1
EXHIBIT 10.22
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement")
is made and entered into as of this 9th day of March, 1998, by and between
STAFFMARK, INC., a Delaware corporation (the "Borrower"), the undersigned
lenders and any other lenders hereafter becoming a party to this Agreement (the
"Lenders"), and MERCANTILE BANK NATIONAL ASSOCIATION, as successor by merger to
Mercantile Bank of St. Louis National Association, a national banking
association, as agent on behalf of Lenders (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the Borrower and the Lenders heretofore entered into that
certain Credit Agreement dated October 4, 1996, as amended by that certain First
Amendment to Credit Agreement dated as of December 18, 1996, and that certain
Second Amendment to Credit Agreement dated as of May 30, 1997 (as so amended,
the "Credit Agreement"); and
WHEREAS, the Borrower has applied for an additional $50,000,000.00 in
loans; and
WHEREAS, the Borrower, Agent and Lenders desire to amend and restate
the Credit Agreement to, among other things, increase the aggregate principal
amount of loans available thereunder from $100,000,000.00 to $150,000,000.00 and
combine the revolving credit facility and reducing revolver credit facility into
a single reducing revolver credit facility, upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually amend and restate the Credit
Agreement so that in its entirety it reads as follows:
SECTION 1. TERM.
The "Term" of this Agreement shall commence on the date hereof
and shall end on April 1, 2003, unless earlier terminated pursuant to Section
3.11 or by acceleration or otherwise upon the occurrence of an Event of Default
under this Agreement, in which case the Term hereof shall end on such earlier
date.
SECTION 2. DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement
or in any Exhibit or Schedule hereto, when used in this Agreement, the following
terms shall have the following meanings (such meanings shall be equally
applicable to the singular and plural forms of the terms used, as the context
requires):
2
Acceptable Acquisition shall mean any Acquisition of an
ongoing business similar to or consistent with the Borrower's current line of
business where each of the following are true: (a) such Acquisition has been:
(i) in the event a corporation or its assets is the subject of such Acquisition,
either (x) approved by the Board of Directors of the corporation which is the
subject of such Acquisition or (y) recommended by such Board of Directors to the
shareholders of such corporation, (ii) in the event a partnership is the subject
of such Acquisition, approved by a majority (by percentage of voting power) of
the partners of the partnership which is the subject of such Acquisition, (iii)
in the event an organization or entity other than a corporation or partnership
is the subject of such Acquisition, approved by a majority (by percentage of
voting power) of the governing body, if any, or by a majority (by percentage of
ownership interest) of the owners of the organization or entity which is the
subject of such Acquisition or (iv) in the event the corporation, partnership or
other organization or entity which is the subject of such Acquisition is in
bankruptcy, approved by the bankruptcy court or another court of competent
jurisdiction; (b) Borrower has given Agent and Lenders at least ten (10)
Business Days prior written notice of such Acquisition if Lenders' consent is
required under the succeeding clause (c) or three (3) Business Days prior
written notice of such Acquisition if Lenders' consent is not required under the
succeeding clause (c); (c) if (i) the sum of: (x) the principal amount of any
Loan requested in connection with such Acquisition, plus (y) the then
outstanding principal balance of all Loans, exceeds $50,000,000.00, and the
portion of the purchase price for such Acquisition payable by Borrower in cash
(whether payable at closing or at any time or times after closing on the
acquisition, and if payable after closing and not determinable prior to closing,
as reasonably estimated by Borrower) exceeds $16,000,000.00, or (ii) the portion
of the purchase price for such acquisition payable by Borrower in cash exceeds
the lesser of $30,000,000.00 or 15% of Shareholders' Equity, Borrower has
obtained the prior written consent of the Required Lenders and the Agent; and
(d) Borrower or a wholly-owned subsidiary of Borrower is the surviving entity;
provided, however, that no Acquisition shall be an Acceptable Acquisition unless
both as of the date of any such Acquisition and immediately following such
Acquisition the Borrower is, and on a pro forma basis projects that it will
continue to be, in compliance with the terms, covenants and conditions contained
in this Agreement and the other Transaction Documents.
Account Debtor shall mean any Person who is and/or may become
obligated to the Borrower or any Guarantor under or on account of Accounts.
Accounts shall mean all trade accounts receivable of the
Borrower or any Guarantor which have been invoiced by the Borrower or such
Guarantor.
Acquisition shall mean any transaction or series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any corporation, partnership or other
organization or entity, whether through purchase of assets, merger or otherwise
or (b) directly or indirectly acquires (in one transaction or as of the most
recent transaction in a series of transactions) at least (i) a majority (in
number of votes) of the stock and/or other securities of a corporation having
ordinary voting power for the election of
-2-
3
directors (other than stock and/or other securities having such power only by
reason of the happening of a contingency), (ii) a majority (by percentage of
voting power) of the outstanding partnership interests of a partnership or (iii)
a majority of the ownership interests in any organization or entity other than a
corporation or partnership.
Agent shall mean Mercantile Bank National Association and its
successors and assigns.
Applicable Margin shall mean, with respect to each type of
Loan or fee, the rate of interest shown in the applicable column below for the
type of Loan or fee specified for each such column:
Level I Level II Level III Level IV Level V
------- -------- --------- -------- -------
IF RATIO OF CONSOLIDATED ADJUSTED TOTAL FUNDED => 3.00 < 3.00 < 2.00 < 1.50 < 1.00
DEBT TO CONSOLIDATED PROFORMA EBITDA IS => 2.00 => 1.50 => 1.00
LIBOR Loans 1.500% 1.250% 1.000% 0.875% 0.625%
Prime Loans 0.000% 0.000% 0.000% 0.000% 0.000%
Commitment Fee 0.2500% 0.2500% 0.2500% 0.1875% 0.1875%
On each January 1, April 1, July 1 and October 1 during the Term hereof, the
ratio of Consolidated Adjusted Total Funded Debt to Consolidated Proforma EBITDA
for the fiscal quarter preceding the fiscal quarter then ended shall be computed
by Agent following delivery to Agent of the Borrower's consolidated financial
statements for such fiscal quarter-end pursuant to Section 7.1(a)(ii) herein
(i.e., for the fiscal quarter beginning April 1, 1998 using the ratio for the
fiscal quarter ended December 31, 1997), and the Applicable Margins adjusted as
of such subsequent January 1, April 1, July 1 and October 1 date in accordance
with the levels set forth above. Such new Applicable Margins shall continue in
effect until the next such adjustment, if any, on the following January 1, April
1, July 1 and October 1 in accordance with the preceding sentence. Each
determination by Agent of the Applicable Margins shall be deemed prima facie
correct. All such adjustments shall become effective as to LIBOR Loans
outstanding on the first day of any quarter upon the expiration of the then
current applicable Interest Periods for such Loans.
Attorneys' Fees shall mean the reasonable value of the
services (and costs, charges and expenses related thereto) of the attorneys (and
all paralegals, secretaries, accountants and other staff employed by such
attorneys) employed by Agent or any of the Lenders (including, without
limitation, attorneys and paralegals who are employees of Agent or any of the
Lenders or any affiliate of Agent or any of the Lenders) from time to time (i)
in connection with the documentation, negotiation, execution, delivery,
administration and enforcement of this Agreement and/or any of the other
Transaction Documents, (ii) to represent Agent or any of the Lenders in any
litigation, contest, dispute, suit or proceeding, or to commence, defend or
intervene in any litigation, contest, dispute, suit or proceeding, or to file
any petition, complaint,
-3-
4
answer, motion or other pleading or to take any other action in or with respect
to any litigation, contest, dispute, suit or proceeding (whether instituted by
Agent, any of the Lenders, the Borrower or any other Person and whether in
bankruptcy or otherwise) in any way or respect relating to any of the
Collateral, any Third Party Collateral, this Agreement or any of the other
Transaction Documents, the Borrower, any Subsidiary of the Borrower or any other
Obligor, (iii) to protect, collect, lease, sell, take possession of or liquidate
any of the Collateral or any Third Party Collateral, (iv) to attempt to enforce
any security interest in or other Lien upon any of the Collateral or any Third
Party Collateral or to give any advice with respect to such enforcement and (v)
to enforce any of Agent's or any Lender's rights to collect any of the
Borrower's Obligations.
Borrower's Obligations shall mean any and all indebtedness
(principal, interest, fees and other amounts), liabilities and obligations of
the Borrower to Agent or any of the Lenders evidenced by or arising under the
Notes, this Agreement, the Security Agreement, the Pledge Agreements, the
Trademark Assignment, any of the other Transaction Documents or any other
agreement, document or instrument heretofore, now or hereafter executed and
delivered by the Borrower to Agent or any of the Lenders, in each case whether
now existing or hereafter arising, absolute or contingent, joint and/or several,
secured or unsecured, direct or indirect, expressed or implied in law,
contractual or tortious, liquidated or unliquidated, at law or in equity, or
otherwise, and whether created directly or acquired by Agent or any of the
Lenders by assignment or otherwise, and any and all costs of collection and/or
Attorneys' Fees incurred or to be incurred in connection therewith.
Business Day shall mean any day except a Saturday, Sunday or
legal holiday observed by any of the Lenders or by commercial banks in St.
Louis, Missouri.
Capital Expenditure shall mean any expenditure which, in
accordance with generally accepted accounting principles consistently applied,
is or should be capitalized on the balance sheet of the Person making the same.
Capitalized Lease shall mean any lease which, in accordance
with generally accepted accounting principles consistently applied, is or should
be capitalized on the balance sheet of the lessee.
Code shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute of similar import, together with the regulations
thereunder, in each case as in effect from time to time. References to sections
of the Code shall be construed to also refer to any successor sections.
Collateral shall mean any Property or assets of the Borrower
which now or at any time hereafter secure the payment or performance of any of
the Borrower's Obligations.
Commitment Fee shall have the meaning ascribed thereto in
Section 3.12.
-4-
5
Consolidated Adjusted Total Funded Debt shall mean as of any
fiscal quarter-end the sum of (a) the outstanding principal amount of all Loans
on any such fiscal quarter-end date, plus (b) the undrawn face amount of all
issued and outstanding Letters of Credit or any other letters of credit issued
for the account of Borrower or its Consolidated Subsidiaries as of any such
fiscal quarter-end date, plus (c) all of the Borrower's and its Consolidated
Subsidiaries' other borrowed money Indebtedness outstanding on any such fiscal
quarter-end date, including, without limitation, amounts due under any
Capitalized Leases, plus (d) the cash portion of each Deferred Payment
Obligation outstanding as of any such fiscal quarter-end date.
Consolidated Fixed Charges shall mean the sum of all of the
Borrower's and its Consolidated Subsidiaries' expenses under any operating
leases within the specified period of any such calculation, plus interest paid
during such specified period, including, without limitation, interest charges
during such period under any Capitalized Leases, plus all income taxes paid
during the specified period of such calculation, plus all payments of principal
made on any Subordinated Debt as permitted to be paid pursuant to the terms of
the subordination and standby agreement or intercreditor agreement made between
Agent and the holder of any such Subordinated Debt, plus Capital Expenditures
made during the specified period of any such calculation, excluding any
expenditures for capital assets acquired by Borrower and its Consolidated
Subsidiaries in an Acceptable Acquisition. The calculation of Consolidated Fixed
Charges of Borrower and its Consolidated Subsidiaries shall include all such
fixed charges described above for the specified period of any such calculation
paid or made by any Subsidiary acquired by Borrower or its Consolidated
Subsidiary during the specified period.
Consolidated Proforma EBITDA Cash Flow shall mean on any date
the Borrower's and its Consolidated Subsidiaries' net income (exclusive of any
extraordinary gains or losses) plus interest expense, plus expenses for income
taxes, plus depreciation, plus amortization, all for the twelve month period
included in any such calculation and ending on the date of any such calculation,
all as determined on a consolidated basis in accordance with generally accepted
accounting principles, consistently applied. The calculation of Consolidated
Proforma EBITDA Cash Flow of Borrower and its Consolidated Subsidiaries shall
include all net income and other such amounts for the full twelve month period
preceding the date of such calculation earned by or incurred or accrued by any
Subsidiary acquired by Borrower or its Consolidated Subsidiaries during the
preceding twelve months (and of any such Subsidiary contemplated for acquisition
by Borrower or its Consolidated Subsidiaries with proceeds of a Reducing
Revolver Loan for purposes of determining compliance with the requirements of
Section 3.1(a)), but shall exclude from such calculation any officer
compensation expenses or other expenses which Agent determines are non-recurring
expenses paid or incurred by Borrower or a Consolidated Subsidiary in connection
with any such Acquisition.
Consolidated Proforma Operating Cash Flow shall mean on any
date the Borrower's and its Consolidated Subsidiaries' net income (exclusive of
any extraordinary gains or losses) plus interest expense, plus expenses for
income taxes, plus depreciation, plus amortization, plus all expenses incurred
by Borrower or any of its Consolidated Subsidiaries under any operating leases,
all for the twelve month period included in any such calculation and ending on
the date of any such calculation, all as determined on a consolidated basis in
-5-
6
accordance with generally accepted accounting principles, consistently applied.
The calculation of Consolidated Proforma Operating Cash Flow of Borrower and its
Consolidated Subsidiaries shall include all net income and other such amounts
for the full twelve month period preceding the date of such calculation earned
by or incurred or accrued by any Subsidiary acquired by Borrower or its
Consolidated Subsidiaries during the preceding twelve months, but shall exclude
from such calculation any officer compensation expenses or other expenses which
Agent determines are non-recurring expenses paid or incurred by Borrower or a
Consolidated Subsidiary in connection with any such Acquisition.
Consolidated Subsidiary shall mean with respect to any Person
at any date, any Subsidiary or other entity the assets and liabilities of which
are or should be consolidated with those of such Person in its consolidated
financial statements as of such date in accordance with generally accepted
accounting principles consistently applied.
Conversion Notice shall have the meaning ascribed thereto in
Section 3.2(b).
Default shall mean any event or condition the occurrence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default as defined in Section 8 hereof.
Deferred Payment Obligation shall mean the cash portion of the
purchase price to be paid by Borrower or any of its Consolidated Subsidiaries in
connection with any Acquisition at a time (whether in installments or a lump
sum) after closing on the Acquisition. If the cash portion percentage of the
purchase price to be paid by Borrower is to be determined by the payee at a time
after closing, the cash portion shall be calculated as the maximum possible
percentage. Further, if all or any portion of the amount of such deferred
payment is contingent upon the performance of the company acquired during a
period after closing, for purposes of this Agreement the portion of the Deferred
Payment Obligation based on such future performance will be calculated based on
such company's historical performance for an equal period of time ending on the
beginning date of any historical period on which the purchase price is based and
if the purchase price is not based on any historical performance, then ending on
the closing date.
Distribution in respect of any corporation shall mean (i)
dividends or other distributions on capital stock of the corporation; and (ii)
the redemption, repurchase or other acquisition of such stock or of warrants,
rights or other options to purchase such stock (except when solely in exchange
for such stock).
Environmental Laws shall mean the Resource Conservation and
Recovery Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Materials or
any other hazardous, toxic or dangerous waste, substance or constituent or other
substance, whether solid, liquid or gas, as now or at any time hereafter in
effect.
-6-
7
Environmental Lien shall have the meaning ascribed thereto in
Section 7.1(k)(vi).
ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
ERISA Affiliate shall mean any corporation, trade or business
that is, along with the Borrower, a member of a controlled group of corporations
or a controlled group of trades or businesses, as described in Sections 414(b)
and 414(c), respectively, of the Code.
Event of Default shall have the meaning ascribed thereto in
Section 8.
Guarantee by any Person shall mean any obligation, contingent
or otherwise, of such Person guaranteeing any Indebtedness of any other Person
or in any manner providing for the payment of any Indebtedness of any other
Person or otherwise protecting the holder of such Indebtedness against loss
(whether by agreement to keep-well, to purchase assets, goods, securities or
services, or to take-or-pay or otherwise); 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 shall have a correlative
meaning.
Guarantor shall mean each Subsidiary of Borrower now or
hereafter executing a Subsidiary Guaranty of all of Borrower's Obligations, and
Guarantors shall mean any or all of them.
Hazardous Materials shall mean any hazardous substance or
pollutant or contaminant defined as such in (or for the purposes of) any
Environmental Law and shall include, without limitation, petroleum, including
crude oil or any fraction thereof which is liquid at standard conditions of
temperature or pressure (60 degrees fahrenheit and 14.7 pounds per square inch
absolute), any radioactive material, including, without limitation, any source,
special nuclear or byproduct material as defined in 42 U.S.C. Section 2011 et
seq., as amended or hereafter amended, and asbestos in any form or condition.
Indebtedness of any Person shall mean and include, without
duplication, any and all indebtedness (principal, interest, fees and other
amounts), liabilities and obligations of such Person which in accordance with
generally accepted accounting principles, consistently applied are or should be
classified upon a balance sheet of such Person as liabilities of such Person,
and in any event shall include all (i) obligations of such Person for borrowed
money or which have been incurred in connection with the acquisition of
Property, (ii) obligations secured by any Lien or other charge upon any Property
owned by such Person, provided that if such Person has not assumed or become
liable for the payment of such obligations, such obligations shall still be
included in Indebtedness but the determination of the amount of Indebtedness
evidenced by such obligations shall be limited to the book value of such
Property, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to any Property acquired by such
Person, provided that if the rights and remedies of the seller, lender or lessor
in
-7-
8
the event of default under such agreement are limited solely to repossession
or sale of such Property, such obligations shall still be included in
Indebtedness but the determination of the amount of Indebtedness evidenced by
such obligations shall be limited to the book value of such Property, (iv) all
Guarantees and other contingent indebtedness, liabilities and obligations of
such Person whether or not reflected on the balance sheet of such Person and (v)
all obligations of such Person as lessee under any Capitalized Lease.
Interest Period shall mean with respect to each LIBOR Loan:
(i) Initially, the period commencing on the date of
such Loan and ending 1, 2, 3 or 6 months thereafter (or such other
period agreed upon in writing by the Borrower and all of the Lenders),
as the Borrower may elect pursuant to Section 3.2(a); and
(ii) Thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Loan and
ending 1, 2, 3 or 6 months thereafter (or such other period agreed upon
in writing by the Borrower and all of the Lenders), as the Borrower may
elect pursuant to Section 3.2(b);
provided that:
(iii) For purposes of determining an Interest Period,
a month means a period starting on one day in a calendar month and
ending on a numerically corresponding day in the next calendar month,
provided, however, if an Interest Period begins on the last day of a
month and if there is no numerically corresponding day in the month in
which an Interest Period is to end, then such Interest Period shall end
on the last Business Day of such month;
(iv) Subject to clauses (v), (vi) and (vii) below, if
any Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the immediately
following Business Day, except that if such immediately following
Business Day is in a different month, such Interest Period shall end on
the immediately preceding Business Day;
(v) No Interest Period with respect to any LIBOR Loan
shall extend beyond the last day of the Term hereof; and
(vi) Any Interest Period which includes a date on
which a payment of principal is required to be made on the applicable
Loan(s) shall end on such date.
Inventory shall mean all inventory of the Borrower and the
Guarantors.
Letter of Credit and Letters of Credit shall have the meanings
ascribed thereto in Section 3.3(a).
-8-
9
Letter of Credit Application shall mean an application and
agreement for irrevocable standby letter of credit in the form of Exhibit C
attached hereto and incorporated herein by reference or an application and
agreement for irrevocable commercial letter of credit in the form of Exhibit D
attached hereto and incorporated herein by reference, and in either case
executed by Borrower, as account party, and delivered to Agent pursuant to
Section 3.3(a) as the same may from time to time be amended, modified, extended
or renewed.
Letter of Credit Commitment Fee shall have the meaning
ascribed thereto in Section 3.3(c)(ii).
Letter of Credit Issuance Fee shall have the meaning ascribed
thereto in Section 3.3(c)(i).
Lien shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on common law, statute or contract,
including, without limitation, any security interest, mortgage, deed of trust,
pledge, hypothecation, judgment lien or other lien or encumbrance of any kind or
nature whatsoever, any conditional sale or trust receipt and any lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property.
LIBOR Base Rate means, for an Interest Period, (a) the LIBOR
Index Rate for such Interest Period, if such rate is available, and (b) if the
LIBOR Index Rate cannot be determined, the arithmetic average of the rates of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
at which deposits in U.S. dollars in immediately available funds are offered to
Agent at 11:00 a.m. (St. Louis time) two (2) Business Days before the beginning
of such Interest Period by two (2) or more major banks in the interbank
eurodollar market selected by Agent for a period equal to such Interest Period
and in an amount equal or comparable to the principal amount of the LIBOR Loan
scheduled to be made available by Lenders. As used herein, "LIBOR Index Rate"
means, for any Interest Period, the rate per annum (rounded upwards, if
necessary, to the next higher one ten-thousandth of a percentage point) for
deposits in U.S. Dollars for a period equal to such Interest Period, which
appears on the Telerate Page 3750 as of 9:00 a.m. (St. Louis time) on the day
two Business Days before the commencement of such Interest Period.
LIBOR Loan shall mean any Loan bearing interest at the LIBOR
Rate.
LIBOR Rate shall mean (a) the quotient of (i) the LIBOR Base
Rate divided by (ii) one minus the LIBOR Reserve Percentage, plus (b) the
Applicable Margin.
LIBOR Reserve Percentage shall mean for any day the reserve
percentage (including any supplemental percentage applied on a marginal basis or
any other reserve requirement having a similar effect), expressed as a decimal,
which is in effect on the first day of
-9-
10
the applicable Interest Period, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) under Regulation D (or any other
applicable regulation of the Board of Governors (or any successor)) with respect
to "Eurocurrency Liabilities." The LIBOR Rate shall be adjusted automatically on
and as of the effective date of any change in the LIBOR Reserve Percentage.
Loan shall mean each Reducing Revolver Loan, whether made as a
Prime Loan or a LIBOR Loan, and Loans shall mean any or all of the foregoing.
Loan Commitments shall mean the total of the Reducing Revolver
Commitments of each of the Lenders.
Multiemployer Plan shall mean a "multi-employer plan" as
defined in Section 4001(a) (3) of ERISA which is maintained for employees of the
Borrower, any ERISA Affiliate or any Subsidiary of the Borrower.
Notes shall mean the Reducing Revolver Notes.
Obligor shall mean the Borrower and each other Person who is
or shall at any time hereafter become primarily or secondarily liable on any of
the Borrower's Obligations or who grants Agent or any of the Lenders a Lien upon
any of the Property or assets of such Person as security for any of the
Borrower's Obligations.
Occupational Safety and Health Laws shall mean the
Occupational Safety and Health Act of 1970, as amended, and any other federal,
state or local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to or imposing liability or standards of conduct concerning
employee health and/or safety, as now or at any time hereafter in effect.
PBGC shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
Pension Plan shall mean a "pension plan," as such term is
defined in Section 3(2) of ERISA, which is established or maintained by the
Borrower, any ERISA Affiliate or any Subsidiary of the Borrower, other than a
Multiemployer Plan.
Permitted Investments shall mean any investment by Borrower or
any Subsidiary in any of the following:
(a) Direct obligations of the United States of
America or any instrumentality or agency thereof, the payment of which is
unconditionally guaranteed by the United States of America or any
instrumentality or agency thereof (all of which Investments must mature within
twelve (12) months from the time of acquisition thereof);
(b) Investments in readily marketable commercial
paper which, at the time of acquisition thereof by Borrower or any Subsidiary,
is rated A-1 or better by Standard &
-10-
11
Poor's or P-1 or better by Xxxxx'x Investment Service and which matures within
270 days from the date of acquisition thereof, provided that the issuer of such
commercial paper shall, at the time of acquisition of such commercial paper,
have a senior long-term debt rating of at least A by Standard & Poor's and
Xxxxx'x Investment Service;
(c) Negotiable certificates of deposit or negotiable
bankers acceptances issued by any of the Lenders or any other bank or trust
company organized under the laws of the United States of America or any state
thereof, which bank or trust company (other than the Lenders to which such
restrictions shall not apply) is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System and is rated B or better by Xxxxxxxx
Bank Watch Service (all of which Permitted Investments must mature within twelve
(12) months from the time of acquisition thereof);
(d) Repurchase agreements, which shall be
collateralized for at least 100% of face value, issued by any of the Lenders or
any other bank or trust company organized under the laws of the United States or
any state thereof, which bank or trust company (other than the Lenders to which
such restrictions shall not apply) is a member of both the Federal Deposit
Insurance Corporation and the Federal Reserve System and is rated B or better by
Xxxxxxxx Bank Watch Service (all of which Permitted Investments must mature
within twelve (12) months from the time of acquisition thereof);
(e) Investments in mutual funds the investments of
which are limited to domestic securities; and
(f) Investments in Acceptable Acquisitions.
Person shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, entity or government (whether national, federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
Pledge Agreements shall mean those certain General Pledge and
Security Agreements executed and to be executed by Borrower and delivered to
Agent for the benefit of each of the Lenders, pledging all of the issued and
outstanding capital stock of each of Borrower's Subsidiaries, together with all
collateral schedules, stock powers, original stock certificates and other
agreements to be delivered in connection therewith pursuant to Section 5.3, all
as the same may be from time to time amended.
Prime Loan shall mean a Loan bearing interest at the Prime
Rate plus the Applicable Margin.
Prime Rate shall mean the interest rate announced from time to
time by Agent as its "prime rate" on commercial loans (which rate shall
fluctuate as and when said prime rate shall change).
-11-
12
Pro Rata Share shall mean, with respect to each Lender, such
Lender's percentage of the aggregate amount of Loans then outstanding,
determined by dividing the aggregate principal amount of all Loans of such
Lender then outstanding by the aggregate amount of all Loans of all Lenders then
outstanding, or, if no Loans are then outstanding, such Lender's percentage of
the total Loan Commitments of all of the Lenders, determined by dividing the sum
of such Lenders' Loan Commitment by the aggregate sum of all Loan Commitments of
all of the Lenders.
Property shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible. Properties
shall mean the plural of Property. For purposes of this Agreement, the Borrower
and each Subsidiary of the Borrower shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
Reducing Revolver Commitment shall mean, subject to
termination or reduction as set forth in Section 3.11 and subject to quarterly
reductions required by Section 3.1(a), for each Lender the amount set forth as
the Reducing Revolver Commitment of such Lender next to its name on the
signature pages hereof or on the signature pages of any subsequent Assignment
Agreement to which such Lender is a party.
Reducing Revolver Loan shall have the meaning ascribed thereto
in Section 3.1.
Reducing Revolver Notes shall mean each of the Reducing
Revolver Notes of the Borrower to be executed and delivered to each of the
Lenders pursuant to Section 3.1, as the same may from time to time be amended,
modified, extended or renewed.
Related Party shall mean any Person (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by or
is under common control with, the Borrower or any Subsidiary of the Borrower,
(ii) which beneficially owns or holds ten percent (10%) or more of the equity
interest of the Borrower, (iii) ten percent (10%) or more of the equity interest
of which is beneficially owned or held by the Borrower or a Subsidiary of the
Borrower, or (iv) who is a director, officer or employee of the Borrower or any
Subsidiary of the Borrower. The term "control" shall mean the possession,
directly or indirectly, of the power to vote ten percent (10%) or more of the
capital stock of any Person or the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Reportable Event shall have the meaning given to such term in
ERISA.
Required Lenders shall mean at any time Lenders having 67% of
the aggregate amount of Loans then outstanding or, if no Loans are then
outstanding, 67% of the total Loan Commitments of all of the Lenders.
-12-
13
Security Agreement shall mean the Security Agreement dated
October 4, 1996, executed by Borrower and delivered to Agent for the benefit of
each of the Lenders pursuant to Section 5.1, as the same may from time to time
be amended.
Shareholders Equity shall mean on any date the total assets
minus total liabilities of Borrower and its Subsidiaries, all determined on a
consolidated basis in accordance with generally accepted accounting principles,
consistently applied.
Subordinated Debt shall mean any borrowed money Indebtedness
of Borrower which has been duly subordinated by the holder thereof to all of
Borrower's Obligations to the Lenders and Agent pursuant to a subordination and
standby agreement or intercreditor agreement in form and substance satisfactory
to the Agent and the Required Lenders.
Subsidiary shall mean, with respect to any Person, any
corporation of which fifty percent (50%) or more of the issued and outstanding
capital stock entitled to vote for the election of directors (other than by
reason of default in the payment of dividends) is at the time owned directly or
indirectly by such Person.
Subsidiary Guaranties shall mean those certain guaranties of
Borrower's Obligations executed respectively by Borrower's Subsidiaries in
existence as of the date hereof and the guaranties of any subsequently created
or acquired Subsidiary of Borrower executed and delivered to Agent hereafter
pursuant to Section 4.2 or Section 7.2(e), all as the same may from time to time
be amended.
Subsidiary Pledge Agreements shall mean those certain general
pledge and security agreements executed respectively by Borrower's Subsidiaries
in existence as of the date hereof and the general pledge and security
agreements of any subsequently created or acquired Subsidiary of Borrower
executed and delivered to Agent hereafter pursuant to Section 4.2 or Section
7.2(e), all as the same may from time to time be amended.
Subsidiary Security Agreements shall mean those certain
security agreements executed respectively by Borrower's Subsidiaries in
existence as of the date hereof and delivered to Agent for the benefit of each
of the Lenders and the Subsidiary Security Agreements executed by any Subsidiary
of Borrower created or acquired subsequent to the date of this Agreement, which
Subsidiary Security Agreement shall be delivered pursuant to Section 4.2 or
Section 7.2(e), all as the same may from time to time be amended.
Term shall have the meaning ascribed thereto in Section 1.
Third Party Collateral shall mean any Property or assets of
any Obligor other than the Borrower which now or at any time hereafter secure
the payment or performance of any of the Borrower's Obligations.
Total Reducing Revolver Commitment shall have the meaning
ascribed thereto in Section 3.1.
-13-
14
Trademark Assignment shall mean the Trademark Collateral
Assignment and Security Agreement executed by Borrower and delivered to Agent
for the benefit of each of the Lenders pursuant to Section 5.2, as the same may
from time to time be amended.
Transaction Documents shall mean this Agreement, the Notes,
the Security Agreement, the Trademark Assignment, the Pledge Agreements, any
Letter of Credit Application, the Subsidiary Guaranties, the Subsidiary Security
Agreements, the Subsidiary Pledge Agreements and all other agreements, documents
and instruments heretofore, now or hereafter delivered to Agent or any of the
Lenders with respect to or in connection with or pursuant to this Agreement, any
Loans made or Letters of Credit issued hereunder or any other of the Borrower's
Obligations, and executed by or on behalf of the Borrower or any of its
Subsidiaries, all as the same may from time to time be amended, modified,
extended or renewed.
SECTION 3. THE LOANS.
3.1 Reducing Revolver Commitment of Lenders.
(a) Subject to the terms and conditions hereof,
during the Term of this Agreement, each Lender hereby severally agrees to make
such loans (individually, a "Reducing Revolver Loan," and collectively, the
"Reducing Revolver Loans"), to the Borrower as the Borrower may from time to
time request pursuant to Section 3.2(a). The aggregate principal amount of
Reducing Revolver Loans which Lenders, cumulatively, shall be required to have
outstanding hereunder at any one time, plus the undrawn face amount of Letters
of Credit issued by Agent and then outstanding under Section 3.3, shall not
exceed the lesser of (i) One Hundred Fifty Million Dollars ($150,000,000.00)
(subject to reduction as provided below, the "Total Reducing Revolver
Commitment"), or (ii) four hundred percent (400%), (and at all times after March
31, 1999, three hundred fifty percent (350%)) of the amount of Borrower's
Consolidated Proforma EBITDA Cash Flow determined as of the most recent fiscal
quarter-end. The amount each Lender shall be required to have outstanding
hereunder as Reducing Revolver Loans plus their undivided Pro Rata Share
participation interest in each Letter of Credit issued by Agent under Section
3.3, shall not exceed, in the aggregate at any one time outstanding, the lesser
of (x) the amount of such Lender's Reducing Revolver Commitment, or (y) such
Lender's Pro Rata Share multiplied times an amount equal to four hundred percent
(400%) (and at all times after March 31, 1999, three hundred fifty percent
(350%)) of Borrower's Consolidated Proforma EBITDA Cash Flow determined as of
the most recent fiscal quarter-end. Each Reducing Revolver Loan under this
Section 3.1 shall be made by the Lenders ratably in proportion to their
respective Reducing Revolver Commitments. The Reducing Revolver Loans shall be
evidenced by the Reducing Revolver Notes of the Borrower, each dated the date
hereof and payable by the Borrower to the respective orders of each of the
Lenders in the aggregate original principal amount of One Hundred Fifty Million
Dollars ($150,000,000.00) and otherwise in the form attached hereto as Exhibit A
and incorporated herein by reference (as the same may from time to time be
amended, restated, modified, extended or renewed, the "Reducing Revolver
Notes"). The Reducing Revolver Notes shall mature on April 1, 2003, unless
earlier terminated by acceleration or otherwise upon the occurrence of an Event
of Default under this Agreement.
-14-
15
Subject to any such earlier maturity by reason of acceleration or otherwise and
in addition to any voluntary reduction requested by Borrower pursuant to Section
3.11, the Total Reducing Revolver Commitment of the Lenders shall be reduced by
the amount of Five Million Dollars ($5,000,000.00) on the first day of each
fiscal quarter commencing with the first such reduction on January 1, 2000 and
continuing on the first day of each fiscal quarter thereafter during the Term
hereof, with such reductions being applied to the respective Reducing Revolver
Commitments of the Lenders in accordance with their Pro Rata Shares thereof. In
the event any such quarterly reduction in the Total Reducing Revolver Commitment
shall cause the amount of the Total Reducing Revolver Commitment to be decreased
below the then outstanding principal amount of all Reducing Revolver Loans to
Borrower plus the undrawn face amount of all outstanding Letters of Credit, or
in the event any reduction in Borrower's most recent quarter-end Consolidated
Proforma EBITDA Cash Flow shall cause the aggregate principal amount of the
Reducing Revolver Loans plus the undrawn face amount of all outstanding Letters
of Credit to exceed four hundred percent (400%) (and at all times after March
31, 1999, three hundred fifty percent (350%)) of such most recent quarter-end
Consolidated Proforma EBITDA Cash Flow, Borrower agrees to pay to Agent for
distribution to the Lenders in accordance with their respective Pro Rata Shares
of the Reducing Revolver Commitments, the amount by which the aggregate
outstanding Reducing Revolver Loans plus the undrawn face amount of all
outstanding Letters of Credit then exceeds the lesser of the then available
Total Reducing Revolver Commitment or four hundred percent (400%) (and at all
times after March 31, 1999, three hundred fifty percent (350%)) of Borrower's
most recent quarter-end Consolidated Proforma EBITDA Cash Flow. If the undrawn
face amount of all Letters of Credit still exceeds the lesser of the then
current Total Reducing Revolver Commitment or four hundred percent (400%) (and
at all times after March 31, 1999, three hundred fifty percent (350%)) of the
most recent quarter-end Consolidated Proforma EBITDA Cash Flow after repayment
in full of all Reducing Revolver Loans under the preceding sentence, Borrower
agrees to provide cash collateral in form and substance acceptable to Agent in
an amount sufficient to cover such shortfall. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay and reborrow the
amounts available under this Section 3.1.
(b) Each Lender shall record in its books and
records, and prior to any transfer of its Reducing Revolver Note shall endorse
on the schedules forming a part thereof, appropriate notations to evidence the
date and amount of each Reducing Revolver Loan made by it during the Term
hereof, whether such Reducing Revolver Loan is then a Prime Loan or a LIBOR
Loan, and the date and amount of each payment of principal made by Borrower with
respect thereto. Each Lender is hereby irrevocably authorized by Borrower so to
endorse its Reducing Revolver Note and to attach to and make a part of any such
Reducing Revolver Note a continuation of any such schedule as and when required;
provided, however that the obligation of Borrower to repay each Reducing
Revolver Loan made hereunder shall be absolute and unconditional,
notwithstanding any failure of any Lender to endorse or any mistake by any
Lender in connection with endorsement on the schedules attached to their
respective Reducing Revolver Notes. The books and records of each Lender
(including, without limitation, the schedules attached to the Reducing Revolver
Notes) showing the account between such Lender and Borrower shall be admissible
in evidence in any action or proceeding and shall constitute prima facie proof
of the items therein set forth.
-15-
16
3.2 Procedure for Borrowing.
(a) Reducing Revolver Loan Advances. Subject to the
terms and conditions hereof, Lenders shall cause the Reducing Revolver Loans to
be made to the Borrower at any time and from time to time during the Term hereof
upon Borrower's application to Agent in writing signed by the authorized
representative of the Borrower and received by Agent not later than 11:00 a.m.
(St. Louis time) three (3) Business Days prior to the date on which such
Reducing Revolver Loan is being borrowed, specifying: (i) if the proceeds of the
Reducing Revolver Loan will be used to finance an Acceptable Acquisition, (A)
the target business to be acquired by Borrower in an Acceptable Acquisition with
the proceeds of such Reducing Revolver Loan (which business must be in a similar
line of business to Borrower and its Subsidiaries), (B) the affidavit of any one
of the President, Chief Financial Officer, Chief Operating Officer, or any
Executive Vice President of Borrower attesting that the Acceptable Acquisition
contemplated will not cause Borrower or any of its Subsidiaries to violate any
provision of the Transaction Documents and including Borrower's financial
projections showing that post-acquisition Borrower and its Subsidiaries will be
in proforma compliance with the financial covenants set forth in Section 7.1(i)
of this Agreement, (C) the desired amount of the new Reducing Revolver Loan,
which shall not exceed the cash purchase price for the target business, and (D)
the date on which the Loan proceeds are to be made available to the Borrower,
which shall be a Business Day, and (ii) if the proceeds of the Reducing Revolver
Loan will be used for any purpose permitted by this Agreement other than to
finance an Acceptable Acquisition, (A) the desired amount of the new Reducing
Revolver Loan and (B) the date on which the Loan proceeds are to be made
available to Borrower, which shall be a Business Day. In addition, not later
than two (2) Business Days prior to the date of funding of any such requested
Reducing Revolver Loan, Borrower shall further notify Agent in writing of: (y)
the applicable interest rate option being selected, and (z) if a LIBOR Loan is
requested, the Interest Period, which in no event shall extend beyond the last
day of the Term hereof. Each application for a Reducing Revolver Loan hereunder
the proceeds of which will be used to finance an Acceptable Acquisition shall
include a copy of the letter of interest, purchase agreement or other documents
signed by and between Borrower and the target business disclosing the terms of
the Acceptable Acquisition. Reducing Revolver Loans made hereunder to fund
Acceptable Acquisitions shall not require the prior written consent of the Agent
or the Required Lenders except as required in subpart (c) of the definition of
Acceptable Acquisition. A Reducing Revolver Loan requested to fund any
Acceptable Acquisition shall be funded in a single advance. Upon receipt of an
application for a Reducing Revolver Loan, the Agent shall deliver a copy of such
information to each Lender on the date of receipt and shall notify each Lender
of such Lender's Pro Rata Share of such new Reducing Revolver Loan. An
application for a Reducing Revolver Loan, once issued, shall not be revocable by
the Borrower. Not later than 2:00 p.m. (St. Louis time) on the date of each new
Reducing Revolver Loan, each Lender shall make available its Pro Rata Share of
such Reducing Revolver Loan, in federal or other funds immediately available in
St. Louis, Missouri, to the Agent at its address specified in or pursuant
-16-
17
to Section 10.7. Agent shall not be required to make any amount available to
Borrower hereunder except to the extent it shall have received such amounts from
the Lenders as set forth herein, provided, however, that unless the Agent shall
have been notified by a Lender prior to the date a Reducing Revolver Loan is to
be made hereunder that such Lender does not intend to make its Pro Rata Share of
such Reducing Revolver Loan available to the Agent, the Agent may assume that
such Lender has made such Pro Rata Share available to the Agent on such date,
and the Agent may in reliance upon such assumption make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Agent by such Lender and the Agent has made such amount
available to the Borrower, the Agent shall be entitled to receive such amount
from such Lender forthwith upon its demand, together with interest thereon in
respect of each day during the period commencing on the date such amount was
made available to the Borrower and ending on but excluding the date the Agent
recovers such amount from the Lender at a rate per annum equal to the effective
rate charged to the Agent for overnight federal funds transactions with member
banks of the Federal Reserve System for each day as determined by the Agent (or
in the case of a day which is not a Business Day, then for the preceding day).
Subject to the terms and conditions hereof, provided that Agent has received a
timely application from Borrower as required in this Section 3.2(a), Agent shall
(unless Agent determines that any applicable condition specified in Sections 4.1
or 4.2 has not been satisfied) make the funds so received from the Lenders
available to Borrower by wiring or otherwise transferring the proceeds of such
Loan not later than 2:30 p.m. (St. Louis time) on the Business Day specified by
Borrower in its application in accordance with any instructions for such
disbursement received from the Borrower. The Borrower hereby authorizes Agent
and Lenders to rely on telephonic, telegraphic, telecopy, telex or written
instructions of any Person identifying himself or herself as a Person authorized
to request a Loan or to make a repayment hereunder, and on any signature which
Agent or any of the Lenders believes to be genuine, and the Borrower shall be
bound thereby in the same manner as if such Person were actually authorized or
such signature were genuine. Borrower also hereby agrees to indemnify Agent and
Lenders and hold Agent and Lenders harmless from and against any and all claims,
demands, damages, liabilities, losses, costs and expenses (including, without
limitation, attorneys' fees and expenses) relating to or arising out of or in
connection with the acceptance of instructions for making Reducing Revolver
Loans or making repayments hereunder unless such acceptance results from the
gross negligence or willful misconduct of the Agent or a Lender as determined by
a court of competent jurisdiction.
(b) Interest Rate Conversions. Subject to the terms
and conditions hereof, Lenders shall permit the Borrower to convert outstanding
Reducing Revolver Loans from a Prime Loan to a LIBOR Loan or from a LIBOR Loan
to a Prime Loan, and Lenders shall permit the Borrower to request a new Interest
Period for any existing LIBOR Loan at the end of its then current Interest
Period, upon timely notice ("Conversion Notice") to Agent, in writing signed by
the authorized representative of the Borrower (including any such notice by
facsimile transmission) specifying: (1) the amount of the outstanding Reducing
Revolver Loan being converted to a new interest rate basis, or the amount of the
LIBOR Loan being continued as a LIBOR Loan for a new Interest Period, (2) the
applicable interest rate option being selected, (3) if a LIBOR Loan is
requested, the Interest Period, which in no event shall extend beyond the last
day of the Term hereof, and (4) the effective date, which shall be a Business
Day, and if
-17-
18
pertaining to an existing LIBOR Loan, shall also be the last day of the then
current Interest Period. Each Conversion Notice must be received by Agent not
later than 11:00 a.m. (St. Louis time) on the Business Day on which a conversion
to a Prime Loan is to be made, and not later than 11:00 a.m. (St. Louis time) on
the second Business Day prior to the Business Day on which a conversion to a
LIBOR Loan is to be made. Each Conversion Notice for extension of an existing
LIBOR Loan for a new Interest Period must be received by Agent not later than
11:00 a.m. (St. Louis time) on the second Business Day prior to the last day of
the then current Interest Period. Upon receipt of a Conversion Notice given to
it, the Agent shall notify each Lender by 12:00 noon (St. Louis time) on the
date of receipt of such Conversion Notice by the Agent of the contents thereof.
Unless the Borrower shall have otherwise requested Agent to notify the Lenders
to continue an existing LIBOR Loan for a new Interest Period in a timely
Conversion Notice, upon the expiration of the current Interest Period any LIBOR
Loan made in relation to such Interest Period and then outstanding shall bear
interest at the Prime Rate plus Applicable Margin from and after the expiration
of such Interest Period unless and until subsequently converted in accordance
with the terms of this Section 3.2(b). A Conversion Notice shall not be
revocable by the Borrower. Subject to the terms and conditions hereof, provided
that Agent has received the timely Conversion Notice, Lenders shall (unless
Agent determines that any applicable condition specified in Section 4 has not
been satisfied) convert the interest rate on the portion of the outstanding
Reducing Revolver Loan, as directed by the Borrower in the Conversion Notice, or
Lenders shall extend any LIBOR Loan for a new Interest Period as directed by the
Borrower in the Conversion Notice, at 2:30 p.m. (St. Louis time) on the Business
Day specified in said Conversion Notice; provided, however, that notwithstanding
the foregoing, in addition to and without limiting the rights and remedies of
the Agent and the Lenders under Section 8 hereof, so long as any Default or
Event of Default under this Agreement has occurred and is continuing, Borrower
shall not be permitted to renew any LIBOR Loan as a LIBOR Loan or to convert any
Prime Loan into a LIBOR Loan. The Borrower hereby authorizes Agent and the
Lenders to rely on telephonic, telegraphic, telecopy, telex or written
instructions of any person identifying himself or herself as a Person authorized
to request a conversion of a Reducing Revolver Loan, or to continue a LIBOR Loan
hereunder, and on any signature which Agent or any of the Lenders believe to be
genuine, and the Borrower shall be bound thereby in the same manner as if such
Person were actually authorized or such signature were genuine. The Borrower
also hereby agrees to indemnify Agent and the Lenders and hold Agent and the
Lenders harmless from and against any and all claims, demands, damages,
liabilities, losses, costs and expenses (including, without limitation,
attorneys' fees and expenses) relating to or arising out of or in connection
with the acceptance of instructions for converting Reducing Revolver Loans to a
new interest rate basis or continuing LIBOR Loans hereunder unless such
acceptance results from the gross negligence or willful misconduct of the Agent
or a Lender as determined by a court of competent jurisdiction. A Conversion
Notice shall not be required in connection with a Prime Loan pursuant to Section
3.6, 3.7 or 3.8.
3.3 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, during the Term of this Agreement, and so long as no Default or Event
of Default under this Agreement has occurred and is continuing (provided,
however, that Agent shall have no liability to any of the
-18-
19
Lenders for issuing a Letter of Credit after the occurrence of any Default or
Event of Default under this Agreement unless Agent has previously received
notice in writing to Agent by Borrower or any of the other Lenders of the
occurrence of such Default or Event of Default), Agent hereby agrees to issue
irrevocable standby and commercial letters of credit for the account of Borrower
(individually, a "Letter of Credit" and collectively, the "Letters of Credit")
in an amount and for the term specifically requested by Borrower by application
in writing to Agent in the form of Exhibit C in the case of a standby Letter of
Credit or in the form of Exhibit D in the case of a commercial Letter of Credit,
each as attached hereto and incorporated herein by reference (a "Letter of
Credit Application") at least three (3) Business Days prior to the requested
issuance thereof; provided, however, that:
(i) Borrower shall have executed and delivered to
Agent a Letter of Credit Application with respect to such Letter of
Credit;
(ii) the term of any such Letter of Credit shall not
extend beyond the earlier of (A) the last day of the Term hereof, or
(B) three hundred sixty-five (365) days from the issuance thereof,
provided, however, that any such Letter of Credit may be renewable on
terms satisfactory to the Agent;
(iii) the aggregate undrawn face amount of all
outstanding Letters of Credit shall not at any one time exceed Ten
Million Dollars ($10,000,000.00) and the aggregate undrawn face amount
of all outstanding Letters of Credit plus the outstanding principal
amount of all Reducing Revolver Loans shall not at any one time exceed
the lesser of (a) four hundred percent (400%) of Borrower's
consolidated Proforma EBITDA Cash Flow determined as of the most recent
fiscal quarter-end or (b) the Total Reducing Revolver Commitment; and
(iv) the text of any such Letter of Credit is
provided to Agent no less than three (3) Business Days prior to the
requested issuance date, which text must be acceptable to Agent in its
sole and absolute discretion.
(b) The payment of drafts under each Letter of Credit
shall be made in accordance with the terms thereof and, in that connection,
Agent shall be entitled to honor any drafts and accept any documents presented
to it by the beneficiary of such Letter of Credit in accordance with the terms
of such Letter of Credit and believed by Agent to be genuine. Agent shall not
have any duty to inquire as to the accuracy or authenticity of any draft or
other drawing document that may be presented to it other than the duties
contemplated by the applicable Letter of Credit Application. If Agent shall have
received documents that in its judgment constitute all of the documents that are
required to be presented before payment or acceptance of a draft under a Letter
of Credit, it shall be entitled to pay such draft provided such documents
conform on their face to the requirements of such Letter of Credit.
(c) In the event of any payment by Agent of a draft
presented or accepted under a Letter of Credit, Borrower agrees to pay to Agent
in immediately available
-19-
20
funds at the time of such drawing an amount equal to the sum of such drawing
plus Agent's negotiation, processing and other fees related thereto. Borrower
hereby authorizes Agent to charge or cause to be charged Borrower's bank
accounts at Agent to the extent there are balances of immediately available
funds therein, in an amount equal to the sum of such drawing plus Agent's
negotiation, processing and other fees related thereto, and Borrower agrees to
pay the amount of any such drawing (and/or Agent's negotiation, processing and
other fees related thereto) not so charged prior to the close of business of
Agent on the day of such drawing. In the event any payment under a Letter of
Credit is made by Agent prior to receipt of payment from Borrower, such payment
by Agent shall constitute a request by Borrower for a Reducing Revolver Loan as
a Prime Loan under Section 3.1(a) above.
(i) Borrower shall also pay to Agent, for its own
account, with respect to each Letter of Credit, a nonrefundable
issuance fee in the amount of One Hundred Twenty-Five Dollars ($125.00)
(the "Letter of Credit Issuance Fee"), which Letter of Credit Issuance
Fee shall be due and payable on the date of issuance of each Letter of
Credit, and such other fees as Agent may from time to time customarily
charge in accordance with Agent's published schedule of fees in effect
from time to time, which fees shall be due and payable on demand by
Agent; and
(ii) Borrower shall pay to Agent for the ratable
account of the Lenders with respect to each Letter of Credit for the
period during which such Letter of Credit is outstanding, a
nonrefundable Letter of Credit Commitment Fee in an amount per annum
equal to the LIBOR Margin in effect for each such fiscal quarter
(calculated on an actual day, 360-day year basis) times the face amount
(taking into account any scheduled increases or decreases therein
during the fiscal quarter in question) of each Letter of Credit issued
hereunder ("Letter of Credit Commitment Fee"), which Letter of Credit
Commitment Fee shall be due and payable on the date of issuance for
each Letter of Credit issued by Agent hereafter, in each case prorated
for the remainder of the then current quarter, and such Letter of
Credit Commitment Fee shall also be payable thereafter for all
outstanding Letters of Credit quarterly in advance on each April 1,
July 1, October 1, and January 1 during the Term hereof.
(d) Upon the issuance of a Letter of Credit by Agent,
an undivided participation interest therein (including, without limitation, an
undivided participation interest in the reimbursement risk relating to such
Letter of Credit and in all payments and Reducing Revolver Loans made in
connection with such Letter of Credit) shall automatically be granted by Agent
to and accepted by each of the other Lenders in an amount based on each such
other Lender's Pro Rata Share of the face amount of such Letter of Credit, which
participation shall be evidenced by a single Letter of Credit Participation
Certificate executed by Agent in favor of such Lender in the form attached
hereto as Exhibit E and incorporated herein by reference. Agent agrees to
provide each Lender with a copy of each Letter of Credit issued hereunder. If
Agent shall make payment on any draft presented or accepted under a Letter of
Credit, Agent shall give notice of such payment to the other Lenders, and each
of the other Lenders hereby
-20-
21
authorizes and requests Agent to advance for their respective accounts, pursuant
to the terms hereof, their respective shares of any such payment based upon
their respective Pro Rata Shares. If a Default has occurred hereunder and if
such drawing is not paid by Borrower in immediately available funds prior to the
close of business of Agent on the date of such drawing, Agent shall promptly so
notify the other Lenders and each of the other Lenders agrees to immediately
reimburse Agent in immediately available funds for its Pro Rata Share of the
amount of such drawing, plus interest calculated on its Pro Rata Share of such
amount at a rate per annum equal to the effective rate charged to the Agent for
overnight federal funds transactions with member banks of the Federal Reserve
System calculated from the date of such payment by Agent to but excluding the
date of reimbursement by such other Lender and on an actual-day, 360-day year
basis. Each of the other Lenders will be entitled to its Pro Rata Share of any
Letter of Credit Commitment Fees paid by Borrower, but such other Lenders shall
have no right to share in any Letter of Credit Issuance Fees or any other fees
paid by Borrower to Agent in connection with any of the Letters of Credit.
(e) Notwithstanding any provision contained in this
Agreement or any of the Letter of Credit Applications to the contrary, upon the
occurrence of any Event of Default under this Agreement, at Agent's option and
without demand or further notice to Borrower, an amount equal to the aggregate
undrawn face amount of all Letter(s) of Credit then outstanding shall be deemed
(as between Agent and Borrower) to have been paid or disbursed by Agent
(notwithstanding that such amounts may not in fact have been so paid or
disbursed by Agent), and which amount shall be immediately due and payable. In
lieu of the foregoing, at the election of the Required Lenders upon the
occurrence of any Event of Default under this Agreement, Borrower shall, upon
the Required Lenders' demand, deliver to Agent cash, or other collateral
acceptable to the Required Lenders in their sole and absolute discretion, having
a value, as determined by the Required Lenders, at least equal to the aggregate
undrawn face amount of all outstanding Letters of Credit. Any such collateral
and/or any amounts received by Agent for such Letters of Credit shall be held by
Agent in a separate account at Agent appropriately designated as a cash
collateral account in relation to this Agreement and the Letters of Credit and
retained by Agent as collateral security for the payment of Borrower's
Obligations hereunder. Cash amounts delivered to Agent pursuant to the foregoing
requirements of this Section shall be invested, at the request and for the
account of Borrower, in investments of a type and nature and with a term
acceptable to the Required Lenders. Such amounts, including in the case of cash
amounts invested in the manner set forth above, any interest realized thereon,
may be applied to reimburse Agent and/or any of the Lenders for drawings or
payments under or pursuant to the Letters of Credit which Agent has paid, or if
no such reimbursement is required to the payment of such other of Borrower's
Obligations as the Required Lenders shall determine. Any amounts remaining in
any cash collateral account established pursuant to this Section after the
payment in full of all of Borrower's Obligations and the expiration or
cancellation of all of the Letters of Credit shall be returned to Borrower
(after deduction of Agent's expenses, if any).
3.4 Interest Rates and Payments.
(a) Each Reducing Revolver Loan shall bear interest
prior to maturity at a rate per annum equal to such of the following as the
Borrower, at its option, shall select in
-21-
22
accordance with Section 3.2: (i) the Prime Rate plus Applicable Margin, which
rate shall fluctuate as and when said Prime Rate or said Applicable Margin shall
change, or (ii) the LIBOR Rate plus Applicable Margin, determined in the case of
LIBOR Loans as of the date of the commencement of the applicable Interest
Period. Accrued interest on all Prime Loans shall be payable quarterly in
arrears on the first day of each calendar quarter, commencing on the first such
date after such Loan is made. Accrued interest on all LIBOR Loans shall be
payable in arrears on the last day of the Interest Period applicable to each
such LIBOR Loan, and if any such Interest Period exceeds three months, all
accrued and unpaid interest shall be due and payable on the date three months
following the commencement of such Interest Period as well. In addition, all
accrued interest on all Loans shall be payable on the last day of the Term
hereof, whether by reason of acceleration or otherwise.
(b) After the occurrence of an Event of Default, the
principal balance of and, to the extent permitted by law, any overdue interest
on any Prime Loan shall bear interest, payable on demand, for each day until
paid, at a rate per annum equal to Three and One-Fourth Percent (3.25%) over and
above the Prime Rate, fluctuating as and when said Prime Rate shall change.
After the occurrence of an Event of Default, the principal balance of and, to
the extent permitted by law, any overdue interest on any LIBOR Loan shall bear
interest, payable on demand, for each day during the applicable Interest Period
until paid, at a rate per annum equal to the sum of Two Percent (2.00%) plus the
LIBOR Rate plus Applicable Margin for such LIBOR Loan, and after the expiration
of such Interest Period, such Loan shall thereafter bear interest at the default
rate applicable to Prime Loans under the preceding sentence. From and after the
maturity of the Notes, whether by reason of acceleration or otherwise, the
unpaid principal balance of each Loan shall bear interest until paid, payable on
demand, at a rate per annum equal to Three and One-Fourth Percent (3.25%) over
and above the Prime Rate, fluctuating as aforesaid.
(c) Interest shall be computed with respect to all
Loans on an actual day, 360-day year basis. Each LIBOR Loan shall be for a
principal amount of Five Hundred Thousand Dollars ($500,000.00) or any larger
multiple of Two Hundred Fifty Thousand Dollars ($250,000.00). The Borrower shall
be permitted to have no more than twelve (12) LIBOR Loans outstanding at any one
time.
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder as selected by Borrower pursuant to Section
3.2. The Agent shall give prompt notice to Borrower and the Lenders by
telephone, telecopy, telex or cable of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
3.5 Prepayment; Funding Losses. The Borrower shall be
privileged to prepay all at any time or any portion from time to time of the
unpaid principal balance of any Loan, provided, however, that any LIBOR Loan may
be prepaid only at the expiration of the applicable Interest Period. If the
Borrower makes any payment with respect to any LIBOR Loan on any day other than
the last day
-22-
23
of the Interest Period applicable thereto (whether by reason of acceleration, a
required prepayment under this Agreement or otherwise), or if the Borrower
converts any LIBOR Loan or portion thereof to a Prime Loan on any day other than
the last day of the Interest Period applicable thereto (whether by reason of
Section 3.7, 3.8 or otherwise), or if the Borrower fails to borrow any LIBOR
Loan after a request for such a Loan has been given to Agent pursuant hereto,
the Borrower shall reimburse any of the Lenders on demand for any resulting
losses and expenses incurred by any such Lender, including, without limitation,
any losses incurred in obtaining, liquidating or employing deposits from third
parties, including loss of margin for the period after such payment or
conversion, provided that such Lender shall have delivered to the Borrower a
certificate, with supporting calculations, as to the amount of such losses and
expenses, which certificate shall be conclusive in the absence of manifest
error. All prepayments shall be applied solely to the payment of principal.
3.6 Basis for Determining Interest Rate Inadequate or Unfair.
If with respect to any Interest Period:
(a) Deposits in dollars (in the applicable amounts)
are not being offered to any Lender in the relevant market for such Interest
Period, or
(b) Any Lender determines that the LIBOR Rate as
determined pursuant to the definition thereof will not adequately and fairly
reflect the cost to such Lender of maintaining or funding the LIBOR Loans for
such Interest Period,
such Lender shall forthwith give notice thereof to the Borrower, which notice
shall set forth in detail the basis for such notice, whereupon until such Lender
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (a) the obligations of such Lender to make LIBOR Loans shall be
suspended, and (b) the Borrower shall convert all of its then outstanding LIBOR
Loans from such Lender on the last day of the then current Interest Period
applicable to each such LIBOR Loan, to a Prime Loan in an equal principal
amount. Interest accrued on such LIBOR Loan prior to such conversion shall be
due and payable on the date of such conversion.
3.7 Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency shall
make it unlawful or impossible for such Lender to make, maintain or fund its
LIBOR Loans to the Borrower, such Lender shall forthwith give notice thereof to
the Borrower. Upon receipt of such notice, the Borrower shall convert all of
their then outstanding LIBOR Loans from such Lender on either (a) the last day
of the then current Interest Period applicable to such LIBOR Loan if such Lender
may lawfully continue to maintain and fund such LIBOR Loan to such day or (b)
immediately if such Lender may not lawfully continue to fund and maintain such
LIBOR Loan to such day, to a Prime Loan in an equal principal amount. Interest
accrued on such LIBOR Loan prior to such conversion shall be due and payable on
the date of such conversion together with any funding losses and other amounts
due under Section 3.5.
-23-
24
3.8 Increased Cost.
(a) If (i) Regulation D of the Board of Governors of
the Federal Reserve System, as amended, or (ii) after the date hereof, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
or regulatory authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
governmental or regulatory authority, central bank or comparable agency (a
"Regulatory Change"):
(i) shall subject any such Lender to any tax, duty or
other charge with respect to its LIBOR Loans, the Notes or the
obligation to make LIBOR Loans, or shall change the basis of taxation
of payments to any such Lender of the principal of or interest on its
LIBOR Loans or any other amounts due under this Agreement in respect of
its LIBOR Loans or its obligation to make LIBOR Loans (except for taxes
on or changes in the rate of tax on the overall net income of such
Lender); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System), special deposit,
capital or similar requirement against assets of, deposits with or for
the account of, or credit extended or committed to be extended by, any
such Lender or shall, with respect to such Lender impose, modify or
deem applicable any other condition affecting such Lender's LIBOR
Loans, the Notes or such Lender's obligation to make LIBOR Loans;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on or increase the cost to) such Lender
of making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by such Lender under this Agreement or under any of the
Notes with respect thereto, by an amount deemed by such Lender to be material,
and if such Lender is not otherwise fully compensated for such increase in cost
or reduction in amount received or receivable by virtue of the inclusion of the
reference to "LIBOR Reserve Percentage" in the calculation of the LIBOR Rate,
then upon notice by such Lender to the Borrower, which notice shall set forth
such Lender's supporting calculations and the details of the Regulatory Change,
the Borrower shall pay such Lender, as additional interest, such additional
amount or amounts as will compensate Lenders for such increased cost or
reduction. The determination by any Lender under this Section of the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount or amounts, the Lenders may use
any reasonable averaging and attribution methods.
(b) If any Lender demands compensation under this
Section, the Borrower may at any time, upon at least one (1) Business Day's
prior notice to such Lender, convert their then outstanding LIBOR Loans to Prime
Loans in an equal principal amount. Interest accrued on such LIBOR Loan prior to
such conversion shall be due and payable on the
-24-
25
date of such conversion together with any funding losses and other amounts due
under Section 3.5.
3.9 Prime Loans Substituted for Affected LIBOR Loans. If
notice has been given by any Lender pursuant to Section 3.6 or 3.7 or by the
Borrower pursuant to Section 3.8 requiring LIBOR Loans to be repaid or
converted, then, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such repayment or conversion no longer apply, all
Loans which would otherwise be made by such Lender to the Borrower as LIBOR
Loans shall be made instead as Prime Loans. Any such Lender shall notify the
Borrower if and when the circumstances giving rise to such repayment no longer
apply. All indemnities and all provisions relating to reimbursement to any
Lender of amounts sufficient to protect the yield to such Lender with respect to
the Loans, including, without limitation, Sections 3.5, 3.6, 3.7, and 3.8
hereof, shall survive the payment of the Notes and the termination of this
Agreement.
3.10 Place and Manner of Payment. Both principal and interest
on the Loans and all fees due hereunder and under any of the other Transaction
Documents payable to any Lender shall be paid in lawful currency of the United
States, in federal or other immediately available funds, at Agent's banking
office at 000 Xxxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000. The Agent will promptly
distribute to each Lender in immediately available funds its ratable share of
each such payment received by the Agent pursuant to the terms of this Agreement
for the account of such Lenders. Whenever any payment of principal of, or
interest on, the Loans or of fees shall be due on a day which is not a Business
Day, the date for payment thereof shall be extended to the next succeeding
Business Day, except as required by clauses (iii) or (iv) of the definition of
Interest Period. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon, at the then applicable rate,
shall be payable for such extended time.
3.11 Termination or Reduction of Reducing Revolver
Commitments. The Borrower may, upon one (1) Business Day's prior written notice
to Agent, terminate entirely at any time, or proportionately reduce from time to
time on a pro rata basis among the Lenders based on their respective Reducing
Revolver Commitments, by an aggregate amount of $500,000.00 or any larger
multiple of $100,000.00, the unused portions of the Reducing Revolver
Commitments as specified by Borrower in such notice to Agent; provided, however,
that (i) at no time shall the Reducing Revolver Commitments be reduced to a
figure less than the total of the outstanding principal amount of all Reducing
Revolver Loans plus the face amount of all outstanding Letters of Credit, (ii)
at no time shall the Reducing Revolver Commitments be reduced to a figure
greater than zero but less than $500,000.00, and (iii) any such termination or
reduction shall be permanent and the Borrower shall have no right to thereafter
reinstate or increase, as the case may be, the Reducing Revolver Commitment, as
the case may be, of any Lender.
3.12 Commitment Fee. From the date hereof to but excluding the
last day of the Term hereof, the Borrower shall pay to the Agent, for
distribution to the Lenders in accordance with their Pro Rata Shares, a
quarterly nonrefundable commitment fee (the "Commitment Fee") equal to the
percentage per annum equal to the then current Applicable Margin, multiplied by
the average daily unused portion of the Total Reducing Revolver Commitment. The
unused portion of the Total Reducing Revolver
-25-
26
Commitment shall be calculated as (i) the sum of the amounts each day during any
such fiscal quarter equal to the Total Reducing Revolver Commitment minus (y)
the outstanding principal balance of all Reducing Revolver Loans on each such
day and (z) the face amount of all issued and outstanding Letters of Credit on
each such day, divided by (ii) 90, or by such lesser number of days in any
partial fiscal quarter for which such Reducing Revolver Commitment was
available. Such commitment fee shall be payable quarterly in arrears on each
April 1, July 1, October 1 and January 1 during the Term hereof and on the last
day of the Term hereof, and shall be calculated on an actual day, 360-day year
basis.
3.13 Maturity. All principal, interest and other amounts
outstanding with respect to the Reducing Revolver Loans which are not paid prior
thereto shall be due and payable on the last day of the Term hereof, whether by
reason of the expiration thereof, acceleration or otherwise.
3.14 Voluntary Prepayments.
(a) Borrower may, upon notice to Agent specifying
that it is paying its Prime Loans, pay its Prime Loans in whole at any time, or
from time to time in part in amounts aggregating $10,000.00 or any larger
multiple of $10,000.00, by paying the principal amount to be paid together with
all accrued and unpaid interest thereon to and including the date of payment;
provided, however, that in no event may the Borrower make a partial payment of
Prime Loans which results in the total outstanding Reducing Revolver Loans which
are Prime Loans being greater than zero but less than $10,000.00.
(b) Borrower may, upon at least two (2) Business
Day's notice to Agent specifying that it is paying LIBOR Loans, pay on the last
day of any Interest Period its LIBOR Loans to which such Interest Period
applies, in whole, or in part in amounts aggregating $100,000.00 or any larger
multiple of $50,000.00, by paying the principal amount to be paid together with
all accrued and unpaid interest thereon to and including the date of payment;
provided, however, that in no event may the Borrower make a partial payment of
LIBOR Loans which results in the total outstanding LIBOR Loans with respect to
which a given Interest Period applies being greater than zero but less than
$500,000.00.
(c) Upon receipt of a notice of payment pursuant to
this Section, the Agent shall promptly notify each Lender of the contents
thereof and of such Lender's Pro Rata Share of such payment and such notice
shall not thereafter be revocable by Borrower.
3.15 Discretion of Lender as to Manner of Funding.
Notwithstanding any provision contained in this Agreement to the contrary, each
of the Lenders shall be entitled to fund and maintain its funding of all or any
part of its LIBOR Loans in any manner it elects, it being understood, however,
that for purposes of this Agreement all determinations hereunder (including,
without limitation, the determination of each Lender's funding losses and
expenses under Section 3.5) shall be made as if such Lender had actually funded
and maintained each LIBOR Loan through the purchase of deposits having a
maturity corresponding to the maturity
-26-
27
of the applicable Interest Period relating to the applicable LIBOR Loan and
bearing an interest rate equal to the applicable LIBOR Rate. Each Lender may, at
its option, elect to make, fund or maintain its Loans hereunder at the branches
or offices specified on the signature pages hereof or on any Assignment
Agreement executed and delivered pursuant to Section 10.12 hereof or at such
other of its branches or offices as such Lender may from time to time elect,
provided that the Borrower shall not be required to reimburse any Lender under
any of the provisions of Section 3.5 for any cost which such Lender would not
have incurred but for changing its lending or funding branch unless Borrower
consents to such change.
SECTION 4. PRECONDITIONS TO LOANS.
4.1 Initial Reducing Revolver Loan or Letter of Credit.
Notwithstanding any provision contained herein to the contrary, Lenders shall
have no obligation to make any Loan hereunder, and Agent shall have no
obligation to issue any Letter of Credit, unless Agent and Lenders shall have
received no later than the following:
(a) This Agreement and the Notes, each executed by a
duly authorized officer of the Borrower;
(b) A Consent of Guarantors (the "Consent of
Guarantors") consenting to the execution, delivery and performance of this
Agreement and the Notes by Borrower, executed and delivered by a duly authorized
officer of each Guarantor;
(c) The Subsidiary Guaranties of any Subsidiary in
existence on the date hereof which has not heretofore provided a Subsidiary
Guaranty to Agent, executed and delivered by a duly authorized officer of each
of such respective Subsidiaries of Borrower;
(d) The Subsidiary Security Agreements, financing
statements, motor vehicle title lien applications and such other documents as
Agent may reasonably require under Section 5.4 of any Subsidiary in existence on
the date hereof which has not heretofore provided a Subsidiary Security
Agreement and such other documents to Agent, each executed by a duly authorized
officer of each of the respective Subsidiaries of Borrower;
(e) A Pledge Agreement, together with such collateral
schedules, stock powers (signed in blank) and other documents as Agent may
reasonably require under Section 5.3 relating to the stock of any subsidiary in
existence on the date hereof not covered by any Pledge Agreement heretofore
provided by Borrower to Agent, each executed by a duly authorized officer of the
Borrower;
(f) The Subsidiary Pledge Agreements, together with
such collateral schedules, stock powers (signed in blank) and other documents as
Agent may reasonably require under Section 5.5 relating to the stock of any
subsidiary of a Subsidiary of Borrower in existence on the date hereof not
covered by any Subsidiary Pledge Agreement heretofore provided by Borrower to
Agent, each executed by a duly authorized officer of the Borrower;
-27-
28
(g) A copy of resolutions of the Board of Directors
of Borrower, duly adopted, which authorize the execution, delivery and
performance of this Agreement, the Notes, the Pledge Agreement, and the other
Transaction Documents to be executed by Borrower, certified by the President and
Secretary of Borrower;
(h) A copy of resolutions of the Boards of Directors
of each of the Guarantors, each duly adopted, authorizing the execution and
delivery of the Consent of Guarantors and of each of the Subsidiaries described
in (b) above, each duly adopted, authorizing the execution, delivery and
performance by each such Subsidiary of its Subsidiary Guaranty, its Subsidiary
Security Agreement, its Subsidiary Pledge Agreement and any other Transaction
Documents to be executed by such Subsidiary, certified by the Vice President and
Assistant Secretary, respectively, of such Subsidiary;
(i) Copies of the Articles of Incorporation of each
of Borrower's Subsidiaries not previously provided to Agent, including any
amendments thereto, certified by the Secretary of State of each of their
respective states of incorporation;
(j) Copies of the Bylaws of each of Borrower's
Subsidiaries not previously provided to Agent, including amendments thereto,
certified respectively by the corporate Secretary of Borrower and each such
Subsidiary;
(k) Incumbency certificates, executed respectively by
the Secretaries of the Borrower and of each Subsidiary of the Borrower, which
shall identify by name and title and bear the signatures of all of the officers
of the Borrower or each such Subsidiary executing any of the Transaction
Documents;
(l) A certificate of corporate good standing of
Borrower and each of its Subsidiaries issued by the Secretary of State of their
respective states of incorporation;
(m) An opinion of counsel of Xxxxxx, Xxxxxxx &
Xxxxxxxx, independent counsel to the Borrower and its Subsidiaries, in the form
of Exhibit H attached hereto and incorporated herein by reference;
(n) Such other agreements, documents, instruments and
certificates as Agent or Lenders may reasonably request.
4.2 Subsequent Reducing Revolver Loans. Notwithstanding any
provision contained herein to the contrary, Lenders shall have no obligation to
make any subsequent Reducing Revolver Loan hereunder unless:
(a) Agent and each of the Lenders shall have received
the current quarter-end financial statements and, if required thereunder, the
month-end compliance certificate as required by Sections 7.1(a)(ii) and (iii);
-28-
29
(b) Agent shall have received a complete application
for such Reducing Revolver Loan as required by Section 3.2(a);
(c) Any Subsidiary created or acquired by Borrower in
connection with the Acceptable Acquisition shall have executed and delivered:
(i) A Subsidiary Guaranty executed and delivered by
a duly authorized officer of such new Subsidiary of Borrower;
(ii) A Subsidiary Security Agreement and a Subsidiary
Pledge Agreement, together with such financing statements, collateral
schedules, stock powers (signed in blank) and other documents as Agent
may reasonably require under Sections 5.4 and 5.5, each executed by a
duly authorized officer of such new Subsidiary;
(iii) A copy of resolutions of the Board of Directors
of such new Subsidiary, duly adopted, authorizing the execution,
delivery and performance by such Subsidiary of its Subsidiary Guaranty,
its Subsidiary Security Agreement, its Subsidiary Pledge Agreement (if
any) and any other Transaction Documents to be executed by such
Subsidiary, certified by the President and Secretary of such
Subsidiary;
(iv) A copy of the Articles of Incorporation of such
new Subsidiary, certified by the Secretary of State of its state of
incorporation;
(v) A copy of the Bylaws of such new Subsidiary,
certified by the corporate Secretary of such Subsidiary;
(vi) An incumbency certificate, executed by the
Secretary of such new Subsidiary, which shall identify by name and
title and bear the signatures of all of the officers of such Subsidiary
executing any of the Transaction Documents; and
(vii) A certificate of corporate good standing of
such Subsidiary, issued by the Secretary of State of its state of
incorporation.
(viii) An opinion of counsel of Xxxxxx, Xxxxxxx &
Xxxxxxxx, independent counsel to the Borrower and such Subsidiary in
form and substance satisfactory to Agent and the Lenders.
(d) Borrower shall have delivered to Agent for the
benefit of each of the Lenders, the original stock certificate of such newly
created or acquired Subsidiary, together with such collateral schedules, stock
powers, and other documents Agent may reasonably require;
-29-
30
(e) On the date of and immediately after such
Reducing Revolver Loan, no Default or Event of Default under this Agreement
shall have occurred and be continuing;
(f) On the date of and immediately after such
Reducing Revolver Loan, no material adverse change in the business, financial
position or results of operations of the Borrower or any of its Subsidiaries
shall have occurred since the date of this Agreement and be continuing;
(g) All of the representations and warranties of the
Borrower contained in this Agreement, including any pertaining to the new
Subsidiary created or acquired as a result of the Acceptable Acquisition, shall
be true and correct on and as of the date of such Reducing Revolver Loan, as if
made on the date of such Reducing Revolver Loan.
Each request for a Reducing Revolver Loan by the Borrower
hereunder shall be deemed to be a representation and warranty by the Borrower on
the date of such Reducing Revolver Loan as to the facts specified in clauses
(e), (f) and (g) of this Section 4.2.
SECTION 5. COLLATERAL.
5.1 Security Agreement. In order to secure the payment when
due of the Borrower's Obligations, the Borrower has conveyed to Agent for the
benefit of each of the Lenders a security interest in, among other things, all
of the Property of the Borrower described on Schedule 5 attached hereto and
incorporated herein by reference, which security interest shall be a first and
prior interest in all such items except for those Uniform Commercial Code
security interests described on Schedule 6.11 attached hereto. Said security
interest is evidenced by a Security Agreement dated October 4, 1996 and executed
by the Borrower in favor of Agent for the benefit of each of the Lenders (as the
same may from time to time be amended, the "Security Agreement"). The Borrower
further covenants and agrees to execute and deliver to Agent for the benefit of
each of the Lenders any and all financing statements, continuation statements
and such other documentation as may be requested by Agent from time to time in
order to create, perfect and continue said security interests. Upon demand, the
Borrower shall pay all legal and filing fees and expenses incurred by Agent in
the preparation of the foregoing documents and perfection of the security
interests contemplated thereby. Lenders shall have no obligation to make any
Loan or convert the interest rate on any Loan hereunder unless and until the
Borrower has fully satisfied these requirements.
5.2 Trademark Assignment. In order to further secure the
payment when due of the Borrower's Obligations, the Borrower has conveyed to
Agent for the benefit of each of the Lenders a security interest in and
collateral assignment of, among other things, all of the existing and future
trademarks and trademark applications of Borrower, which security interest and
collateral assignment shall be a first and prior interest in all such items
except for those security interests described on Schedule 6.11 attached hereto.
Said security interest and collateral assignment is evidenced by a Trademark
Collateral Assignment and Security Agreement dated October 4, 1996 and executed
by the Borrower in favor of Agent for the benefit of each of the
-30-
31
Lenders in form and substance acceptable to Agent (as the same may from time to
time be amended, the "Trademark Assignment"). The Borrower further covenants and
agrees to execute and deliver to Agent for the benefit of each of the Lenders
any and all amendments and exhibits thereto for any future trademarks and
trademark applications filed by Borrower and such other documentation as may be
requested by Agent from time to time in order to create, perfect and continue
said security interests. Upon demand, the Borrower shall pay all legal and
filing fees and expenses incurred by Agent in the preparation of the foregoing
documents and perfection of the security interests contemplated thereby. Lenders
shall have no obligation to make any Loan or convert the interest rate on any
Loan hereunder unless and until the Borrower has fully satisfied these
requirements.
5.3 Pledge Agreement. In order to further secure the payment
when due of the Borrower's Obligations, the Borrower has pledged to Agent for
the benefit of each of the Lenders all of the issued and outstanding capital
stock of each present Subsidiary of the Borrower, and if any such Subsidiary is
created or acquired subsequent to the date hereof, on the date of any such
acquisition or formation, Borrower shall pledge and deliver to Agent for the
benefit of each of the Lenders all of the issued and outstanding stock of any
such future Subsidiary. Said pledge is more fully described and evidenced by
that certain General Pledge and Security Agreement dated October 4, 1996 and
executed by the Borrower in favor of Agent for the benefit of each of the
Lenders and each of the other General Pledge and Security Agreements heretofore
executed and delivered by Borrower to Agent for the benefit of each of the
Lenders (as the same may from time to time be amended, modified, extended or
renewed, collectively, the "Pledge Agreements"). The Borrower covenants and
agrees to execute any and all collateral schedules, stock powers and such other
documents as may from time to time be requested by Agent or any Lender in order
to create, perfect and maintain the pledge created by the Pledge Agreements and
to deliver all original stock certificates for any such present or future
Subsidiaries. Upon demand, the Borrower shall pay to Agent or to any other party
designated by Agent, all filing fees or transfer fees incurred by Agent in the
perfection and administration of the pledge contemplated hereby. Lenders shall
have no obligation to make any Loan hereunder or to convert any Loan hereunder
to a new interest rate basis unless and until the Borrower has fully satisfied
these requirements.
5.4 Subsidiary Security Agreement. In order to secure the
payment when due of the Borrower's Obligations, as guaranteed under each of the
respective Subsidiary Guaranties, the Borrower heretofore caused and hereafter
shall cause each Subsidiary to convey to Agent for the benefit of each of the
Lenders a security interest in, among other things, all of the Property of each
such Subsidiary similar to that described on Schedule 5 attached hereto and
incorporated herein by reference, which security interest shall be a first and
prior interest in all such items except for those Uniform Commercial Code
security interests consented to by Agent and the Required Lenders. Said security
interest shall be evidenced by a Subsidiary Security Agreement and executed,
respectively, by each such Subsidiary in favor of Agent for the benefit of each
of the Lenders in form and substance acceptable to Agent (as the same may from
time to time be amended, the "Subsidiary Security Agreements"). The Borrower
further covenants and agrees to cause each of its Subsidiaries to execute and
deliver to Agent for the benefit of each of the Lenders any and all financing
statements, continuation statements and such other documentation
-31-
32
as may be requested by Agent from time to time in order to create, perfect and
continue said security interests. Upon demand, the Borrower shall pay all legal
and filing fees and expenses incurred by Agent in the preparation of the
foregoing documents and perfection of the security interests contemplated
thereby. Lenders shall have no obligation to make any Loan hereunder or convert
the interest rate on any Loan hereunder unless and until the Borrower and each
of its Subsidiaries have fully satisfied these requirements.
5.5 Subsidiary Pledge Agreements. In order to further secure
the payment when due of the Borrower's Obligations, as guaranteed under each of
the respective Subsidiary Guaranties, the Borrower heretofore has caused and
hereafter shall cause each of its Subsidiaries to pledge to Agent for the
benefit of each of the Lenders all of the issued and outstanding capital stock
of each present Subsidiary of such Subsidiary of Borrower, and if any such
Subsidiary is created or acquired subsequent to the date hereof, on the date of
any such acquisition or formation, Borrower shall cause each of its Subsidiaries
to pledge and deliver to Agent for the benefit of each of the Lenders all of the
issued and outstanding stock of any such future Subsidiary. Each such pledge is
or shall be evidenced by a General Pledge and Security Agreement executed,
respectively, by each such Subsidiary of the Borrower in favor of Agent for the
benefit of each of the Lenders in form and substance acceptable to Agent (as the
same may from time to time be amended, modified, extended or renewed, the
"Subsidiary Pledge Agreements"). The Borrower covenants and agrees to cause each
of its Subsidiaries to execute any and all collateral schedules, stock powers
and such other documents as from time to time may be requested by Agent or any
Lender in order to create, perfect and maintain the pledges created by the
Subsidiary Pledge Agreements and to deliver all original stock certificates for
any such present or future Subsidiaries. Upon demand, the Borrower shall pay to
Agent or to any other party designated by Agent, all filing fees or transfer
fees incurred by Agent in the perfection and administration of the pledges
contemplated hereby. Lenders shall have no obligation to make any Loan hereunder
or to convert any Loan hereunder to a new interest rate basis unless and until
the borrower has fully satisfied these requirements.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Agent and Lenders that:
6.1 Corporate Existence and Power. Borrower: (a) is duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware; (b) has all requisite corporate powers and all governmental and
regulatory licenses, authorizations, consents and approvals required to carry on
its business as now conducted; and (c) is duly qualified to do business in all
jurisdictions in which the nature of the business conducted by it makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, financial condition or operations.
6.2 Authorization. The execution, delivery and performance by
the Borrower of this Agreement, the Notes, the Security Agreement, the Pledge
Agreements, the Trademark Assignment and the other Transaction Documents are
within the corporate powers of Borrower,
-32-
33
and have been duly authorized by all necessary action of the board of directors
of said corporation.
6.3 Binding Effect. This Agreement, the Notes, the Security
Agreement, the Pledge Agreements, the Trademark Assignment and the other
Transaction Documents have been duly executed and delivered by the Borrower and
constitute the legal, valid and binding obligations of the Borrower enforceable
in accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights in general.
6.4 Financial Statements. The Borrower has furnished Agent and
the Lenders with the following financial statements, identified by the principal
financial officer of the Borrower: consolidated and consolidating balance sheets
as of September 30, 1997 and corresponding statements of income, retained
earnings and cash flows of Borrower and each of its Consolidated Subsidiaries
for the fiscal quarter ending September 30, 1997, certified by the principal
financial officer of the Borrower as being true and correct to the best of his
knowledge and as being prepared in accordance with the Borrower's normal
accounting procedures. The Borrower further represents and warrants to Agent and
each of the Lenders that: (1) said balance sheets and their accompanying notes
fairly present the condition of Borrower and its Consolidated Subsidiaries as of
the dates thereof; (2) there has been no material adverse change in the
condition or operation, financial or otherwise, of any of the Borrower or its
Consolidated Subsidiaries since September 30, 1997; and (3) neither the Borrower
nor any of its Subsidiaries has any direct or contingent liabilities which are
not disclosed on said financial statements.
6.5 Litigation. Except as disclosed on Schedule 6.5 attached
hereto, there is no action or proceeding pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary of the
Borrower before any court, arbitrator or any governmental, regulatory or
administrative body, agency or official which could result in any material
adverse change in the condition or operation, financial or otherwise, of the
Borrower or any Subsidiary of the Borrower, and neither the Borrower nor any
Subsidiary of the Borrower is in default with respect to any order, writ,
injunction, decision or decree of any court, arbitrator or any governmental,
regulatory or administrative body, agency or official, a default under which
could have a material adverse effect on the condition or operation, financial or
otherwise, of the Borrower or any Subsidiary of the Borrower.
6.6 Pension and Welfare Plans. Each Pension Plan complies with
all applicable statutes and governmental rules and regulations; no Reportable
Event has occurred and is continuing with respect to any Pension Plan; neither
the Borrower nor any ERISA Affiliate nor any Subsidiary of the Borrower has
withdrawn from any Multiemployer Plan in a "complete withdrawal" or a "partial
withdrawal" as defined in Sections 4203 or 4205 of ERISA, respectively; no steps
have been instituted by the Borrower, any ERISA Affiliate or any Subsidiary of
the Borrower to terminate any Pension Plan; no condition exists or event or
transaction has occurred in connection with any Pension Plan or Multiemployer
Plan which could result in the incurrence by the Borrower, any ERISA Affiliate
or any Subsidiary of the Borrower of any material liability, fine or penalty;
and neither the Borrower nor any ERISA
-33-
34
Affiliate nor any Subsidiary of the Borrower is a "contributing sponsor" as
defined in Section 4001(a)(13) of ERISA of a "single-employer plan" as defined
in Section 4001(a)(15) of ERISA which has two or more contributing sponsors at
least two of whom are not under common control. Except as disclosed on Schedule
6.6 attached hereto, neither the Borrower nor any Subsidiary of the Borrower has
any contingent liability with respect to any "employee welfare benefit plan", as
such term is defined in Section 3(a) of ERISA, which covers retired employees
and their beneficiaries.
6.7 Tax Returns and Payment. The Borrower and each Subsidiary
of the Borrower has filed all federal, state and local income tax returns and
all other tax returns which are required to be filed and has paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Subsidiary of the Borrower, except for the filing of such returns, if
any, in respect of which an extension of time for filing is in effect and except
for such taxes, if any, as are being contested in good faith by appropriate
proceedings being diligently conducted and as to which adequate reserves in
accordance with generally accepted accounting principles consistently applied
have been provided. The charges, accruals and reserves on the books of the
Borrower and each Subsidiary of the Borrower in respect of any taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
6.8 Subsidiaries. The Borrower's Subsidiaries are as listed in
Schedule 6.8 attached hereto, which schedule sets forth each such Subsidiary's
past and present names, their current principal places of business and all
locations of any inventory or equipment owned by such Subsidiaries.
6.9 Compliance With Other Instruments; None Burdensome.
Neither the Borrower nor any Subsidiary of the Borrower is a party to any
contract or agreement or subject to any charter or other corporate restriction
which materially and adversely affects its business, Property or financial
condition and which is not disclosed on the Borrower's financial statements
heretofore submitted to Agent and the Lenders; none of the execution and
delivery by the Borrower of the Transaction Documents, the consummation of the
transactions therein contemplated or the compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower, or any of the provisions of Borrower's
Articles of Incorporation or Bylaws or any of the provisions of any indenture,
agreement, document, instrument or undertaking to which the Borrower is a party
or subject, or by which it or its Property is bound, or conflict with or
constitute a default thereunder or result in the creation or imposition of any
Lien pursuant to the terms of any such indenture, agreement, document,
instrument or undertaking (other than in favor of Agent for the benefit of
Lenders pursuant to the Transaction Documents). No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental, regulatory, administrative or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, the execution, delivery or performance of, or the
legality, validity, binding effect or enforceability of, any of the Transaction
Documents.
-34-
35
6.10 Other Loans and Guarantees. Except as disclosed on
Schedule 6.10 attached hereto, neither the Borrower nor any Subsidiary of the
Borrower is a party to any loan transaction or Guarantee other than this
Agreement and the Subsidiary Guaranties.
6.11 Title to Property. The Borrower, and each Subsidiary of
the Borrower, is the sole and absolute owner of, or has the legal right to use
and occupy, all Property it claims to own or which is necessary for the Borrower
or such Subsidiary of the Borrower to conduct its business. Neither the Borrower
nor any Subsidiary of the Borrower has signed any financing statements, security
agreements or chattel mortgages with respect to any of its Property, has granted
or permitted any Liens with respect to any of its Property or has any knowledge
of any Liens with respect to any of its Property, except in favor of Agent for
the benefit of Lenders or as otherwise disclosed on Schedule 6.11 attached
hereto.
6.12 Multi-Employer Pension Plan Amendments Act of 1980.
Neither the Borrower nor any Subsidiary of the Borrower is a party to any
Multiemployer Plan.
6.13 Patents, Licenses, Trademarks, Etc. The Borrower, and
each Subsidiary of the Borrower, possesses all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business without conflict with any patent, license, trademark, trade
name or copyright of any other Person.
6.14 Environmental and Safety and Health Matters. Except as
disclosed on Schedule 6.14 attached hereto: (i) the operations of the Borrower
and each Subsidiary of the Borrower comply with (A) all applicable Environmental
Laws and (B) all applicable Occupational Safety and Health Laws; (ii) none of
the operations of the Borrower or any Subsidiary of the Borrower is subject to
any judicial, governmental, regulatory or administrative proceeding alleging the
violation of any Environmental Law or Occupational Safety and Health Law; (iii)
none of the operations of the Borrower or any Subsidiary of the Borrower is the
subject of any federal or state investigation evaluating whether any remedial
action is needed to respond to (A) any spillage, disposal or release into the
environment of any Hazardous Material or any other hazardous, toxic or dangerous
waste, substance or constituent or other substance, or (B) any unsafe or
unhealthful condition at any premises of the Borrower or such Subsidiary of the
Borrower; (iv) neither the Borrower nor any Subsidiary of the Borrower has filed
any notice under any Environmental Law or Occupational Safety and Health Law
indicating or reporting (A) any past or present spillage, disposal or release
into the environment of, or treatment, storage or disposal of, any Hazardous
Material or any other hazardous, toxic or dangerous waste, substance or
constituent or other substance or (B) any unsafe or unhealthful condition at any
premises of the Borrower or such Subsidiary of the Borrower; and (v) neither the
Borrower nor any Subsidiary of the Borrower has any known contingent liability
in connection with (A) any spillage, disposal or release into the environment
of, or otherwise with respect to, any Hazardous Material or any other hazardous,
toxic or dangerous waste, substance or constituent or other substance or (B) any
unsafe or unhealthful condition at any premises of the Borrower or such
Subsidiary of the Borrower.
-35-
36
6.15 Other Corporate or Fictitious Names. The Borrower has
not, during the preceding five (5) years, been known by or used any corporate or
fictitious name other than "StaffMark, Inc." or "One Source Staffing, Inc.," and
no Subsidiary of Borrower has used any such other corporate or fictitious name
during the preceding five (5) years other than those listed in Schedule 6.15
attached hereto.
SECTION 7. COVENANTS.
7.1 Affirmative Covenants of the Borrower. The Borrower
covenants and agrees that, so long as Lenders have any obligation to make any
Loan hereunder or any of the Borrower's Obligations remain unpaid or any Letter
of Credit remains outstanding:
(a) Information. The Borrower will deliver to Agent
and each of the Lenders:
(i) As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of
Borrower, the consolidated and consolidating balance sheets of Borrower
and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated and consolidating statements of income,
retained earnings and cash flows for such fiscal year, setting forth in
each case, in comparative form, the figures for the previous fiscal
year, all such financial statements to be prepared in accordance with
generally accepted accounting principles consistently applied and
audited by independent certified public accountants selected by the
Borrower and acceptable to Agent, together with (1) the unqualified
opinion of such accountants (except with respect to consistency
qualifications arising from new accounting principles), and (2) a
letter from such accountants authorizing Agent and Lenders to receive
and rely on such audited financial statements of Borrower as if in
privity of contract with such accountants or such other agreement of
normal acceptance in the accounting profession as may be used in the
future to permit lenders to rely on financial statements of a borrower
in making credit decisions;
(ii) As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter, consolidated
and consolidating balance sheets of Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
and consolidating statements of income for such quarter and for the
portion of the Borrower's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form, the figures for the
corresponding quarter and the corresponding portion of the Borrower's
previous fiscal year and the figures for such quarter and such portion
of Borrower's current fiscal year from Borrower's budget for such year,
all certified (subject to normal year-end adjustments) as to fairness
of presentation, generally accepted accounting principles and
consistency by the principal financial officer of Borrower;
-36-
37
(iii) Simultaneously with the delivery of each set of
quarter end and fiscal year end financial statements referred to in
clauses (i) and (ii) above and, in addition, during any time that the
outstanding principal balance of all Loans outstanding hereunder plus
the face amount of all issued and outstanding Letters of Credit exceeds
One Hundred Million Dollars ($100,000,000.00), within forty-five (45)
days after the end of each calendar month, a certificate of the
principal financial officer of Borrower in the form attached hereto as
Exhibit B and incorporated herein by reference;
(iv) Promptly upon receipt thereof, any reports
submitted to the Borrower or any Consolidated Subsidiary of the
Borrower (other than reports previously delivered pursuant to Sections
7.1(a)(i) and (ii) above) by independent accountants in connection with
any annual, interim or special audit made by them of the books of the
Borrower or any Consolidated Subsidiary of the Borrower;
(v) On the last day of each February, April, June,
August, October and December during the Term hereof, a report of all
places of business of the Borrower and each Subsidiary of the Borrower
and all locations of any of the Collateral as of the date of such
report;
(vi) Promptly upon any filing thereof, and in any
event within ten (10) days after the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on form S-8 or its equivalent) and annual,
quarterly or monthly reports which Borrower shall file with the
Securities and Exchange Commission;
(vii) Promptly upon the mailing thereof to the
shareholders of Borrower generally, and in any event within ten (10)
days after such mailing, copies of all financial statements, reports,
proxy statements and other material and information so mailed;
(viii) Within ninety (90) days of the beginning of
each fiscal year of the Borrower, the Borrower's annual budget and
quarterly projections for such fiscal year;
(ix) Not less than ten (10) Business Days, if
Lenders' consent is required, or three (3) Business Days if Lenders'
consent is not required, under clause (c) of the definition of
Acceptable Acquisition in Section 2 of this Agreement, prior to the
closing of any Acceptable Acquisition, the following documents and
information with respect to such Acceptable Acquisition: (A) a copy of
the letter of intent signed by all parties or if no letter of intent
has been signed, a detailed summary of the terms and conditions upon
which the Acquisition is being negotiated, including Borrower's
rationale for pursuing the Acquisition, (B) historical financial
statements of the target company and any other documents reasonably
requested by any Lender received by Borrower in performing its due
-37-
38
diligence; (C) a copy of the financial models run or projections made
of the Borrower that include the target company; and (D) such other
information and documents reasonably requested by any Lender with
respect to such Acceptable Acquisition.
(x) Within forty-five (45) days after the end of each
fiscal quarter, a schedule of all Deferred Payment Obligations of
Borrower and its Consolidated Subsidiaries which remain outstanding as
of the end of such quarter, certified by the principal financial
officer of Borrower; and
(xi) With reasonable promptness, such further
information regarding the business, affairs and/or financial condition
of Borrower or any Subsidiary of Borrower as Agent or any of the
Lenders may from time to time reasonably request.
Agent and each of the Lenders are hereby authorized to deliver
a copy of any financial statement or other information made available by the
Borrower to any regulatory authority having jurisdiction over Agent or any such
Lender, pursuant to any request therefor.
(b) Payment of Indebtedness. The Borrower and each
Subsidiary of the Borrower will (i) pay any and all Indebtedness payable or
Guaranteed by the Borrower or such Subsidiary of the Borrower, as the case may
be, and any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) in accordance
with the agreement, document or instrument relating to such Indebtedness or
Guarantee and (ii) faithfully perform, observe and discharge all covenants,
conditions and obligations which are imposed upon the Borrower or such
Subsidiary of the Borrower, as the case may be, by any and all agreements,
documents and instruments evidencing, securing or otherwise relating to such
Indebtedness or Guarantee.
(c) Consultations and Inspections. The Borrower will
permit, and will cause each Subsidiary of the Borrower to permit, Agent and
Lenders (and any Person appointed by Agent or any of the Lenders to whom the
Borrower does not reasonably object) to discuss the affairs, finances and
accounts of the Borrower and each Subsidiary of the Borrower with the officers
of the Borrower and each Subsidiary of the Borrower, all at such reasonable
times and as often as Agent or any of the Lenders may reasonably request. The
Borrower will also permit, and will cause each Subsidiary of the Borrower to
permit, inspection of its Properties, books and records and the Collateral by
Agent and Lenders, upon reasonable advance notice, during normal business hours
or at other reasonable times. The Borrower will also permit, and will cause each
Subsidiary of the Borrower to permit, Agent and Lenders to conduct Accounts
field inspections at such times during reasonable business hours as Agent or any
of the Lenders elects, and without the necessity of advance warning to the
Borrower or any such Subsidiary. Prior to the occurrence of an Event of Default,
Borrower shall pay all reasonable costs and expenses incurred by Agent and the
Lenders for one such inspection in each fiscal year (not to exceed $15,000.00 in
any fiscal year for inspections conducted prior to an Event of Default),
provided, that after the occurrence of an Event of Default, Borrower shall pay
all reasonable costs and expenses incurred
-38-
39
by Agent or any such Lender in connection with any such inspections. The
Borrower further agrees to reimburse to Agent and the Lenders the actual costs
and expenses incurred by Agent or any of the Lenders in connection with its up
front collateral inspection conducted prior to closing by Agent or any of the
Lenders, whether Agent or any such Lender shall have used its own auditors or
shall contract for such audit services through a third party.
(d) Payment of Taxes; Corporate Existence;
Maintenance of Properties; Maintenance of Collateral; Insurance. The Borrower
and each Subsidiary of the Borrower will:
(i) Duly file all federal, state and local income tax
returns and all other tax returns and reports of the Borrower and each
Subsidiary of the Borrower which are required to be filed and duly pay
and discharge promptly all taxes, assessments and other governmental
charges imposed upon it or any of its income, Property or assets;
provided, however, that neither the Borrower nor any Subsidiary of the
Borrower shall be required to pay any such tax, assessment or other
governmental charge the payment of which is being contested in good
faith and by appropriate proceedings diligently conducted and for which
adequate reserves in form and amount satisfactory to Agent in its
reasonable discretion have been provided, except that the Borrower and
each Subsidiary of the Borrower shall pay or cause to be paid all such
taxes, assessments and governmental charges forthwith upon the
commencement of proceedings to foreclose any Lien which is attached as
security therefor, unless such foreclosure is stayed by the filing of
an appropriate bond in a manner satisfactory to Agent;
(ii) Do all things necessary to preserve and keep in
full force and effect its corporate existence, rights and franchise and
to be duly qualified to do business in all jurisdictions where the
nature of its business requires such qualification;
(iii) Maintain and keep its Properties as a whole in
good repair, working order and condition; provided, however, that
nothing in this subsection (iii) shall prevent any abandonment of any
Property which is not disadvantageous in any material respect to
Lenders and which, in the good faith opinion of the management of the
Borrower, is in the best interests of the Borrower or such Subsidiary
of the Borrower, as the case may be;
(iv) Keep all of the Collateral in good and
merchantable condition, and will, as applicable, shelter, store,
secure, refrigerate, process and otherwise deal with the Collateral in
accordance with the standards and practices adhered to generally by
owners, bailees or processors, as applicable, of like properties; and
(v) Insure with financially sound and reputable
insurers acceptable to Lenders, all Property of the Borrower and each
Subsidiary of the
-39-
40
Borrower of the character usually insured by corporations engaged in
the same or similar businesses similarly situated, against loss or
damage of the kind customarily insured against by such corporations or
partnerships, unless higher limits or coverage are reasonably required
in writing by Agent, and carry adequate liability insurance and other
insurance of a kind and in an amount generally carried by corporations
engaged in the same or similar businesses similarly situated, unless
higher limits or coverage are reasonably required in writing by Agent,
and in each case naming Agent as loss payee, as mortgagee or as an
additional insured, as appropriate, in such policies for the benefit of
each of the Lenders. All such insurance may be subject to reasonable
deductible amounts. Promptly upon any Lender's request therefor, the
Borrower shall provide such Lender with evidence that the Borrower
maintains, and that each Subsidiary of the Borrower maintains, the
insurance required under this Section 7.1(d)(v), and evidence of the
payment of all premiums therefor.
(e) Accountants. The Borrower shall give Agent and
each of the Lenders prompt notice of any change of the Borrower's independent
certified public accountants and a statement of the reasons for such change. The
Borrower shall at all times utilize independent certified public accountants
reasonably acceptable to Agent and Lenders.
(f) ERISA Compliance. If the Borrower or any
Subsidiary of the Borrower shall have any Pension Plan, the Borrower and such
Subsidiary or Subsidiaries of the Borrower shall comply with all requirements of
ERISA relating to such plan. Without limiting the generality of the foregoing,
neither the Borrower nor any Subsidiary of the Borrower shall:
(i) permit any Pension Plan maintained by it to
engage in any nonexempt "prohibited transaction," as such term is
defined in Section 4975 of the Code;
(ii) permit any Pension Plan maintained by it to
incur any "accumulated funding deficiency", as such term is defined in
Section 302 of ERISA, 29 U.S.C. Section 1082, whether or not waived;
(iii) terminate any such Pension Plan in a manner
which could result in the imposition of a Lien on any Property of the
Borrower or any Subsidiary of the Borrower pursuant to Section 4068 of
ERISA, 29 U.S.C. ss. 1368; or
(iv) take any action which would constitute a
complete or partial withdrawal from a Multiemployer Plan within the
meaning of Sections 4203 and 4205 of Title IV of ERISA.
Notwithstanding any provision contained in this Section 7.1(f)
to the contrary, an act by the Borrower or any Subsidiary of the Borrower shall
not be deemed to constitute a violation of subparagraphs (i) through (iv) hereof
unless Agent determines in good faith that said
-40-
41
action, individually or cumulatively with other acts of the Borrower and the
Subsidiaries of the Borrower, does have or is likely to cause a significant
adverse financial effect upon the Borrower or any such Subsidiary of the
Borrower.
Borrower shall have the affirmative obligation hereunder to
report to Agent any of those acts identified in subparagraphs (i) through (iv)
hereof, regardless of whether said act does or is likely to cause a significant
adverse financial effect upon the Borrower or any Subsidiary of the Borrower,
and failure by the Borrower to report such act promptly upon the Borrower's
becoming aware of the existence thereof shall constitute an Event of Default
hereunder.
(g) Maintenance of Books and Records. The Borrower
and each Subsidiary of the Borrower will maintain its books and records in
accordance with generally accepted accounting principles consistently applied
and in which true, correct and complete entries will be made of all of its
dealings and transactions.
(h) Further Assurances. The Borrower will execute any
and all further agreements, documents and instruments, and take any and all
further actions which may be required under applicable law, or which Agent or
any of the Lenders may from time to time reasonably request, in order to
effectuate the transactions contemplated by this Agreement, the Notes, the
Security Agreement, the Pledge Agreements, the Trademark Assignment the Letter
of Credit Applications and the other Transaction Documents.
(i) Financial Covenants. The Borrower will:
(i) Fixed Charges Coverage Ratio. Maintain on a
consolidated basis as of each fiscal quarter-end during the Term hereof
a ratio of Consolidated Proforma Operating Cash Flow to Consolidated
Fixed Charges determined for the 12-month period ending as of each such
fiscal quarter-end of not less than (a) 1.25 to 1.0 for each fiscal
quarter ending on or before June 30, 2000, and (b) 1.50 to 1.0 for each
fiscal quarter-end thereafter during the Term hereof.
(ii) Consolidated Adjusted Total Funded Debt to
Consolidated Proforma EBITDA Cash Flow. Maintain on a consolidated
basis at each fiscal quarter-end during the Term hereof, a ratio of
Consolidated Adjusted Total Funded Debt to Consolidated Proforma EBITDA
Cash Flow (determined for the twelve-month period ending on the date of
any such calculation) of not more than: (a) 4.00 to 1.0 for each
quarter-end occurring on or before March 31, 1999, and (b) 3.50 to 1.0
for quarters ending after March 31, 1999 through the remainder of the
Term hereof.
(iii) Consolidated Shareholders' Equity. Maintain on
a consolidated basis determined as of each fiscal quarter-end during
the Term hereof, Consolidated Shareholders' Equity of at least the sum
of (x) $185,000,000.00, plus (y) fifty percent (50%) of the after tax
net income for each fiscal quarter of Borrower in which net income is
earned (but zero percent (0%) of
-41-
42
any after tax net loss for any fiscal quarter of Borrower in which a
net loss is incurred) as shown on Borrower's financial statements
delivered pursuant to Section 7.1(a)(i) and (ii), commencing with the
addition of any net income for the fiscal quarter ending March 31,
1998, with such required increases to be cumulative for each fiscal
quarter thereafter during the Term hereof, plus (z) one hundred percent
(100%) of the net proceeds received by Borrower or any of its
consolidated Subsidiaries from capital stock issued by Borrower or such
Subsidiary subsequent to December 31, 1997, including without
limitation, the value received in an Acceptable Acquisition in exchange
for capital stock.
(iv) Deliver a certificate of the principal financial
officer of the Borrower containing the financial ratio calculations
required in clauses (i), (ii) and (iii) above simultaneously with the
financial statements referred to in Sections 7.1(a)(i) and (ii).
(j) Compliance with Law. The Borrower will, and will
cause each Subsidiary of the Borrower to, comply with any and all laws,
ordinances and governmental and regulatory rules and regulations to which it is
subject and obtain any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its business, which violation or failure to
obtain might materially adversely affect the condition or operation, financial
or otherwise, of the Borrower or any Subsidiary of the Borrower.
(k) Notices. The Borrower will notify Agent and the
Lenders in writing of any of the following immediately upon learning of the
occurrence thereof, describing the same and, if applicable, the steps being
taken by the Person(s) affected with respect thereto:
(i) Default. The occurrence of any Default or Event
of Default under this Agreement or any default or event of default by
the Borrower, any other Obligor or any Subsidiary of the Borrower under
any note, indenture, loan agreement, mortgage, deed of trust, security
agreement, lease or other similar agreement, document or instrument to
which the Borrower, any other Obligor or any Subsidiary of the
Borrower, as the case may be, is a party or by which it is bound or to
which it is subject;
(ii) Litigation. The institution of any litigation,
arbitration proceeding or governmental or regulatory proceeding
affecting the Borrower, any other Obligor, any Subsidiary of the
Borrower, any Collateral or any Third Party Collateral, whether or not
considered to be covered by insurance, provided that if such action is
an action for money damages, that the damages sought are in excess of
$1,000,000.00 or if more than one such action has been instituted,
in excess of $5,000,000.00 in the aggregate;
(iii) Judgment. The entry of any judgment or decree
against the Borrower, any other Obligor or any Subsidiary of the
Borrower in excess of
-42-
43
$1,000,000.00 or if more than one such judgment or decree has been
entered, in excess of $5,000,000.00 in the aggregate;
(iv) Pension Plans. The occurrence of a Reportable
Event with respect to any Pension Plan; the filing of a notice of
intent to terminate a Pension Plan by the Borrower, any ERISA Affiliate
or any Subsidiary of the Borrower; the institution of proceedings to
terminate a Pension Plan by the PBGC or any other Person; the
withdrawal in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205, respectively, of ERISA by the
Borrower, any ERISA Affiliate or any Subsidiary of the Borrower from
any Multiemployer Plan; or the incurrence of any material increase in
the contingent liability of the Borrower or any Subsidiary of the
Borrower with respect to any "employee welfare benefit plan" as defined
in Section 3(1) of ERISA which covers retired employees and their
beneficiaries;
(v) Change of Name. Any change in the name of the
Borrower, any other Obligor or any Subsidiary of the Borrower;
(vi) Environmental Matters. Receipt of any notice
that the operations of the Borrower, any other Obligor or any
Subsidiary of the Borrower are not in full compliance with any of the
requirements of any applicable Environmental Law or Occupational Safety
and Health Law; receipt of notice that the Borrower, any other Obligor
or any Subsidiary of the Borrower is subject to any federal, state or
local investigation evaluating whether any remedial action is needed to
respond to the release of any Hazardous Materials or any other
hazardous or toxic waste, substance or constituent or other substance
into the environment; or receipt of notice that any of the Properties
or assets of the Borrower, any other Obligor or any Subsidiary of the
Borrower are subject to an Environmental Lien. For purposes of this
Section 7.1(k)(vi), "Environmental Lien" shall mean a Lien in favor of
any governmental or regulatory agency, entity, authority or official
for (1) any liability under Environmental Laws or (2) damages arising
from or costs incurred by any such governmental or regulatory agency,
entity, authority or official in response to a release of any Hazardous
Materials or any other hazardous or toxic waste, substance or
constituent or other substance into the environment;
(vii) Material Adverse Change. The occurrence of any
material adverse change in the business, operations or condition,
financial or otherwise, of the Borrower, any other Obligor or any
Subsidiary of the Borrower;
(viii) Change in Management or Line(s) of Business.
Any material change in the directors and executive officers of the
Borrower or any Subsidiary of the Borrower as listed in Schedule
7.1(k)(viii) attached hereto, or any change in the Borrower's or any
Subsidiary of the Borrower's line(s) of business; and
-43-
44
(ix) Other Notices. Any notices required to be
provided pursuant to other provisions of this Agreement and notice of
the occurrence of such other events as Agent may from time to time
reasonably specify.
(l) Protection of Collateral. During the term of this
Agreement, the Borrower will (i) do all things necessary to keep
unimpaired the Borrower's rights in the Collateral; (ii) cause all
operating equipment included in the Collateral to be maintained
properly in good and effective operating condition with all repairs,
renewals, replacements, additions and improvements being promptly made
in accordance with generally accepted practices and applicable federal,
state and local laws, rules and regulations; (iii) pay, or cause to be
paid, promptly as and when due and payable, all expenses incurred in or
arising from the maintenance, storage and care of the Collateral; and
(iv) cause the Inventory and other Collateral to be properly maintained
and protected in accordance with prudent operating practice, giving
consideration to and complying with applicable federal, state and local
laws, rules and regulations.
7.2 Negative Covenants of the Borrower. The Borrower covenants
and agrees that, so long as Lenders have any obligation to make any Loan
hereunder or any of the Borrower's Obligations remain unpaid or any Letter of
Credit remains outstanding, unless the prior written consent of the Required
Lenders is obtained:
(a) Limitation on Indebtedness. Neither the Borrower
nor any Subsidiary of the Borrower will incur or be obligated on any
Indebtedness, either directly or indirectly, by way of Guarantee, suretyship or
otherwise, other than:
(i) Indebtedness evidenced by the Notes;
(ii) Unsecured trade accounts payable and normal
accruals incurred in the ordinary course of business which are not yet
due and payable;
(iii) The following categories of Indebtedness, all
of which, in the aggregate, together with the payments permitted by
Section 7.2(m) (Operating Leases) shall not exceed at any one time
Twenty-Five Million Dollars ($25,000,000.00):
(A) Indebtedness incurred in the ordinary
course of business in connection with the acquisition of
Property by Borrower (excluding Indebtedness assumed on any
capital assets acquired pursuant to an Acceptable
Acquisition), provided that such Indebtedness shall not exceed
the value of the Property so acquired; and
(B) Secured or unsecured Indebtedness
assumed by Borrower or a Subsidiary in connection with an
Acceptable Acquisition or any other unsecured Indebtedness
incurred in the ordinary course of business.
-44-
45
(iv) Subordinated Debt (y) incurred in connection
with one or more Acceptable Acquisitions not to exceed in the aggregate
$20,000,000.00 and (z) incurred other than in connection with an
Acceptable Acquisition not to exceed in the aggregate $150,000,000.00
less any Subordinated Debt incurred in connection with an Acceptable
Acquisition, provided that all such Subordinated Debt is unsecured, and
the holder of such Subordinated Debt has executed a Subordination and
Standby Agreement in favor of Agent and the Lenders substantially in
the form of Exhibit G attached hereto, which Subordination and Standby
Agreement shall, among other things: (A) (1) if such Subordinated Debt
was incurred in connection with an Acceptable Acquisition,
notwithstanding any terms of the subordinated debt to the contrary,
allow for permitted payments of accrued interest and scheduled
principal (but no prepayments or accelerated payments) on such
Subordinated Debt prior to notice from Agent of the occurrence of an
Event of Default on a schedule no faster than a three year, straight
line amortization of principal of the Subordinated Debt or (2) if such
Subordinated Debt was incurred other than in connection with an
Acceptable Acquisition, notwithstanding any terms of the subordinated
debt to the contrary, allow for permitted payments of accrued interest
only (and no principal payments, prepayments or accelerated payments)
on such Subordinated Debt prior to notice from Agent of the occurrence
of an Event of Default, and (B) after notice from Agent of the
occurrence of an Event of Default, terminate all payments of principal
and interest on the Subordinated Debt until Borrower's Obligations are
paid in full and shall otherwise prohibit the holder of such
Subordinated Debt from taking any action to enforce the Subordinated
Debt obligations against Borrower or any other Obligor for a one year
period following such notice.
(b) Limitations on Liens. The Borrower will not
create, incur, assume or suffer to exist, and will not cause or permit any
Subsidiary of the Borrower to create, incur, assume or suffer to exist, any Lien
on any of its Property, assets or revenues other than:
(i) Liens presently in existence which are
described on Schedule 6.11 attached hereto;
(ii) Pledges or deposits in connection with or to
secure workmen's compensation, unemployment insurance, pension or other
employee benefits;
(iii) Purchase money Liens incurred to secure
Indebtedness permitted under Section 7.2(a)(iii), provided that such
Lien shall attach only to the Property acquired in connection with such
Indebtedness;
(iv) Any Lien renewing, extending or refunding any
Lien permitted hereunder, provided that the principal amount of
Indebtedness secured
-45-
46
by such Lien is not increased and such Lien is not extended to cover
any other Property or assets of the Borrower or any Subsidiary of the
Borrower;
(v) Subject to Section 7.1(d)(i), Liens for taxes,
assessments or governmental charges or levies on the income, Property
or assets of the Borrower or any Subsidiary of the Borrower if the same
are not yet due and payable or are being contested in good faith and by
appropriate proceedings diligently conducted and for which adequate
reserves in form and amount satisfactory to Agent and the Lenders are
provided; and
(vi) Statutory liens for amounts not yet due and
payable or which are being contested in good faith and by appropriate
proceedings diligently conducted and for which adequate reserves in
form and amount satisfactory to Agent and the Lenders are provided.
(c) Sale of Property. Neither the Borrower nor any
Subsidiary of the Borrower will sell, lease, transfer or otherwise dispose of
any Property or assets of the Borrower or such Subsidiary of the Borrower, as
the case may be, except in the ordinary course of business.
(d) Mergers and Consolidations. Neither the Borrower
nor any Subsidiary of the Borrower will merge or consolidate with any other
Person or sell, transfer or convey all or a substantial part of its Property or
assets to any Person, except for Acquisitions permitted under Section 7.2(e).
(e) Acquisitions; Subsidiaries. The Borrower will
not, and will not cause or permit any Subsidiary to, make or suffer to exist any
Acquisition of any Person, except Acceptable Acquisitions. If at any time after
the date hereof Borrower shall create any new Subsidiary, whether in connection
with an Acceptable Acquisition or otherwise, Borrower shall give Lender fifteen
(15) Business Days' prior written notice thereof, and Borrower shall (w) cause
such Subsidiary to execute and deliver to Agent for the benefit of each of the
Lenders a Subsidiary Guaranty of all of Borrower's Obligations, (x) cause such
Subsidiary to grant a security interest pursuant to a Subsidiary Security
Agreement in all of its assets of a type listed in Schedule 5 hereto, (y) cause
such Subsidiary to pledge all of the issued and outstanding stock of any
Subsidiary to Agent for the benefit of each of the Lenders pursuant to a
Subsidiary Pledge Agreement, and deliver to Agent collateral schedules, stock
powers and other pledge documents in form and substance satisfactory to Agent
and the Required Lenders, and (z) pledge all of the issued and outstanding stock
of such Subsidiary to Agent for the benefit of each of the Lenders pursuant to a
Pledge Agreement, and deliver to Agent collateral schedules, stock powers and
other pledge documents in form and substance satisfactory to Agent and the
Required Lenders. Borrower further agrees to execute or cause any such
Subsidiary to execute such amendments to this Agreement and to the other
Transaction Documents or such additional agreements as may be required by Agent
and the Lenders to satisfy such obligations.
-46-
47
(f) Fiscal Year. Neither Borrower nor any Subsidiary
of the Borrower will change its fiscal year.
(g) Stock Redemptions and Distributions. The Borrower
will not make or declare or incur any liability to make any Distribution in
respect of the capital stock of the Borrower.
(h) Transactions with Related Parties. Except as
disclosed in Schedule 7.2(h) attached hereto, neither Borrower nor any
Subsidiary of the Borrower will, directly or indirectly, engage in any material
transaction, in the ordinary course of business or otherwise, with any Related
Party unless such transaction is upon fair market terms, is not disadvantageous
in any material respect to the Lenders and has been approved by a majority of
the disinterested directors of the Borrower or such Subsidiary of the Borrower,
as the case may be (or, if none of such directors are disinterested, by a
majority of the directors), as being in the best interests of the Borrower or
such Subsidiary of the Borrower, as the case may be. In addition, neither the
Borrower nor any Subsidiary of the Borrower shall (i) transfer any Property or
assets to any Related Party for other than its fair market value or (ii)
purchase or sign any agreement to purchase any stock or other securities of any
Related Party (whether debt, equity or otherwise), underwrite or Guarantee the
same, or otherwise become obligated with respect thereto.
(i) Capital Expenditures. Neither Borrower nor any
Subsidiary of the Borrower will make any capital expenditures or enter into any
Capitalized Leases which in the aggregate (for the Borrower and all Subsidiaries
of the Borrower) exceeds $10,000,000.00 during any fiscal year without the prior
written consent of the Required Lenders.
(j) Advancing or Guaranteeing Credit. Neither
Borrower nor any Subsidiary of the Borrower will become or be a guarantor or
surety of, or otherwise become or be responsible in any manner with respect to,
any undertaking of another except for the Subsidiary Guaranties of Borrower's
Obligations.
(k) Loans and Investments. Neither Borrower nor any
Subsidiary of the Borrower will make any loans or advances or extensions of
credit to purchase any stocks, bonds, notes, debentures or other securities of,
make any expenditures on behalf of, or in any manner assume liability (direct,
contingent or otherwise) for the Indebtedness of any Person, except for
Permitted Investments, and except for loans to employees of Borrower and its
Subsidiaries not to exceed $1,000,000.00 in the aggregate to enable such
employees to make investments in Borrower's stock option plan; provided,
however, Loans to employees existing on the books of a newly acquired Subsidiary
as an Acceptable Acquisition, in order to grant key employees an equity interest
in such Subsidiary (i.e. when the employee loan is a non-cash item and is offset
on the balance sheet by a corresponding deferred compensation liability for the
same amount) shall be excluded from this limitation.
(l) Dissolution or Liquidation. Borrower will not
seek or permit the dissolution or liquidation of the Borrower in whole or in
part.
-47-
48
(m) Operating Leases. Neither Borrower nor any
Subsidiary of the Borrower will enter into or permit to remain in effect any
agreements to rent or lease (as lessee) any real or personal property (other
than Capitalized Leases) for initial terms (including options to renew or extend
any term, whether or not exercised) of more than one (1) year which in the
aggregate (for the Borrower and all Subsidiaries of the Borrower) provide for
payments, which at any time when added to all of the then existing indebtedness
of the categories described in Section 7.2(a)(iii) are in excess of
$25,000,000.00 during any consecutive twelve-month (12-month) period.
(n) Change in Nature of Business. Neither Borrower
nor any Subsidiary of the Borrower will make any material change in the nature
of its business.
(o) Pension Plans. Neither Borrower nor any
Subsidiary of Borrower shall (a) permit any condition to exist in connection
with any Pension Plan which might constitute grounds for the PBGC to institute
proceedings to have such Pension Plan terminated or a trustee appointed to
administer such Pension Plan or (b) engage in, or permit to exist or occur, any
other condition, event or transaction with respect to any Pension Plan which
could result in the incurrence by Borrower or any Subsidiary of the Borrower of
any material liability, fine or penalty. Neither Borrower nor any Subsidiary of
the Borrower shall become obligated to contribute to any Pension Plan or
Multiemployer Plan other than any such plan or plans in existence on the date
hereof.
(p) Management Fees. Neither Borrower nor any
Subsidiary of Borrower will pay any management fees, consulting fees or similar
fees to any Related Parties without the prior written consent of the Required
Lenders, except that Borrower or its Subsidiaries may pay consulting fees or
other similar fees incurred in connection with Acceptable Acquisitions provided
no Default or Event of Default is then existing or would occur on a pro forma
basis as the result of Borrower's or any such Subsidiary's payment or agreement
to pay such amounts and further provided that such fees shall not exceed the
lesser of $250,000.00 in the aggregate for any single Acceptable Acquisition or
$750,000.00 in the aggregate for all Acceptable Acquisitions in any fiscal year.
7.3 Use of Proceeds.
(a) The Borrower agrees that the proceeds of the
Reducing Revolving Loans hereunder will be used solely for the Borrower's
working capital and general corporate purposes and for financing Acceptable
Acquisitions; and
(b) None of such proceeds will be used in violation
of any applicable law or regulation or to purchase or carry "margin stock"
within the meanings of Regulation U of The Board of Governors of the Federal
Reserve System, as amended, or to extend credit to others for the purpose of
purchasing or carrying margin stock, or to refund or repay indebtedness
originally incurred for such purpose.
-48-
49
SECTION 8. EVENTS OF DEFAULT.
If any of the following (each of the following herein
sometimes called an "Event of Default") shall occur and be continuing:
8.1 Borrower shall fail to pay any of the Borrower's
Obligations when the same shall become due and payable, whether by reason of
demand, acceleration, mandatory prepayment or otherwise;
8.2 Any representation or warranty of the Borrower made in
this Agreement, in any other Transaction Document or in any certificate,
agreement, instrument or statement furnished or made or delivered pursuant
hereto or thereto or in connection herewith or therewith, shall prove to have
been untrue or incorrect in any material respect when made or effected;
8.3 Borrower shall fail to perform or observe any term,
covenant or provision contained in Section 7.1(a), Section 7.1(c), Section
7.1(i), Section 7.2 or Section 7.3;
8.4 Borrower shall fail to perform or observe any term or
provision contained in Section 7.1(l) and such failure shall remain unremedied
for five (5) days after written notice thereof shall have been given to the
Borrower by Agent or any of the Lenders;
8.5 Borrower shall fail to perform or observe any other term,
covenant or provision contained in this Agreement and any such failure shall
remain unremedied for thirty (30) days after written notice thereof shall have
been given to the Borrower by Agent or any of the Lenders;
8.6 This Agreement or any of the other Transaction Documents
shall at any time for any reason cease to be in full force and effect or shall
be declared to be null and void by a court of competent jurisdiction, or if the
validity or enforceability thereof shall be contested or denied by the Borrower,
or if the transactions completed hereunder or thereunder shall be contested by
the Borrower or if the Borrower shall deny that it has any or further liability
or obligation hereunder or thereunder;
8.7 Borrower, any Subsidiary of the Borrower or any other
Obligor shall (i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency, receivership, liquidation or similar
law, (ii) consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official of itself, himself or herself or of a
substantial part of its, his or her Property or assets, (iv) file an answer
admitting the material allegations of a petition filed against itself, himself
or herself in any such proceeding, (v) make a general assignment for the benefit
of creditors, (vi) become unable, admit in writing its, his or her inability or
fail generally to pay its, his or her debts as they become due or (vii) take any
corporate or other action for the purpose of effecting any of the foregoing;
-49-
50
8.8 An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower, any Subsidiary of the Borrower or any
other Obligor, or of a substantial part of the Property or assets of the
Borrower, any Subsidiary of the Borrower or any other Obligor, under Title 11 of
the United States Code or any other federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar official of the Borrower,
any Subsidiary of the Borrower or any other Obligor or of a substantial part of
the Property or assets of the Borrower, any Subsidiary of the Borrower or any
other Obligor or (iii) the winding-up or liquidation of the Borrower, any
Subsidiary of the Borrower or any other Obligor; and such proceeding or petition
shall continue undismissed for sixty (60) consecutive days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and in effect
for sixty (60) consecutive days;
8.9 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of the Security Agreement;
8.10 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of any Pledge Agreement;
8.11 Any event of default shall occur under the terms of any
Letter of Credit Application;
8.12 Any event of default shall occur under the terms of the
Trademark Assignment;
8.13 Any of the Subsidiary Guaranties shall at any time for
any reason cease to be in full force and effect or shall be declared to be null
and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested by or denied by the Subsidiary
executing any such Subsidiary Guaranty, or if any such Subsidiary shall deny
that it has any further liability or obligation thereunder;
8.14 Any "Event of Default" (as defined therein) shall occur
under or within the meaning of any of the Subsidiary Security Agreements or any
of the Subsidiary Pledge Agreements;
8.15 Borrower, any Subsidiary of the Borrower or any other
Obligor shall be declared by Agent or any of the Lenders to be in default
(beyond any applicable cure or grace period, if any) on, or pursuant to the
terms of, (1) any other present or future obligation to Agent or any of the
Lenders, including, without limitation, any other loan, line of credit,
revolving credit, guaranty or letter of credit reimbursement obligation, or (2)
any other present or future agreement purporting to convey to any such Lender or
to Agent a Lien upon any Property or assets of the Borrower, such Subsidiary of
the Borrower or such other Obligor, as the case may be;
-50-
51
8.16 Borrower, any Subsidiary of the Borrower or any other
Obligor shall fail (and such failure shall not have been cured or waived) to
perform or observe any term, provision or condition of, or any other default or
event of default shall occur under, any agreement, document or instrument
evidencing, securing or otherwise relating to any outstanding Indebtedness of
the Borrower, such Subsidiary of the Borrower or such other Obligor, as the case
may be, for borrowed money (other than the Borrower's Obligations) in a
principal amount in excess of One Hundred Thousand Dollars ($100,000.00), if the
effect of such failure or default is to cause or permit such Indebtedness to be
declared to be due and payable or otherwise accelerated, or to be required to be
prepaid (other than by a regularly scheduled required prepayment), prior to the
stated maturity thereof;
8.17 A default or event of default shall occur and be
continuing under any of the terms of any agreement, whether executed now or
hereafter, to provide the Borrower with any interest rate swap, interest rate
cap or other interest hedge, including, but not limited to, any such agreements
to finance any such arrangement;
8.18 Borrower, any Subsidiary of the Borrower or any other
Obligor shall have a judgment entered against it, him or her by a court having
jurisdiction in the premises in an amount of One Hundred Thousand Dollars
($100,000.00) or more and such judgment shall not be appealed in good faith or
satisfied by the Borrower, such Subsidiary of the Borrower or such other
Obligor, as the case may be, within thirty (30) days after the entry of such
judgment;
THEN, and in each such event (other than an event described in
Sections 8.7 or 8.8), Agent may, or if requested in writing by the Required
Lenders shall, declare that the obligations of the Lenders to make Loans and of
the Agent to issue Letters of Credit under this Agreement have terminated,
whereupon such obligations of Agent and Lenders shall be immediately and
forthwith terminated, and Agent may further, with the consent of the Required
Lenders, or if requested in writing by the Required Lenders shall further,
declare on behalf of each of the Lenders that the entire outstanding principal
balance of and all accrued and unpaid interest on the Notes and all of the other
Borrower's Obligations are forthwith due and payable, whereupon all of the
unpaid principal balance of and all accrued and unpaid interest on the Notes and
all such other Borrower's Obligations shall become and be immediately due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower, and Agent and the Lenders
may exercise any and all other rights and remedies which any of them may have
under any of the other Transaction Documents or under applicable law; provided,
however, that upon the occurrence of any event described in Sections 8.7 or 8.8,
Lenders' obligations to make Loans and Agent's obligation to issue Letters of
Credit under this Agreement shall automatically terminate and the entire
outstanding principal balance of and all accrued and unpaid interest on the
Notes issued under this Agreement and all other Borrower's Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower, and Agent and the Lenders may exercise any and all other rights
and remedies which any of them may have under any of the other Transaction
Documents or under applicable law. Following acceleration of Borrower's
Obligations hereunder as set forth above, Agent may, or if requested in writing
by the Required Lenders and provided with the indemnity
-51-
52
required under Section 9.6 shall, proceed to enforce any remedy then available
to Agent or any of the Lenders under any applicable law, including, without
limitation, all rights granted to Agent hereunder, under the Subsidiary
Guaranties, the Security Agreement, the Trademark Assignment, the Pledge
Agreements, any of the Subsidiary Security Agreements, any of the Subsidiary
Pledge Agreements, or any Letter of Credit Application, and the rights and
remedies available to a secured party under the Uniform Commercial Code as in
effect in the State of Missouri.
Upon the occurrence of any Event of Default, Agent will have
the right, in addition to all other rights and remedies available to Agent and
the Lenders under this Agreement or under the other Loan Documents, after oral
or written notice is sent to the Borrower, to take possession of, preserve and
care for the Collateral, to execute and/or endorse as the Borrower's agent any
bills of sale or documents, instruments or chattel paper in or pertaining to the
Collateral, to notify Account Debtors and obligors on documents, Accounts and
instruments included in the Collateral to make payment directly to Agent, to
take control of all of the Borrower's cash, to collect and receive funds
generated by the Collateral, including proceeds or refunds from insurance, or as
a result of claims for the damage, loss, or destruction of the Collateral, and
use the same to reduce any part of the obligations.
The Agent shall give notice of a Default to Borrower promptly
upon being requested to do so by any Lender and shall thereupon notify all of
the Lenders thereof.
Following any Default or Event of Default, all payments and
other amounts received by Agent and/or any of the Lenders, whether voluntary or
involuntary, including but not limited to any proceeds of any collateral, any
right of offset or otherwise, shall be shared among the Lenders in accordance
with their Pro Rata Shares of the outstanding principal indebtedness under all
of the Reducing Revolver Loans and Letter of Credit obligations then outstanding
of Borrower. Such application shall be made first, to any costs or expenses of
Agent or any of the Lenders incurred in connection with the collection of such
proceeds, second, to any accrued and unpaid fees due hereunder or under any of
the other Transaction Documents, third, to any and all accrued and unpaid
interest on any of the Loans, fourth, to collateralize any outstanding Letters
of Credit pursuant to Section 3.3(e) herein, and fifth, to the unpaid principal
amounts of any of the Loans outstanding hereunder and under the other
Transaction Documents.
SECTION 9. THE AGENT
9.1 Appointment and Authorization. Each Lender irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement, the Notes and the other
Transaction Documents as are delegated to the Agent by the terms hereof or
thereof, together with all such powers as may be reasonably incidental thereto.
9.2 Agent and Affiliates. The Agent shall have the same rights
and powers under this Agreement as any other Lender and may exercise or refrain
from exercising the same as though it were not the Agent, and the Agent and its
affiliates may accept deposits from, lend
-52-
53
money to and generally engage in any kind of business with Borrower or any of
its Subsidiaries or Affiliates as if it were not the Agent hereunder.
9.3 Action by Agent. The obligations of the Agent hereunder
are only those expressly set forth herein. Without limiting the generality of
the foregoing, the Agent shall not be required to take any action with respect
to any Default or Event of Default, except as expressly provided in Section 8.
9.4 Consultation with Experts. The Agent may consult with
legal counsel, independent certified 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 other experts.
9.5 Liability of Agent. Neither the Agent nor any of its
directors, officers, employees, agents or advisors shall be liable for any
action taken or not taken by it in connection herewith (i) with the consent or
at the request of the requisite percentage in interest of the Lenders set forth
herein or (ii) in the absence of its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction. Neither the Agent nor any of
its directors, officers, employees, agents or advisors shall be responsible for
or have any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this Agreement or any Loan
hereunder; (ii) the performance or observance of any of the covenants or
agreements of Borrower; (iii) the satisfaction of any condition specified in
Section 4, except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of this Agreement, the Notes or
any of the other Transaction Documents. The Agent shall not incur any liability
by acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, telex, telecopy or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.
9.6 Indemnification. Notwithstanding any other provision
contained in this Agreement to the contrary, to the extent Borrower fails to
reimburse the Agent pursuant to Section 10.3, Section 10.4 or Section 10.5, or
if any Default or Event of Default shall occur under this Agreement, the Lenders
shall ratably in accordance with their respective Pro Rata Shares, indemnify the
Agent and hold it harmless from and against any and all liabilities, losses,
costs and/or expenses, including, without limitation, any liabilities, losses,
costs and/or expenses arising from the failure of any Lender to perform its
obligations hereunder or in respect of this Agreement, and also including,
without limitation, reasonable attorneys' fees and expenses, which the Agent may
incur, directly or indirectly, in connection with this Agreement, the Notes or
any of the other Transaction Documents, or any action or transaction related
hereto or thereto; provided only that the Agent shall not be entitled to such
indemnification for any losses, liabilities, costs and/or expenses directly and
solely resulting from its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction. This indemnity shall be a
continuing indemnity, contemplates all liabilities, losses, costs and expenses
related to the execution, delivery and performance of this Agreement, the Notes
and the other Transaction Documents, and shall survive the satisfaction and
payment of the Loans and the termination of this Agreement.
-53-
54
9.7 Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
9.8 Resignation of Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and Borrower. Upon any such
resignation, Lenders shall have the right to appoint a successor Agent with the
prior consent of Borrower, which consent shall not be unreasonably withheld, and
which successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000.00. If no successor Agent shall have been
so appointed by Lenders, and shall have accepted such appointment, within thirty
(30) days after the retiring Agent's giving of notice of resignation, then the
Agent shall, on behalf of all of the Lenders, appoint a successor Agent with the
prior consent of Borrower, which consent shall not be unreasonably withheld, and
which successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000.00. 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 of the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
all of its duties and obligations under this Agreement. After any retiring
Agent's resignation as Agent, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
9.9 Removal of Agent. The Agent may be removed at any time,
for or without cause, by an instrument or instruments in writing executed by the
Required Lenders and delivered to the Agent with a copy to Borrower, specifying
the removal and the date when it shall take effect. Upon any such removal,
Lenders shall have the right to appoint a successor Agent with the prior consent
of Borrower, which consent shall not be unreasonably withheld, and which
successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $100,000,000.00. If no successor Agent shall have been
so appointed by Lenders, and shall have accepted such appointment, within thirty
(30) days after the date of removal of the Agent, then the Required Lenders
shall, on behalf of all of the Lenders, appoint a successor Agent with the prior
consent of Borrower, which consent shall not be unreasonably withheld, and which
successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any state thereof and having a combined capital
and surplus of at least $100,000,000.00. 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 removed Agent, and the removed Agent shall be discharged from all of its
duties and obligations under this Agreement. After any such removal, the
-54-
55
provisions of this Section 9 shall inure to such former Agent's benefit as to
any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
9.10 Agent's Fee. Borrower will pay to Agent for its own
account on the date hereof and on each anniversary of the date hereof during the
Term, an Agent's Fee in the amount agreed to between Borrower and Agent.
SECTION 10. GENERAL.
10.1 No Waiver. No failure or delay by Agent or any of the
Lenders in exercising any right, remedy, power or privilege hereunder or under
any other Transaction Document shall operate as a waiver thereof; nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
remedies provided herein and in the other Transaction Documents are cumulative
and not exclusive of any remedies provided by law. Nothing herein contained
shall in any way affect the right of Agent or any of the Lenders to exercise any
statutory or common law right of banker's lien or setoff.
10.2 Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, each of the Lenders is hereby authorized at
any time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower) and to the fullest extent permitted by
law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by any such Lender and any and
all other indebtedness at any time owing by any such Lender to or for the credit
or account of the Borrower against any and all of the Borrower's Obligations
irrespective of whether or not Agent or any such Lender shall have made any
demand hereunder or under any of the other Transaction Documents and although
such obligations may be contingent or unmatured. Such Lender agrees to promptly
notify Borrower after any such setoff and application made by such Lender,
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of Lenders under this
Section 10.2 are in addition to any other rights and remedies (including,
without limitation, other rights of setoff) which Lenders may have. Nothing
contained in this Agreement or any other Transaction Document shall impair the
right of each of the Lenders to exercise any right of setoff or counterclaim
they may have against the Borrower and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower unrelated to this
Agreement or the other Transaction Documents.
10.3 Cost and Expenses. Borrower agrees, whether or not any
Loan is made hereunder, to pay Agent upon demand (i) all reasonable
out-of-pocket costs and expenses and all Attorneys' Fees of Agent in connection
with the preparation, documentation, negotiation, execution and administration
of this Agreement, the Notes and the other Transaction Documents, (ii) all
reasonable recording, filing and search fees incurred in connection with this
Agreement and the other Transaction Documents, (iii) all reasonable
out-of-pocket costs and expenses and all Attorneys' Fees of Agent and each of
the Lenders in connection with the preparation of any waiver or consent
hereunder or any amendment hereof or any Event of Default or alleged Event of
Default hereunder, (iv) if an Event of Default occurs, all out-of-pocket costs
and expenses and
-55-
56
all Attorneys' Fees incurred by Agent and each of the Lenders in connection with
such Event of Default and collection and other enforcement proceedings resulting
therefrom and (v) all other Attorneys' Fees incurred by Agent and each of the
Lenders relating to or arising out of or in connection with this Agreement or
any of the other Transaction Documents subsequent to the date hereof. The
Borrower further agrees to pay or reimburse Agent and each of the Lenders for
any stamp or other taxes which may be payable with respect to the execution,
delivery, recording and/or filing of this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Trademark Assignment, the Subsidiary
Guaranties, the Subsidiary Security Agreements, or any of the other Transaction
Documents. All of the obligations of the Borrower under this Section 10.3 shall
survive the satisfaction and payment of the Borrower's Obligations and the
termination of this Agreement. In the event Agent or any Lender claims any
amounts pursuant to this Section 10.3, Agent or such Lender, as the case may be,
shall provide to Borrower an itemized statement of amounts claimed.
10.4 Environmental Indemnity. The Borrower hereby agrees to
indemnify Agent and each of the Lenders and hold Agent and each of the Lenders
harmless from and against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever (including, without
limitation, court costs and attorneys' fees and expenses) which at any time or
from time to time may be paid, incurred or suffered by, or asserted against,
Agent or any of the Lenders for, with respect to or as a direct or indirect
result of the violation by the Borrower or any Subsidiary of the Borrower of any
Environmental Laws; or with respect to, or as a direct or indirect result of the
presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission or release from, properties utilized by the Borrower and/or any
Subsidiary of the Borrower in the conduct of its businesses into or upon any
land, the atmosphere or any watercourse, body of water or wetland, of any
Hazardous Materials or any other hazardous or toxic waste, substance or
constituent or other substance (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising
under the Environmental Laws); and the provisions of and undertakings and
indemnification set out in this Section 10.4 shall survive the satisfaction and
payment of the Borrower's Obligations and the termination of this Agreement.
10.5 General Indemnity. In addition to the payment of expenses
pursuant to Section 10.3, whether or not the transactions contemplated hereby
shall be consummated, the Borrower hereby agrees to indemnify, pay and hold
Agent, each of the Lenders and any other holder(s) of the Notes, and the
officers, directors, employees, agents and affiliates of any of them
(collectively, the "Indemnitees") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitees
shall be designated a party thereto), that may be imposed on, incurred by or
asserted against the Indemnitees, in any manner relating to or arising out of
this Agreement, any of the other Transaction Documents or any other agreement,
document or instrument executed and delivered by the Borrower or any other
Obligor in connection herewith or therewith, the statements contained in any
commitment letters delivered by Agent or any of the Lenders, the Lenders'
-56-
57
agreements to make the Loans hereunder or the use or intended use of the
proceeds of any Loan hereunder (collectively, the "indemnified liabilities");
provided that the Borrower shall have no obligation to an Indemnitee hereunder
with respect to indemnified liabilities arising from the gross negligence or
willful misconduct of that Indemnitee as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them. The provisions of the undertakings and
indemnification set out in this Section 10.5 shall survive satisfaction and
payment of the Borrower's Obligations and the termination of this Agreement.
10.6 Authority to Act. Agent and the Lenders shall be entitled
to act on any notices and instructions (telephonic or written) believed by Agent
or any such Lender to have been delivered by any Person authorized to act on
behalf of the Borrower pursuant hereto, regardless of whether such notice or
instruction was in fact delivered by a Person authorized to act on behalf of the
Borrower, and the Borrower hereby agrees to indemnify Agent and each of the
Lenders and hold Agent and each of the Lenders harmless from and against any and
all losses and expenses, if any, ensuing from any such action, other than for
such losses or expenses directly caused by the gross negligence or willful
misconduct of the Agent or such Lender, as determined by a court of competent
jurisdiction.
10.7 Notices. Any notice, request, demand, consent,
confirmation or other communication hereunder shall be in writing and delivered
in person or sent by telegram, telex, telecopy or registered or certified mail,
return receipt requested and postage prepaid, if to the Borrower, in care of
StaffMark, Inc. at 000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxx X. Xxxxxxx, Chief Financial Officer, if to Agent, at 000 Xxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Vice President,
or if to Lenders, at their respective addresses or telecopy numbers set forth on
the signature pages of this Agreement, or at such other address as any party may
designate as its address for communications hereunder by notice so given. Such
notices shall be deemed effective on the day on which delivered or sent if
delivered in person or sent by telegram, telex or telecopy, or on the third
(3rd) Business Day after the day on which mailed, if sent by registered or
certified mail.
10.8 CONSENT TO JURISDICTION. BORROWER IRREVOCABLY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED STATES
OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS AGENT MAY
ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT TO THE EXTENT SUBJECT MATTER
JURISDICTION EXISTS. THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF
SUCH COURTS. THE BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF
-57-
58
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND THE BORROWER
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE
BORROWER HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH THE
BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT
DOMICILE. THE BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON THE BORROWER BY
REGISTERED MAIL SENT TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.7.
10.9 Agent's and Lenders' Books and Records. Agent's and
Lenders' books and records showing the account between the Borrower and Agent or
any of the Lenders shall be admissible in evidence in any action or proceeding
and shall constitute prima facie proof thereof.
10.10 Governing Law; Amendments and Waivers. This Agreement,
the Notes, the Security Agreement, the Pledge Agreement, the Trademark
Assignment, the Subsidiary Guaranties, the Subsidiary Security Agreements, and
all of the other Transaction Documents shall be governed by and construed in
accordance with the internal laws of the State of Missouri. Any provision of
this Agreement, the Notes, the Security Agreement, the Pledge Agreement, the
Trademark Assignment, the Subsidiary Guaranties, the Subsidiary Security
Agreements, or any of the other Transaction Documents may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by
Borrower and the Required Lenders (and, if the rights or duties of the Agent in
its capacity as Agent are affected thereby, by the Agent); provided that no such
amendment or waiver shall, unless signed by all of the Lenders, (i) increase the
Reducing Revolver Commitment of any Lender, (ii) reduce the principal amount of
or rate of interest on any Loan or any fees hereunder, (iii) postpone the date
fixed for any payment of principal of or interest on any Loan or any fees
hereunder or any scheduled reduction in the Reducing Revolver Commitment of the
several Lenders as set forth in Section 3.1(a), (iv) release any collateral
security or any guaranty for any Loan hereunder, (v) increase the multiple
against Borrower's Consolidated Proforma EBITDA Cash Flow above four hundred
percent (400%) as set forth in Section 3.1(a) herein, (vi) amend or waive any
Event of Default, or (vii) change the percentage in the definition of Required
Lenders, or (v) amend this Section 10.10.
10.11 Successors and Assigns; Participations.
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Borrower may not assign or otherwise
transfer any of its rights or delegate any of its obligations under this
Agreement. Any of the Lenders may sell participations in its Notes and its
rights under this Agreement, the other Transaction Documents and in the
Collateral in whole or in part to any commercial bank organized under the laws
of the United States or any state thereof without the prior consent of Borrower
so long as each agreement pursuant to which any such participation is granted
provides that no such participant shall have any rights under this Agreement or
any other Transaction Document (the participants' rights against the Lender
granting its participation to be those set forth in the Participation Agreement
between the
-58-
59
participant and such Lender), and such selling Lender shall retain the sole
right to approve or disapprove any amendment, modification or waiver of any
provision of this Agreement or any of the other Transaction Documents. Each such
participant shall be entitled to the benefits of the yield protection provisions
hereof to the extent any Lender would have been so entitled had not such
participation been sold or assignment made.
(b) Any Lender which, in accordance with Section
10.11(a), grants a participation in any of its rights under this Agreement or
its Notes shall give prompt notice describing the details thereof to the Agent
and Borrower.
(c) Unless otherwise agreed to by Borrower in
writing, no Lender shall, as between Borrower and that Lender, be relieved of
any of its obligations under this Agreement as a result of such Lender's
granting of a participation in all or any part of such Lender's Notes or all or
any part of such Lender's rights under this Agreement.
10.12 Assignment Agreements. Each Lender may, upon prior
notice to and consent of Borrower and Agent, which consent shall not be
unreasonably withheld, from time to time sell or assign to other banking
institutions rated "B" or better by Xxxxxxxx Agent Watch Service a pro rata part
of all of the indebtedness evidenced by the Notes then owed by it together with
an equivalent proportion of its obligation to make Loans hereunder and the
credit risk incidental to the Letters of Credit pursuant to an Assignment
Agreement substantially in the form of Exhibit F attached hereto, executed by
the assignor, the assignee and the Borrower, which agreements shall specify in
each instance the portion of the indebtedness evidenced by the Notes which is to
be assigned to each such assignor and the portion of the Loan Commitments of the
assignor and the credit risk incidental to the Letters of Credit (which portions
shall be equivalent) to be assumed by it (the "Assignment Agreements"), provided
that nothing herein contained shall restrict, or be deemed to require any
consent as a condition to, or require payment of any fee in connection with, any
sale, discount or pledge by any Lender of any Note or other obligation hereunder
to a federal reserve bank. Any such portion of the indebtedness assigned by any
Lender pursuant to this Section 10.12 shall not be less than $5,000,000.00. Upon
the execution of each Assignment Agreement by the assignor, the assignee and the
Borrower and consent thereto by the Agent (i) such assignee shall thereupon
become a "Lender" for all purposes of this Agreement with Loan Commitments in
the amount set forth in such Assignment Agreement and with all the rights,
powers and obligations afforded a Lender hereunder, (ii) the assignor shall have
no further liability for funding the portion of its Loan Commitments assumed by
such other Lender and (iii) the address for notices to such Lender shall be as
specified in the Assignment Agreement, and the Borrower shall, in exchange for
the cancellation of the Notes held by the assignor Lender, execute and deliver
Notes to the assignee Lender in the amount of its Loan Commitments and new Notes
to the assignor Lender in the amount of its Loan Commitments after giving effect
to the reduction occasioned by such assignment, all such Notes to constitute
"Notes" for all purposes of this Agreement, and there shall be paid to the
Agent, as a condition to such assignment, an administration fee of $2,000.00
plus any out-of-pocket costs and expenses incurred by it in effecting such
assignment, such fee to be paid by the assignor or the assignee as they may
mutually agree, but under no circumstances shall any portion of such fee be
payable by or charged to the Borrower.
-59-
60
10.13 References; Headings for Convenience. Unless otherwise
specified herein, all references herein to Section numbers refer to Section
numbers of this Agreement, all references herein to Exhibits X, X, X, X, X, X, X
and H refer to annexed Exhibits X, X, X, X, X, X, X and H which are hereby
incorporated herein by reference and all references herein to Schedules 5, 6.5,
6.6, 6.8, 6.10, 6.11, 6.14, 6.15, 7.1(k)(viii) and 7.2(h) refer to annexed
Schedules 5, 6.5, 6.6, 6.8, 6.10, 6.11, 6.14, 6.15, 7.1(k)(viii) and 7.2(h)
which are hereby incorporated herein by reference. The Section headings are
furnished for the convenience of the parties and are not to be considered in the
construction or interpretation of this Agreement.
10.14 Subsidiary Reference. Any reference herein to a
Subsidiary or Consolidated Subsidiary of the Borrower, and any financial
definition, ratio, restriction or other provision of this Agreement which is
stated to be applicable to the Borrower and its Subsidiaries or Consolidated
Subsidiaries or which is to be determined on a "consolidated" or "consolidating"
basis, shall apply only to the extent the Borrower has any Subsidiaries or
Consolidated Subsidiaries and, where applicable, to the extent any such
Subsidiaries are consolidated with the Borrower for financial reporting
purposes.
10.15 Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the Borrower and its successors and Agent and each
of the Lenders and their respective successors and assigns. The Borrower may not
assign or delegate any of its rights or obligations under this Agreement.
10.16 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. ORAL AGREEMENTS OR
COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE.
TO PROTECT THE BORROWER, AGENT AND LENDERS FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY AGREEMENTS REACHED BY THE BORROWER, AGENT AND LENDERS
COVERING SUCH MATTERS ARE CONTAINED IN THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS, WHICH AGREEMENT AND OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN THE BORROWER, AGENT AND LENDERS,
EXCEPT AS THE BORROWER, AGENT AND LENDERS MAY LATER AGREE IN WRITING TO MODIFY
THEM. THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR
WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
10.17 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein that may be given effect without the invalid, illegal or
unenforceable provision shall not in any way be affected or impaired thereby.
-60-
61
10.18 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.19 Resurrection of the Borrower's Obligations. To the
extent that Agent or any of the Lenders receives any payment on account of any
of the Borrower's Obligations, and any such payment(s) or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
subordinated and/or required to be repaid to a trustee, receiver or any other
Person under any bankruptcy act, state or federal law, common law or equitable
cause, then, to the extent of such payment(s) received, the Borrower's
Obligations or part thereof intended to be satisfied and any and all Liens upon
or pertaining to any Property or assets of the Borrower and theretofore created
and/or existing in favor of Agent for the benefit of the Lenders as security for
the payment of the Borrower's Obligations shall be revived and continue in full
force and effect, as if such payment(s) had not been received by Agent or any
such Lender and applied on account of the Borrower's Obligations.
10.20 U. S. Dollars. All currency references set forth herein,
in any other Transaction Documents and in any transactions referenced herein or
therein shall be denominated in Dollars of the United States of America.
-61-
62
IN WITNESS WHEREOF, the parties have executed this Amended
and Restated Credit Agreement this 9th day of March, 1998.
STAFFMARK, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Reducing Revolver Commitment: MERCANTILE BANK
$73,000,000.00 NATIONAL ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Mid America Group
Telecopy No: 000-000-0000
Reducing Revolver Commitment: DEPOSIT GUARANTY NATIONAL BANK
$10,000,000.00
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 X. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No.
-------------------------
-62-
63
Reducing Revolver Commitment: THE FIRST NATIONAL BANK OF CHICAGO
$19,500,000.00
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: One First National Plaza
00xx Xxxxx
Xxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, VP
Telecopy No. (000)000-0000
Reducing Revolver Commitment: FIRST UNION NATIONAL BANK
$17,500,000.00
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx, XX0
Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxx,
VP
Telecopy No. (000)000-0000
Reducing Revolver Commitment: LASALLE NATIONAL BANK
$15,000,000.00
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: One Metropolitan Square
000 Xxxxx Xxxxxxxx
Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx, AVP
Telecopy No. (000)000-0000
-63-
64
Reducing Revolver Commitment: BANK OF AMERICA NATIONAL TRUST
$15,000,000.00 AND SAVINGS ASSOCIATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 X. XxXxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxx,
VP
Telecopy No. (000)000-0000
MERCANTILE BANK
NATIONAL ASSOCIATION, AS AGENT
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address: 000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Mid America Group
-64-
