors, officers, agents and employees from and against (a) any and all
losses, claims, damages, liabilities, deficiencies, judgments or expenses
incurred by any of them (except to the extent that it is finally judicially
determined to have resulted from their own gross negligence or willful
misconduct) arising out of or by reason of any litigations, investigations,
claims or proceedings which arise out of or are in any way related to (i) this
Credit Agreement or the transactions contemplated thereby, (ii) any actual or
proposed use by the Borrower of the proceeds of the Loans or (iii) the Agent's
or the Lenders' entering into this Credit Agreement, the other Credit Documents
or any other agreements and documents relating hereto, including, without
limitation, amounts paid in settlement, court costs and the fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing and (b) any such losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred in connection with any remedial or
other action taken by the Borrower, any Pledgor or any of the Lenders in
connection with compliance by the Borrower or any Subsidiaries, or any of their
respective properties, with any federal, state or local environmental laws,
acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines. If and to the extent that the obligations of the Borrower hereunder
are unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The Borrower shall, upon demand, pay to the
Agent and any Lender all costs and expenses (including the reasonable fees and
disbursements of counsel and other professionals) paid or incurred by the Agent
or such Lender in (i) enforcing or defending its rights under or in respect of
this Credit Agreement, the other Credit Documents or any other document or
instrument now or hereafter executed and delivered in connection herewith, (ii)
in collecting the Loans, (iii) in foreclosing or otherwise collecting upon the
Collateral or any part thereof and (iv) obtaining any legal, accounting or other
advice in connection with any of the foregoing. The provisions of this Section
-------
13.9 shall not limit or waive, and are not
----
intended to limit or waive, any claim which the Borrower has or may have against
any Defaulting Lender.
Without limiting the generality of the foregoing paragraph, the Borrower
will defend, indemnify and hold harmless the Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to, the violation of or noncompliance
with any Environmental Laws applicable to any real property owned, leased or
operated by the Borrower, or any orders, requirements or demands of governmental
authorities
116
related thereto, including, without limitation, attorney's and consultant's
fees, investigation and laboratory fees, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of the gross negligence
or willful misconduct of the party seeking indemnification therefor.
The Borrower's obligations under this Section 13.09 shall survive any
-------------
termination of the Commitments and the payment in full of the Obligations, and
are in addition to, and not in substitution of, any other of its obligations set
forth in this Credit Agreement.
13.10 Entire Agreement; Successors and Assigns. This Credit Agreement
----------------------------------------
along with the other Credit Documents constitutes the entire agreement among the
Borrower, the Agent and the Lenders, supersedes any prior agreements among them,
and shall bind and benefit the Borrower and the Lenders and their respective
successors and permitted assigns.
13.11 Amendments, Etc. No amendment or waiver of any provision of this
----------------
Credit Agreement or any other Credit Document, nor consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders, or if the Lenders shall
not be parties thereto, by the parties thereto and consented to by the Required
Lenders, and each such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
--------
that no amendment, waiver or consent shall, unless in writing and signed by all
----
the Lenders, do any of the following: (i) increase the Commitments, (ii) except
as otherwise expressly provided in this Credit Agreement, reduce the principal
of, or interest on, the Notes, any Letter of Credit reimbursement obligations,
any Foreign Exchange Obligations, any Acceptance Obligations or any Fees
hereunder (other than Fees that are exclusively for the account of the Agent),
(iii) postpone any date fixed for any payment in respect of principal of, or
interest on, the Notes, any Letter of Credit reimbursement obligations, any
Foreign Exchange Obligations, any Acceptance Obligations or any Fees hereunder
(other than Fees that are exclusively for the account of the Agent), (iv) change
the percentage of the Commitments, or any minimum requirement necessary for the
Lenders or the Required Lenders to take any action hereunder, (v) amend or waive
Section 3.5(b) or this Section 13.11, or change the definition of Required
-------------- -------------
Lenders, or (vi) except as otherwise expressly provided in this Credit
Agreement, and other than in connection with the financing, refinancing, sale or
other disposition of any asset of the Borrower permitted under this Credit
Agreement, release any Liens in favor of the Lenders on any of the Collateral
(except as provided in Sections 7.5 and 12.10) and provided further, that no
------------ ----- -------- -------
amendment, waiver or consent affecting the rights or duties of the Agent, an
Issuing Bank, a Foreign Exchange Guarantor or an Accepting Bank under any Credit
Document shall in any event be effective, unless in writing and signed by the
Agent and/or such Issuing Bank, such Foreign Exchange Guarantor or such
Accepting Bank, as applicable, in addition to the Lenders required hereinabove
to take such action. Notwithstanding any of the foregoing to the contrary, the
consent of the Borrower shall not be required for any amendment, modification or
waiver of the provisions of Article 12 (other than
----------
117
the provisions of Section 12.9 and 12.10). In addition, the Borrower and the
------------ -----
Lenders hereby authorize the Agent to modify this Credit Agreement by
unilaterally amending or supplementing Annex I from time to time in the manner
requested by the Borrower, the Agent or any Lender in order to reflect any
assignments or transfers of the Loans as provided for hereunder; provided,
--------
however, that the Agent shall promptly deliver a copy of any such modification
-------
to the Borrower and each Lender.
13.12 [INTENTIONALLY OMITTED].
13.13 Nonliability of Agent and Lenders. The relationship between the
---------------------------------
Borrower and the Lenders and the Agent shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent nor any Lender undertakes
any responsibility to the Borrower to review or inform the Borrower of any
matter in connection with any phase of the Borrower's business or operations.
13.14 Independent Nature of Lenders' Rights. The amounts payable at any
-------------------------------------
time hereunder to each Lender under such Lender's Note or Notes shall be a
separate and independent debt.
13.15 Counterparts. This Credit Agreement may be executed in any number
------------
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
13.16 Effectiveness. This Credit Agreement shall become effective on the
-------------
date on which all of the parties hereto shall have signed a copy hereof (whether
the same or different copies) and shall have delivered the same to the Agent or,
in the case of Lenders who have not so delivered the same to the Agent, shall
have given to the Agent written, telecopied or telex notice (actually received)
at such office that the same has been signed and mailed to it.
13.17 Severability. In case any provision in or obligation under this
------------
Credit Agreement or the Notes or the other Credit Documents shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
13.18 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Credit Agreement, and the Table of Contents, are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Credit Agreement.
118
13.19 Maximum Rate. Notwithstanding anything to the contrary contained
------------
elsewhere in this Credit Agreement or in any other Credit Document, the
Borrower, the Agent and the Lenders hereby agree that all agreements among them
under this Credit Agreement and the other Credit Documents, whether now existing
or hereafter arising and whether written or oral, are expressly limited so that
in no contingency or event whatsoever shall the amount paid, or agreed to be
paid, to the Agent or any Lender for the use, forbearance, or detention of the
money loaned to the Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due shall
exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding Obligations, such
excess shall be refunded to the Borrower. All sums paid or agreed to be paid to
the Agent or any Lender for the use, forbearance, or detention of the
Obligations and other indebtedness of the Borrower to the Agent or any Lender
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until payment
in full so that the actual rate of interest on account of all such indebtedness
does not exceed the Highest Lawful Rate throughout the entire term of such
indebtedness. The terms and provisions of this Section 13.19 shall control every
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other provision of this Credit Agreement and all agreements among the Borrower,
the Agent and the Lenders.
13.20 Right of Setoff. In addition to and not in limitation of all rights
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of offset that any Lender or other holder of a Note may have under applicable
law, each Lender or other holder of a Note shall, upon the occurrence of any
Event of Default and whether or not such Lender or such holder has made any
demand or the Obligations of any Credit Party are matured, have the right to
appropriate and apply to the payment of the Obligations of such Credit Party all
deposits (general or special, time or demand, provisional or final) then or
thereafter held by and other indebtedness or property then or thereafter owing
by such Lender or other holder. Any amount received as a result of the exercise
of such rights shall be reallocated among the Lenders as set forth in Section
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3.11 hereof.
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13.21 Confidentiality. (a) The Agent and each Lender agree that they
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shall hold in confidence in accordance with their respective customary procedure
for handling confidential information of this nature and in accordance with safe
and sound banking practices, any confidential information which has been marked
as "confidential" provided by the Borrower either directly to the Agent or such
Lender or indirectly through the Agent.
119
(b) Notwithstanding the foregoing paragraph (a), this Section shall not
apply to: (i) information exchanged among the Agent and the Lenders or among
their employees, officers, accountants, attorneys or consultants provided that
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any such Person shall have first been advised of the confidential nature of such
information; (ii) information that has been or is made public by the Borrower or
any third party without breach of this Credit Agreement or otherwise becomes
generally available to the public other than as a result of a disclosure in
violation of this Section 13.21; (iii) information that was or becomes available
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to the Agent, or any Lender from a third party on a non-confidential basis; (iv)
information that is required to be disclosed by law, including to bank examiners
and regulatory authorities; (v) information that is required to be disclosed by
any court, agency or legislative body (by interrogatories, requests for
information, oral questions, subpoena, civil investigative demand or similar
process); or (vi) any disclosure of confidential information to a proposed
participant or purchasing bank in connection with a proposed participation or
transfer pursuant to Section 13.6 hereof; provided that such proposed
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participant or purchasing bank shall have first agreed to treat such information
as confidential as provided in this Section 13.21.
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120
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed and delivered by their proper and duly authorized officers as of the
date set forth above.
BORROWER:
CONVERSE INC.
By:
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Senior Vice President
LENDER:
BT COMMERCIAL CORPORATION
By:
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Senior Vice President
121
ANNEX I
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LENDERS AND COMMITMENT AMOUNTS
As of May 20, 1997
Name and Address of Lender Revolving Credit Commitment
-------------------------- ---------------------------
BT COMMERCIAL CORPORATION $150,000,000.00
000 Xxxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
