================================================================================
CREDIT AGREEMENT
Dated as of July 2, 2002
among
XXXXX INTERNATIONAL ENTERPRISES CORP.,
and
BLUE RIDGE TEXTILE MANUFACTURING INC.
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
GECC CAPITAL MARKETS GROUP, INC.
as Lead Arranger
================================================================================
Table of Contents
-----------------
Page
----
1. AMOUNT AND TERMS OF CREDIT ............................................................ 2
1.1 Credit Facilities .............................................................. 2
1.2 Letters of Credit .............................................................. 7
1.3 Prepayments .................................................................... 7
1.4 Use of Proceeds ................................................................ 10
1.5 Interest and Applicable Margins ................................................ 11
1.6 Eligible Accounts .............................................................. 13
1.7 Eligible Inventory ............................................................. 15
1.8 Cash Management Systems ........................................................ 16
1.9 Fees ........................................................................... 16
1.10 Receipt of Payments ............................................................ 17
1.11 Application and Allocation of Payments ......................................... 17
1.12 Loan Account and Accounting .................................................... 18
1.13 Indemnity ...................................................................... 18
1.14 Access ......................................................................... 20
1.15 Taxes .......................................................................... 20
1.16 Capital Adequacy; Increased Costs; Illegality .................................. 21
1.17 Single Loan .................................................................... 22
1.18 Security Interest; Priority of Liens; Intercreditor Agreements ................. 22
2. CONDITIONS PRECEDENT .................................................................. 24
2.1 Conditions to the Initial Loans ................................................ 24
2.2 Further Conditions to Each Loan ................................................ 25
3. REPRESENTATIONS AND WARRANTIES ........................................................ 26
3.1 Corporate Existence; Compliance with Law ....................................... 26
3.2 Executive Offices, Collateral Locations, FEIN .................................. 27
3.3 Corporate Power, Authorization, Enforceable Obligations ........................ 27
3.4 Financial Statements and Projections ........................................... 27
3.5 Material Adverse Effect ........................................................ 28
3.6 Ownership of Property; Liens ................................................... 28
3.7 Labor Matters .................................................................. 29
i
TABLE OF CONTENTS
-----------------
(continued)
Page
----
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness ........... 29
3.9 Government Regulation ............................................................... 30
3.10 Margin Regulations .................................................................. 30
3.11 Taxes ............................................................................... 30
3.12 ERISA ............................................................................... 31
3.13 No Litigation ....................................................................... 32
3.14 Brokers ............................................................................. 32
3.15 Intellectual Property ............................................................... 32
3.16 Full Disclosure ..................................................................... 32
3.17 Environmental Matters ............................................................... 32
3.18 Insurance ........................................................................... 33
3.19 Deposit and Disbursement Accounts ................................................... 33
3.20 Government Contracts ................................................................ 33
3.21 Customer and Trade Relations ........................................................ 34
3.22 Agreements and Other Documents ...................................................... 34
3.23 Solvency ............................................................................ 34
3.24 Subordinated Note Repurchase Documents .............................................. 34
3.25 Subordinated Debt ................................................................... 35
4. FINANCIAL STATEMENTS AND INFORMATION ...................................................... 35
4.1 Reports and Notices ................................................................. 35
4.2 Communication with Accountants ...................................................... 35
5. AFFIRMATIVE COVENANTS ..................................................................... 35
5.1 Maintenance of Existence and Conduct of Business .................................... 35
5.2 Payment of Charges .................................................................. 36
5.3 Books and Records ................................................................... 36
5.4 Insurance; Damage to or Destruction of Collateral ................................... 36
5.5 Compliance with Laws ................................................................ 38
5.6 Supplemental Disclosure ............................................................. 38
5.7 Intellectual Property ............................................................... 39
5.8 Environmental Matters ............................................................... 39
ii
TABLE OF CONTENTS
-----------------
(continued)
Page
----
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases ........ 39
5.10 Swap Contracts ............................................................................... 40
5.11 Further Assurances ........................................................................... 40
5.12 Subordinated Notes Indenture ................................................................. 40
6. NEGATIVE COVENANTS .................................................................................. 40
6.1 Mergers, Subsidiaries, Etc ................................................................... 40
6.2 Investments; Loans and Advances .............................................................. 43
6.3 Indebtedness ................................................................................. 43
6.4 Employee Loans and Affiliate Transactions .................................................... 44
6.5 Capital Structure and Business ............................................................... 44
6.6 Guaranteed Indebtedness ...................................................................... 44
6.7 Liens ........................................................................................ 45
6.8 Sale of Stock and Assets ..................................................................... 45
6.9 ERISA ........................................................................................ 46
6.10 Financial Covenants .......................................................................... 46
6.11 Hazardous Materials .......................................................................... 46
6.12 Sale-Leasebacks .............................................................................. 46
6.13 Cancellation of Indebtedness ................................................................. 46
6.14 Restricted Payments .......................................................................... 46
6.15 Change of Corporate Name or Location; Change of Fiscal Year .................................. 47
6.16 No Impairment of Intercompany Transfers ...................................................... 47
6.17 No Speculative Transactions .................................................................. 47
6.18 Leases; Real Estate Purchases ................................................................ 47
6.19 Changes Relating to Subordinated Debt; Material Contracts .................................... 47
6.20 OGRI ......................................................................................... 48
7. TERM ................................................................................................ 48
7.1 Termination .................................................................................. 48
7.2 Survival of Obligations Upon Termination of Financing Arrangements ........................... 48
iii
TABLE OF CONTENTS
-----------------
(continued)
Page
----
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ......................................................... 48
8.1 Events of Default ....................................................................... 48
8.2 Remedies ................................................................................ 51
8.3 Waivers by Credit Parties ............................................................... 52
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT ............................................ 52
9.1 Assignment and Participations ........................................................... 52
9.2 Appointment of Agent .................................................................... 54
9.3 Agent's Reliance, Etc ................................................................... 55
9.4 GE Capital and Affiliates ............................................................... 55
9.5 Lender Credit Decision .................................................................. 56
9.6 Indemnification ......................................................................... 56
9.7 Successor Agent ......................................................................... 56
9.8 Setoff and Sharing of Payments .......................................................... 57
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert ................ 58
9.10 Buy-Out Right of Term B Lenders ......................................................... 60
10. SUCCESSORS AND ASSIGNS ......................................................................... 61
10.1 Successors and Assigns .................................................................. 61
11. MISCELLANEOUS .................................................................................. 61
11.1 Complete Agreement; Modification of Agreement ........................................... 61
11.2 Amendments and Waivers .................................................................. 61
11.3 Fees and Expenses ....................................................................... 63
11.4 No Waiver ............................................................................... 65
11.5 Obligations Absolute; Remedies .......................................................... 65
11.6 Severability ............................................................................ 65
11.7 Conflict of Terms ....................................................................... 65
11.8 Confidentiality ......................................................................... 65
11.9 GOVERNING LAW ........................................................................... 66
11.10 Notices ................................................................................. 67
11.11 Section Titles .......................................................................... 67
iv
TABLE OF CONTENTS
-----------------
(continued)
Page
----
11.12 Counterparts ................................................ 67
11.13 WAIVER OF JURY TRIAL ........................................ 67
11.14 Press Releases and Related Matters .......................... 67
11.15 Reinstatement ............................................... 68
11.16 Advice of Counsel ........................................... 68
11.17 No Strict Construction ...................................... 68
12. CROSS-GUARANTY ...................................................... 68
12.1 Cross-Guaranty .............................................. 68
12.2 Waivers by Borrowers ........................................ 69
12.3 Benefit of Guaranty ......................................... 69
12.4 Subordination of Subrogation, Etc ........................... 69
12.5 Election of Remedies ........................................ 69
12.6 Limitation .................................................. 70
12.7 Contribution with Respect to Guaranty Obligations ........... 70
12.8 Liability Cumulative ........................................ 71
v
INDEX OF APPENDICES
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
Annex C (Section 1.8) - Cash Management System
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections --
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
Annex J (from Annex A -
Commitments definition) Commitments as of Closing Date
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(i) - Form of Term A Note
Exhibit 1.1(b)(ii) - Form of Term B-1 Note
Exhibit 1.1(b)(iii) - Form of Term B-2 Note
Exhibit 1.1(c)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1 - Master Agreement for Standby Letters of Credit
Exhibit B-2 - Master Agreement for Documentary Letters of
Credit
Schedule 1.1 - Agent's Representatives
Schedule 1.1(b) - Ratable Shares of each Borrower
Disclosure Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(A) - Financial Statements
Disclosure Schedule 3.4(B) - Pro Forma
Disclosure Schedule 3.4(C) - Projections
Disclosure Schedule 3.4(D) - Fair Salable Balance Sheet
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates;
Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
i
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.14 - Estate Tax Redemptions
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.7 - Existing Liens
ii
This CREDIT AGREEMENT (as the same may be amended, supplemented,
restated or otherwise modified from time to time, the "Agreement"), dated as of
July 2, 2002 among Xxxxx International Enterprises Corp., a New York corporation
("Xxxxx") and Blue Ridge Textile Manufacturing Inc., a Georgia corporation
("Blue Ridge") (Xxxxx and Blue Ridge are sometimes collectively referred to
herein as the "Borrowers" and individually as a "Borrower"); the other Credit
Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity, "GE Capital"), for itself, as Lender,
and as Agent for Lenders, and the other Lenders signatory hereto from time to
time.
RECITALS
WHEREAS, Borrowers have requested that Lenders extend revolving and
term credit facilities to Borrowers of up to Fifty-Five Million Dollars
($55,000,000) in the aggregate for the purpose of repurchasing a portion of the
Subordinated Notes and refinancing certain indebtedness of Borrowers and to
provide (a) working capital financing for Borrowers, (b) funds for other general
corporate purposes of Borrowers, and (c) funds for other purposes permitted
hereunder; and for these purposes, Lenders are willing to make certain loans and
other extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein; and
WHEREAS, Borrowers have agreed to secure all of their obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of their existing and
after-acquired personal and real property; and
WHEREAS, Ohio Garment Rental, Inc., an Ohio corporation and a wholly
owned Subsidiary of Xxxxx ("OGRI"), is willing to guarantee all of the
obligations of Borrowers to Agent and Lenders under the Loan Documents and to
grant to Agent, for the benefit of Agent and Lenders, a security interest and
liens upon all of its existing and after-acquired personal and real property;
WHEREAS, the Xxxxxx X. Xxxxx Trust, the J. Xxxxxxx Xxxxx Revocable
Trust, the J. Xxxxxxx Xxxxx Inter Vivos Irrevocable Trust and the trusts created
for the benefit of Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, Xxxxx X. Xxxxxxx and Xxxx X.
Xxxxx, Xx. the holders of all of the Stock of Xxxxx (the "Xxxxx Stockholders")
are willing to pledge to Agent, for the benefit of Agent and Lenders, all of the
Stock of Xxxxx owned or which will be owned by such Person to secure all the
obligations of the Credit Parties under the Loan Documents; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Annex A and, for purposes of this Agreement and the
other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
(a) Revolving Credit Facility.
(i) Subject to the terms and conditions hereof, each Revolving
Lender agrees to make available to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of advances (each, a "Revolving
Credit Advance"). The Pro Rata Share of the Revolving Loan of any Revolving
Lender shall not at any time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be several and not joint.
Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow
under this Section 1.1(a); provided that the amount of any Revolving Credit
Advance to be made at any time shall not exceed Borrowing Availability at such
time. Borrowing Availability may be reduced by Reserves imposed by Agent in its
reasonable credit judgment. Moreover, the sum of the Revolving Loan and Swing
Line Loan outstanding to any Borrower shall not exceed at any time that
Borrower's separate Borrowing Base. Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1(a). Each Revolving Credit Advance shall be made on notice by Borrower
Representative on behalf of the applicable Borrower to one of the
representatives of Agent identified in Schedule 1.1 at the address specified
therein. Any such notice must be given no later than (A) 11:00 a.m. (New York
time) on the Business Day of the proposed Revolving Credit Advance, in the case
of an Index Rate Loan, or (B) 11:00 a.m. (New York time) on the date which is 3
Business Days prior to the proposed Revolving Credit Advance, in the case of a
LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance") must be
given in writing (by telecopy or overnight courier) substantially in the form of
Exhibit 1.1(a)(i), and shall include the information required in such Exhibit
and such other information as may be required by Agent. If any Borrower desires
to have the Revolving Credit Advances bear interest by reference to a LIBOR
Rate, Borrower Representative must comply with Section 1.5(e).
(ii) Except as provided in Section 1.12, each Borrower shall
execute and deliver to each Revolving Lender a note to evidence the Revolving
Loan Commitment of that Revolving Lender. Each note shall be in the principal
amount of the Revolving Loan Commitment of the applicable Revolving Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii) (each
a "Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving
Note shall represent the obligation of the applicable Borrower to pay the amount
of the applicable Revolving Lender's Revolving Loan Commitment or, if less, such
Revolving Lender's Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to such Borrower, in each case, together with
interest thereon as prescribed in Section 1.5. The entire unpaid balance of the
aggregate Revolving Loan and all other non-contingent Obligations shall be
immediately due and payable in full in immediately available funds on the
Commitment Termination Date.
(iii) Anything in this Agreement to the contrary notwithstanding,
at the request of Borrower Representative, in its discretion Agent may (but
shall have absolutely no obligation to), make Revolving Credit Advances to
Borrowers on behalf of Revolving Lenders in amounts that cause the outstanding
balance of the aggregate Revolving Loan to exceed the
2
Aggregate Borrowing Base (less the Swing Line Loan) or which cause the
outstanding balance of the Revolving Loan owing by any Borrower to exceed that
Borrower's separate Borrowing Base (less the Swing Line Loan advanced to that
Borrower) (any such excess Revolving Credit Advances are herein referred to
collectively as "Overadvances"); provided that (A) no such event or occurrence
shall cause or constitute a waiver of Agent's, Swing Line Lender's or Revolving
Lenders' right to refuse to make any further Overadvances, Swing Line Advances
or Revolving Credit Advances, or incur any Letter of Credit Obligations, as the
case may be, at any time that an Overadvance exists, and (B) no Overadvance
shall result in a Default or Event of Default based on Borrowers' failure to
comply with Section 1.3(b)(i) for so long as Agent permits such Overadvance to
be outstanding, but solely with respect to the amount of such Overadvance. In
addition, Overadvances may be made even if there exists any of the conditions
set forth in Section 2 which would otherwise limit the obligations of the
Lenders to fund such Loan. All Overadvances shall constitute Index Rate Loans,
shall bear interest at the Default Rate and shall be payable on demand. Except
as otherwise provided in Section 1.11(c), the authority of Agent to make
Overadvances is limited to an aggregate amount not to exceed $3,500,000 at any
time, shall not cause the aggregate Revolving Loan to exceed the Maximum Amount,
and may be revoked prospectively by a written notice to Agent signed by
Revolving Lenders holding more than 50% of the Revolving Loan Commitments.
(b) Term A Loan.
(i) Term A Loan
(A) Subject to the terms and conditions hereof, each Term A
Lender agrees to make a term loan (each a "Term A Loan" and collectively, the
"Term A Loans") on the Closing Date to each Borrower in the amount of that
Borrower's Ratable Share of the applicable Term A Lender's Term A Loan
Commitment. The obligations of each Term Lender hereunder shall be several and
not joint. Each such Term A Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b)(i) (each a "Term A Note" and
collectively the "Term A Notes"), and, except as provided in Section 1.12, all
of the Borrowers shall jointly execute and deliver the Term A Note to the
applicable Term A Lender. Each Term A Note shall represent the obligation of
each Borrower to pay its Ratable Share of the applicable Term A Lender's Term A
Loan Commitment, together with interest thereon as prescribed in Section 1.5.
The aggregate principal amount of the Term A Loan advanced to each Borrower
shall be the primary obligation of that Borrower (but shall also be guaranteed
by all other Borrowers pursuant to Section 12). Each Borrower's Ratable Share of
the Term A Loan Commitment expressed in Dollars and as a percentage of the whole
is set forth in Schedule 1.1(b) hereto.
(B) Each Borrower shall repay its Ratable Share of the Term A
Loans in fifteen (15) consecutive quarterly installments on the first day of
January, April, July and October of each year, commencing October 1, 2002 in an
aggregate amount equal to $250,000 on each installment date:
The final installment due on July 1, 2006 shall be in the amount
of $3,250,000 or, if different, the remaining principal balance of the Term A
Loans.
3
(C) Notwithstanding Section 1.1(b)(i)(B), the aggregate
outstanding principal balance of the Term A Loan shall be due and payable in
full in immediately available funds on the Commitment Termination Date, if not
sooner paid in full. No payment with respect to the Term A Loan may be
reborrowed.
(D) Each payment of principal with respect to the Term A Loan
shall be paid to Agent for the ratable benefit of each Term A Lender making a
Term A Loan, ratably in proportion to each such Term A Lender's respective Term
A Loan Commitment.
(ii) Term B Loan.
(A) Subject to the terms and conditions hereof, each Term B
Lender agrees to make a term loan (each a "Term B Loan" and, collectively, the
"Term B Loans") on the Closing Date to each Borrower in the amount of that
Borrower's Ratable Share of the applicable Term B Lender's Term B Loan
Commitment. The obligations of each Term B Lender hereunder shall be several and
not joint. Each such Term B Loan shall be evidenced by a promissory note
substantially in the form of Exhibit 1.1(b)(ii) (each a "Term B Note" and
collectively the "Term B Notes"), and, except as provided in Section 1.12, all
of the Borrowers shall jointly execute and deliver the Term B Note to the
applicable Term B Lender. Each Term B Note shall represent the obligation of
each Borrower to pay its Ratable Share of the applicable Term B Lender's Term B
Loan Commitment, together with interest thereon as prescribed in Section 1.5.
The aggregate principal amount of the Term B Loan advanced to each Borrower
shall be the primary obligation of that Borrower (but shall also be guaranteed
by all other Borrowers pursuant to Section 12). Each Borrower's Ratable Share of
the Term B Loan Commitment expressed in Dollars and as a percentage of the whole
is set forth in Schedule 1.1(b) hereto.
(B) Each Borrower shall repay its Ratable Share of the Term B-1
Loans in eight (8)) consecutive quarterly installments on the first day of
January, April, July and October of each year, commencing July 1, 2004 in an
aggregate amount equal to $25,000 on each installment date:
The final installment of the Term B-1 Loans due on July 1, 2006
shall be in the amount of $9,800,000 or, if different, the remaining principal
balance of the Term B-1 Loans.
Each Borrower shall repay its Ratable Share of the Term B-2 Loans
in twelve (12) consecutive quarterly installments on the first day of January,
April, July and October of each year, commencing July 1, 2004 in an aggregate
amount equal to $40,000 on each installment date:
The final installment on the Term B-2 Loans due on July 1, 2007
shall be in the amount of $15,520,000 or, if different, the remaining principal
balance of the Term B-2 Loans.
4
(C) Notwithstanding Section 1.1(b)(ii)(B), the aggregate
outstanding principal balance of the Term B Loan shall be due and payable in
full in immediately available funds on the Commitment Termination Date, if not
sooner paid in full. No payment with respect to the Term B Loan may be
reborrowed.
(D) Each payment of principal with respect to the Term B Loan
shall be paid to Agent for the ratable benefit of each Term B Lender making a
Term B Loan, ratably in proportion to each such Term B Lender's respective Term
B Loan Commitment.
(c) Swing Line Facility.
(i) Agent shall notify the Swing Line Lender upon Agent's
receipt of any Notice of Revolving Credit Advance. Subject to the terms and
conditions hereof, the Swing Line Lender may, in its discretion, make available
from time to time until the Commitment Termination Date advances (each, a "Swing
Line Advance") in accordance with any such notice. The provisions of this
Section 1.1(c) shall not relieve Revolving Lenders of their obligations to make
Revolving Credit Advances under Section 1.1(a); provided that if the Swing Line
Lender makes a Swing Line Advance pursuant to any such notice, such Swing Line
Advance shall be in lieu of any Revolving Credit Advance that otherwise may be
made by Revolving Lenders pursuant to such notice. The aggregate amount of Swing
Line Advances outstanding shall not exceed at any time the lesser of (A) the
Swing Line Commitment and (B) the lesser of the Maximum Amount and (except for
Overadvances) the Aggregate Borrowing Base, in each case, less the outstanding
balance of the Revolving Loan at such time ("Swing Line Availability").
Moreover, except for Overadvances, the Swing Line Loan outstanding to any
Borrower shall not exceed at any time that Borrower's separate Borrowing Base
less the Revolving Loan outstanding to such Borrower. Until the Commitment
Termination Date, Borrowers may from time to time borrow, repay and reborrow
under this Section 1.1(c). Each Swing Line Advance shall be made pursuant to a
Notice of Revolving Credit Advance delivered to Agent by Borrower Representative
on behalf of the applicable Borrower in accordance with Section 1.1(a). Any such
notice must be given no later than 11:00 a.m. (New York time) on the Business
Day of the proposed Swing Line Advance. Unless the Swing Line Lender has
received at least one Business Day's prior written notice from Requisite
Revolving Lenders instructing it not to make a Swing Line Advance, the Swing
Line Lender shall, notwithstanding the failure of any condition precedent set
forth in Sections 2.2, be entitled to fund that Swing Line Advance, and to have
each Revolving Lender make Revolving Credit Advances in accordance with Section
1.1(c)(iii) or purchase participating interests in accordance with Section
1.1(c)(iv). Notwithstanding any other provision of this Agreement or the other
Loan Documents, the Swing Line Loan shall constitute an Index Rate Loan.
Borrowers shall repay the aggregate outstanding principal amount of the Swing
Line Loan upon demand therefor by Agent.
(ii) Each Borrower shall execute and deliver to the Swing Line
Lender a promissory note to evidence the Swing Line Commitment. Each note shall
be in the principal amount of the Swing Line Commitment of the Swing Line
Lender, dated the Closing Date and substantially in the form of Exhibit
1.1(c)(ii) (each a "Swing Line Note" and, collectively, the "Swing Line Notes").
Each Swing Line Note shall represent the obligation of each Borrower to pay the
amount of the Swing Line Commitment or, if less, the aggregate unpaid principal
amount of all Swing Line Advances made to such Borrower, in each case, together
with interest thereon
5
as prescribed in Section 1.5. The entire unpaid balance of the Swing Line Loan
and all other noncontingent Obligations shall be immediately due and payable in
full in immediately available funds on the Commitment Termination Date if not
sooner paid in full.
(iii) The Swing Line Lender, at any time and from time to time in
its sole and absolute discretion may on behalf of any Borrower (and each
Borrower hereby irrevocably authorizes the Swing Line Lender to so act on its
behalf) request each Revolving Lender (including the Swing Line Lender) to make
a Revolving Credit Advance to each Borrower (which shall be an Index Rate Loan)
in an amount equal to that Revolving Lender's Pro Rata Share of the principal
amount of the applicable Borrower's Swing Line Loan (the "Refunded Swing Line
Loan") outstanding on the date such notice is given. Unless any of the events
described in Sections 8.1(h) or 8.1(i) has occurred (in which event the
procedures of Section 1.1(c)(iv) shall apply) and regardless of whether the
conditions precedent set forth in this Agreement to the making of a Revolving
Credit Advance are then satisfied, each Revolving Lender shall disburse directly
to Agent, its Pro Rata Share of a Revolving Credit Advance on behalf of the
Swing Line Lender prior to 3:00 p.m. (New York time) in immediately available
funds on the Business Day next succeeding the date that notice is given. The
proceeds of those Revolving Credit Advances shall be immediately paid to the
Swing Line Lender and applied to repay the Refunded Swing Line Loan of the
applicable Borrower.
(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(c)(iii), one of the events described in
Sections 8.1(h) or 8.1(i) has occurred, then, subject to the provisions of
Section 1.1(c)(v) below, each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of the applicable Borrower,
purchase from the Swing Line Lender an undivided participation interest in the
Swing Line Loan to such Borrower in an amount equal to its Pro Rata Share of
such Swing Line Loan. Upon request, each Revolving Lender shall promptly
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(c)(iii) and to purchase participation
interests in accordance with Section 1.1(c)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right that such Revolving
Lender may have against the Swing Line Lender, any Borrower or any other Person
for any reason whatsoever; (B) the occurrence or continuance of any Default or
Event of Default; (C) any inability of any Borrower to satisfy the conditions
precedent to borrowing set forth in this Agreement at any time or (D) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing. If any Revolving Lender does not make available to Agent or the
Swing Line Lender, as applicable, the amount required pursuant to Sections
1.1(c)(iii) or 1.1(c)(iv), as the case may be, the Swing Line Lender shall be
entitled to recover such amount on demand from such Revolving Lender, together
with interest thereon for each day from the date of non-payment until such
amount is paid in full at the Federal Funds Rate for the first two Business Days
and at the Index Rate thereafter.
(d) Reliance on Notices; Appointment of Borrower Representative.
Agent shall be entitled to rely upon, and shall be fully protected in relying
upon, any Notice of Revolving Credit Advance, Notice of Conversion/Continuation
or similar notice believed by
6
Agent to be genuine. Agent may assume that each Person executing and delivering
any notice in accordance herewith was duly authorized, unless the responsible
individual acting thereon for Agent has actual knowledge to the contrary. Each
Borrower hereby designates Borrower Representative as its representative and
agent on its behalf for the purposes of issuing Notices of Revolving Credit
Advances and Notices of Conversion/Continuation, giving instructions with
respect to the disbursement of the proceeds of the Loans, selecting interest
rate options, requesting Letters of Credit, giving and receiving all other
notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on
behalf of any Borrower or Borrowers under the Loan Documents. Borrower
Representative hereby accepts such appointment. Agent and each Lender may regard
any notice or other communication pursuant to any Loan Document from Borrower
Representative as a notice or communication from all Borrowers, and may give any
notice or communication required or permitted to be given to any Borrower or
Borrowers hereunder to Borrower Representative on behalf of such Borrower or
Borrowers. Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such
Borrower and shall be binding upon and enforceable against such Borrower to the
same extent as if the same had been made directly by such Borrower.
1.2 Letters of Credit. Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower Representative, on
behalf of the applicable Borrower, shall have the right to request, and
Revolving Lenders agree to incur, or purchase participations in, Letter of
Credit Obligations in respect of each Borrower.
1.3 Prepayments.
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments.
Borrowers may at any time on at least 3 days' prior written notice by Borrower
Representative to Agent (i) voluntarily prepay all or part of the Term A Loans
and/or (ii) permanently reduce (but not terminate) the Revolving Loan Commitment
and/or (iii) voluntarily prepay all or part of the Term B Loans; provided that
(A) any such prepayments or reductions shall be in a minimum amount of $500,000
and integral multiples of $100,000 in excess of such amount, (B) the Revolving
Loan Commitment shall not be reduced to an amount less than the amount of the
Revolving Loan then outstanding, (C) after giving effect to such reductions,
Borrowers shall be in compliance with Section 1.3(b)(i), and (D) with respect to
the prepayment of any portion of the Term B Loans prior to the A Obligations
Termination Date, (1) the aggregate principal amount of such prepayments shall
not exceed $11,000,000, (2) both before and after giving effect to any such
prepayment, no Default or Event of Default has occurred and is continuing, (3)
both before and after giving effect to such prepayment, the Borrowing
Availability is not less than $3,000,000, and (4) after giving effect to such
prepayment the aggregate outstanding principal amount of the Term B Loans is not
less than the amount equal to the difference between $15,000,000 less the amount
of scheduled principal payments on the Term B Loans made pursuant to Section
1.1(b)(ii)(B), if any, on or before such date of prepayment. In addition,
Borrowers may at any time on at least 10 days' prior written notice by Borrower
Representative to Agent terminate the Revolving Loan Commitment; provided that
upon such termination, all Loans (other than Term B Loans) and other Obligations
(other than B Obligations) shall be immediately due and payable in full and all
Letter of Credit Obligations shall be cash
7
collateralized or otherwise satisfied in accordance with Annex B hereto. Any
voluntary prepayment and any reduction or termination of the Revolving Loan
Commitment, the Term A Loans or the Term B Loans must be accompanied by payment
of the Fee required by Section 1.9(c), if any, plus the payment of any LIBOR
funding breakage costs in accordance with Section 1.13(b). Upon any such
reduction or termination of the Revolving Loan Commitment, each Borrower's right
to request Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request Swing Line Advances, shall
simultaneously be permanently reduced or terminated, as the case may be;
provided that a permanent reduction of the Revolving Loan Commitment shall not
require a corresponding pro rata reduction in the L/C Sublimit. Each notice of
partial prepayment shall designate the Loans or other Obligations to which such
prepayment is to be applied; provided that any partial prepayments of the Term A
Loan or the Term B Loan made by or on behalf of any Borrower shall be applied to
prepay the scheduled installments of such Borrower's Term A Loans or the Term B
Loans, as applicable, in inverse order of maturity.
(b) Mandatory Prepayments.
(i) If at any time the aggregate outstanding balances of the
Revolving Loan and the Swing Line Loan exceed the lesser of (A) the Maximum
Amount and (B) the Aggregate Borrowing Base, in each case, minus $2,000,000,
Borrowers shall immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. If any such excess
remains after repayment in full of the aggregate outstanding Revolving Credit
Advances, Borrowers shall provide cash collateral for the Letter of Credit
Obligations in the manner set forth in Annex B to the extent required to
eliminate such excess. Furthermore, if, at any time, the outstanding balance of
the Revolving Loan of any Borrower exceeds that Borrower's separate Borrowing
Base less the outstanding balance of the Swing Line Loan of that Borrower, the
applicable Borrower shall immediately repay its Revolving Credit Advances in the
amount of such excess (and, if necessary, shall provide cash collateral for its
Letter of Credit Obligations as described above). Notwithstanding the foregoing,
any Overadvance made pursuant to Section 1.1(a)(iii) shall be repaid only on
demand.
(ii) Immediately upon receipt by any Borrower or any Subsidiary
thereof of proceeds of any asset disposition (excluding proceeds of asset
dispositions permitted by Section 6.8 or to be invested in substitute Collateral
with the approval of Agent) or any sale of Stock of any Subsidiary of any Credit
Party, such Borrower shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction and payable
by Borrowers in connection therewith (in each case, paid to non-Affiliates), (B)
transfer taxes, (C) amounts payable to holders of senior Liens (to the extent
such Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall be applied in accordance with Section
1.3(c).
(iii) If any Credit Party or any subsidiary of any Credit Party
issues Stock or debt securities (other than debt securities issued in accordance
with the terms of Section 6.3), no later than the Business Day following the
date of receipt of the proceeds thereof, the issuing Borrower shall prepay the
Loans in an amount equal to all such proceeds, net of
8
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. Any such prepayment shall be applied in
accordance with Section 1.3(c).
(iv) Until the Termination Date, Borrowers shall prepay the
Obligations on the date that is 10 days after the earlier of (A) the date on
which Borrowers' annual audited Financial Statements for the immediately
preceding Fiscal Year are delivered pursuant to Annex E or (B) the date on which
such annual audited Financial Statements were required to be delivered pursuant
to Annex E, in (i) with respect to Fiscal Year ended October 31, 2002, an amount
equal to fifty percent (50%) of Excess Cash Flow for the period beginning July
1, 2002 through October 31, 2002 and (ii) with respect to each other Fiscal
Year, an amount equal to fifty percent (50%) of Excess Cash Flow for the
immediately preceding Fiscal Year; provided, that no such prepayment shall be
made until such time that, both before and after giving effect to such
prepayment, Borrowing Availability is greater than $2,000,000. Any prepayments
from Excess Cash Flow paid pursuant to this clause (iv) shall be allocated to
each Borrower's Obligations based upon such Borrower's relative contribution to
Excess Cash Flow and shall be applied in accordance with Section 1.3(e). Each
such prepayment shall be accompanied by a certificate signed by Borrower
Representative's chief financial officer certifying the manner in which Excess
Cash Flow, the resulting prepayment, and the method of allocation to each
Borrower's Obligations were calculated, which certificate shall be in form and
substance reasonably satisfactory to Agent.
(c) Application of Certain Mandatory Prepayments. Any prepayments
made by any Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) above or
Section 1.3(d) below shall be applied as follows: first, to prepay the scheduled
principal installments of that Borrower's Ratable Share of the Term A Loan in
inverse order of maturity, until such Ratable Share has been prepaid in full;
second, to the Ratable Share(s) of the Term A Loan of each other Borrower, pro
rata, to prepay the scheduled principal installments of the Ratable Share(s) of
the Term A Loan of such other Borrowers in inverse order of maturity, until such
Ratable Share(s) have been prepaid in full; third, to prepay the scheduled
principal installments of that Borrower's Ratable Share of the Term B Loan in
inverse order of maturity (and such prepayment shall be allocated pro rata among
the Term B-1 Loans and Term B-2 loans based upon the percentage obtained by
dividing the outstanding principal amount of such B-1 Loan or Term B-2 Loan, as
applicable, by the aggregate outstanding principal amounts of all Term B Loans)
until such Ratable Share has been prepaid in full; fourth, to the Ratable
Share(s) of the Term B Loan of each other Borrower, pro rata, to prepay the
scheduled principal installments of the Ratable Share(s) of the Term B Loan of
such other Borrowers in inverse order of maturity (and such prepayment shall be
allocated pro rata among the Term B-1 Loans and Term B-2 loans based upon the
percentage obtained by dividing the outstanding principal amount of such B-1
Loan or Term B-2 Loan, as applicable, by the aggregate outstanding principal
amounts of all Term B Loans) until such Ratable Share(s) have been prepaid in
full; fifth, to the principal balance of Revolving Credit Advances outstanding
to that Borrower until the same has been paid in full; sixth, to any Letter of
Credit Obligations of such Borrower to provide cash collateral therefor in the
manner set forth in Annex B, until all such Letter of Credit Obligations have
been fully cash collateralized in the manner set forth in Annex B; seventh, to
the principal balance of the Revolving Credit Advances made to each other
Borrower, pro rata, until the same has been paid in full; and eighth, to any
Letter of Credit Obligations of each other Borrower, pro rata, to provide cash
collateral therefor
9
in the manner set forth in Annex B, until all such Letter of Credit Obligations
have been fully cash collateralized.
(d) Application of Prepayments from Insurance and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) and the Mortgages, respectively, shall be applied to prepayment
of the Loans in accordance with Section 1.3(c) above.
(e) Application of Excess Cash Flow Mandatory Prepayments. Any
prepayments made by any Borrower pursuant to Sections 1.3(b)(iv) above shall be
applied as follows: first, to prepay the scheduled principal installments of
that Borrower's Ratable Share of the Term B-1 Loan in inverse order of maturity,
until such Ratable Share has been prepaid in full; second, to the Ratable
Share(s) of the Term B-1 Loan of each other Borrower, pro rata, to prepay the
scheduled principal installments of the Ratable Share(s) of the Term B-1 Loan of
such other Borrowers in inverse order of maturity, until such Ratable Share(s)
have been prepaid in full; third, to prepay the scheduled principal installments
of that Borrower's Ratable Share of the Term B-2 Loan in inverse order of
maturity, until such Ratable Share has been prepaid in full; fourth, to the
Ratable Share(s) of the Term B-2 Loan of each other Borrower, pro rata, to
prepay the scheduled principal installments of the Ratable Share(s) of the
remaining Term B Loan of such other Borrowers in inverse order of maturity,
until such Ratable Share(s) have been prepaid in full; fifth, to prepay the
scheduled principal installments of that Borrower's Ratable Share of the Term A
Loan in inverse order of maturity, until such Ratable Share has been prepaid in
full; sixth, to the Ratable Share(s) of the Term A Loan of each other Borrower,
pro rata, to prepay the scheduled principal installments of the Ratable Share(s)
of the Term A Loan of such other Borrowers in inverse order of maturity, until
such Ratable Shares have been paid in full; seventh, to the principal balance of
Revolving Credit Advances outstanding to that Borrower until the same has been
paid in full; eighth, to any Letter of Credit Obligations of such Borrower to
provide cash collateral therefor in the manner set forth in Annex B, until all
such Letter of Credit Obligations have been fully cash collateralized in the
manner set forth in Annex B; ninth, to the principal balance of the Revolving
Credit Advances made to each other Borrower, pro rata, until the same has been
paid in full; and tenth, to any Letter of Credit Obligations of each other
Borrower, pro rata, to provide cash collateral therefor in the manner set forth
in Annex B, until all such Letter of Credit Obligations have been fully cash
collateralized.
(f) No Implied Consent. Nothing in this Section 1.3 shall be
construed to constitute Agent's or any Lender's consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.4 Use of Proceeds. Borrowers shall utilize the proceeds of the Term
A Loan, Term B Loan, the Revolving Loan and the Swing Line Advances solely for
the repurchase of the Subordinated Notes as provided herein, the Refinancing,
the financing of Borrowers' ordinary working capital and general corporate
needs, and to pay fees and expenses incurred in connection with the transactions
contemplated by this Agreement. Disclosure Schedule (1.4) contains a description
of Borrowers' sources and uses of funds as of the Closing Date, including Loans
and Letter of Credit Obligations to be made or incurred on that date, and a
funds flow memorandum detailing how funds from each source are to be transferred
to particular uses.
10
1.5 Interest and Applicable Margins.
(a) Borrowers shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Loans being made by each Lender, in
arrears on each applicable Interest Payment Date, at the following rates: (i)
with respect to the Revolving Credit Advances, the Index Rate plus the
Applicable Revolver Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable Revolver LIBOR
Margin per annum, based on the aggregate Revolving Credit Advances outstanding
from time to time; (ii) with respect to the Term A Loan, the Index Rate plus the
Applicable Term A Loan Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable Term A Loan LIBOR
Margin per annum; (iii) with respect to the Swing Line Loan, the Index Rate plus
the Applicable Revolver Index Margin per annum; (iv) with respect to the Term
B-1 Loan, the Index Rate plus 10.25%; provided, however, 2% per annum of such
interest on the Term B-1 Loan shall be paid in kind by capitalizing such
interest and adding the amount thereof to the aggregate principal amount of the
Term B-1 Loan, effective as of the applicable Interest Payment Date, and the
remaining per annum interest on the Term B-1 Loan shall be payable in cash; and
(v) with respect to the Term B-2 Loan, 15% per annum on the aggregate
outstanding principal amount of the Term B-2 Loan; provided, however, 2% per
annum of such interest on the Term B-2 Loan shall be paid in kind by
capitalizing such interest and adding the amount thereof to the aggregate
principal amount of the Term B-2 Loan, effective as of the applicable Interest
Payment Date.
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
final, binding and conclusive on Borrowers, absent manifest error.
(d) So long as an Event of Default has occurred and is continuing
under Section 8.1(a), (h) or (i) or so long as any other Event of Default has
occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to Borrower
Representative, the interest rates applicable to the Loans and the Letter of
Credit Fees shall be increased by two percentage points (2%) per annum above the
rates of interest or the rate of such Fees otherwise applicable hereunder
("Default Rate"), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations. Interest and Letter of Credit Fees
at the Default Rate shall accrue from the initial date of such Event of Default
until that Event of Default is cured or waived and shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2,
Borrower Representative shall have the option to (i) request that any Revolving
Credit Advance be made as a LIBOR Loan, (ii) convert at any time all or any part
of outstanding Loans (other than the
11
Swing Line Loan and the Term B Loan) from Index Rate Loans to LIBOR Loans, (iii)
convert any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto, or (iv) continue
all or any portion of any Loan (other than the Swing Line Loan and the Term B
Loan) as a LIBOR Loan upon the expiration of the applicable LIBOR Period and the
succeeding LIBOR Period of that continued Loan shall commence on the first day
after the last day of the LIBOR Period of the Loan to be continued. Any Loan or
group of Loans having the same proposed LIBOR Period to be made or continued as,
or converted into, a LIBOR Loan must be in a minimum amount of $500,000 and
integral multiples of $100,000 in excess of such amount. Any such election must
be made by 11:00 a.m. (New York time) on the 3rd Business Day prior to (A) the
date of any proposed Advance which is to bear interest at the LIBOR Rate, (B)
the end of each LIBOR Period with respect to any LIBOR Loans to be continued as
such, or (C) the date on which Borrower Representative wishes to convert any
Index Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower
Representative in such election. If no election is received with respect to a
LIBOR Loan by 11:00 a.m. (New York time) on the 3rd Business Day prior to the
end of the LIBOR Period with respect thereto (or if a Default or an Event of
Default has occurred and is continuing or if the additional conditions precedent
set forth in Section 2.2 shall not have been satisfied), that LIBOR Loan shall
be converted to an Index Rate Loan at the end of its LIBOR Period. Borrower
Representative must make such election by notice to Agent in writing, by
telecopy or overnight courier. In the case of any conversion or continuation,
such election must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.5(e).
(f) Notwithstanding anything to the contrary set forth in this
Section 1.5, if a court of competent jurisdiction determines in a final order
that the rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.5(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.5(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.11 and thereafter shall refund any excess to Borrowers or as a
court of competent jurisdiction may otherwise order.
12
1.6 Eligible Accounts. All of the Accounts owned by each Borrower and
reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Accounts" for purposes of this Agreement,
except any Account to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish or modify or eliminate Reserves
against Eligible Accounts from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Accounts, in
its reasonable credit judgment. Eligible Accounts shall not include any Account
of any Borrower:
(a) that does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of its business;
(b) (i) upon which such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) as to which such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process or (iii) if the
Account represents a progress billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract under which the Account
Debtor's obligation to pay that invoice is subject to such Borrower's completion
of further performance under such contract or is subject to the equitable lien
of a surety bond issuer;
(c) in the event that any defense, counterclaim, setoff or dispute is
asserted as to such Account;
(d) that is not a true and correct statement of bona fide
indebtedness incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(e) with respect to which an invoice, reasonably acceptable to Agent
in form and substance, has not been sent to the applicable Account Debtor;
(f) that (i) is not owned by such Borrower or (ii) is subject to any
right, claim, security interest or other interest of any other Person, other
than Liens in favor of Agent, on behalf of itself and Lenders;
(g) that arises from a sale to any director, officer, other employee
or Affiliate of any Credit Party, or to any entity that has any common officer
or director with any Credit Party;
(h) that is the obligation of an Account Debtor that is the United
States government or a political subdivision thereof, or any state, county or
municipality or department, agency or instrumentality thereof unless Agent, in
its sole discretion, has agreed to the contrary in writing and such Borrower, if
necessary or desirable, has complied with respect to such obligation with the
Federal Assignment of Claims Act of 1940, or any applicable state, county or
municipal law restricting assignment thereof;
(i) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the province of Newfoundland, the Northwest
Territories and the
13
Territory of Nunavit) unless payment thereof is assured by a letter of credit
assigned and delivered to Agent, reasonably satisfactory to Agent as to form,
amount and issuer;
(j) to the extent such Borrower or any Subsidiary thereof is liable
for goods sold or services rendered by the applicable Account Debtor to such
Borrower or any Subsidiary thereof but only to the extent of the potential
offset;
(k) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment, guaranteed sale
or other terms by reason of which the payment by the Account Debtor is or may be
conditional;
(l) that is in default; provided, that, without limiting the
generality of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier of: 60 days
following its due date or 90 days following its original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors or fails to
pay its debts generally as they come due; or
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other federal, state
or foreign (including any provincial) receivership, insolvency relief or other
law or laws for the relief of debtors;
(m) that is the obligation of an Account Debtor if 50% or more of the
Dollar amount of all Accounts owing by that Account Debtor are ineligible under
the other criteria set forth in this Section 1.6;
(n) as to which Agent's Lien thereon, on behalf of itself and
Lenders, is not a first priority perfected Lien;
(o) as to which any of the representations or warranties in the Loan
Documents are untrue;
(p) to the extent such Account is evidenced by a judgment, Instrument
or Chattel Paper;
(q) to the extent such Account exceeds any credit limit established
by Agent, in its reasonable credit judgment;
(r) to the extent that such Account, together with all other Accounts
owing by such Account Debtor and its Affiliates as of any date of determination
exceed 10% of all Eligible Accounts;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
14
1.7 Eligible Inventory. All of the Inventory owned by the Borrowers
and reflected in the most recent Borrowing Base Certificate delivered by each
Borrower to Agent shall be "Eligible Inventory" for purposes of this Agreement,
except any Inventory to which any of the exclusionary criteria set forth below
applies. Agent shall have the right to establish or modify or eliminate Reserves
against Eligible Inventory from time to time in its reasonable credit judgment.
In addition, Agent reserves the right, at any time and from time to time after
the Closing Date, to adjust any of the criteria set forth below, to establish
new criteria and to adjust advance rates with respect to Eligible Inventory, in
its reasonable credit judgment. Eligible Inventory shall not include any
Inventory of any Borrower that:
(a) is not owned by such Borrower free and clear of all Liens and
rights of any other Person (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower's performance with respect to that Inventory), except the Liens in
favor of Agent, on behalf of itself and Lenders, and Permitted Encumbrances in
favor of landlords and bailees to the extent permitted in Section 5.9 hereof
(subject to Reserves established by Agent in accordance with Section 5.9
hereof);
(b) (i) is not located on premises owned, leased or rented by such
Borrower and set forth in Disclosure Schedule (3.2), or (ii) is stored at a
leased location, unless Agent has given its prior consent thereto and unless
either (x) a reasonably satisfactory landlord waiver has been delivered to
Agent, or (y) Reserves reasonably satisfactory to Agent have been established
with respect thereto or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established with respect
thereto, or (iv) is located at an owned location subject to a mortgage in favor
of a lender other than Agent unless a reasonably satisfactory mortgagee waiver
has been delivered to Agent, or (v) is located at any site if the aggregate book
value of Inventory at any such location is less than $75,000;
(c) is placed on consignment or is in transit;
(d) is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent and Lenders;
(e) is excess, obsolete, unsalable, shopworn, seconds, damaged, or
unfit for sale or is used or has been used by any customer of any Borrower
pursuant to a service contract or otherwise (regardless of condition);
(f) consists of display items or packing or shipping materials,
manufacturing supplies, work-in-process Inventory or replacement parts;
(g) consists of goods which have been returned by the buyer;
(h) is not of a type held for sale in the ordinary course of such
Borrower's business;
(i) is not subject to a first priority lien in favor of Agent on
behalf of itself and Lenders, subject to Permitted Encumbrances;
15
(j) breaches any of the representations or warranties pertaining to
Inventory set forth in the Loan Documents;
(k) consists of any costs associated with "freight-in" charges;
(l) consists of Hazardous Materials or goods that can be transported
or sold only with licenses that are not readily available;
(m) is not covered by casualty insurance reasonably acceptable to
Agent; or
(n) is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.8 Cash Management Systems. On or prior to the Closing Date,
Borrowers will establish and will maintain until the Termination Date, the cash
management systems described in Annex C (the "Cash Management Systems").
1.9 Fees.
(a) Borrowers shall pay (i) to GE Capital, individually, the Fees
specified in that certain fee letter dated as of the Closing Date among the
Credit Parties and GE Capital (the "GE Capital Fee Letter"), at the times
specified for payment therein and (ii) to Gladstone Advisers, Inc. (an Affiliate
of Gladstone), individually, the Fees specified in that certain fee letter,
dated as of the Closing Date among the Credit Parties and Gladstone Advisers,
Inc. (the "Gladstone Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Revolving Lenders, Borrowers
shall pay to Agent, for the ratable benefit of such Lenders, in arrears, on the
first Business Day of each month prior to the Commitment Termination Date and on
the Commitment Termination Date, a Fee for Borrowers' non-use of available funds
in an amount equal to one-half of one percent (0.50%) per annum (calculated on
the basis of a 360 day year for actual days elapsed) multiplied by the
difference between (x) the Maximum Amount (as it may be reduced from time to
time) and (y) the average for the period of the daily closing balances of the
aggregate Revolving Loan and the Swing Line Loan outstanding during the period
for which such Fee is due.
(c) If Borrowers pay after acceleration or prepay all or any portion
of the Term A Loan or the Term B Loan or prepay the Revolving Loan and reduce or
terminate the Revolving Loan Commitment, whether voluntarily or involuntarily
and whether before or after acceleration of the Obligations, or if any of the
Commitments are otherwise terminated, Borrowers shall pay to Agent, for the
benefit of Lenders as liquidated damages and compensation for the costs of being
prepared to make funds available hereunder an amount equal to the Applicable
Percentage (as defined below) multiplied by the sum of (i) the principal amount
of the Term A Loan paid after acceleration or prepaid, (ii) the principal amount
of the Term B Loan paid after acceleration or prepaid, and (iii) the amount of
the Revolving Loan Commitment subject to such reduction or termination. As used
herein, the term "Applicable Percentage" shall mean (x) three percent (3.00%),
in the case of a prepayment, reduction or termination on or prior to the first
anniversary of the Closing Date, (y) two percent (2.00%), in the case of a
prepayment, reduction or termination after the first anniversary of the Closing
Date but on or prior to the second anniversary thereof, and (z) one percent
(1.00%), in the case of a
16
prepayment, reduction or termination after the second anniversary of the Closing
Date but on or prior to the third anniversary thereof. The Credit Parties agree
that the Applicable Percentages are a reasonable calculation of Lenders' lost
profits in view of the difficulties and impracticality of determining actual
damages resulting from an early termination of the Commitments. Notwithstanding
the foregoing, no prepayment fee shall be payable by Borrowers upon a mandatory
prepayment made pursuant to Sections 1.3(b)(i) or (ii), or (iv), or 1.16(c) or
5.4; provided that Borrowers do not permanently reduce or terminate the
Revolving Loan Commitment upon any such prepayment and, in the case of
prepayments made pursuant to Sections 1.3(b)(ii), the transaction giving rise to
the applicable prepayment is expressly permitted under Section 6.
(d) Borrowers shall pay to Agent, for the ratable benefit of
Revolving Lenders, the Letter of Credit Fee as provided in Annex B.
1.10 Receipt of Payments. Borrowers shall make each payment under
this Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.
1.11 Application and Allocation of Payments.
(a) So long as no Default or Event of Default has occurred and is
continuing, (i) payments made to the Agent shall be applied, first, to Fees and
reimbursable expenses of Agent then due and payable pursuant to any of the Loan
Documents; second to the Swing Line Loan and, third, to the Revolving Loan; (ii)
payments matching specific scheduled payments then due shall be applied to those
scheduled payments; (iii) voluntary prepayments shall be applied as determined
by Borrower Representative, subject to the provisions of Section 1.3(a); and
(iv) mandatory prepayments shall be applied as set forth in Sections 1.3(c),
1.3(d) and 1.3(e); provided that prior to application of any such voluntary or
mandatory prepayments to the principal of the Loans, Agent may in its discretion
apply such funds to any Fees and expenses of Agent then due and payable under
the Loan Documents and to interest then due on the Loans. All payments and
prepayments applied to a particular Loan shall be applied ratably to the portion
thereof held by each Lender as determined by its Pro Rata Share. As to any other
payment, and as to all payments made when a Default or Event of Default has
occurred and is continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations of Borrowers as Agent
may deem advisable notwithstanding any previous entry by Agent in the Loan
Account or any other books and records.
(b) Agent is authorized to, and at its sole election may, charge to
the Revolving Loan balance on behalf of each Borrower and cause to be paid all
Fees, expenses,
17
Charges, costs (including insurance premiums in accordance with Section 5.4(a)
and any amounts the Agent determines is reasonably necessary to preserve and
protect the Collateral, or any portion thereof or enhance the likelihood or, or
maximize the amount of repayment of the Obligations) and interest and principal,
other than principal of the Revolving Loan, owing by Borrowers under this
Agreement or any of the other Loan Documents if and to the extent Borrowers fail
to pay promptly any such amounts as and when due, even if the amount of such
charges would exceed Borrowing Availability at such time or would cause the
balance of the Revolving Loan and the Swing Line Loan to any Borrower to exceed
such Borrower's separate Borrowing Base after giving effect to such charges;
provided, that such advances do not cause all borrowings under the Revolving
Loan and the Swing Line Loan to exceed the Maximum Amount. At Agent's option and
to the extent permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.12 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Advances and Loans, all
payments made by Borrowers, and all other debits and credits as provided in this
Agreement with respect to the Loans or any other Obligations. All entries in the
Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. The balance in the Loan Account, as
recorded on Agent's most recent printout or other written statement, shall,
absent manifest error, be presumptive evidence of the amounts due and owing to
Agent and Lenders by each Borrower; provided that any failure to so record or
any error in so recording shall not limit or otherwise affect any Borrower's
duty to pay the Obligations. Agent shall render to Borrower Representative a
monthly accounting of transactions with respect to the Loans setting forth the
balance of the Loan Account as to each Borrower for the immediately preceding
month. Unless Borrower Representative notifies Agent in writing of any objection
to any such accounting (specifically describing the basis for such objection),
within 30 days after the date thereof, each and every such accounting shall
(absent manifest error) be deemed final, binding and conclusive on Borrowers in
all respects as to all matters reflected therein. Only those items expressly
objected to in such notice shall be deemed to be disputed by Borrowers.
Notwithstanding any provision herein contained to the contrary, any Lender may
elect (which election may be revoked) to dispense with the issuance of Notes to
that Lender and may rely on the Loan Account as evidence of the amount of
Obligations from time to time owing to it.
1.13 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to
18
any of the Loan Documents (collectively, "Indemnified Liabilities"); provided,
that no such Credit Party shall be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense results from that Indemnified Person's gross
negligence or willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) any
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) any Borrower shall refuse to accept any
borrowing of, or shall request a termination of, any borrowing of, conversion
into or continuation of, LIBOR Loans after Borrower Representative has given
notice requesting the same in accordance herewith; or (iv) any Borrower shall
fail to make any prepayment of a LIBOR Loan after Borrower Representative has
given a notice thereof in accordance herewith, then Borrowers shall jointly and
severally indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.13(b), and
such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within 10 Business Days of receipt
thereof, specifying the basis for such objection in detail.
1.14 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon one Business Day's prior notice as
frequently as Agent determines to be appropriate: (a) provide Agent and any of
its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test
19
verifications and counts of the Accounts, Inventory and other Collateral of any
Credit Party. If a Default or Event of Default has occurred and is continuing or
if access is necessary to preserve or protect the Collateral as determined by
Agent, each such Credit Party shall provide such access to Agent and to each
Lender at all times and without advance notice. Furthermore, so long as any
Event of Default has occurred and is continuing, Borrowers shall provide Agent
and each Lender with access to their suppliers and customers. Each Credit Party
shall make available to Agent and its counsel, as quickly as is possible under
the circumstances, originals or copies of all books and records that Agent may
reasonably request. Each Credit Party shall deliver any document or instrument
necessary for Agent, as it may from time to time reasonably request, to obtain
records from any service bureau or other Person that maintains records for such
Credit Party, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party. Agent
will give Lenders at least 5 days' prior written notice of regularly scheduled
audits. Representatives of other Lenders may accompany Agent's representatives
on regularly scheduled audits at no charge to Borrowers.
1.15 Taxes.
(a) Any and all payments by each Borrower hereunder (including any
payments made pursuant to Section 12) or under the Notes shall be made, in
accordance with this Section 1.15, free and clear of and without deduction for
any and all present or future Taxes. If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder (including any
sum payable pursuant to Section 12) or under the Notes, (i) the sum payable
shall be increased as much as shall be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 1.15) Agent or Lenders, as applicable, receive an amount
equal to the sum they would have received had no such deductions been made, (ii)
such Borrower shall make such deductions, and (iii) such Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law. Within 30 days after the date of any payment of Taxes,
Borrower Representative shall furnish to Agent the original or a certified copy
of a receipt evidencing payment thereof. Agent and Lenders shall not be
obligated to return or refund any amounts received pursuant to this Section.
(b) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and, within 10 days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a jurisdiction outside
the United States (a "Foreign Lender") as to which payments to be made under
this Agreement or under the Notes are exempt from United States withholding tax
under an applicable statute or tax treaty shall provide to Borrower
Representative and Agent a properly completed and executed IRS Form W-8ECI or
Form W-8BEN or other applicable form, certificate or document prescribed by the
IRS or the United States certifying as to such Foreign Lender's entitlement to
such exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower Representative and
20
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender.
1.16 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrowers
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower Representative and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any
law or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan, then
Borrowers shall from time to time, upon demand by such Lender (with a copy of
such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall be conclusive and binding on
Borrowers for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances referred to
above which would result in any such increased cost, the affected Lender shall,
to the extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if
the introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Loans or the income obtained therefrom,
on notice thereof and demand therefor by such Lender to Borrower Representative
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) each
Borrower shall forthwith prepay in full all outstanding LIBOR Loans owing by
such Borrower to such Lender, together with interest accrued thereon, unless
Borrower
21
Representative on behalf of such Borrower, within 5 Business Days after the
delivery of such notice and demand, converts all LIBOR Loans into Index Rate
Loans.
(d) Within 15 days after receipt by Borrower Representative of
written notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.15(a), 1.16(a)
or 1.16(b), Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent, may obtain, at Borrowers' expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent. If Borrowers obtain
a Replacement Lender within 90 days following notice of their intention to do
so, the Affected Lender must sell and assign its Loans and Commitments to such
Replacement Lender for an amount equal to the principal balance of all Loans
held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale; provided, that Borrowers shall have
reimbursed such Affected Lender for the additional amounts or increased costs
that it is entitled to receive under this Agreement through the date of such
sale and assignment. Notwithstanding the foregoing, Borrowers shall not have the
right to obtain a Replacement Lender if the Affected Lender rescinds its demand
for increased costs or additional amounts within 15 days following its receipt
of Borrowers' notice of intention to replace such Affected Lender. Furthermore,
if Borrowers give a notice of intention to replace and do not so replace such
Affected Lender within 90 days thereafter, Borrowers' rights under this Section
1.16(d) shall terminate and Borrowers shall promptly pay all increased costs or
additional amounts demanded by such Affected Lender pursuant to Sections
1.15(a), 1.16(a) and 1.16(b).
1.17 Single Loan. All Loans to each Borrower and all of the other
Obligations of each Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of that Borrower secured,
until the Termination Date, by all of the Collateral.
1.18 Security Interest; Priority of Liens; Intercreditor Agreements.
(a) Security; Priority of Liens. Borrower, hereby, as more fully set
forth in the Collateral Documents, grants to the Agent (i) for the benefit of
the holders of the A Obligations a first priority lien on the Collateral and
(ii) for the benefit of the holders of the B Obligations, a second priority lien
on the Collateral to secure the Obligations.
22
(b) Intercreditor Agreements. The Lenders hereby agree, among
themselves, that the Lien created in favor of the holders of A Obligations shall
be prior and superior to any Lien or other interests created in favor of or held
by the holders of the B Obligations in respect of the Collateral, such priority
as between the holders of the A Obligations and the holders of the B
Obligations, shall give the holders of the A Obligations all the rights, powers
and privileges of a first priority secured creditor under the Code, other
applicable law and otherwise in respect of the Collateral, with the rights,
powers and privileges of holders of the B Obligations in respect of the
Collateral being subject to and subordinate to the Lien for the benefit of the
holders of the A Obligations. Subject to the terms hereof, including the prior
and superior Lien in favor of the holders of the A Obligations, the holders of
the B Obligations shall have the right to receive from the Credit Parties, and
to retain free of any rights of the holders of A Obligations, the Proceeds of
Collateral. Upon the exercise of any rights and remedies by the Agent under the
Loan Documents with respect to the Collateral and as a consequence of the prior
and superior Lien in favor of the holders of the A Obligations, all proceeds of
the Collateral shall first be applied by Agent to the A Obligations until such
Obligations have been paid in full in cash and all Letter of Credit Obligations
have been cash collateralized, canceled or backed by stand-by letters of credit
in accordance with Annex B and then to the B Obligations. As a consequence of
the prior and superior Lien in favor of the holders of the A Obligations, any
payments from Collateral (including with respect to Proceeds thereof) with
respect to the Loans and other Obligations received by the Agent or any Lender
at any time (i) after all of the Obligations have become immediately due and
payable, with or without declaration, pursuant to Section 8.2(b) or (ii) when an
Event of Default has occurred and is continuing and the occurrence or omission
constituting such Event of Default has not been cured or waived and Borrowing
Availability of the Borrowers is less than $2,000,000 (after giving effect to
any application of any such payment to the Revolving Loan), shall be applied
first, to the Fees and reimbursable expenses of the Agent then due and payable
pursuant to any of the Loan Documents, second, to the A Obligations in such
order as Agent may elect (including to cash collateralize letters of credit in
accordance with Annex B), and third, to the B Obligations. As a consequence of
the prior and superior Lien in favor of the holders of the A Obligations, in the
event that any holder of B Obligations shall receive any Proceeds of Collateral
in contravention of this Agreement, the holders of such B Obligations shall
promptly so notify the holders of the A Obligations and shall segregate and hold
in trust any such payment or distribution, and shall be paid over promptly on
demand to, the Agent for the benefit of the holders of the A Obligations, for
application to the payment of the A Obligations until the same shall have been
paid in full in cash, after giving effect to any concurrent payment or
distribution to the holders of the A Obligations. The Lien priorities provided
herein and in the Collateral Documents shall not be altered or otherwise
affected by any modification, renewal, restatement, extension or refinancing of
any Obligations. The Lenders acknowledge and consent to the granting of the
Liens on the Collateral as provided for herein and shall not (and hereby waive
any right to) contest in any proceeding the validity, priority or enforceability
of the Lien on the Collateral of the holders of A Obligations.
(c) Lenders Benefit. The provisions of this Section 1.18 and the
rights and benefits hereof shall insure solely to the benefit of the Lenders and
their respective successors and permitted assigns and no other Person
(including, without limitation, the Credit Parties) shall have or be entitled to
assert rights or benefits under this Section 1.18
23
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Loan or incur any Letter of Credit Obligations on the Closing Date, or
to take, fulfill, or perform any other action hereunder, until the following
conditions have been satisfied or provided for in a manner satisfactory to
Agent, or waived in writing by Agent and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrowers, each other
Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to Agent.
(b) Repayment of Prior Lender Obligations; Satisfaction of
Outstanding L/Cs. (i) Agent shall have received a fully executed original of a
pay-off letter reasonably satisfactory to Agent confirming that all of the Prior
Lender Obligations will be repaid in full from the proceeds of the Term A Loan,
the Term B Loan and the initial Revolving Credit Advance and all Liens upon any
of the property of Borrowers or any of their Subsidiaries in favor of Prior
Lender shall be terminated by Prior Lender immediately upon such payment; and
(ii) all letters of credit issued or guaranteed by Prior Lender shall have been
cash collateralized, supported by a guaranty of Agent or supported by a Letter
of Credit issued pursuant to Annex B, as mutually agreed upon by Agent,
Borrowers and Prior Lender.
(c) Approvals. Agent shall have received (i) satisfactory evidence
that the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents and the
consummation of the Related Transactions or (ii) an officer's certificate in
form and substance reasonably satisfactory to Agent affirming that no such
consents or approvals are required.
(d) Opening Availability. The Eligible Accounts and Eligible
Inventory supporting the initial Revolving Credit Advance and the initial Letter
of Credit Obligations incurred and the amount of the Reserves to be established
on the Closing Date shall be sufficient in value, as determined by Agent, to
provide Borrowers, collectively, with Borrowing Availability, after giving
effect to the initial Revolving Credit Advance made to each Borrower, the
incurrence of any initial Letter of Credit Obligations and the consummation of
the Related Transactions (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales) of at least $5,000,000.
(e) Payment of Fees. Borrowers shall have paid the Fees required to
be paid on the Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter and the Gladstone Fee
Letter), and shall have reimbursed Agent and Lenders, and their respective
counsel, for all fees, costs and expenses of closing presented as of the Closing
Date.
24
(f) Capital Structure; Other Indebtedness; Material Contracts; Tax
Effect. The capital structure and governing documents of each Credit Party and
the terms and conditions of all Indebtedness and all other material contracts
(including, without limitation, subordination provisions with respect to the
Subordinated Notes) of each Credit Party and all documentation relating to the
structure of the Xxxxx Stockholders and the tax effects after giving effect to
the this Agreement and the Related Transactions herein shall be acceptable to
Agent in its sole discretion. Without limiting the foregoing, the total
Indebtedness of the Credit Parties, on a consolidated basis, after giving effect
to the loans hereunder on the Closing Date and the consummation of the Related
Transactions shall not exceed $105,000,000 and the aggregate fees and expenses
incurred by the Credit Parties in connection with the Related Transaction shall
not exceed $3,500,000.
(g) Due Diligence. Agent shall have completed its business and legal
due diligence, including (i) satisfaction that all tangible and intangible
assets of the Borrowers relating to truck routes (including, without limitation,
customer service and route agreements) are assignable on satisfactory terms and
(ii) a roll forward of its previous Collateral audit, with results reasonably
satisfactory to Agent.
(h) Consummation of Related Transactions. Agent shall have received
fully executed copies of the Subordinated Note Repurchase Documents and each of
the other Related Transactions Documents, each of which shall be in form and
substance reasonably satisfactory to Agent and its counsel. The Subordinated
Note Repurchase and the other Related Transactions shall have been consummated
in accordance with the terms of the Subordinated Note Repurchase Documents and
the other Related Transactions Documents but for the payment of the cash
purchase price payable on the Closing Date pursuant to the Subordinated Note
Repurchase Documents.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Advance, convert or
continue any Loan as a LIBOR Loan or incur any Letter of Credit Obligation, if,
as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect as of such date,
except to the extent that such representation or warranty expressly relates to
an earlier date and except for changes therein expressly permitted or expressly
contemplated by this Agreement and Agent or Requisite Revolving Lenders have
determined not to make such Advance, convert or continue any Loan as LIBOR Loan
or incur such Letter of Credit Obligation as a result of the fact that such
warranty or representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite Revolving Lenders
and Agent or Requisite Revolving Lenders have determined not to make such
Advance, convert or continue any Loan as a LIBOR Loan or incur such Letter of
Credit Obligation as a result of the fact that such event or circumstance has
occurred;
25
(c) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligation), and Agent or Requisite Revolving Lenders shall have
determined not to make any Advance, convert or continue any Loan as a LIBOR Loan
or incur any Letter of Credit Obligation as a result of that Default or Event of
Default; or
(d) after giving effect to such Advance (or the incurrence of such
Letter of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Aggregate Borrowing Base
and the Maximum Amount, in each case, less the then outstanding principal amount
of the Swing Line Loan, or (ii) the outstanding principal amount of the
Revolving Loan of the applicable Borrower would exceed such Borrower's separate
Borrowing Base less the outstanding principal amount of the Swing Line Loan to
that Borrower.
The request and acceptance by any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or continuation
of any Loan into, or as, a LIBOR Loan shall be deemed to constitute, as of the
date thereof, (i) a representation and warranty by Borrowers that none of the
events (without regards to the determination by Agent or Requisite Revolving
Lenders to make any Advance, convert or continue any Loan as a LIBOR Loan or
incur any Letter of Credit Obligations) set forth in this Section 2.2 has or
would occur after giving effect to such Advance (or the incurrence of such
Letter of Credit Obligations) and (ii) a reaffirmation by Borrowers of the
cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, the Credit Parties executing this Agreement, jointly and severally,
make the following representations and warranties to Agent and each Lender with
respect to all Credit Parties, each and all of which shall survive the execution
and delivery of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a)
is a corporation, limited liability company or limited partnership duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization set forth in Disclosure
Schedule (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not result in exposure to losses, damages or
liabilities in excess of $50,000; (c) has the requisite power and authority and
the legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease and to conduct its
business as now, heretofore and proposed to be conducted; (d) subject to
specific representations regarding Environmental Laws, has all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct; (e) is in compliance with its charter and bylaws or
partnership or operating agreement, as applicable; and (f) subject to specific
representations set forth herein regarding ERISA,
26
Environmental Laws, tax and other laws, is in compliance with all applicable
provisions of law, except where the failure to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
warehouses and premises at which any Collateral is located are set forth in
Disclosure Schedule (3.2), and none of such locations has changed within the 12
months preceding the Closing Date. In addition, Disclosure Schedule (3.2) lists
the federal employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4 Financial Statements and Projections. Except for the Projections
and the Fair Salable Balance Sheet, all Financial Statements concerning
Borrowers and their respective Subsidiaries that are referred to below have been
prepared in accordance with GAAP consistently applied throughout the periods
covered (except as disclosed therein and except, with respect to unaudited
Financial Statements, for the absence of footnotes and normal year-end audit
adjustments) and present fairly in all material respects the financial position
of the Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:
(i) The audited consolidated and consolidating balance sheets at
October 31, 2001 and the related statements of income and cash flows of
Borrowers and their Subsidiaries for the Fiscal Years then ended, certified by
Dannible & XxXxx LLP.
27
(ii) The unaudited balance sheet(s) at January 31, 2002 and April
30, 2002 and the related statement(s) of income and cash flows of Borrowers and
their Subsidiaries for such Fiscal Quarters then ended.
(b) Pro Forma. The Pro Forma delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) was prepared by Borrowers giving
pro forma effect to the Related Transactions, was based on the unaudited
consolidated and consolidating balance sheets of Borrowers and their
Subsidiaries dated May 31, 2002, and was prepared in accordance with GAAP, with
only such adjustments thereto as would be required in accordance with GAAP.
(c) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(c)) have been prepared by Borrowers
in light of the past operations of their businesses, but including future
payments, if any, of known contingent liabilities reflected on Disclosure
Schedule 3.4(d), and reflect projections for the four-year period beginning on
November 1, 2001 on a month-by-month basis for the first year and on a
year-by-year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrowers believe to be reasonable and
fair in light of current conditions and current facts known to Borrowers and, as
of the Closing Date, reflect Borrowers' good faith and reasonable estimates of
the future financial performance of Borrowers and of the other information
projected therein for the period set forth therein.
(d) Contingent Liabilites. The schedule of known contingent
liabilities delivered on the date hereof and attached hereto as Disclosure
Schedule (3.4(d)) includes all contingent liabilities (other than those
reflected in the Pro Forma delivered on the date hereof) of Borrowers stated at
the reasonably estimated present values thereof.
3.5 Material Adverse Effect. Between October 31, 2001 and the Closing
Date: (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has been
entered into by any Credit Party or has become binding upon any Credit Party's
assets and no law or regulation applicable to any Credit Party has been adopted
that has had or could reasonably be expected to have a Material Adverse Effect,
and (c) no Credit Party is in default and to the best of Borrowers' knowledge no
third party is in default under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect. Between October 31, 2001 and the Closing Date no
event has occurred, that alone or together with other events, could reasonably
be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid and marketable leasehold interests in all of its leased Real
Estate, all as described on Disclosure Schedule (3.6), and copies of all such
leases or a summary of terms thereof reasonably satisfactory to Agent have been
delivered to Agent. Disclosure Schedule (3.6) further describes any Real Estate
with respect to which any Credit
28
Party is a lessor, sublessor or assignor as of the Closing Date. Each Credit
Party also has good and marketable title to, or valid leasehold interests in,
all of its personal property and assets. As of the Closing Date, none of the
properties and assets of any Credit Party are subject to any Liens other than
Permitted Encumbrances, and there are no facts, circumstances or conditions
known to any Credit Party that may result in any Liens (including Liens arising
under Environmental Laws) other than Permitted Encumbrances. Each Credit Party
has received all deeds, assignments, waivers, consents, nondisturbance and
attornment or similar agreements, bills of sale and other documents, and has
duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other similar
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of any Credit Party's Real Estate has suffered any material damage by
fire or other casualty loss that has not heretofore been repaired and restored
in all material respects to its original condition or otherwise remedied. As of
the Closing Date, all material permits required to have been issued or
appropriate to enable the Real Estate to be lawfully occupied and used for all
of the purposes for which it is currently occupied and used have been lawfully
issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on
Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is owned by
each of the Stockholders and in the amounts set forth in Disclosure Schedule
(3.8). Except as set forth in Disclosure Schedule (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or
29
any Stock or other equity securities of its Subsidiaries. All outstanding
Indebtedness and Guaranteed Indebtedness of each Credit Party as of the Closing
Date (except for the Obligations) is described in Section 6.3 (including
Disclosure Schedule (6.3)). Except as set forth on Disclosure Schedule (3.8)
OGRI does not have any assets or any Indebtedness or Guaranteed Indebtedness
(except the Obligations).
3.9 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Loans by Lenders to
Borrowers, the incurrence of the Letter of Credit Obligations on behalf of
Borrowers, the application of the proceeds thereof and repayment thereof and the
consummation of the Related Transactions will not violate any provision of any
such statute or any rule, regulation or order issued by the Securities and
Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Loans or other extensions of credit under this Agreement
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any Indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose that might cause any of the Loans or other extensions of credit under
this Agreement to be considered a "purpose credit" within the meaning of
Regulations T, U or X of the Federal Reserve Board. No Credit Party will take or
permit to be taken any action that might cause any Loan Document to violate any
regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority ("Tax Returns") to
be filed by any Credit Party have been filed with the appropriate Governmental
Authority, all such Tax Returns are true, correct and complete in all material
respects, and all Charges have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid), excluding
Charges or other amounts being contested in accordance with Section 5.2(b).
There are no Liens for charges (other than current charges not yet due and
payable) upon the assets of any Credit Party. No adjustment relating to such Tax
Returns has been proposed formally or informally by any Governmental Authority
and to the knowledge of each Credit Party, no basis exists for any such
adjustments. Proper and accurate amounts have been withheld by each Credit Party
from its respective employees, independent contractors, creditors and other
third parties for all periods in full and complete compliance with all
applicable federal, state, local and foreign laws and such withholdings have
been timely paid to the respective Governmental Authorities. Disclosure Schedule
(3.11) sets forth as of the Closing Date those taxable years for which any
Credit Party's tax returns are currently being audited by the IRS or any other
applicable Governmental
30
Authority, and any assessments or threatened assessments in connection with such
audit, or otherwise currently outstanding. Except as indicated in Disclosure
Schedule (3.11) all charges have been claimed, proposed, asserted or assessed
against any Credit Party (or with respect to any of their assets) have been
fully paid or finally settled. Except as described in Disclosure Schedule
(3.11), no Credit Party has executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges.
None of the Credit Parties and their respective predecessors are liable for any
Charges: (a) under any agreement (including any tax sharing agreements) or (b)
to each Credit Party's knowledge, as a transferee. As of the Closing Date, no
Credit Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise, which
would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists (i) all ERISA Affiliates and
(ii) all Plans and separately identifies all Pension Plans, including Title IV
Plans, Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree
Welfare Plans. Copies of all such listed Plans, together with a copy of the
latest IRS/DOL 5500-series form for each such Plan, have been delivered to
Agent. Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and nothing has occurred that would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
with the applicable provisions of ERISA and the IRC, including the timely filing
of all reports required under the IRC or ERISA, including the statement required
by 29 CFR Section 2520.104-23. Neither any Credit Party nor ERISA Affiliate has
failed to make any contribution or pay any amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan.
Neither any Credit Party nor ERISA Affiliate has engaged in a "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the IRC, in
connection with any Plan, that would subject any Credit Party to a material tax
on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of
the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title
IV Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened claims (other than claims for
benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any liability as a result of a complete or partial withdrawal from a
Multiemployer Plan; (v) within the last five years no Title IV Plan of any
Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at
any time within the last five years) with Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such
time); (vi) except in the case of any ESOP, Stock of all Credit Parties and
their ERISA Affiliates makes up, in the aggregate, no more than 10% of fair
market value of the assets of any
31
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or an equivalent rating by another
nationally recognized rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation
or proceeding is now pending or, to the knowledge of any Credit Party,
threatened against any Credit Party, before any Governmental Authority or before
any arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Related Transaction Documents to which it is a party, or
the validity or enforceability of any Related Transaction Document or any action
taken thereunder, or (b) that has a reasonable risk of being determined
adversely to any Credit Party and that, if so determined, could be reasonably be
expected to have a Material Adverse Effect. Except as set forth on Disclosure
Schedule (3.13), as of the Closing Date there is no Litigation pending or, to
any Credit Party's knowledge, threatened, that seeks damages in excess of
$50,000 or injunctive relief against, or alleges criminal misconduct of, any
Credit Party.
3.14 Brokers. Other than Xxxxxxxx Xxxxxxx & Company, no broker or
finder brought about the obtaining, making or closing of the Loans or the
Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect. Except as set forth in Disclosure Schedule
(3.15), no Credit Party is aware of any infringement claim by any other Person
with respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any
Lender pursuant to the terms of this Agreement contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not misleading
in light of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral Documents
will at all times be fully perfected first priority Liens in and to the
Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and
32
that would not result in Environmental Liabilities that could reasonably be
expected to exceed $75,000; (ii) no Credit Party has caused or suffered to occur
any Release of Hazardous Materials on, at, in, under, above, to, from or about
any of its Real Estate; (iii) the Credit Parties are and have been in compliance
with all Environmental Laws, except for such noncompliance that would not result
in Environmental Liabilities which could reasonably be expected to exceed
$75,000; (iv) the Credit Parties have obtained, and are in compliance with, all
Environmental Permits required by Environmental Laws for the operations of their
respective businesses as presently conducted or as proposed to be conducted,
except where the failure to so obtain or comply with such Environmental Permits
would not result in Environmental Liabilities that could reasonably be expected
to exceed $75,000, and all such Environmental Permits are valid, uncontested and
in good standing; (v) no Credit Party is involved in operations or knows of any
facts, circumstances or conditions, including any Releases of Hazardous
Materials, that are likely to result in any Environmental Liabilities of such
Credit Party which could reasonably be expected to exceed $75,000, and no Credit
Party has permitted any current or former tenant or occupant of the Real Estate
to engage in any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or Hazardous Material
that seeks damages, penalties, fines, costs or expenses in excess of $75,000 or
injunctive relief against, or that alleges criminal misconduct by, any Credit
Party; (vii) no notice has been received by any Credit Party identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of the Credit Parties, there are
no facts, circumstances or conditions that may result in any Credit Party being
identified as a "potentially responsible party" under CERCLA or analogous state
statutes; and (viii) the Credit Parties have provided to Agent copies of all
existing environmental reports, reviews and audits and all written information
pertaining to actual or potential Environmental Liabilities, in each case
relating to any Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i)
is not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance
policies of any nature maintained, as of the Closing Date, for current
occurrences by each Credit Party, as well as a summary of the terms of each such
policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. To the best knowledge of the Credit
Parties, except as set forth in Disclosure Schedule (3.20), as of the Closing
Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority and no Credit Party's
33
Accounts are subject to the Federal Assignment of Claims Act (31 U.S.C. Section
3727) or any similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in (a) the business relationship of any Credit Party with any customer or group
of customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or (b) the business
relationship of any Credit Party with any supplier material to its operations.
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Disclosure
Schedule (3.22): (a) supply agreements and purchase agreements not terminable by
such Credit Party within 60 days following written notice issued by such Credit
Party and involving transactions in excess of $250,000 per annum; (b) leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $250,000 per annum; (c) all customer
supply contracts or similar agreements pursuant to which the Credit Parties are
paid revenues of more than $250,000 in any 12-month period, (d) licenses and
permits held by the Credit Parties, the absence of which could be reasonably
likely to have a Material Adverse Effect; (e) instruments and documents
evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party and
any Lien granted by such Credit Party with respect thereto; and (f) instruments
and agreements evidencing the issuance of any equity securities, warrants,
rights or options to purchase equity securities of such Credit Party.
3.23 Solvency. Both before and after giving effect to (a) the Loans
and Letter of Credit Obligations to be made or incurred on the Closing Date or
such other date as Loans and Letter of Credit Obligations requested hereunder
are made or incurred, (b) the disbursement of the proceeds of such Loans
pursuant to the instructions of Borrower Representative; (c) the Subordinated
Note Repurchase, the Refinancing and the consummation of the other Related
Transactions; and (d) the payment and accrual of all transaction costs in
connection with the foregoing, each Credit Party is and will be Solvent.
3.24 Subordinated Note Repurchase Documents. As of the Closing Date,
Borrowers have delivered to Agent a complete and correct copy of the
Subordinated Note Repurchase Documents (including all schedules, exhibits,
amendments, supplements, modifications, assignments and all other documents
delivered pursuant thereto or in connection therewith). No Credit Party and no
other Person party thereto is in default in the performance or compliance with
any provisions thereof. The Subordinated Note Repurchase Documents comply with,
and the Subordinated Note Repurchase has been consummated in accordance with,
all applicable laws. The Subordinated Note Repurchase has not been terminated,
rescinded or withdrawn. All requisite approvals by Governmental Authorities
having jurisdiction over any Credit Party and other Persons referenced therein
with respect to the transactions contemplated by the Subordinated Note
Repurchase Documents have been obtained, and no such approvals impose any
conditions to the consummation of the transactions contemplated by the
34
Subordinated Note Repurchase Documents or to the conduct by any Credit Party of
its business thereafter.
3.25 Subordinated Debt. As of the Closing Date, (a) Borrowers have
delivered to Agent a complete and correct copy of all Subordinated Notes
Documents (including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant thereto or
in connection therewith) and (b) other than the Subordinated Notes, no
Subordinated Debt is outstanding. The subordination provisions of the
Subordinated Notes Indenture are enforceable against the holders of the
Subordinated Notes by Agent and Lenders. All Obligations, including the Letter
of Credit Obligations, constitute "Senior Debt" under and as defined in the
Subordinated Notes Indenture and are entitled to the benefits of the
subordination provisions contained in the Subordinated Notes Indenture.
Borrowers acknowledge that Agent and each Lender are entering into this
Agreement and are extending the Commitments in reliance upon the subordination
provisions of the Subordinated Notes Indenture and this Section 3.25.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees that
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent or to Agent and Lenders, as required, the Financial Statements,
notices, Projections and other information at the times, to the Persons and in
the manner set forth in Annex E.
(b) Each Credit Party executing this Agreement hereby agrees that,
from and after the Closing Date and until the Termination Date, it shall deliver
to Agent or to Agent and Lenders, as required, the various Collateral Reports
(including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the
times, to the Persons and in the manner set forth in Annex F.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including Dannible & XxXxx, LLP, and
authorizes and, at Agent's request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and all
Financial Statements and other supporting financial documents, schedules and
information relating to any Credit Party (including copies of any issued
management letters) with respect to the business, financial condition and other
affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Credit Agreement jointly and
severally agrees as to all Credit Parties that from and after the date hereof
and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit
Party shall: (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its rights and
franchises; (b) continue to conduct its business substantially as now conducted
or as otherwise permitted hereunder; (c) at all times maintain,
35
preserve and protect all of its assets and properties used or useful in the
conduct of its business, and keep the same in good repair, working order and
condition in all material respects (taking into consideration ordinary wear and
tear) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices; and (d) transact business only in such corporate and trade
names as are set forth in Disclosure Schedule (5.1).
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges; (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest; (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met; and (v) Agent has not advised Borrowers in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or result in a
Material Adverse Effect.
5.3 Books and Records. Each Credit Party shall keep adequate books
and records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense,
maintain the policies of insurance described on Disclosure Schedule (3.18) as in
effect on the date hereof or otherwise in form and amounts and with insurers
reasonably acceptable to Agent. Such policies of insurance (or the loss payable
and additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the
36
policies of insurance required above, or to pay all premiums relating thereto,
Agent may at any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
that Agent deems advisable. Agent shall have no obligation to obtain insurance
for any Credit Party or pay any premiums therefor. By doing so, Agent shall not
be deemed to have waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums therefor. All
sums so disbursed, including reasonable attorneys' fees, court costs and other
charges related thereto, shall be payable on demand by Borrowers to Agent and
shall be additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any
Credit Party's risk profile (including any change in the product mix maintained
by any Credit Party or any laws affecting the potential liability of such Credit
Party) to require additional forms and limits of insurance to, in Agent's
opinion, adequately protect both Agent's and Lender's interests in all or any
portion of the Collateral and to ensure that each Credit Party is protected by
insurance in amounts and with coverage customary for its industry. If reasonably
requested by Agent, each Credit Party shall deliver to Agent from time to time a
report of a reputable insurance broker, reasonably satisfactory to Agent, with
respect to its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Default or
Event of Default has occurred and is continuing or the anticipated insurance
proceeds exceed $250,000, as such Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of such Credit Party
on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower Representative shall promptly notify Agent of any
loss, damage, or destruction to the Collateral in the amount of $250,000 or
more, whether or not covered by insurance. After deducting from such proceeds
the expenses, if any, incurred by Agent in the collection or handling thereof,
Agent may, at its option, apply such proceeds to the reduction of the
Obligations in accordance with Section 1.3(d) (provided that in the case of
insurance proceeds pertaining to any Credit Party that is not a Borrower which
the Agent elects to be applied to the reduction of Obligations, such insurance
proceeds shall be applied ratably to all of the Loans owing by each Borrower),
or permit or require the applicable Credit Party to use such money, or any part
thereof, to replace, repair, restore or rebuild the Collateral in a diligent and
expeditious manner with materials and workmanship of substantially the same
quality as existed before the loss, damage or destruction. Notwithstanding the
foregoing, if the casualty giving rise to such insurance proceeds could not
reasonably be expected to have a Material Adverse Effect and such insurance
proceeds do not exceed $500,000 in the aggregate, Agent shall permit the
applicable Credit Party to replace, restore, repair or rebuild the property;
provided that if such Credit Party shall not have completed or entered into
binding agreements to complete such replacement, restoration, repair or
rebuilding within 180 days of such casualty, Agent may apply
37
such insurance proceeds to the Obligations in accordance with Section 1.3(d);
provided, further, that in the case of insurance proceeds pertaining to any
Credit Party that is not a Borrower, such insurance proceeds shall be applied
ratably to all of the Loans owing by each Borrower. All insurance proceeds that
are to be made available to any Borrower to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding principal
balance of the Revolving Loan of such Borrower (which application shall not
result in a permanent reduction of the Revolving Loan Commitment) and upon such
application, Agent shall establish a Reserve against the separate Borrowing Base
of the affected Borrower in an amount equal to the amount of such proceeds so
applied. All insurance proceeds made available to any Credit Party that is not a
Borrower to replace, repair, restore or rebuild Collateral shall be deposited in
a cash collateral account. Thereafter, such funds shall be made available to
that Borrower or Credit Party to provide funds to replace, repair, restore or
rebuild the Collateral as follows: (i) Borrower Representative shall request a
Revolving Credit Advance or a release from the cash collateral account be made
to such Borrower or Credit Party in the amount requested to be released; (ii) so
long as the conditions set forth in Section 2.2 have been met, Revolving Lenders
shall make such Revolving Credit Advance or Agent shall release funds from the
cash collateral account; and (iii) in the case of insurance proceeds applied
against the Revolving Loan, the Reserve established with respect to such
insurance proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or rebuild the
Collateral, such insurance proceeds shall be applied in accordance with Section
1.3(d); provided that in the case of insurance proceeds pertaining to any Credit
Party that is not a Borrower, such insurance proceeds shall be applied ratably
to all of the Loans owing by each Borrower.
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
38
5.7 Intellectual Property. Each Credit Party will conduct its
business and affairs without infringement of or interference with any
Intellectual Property of any other Person in any material respect.
5.8 Environmental Matters. Each Credit Party shall and shall cause
each Person within its control to: (a) conduct its operations and keep and
maintain its Real Estate in compliance with all Environmental Laws and
Environmental Permits other than noncompliance that could not reasonably be
expected to have a Material Adverse Effect; (b) implement any and all
investigation, remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or to
otherwise comply with Environmental Laws and Environmental Permits pertaining to
the presence, generation, treatment, storage, use, disposal, transportation or
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of its Real Estate; (c) notify Agent promptly after such Credit Party
becomes aware of any violation of Environmental Laws or Environmental Permits or
any Release on, at, in, under, above, to, from or about any Real Estate that is
reasonably likely to result in Environmental Liabilities in excess of $75,000;
and (d) promptly forward to Agent a copy of any order, notice, request for
information or any communication or report received by such Credit Party in
connection with any such violation or Release or any other matter relating to
any Environmental Laws or Environmental Permits that could reasonably be
expected to result in Environmental Liabilities in excess of $75,000, in each
case whether or not the Environmental Protection Agency or any Governmental
Authority has taken or threatened any action in connection with any such
violation, Release or other matter. If Agent at any time has a reasonable basis
to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then each Credit Party shall, upon
Agent's written request (i) cause the performance of such environmental audits
including subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrowers' expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms reasonably acceptable to Agent and shall be in form and
substance reasonably acceptable to Agent, and (ii) permit Agent or its
representatives to have access to all Real Estate for the purpose of conducting
such environmental audits and testing as Agent deems appropriate, including
subsurface sampling of soil and groundwater. Borrowers shall reimburse Agent for
the costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Each Credit Party shall use its best efforts to obtain a
landlord's agreement, mortgagee agreement or bailee letter, as applicable, from
the lessor of each leased property, mortgagee of owned property or bailee with
respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably satisfactory in form and substance to Agent. With respect to such
locations or warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Closing Date (or, if later, as of the date such location
is acquired or leased), any Borrower's Eligible Inventory at that location
shall, in Agent's
39
discretion, be excluded from the Borrowing Base or be subject to such Reserves
as may be established by Agent in its reasonable credit judgment. After the
Closing Date, no real property or warehouse space shall be leased by any Credit
Party and no Inventory shall be shipped to a processor or converter under
arrangements established after the Closing Date (including the transfer of
Inventory from any property or space with respect to which an appropriate
agreement as described has been obtained to any property or space with respect
to which an appropriate agreement has not been obtained other than transfers
which do not exceed $75,000 per annum) without the prior written consent of
Agent (which consent, in Agent's discretion, may be conditioned upon the
exclusion from the Borrowing Base of Eligible Inventory at that location or the
establishment of Reserves acceptable to Agent) or, unless and until a reasonably
satisfactory landlord agreement or bailee letter, as appropriate, shall first
have been obtained with respect to such location. Each Credit Party shall timely
and fully pay and perform its obligations under all leases and other agreements
with respect to each leased location or public warehouse where any Collateral is
or may be located. To the extent otherwise permitted hereunder, if any Credit
Party proposes to acquire a fee ownership interest in Real Estate after the
Closing Date, it shall first provide to Agent a mortgage or deed of trust
granting Agent a first priority Lien on such Real Estate, together with, if
required by any Lender in its sole discretion, environmental audits, mortgage
title insurance commitment, real property survey, local counsel opinion(s),
supplemental casualty insurance and flood insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each case, in form
and substance reasonably satisfactory to Agent.
5.10 Swap Contracts. At the request of the Term B-1 Lenders, the
Borrowers shall enter into a swap agreement in form and substance satisfactory
to the Term B-1 Lenders with a bank acceptable to the Term B-1 Lenders to
provide protection against fluctuations in the interest rates with respect to
the Term B-1 Loan.
5.11 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
5.12 Subordinated Notes Indenture. Subject to any applicable periods
of notice or grace, the Credit Parties shall comply with all of the covenants
under the Subordinated Notes Indenture.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally
agrees as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person
or (c) acquire any Routes. Notwithstanding the foregoing, Xxxxx may
40
acquire Routes from any person (the "Seller") through the purchase of the assets
related to such Routes (a "Permitted Acquisition") subject to the satisfaction
of each of the following conditions:
(i) If the purchase price exceeds $250,000, Agent shall
receive at least 30 Business Days' prior written notice of such proposed
Permitted Acquisition, which notice shall include a reasonably detailed
description of such proposed Permitted Acquisition;
(ii) such Permitted Acquisition shall only involve assets
located in the United States in a geographical area contiguous to an area which
such Borrower is operating in at the time of the proposed Permitted Acquisition
and comprising a business, or those assets of a business, of the type engaged in
by Xxxxx as of the Closing Date, and which business would not subject Agent or
any Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other Loan
Documents other than approvals applicable to the exercise of such rights and
remedies with respect to Borrowers prior to such Permitted Acquisition;
(iii) such Permitted Acquisition shall be consensual and
shall have been approved by the Seller's board of directors;
(iv) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities (including any earnout payments or
similar arrangements) shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of Borrowers after giving effect to such Permitted
Acquisition, except (A) Loans made hereunder, (B) customary and ordinary course
liabilities under supply contracts for such Routes, and (C) unsecured seller
notes issued by Xxxxx to the Seller in payment of a portion of the purchase
price (not exceeding 100% of the purchase price) for such Permitted Acquisition
so long as such seller notes constitute Subordinated Debt and (2) the aggregate
principal amount of such Seller notes issued by Xxxxx does not exceed $2,000,000
outstanding at any time;
(v) the sum of all amounts payable in cash in connection
with all Permitted Acquisitions after the Closing Date (including all
transaction costs) shall not exceed $750,000 in any fiscal year;
(vi) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than Permitted
Encumbrances);
(vii) at or prior to the closing of any Permitted
Acquisition, Agent will be granted a first priority perfected Lien (subject to
Permitted Encumbrances) in all assets acquired pursuant thereto;
(viii) Concurrently with delivery of the notice referred to
in clause (i) above if the purchase price of the Permitted Acquisition will
exceed $250,000, Borrowers shall have delivered to Agent, in form and substance
reasonably satisfactory to Agent:
(1) a pro forma consolidated balance sheet, income
statement and cash flow statement of Borrowers and their Subsidiaries (the
"Acquisition Pro Forma"), based on recent financial statements, which shall be
complete and shall fairly present in all
41
material respects the assets, liabilities, financial condition and results of
operations of Borrowers and their Subsidiaries in accordance with GAAP
consistently applied, but taking into account such Permitted Acquisition and the
funding of all Loans in connection therewith, and such Acquisition Pro Forma
shall reflect that (x) average daily Borrowing Availability of all Borrowers for
the 90-day period preceding the consummation of such Permitted Acquisition would
have exceeded $2,000,000 on a pro forma basis (after giving effect to such
Permitted Acquisition and all Loans funded in connection therewith as if made on
the first day of such period) and the Acquisition Projections (as hereinafter
defined) shall reflect that such Borrowing Availability of $2,000,000 shall
continue for at least 90 days after the consummation of such Permitted
Acquisition, and (y) on a pro forma basis, no Event of Default has occurred and
is continuing or would result after giving effect to such Permitted Acquisition
and Borrowers would have been in compliance with the financial covenants set
forth in Annex G for the four quarter period reflected in the Compliance
Certificate most recently delivered to Agent pursuant to Annex E prior to the
consummation of such Permitted Acquisition (after giving effect to such
Permitted Acquisition and all Loans funded in connection therewith as if made on
the first day of such period);
(2) updated versions of the most recently delivered
Projections covering the 1-year period commencing on the date of such Permitted
Acquisition and otherwise prepared in accordance with the Projections (the
"Acquisition Projections") and based upon historical financial data of a recent
date reasonably satisfactory to Agent, taking into account such Permitted
Acquisition; and
(3) a certificate of the chief financial officer of
each Borrower to the effect that: (w) each Borrower will be Solvent upon the
consummation of the Permitted Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Borrowers (on a consolidated basis) as of
the date thereof after giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future financial
performance of Borrowers subsequent to the date thereof based upon the
historical performance of Borrowers and the Route being acquired and show that
Borrowers shall continue to be in compliance with the financial covenants set
forth in Annex G for the three-year period thereafter; and (z) Borrowers have
completed their due diligence investigation with respect to the Seller and the
Route, and such Permitted Acquisition, which investigation was conducted in a
manner similar to that which would have been conducted by a prudent purchaser of
a comparable business and the results of which investigation were delivered to
Agent and Lenders;
(ix) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance reasonably satisfactory to
Agent, copies of the acquisition agreement and related agreements and
instruments, and all opinions, certificates, lien search results and other
documents reasonably requested by Agent including those specified in the last
sentence of Section 5.9; and
(x) at the time of such Permitted Acquisition and after
giving effect thereto, no Default or Event of Default has occurred and is
continuing.
42
Notwithstanding the foregoing, the Accounts and Inventory
purchased pursuant to such Permitted Acquisition shall not be included in
Eligible Accounts and Eligible Inventory without the prior written consent of
Agent and Requisite Revolving Lenders.
6.2 Investments; Loans and Advances. Except as otherwise
expressly permitted by this Section 6, no Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding
of securities or otherwise, except that: (a) Borrowers may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to any Borrower pursuant to negotiated agreements with respect to
settlement of such Account Debtor's Accounts in the ordinary course of business,
so long as the aggregate amount of such Accounts so settled by Borrowers does
not exceed $50,000 in any Fiscal Year, and (b) each Credit Party may maintain
its existing investments in its Subsidiaries as of the Closing Date.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security interests and Capital Leases permitted in Section
6.7(c), (ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness described in Disclosure Schedule (6.3) (including obligations with
respect to the IRB) and refinancings thereof or amendments or modifications
thereto that do not have the effect of increasing the principal amount thereof
or changing the amortization thereof (other than to extend the same) and that
are otherwise on terms and conditions no less favorable to any Credit Party,
Agent or any Lender, as determined by Agent, than the terms of the Indebtedness
being refinanced, amended or modified, (v) Subordinated Debt in the form of
Seller notes specifically permitted under Section 6.1(iv), (vi) Indebtedness
specifically permitted under Section 6.17, (vii) Permitted Subordinated Debt in
an outstanding principal amount not to exceed $25,000,000, and (viii)
Indebtedness consisting of intercompany loans and advances made by any Credit
Party to any other Credit Party; provided, that: (A) each Credit Party shall
have executed and delivered to each other Credit Party, on the Closing Date, a
demand note (collectively, the "Intercompany Notes") to evidence any such
intercompany Indebtedness owing at any time by such Credit Party to such other
Credit Parties which Intercompany Notes shall be in form and substance
reasonably satisfactory to Agent and shall be pledged and delivered to Agent
pursuant to the applicable Pledge Agreement or Security Agreement as additional
collateral security for the Obligations; (B) each Credit Parties shall record
all intercompany transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each Credit Party under any such
Intercompany Notes shall be subordinated to the Obligations of such Credit Party
hereunder and under the other Loan Documents in a manner reasonably satisfactory
to Agent; (D) at the time any such intercompany loan or advance is made by any
Credit Party to any other Credit Party and after giving effect thereto, each
such Credit Party shall be Solvent; (E) no Default or Event of Default would
occur and be continuing after giving effect to any such proposed intercompany
loan; and (F) any Borrower advancing such funds shall have Borrowing
Availability under its separate Borrowing Base of not less than $100,000 after
giving effect to such intercompany loan.
43
(b) No Credit Party shall, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness, other than
(i) the Obligations; (ii) Indebtedness (other than Subordinated Debt) secured by
a Permitted Encumbrance if the asset securing such Indebtedness has been sold or
otherwise disposed of in accordance with Sections 6.8(b) or (c); (iii)
Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing thereof in
accordance with Section 6.3(a)(iv); and (iv) as otherwise permitted in Section
6.14.
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this Section
6 with respect to Affiliates, no Credit Party shall enter into or be a party to
any transaction with any other Credit Party or any Affiliate thereof except in
the ordinary course of and pursuant to the reasonable requirements of such
Credit Party's business and upon fair and reasonable terms that are no less
favorable to such Credit Party than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate of such Credit Party. In
addition, if any such transaction or series of related transactions involves
payments in excess of $100,000 in the aggregate, the terms of these transactions
must be disclosed in advance to Agent and Lenders. All such transactions
existing as of the date hereof are described in Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or
borrowing transaction with any employees of any Credit Party, except loans to
its respective employees in the ordinary course of business consistent with past
practices for travel and entertainment expenses, relocation costs and similar
purposes up to a maximum of $50,000 to any employee and up to a maximum of
$200,000 in the aggregate at any one time outstanding.
(c) No Credit Party shall increase the direct or indirect
aggregate compensation (excluding stock options and payments pursuant to the
bonus plans listed in Disclosure Schedule 3.7) of the ten most highly
compensated employees of the Credit Parties, taken as a whole, by more than 10%
per annum in excess of the current compensation level for those employees,
expressed as an aggregate dollar amount and set forth in Disclosure Schedule
(6.4(c) previously delivered to the Agent).
6.5 Capital Structure and Business. No Credit Party shall
(a) make any changes in any of its business objectives, purposes or operations
that could in any way adversely affect the repayment of the Loans or any of the
other Obligations or could reasonably be expected to have or result in a
Material Adverse Effect, (b) make any change in its capital structure as
described in Disclosure Schedule (3.8), including the issuance or sale of any
shares of Stock, warrants or other securities convertible into Stock or any
revision of the terms of its outstanding Stock, or (c) amend its charter or
bylaws in a manner that would adversely affect Agent or Lenders or such Credit
Party's duty or ability to repay the Obligations. No Credit Party shall engage
in any business other than the businesses currently engaged in by it.
6.6 Guaranteed Indebtedness. No Credit Party shall create,
incur, assume or permit to exist any Guaranteed Indebtedness except (a) by
endorsement of instruments or items of payment for deposit to the general
account of any Credit Party, and (b) for Guaranteed
44
Indebtedness incurred for the benefit of any other Credit Party if the primary
obligation is expressly permitted by this Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or
permit to exist any Lien on or with respect to its Accounts or any of its other
properties or assets (whether now owned or hereafter acquired) except for (a)
Permitted Encumbrances, (b) Liens in existence on the date hereof and summarized
on Disclosure Schedule (6.7) (including the liens securing the obligations under
the IRB) securing the Indebtedness described on Disclosure Schedule (6.3) and
permitted refinancings, extensions and renewals thereof, including extensions or
renewals of any such Liens; provided that the principal amount of the
Indebtedness so secured is not increased and the Lien does not attach to any
other property, (c) Liens created by conditional sale or other title retention
agreements (including Capital Leases) or in connection with purchase money
Indebtedness with respect to Equipment and Fixtures acquired by any Credit Party
in the ordinary course of business, involving the incurrence of an aggregate
amount of purchase money Indebtedness and Capital Lease Obligations of not more
than $3,000,000 outstanding at any one time for all such Liens (provided that
such Liens attach only to the assets subject to such purchase money debt and
such Indebtedness is incurred within 20 days following such purchase and does
not exceed 100% of the purchase price of the subject assets), and (d) Liens on
the Collateral securing Permitted Subordinated Debt which are subordinate to the
Liens created in favor of Agent on behalf of Lenders in a manner and form
satisfactory to Agent and Lenders in their sole discretion. In addition, no
Credit Party shall become a party to any agreement, note, indenture or
instrument, or take any other action, that would prohibit the creation of a Lien
on any of its properties or other assets in favor of Agent, on behalf of itself
and Lenders, as additional collateral for the Obligations, except operating
leases, Capital Leases or Licenses which prohibit Liens upon the assets that are
subject thereto.
6.8 Sale of Stock and Assets. Subject to Section 11.2,
without the consent of Agent, in its sole discretion, no Credit Party shall
sell, transfer, convey, assign or otherwise dispose of any of its properties or
other assets, including the Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of its Accounts, other than
(a) the sale of Inventory in the ordinary course of business, (b) the sale,
transfer, conveyance or other disposition by a Credit Party of Inventory,
Equipment, Fixtures or Real Estate that are obsolete or no longer used or useful
in such Credit Party's business and having a net book value not exceeding
$100,000 in any single transaction or $200,000 in the aggregate in any Fiscal
Year, (c) the sale, transfer, conveyance or other disposition by a Credit Party
of any other Routes, Equipment, Fixtures and Real Estate having a value not
exceeding $200,000 in any single transaction or $400,000 in the aggregate in any
Fiscal Year, and (d) with the consent of the Agent, the sale, transfer,
conveyance or other disposition by a Credit Party of additional Equipment,
Fixtures, Routes and Real Estate having a value not exceeding $200,000 in any
single transaction or $300,000 in the aggregate in any Fiscal Year. With respect
to any disposition of assets or other properties permitted pursuant to clauses
(b), (c) and (d) above, subject to Section 1.3(b), Agent agrees (and the Lenders
authorize Agent to), on reasonable prior written notice, to release its Lien on
such assets or other properties in order to permit the applicable Credit Party
to effect such disposition and shall execute and deliver to Borrowers, at
Borrowers' expense, appropriate UCC-3 termination statements and other releases
as reasonably requested by Borrowers.
45
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrowers shall not breach or fail to comply
with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) intercompany loans and advances between Borrowers to the
extent permitted by Section 6.3, (b) dividends and distributions by Subsidiaries
of any Borrower paid to such Borrower, (c) employee loans permitted under
Section 6.4(b), (d) payments of principal of and interest on Intercompany Notes
issued in accordance with Section 6.3, (e) redemption of non-voting stock held
by the J. Xxxxxxx Xxxxx Revocable Trust and/or the J. Xxxxxxx Xxxxx Inter Vivos
Irrevocable Trust, and/or the Xxxxxx X. Xxxxx Trust and/or the trusts for the
benefit of Xxxxxx X. Xxxxx, Xxxxxx Xxxxxx, Xxxxx X. Xxxxxxx and Xxxx X. Xxxxx,
Xx. of (i) up to $2,432,414.19 the proceeds of which will be used to repay those
certain Promissory Notes made by J. Xxxxxxx Xxxxx to M&T Bank and to Xxxxxx X.
VanerSluis as more fully described in the Stock Redemption Documents and (ii) in
the amounts and on the dates set forth in Schedule 6.14 hereto to pay estate tax
and administrative costs with respect to the corresponding calendar year in such
Schedule 6.14, in each case pursuant to and subject to the terms of the Stock
Redemption Documents, (f) redemptions, dividends or other distributions of up to
$400,000 in the aggregate to in each Fiscal Year pursuant to and subject to the
terms of the Stock Redemption Documents provided that to the extent any
distributions are not permitted to be made in any year as a result of the
failure to comply with clause (ii) in the proviso set forth below, such
distribution may be made in the next year in which, and to the extent, such
payments together with all other payments being made with respect thereto could
be made in compliance with clause (ii) of the proviso below and otherwise in
accordance with the terms hereof, (g) prepayments or purchases of the
Subordinated Notes at a repurchase price not to exceed 55% of the aggregate
stated principal amount of the Subordinated Notes being so repurchased on terms
and conditions satisfactory to Agent in its sole discretion, and (h) scheduled
payments of interest with respect to
46
Subordinated Debt; provided, that (i) no Default or Event of Default has
occurred and is continuing or would result after giving effect to any Restricted
Payment pursuant to clauses (e), (f), (g) or (h) above, (ii) Borrowers
collectively shall have Borrowing Availability of at least $4,000,0000 after
giving effect to any Restricted Payment pursuant to clauses (f) or (g) above,
(iii) Borrowers collectively shall have Borrowing Availability of at least
$2,000,000 after giving effect to any Restricted Payment pursuant to clause (e)
above, and (iv) the timing of the Restricted Payments referred to in clauses
(e), (f), (g) and (h) above shall be set at dates that permit the delivery of
Financial Statements necessary to determine current compliance with the
Financial Covenants prior to each such payment.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) change
its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least 30 days prior written notice to
Agent and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has
been completed or taken, and provided that any such new location shall be in the
continental United States. No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of any Borrower
to any Borrower or between Borrowers.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Leases; Real Estate Purchases. No Credit Party shall enter into
any operating lease for Equipment or Real Estate, if the aggregate of all such
operating lease payments payable in any year for all Credit Parties on a
consolidated basis would exceed $3,000,000. No Credit Party shall purchase a fee
simple ownership interest in Real Estate other than Real Estate, the aggregate
purchase price of which does not exceed $250,000 in any Fiscal Year.
6.19 Changes Relating to Subordinated Debt; Material Contracts.
(a) No Credit Party shall change or amend the terms of any
Subordinated Debt (or any indenture or agreement in connection therewith) if the
effect of such amendment is to: (a) increase the interest rate on such
Subordinated Debt, (b) change the dates upon which
47
payments of principal or interest are due on such Subordinated Debt other than
to extend such dates, (c) change any default or event of default other than to
delete or make less restrictive any default provision therein, or add any
covenant with respect to such Subordinated Debt, (d) change the redemption or
prepayment provisions of such Subordinated Debt other than to extend the dates
therefor or to reduce the premiums payable in connection therewith, (e) grant
any security or collateral to secure payment of such Subordinated Debt, or (f)
change or amend any other term if such change or amendment would materially
increase the obligations of the Credit Party thereunder or confer additional
material rights on the holder of such Subordinated Debt in a manner adverse to
any Credit Party, Agent or any Lender.
(b) No Credit Party shall change or amend the terms of any of the
following material contracts: (i) the Subordinated Note Documents, (ii) any
documents relating to the Permitted Subordinated Debt, (iii) the Stock
Redemption Documents, and (iv) any Service Agreement; provided, however, that
any amendments to any Service Agreement which is not materially adverse to such
Credit Party shall not be deemed a violation of this Section 6.19.
6.20 OGRI. OGRI shall not engage in any trade or business, have any
employees or own any assets (other than the Real Property located at 00000 Xxxxx
Xxxxxx, Xxxxxxxxx, Xxxx) or incur any Indebtedness or Guaranteed Indebtedness
(other than the Obligations and other than as disclosed on Disclosure Schedule
3.8).
7. TERM
7.1 Termination. The financing arrangements contemplated hereby shall
be in effect until the Commitment Termination Date, and the Revolving Loans, the
Swing Line Loans, the Term A Loans, and the Term B Loans, and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Loans or any other
Obligations, due or not due, liquidated, contingent or unliquidated, or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Commitment Termination
Date. Except as otherwise expressly provided herein or in any other Loan
Document, all undertakings, agreements, covenants, warranties and
representations of or binding upon the Credit Parties, and all rights of Agent
and each Lender, all as contained in the Loan Documents, shall not terminate or
expire, but rather shall survive any such termination or cancellation and shall
continue in full force and effect until the Termination Date; provided, that the
provisions of Section 11, the payment obligations under Sections 1.15 and 1.16,
and the indemnities contained in the Loan Documents shall survive the
Termination Date.
48
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Any Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within 10 days following Agent's demand for such reimbursement or payment of
expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.4, 1.8, 5.4(a) or 6, or any of the provisions
set forth in Annexes C or G, respectively.
(c) Any Borrower fails or neglects to perform, keep or observe any of
the provisions of Section 4 or any provisions set forth in Annexes E or F,
respectively, and the same shall remain unremedied for 3 days or more.
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this Section
8.1) and the same shall remain unremedied for 20 days or more.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $250,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $250,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral in respect thereof to be
demanded, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect, or any representation or warranty herein or
in any Loan Document or in any written statement, report, financial statement or
certificate (other than a Borrowing Base Certificate) made or delivered to Agent
or any Lender by any Credit Party is untrue or incorrect in any material respect
as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $250,000 or
more are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors of any Credit Party and such condition
continues for 30 days or more.
49
(h) A case or proceeding is commenced against any Credit Party seeking
a decree or order in respect of such Credit Party (i) under the Bankruptcy Code,
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party's assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Credit Party, and such case or proceeding
shall remain undismissed or unstayed for 60 days or more or a decree or order
granting the relief sought in such case or proceeding shall be entered by a
court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consents to or fails to contest in a timely and
appropriate manner the institution of proceedings thereunder or the filing of
any such petition or the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official)
for such Credit Party or for any substantial part of any such Credit Party's
assets, (iii) makes an assignment for the benefit of creditors, (iv) takes any
action in furtherance of any of the foregoing; or (v) admits in writing its
inability to, or is generally unable to, pay its debts as such debts become due.
(j) A final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate at any time are outstanding against one or more of
the Credit Parties and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) Any event occurs, whether or not insured or insurable, as a result
of which revenue-producing activities cease or are substantially curtailed at
any facility of the Credit Parties generating more than 20% of Borrowers'
consolidated revenues for the Fiscal Year preceding such event and such
cessation or curtailment continues for more than 20 days.
(n) Any default or breach by any Credit Party occurs under the
Subordinated Notes Indenture or any Permitted Subordinated Debt or any Service
Agreement after the expiration of any applicable periods of notice or grace or
any such agreements shall be terminated for any reason (other than, with respect
to any Service Agreement, the expiration of the agreement on the stated
expiration date).
50
(o) Any default or breach by any Credit Party, any Xxxxx Stockholder
or any other guarantor, grantor or pledgor in the observance or performance of
any covenant or agreement contained or incorporated by reference in any
Collateral Document and such default shall continue beyond the grace period, if
any, provided in such Collateral Document.
(p) The assertion by the IRS of a lien against any of the Xxxxx Stock
in excess of (i) the aggregate amount set forth in Schedule 6.14 plus $250,000
less (ii) any payments made or the enforcement by the IRS of any lien against
any of the Xxxxx Stock.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Revolving Lenders shall),
without notice, suspend the Revolving Loan facility with respect to additional
Advances and/or the incurrence of additional Letter of Credit Obligations,
whereupon any additional Advances and additional Letter of Credit Obligations
shall be made or incurred in Agent's sole discretion (or in the sole discretion
of the Requisite Revolving Lenders, if such suspension occurred at their
direction) so long as such Default or Event of Default is continuing. If any
Default or Event of Default has occurred and is continuing, Agent may (and at
the written request of Requisite Lenders shall), without notice except as
otherwise expressly provided herein, increase the rate of interest applicable to
the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite A Lenders, or, subject to Section
8.2 (c), the Requisite B Lenders, shall), without notice: (i) terminate the
Revolving Loan facility with respect to further Advances or the incurrence of
further Letter of Credit Obligations; (ii) declare all or any portion of the
Obligations, including all or any portion of any Loan to be forthwith due and
payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand, protest
or further notice of any kind, all of which are expressly waived by Borrowers
and each other Credit Party; or (iii) exercise any rights and remedies provided
to Agent under the Loan Documents or at law or equity, including all remedies
provided under the Code; provided, that upon the occurrence of an Event of
Default specified in Sections 8.1(h) or (i), the Revolving Loan facility shall
be immediately terminated and all of the Obligations, including the aggregate
Revolving Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.
(c) Notwithstanding anything herein to the contrary, (i) the Requisite
B Lenders shall not make any request to exercise rights under Section 8.2(b)
unless (A) the A Obligations Termination Date has occurred or (B) the Borrowers
have failed to make a scheduled payment of principal of or interest on the Term
B Loan to the Term B Lenders required hereunder when such amount is due and
owing and such failure has remained unremedied for a period of at least 60 days,
and (ii) the Requisite A Lenders (and after the A Obligations Termination Date
has occurred, the Requisite B Lenders) and the Agent shall determine the method,
time and all other matters with regard to the exercise of rights and remedies
under Section 8.2(b)(iii) (subject only to clause (d) below, the right of the
Term B Lenders to exercise the Buy-Out Right set forth in Section 9.10 hereof
and the requirement to act in good faith), and the Term B Lenders hereby
authorize the Agent to release any Liens on the Collateral in
51
connection therewith (it being understood that this provision is not intended to
waive the rights of the Term B Lenders to receive proceeds of Collateral in
accordance with Section 1.11(b)).
(d) If the Agent exercises its rights and remedies under Section
8.2(b) above and has commenced enforcement action to foreclose on the security
interest in all or a substantial portion of the Collateral or to take possession
of all or a substantial portion of the Collateral and the Agent does not provide
notice to the Term B Lenders within 90 days of commencement of such actions,
that it intends to foreclose on the Mortgaged Properties II, then the Agent
shall assign its rights under the Mortgages covering such Mortgaged Properties
II to a Person designated by the Requisite B Lenders, as collateral agent for
the Lenders for the benefit of the Agent and the Lenders, and the Requisite B
Lenders shall determine the method, time and all other matters with regard to
the exercise of rights and remedies under such Mortgages; provided, however,
that all proceeds received in respect thereof shall be delivered to the Agent
for application to the Obligations pursuant to Section 1.11.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives (including for
purposes of Section 12): (a) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which any Credit Party may in any way be liable, and hereby ratifies and
confirms whatever Agent may do in this regard, (b) all rights to notice and a
hearing prior to Agent's taking possession or control of, or to Agent's replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing Agent to exercise any of its remedies,
and (c) the benefit of all valuation, appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at any time or
times, the Loan Documents, Loans, Letter of Credit Obligations and any
Commitment or any portion thereof or interest therein, including any Lender's
rights, title, interests, remedies, powers or duties thereunder. Any assignment
by a Lender shall: (i) require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified Assignee) and the
execution of an assignment agreement (an "Assignment Agreement") substantially
in the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent; (ii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Loans to be assigned to it for its
own account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$5,000,000; (iv) include a payment to Agent of an assignment fee of $3,500; and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower Representative, which shall not be unreasonably withheld or
52
delayed; provided that no such consent shall be required for an assignment to a
Qualified Assignee. In the case of an assignment by a Lender under this Section
9.1, the assignee shall have, to the extent of such assignment, the same rights,
benefits and obligations as all other Lenders hereunder. The assigning Lender
shall be relieved of its obligations hereunder with respect to its Commitments
or assigned portion thereof from and after the date of such assignment. Each
Borrower hereby acknowledges and agrees that any assignment shall give rise to a
direct obligation of Borrowers to the assignee and that the assignee shall be
considered to be a "Lender". In all instances, each Lender's liability to make
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrowers and Borrowers shall, upon the
request of Agent or such Lender, execute new Notes in exchange for the Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any Lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of its
Commitments shall be made with the understanding that all amounts payable by
Borrowers hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.13,
1.15, 1.16 and 9.8, each Borrower acknowledges and agrees that a participation
shall give rise to a direct obligation of Borrowers to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence no Borrower or Credit Party shall have any obligation or duty
to any participant. Neither Agent nor any Lender (other than the Lender selling
a participation) shall have any duty to any participant and may continue to deal
solely with the Lender selling a participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrowers and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
or negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and,
if requested by Agent, the preparation of informational materials for,
53
and the participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by them
and all other information provided by them and included in such materials,
except that any Projections delivered by Borrowers shall only be certified by
Borrowers as having been prepared by Borrowers in compliance with the
representations contained in Section 3.4(c).
(e) Any Lender may furnish any information concerning Credit Parties
in the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its Loans or
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.16(a), increased
costs under Section 1.16(b), an inability to fund LIBOR Loans under Section
1.16(c), or withholding taxes in accordance with Section 1.15(a).
(g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrowers, its rights to receive payment on the Term B Loans and rights to the
benefit of the Collateral supporting such Term B Loans; provided, however that
the Granting Lender shall not assign any of its other rights hereunder to such
SPC. No SPC shall be liable for any indemnity or similar payment obligation
under this Agreement (all liability for which shall remain with the Granting
Lender). For the avoidance of doubt, the Granting Lender shall for all purposes,
including, without limitation, the approval of any amendment or waiver of any
provision of any Loan Document or the obligation to pay any amount otherwise
payable by the Granting Lender under the Loan Documents, continue to be the
Lender of record hereunder. Granting Lender may replace its Note with one or
more new Notes for the purpose of reapportioning the Term B Loan among the
Notes, and Borrowers agree to execute and deliver to Granting Lender, such
amended Notes and replacement Notes and such other agreements or instruments
reasonably necessary or appropriate to reflect any reapportioning as described
in this Section 9.2(g). This Section 9.1(g) may not be amended without the prior
written consent of each Granting Lender, all or any of whose Loans are being
funded by an SPC at the time of such amendment.
9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical
54
and administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity. Neither Agent nor any of its Affiliates nor any of
their respective officers, directors, employees, agents or representatives shall
be liable to any Lender for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection herewith or
therewith, except for damages caused by its or their own gross negligence or
willful misconduct.
If Agent shall request instructions from Requisite Lenders, Requisite
Revolving Lenders, Requisite A Lenders, Requisite B Lenders or all affected
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders, Requisite Revolving
Lenders, Requisite A Lenders, Requisite B Lenders or all affected Lenders, as
the case may be, and Agent shall not incur liability to any Person by reason of
so refraining. Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document (a) if such action would, in
the opinion of Agent, be contrary to law or the terms of this Agreement or any
other Loan Document, (b) if such action would, in the opinion of Agent, expose
Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders, Requisite Revolving Lenders, Requisite A Lenders,
Requisite B Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no
55
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon 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 action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of the
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by Agent in
connection therewith; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Credit Parties.
56
9.7 Successor Agent. Agent may resign at any time by giving not less
than 30 days' prior written notice thereof to Lenders and Borrower
Representative. Upon any such resignation, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent's giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within 30 days after the date such notice of resignation was given by
the resigning Agent, such resignation shall become effective and the Requisite
Lenders shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as provided
above. Any successor Agent appointed by Requisite Lenders (other than a
successor Agent who is a Lender) hereunder shall be subject to the approval of
Borrower Representative, such approval not to be unreasonably withheld or
delayed; provided that such approval shall not be required if a Default or an
Event of Default has occurred and is continuing. On or after the A Obligations
Termination Date, the Requisite B Lenders may remove the Agent and appoint a
successor Agent. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the resigning Agent. Upon the
earlier of the acceptance of any appointment as Agent hereunder by a successor
Agent or the effective date of the resigning Agent's resignation, the resigning
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents, except that any indemnity rights or other rights
in favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, 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 acting
as Agent under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of any Borrower or Guarantor (regardless of whether such balances are then due
to such Borrower or Guarantor) and any other properties or assets at any time
held or owing by that Lender or that holder to or for the credit or for the
account of any Borrower or Guarantor against and on account of any of the
Obligations that are not paid when due. Any Lender exercising a right of setoff
or otherwise receiving any payment on account of the Obligations shall deliver
such amounts to Agent and Agent shall apply such funds to the payment of the
Obligations in accordance with Section 1.11. Such Lender shall purchase for cash
(and the other Lenders or holders shall sell) such participations in each such
other Lender's or holder's Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise
received with each other Lender or holder in accordance with the payment
applications set forth in Section 1.11 (other than offset rights exercised by
any Lender with respect to Sections 1.13, 1.15 or 1.16). Each Lender's
obligation under this Section 9.8 shall be in addition
57
to and not in limitation of its obligations to purchase a participation in an
amount equal to its Pro Rata Share of the Swing Line Loans under Section 1.1.
Each Credit Party that is a Borrower or Guarantor agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset with
respect to amounts in excess of its Pro Rata Share of the Obligations and may
sell participations in such amounts so offset to other Lenders and holders and
(b) any Lender so purchasing a participation in the Loans made or other
Obligations held by other Lenders or holders may exercise all rights of offset,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender or holder were a direct holder of the Loans and the
other Obligations in the amount of such participation. Notwithstanding the
foregoing, if all or any portion of the offset amount or payment otherwise
received is thereafter recovered from the Lender that has exercised the right of
offset, the purchase of participations by that Lender shall be rescinded and the
purchase price restored without interest.
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in
Concert.
(a) Advances; Payments.
(i) Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of Section 1.1(c). If the
Swing Line Lender declines to make a Swing Line Loan or if Swing Line
Availability is zero, Agent shall notify Revolving Lenders, promptly after
receipt of a Notice of Revolving Credit Advance and in any event prior to 1:00
p.m. (New York time) on the date such Notice of Revolving Advance is received,
by telecopy, telephone or other similar form of transmission. Each Revolving
Lender shall make the amount of such Lender's Pro Rata Share of such Revolving
Credit Advance available to Agent in same day funds by wire transfer to Agent's
account as set forth in Annex H not later than 3:00 p.m. (New York time) on the
requested funding date, in the case of an Index Rate Loan, and not later than
11:00 a.m. (New York time) on the requested funding date, in the case of a LIBOR
Loan. After receipt of such wire transfers (or, in the Agent's sole discretion,
before receipt of such wire transfers), subject to the terms hereof, Agent shall
make the requested Revolving Credit Advance to the Borrower designated by
Borrower Representative in the Notice of Revolving Credit Advance. All payments
by each Revolving Lender shall be made without setoff, counterclaim or deduction
of any kind.
(ii) On the 2nd Business Day of each calendar week or more
frequently at Agent's election (each, a "Settlement Date"), Agent shall advise
each Lender by telephone, or telecopy of the amount of such Lender's Pro Rata
Share of principal, interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender has funded all
payments or Advances required to be made by it and has purchased all
participations required to be purchased by it under this Agreement and the other
Loan Documents as of such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid by Borrowers since
the previous Settlement Date for the benefit of such Lender on the Loans held by
it. To the extent that any Lender (a "Non-Funding Lender") has failed to fund
all such payments and Advances or failed to fund the purchase of all such
participations, Agent shall be entitled to set off the funding short-fall
against that Non-Funding Lender's Pro Rata Share of all payments received from
Borrowers. Such payments shall be made by wire transfer to such Lender's account
(as specified by such Lender
58
in Annex H or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the next Business Day following each Settlement Date.
(b) Availability of Lender's Pro Rata Share. Agent may assume that
each Revolving Lender will make its Pro Rata Share of each Revolving Credit
Advance available to Agent on each funding date. If such Pro Rata Share is not,
in fact, paid to Agent by such Revolving Lender when due, Agent will be entitled
to recover such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails to pay the
amount of its Pro Rata Share forthwith upon Agent's demand, Agent shall promptly
notify Borrower Representative and Borrowers shall immediately repay such amount
to Agent. Nothing in this Section 9.9(b) or elsewhere in this Agreement or the
other Loan Documents shall be deemed to require Agent to advance funds on behalf
of any Revolving Lender or to relieve any Revolving Lender from its obligation
to fulfill its Commitments hereunder or to prejudice any rights that Borrowers
may have against any Revolving Lender as a result of any default by such
Revolving Lender hereunder. To the extent that Agent advances funds to any
Borrower on behalf of any Revolving Lender and is not reimbursed therefor on the
same Business Day as such Advance is made, Agent shall be entitled to retain for
its account all interest accrued on such Advance until reimbursed by the
applicable Revolving Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or will be received by
Agent from Borrowers and such related payment is not received by Agent, then
Agent will be entitled to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to any Borrower or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document, Agent will
not be required to distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such amount that Agent
has distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to any Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder or to
purchase any participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor shall not relieve any other Lender (each such
other Revolving Lender, an "Other Lender") of its obligations to make such
Advance or purchase such participation on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" or a "Revolving Lender"
(or be included in the calculation of "Requisite Lenders", "Requisite Revolving
Lenders," "Requisite A Lenders" or "Requisite B Lenders" hereunder) for
59
any voting or consent rights under or with respect to any Loan Document. At
Borrower Representative's request, Agent or a Person reasonably acceptable to
Agent shall have the right with Agent's consent and in Agent's sole discretion
(but shall have no obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent's request, sell and assign to
Agent or such Person, all of the Commitments of that Non-Funding Lender for an
amount equal to the principal balance of all Loans held by such Non-Funding
Lender and all accrued interest and fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable efforts
to provide Lenders with any notice of Default or Event of Default received by
Agent from, or delivered by Agent to, any Credit Party, with notice of any Event
of Default of which Agent has actually become aware and with notice of any
action taken by Agent following any Event of Default; provided, that Agent shall
not be liable to any Lender for any failure to do so, except to the extent that
such failure is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrowers are required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding but subject to Section 8.2(c), each Lender hereby agrees with
each other Lender that no Lender shall take any action to protect or enforce its
rights arising out of this Agreement or the Notes (including exercising any
rights of setoff) without first obtaining the prior written consent of Agent and
Requisite A Lenders, Requisite B Lenders or Requisite Lenders, as applicable, it
being the intent of Lenders that any such action to protect or enforce rights
under this Agreement and the Notes shall be taken in concert and at the
direction or with the consent of Agent and/or Requisite A Lenders, Requisite B
Lenders or Requisite Lenders, as applicable in accordance with the terms hereof.
Notwithstanding anything herein to the contrary, no Lender shall enter into any
agreement or have any understanding with any other Lender with regard to the
manner or substance of any vote on any matter requiring such Lender's vote.
9.10 Buy-Out Right of Term B Lenders. This Section 9.10 describes the
buy-out right (the "Buy-Out Right") of Term B-2 Lenders:
(a) Term B-2 Lenders may (but shall not be obligated to) cause the
assignment to Term B-2 Lenders by the Lenders (other than the Term B-2 Lenders)
of all right, title and interest, in, to, arising under, or in respect of all
Buy-Out Obligations of all Lenders upon 5 Business Days prior written notice
("Buy-Out Notice") given to Agent within 5 Business Days of Term B-2 Lenders'
receipt of a notice from Agent that it intends to sell all or substantially all
of the Collateral or any portion of the Collateral, if, with respect to a sale
of a portion of the Collateral, after giving effect to such sale, Agent
reasonably expects (i) the A Obligations will be paid in full and (ii) funds
will be deposited in a cash collateral account in an amount equal to the Letter
of Credit Obligations.
(b) Such assignments shall be effected on the fifth Business Day after
a Buy-Out Notice is issued by Term B-2 Lenders, by the execution by Lenders
(other than the Term B-2 Lenders) and Term B-2 Lenders of an Assignment and
Acceptance Agreement in exchange for
60
(x) the payment, in immediately available funds, of the amount of Buy-Out
Obligations owed to each Lender as of the date on which such assignment is made,
and (y) the deposit of funds in a cash collateral account in an amount equal to
the Letter of Credit Obligations as of the date on which such assignment is
made. Term B-2 Lenders' rights under this Section 9.10 shall terminate if
payment of all such amounts are not received by Lenders (other than the Term B-2
Lenders) at the expiration of the applicable period set forth in the conditions
of this clause (b); provided that in the event a sale of Collateral does not
close, the Buy-Out Rights of Term B-2 Lenders and the notice provisions under
this Section 9.10 shall be reinstated in full.
(c) The Buy-Out Right under this Section 9.10 may (i) only be
exercised after Agent has given notice of its intent to sell all or
substantially all of the Collateral or any portion of the Collateral, if, with
respect to a sale of a portion of the Collateral, after giving effect to such
sale, Agent reasonably expects that (x) the A Obligations will be paid in full
and (y) funds will be deposited in a cash collateral account in an amount equal
to the Letter of Credit Obligations and (ii) only be exercised completely with
respect to all Buy-Out Obligations and upon a representative of Term B-2 Lenders
becoming Agent hereunder, at which time, Agent shall be released from all
obligations and duties hereunder. Agent shall give notice of any proposed sale
described above at least 10 Business Days prior to such sale. The assignments by
Term A Lenders, Term B-1 Lenders, Revolving Lenders, Swing Line Lender and Agent
pursuant to this Section 9.10 shall be without recourse or warranty of any kind
other than with respect to ownership of the rights, title and interest it is
assigning under this Section 9.10.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter of interest, commitment letter, or fee letter
(other than the GE Capital Fee Letter and the Gladstone Fee Letter) or
confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement.
61
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrowers, and by Requisite Lenders,
Requisite Revolving Lenders, Requisite A Lenders, Requisite B Lenders or all
affected Lenders, as applicable. Except as set forth in clauses (b) and (c)
below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that increases the percentage
advance rates set forth in the definition of the Xxxxx Borrowing Base or the
Blue Ridge Borrowing Base, or that makes less restrictive the nondiscretionary
criteria for exclusion from Eligible Accounts and Eligible Inventory set forth
in Sections 1.6 and 1.7, shall be effective unless the same shall be in writing
and signed by Agent, Requisite Revolving Lenders and Borrowers. No amendment,
modification, termination or waiver of or consent with respect to any provision
of this Agreement that waives compliance with the conditions precedent set forth
in Section 2.2 to the making of any Loan or the incurrence of any Letter of
Credit Obligations shall be effective unless the same shall be in writing and
signed by Agent, Requisite Revolving Lenders and Borrowers. Notwithstanding
anything contained in this Agreement to the contrary, no waiver or consent with
respect to any Default or any Event of Default shall be effective for purposes
of the conditions precedent to the making of Loans or the incurrence of Letter
of Credit Obligations set forth in Section 2.2 unless the same shall be in
writing and signed by Agent, Requisite Revolving Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment (which action shall be
deemed only to affect those Lenders whose Commitments are increased and may be
approved by Requisite Lenders, including those Lenders whose Commitments are
increased); (ii) reduce the principal of, rate of interest on or Fees payable
with respect to any Loan or Letter of Credit Obligations of any affected Lender;
(iii) extend any scheduled payment date (other than payment dates of mandatory
prepayments under Section 1.3(b)(ii), (iii) and (iv)) or final maturity date of
the principal amount of any Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) except as otherwise permitted herein or in the other Loan Documents,
release any Credit Party or release, or permit any Credit Party to sell or
otherwise dispose of, all or substantially all of the Collateral (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Loans that
shall be required for Lenders or any of them to take any action hereunder; (vii)
amend or waive this Section 11.2 or the definitions of the terms "Maximum
Amount", "Revolving Loan Commitment", "Term A Commitment" or "Term B Commitment"
or the terms "Requisite Lenders", "Requisite Revolving Lenders", "Requisite A
Lenders" or "Requisite B Lenders" insofar as such definitions affect the
substance of this Section 11.2 and (viii) increase the aggregate principal of
all Commitments in excess of (A) the Maximum Amount (as may be amended by the
immediately succeeding sentence) plus (B) the
62
aggregate Term A Commitments and Term B Commitments less all previous payments
of principal thereon (which action shall be deemed to affect all Lenders).
Notwithstanding anything set forth in this Agreement to the contrary, the
Revolving Loan Commitment may be increased to an aggregate principal amount not
to exceed $23,000,000 with the approval of the Borrower Representative,
Requisite Revolving Lenders and the Lender whose Revolving Loan Commitment is
increased. Furthermore, no amendment, modification, termination or waiver
affecting the rights or duties of Agent or L/C Issuer under this Agreement or
any other Loan Document shall be effective unless in writing and signed by Agent
or L/C Issuer, as the case may be, in addition to Lenders required hereinabove
to take such action. Each amendment, modification, termination or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note.
No notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 11.2 shall be binding upon
each holder of the Notes at the time outstanding and each future holder of the
Notes.
(d) If, in connection with any proposed amendment, modification,
waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other Lenders whose consent is
required is not obtained (any such Lender whose consent is not obtained as
described in this clause (i) and in clause (ii) below being referred to as a
"Non-Consenting Lender"), or
(ii) requiring the consent of Requisite Lenders, the consent of
Requisite A Lenders is obtained, but the consent of Requisite B Lenders is not
obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent or a Person reasonably acceptable to Agent shall
have the right with Agent's consent and in Agent's sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lenders for an amount equal to the principal balance of all Loans held by the
Non-Consenting Lenders and all accrued interest and Fees with respect thereto
through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions, proceedings or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrowers termination
statements, mortgage releases and other documents necessary or appropriate to
evidence the termination of the Liens securing payment of the Obligations.
63
11.3 Fees and Expenses. Borrowers shall reimburse (i) Agent and Lenders
for all fees, costs and expenses (including the reasonable fees and expenses of
all of its counsel, advisors, consultants, auditors, environmental and
management consultants and appraisers), incurred in connection with the
negotiation and preparation of the Loan Documents and incurred in connection
with:
(a) the forwarding to Borrowers or any other Person on behalf of
Borrowers by Agent of the proceeds of any Loan (including a wire transfer fee of
$25 per wire transfer);
(b) any amendment, modification or waiver of, consent with respect to,
or termination of, any of the Loan Documents or advice in connection with the
syndication and administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the Borrowers or
any other Person that may be obligated to Agent by virtue of the Loan Documents;
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during the
pendency of one or more Events of Default; provided, that no Person shall be
entitled to reimbursement under this clause (c) in respect of any litigation,
contest, dispute, suit, proceeding or action to the extent any of the foregoing
results from such Person's gross negligence or willful misconduct;
(d) any attempt to enforce any remedies of Agent against any or all of
the Credit Parties or any other Person that may be obligated to Agent or any
Lender by virtue of any of the Loan Documents, including any such attempt to
enforce any such remedies in the course of any work-out or restructuring of the
Loans during the pendency of one or more Events of Default;
(e) any workout or restructuring of the Loans during the pendency of
one or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, protect, evaluate, assess, appraise, collect, sell,
liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees incurred by such counsel and others in connection with or
relating to any of the events or actions described in this Section 11.3, all of
which shall be payable, on demand, by Borrowers to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants,
64
environmental advisors, appraisers, investment bankers, management and other
consultants and paralegals; court costs and expenses; photocopying and
duplication expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram or telecopy charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal or other advisory
services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders, and directed to Borrowers specifying
such suspension or waiver.
11.5 Obligations Absolute; Remedies. The payment and performance by the
Credit Parties of all of the Obligations shall be absolute and unconditional,
irrespective of any defense or rights of set-off, recoupment or counterclaim any
Credit Party might otherwise have against the Agent or any Lender, and the
Credit Parties shall pay and perform all of the Obligations, free of any
deductions and without abatement, diminution, recoupment, counterclaim or
set-off. Until payment in full of all of the Obligations, the Credit Parties
shall (a) not suspend or discontinue any payments required pursuant to the
Notes, this Agreement or any other Loan Document; and (b) perform and observe
all of the other terms and provisions of this Agreement or any other Loan
Documents. Agent's and Lenders' rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies that Agent or
any Lender may have under any other agreement, including the other Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintaining the confidentiality of its own confidential information) to maintain
as confidential all confidential
65
information provided to them by the Credit Parties and designated as
confidential for a period of 2 years following receipt thereof, except that
Agent and any Lender may disclose such information (a) to Persons employed or
engaged by Agent or such Lender; (b) to any bona fide assignee or participant or
potential assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8 (and any such bona fide assignee or participant
or potential assignee or participant may disclose such information to Persons
employed or engaged by them as described in clause (a) above); (c) as required
or requested by any Governmental Authority or reasonably believed by Agent or
such Lender to be compelled by any court decree, subpoena or legal or
administrative order or process; (d) as, on the advice of Agent's or such
Lender's counsel, is required by law; (e) in connection with the exercise of any
right or remedy under the Loan Documents or in connection with any Litigation to
which Agent or such Lender is a party; or (f) that ceases to be confidential
through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN XXX XXXX
XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY X XXXXX XXXXXXX XXXXXXX XX XXX
XXXX XXXXXX; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT.
EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH IN
ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL
66
RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER
POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered: (a) upon the earlier of actual receipt and 3
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid; (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) 1 Business Day after deposit with a reputable overnight courier with
all charges prepaid or (d) when delivered, if hand-delivered by messenger, all
of which shall be addressed to the party to be notified and sent to the address
or facsimile number indicated in Annex I or to such other address (or facsimile
number) as may be substituted by notice given as herein provided. The giving of
any notice required hereunder may be waived in writing by the party entitled to
receive such notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other communication to any
Person (other than Borrower Representative or Agent) designated in Annex I to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
67
11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least 2 Business Days' prior
notice to GE Capital and without the prior written consent of GE Capital unless
(and only to the extent that) such Credit Party or Affiliate is required to do
so under law and then, in any event, such Credit Party or Affiliate will consult
with GE Capital before issuing such press release or other public disclosure.
Each Credit Party consents to the publication by Agent or any Lender of a
tombstone or similar advertising material relating to the financing transactions
contemplated by this Agreement. Agent reserves the right to provide to industry
trade organizations information necessary and customary for inclusion in league
table measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party for liquidation or reorganization, should any Credit Party
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty. Each Borrower hereby agrees that such Borrower is
jointly and severally liable for, and hereby absolutely and unconditionally
guarantees to Agent and Lenders and their respective successors and assigns, the
full and prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of, all Obligations owed or hereafter owing to Agent
and Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and not
of collection, that its obligations under this Section 12 shall not be
discharged until payment and performance, in full, of the Obligations has
occurred, and that its obligations under this Section 12 shall be absolute and
unconditional, irrespective of, and unaffected by,
68
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, this Agreement, any other Loan Document or
any other agreement, document or instrument to which any Borrower is or may
become a party;
(b) the absence of any action to enforce this Agreement (including
this Section 12) or any other Loan Document or the waiver or consent by Agent
and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its
Lien against, any security for the Obligations or any action, or the absence of
any action, by Agent and Lenders in respect thereof (including the release of
any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise constitute
a legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as principal
debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law or
in equity, or otherwise, to compel Agent or Lenders to xxxxxxxx assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders would
decline to enter into this Agreement.
12.3 Benefit of Guaranty. Each Borrower agrees that the provisions of
this Section 12 are for the benefit of Agent and Lenders and their respective
successors, transferees, endorsees and assigns, and nothing herein contained
shall impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 12.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution, indemnification
or set off and any and all defenses available to a surety, guarantor or
accommodation co-obligor until the Obligations are indefeasibly paid in full in
cash. Each Borrower acknowledges and agrees that this subordination is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 12, and
that Agent, Lenders and their respective successors and assigns are intended
third party beneficiaries of the waivers and agreements set forth in this
Section 12.4.
69
12.5 Election of Remedies. If Agent or any Lender may, under applicable
law, proceed to realize its benefits under any of the Loan Documents giving
Agent or such Lender a Lien upon any Collateral, whether owned by any Borrower
or by any other Person, either by judicial foreclosure or by non-judicial sale
or enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights and
remedies under this Section 12. If, in the exercise of any of its rights and
remedies, Agent or any Lender shall forfeit any of its rights or remedies,
including its right to enter a deficiency judgment against any Borrower or any
other Person, whether because of any applicable laws pertaining to "election of
remedies" or the like, each Borrower hereby consents to such action by Agent or
such Lender and waives any claim based upon such action, even if such action by
Agent or such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such action by
Agent or such Lender. Any election of remedies that results in the denial or
impairment of the right of Agent or any Lender to seek a deficiency judgment
against any Borrower shall not impair any other Borrower's obligation to pay the
full amount of the Obligations. In the event Agent or any Lender shall bid at
any foreclosure or trustee's sale or at any private sale permitted by law or the
Loan Documents, Agent or such Lender may bid all or less than the amount of the
Obligations and the amount of such bid need not be paid by Agent or such Lender
but shall be credited against the Obligations. The amount of the successful bid
at any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Section 12, notwithstanding that any present
or future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which Agent or any Lender might otherwise be
entitled but for such bidding at any such sale.
12.6 Limitation. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 12 (which liability is in
any event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any date of
determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or for the
benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law after taking into account, among other
things, such Borrower's right of contribution and indemnification from each
other Borrower under Section 12.7.
12.7 Contribution with Respect to Guaranty Obligations.
(a) To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made to that
Borrower for which it is primarily liable) (a "Guarantor Payment") that, taking
into account all other Guarantor
70
Payments then previously or concurrently made by any other Borrower, exceeds the
amount that such Borrower would otherwise have paid if each Borrower had paid
the aggregate Obligations satisfied by such Guarantor Payment in the same
proportion that such Borrower's Allocable Amount (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each
of the Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.
(b) As of any date of determination, the "Allocable Amount" of any
Borrower shall be equal to the maximum amount of the claim that could then be
recovered from such Borrower under this Section 12 without rendering such claim
voidable or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or
under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative rights
of Borrowers and nothing set forth in this Section 12.7 is intended to or shall
impair the obligations of Borrowers, jointly and severally, to pay any amounts
as and when the same shall become due and payable in accordance with the terms
of this Agreement, including Section 12.1. Nothing contained in this Section
12.7 shall limit the liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses with respect
thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to which such
contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of the Commitments.
12.8 Liability Cumulative. The liability of Borrowers under this
Section 12 is in addition to and shall be cumulative with all liabilities of
each Borrower to Agent and Lenders under this Agreement and the other Loan
Documents to which such Borrower is a party or in respect of any Obligations or
obligation of the other Borrower, without any limitation as to amount, unless
the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
71
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWERS
XXXXX INTERNATIONAL ENTERPRISES CORP.
By:____________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President of Finance
BLUE RIDGE TEXTILE MANUFACTURING INC.
By:____________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By:____________________________________
E. Xxxxxx Xxxx
Its Duly Authorized Signatory
GLADSTONE CAPITAL CORPORATION
as Lender
By:____________________________________
Name: Xxxxx Xxxxxxxxx
Title: Chairman
72
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrowers.
CREDIT PARTIES
OHIO GARMENT RENTAL, INC.
By:________________________________
Name: Xxxxxxx X. Xxxx
Title: Vice President of Finance
73
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings, and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed it in Annex G.
"Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, or Instruments),
(including any such obligations that may be characterized as an account or
contract right under the Code), (b) all of each Credit Party's rights in, to and
under all purchase orders or receipts for goods or services, (c) all of each
Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all rights to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health care insurance receivables and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.
"Advance" means any Revolving Credit Advance or Swing Line Advance, as
the context may require.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrowers, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of any Borrower. For the purposes
of this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management
A-1
or policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
"Agent" means GE Capital in its capacity as Agent for Lenders or its
successor appointed pursuant to Section 9.7.
"Aggregate Borrowing Base" means as of any date of determination, an
amount equal to (i) the sum of the Xxxxx Borrowing Base and the Blue Ridge
Borrowing Base; less (ii) any Reserves except to the extent already deducted
therefrom.
"Agreement" has the meaning ascribed to it in the preamble to the
credit agreement to which this Annex A is attached.
"Allocable Amount" has the meaning ascribed to it in Section 12.7(b).
"A Obligations" means all Obligations (including any interest which
accrues after the commencement of any case or proceeding in bankruptcy after the
insolvency of, or for the reorganization of, any Credit Party whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding)
other than the principal of, interest on, and all fees and expenses payable in
respect of, the Term B Loan.
"A Obligations Termination Date" means (a) the Loans (other than the
Term B Loans) have been indefeasibly repaid in full, (b) all other Obligations
(other than the B Obligations) under the Agreement and the other Loan Documents
have been completely discharged, (c) all Letter of credit Obligations have been
cash collateralized, canceled or backed by standby letters of credit in
accordance with Annex B, and (d) none of the Borrowers have any further right to
borrow any monies under the Agreement.
"Appendices" has the meaning ascribed to it in the recitals to the
Agreement.
"Applicable Margins" means collectively the Applicable Revolver Index
Margin, the Applicable Term A Loan Index Margin, the Applicable Revolver LIBOR
Margin and the Applicable Term A Loan LIBOR Margin.
"Applicable Revolver Index Margin" means 1.25%.
"Applicable Revolver LIBOR Margin" means 2.75%.
"Applicable Term A Loan Index Margin" means 1.75%.
"Applicable Term A Loan LIBOR Margin" means 3.25%.
"Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United States
Code, 11 U.S.C.(SS).101 et seq.
A-2
"Blocked Accounts" has the meaning ascribed to it in Annex C.
"Blue Ridge" means has the meaning ascribed to it in the preamble to
the Agreement.
"Blue Ridge Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) 85% of the book value of Blue Ridge's Eligible Accounts; and
(b) the lesser of (i) 85% of the appraised net orderly liquidation
value of Blue Ridge's Eligible Inventory and (ii) 60% of the book value of Blue
Ridge's Eligible Inventory valued at the lower of cost (determined on a
first-in, first-out basis) or market;
in each case, less any Reserves established by Agent at such time.
"B Obligations" means the Term B Loan and all other Obligations to the
Term B Lenders.
"Borrower Representative" means Xxxxx in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(d).
"Borrowers" and "Borrower" have the respective meanings ascribed to it
in the preamble to the Agreement.
"Borrowing Availability" means as of any date of determination (a) as
to all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Aggregate
Borrowing Base, in each case, less the sum of the aggregate Revolving Loan and
Swing Line Loan then outstanding, or (b) as to an individual Borrower, the
lesser of (i) the Maximum Amount less the sum of the Revolving Loan and Swing
Line Loan outstanding to all other Borrowers and (ii) that Borrower's separate
Borrowing Base, less the sum of the Revolving Loan and Swing Line Loan
outstanding to that Borrower; provided that an Overadvance in accordance with
Section 1.1(a)(iii) may cause the Revolving Loan and the Swing Line Loan to
exceed the Aggregate Borrowing Base or a Borrower's separate Borrowing Base by
the amount of such permitted Overadvance.
"Borrowing Base" means as the context may require, the Xxxxx Borrowing
Base and the Blue Ridge Borrowing Base or any such Borrowing Base.
"Borrowing Base Certificate" means a certificate to be executed and
delivered from time to time by each Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New York
and in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.
A-3
"Buy Out Obligations" means all Obligations (including any interest
which accrues after the commencement of any case or proceeding in bankruptcy
after the insolvency of, or for the reorganization of, any Credit Party whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) other than the principal of, interest on, and all fees and expenses
payable in respect of, the Term B-2 Loan.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements or
for replacements, substitutions or additions thereto that have a useful life of
more than one year and that are required to be capitalized under GAAP
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in Section
1.8.
"Change of Control" means any event, transaction or occurrence as a
result of which (a) the Permitted Holders cease to own and control all of the
economic and voting rights associated with ownership of one hundred percent
(100%) of the outstanding capital Stock of all classes of Xxxxx on a fully
diluted basis, or (b) Xxxxx ceases to own and control all of the economic and
voting rights associated with all of the outstanding capital Stock of any of its
Subsidiaries.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including any interest, penalties or other
additions to tax that may become payable in respect thereof and taxes owed to
the PBGC at the time due and payable), levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Obligations, (c) the employees, payroll, income or gross receipts of any Credit
Party, (d) any Credit Party's ownership or use of any properties or other
assets, or (e) any other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party.
"Closing Date" means July 2, 2002.
A-4
"Closing Checklist" means the schedule, including all appendices,
exhibits or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and the
transactions contemplated thereunder, substantially in the form attached hereto
as Annex D.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in different Articles or Divisions of the
Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" means the Security Agreement, the Pledge
Agreements, the Guaranties, the Mortgages, the Intellectual Property Security
Agreement, and all similar agreements entered into guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.
"Collateral Reports" means the reports with respect to the Collateral
referred to in Annex F.
"Collection Account" means that certain account of Agent, account
number 000-000-00 in the name of Agent at Bankers Trust Company in New York, New
York ABA No. 021 001 033, or such other account as may be specified in writing
by Agent as the "Collection Account."
"Commitment Termination Date" means the earliest of (a) with respect
to all Obligations (other than the Term B Loan), July 1, 2006, with respect to
the Term B Loan, July 1, 2007 or, at the option of the Term B Lenders, the date
of termination of Lenders' obligations to make any Advances and incur Letter of
Credit Obligations, (b) the date of termination of Lenders' obligations to make
Advances and to incur Letter of Credit Obligations or permit existing Loans to
remain outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrowers of the Loans and the cancellation and return (or
stand-by guarantee) of all Letters of Credit or the cash collateralization of
all Letter of Credit Obligations pursuant to Annex B, and the permanent
reduction of all Commitments to zero dollars ($0).
A-5
"Commitments" means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment (including without duplication the Swing Line
Lender's Swing Line Commitment as a subset of its Revolving Loan Commitment),
Term A Loan Commitment and Term B Loan Commitment as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Lenders, the aggregate of all Lenders' Revolving Loan Commitments
(including without duplication the Swing Line Lender's Swing Line Commitment as
a subset of its Revolving Loan Commitment), Term A Loan Commitments and Term B
Loan Commitments, which aggregate commitment shall be Fifty Five Million Dollars
($55,000,000) on the Closing Date, as to each of clauses (a) and (b), as such
Commitments may be reduced, amortized or adjusted from time to time in
accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in Annex E.
"Concentration Accounts" has the meaning ascribed to it in Annex C.
"Contracts" means all "contracts," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant disclaims any security interest in the applicable
financial assets, acknowledges the Lien of Agent, on behalf of itself and
Lenders, on such financial assets, and agrees to follow the instructions or
entitlement orders of Agent without further consent by the affected Credit
Party.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
A-6
"Xxxxx" has the meaning ascribed to it in the preamble to this
Agreement.
"Xxxxx Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) 85% of the book value of Xxxxx'x Eligible Accounts; and
(b) the lesser of (i) 85% of the appraised net orderly liquidation
value of Xxxxx'x Eligible Inventory and (ii) 60% of the book value of
Xxxxx'x Eligible Inventory valued at the lower of cost (determined on a
first-in, first-out basis) or market;
in each case, less any Reserves established by Agent at such time.
"Xxxxx Stockholders" has the meaning ascribed thereto in the Recitals.
"Xxxxx Stockholders Pledge Agreement" means the Pledge Agreement of
even date herewith executed by each of the Xxxxx Stockholders in favor of Agent,
on behalf of itself and Lenders, pledging all Stock of Xxxxx held by such
Stockholder.
"Credit Parties" means each Borrower, and each of their respective
Subsidiaries.
"Credit Party Pledge Agreement" means the Pledge Agreement of even
date herewith executed by each of the Credit Parties in favor of Agent, on
behalf of itself and Lenders, pledging all Stock of such Credit Party's
Subsidiaries, if any, and all Intercompany Notes owing to or held by it.
"Current Assets" means, with respect to any Person, all current assets
of such Person as of any date of determination calculated in accordance with
GAAP, but excluding cash, cash equivalents and debts due from Affiliates.
"Current Liabilities" means, with respect to any Person, all
liabilities that should, in accordance with GAAP, be classified as current
liabilities, and in any event shall include all Indebtedness payable on demand
or within one year from any date of determination without any option on the part
of the obligor to extend or renew beyond such year, all accruals for federal or
other taxes based on or measured by income and payable within such year, but
excluding the current portion of long-term debt required to be paid within one
year and the aggregate outstanding principal balances of the Revolving Loan and
the Swing Line Loan.
"Current Ratio" means, with respect to any Person as of any date of
determination, the ratio of (a) Current Assets to (b) Current Liabilities.
"Debt Service" means, with respect to any Person for any fiscal
period, an amount equal to the sum of (a) Interest Expense for such period and
(b) the scheduled amortization of any outstanding Indebtedness during such
period.
A-7
"Debt Service Coverage Ratio" means, with respect to any Person for
any period, the ratio of (i) EBITDA plus Merchandise Amortization, minus
Merchandise Purchases, minus Capital Expenditures, minus Taxes, currently paid,
minus Permitted Distributions to (ii) Debt Service.
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
"Deposit Accounts" means all "deposit accounts" as such term is
defined in the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
"Disclosure Schedules" means the Schedules prepared by Borrowers and
denominated as Disclosure Schedules (1.4) through (6.7) in the Index to the
Agreement.
"Documents" means all "documents," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any fiscal period,
without duplication, an amount equal to (a) consolidated net income of such
Person for such period determined in accordance with GAAP, minus (b) the sum of
(i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, exchange or other disposition of
capital assets by such Person (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), and (v) any other non-cash gains that have been
added in determining consolidated net income, in each case to the extent
included in the calculation of consolidated net income of such Person for such
period in accordance with GAAP, but without duplication, plus (c) the sum of (i)
any provision for income taxes, (ii) Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash charges
(including depreciation and amortization) for such period, (v) amortized debt
discount for such period, and (vi) the amount of any deduction to consolidated
net income as the result of any grant to any members of the management of such
Person of any Stock, in each case to the extent included in the calculation of
consolidated net income of such Person for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (1) the
income (or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of such
Person's Subsidiaries; (2) the income (or deficit) of any other Person (other
than a Subsidiary) in which such Person has an ownership interest, except to the
extent any such income has actually been received by such Person in the form of
cash dividends or distributions; (3) the undistributed earnings of any
Subsidiary of such Person to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of
A-8
any contractual obligation or requirement of law applicable to such Subsidiary;
(4) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection of
the proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person, (8) in the case of a successor to such Person by
consolidation or merger or as a transferee of its assets, any earnings of such
successor prior to such consolidation, merger or transfer of assets, and (9) any
deferred credit representing the excess of equity in any Subsidiary of such
Person at the date of acquisition of such Subsidiary over the cost to such
Person of the investment in such Subsidiary.
"Eligible Accounts" has the meaning ascribed to it in Section 1.6.
"Eligible Inventory" has the meaning ascribed to it in Section 1.7.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C.(S)(S)9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.(S)(S)5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.(S)(S)136 et seq.); the
Solid Waste Disposal Act (42 U.S.C.(S)(S) 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C.(S)(S)2601 et seq.); the Clean Air Act (42
U.S.C.(S)(S)7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C.(S)(S)1251 et seq.); the Occupational Safety and Health Act (29
U.S.C.(S)(S)651 et seq.); and the Safe Drinking Water Act (42 U.S.C.(S)(S)
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
A-9
"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located and,
in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade
or business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other
event or condition that might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Title IV Plan or Multiemployer Plan or for the imposition of
liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a
Multiemployer Plan under Section 4041A of ERISA or the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i)
the loss of a Qualified Plan's qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 8.1.
A-10
"Excess Cash Flow" means, without duplication, with respect to any
Fiscal Year of Borrowers and their Subsidiaries, consolidated net income plus
(a) depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income, minus (b) Capital Expenditures during such
Fiscal Year (excluding the financed portion thereof and excluding any Capital
Expenditures in such Fiscal Year to the extent in excess of the amount permitted
to be made in such Fiscal Year pursuant to clause (a) of Annex G), minus (c)
Interest Expense paid or accrued (excluding any original issue discount,
interest paid in kind or amortized debt discount, to the extent included in
determining Interest Expense) and scheduled principal payments paid or payable
in respect of Funded Debt, plus or minus (as the case may be), (d) extraordinary
gains or losses which are cash items not included in the calculation of net
income, minus (e) mandatory prepayments paid in cash pursuant to Section 1.3
other than mandatory prepayments made pursuant to Sections 1.3(b)(i),
1.3(b)(ii), 1.3(b)(iv) or 1.3(d), plus (f) taxes deducted in determining
consolidated net income to the extent not paid for in cash, (g) plus Merchandise
Amortization, (h) less Merchandise Purchases.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C.(S)201 et seq.
"Fair Salable Balance Sheet" means a balance sheet of Borrowers
prepared in accordance with Section 3.4(d).
"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in Annex
G.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers delivered
in accordance with Section 3.4 and Annex E.
"Fiscal Month" means any of the monthly accounting periods of
Borrowers.
"Fiscal Quarter" means any of the quarterly accounting periods of
Borrowers, ending on January 30, April 30, July 31 and October 31 of each year.
"Fiscal Year" means any of the annual accounting periods of Borrowers
ending on October 31 of each year.
A-11
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party.
"Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one year
from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the United
States of America consistently applied, as such term is further defined in Annex
G to the Agreement.
"GE Capital" has the meaning ascribed to it in the preamble to this
Agreement.
"GE Capital Fee Letter" has the meaning ascribed to it in Section 1.9.
"General Intangibles" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Gladstone" means Gladstone Capital Corporation, a Maryland
corporation.
"Gladstone Fee Letter" has the meaning ascribed to it in Section 1.9.
"Goods" means all "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent
A-12
included in "goods" as defined in the Code, manufactured homes, standing timber
that is cut and removed for sale and unborn young of animals.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranteed Indebtedness" means as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) advance or supply funds (i) for the purchase or payment of any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation, (d) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, each Subsidiary Guaranty and any
other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantor Payment" has the meaning ascribed to it in Section 12.7(a).
"Guarantors" means each Subsidiary of each Borrower, and each other
Person, if any, that executes a guaranty or other similar agreement in favor of
Agent, for itself and the ratable benefit of Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property
A-13
payment for which is deferred 6 months or more, but excluding obligations to
trade creditors incurred in the ordinary course of business that are unsecured
and not overdue by more than 6 months unless being contested in good faith, (b)
all reimbursement and other obligations with respect to letters of credit,
bankers' acceptances and surety bonds, whether or not matured, (c) all
obligations evidenced by notes, bonds, debentures or similar instruments, (d)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the Index
Rate as in effect on the Closing Date) of future rental payments under all
synthetic leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter the
risks of that Person arising from fluctuations in currency values or interest
rates, in each case whether contingent or matured, (h) all Indebtedness referred
to above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the payment
of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in Section
1.13.
"Indemnified Person" has the meaning ascribed to in Section 1.13.
"Index Rate" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
"base rate on corporate loans posted by at least 75% of the nation's 30 largest
banks" (or, if The Wall Street Journal ceases quoting a base rate of the type
described, the highest per annum rate of interest published by the Federal
Reserve Board in Federal Reserve statistical release H.15 (519) entitled
"Selected Interest Rates" as the Bank prime loan rate or its equivalent), and
(ii) the Federal Funds Rate plus 50 basis points per annum. Each change in any
interest rate provided for in the Agreement based upon the Index Rate shall take
effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
A-14
"Intellectual Property Security Agreement" means the Intellectual
Property Security Agreements made in favor of Agent, on behalf of itself and
Lenders, by each applicable Credit Party.
"Intercompany Notes" has the meaning ascribed to it in Section 6.3.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including,
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period provided that, in
addition to the foregoing, each of (x) the date upon which all of the
Commitments have been terminated and the Loans have been paid in full and (y)
the Commitment Termination Date shall be deemed to be an "Interest Payment Date"
with respect to any interest that has then accrued under the Agreement.
"Inventory" means all "inventory," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal property
that are held by or on behalf of any Credit Party for sale or lease or are
furnished or are to be furnished under a contract of service, or that constitute
raw materials, work in process, finished goods, returned goods, or materials or
supplies of any kind, nature or description used or consumed or to be used or
consumed in such Credit Party's business or in the processing, production,
packaging, promotion, delivery or shipping of the same, including all supplies
and embedded software.
"Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRB" means those certain Industrial Revenue Bonds Due 2006 in the
aggregate principal amount of $2,200,000.
"IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS" means the Internal Revenue Service.
A-15
"L/C Issuer" has the meaning ascribed to it in Annex B.
"L/C Sublimit" has the meaning ascribed to it in Annex B.
"Lead Arranger" has the meaning ascribed to it in the preamble to the
Agreement.
"Lenders" means GE Capital, the other Lenders named on the signature
pages of the Agreement, and, if any such Lender shall decide to assign all or
any portion of the Obligations, such term shall include any assignee of such
Lender.
"Letter of Credit Fee" has the meaning ascribed to it in Annex B.
"Letter of Credit Obligations" means all outstanding obligations
incurred by Agent and Lenders at the request of Borrower Representative, whether
direct or indirect, contingent or otherwise, due or not due, in connection with
the issuance of Letters of Credit by Agent or another L/C Issuer or the purchase
of a participation as set forth in Annex B with respect to any Letter of Credit.
The amount of such Letter of Credit Obligations shall equal the maximum amount
that may be payable at such time or at any time thereafter by Agent or Lenders
thereupon or pursuant thereto.
"Letters of Credit" means documentary or standby letters of credit
issued for the account of any Borrower by any L/C Issuer, and bankers'
acceptances issued by any Borrower, for which Agent and Lenders have incurred
Letter of Credit Obligations.
"Letter-of-Credit Rights" means "letter-of-credit rights" as such term
is defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit, whether or
not such Credit Party, as beneficiary, has demanded or is entitled to demand
payment or performance.
"LIBOR Business Day" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative pursuant
to the Agreement and ending one, two or three months thereafter, as selected by
Borrower Representative's irrevocable notice to Agent as set forth in Section
1.5(e); provided, that the foregoing provision relating to LIBOR Periods is
subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a
LIBOR Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension would be
to carry such LIBOR Period into another calendar month in which event such
LIBOR Period shall end on the immediately preceding LIBOR Business Day;
A-16
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end 2 LIBOR Business Days prior to such date;
(c) any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such LIBOR Period) shall end on the
last LIBOR Business Day of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period for
such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there
shall be no more than five (5) separate LIBOR Loans in existence at any one
time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest determined
by Agent equal to:
(a) the offered rate for deposits in United States Dollars for the
applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time), on the second full LIBOR Business Day next preceding the first
day of such LIBOR Period (unless such date is not a Business Day, in which event
the next succeeding Business Day will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements in effect
on the day that is 2 LIBOR Business Days prior to the beginning of such LIBOR
Period (including basic, supplemental, marginal and emergency reserves under any
regulations of the Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Federal Reserve Board that are required to be maintained by
a member bank of the Federal Reserve System.
If such interest rates shall cease to be available from Telerate News
Service, the LIBOR Rate shall be determined from such financial reporting
service or other information as shall be mutually acceptable to Agent and
Borrower Representative.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
A-17
"Loan Account" has the meaning ascribed to it in Section 1.12.
"Loan Documents" means the Agreement, the Notes, the Collateral
Documents, the Master Standby Agreement, the Master Documentary Agreement, and
all other agreements, instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of, Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.
"Loans" means the Revolving Loan, the Swing Line Loan, the Term A
Loan, and the Term B Loan.
"Lock Boxes" has the meaning ascribed to it in Annex C.
"Margin Stock" has the meaning ascribed to in Section 3.10.
"Master Documentary Agreement" means the Master Agreement for
Documentary Letters of Credit, dated as of the Closing Date, among Borrowers, as
Applicant(s) and GE Capital.
"Master Standby Agreement" means the Master Agreement for Standby
Letters of Credit dated as of the Closing Date among Borrowers, as Applicant(s),
and GE Capital, as issuer.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of any
Credit Party or the Credit Parties considered as a whole, (b) any Borrower's
ability to pay any of the Loans or any of the other Obligations in accordance
with the terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf
of itself and Lenders, on the Collateral or the priority of such Liens, or (d)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, any event or
occurrence adverse to one or more Credit Parties which results or could
reasonably be expected to result in costs and/or liabilities or loss of
revenues, individually or in the aggregate, to any Credit Party in any 30-day
period in excess of $100,000 or in excess of $150,000 in any 90-day period shall
constitute a Material Adverse Effect.
"Maximum Amount" means, as of any date of determination, an amount
equal to the Revolving Loan Commitment of all Lenders as of that date.
"Merchandise Amortization" means, with respect to any Person for any
measurement period, the amortization of any Inventory which is leased or
furnished under a contract of service.
A-18
"Merchandise Purchases" means, with respect to any Person for any
measurement period, any Inventory purchased over such period.
"Mortgaged Properties" has the meaning assigned to it in Annex D.
"Mortgaged Properties II" has the meaning assigned to it in Annex D.
"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Mortgaged Properties, all in form and
substance reasonably satisfactory to Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is
making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Worth" means, with respect to any Person as of any date of
determination, the book value of the assets of such Person, minus the sum of (a)
reserves applicable thereto, and (b) all of such Person's liabilities on a
consolidated basis (including accrued and deferred income taxes), all as
determined in accordance with GAAP.
"Non-Consenting Lender" has the meaning ascribed to it in Section
11.2(d).
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notes" means, collectively, the Revolving Notes, the Swing Line
Notes, the Term A Notes, and the Term B Notes.
"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).
"Notice of Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
A-19
"OGRI" has the meaning ascribed to it in the Recitals to this
Agreement.
"Overadvance" has the meaning ascribed to it in Section 1.1(a)(iii).
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or of any other country, all registrations and recordings thereof, and
all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State, or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
"Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b); (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA); (c) pledges or deposits of money
securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) carriers',
warehousemen's, suppliers' or other similar possessory liens arising in the
ordinary course of business and securing liabilities in an outstanding aggregate
amount not in excess of $100,000 at any time, so long as such Liens attach only
to Inventory; (f) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Credit Party is a party; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(j); (h)
zoning restrictions, easements, licenses, or other restrictions on the use of
any Real Estate or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such Real Estate; (i) presently existing or hereafter created
Liens in favor of Agent, on behalf of Lenders; and (j) Liens expressly permitted
under clauses (b), (c) and (d) of Section 6.7 of the Agreement.
"Permitted Holders" means (a) the Xxxxx Stockholders, Xxxxxx X. Xxxxx
and members of his immediate family or any trust established for the benefit of
such individuals, controlled by Xxxxxx X. Xxxxx or any executor for the estate
thereof or (b) any Person of which all economic and voting rights associated
with all of the outstanding Stock or other ownership interests of such Person
are owned and controlled by individuals or trusts referred to in the foregoing
clause (a).
A-20
"Permitted Subordinated Debt" means Subordinated Debt which is (i)
subject to an intercreditor and subordination agreement satisfactory to Agent
and Requisite Lenders (including as to payment and lien subordination, remedy
standstill periods, payment blockages and waivers by the holders thereof with
respect to adequate protection in an insolvency of the Credit Parties and the
use of cash collateral or the provisions of post-petition financing) and (ii)
issued on terms and pursuant to documentation acceptable to Agent and Requisite
Lenders in their sole discretion, including, without limitation, as to interest
rate, fees, expenses, maturity and amortization and the terms of which do not
contain any provisions which would require a Default or Event of Default be a
default or event of default under the documents governing or related to such
Permitted Subordinated Debt.
"Permitted Distributions" means with respect to any period, those
payments described in Section 6.14(f) which are made in such period.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan", as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to or has maintained,
contributed to or had an obligation to contribute to at any time within the past
7 years on behalf of participants who are or were employed by any Credit Party
or ERISA Affiliate.
"Pledge Agreements" means, collectively, the Xxxxx Stockholder Pledge
Agreement, the Credit Party Pledge Agreement, and any pledge agreements entered
into after the Closing Date by any Credit Party (as required by the Agreement or
any other Loan Document).
"Prior Lender" means Bank of America, N.A.
"Prior Lender Obligations" means all of the obligations owing by the
Borrower's or any Credit Party to the Prior Lender.
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the
A-21
Collateral including claims arising out of the loss or nonconformity of,
interference with the use of, defects in, or infringement of rights in, or
damage to, Collateral, (e) all amounts collected on, or distributed on account
of, other Collateral, including dividends, interest, distributions and
Instruments with respect to Investment Property and pledged Stock, and (f) any
and all other amounts, rights to payment or other property acquired upon the
sale, lease, license, exchange or other disposition of Collateral and all rights
arising out of Collateral.
"Pro Forma" means the unaudited consolidated and consolidating balance
sheet of Borrowers and their Subsidiaries as of May 31, 2002 after giving pro
forma effect to the Related Transactions.
"Proposed Change" has the meaning ascribed to it in Section 11.2(d).
"Projections" means Borrowers' forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of the Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to any
Lender, (a) with respect to the Revolving Loan, the percentage obtained by
dividing (i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders, (b) with respect to the Term A Loan,
the percentage obtained by dividing (i) the Term A Loan Commitment of that
Lender by (ii) the aggregate Term A Loan Commitments of all Lenders, as any such
percentages may be adjusted by assignments permitted pursuant to Section 9.1,
(c) with respect to the Term B Loan, the percentage obtained dividing (i) the
Term B Loan Commitment of that Lender by (ii) the aggregate Term B Loan
Commitments of all Lenders, (d) with respect to all Loans, the percentage
obtained by dividing (i) the aggregate Commitments of that Lender by (ii) the
aggregate Commitments of all Lenders, and (e) with respect to all Loans on and
after the Commitment Termination Date, the percentage obtained by dividing (i)
the aggregate outstanding principal balance of the Loans held by that Lender, by
(ii) the outstanding principal balance of the Loans held by all Lenders.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act of 1933) which
extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance
companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Xxxxx'x at the date that it becomes a Lender and
which, through its applicable lending office, is capable of lending to
A-22
Borrowers without the imposition of any withholding or similar taxes; provided
that no Person determined by Agent to be acting in the capacity of a vulture
fund or distressed debt purchaser shall be a Qualified Assignee, and no Person
or Affiliate of such Person (other than a Person that is already a Lender)
holding Subordinated Debt or Stock issued by any Credit Party shall be a
Qualified Assignee.
"Ratable Share" means the aggregate principal amount of the Term A
Loan or Term B Loan as applicable, advanced to a Borrower.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Refinancing" means the repayment in full by Borrowers of the Prior
Lender Obligations on the Closing Date.
"Refunded Swing Line Loan" has the meaning ascribed to it in Section
1.1(c)(iii).
"Related Transactions" means the initial borrowing under the Revolving
Loan, the Term A Loan and the Term B Loan on the Closing Date, the Subordinated
Note Repurchase, the Refinancing, the redemption of Stock of Xxxxx pursuant to
the Stock Redemption Documents, the payment of all fees, costs and expenses
associated with all of the foregoing and the execution and delivery of all of
the Related Transactions Documents.
"Related Transactions Documents" means the Loan Documents, the
Subordinated Note Repurchase Documents, the Stock Redemption Documents, and all
other agreements or instruments executed in connection with the Related
Transactions.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite A Lenders" means Lenders having (a) more than 51% of the
sum of (i) Revolving Loan Commitments (or, if the Revolving Loan Commitments
have been terminated, aggregate outstanding amount of all Revolving Loans) and
(ii) Term A Loan Commitment of all Lenders,
"Requisite B Lenders" means Lenders having more than 51% of the Term B
Loan Commitment of all Lenders; provided, however, from and after the A
Obligations Termination Date, "Requisite B Lenders" shall mean lenders having
more than 51% of the Term B-1 Loan and more than 51% of the Term B-2 Loan.
"Requisite Lenders" means, collectively, the Requisite A Lenders and
the Requisite B Lenders.
A-23
"Requisite Revolving Lenders" means Lenders having (a) more than 51%
of the Revolving Loan Commitments of all Lenders, or (b) if the Revolving Loan
Commitments have been terminated, more than 51% of the aggregate outstanding
amount of the Revolving Loan.
"Reserves" means (a) reserves established by Agent from time to time
against Eligible Inventory pursuant to Section 5.9, (b) reserves established
pursuant to Section 5.4(c), (c) reserves in an amount equal to aggregate amount
of all Letters of Credit issued and outstanding at any time, and (d) such other
reserves against Eligible Accounts, Eligible Inventory or Borrowing Availability
of any Borrower that Agent may, in its reasonable credit judgment, establish
from time to time. Without limiting the generality of the foregoing, Reserves
established to ensure the payment of accrued Interest Expenses or Indebtedness
shall be deemed to be a reasonable exercise of Agent's credit judgment.
"Restricted Payment" means, with respect to any Credit Party (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Credit
Party other than payment of compensation in the ordinary course of business to
Stockholders who are employees of such Person; and (g) any payment of management
fees (or other fees of a similar nature) by such Credit Party to any Stockholder
of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolving Credit Advance" has the meaning ascribed to it in Section
1.1(a)(i).
"Revolving Lenders" means, as of any date of determination, Lenders
having a Revolving Loan Commitment.
"Revolving Loan" means, at any time, the sum of (i) the aggregate
amount of Revolving Credit Advances outstanding to Borrower plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrower. Unless
the context otherwise requires, references to
A-24
the outstanding principal balance of the Revolving Loan shall include the
outstanding balance of Letter of Credit Obligations.
"Revolving Loan Commitment" means (a) as to any Revolving Loan Lender,
the aggregate commitment of such Revolving Loan Lender to make Revolving Credit
Advances or incur Letter of Credit Obligations as set forth on Annex J to the
Agreement or in the most recent Assignment Agreement executed by such Lender and
(b) as to all Revolving Loan Lenders, the aggregate commitment of all Lenders to
make Revolving Credit Advances or incur Letter of Credit Obligations, which
aggregate commitment shall be Eighteen Million Dollars ($18,000,000) on the
Closing Date, as such amount may be adjusted, if at all, from time to time in
accordance with the Agreement.
"Revolving Notes" has the meaning ascribed to it in Section
1.1(a)(ii).
"Routes" means any business which supplies uniforms or other clothing
to its customers or any contract relating thereto.
"Security Agreement" means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
each Credit Party that is a signatory thereto.
"Senior Debt" means all Funded Debt other than Subordinated Debt.
"Senior Debt Ratio" means, with respect to any Person for any period,
the ratio of (i) Senior Debt to (ii) EBITDA plus Merchandise Amortization, minus
Merchandise Purchases.
"Service Agreements" shall have the meaning set forth in that certain
letter agreement dated as of the date hereof, by and among Agent, Lenders and
the Credit Parties.
"Settlement Date" has the meaning ascribed it in Section 9.9(a)(ii).
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light
A-25
of all the facts and circumstances existing at the time, represents the amount
that can be reasonably be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stock Redemption Documents" means (i) that certain Redemption
Agreement between Xxxxx and Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxx and Xxxxxxx X.
XxXxxxxx, as Trustees (the "Trustees") dated as of June 28, 2002 and (ii) all
other instruments, documents and certificates executed or delivered in
connection therewith or related thereto.
"Stockholder" means, with respect to any Person, each holder of Stock
of such Person.
"Subordinated Debt" means the Indebtedness of Xxxxx evidenced by the
Subordinated Notes and any other Indebtedness of any Credit Party subordinated
to the Obligations in a manner and form satisfactory to Agent and Requisite
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subordinated Notes" means those certain 11 1/4% Senior Subordinated
Notes due June 1, 2008 issued by Xxxxx in an original aggregate outstanding
principal amount of $75,000,000.
"Subordinated Notes Documents" means the Subordinated Notes Indenture
and all other instruments, documents and certificates executed or delivered in
connection therewith or related thereto.
"Subordinated Notes Indenture" means that certain Indenture, dated as
of June 26, 1998, by and between Xxxxx and IBJ Xxxxxxxx Bank & Trust Company, as
Trustee, as such agreement may be amended, restated or otherwise supplemented
from time to time.
"Subordinated Note Repurchase" means the purchase by Xxxxx on the
Closing Date of $20,095,000 of its Subordinated Notes for an aggregate purchase
price not to exceed 60% of the aggregate stated principal amount of the
Subordinated Notes being so repurchased and the amendment of the Subordinated
Notes Indenture in accordance with the terms of the Subordinated Notes
Repurchase Documents.
"Subordinated Note Repurchase Documents" means (i) that certain
Offering Circular Offer to Purchase up to $50 million of 11 1/4% Series B Senior
Subordinated Notes due 2008 of Xxxxx dated May 16, 2002, as supplemented (the
"Offering Circular"), (ii) that certain Letter of Transmittal and Solicitation
for Consent to Amend the Subordinated Notes Indenture related to the Offering
Circular, and (iii) that certain Notice of Guaranteed Delivery related to the
A-26
Offering Circular, and (iv) all other instruments, documents and certificates
executed or delivered in connection with the Subordinated Note Repurchase.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of a Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even date
herewith executed by each Subsidiary of each Borrower in favor of Agent, on
behalf of itself and Lenders.
"Supporting Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Swing Line Advance" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Availability" has the meaning ascribed to it in Section
1.1(c)(i).
"Swing Line Commitment" means, as to the Swing Line Lender, the
commitment of the Swing Line Lender to make Swing Line Advances as set forth on
Annex J to the Agreement, which commitment constitutes a subfacility of the
Revolving Loan Commitment of the Swing Line Lender.
"Swing Line Lender" means GE Capital.
"Swing Line Loan" means, as the context may require, at any time, the
aggregate amount of Swing Line Advances outstanding to any Borrower or to all
Borrowers.
"Swing Line Note" has the meaning ascribed to it in Section
1.1(c)(ii).
"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Tax Returns" has the meaning ascribed to it in Section 3.11.
A-27
"Termination Date" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been completely discharged (c) all Letter of
Credit Obligations have been cash collateralized, canceled or backed by standby
letters of credit in accordance with Annex B, and (d) none of Borrowers shall
have any further right to borrow any monies under the Agreement.
"Term A Lenders" means those Lenders having Term A Loan Commitments.
"Term A Loan(s)" has the meaning ascribed to it in Section 1.1(b)(i).
"Term A Loan Commitment" means (a) as to any Lender with a Term A Loan
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
A Loan as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term A Loan
Commitment, the aggregate commitment of all Lenders to make the Term A Loan,
which aggregate commitment shall be Seven Million Dollars ($7,000,000) on the
Closing Date. After advancing the Term A Loan, each reference to a Lender's Term
A Loan Commitment shall refer to that Lender's Pro Rata Share of the outstanding
Term A Loan.
"Term A Note(s)" has the meaning ascribed to it in Section 1.1(b)(i).
"Term B Lenders" means those Lenders having Term B Loan Commitments.
"Term B-1 Lenders" means those Lenders holding Term B-1 Loans.
"Term B-2 Loan(s)" means those Lenders holding Term B-2 Loans.
"Term B Loan(s)" has the meaning ascribed to it in Section 1.1(b)(ii).
The Term B Loans consist of the Term B-1 Loans and the Term B-2 Loans.
"Term B-1 Loan(s)" means the Term B Loans made by GE Capital on the
date hereof in an aggregate principal amount of Ten Million Dollars
($10,000,000), as such Term B Loan may be assigned pursuant to Section 10.1
hereto.
"Term B-2 Loan(s)" means the Term B Loans made by Gladstone on the
date hereof in an aggregate principal amount of Sixteen Million Dollars
($16,000,000), as such Term B Loan may be assigned pursuant to Section 10.1
hereto.
"Term B Loan Commitment" means (a) as to any Lender with a Term B Loan
Commitment, the commitment of such Lender to make its Pro Rata Share of the Term
B Loan as set forth on Annex J to the Agreement or in the most recent Assignment
Agreement executed by such Lender, and (b) as to all Lenders with a Term B Loan
Commitment, the aggregate commitment of all Lenders to make the Term B Loan,
which aggregate commitment shall be Twenty-Six Million Dollars ($26,000,000) on
the Closing Date. After advancing the Term B Loan, each reference to a Lender's
Term B Loan Commitment shall refer to that Lender's Pro Rata Share of the
outstanding Term B Loan.
A-28
"Term B Note(s)" has the meaning ascribed to it in Section 1.1(b)(ii).
"Title IV Plan" means a Pension Plan (other than a Multiemployer
Plan), that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter
existing or adopted or acquired by any Credit Party: (a) all trademarks, trade
names, corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated with
or symbolized by any of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of ERISA.
Rules of construction with respect to accounting terms used in the
Agreement or the other Loan Documents shall be as set forth in Annex G. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
A-29
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
A-30
ANNEX B (Section 1.2)
to
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance. Subject to the terms and conditions of the Agreement,
Agent and Revolving Lenders agree to incur, from time to time prior to the
Commitment Termination Date, upon the request of Borrower Representative on
behalf of the applicable Borrower and for such Borrower's account, Letter of
Credit Obligations by causing Letters of Credit to be issued by GE Capital or a
Subsidiary thereof or a bank or other legally authorized Person selected by or
acceptable to Agent in its sole discretion (each, an "L/C Issuer") for such
Borrower's account and guaranteed by Agent; provided, that if the L/C Issuer is
a Revolving Lender, then such Letters of Credit shall not be guaranteed by Agent
but rather each Revolving Lender shall, subject to the terms and conditions
hereinafter set forth, purchase (or be deemed to have purchased) risk
participations in all such Letters of Credit issued with the written consent of
Agent, as more fully described in paragraph (b)(ii) below. The aggregate amount
of all such Letter of Credit Obligations shall not at any time exceed the least
of (i) Two Million Dollars ($2,000,000) (the "L/C Sublimit") and (ii) the
Maximum Amount less the aggregate outstanding principal balance of the Revolving
Credit Advances and the Swing Line Loan, and (iii) the Aggregate Borrowing Base
less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan. Furthermore, the aggregate amount of any
Letter of Credit Obligations incurred on behalf of any Borrower shall not at any
time exceed such Borrower's separate Borrowing Base less the aggregate principal
balance of the Revolving Credit Advances and the Swing Line Loan to such
Borrower. No such Letter of Credit shall have an expiry date that is more than
one year following the date of issuance thereof, unless otherwise determined by
the Agent, in its sole discretion, and neither Agent nor Revolving Lenders shall
be under any obligation to incur Letter of Credit Obligations in respect of, or
purchase risk participations in, any Letter of Credit having an expiry date that
is later than the Commitment Termination Date.
(b) (i) Advances Automatic; Participations. In the event that Agent
or any Revolving Lender shall make any payment on or pursuant to any Letter of
Credit Obligation, such payment shall then be deemed automatically to constitute
a Revolving Credit Advance to the applicable Borrower under Section 1.1(a) of
the Agreement regardless of whether a Default or Event of Default has occurred
and is continuing and notwithstanding any Borrower's failure to satisfy the
conditions precedent set forth in Section 2, and each Revolving Lender shall be
obligated to pay its Pro Rata Share thereof in accordance with the Agreement.
The failure of any Revolving Lender to make available to Agent for Agent's own
account its Pro Rata Share of any such Revolving Credit Advance or payment by
Agent under or in respect of a Letter of Credit shall not relieve any other
Revolving Lender of its obligation hereunder to make available to Agent its Pro
Rata Share thereof, but no Revolving Lender shall be responsible for the failure
of any other Revolving Lender to make available such other Revolving Lender's
Pro Rata Share of any such payment.
B-1
(ii) If it shall be illegal or unlawful for any Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above because of
an Event of Default described in Sections 8.1(h) or (i) or otherwise or if it
shall be illegal or unlawful for any Revolving Lender to be deemed to have
assumed a ratable share of the reimbursement obligations owed to an L/C Issuer,
or if the L/C Issuer is a Revolving Lender, then (A) immediately and without
further action whatsoever, each Revolving Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation equal to such Revolving
Lender's Pro Rata Share (based on the Revolving Loan Commitments) of the Letter
of Credit Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit, each
Revolving Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation in such Revolving Lender's Pro Rata Share (based on
the Revolving Loan Commitments) of the Letter of Credit Obligations with respect
to such Letter of Credit on the date of such issuance. Each Revolving Lender
shall fund its participation in all payments or disbursements made under the
Letters of Credit in the same manner as provided in the Agreement with respect
to Revolving Credit Advances.
(c) Cash Collateral.
(i) If Borrowers are required to provide cash collateral for any
Letter of Credit Obligations pursuant to the Agreement prior to the Commitment
Termination Date, each Borrower will pay to Agent for the ratable benefit of
itself and Revolving Lenders cash or cash equivalents acceptable to Agent ("Cash
Equivalents") in an amount equal to 105% of the aggregate maximum amount then
available to be drawn under each applicable Letter of Credit outstanding for the
benefit of such Borrower. Such funds or Cash Equivalents shall be held by Agent
in a cash collateral account (the "Cash Collateral Account") maintained at a
bank or financial institution acceptable to Agent. The Cash Collateral Account
shall be in the name of the applicable Borrower and shall be pledged to, and
subject to the control of, Agent, for the benefit of Agent and Lenders, in a
manner satisfactory to Agent. Each Borrower hereby pledges and grants to Agent,
on behalf of itself and Lenders, a security interest in all such funds and Cash
Equivalents held in the Cash Collateral Account from time to time and all
proceeds thereof, as security for the payment of all amounts due in respect of
the Letter of Credit Obligations and other Obligations, whether or not then due.
The Agreement, including this Annex B, shall constitute a security agreement
under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, Borrowers shall either (A) provide cash collateral therefor in the manner
described above, or (B) cause all such Letters of Credit and guaranties thereof,
if any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guaranty of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration (plus
30 additional days) as, and in an amount equal to 105% of the aggregate maximum
amount then available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued by a Person,
and shall be subject to such terms and conditions, as are be satisfactory to
Agent in its sole discretion.
B-2
(iii) From time to time after funds are deposited in the Cash
Collateral Account by any Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents then held in
the Cash Collateral Account to the payment of any amounts, and in such order as
Agent may elect, as shall be or shall become due and payable by such Borrower to
Agent and Lenders with respect to such Letter of Credit Obligations of such
Borrower and, upon the satisfaction in full of all Letter of Credit Obligations
of such Borrower, to any other Obligations of any Borrower then due and payable.
(iv) No Borrower nor any Person claiming on behalf of or through
any Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon the
termination of all Letter of Credit Obligations and the payment of all amounts
payable by Borrowers to Agent and Lenders in respect thereof, any funds
remaining in the Cash Collateral Account shall be applied to other Obligations
then due and owing and upon payment in full of such Obligations, any remaining
amount shall be paid to Borrowers or as otherwise required by law. Interest
earned on deposits in the Cash Collateral Account shall be for the account of
Agent.
(d) Fees and Expenses. Borrowers agree to pay to Agent for the
benefit of Revolving Lenders, as compensation to such Lenders for Letter of
Credit Obligations incurred hereunder, (i) all costs and expenses incurred by
Agent or any Lender on account of such Letter of Credit Obligations, and (ii)
for each month during which any Letter of Credit Obligation shall remain
outstanding, a fee (the "Letter of Credit Fee") in an amount equal to two
percent (2.00%) per annum multiplied by the maximum amount available from time
to time to be drawn under the applicable Letter of Credit. Such fee shall be
paid to Agent for the benefit of the Revolving Lenders in arrears, on the first
day of each month and on the Commitment Termination Date. In addition, Borrowers
shall pay to any L/C Issuer, on demand, such fees (including all per annum
fees), charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations. Borrower
shall enter into a Master Agreement for Standby Letters of Credit in the form of
Exhibit B-1 attached hereto and a Master Agreement for Documentary Letters of
Credit in the form of Exhibit B-2 attached hereto. Borrower Representative shall
give Agent at least 2 Business Days' prior written notice requesting the
incurrence of any Letter of Credit Obligation. The notice shall be accompanied
by the form of the Letter of Credit (which shall be acceptable to the L/C
Issuer) and a completed Application for Standby Letter of Credit or Application
for Documentary Letter of Credit, as applicable, in the form customarily
accepted by L/C Issuer. Notwithstanding anything contained herein to the
contrary, Letter of Credit applications by Borrower Representative and approvals
by Agent and the L/C Issuer may be made and transmitted pursuant to electronic
codes and security measures mutually agreed upon and established by and among
Borrower Representative, Agent and the L/C Issuer.
B-3
(f) Obligation Absolute. The obligation of Borrowers to reimburse
Agent and Revolving Lenders for payments made with respect to any Letter of
Credit Obligation shall be absolute, unconditional and irrevocable, without
necessity of presentment, demand, protest or other formalities, and the
obligations of each Revolving Lender to make payments to Agent with respect to
Letters of Credit shall be unconditional and irrevocable. Such obligations of
Borrowers and Revolving Lenders shall be paid strictly in accordance with the
terms hereof under all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of
Credit or the Agreement or the other Loan Documents or any other
agreement;
(ii) the existence of any claim, setoff, defense or other right
that any Borrower or any of their respective Affiliates or any Lender
may at any time have against a beneficiary or any transferee of any
Letter of Credit (or any Persons or entities for whom any such
transferee may be acting), Agent, any Lender, or any other Person,
whether in connection with the Agreement, the Letter of Credit, the
transactions contemplated herein or therein or any unrelated
transaction (including any underlying transaction between any Borrower
or any of their respective Affiliates and the beneficiary for which
the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft or
certificate or other document that does not comply with the terms of
such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is similar
to any of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred
and is continuing.
(g) Indemnification; Nature of Lenders' Duties.
(i) In addition to amounts payable as elsewhere provided in the
Agreement, Borrowers hereby agree to pay and to protect, indemnify, and save
harmless Agent each L/C Issuer, and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
that Agent or any Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or guaranty thereof, or
(B) the failure of Agent, any L/C Issuer or any Lender seeking indemnification
or of any L/C Issuer to honor a demand for payment under any Letter of Credit or
guaranty thereof as a result of any act
B-4
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority, in each case other than to the
extent solely as a result of the gross negligence or willful misconduct of
Agent, such L/C Issuer or such Lender (as finally determined by a court of
competent jurisdiction).
(ii) As between Agent, any L/C Issuer and any Lender on the one
hand and Borrowers on the other hand, Borrowers assume all risks of the acts and
omissions of, or misuse of any Letter of Credit by beneficiaries, of any Letter
of Credit. In furtherance and not in limitation of the foregoing, to the fullest
extent permitted by law, neither Agent nor any L/C Issuer or Lender shall be
responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document issued by any party in connection with the
application for and issuance of any Letter of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, that may prove
to be invalid or ineffective for any reason; (C) failure of the beneficiary of
any Letter of Credit to comply fully with conditions required in order to demand
payment under such Letter of Credit; provided, that in the case of any payment
by Agent or a L/C Issuer, as applicable, under any Letter of Credit or guaranty
thereof, Agent or such L/C Issuer, as the case may be, shall be liable to the
extent such payment was made solely as a result of its gross negligence or
willful misconduct (as finally determined by a court of competent jurisdiction)
in determining that the demand for payment under such Letter of Credit or
guaranty thereof complies on its face with any applicable requirements for a
demand for payment under such Letter of Credit or guaranty thereof; (D) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they may be in
cipher; (E) errors in interpretation of technical terms; (F) any loss or delay
in the transmission or otherwise of any document required in order to make a
payment under any Letter of Credit or guaranty thereof or of the proceeds
thereof; (G) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from causes beyond
the control of Agent, any L/C Issuer or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent's L/C Issuer's or any
Lender's rights or powers hereunder or under the Agreement.
(iii) Nothing contained herein shall be deemed to limit or to
expand any waivers, covenants or indemnities made by Borrowers in favor of any
L/C Issuer in any letter of credit application, reimbursement agreement or
similar document, instrument or agreement between or among Borrowers and such
L/C Issuer, including an, a Master Documentary Agreement and a Master Standby
Agreement entered into with Agent.
B-5
ANNEX C (Section 1.8)
to
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEM
Each Credit Party shall, and shall cause its Subsidiaries to,
establish and maintain the Cash Management Systems described below:
(a) On or before the Closing Date and until the Termination Date,
each Borrower shall (i) establish lock boxes ("Lock Boxes") or at Agent's
discretion, blocked accounts ("Blocked Accounts") at one or more of the banks
set forth in Disclosure Schedule (3.19), and shall request in writing and
otherwise take such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lock Boxes, and (ii) deposit and cause its Subsidiaries
to deposit or cause to be deposited promptly, and in any event no later than the
first Business Day after the date of receipt thereof, all cash, checks, drafts
or other similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a Lock
Box) into one or more Blocked Accounts in such Borrower's name or any such
Subsidiary's name and at a bank identified in Disclosure Schedule (3.19) (each,
a "Relationship Bank"). On or before the Closing Date, each Borrower shall have
established a concentration account in its name (each a "Concentration Account"
and collectively, the "Concentration Accounts") at the bank or banks that shall
be designated as the Concentration Account bank for each such Borrower in
Disclosure Schedule (3.19) (each a "Concentration Account Bank" and
collectively, the "Concentration Account Banks"), which banks shall be
reasonably satisfactory to Agent.
(b) Each Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
reasonably acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances and Swing Line Advances made to
such Borrower pursuant to Section 1.1 for use by such Borrower solely in
accordance with the provisions of Section 1.4.
(c) Except as provided in Clause (h) below, on or before the Closing
Date (or such later date as Agent shall consent to in writing), each
Concentration Account Bank, each bank where a Disbursement Account is maintained
and all other Relationship Banks, shall have entered into tri-party blocked
account agreements with Agent, for the benefit of itself and Lenders, and the
applicable Borrower and Subsidiaries thereof, as applicable, in form and
substance reasonably acceptable to Agent, which shall become operative on or
prior to the Closing Date. Each such blocked account agreement shall provide,
among other things, that (i) all items of payment deposited in such account and
proceeds thereof deposited in the applicable Concentration Account are held by
such bank as agent or bailee-in-possession for Agent, on behalf of itself and
Lenders, (ii) the bank executing such agreement has no rights of setoff or
recoupment or any other claim against such account, as the case may be, other
than for payment of its service fees and other charges directly related to the
administration of such account and for
C-1
returned checks or other items of payment, and (iii) from and after the Closing
Date (A) with respect to banks at which a Blocked Account is maintained, such
bank agrees, from and after the receipt of a notice (an "Activation Notice")
from Agent (which Activation Notice may be given by Agent at any time at which
(1) a Default or Event of Default has occurred and is continuing, (2) Agent
reasonably believes based upon information available to it that a Default or an
Event of Default is likely to occur; (3) Agent reasonably believes that an event
or circumstance that is likely to have a Material Adverse Effect has occurred,
or (4) Agent reasonably has grounds to question the integrity of any Borrower's
Cash Management Systems or any Borrower's compliance with the provisions of this
Annex C or any other provisions of the Loan Documents to the extent related to
such Cash Management Systems (any of the foregoing being referred to herein as
an "Activation Event")), to forward immediately all amounts in each Blocked
Account to such Borrower's Concentration Account Bank and to commence the
process of daily sweeps from such Blocked Account into the applicable
Concentration Account and (B) with respect to each Concentration Account Bank,
such bank agrees from and after the receipt of an Activation Notice from Agent
upon the occurrence of an Activation Event, to immediately forward all amounts
received in the applicable Concentration Account to the Collection Account
through daily sweeps from such Concentration Account into the Collection
Account. From and after the date Agent has delivered an Activation Notice to any
bank with respect to any Blocked Account(s). No Borrower shall, or shall cause
or permit any Subsidiary thereof to, accumulate or maintain cash in Disbursement
Accounts or payroll accounts as of any date of determination in excess of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrowers may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any Concentration
Account or any Disbursement Account; provided, that (i) Agent shall have
consented in writing in advance to the opening of such account or Lock Box with
the relevant bank and (ii) prior to the time of the opening of such account or
Lock Box, the applicable Borrower or its Subsidiaries, as applicable, and such
bank shall have executed and delivered to Agent a tri-party blocked account
agreement, in form and substance reasonably satisfactory to Agent. Borrowers
shall close any of their accounts (and establish replacement accounts in
accordance with the foregoing sentence) promptly and in any event within 30 days
following notice from Agent that the creditworthiness of any bank holding an
account is no longer acceptable in Agent's reasonable judgment, or as promptly
as practicable and in any event within 60 days following notice from Agent that
the operating performance, funds transfer or availability procedures or
performance with respect to accounts or Lock Boxes of the bank holding such
accounts or Agent's liability under any tri-party blocked account agreement with
such bank is no longer acceptable in Agent's reasonable judgment.
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash, checks
and other similar items of payment in such accounts securing payment of the
Loans and all other Obligations, and in which each Borrower and each Subsidiary
thereof shall have granted a Lien to Agent, on behalf of itself and Lenders,
pursuant to the Security Agreement.
C-2
(f) All amounts deposited in the Collection Account shall be deemed
received by Agent in accordance with Section 1.10 and the GE Capital Fee Letter
and shall be applied (and allocated) by Agent in accordance with Section 1.11.
In no event shall any amount be so applied unless and until such amount shall
have been credited in immediately available funds to the Collection Account.
(g) Each Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by such Borrower or any such Related Person, and (ii) except as
otherwise provided in clause (h) below, within 2 Business Days after receipt by
such Borrower or any such Related Person of any checks, cash or other items of
payment, deposit the same into a Blocked Account of such Borrower. Each Borrower
and each Related Person thereof acknowledges and agrees that all cash, checks or
other items of payment constituting proceeds of Collateral are part of the
Collateral. All proceeds of the sale or other disposition of any Collateral,
shall be deposited directly into the applicable Blocked Accounts.
(h) Borrower and its Subsidiaries may maintain funds in the accounts
set forth on Disclosure Schedule 3.19 (other than the accounts listed therein
with Bank of America, Key Bank, M&T Bank, Fleet Boston, National City and First
Union (the "Excluded Accounts") and such Excluded Accounts are not required to
be subject to a tri-party blocked account agreement as required by clause (c) of
this Annex C; provided that (i) not more than $100,000 in the aggregate shall be
held in all such Excluded Accounts for more than one Business Day and (ii)
Borrower shall comply with the provisions of clause (c) of this Annex C with
respect to such Excluded Accounts within 30 days after request thereof is made
by Agent.
C-3
ANNEX D (Section 2.1(a))
to
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein shall
have the meaning ascribed thereto in Annex A to the Agreement):
A. Appendices. All Appendices to the Agreement, in form and
substance satisfactory to Agent.
B. Revolving Notes, Swing Line Notes, Term A Notes, and Term B
Notes. Duly executed originals of the Revolving Notes, Swing Line Notes and Term
Notes for each applicable Lender, dated the Closing Date.
C. Security Agreement. Duly executed originals of the Security
Agreement, dated the Closing Date, and all instruments, documents and agreements
executed pursuant thereto, including, without limitation, powers of attorney.
D. Insurance. Satisfactory evidence that the insurance policies
required by Section 5.4 are in full force and effect, together with appropriate
evidence showing loss payable and/or additional insured clauses or endorsements,
as requested by Agent, in favor of Agent, on behalf of Lenders.
E. Security Interests and Code Filings.
(a) Evidence satisfactory to Agent that Agent (for the benefit
of itself and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly executed by each
Credit Party (including financing statements under the Code and other applicable
documents under the laws of any jurisdiction with respect to the perfection of
Liens) as Agent may request in order to perfect its security interests in the
Collateral and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together with copies
of such financing statements, none of which shall cover the Collateral, except
for those relating to the Prior Lender Obligations (all of which shall be
terminated on the Closing Date).
(b) Evidence satisfactory to Agent, including copies, of all
UCC-1 and other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated
securities and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of each Borrower, and (iii) all futures commission
D-1
agents and clearing houses with respect to all commodities contracts and
commodities accounts held by any Borrower.
F. Payoff Letter; Termination Statements. Copies of a duly executed
payoff letter, in form and substance reasonably satisfactory to Agent, by and
between all parties to the Prior Lender loan documents evidencing repayment in
full of all Prior Lender Obligations and the release of all Liens in favor of
Prior Lender or relating to the Prior Lender Obligation, together with (a) UCC-3
or other appropriate termination statements, in form and substance satisfactory
to Agent, releasing all liens of Prior Lender upon any of the personal property
of each Credit Party, and (b) termination of all blocked account agreements,
bank agency agreements or other similar agreements or arrangements or
arrangements in favor of Prior Lender or relating to the Prior Lender
Obligations.
G. Intellectual Property Security Agreements. Duly executed
originals of Intellectual Property Security Agreements, each dated the Closing
Date and signed by each Credit Party which owns Trademarks, Copyrights and/or
Patents, all in form and substance reasonably satisfactory to Agent, together
with all instruments, documents and agreements executed pursuant thereto.
H. Subsidiary Guaranties. Subsidiary Guaranties executed by and each
direct and indirect Subsidiary of Xxxxx that is not a Borrower in favor of
Agent, for the benefit of Lenders.
I. Initial Borrowing Base Certificate. Duly executed originals of an
initial Borrowing Base Certificate from each Borrower, dated the Closing Date,
reflecting information concerning Eligible Accounts and Eligible Inventory of
such Borrower as of a date not more than 7 days prior to the Closing Date.
J. Initial Notice of Revolving Credit Advance. Duly executed
originals of a Notice of Revolving Credit Advance, dated the Closing Date, with
respect to the initial Revolving Credit Advance to be requested by Borrower
Representative on the Closing Date.
K. Letter of Direction. Duly executed originals of a letter of
direction from Borrower Representative addressed to Agent, on behalf of itself
and Lenders, with respect to the disbursement on the Closing Date of the
proceeds of the Term A Loan, the Term B Loan and the initial Revolving Credit
Advance.
L. Cash Management System; Blocked Account Agreements. Evidence
satisfactory to Agent that, as of the Closing Date, Cash Management Systems
complying with Annex C to the Agreement have been established and are currently
being maintained in the manner set forth in such Annex C, together with copies
of duly executed tri-party blocked account and lock box agreements, reasonably
satisfactory to Agent, with the banks as required by Annex C.
D-2
M. Charter and Good Standing. For each Credit Party, such Person's
(a) charter and all amendments thereto, (b) good standing certificates
(including verification of tax status) in its state of incorporation and (c)
good standing certificates (including verification of tax status) and
certificates of qualification to conduct business in each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and certified
by the applicable Secretary of State or other authorized Governmental Authority.
N. Bylaws and Resolutions. For each Credit Party, (a) such Person's
bylaws, together with all amendments thereto and (b) resolutions of such
Person's Board of Directors and the other Related Transaction Documents,
approving and authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and the transactions to be consummated
in connection therewith, each certified as of the Closing Date by such Person's
corporate secretary or an assistant secretary as being in full force and effect
without any modification or amendment.
O. Incumbency Certificates. For each Credit Party, signature and
incumbency certificates of the officers of each such Person executing any of the
Loan Documents, certified as of the Closing Date by such Person's corporate
secretary or an assistant secretary as being true, accurate, correct and
complete.
P. Opinions of Counsel. Duly executed originals of opinions of Bond,
Xxxxxxxxx & Xxxx, LLP, counsel for the Credit Parties, together with any local
counsel opinions reasonably requested by Agent, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the Closing Date, and
each accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express statement to the
effect that Agent and Lenders are authorized to rely on such opinion.
Q. Pledge Agreements. Duly executed originals of each of the Pledge
Agreements accompanied by (as applicable) (a) share certificates representing
all of the outstanding Stock being pledged pursuant to such Pledge Agreement and
stock powers for such share certificates executed in blank and (b) the original
Intercompany Notes and other instruments evidencing Indebtedness being pledged
pursuant to such Pledge Agreement, duly endorsed in blank.
R. Accountants' Letters. A letter from the Credit Parties to their
independent auditors authorizing the independent certified public accountants of
the Credit Parties to communicate with Agent and Lenders in accordance with
Section 4.2, and a letter from such auditors acknowledging Lenders' reliance on
the auditor's certification of past and future Financial Statements.
S. Appointment of Agent for Service. An appointment of Xxxxx as each
Credit Party's agent for service of process.
D-3
T. Solvency Certificate. The Credit Parties shall deliver to Agent
for the benefit of Lenders a solvency certificate from its chief financial
officer in form and substance reasonably satisfactory to Agent.
U. Fee Letters. Duly executed originals of the GE Capital Fee Letter
and the Gladstone Fee Letter.
V. Officer's Certificate. Agent shall have received duly executed
originals of a certificate of the Chief Executive Officer and Chief Financial
Officer of each Borrower, dated the Closing Date, stating that, (a) since
October 31, 2001 no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) since October 31,
2001 there has been no material adverse change in the industry in which any
Borrower operates; (c) no Litigation has been commenced which, if successful,
would have a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Related Transaction Documents; (d)
since October 31, 2001 there have been no Restricted Payments made by any Credit
Party; (e) since October 31, 2001 there has been no material increase in
liabilities, liquidated or contingent, and no material decrease in assets of any
Borrower or any of its Subsidiaries and (f) the representations and warranties
of the Borrowers in Section 3 are time and correct.
W. Waivers. Agent, on behalf of Lenders, shall have received
landlord waivers and consents, bailee letters and mortgagee agreements in form
and substance reasonably satisfactory to Agent, in each case as required
pursuant to Section 5.9.
X. Mortgages. (a) Mortgages covering the Real Estate located at
each of XXX Xxxxxx Xxxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxxxx and 000 Xxxxx Xxxxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx (collectively, the "Mortgaged Properties") together
with: (i) title insurance policies, current as-built surveys, zoning letters and
certificates of occupancy, in each case reasonably satisfactory in form and
substance to Agent, in its sole discretion; (ii) evidence that counterparts of
the Mortgages have been recorded in all places to the extent necessary or
desirable, in the judgment of Agent, to create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on each Mortgaged Property in
favor of Agent for the benefit of itself and Lenders (or in favor of such other
trustee as may be required or desired under local law); and (iii) an opinion of
counsel in each state in which any Mortgaged Property is located in form and
substance and from counsel reasonably satisfactory to Agent; and (b) Mortgages
covering the Real Estate other than the Mortgaged Properties (such Real Estate
is hereinafter referred to as the "Mortgaged Properties II", together with
evidence that counterparts of the Mortgages have been recorded in all places to
the extent necessary or desirable, in the judgment of Agent, to create a valid
and enforceable lien on each Mortgaged Property in favor of Agent for the
benefit of itself and Lenders (or in favor of such other trustee as may be
required or desired under local law).
Y. Subordination and Intercreditor Agreements. Agent and Lenders
shall have received any and all subordination and/or intercreditor agreements,
all in form and substance reasonably satisfactory to Agent, in its sole
discretion, as Agent shall have deemed necessary or appropriate with respect to
any Indebtedness of any Credit Party.
D-4
Z. Environmental Reports. Agent shall have received Phase I
Environmental Site Assessment Reports, consistent with American Society for
Testing and Materials (ASTM) Standard E 1527-94 and applicable state
requirements, on all of the Real Estate, dated no more than 6 months prior to
the Closing Date, prepared by environmental engineers reasonably satisfactory to
Agent, all in form and substance reasonably satisfactory to Agent, in its sole
discretion; and Agent shall have further received such environmental review and
audit reports, including Phase II reports, with respect to the Real Estate of
any Credit Party as Agent shall have requested, and Agent shall be satisfied, in
its sole discretion, with the contents of all such environmental reports. Agent
shall have received letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to Agent,
authorizing Agent and Lenders to rely on such reports.
AA. Appraisals. Agent shall have received appraisals as to all
Equipment, Inventory and as to each parcel of Real Estate owned by each Credit
Party of the Mortgaged Properties, together with reliance letters in favor of
Agent and Lenders, all of which shall be in form and substance reasonably
satisfactory to Agent.
BB. Audited Financials; Financial Condition. Agent shall have
received the Financial Statements, Projections and other materials set forth in
Section 3.4, certified by Borrower Representative's Chief Financial Officer, in
each case in form and substance reasonably satisfactory to Agent, and Agent
shall be satisfied, in its sole discretion, with all of the foregoing. Agent
shall have further received a certificate of the Chief Executive Officer and/or
the Chief Financial Officer of each Borrower, based on such Pro Forma and
Projections, to the effect that (a) such Borrower will be Solvent upon the
consummation of the transactions contemplated herein; (b) the Pro Forma fairly
presents the financial condition of such Borrower as of the date thereof after
giving effect to the transactions contemplated by the Loan Documents; (c) the
Projections are based upon estimates and assumptions stated therein, all of
which such Borrower believes to be reasonable and fair in light of current
conditions and current facts known to such Borrower and, as of the Closing Date,
reflect such Borrower's good faith and reasonable estimates of its future
financial performance and of the other information projected therein for the
period set forth therein; (d) the schedule of contingent liabilities delivered
on the date hereof include all contingent liabilities (other than those
reflected in the Pro Forma delivered on the date hereof) of the Borrowers at the
reasonably estimated present values thereof; and (e) containing such other
statements with respect to the solvency of such Borrower and matters related
thereto as Agent shall request.
CC. Master Standby Agreement. A Master Agreement for Standby Letters
of Credit among Borrowers and GE Capital.
DD. Master Documentary Agreement. A Master Agreement for Documentary
Letters of Credit among Borrowers and GE Capital.
EE. Trust Documents. Agent shall have received copies of all
documents related to the formation of each of the Xxxxx Stockholders which are
trusts, certified as true, accurate, correct and complete by a trustee of such
trust, as well as a trustee certificate certified
D-5
as of the Closing Date by such trustee with respect to the trust documents and
its capacity as trustee.
FF. Subordinated Notes Documents. Agent shall have received true,
accurate, correct and complete copies of the Subordinated Notes Repurchase
Documents and the Subordinated Notes Documents, certified by an officer of
Xxxxx.
GG. Stock Redemption Documents. Agent shall have received true,
accurate, correct and complete copies of the Stock Redemption Documents
certified by an officer of Xxxxx.
HH. Other Documents. Such other certificates, documents and
agreements respecting any Credit Party as Agent may, in its sole discretion,
request.
D-6
ANNEX E (Section 4.1(a))
to
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
Borrowers shall deliver or cause to be delivered to Agent or to Agent
and Lenders, as indicated, the following:
(a) Monthly Financials. To Agent and Lenders, within 30 days after
the end of each Fiscal Month, financial information regarding Borrowers and
their Subsidiaries, certified by the Chief Financial Officer of Borrower
Representative, consisting of consolidated and consolidating (i) unaudited
balance sheets as of the close of such Fiscal Month and the related statements
of income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Month; (ii) unaudited statements of income and cash flows
for such Fiscal Month, setting forth in comparative form the figures for the
corresponding period in the prior year and the figures contained in the
Projections for such Fiscal Year, all prepared in accordance with GAAP (subject
to normal year-end adjustments); and (iii) a summary of the outstanding balance
of all Intercompany Notes as of the last day of that Fiscal Month. Such
financial information shall be accompanied by (A) a statement (each, a
"Compliance Certificate") in reasonable detail showing the calculations used in
determining compliance with each Financial Covenant, if any, that is tested on a
monthly basis, and (B) the certification of the Chief Financial Officer of
Borrower Representative that (i) such financial information presents fairly in
accordance with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of Borrowers and their Subsidiaries, on a
consolidated and consolidating basis, in each case as at the end of such Fiscal
Month and for that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material respects and
that there was no Default or Event of Default in existence as of such time or,
if a Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.
(b) Quarterly Financials. To Agent and Lenders, within 45 days after
the end of each Fiscal Quarter, consolidated and consolidating financial
information regarding Borrowers and their Subsidiaries, certified by the Chief
Financial Officer of Borrower Representative, including (i) unaudited balance
sheets as of the close of such Fiscal Quarter and the related statements of
income and cash flow for that portion of the Fiscal Year ending as of the close
of such Fiscal Quarter and (ii) unaudited statements of income and cash flows
for such Fiscal Quarter, in each case setting forth in comparative form the
figures for the corresponding period in the prior year and the figures contained
in the Projections for such Fiscal Year, all prepared in accordance with GAAP
(subject to normal year-end adjustments). Such financial information shall be
accompanied by (A) a Compliance Certificate in respect of each of the Financial
Covenants that is tested on a quarterly basis and (B) the certification of the
Chief Financial Officer of Borrower Representative that (i) such financial
information presents fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and statements of
cash flows of Borrowers and their Subsidiaries, on both a consolidated and
consolidating basis, as at the end of such Fiscal Quarter and for that portion
of
E-1
the Fiscal Year then ended, (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default. In addition,
Borrowers shall deliver to Agent and Lenders, within 45 days after the end of
each Fiscal Quarter, a management discussion and analysis that includes a
comparison to budget for that Fiscal Quarter and a comparison of performance for
that Fiscal Quarter to the corresponding period in the prior year.
(c) Operating Plan. To Agent and Lenders, as soon as available, but
not later than 30 days after the end of each Fiscal Year, an annual operating
plan for Borrowers, on a consolidated and consolidating basis, approved by the
Board of Directors of Borrowers, for the following Fiscal Year, which (i)
includes a statement of all of the material assumptions on which such plan is
based, (ii) includes monthly balance sheets, income statements and statements of
cash flows for the following year and (iii) integrates sales, gross profits,
operating expenses, operating profit, cash flow projections and Borrowing
Availability projections, all prepared on the same basis and in similar detail
as that on which operating results are reported (and in the case of cash flow
projections, representing management's good faith estimates of future financial
performance based on historical performance), and including plans for personnel,
Capital Expenditures and facilities.
(d) Annual Audited Financials. To Agent and Lenders, within 90 days
after the end of each Fiscal Year, audited Financial Statements for Borrowers
and their Subsidiaries on a consolidated and (unaudited) consolidating basis,
consisting of balance sheets and statements of income and retained earnings and
cash flows, setting forth in comparative form in each case the figures for the
previous Fiscal Year, which Financial Statements shall be prepared in accordance
with GAAP and certified without qualification, by an independent certified
public accounting firm of national standing or otherwise acceptable to Agent.
Such Financial Statements shall be accompanied by (i) a statement prepared in
reasonable detail showing the calculations used in determining compliance with
each of the Financial Covenants, (ii) a report from such accounting firm to the
effect that, in connection with their audit examination, nothing has come to
their attention to cause them to believe that a Default or Event of Default has
occurred (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) a letter addressed to
Agent, on behalf of itself and Lenders, in form and substance reasonably
satisfactory to Agent and subject to standard qualifications required by
nationally recognized accounting firms, signed by such accounting firm
acknowledging that Agent and Lenders are entitled to rely upon such accounting
firm's certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (v) the
certification of the Chief Executive Officer or Chief Financial Officer of
Borrowers that all such Financial Statements present fairly in accordance with
GAAP the financial position, results of operations and statements of cash flows
of Borrowers and their Subsidiaries on a consolidated and consolidating basis,
as at the end of such Fiscal Year and for the period then ended, and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has
E-2
occurred and is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default.
(e) Management Letters. To Agent and Lenders, within 5 Business Days
after receipt thereof by any Credit Party, copies of all management letters,
exception reports or similar letters or reports received by such Credit Party
from its independent certified public accountants.
(f) Default Notices. To Agent and Lenders, as soon as practicable,
and in any event within 5 Business Days after an executive officer of any
Borrower has actual knowledge of the existence of any Default, Event of Default
or other event that has had a Material Adverse Effect, telephonic or telecopied
notice specifying the nature of such Default or Event of Default or other event,
including the anticipated effect thereof, which notice, if given telephonically,
shall be promptly confirmed in writing on the next Business Day.
(g) SEC Filings and Press Releases. To Agent and Lenders, promptly
upon their becoming available, copies of: (i) all Financial Statements, reports,
notices and proxy statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by any Credit Party with any
securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority; and (iii) all press releases and
other statements made available by any Credit Party to the public concerning
material changes or developments in the business of any such Person.
(h) Subordinated Debt and Equity Notices. To Agent, as soon as
practicable, copies of all material written notices given or received by any
Credit Party with respect to any Subordinated Debt or Stock of such Person, and,
within 2 Business Days after any Credit Party obtains knowledge of any matured
or unmatured event of default with respect to any Subordinated Debt, notice of
such event of default.
(i) Supplemental Schedules. To Agent, supplemental disclosures, if
any, required by Section 5.6.
(j) Litigation. To Agent in writing, promptly upon learning thereof,
notice of any Litigation commenced or threatened against any Credit Party that
(i) seeks damages in excess of $100,000, (ii) seeks injunctive relief, (iii) is
asserted or instituted against any Plan, its fiduciaries or its assets or
against any Credit Party or ERISA Affiliate in connection with any Plan, (iv)
alleges criminal misconduct by any Credit Party, (v) alleges the violation of
any law regarding, or seeks remedies in connection with, any Environmental
Liabilities or (vi) involves any product recall.
(k) Insurance Notices. To Agent, disclosure of losses or casualties
required by Section 5.4.
E-3
(l) Lease Default Notices. To Agent, within 2 Business Days after
receipt thereof, copies of (i) any and all default notices received under or
with respect to any leased location or public warehouse where Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request.
(m) Lease Amendments. To Agent, within 2 Business Days after receipt
thereof, copies of all material amendments to any real estate lease.
(n) Other Documents. To Agent and Lenders, such other financial and
other information respecting any Credit Party's business or financial condition
as Agent or any Lender shall from time to time reasonably request.
E-4
ANNEX F (Section 4.1(b))
to
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in any event no less frequently
than 15 Business Days after the end of each Fiscal Month (together with a copy
of all or any part of the following reports requested by any Lender in writing
after the Closing Date), each of the following reports, each of which shall be
prepared by the applicable Borrower as of the last day of the immediately
preceding Fiscal Month:
(i) a Borrowing Base Certificate with respect to each Borrower,
in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(ii) with respect to each Borrower, a summary of Inventory by
location and type with a supporting perpetual Inventory report, in each
case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and
(iii) with respect to each Borrower, a monthly trial balance
showing Accounts outstanding aged from invoice date as follows: 1 to 30
days, 31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion.
(b) To Agent, on a weekly basis or at such more frequent intervals
as Agent may request from time to time (together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date),
collateral reports with respect to each Borrower, including all additions and
reductions (cash and non-cash) with respect to Accounts of such Borrower, in
each case accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion each of which shall be prepared
by the applicable Borrower as of the last day of the immediately preceding week
or the date 2 days prior to the date of any such request;
(c) To Agent, at the time of delivery of each of the monthly
Financial Statements delivered pursuant to Annex E:
(i) a reconciliation of the Accounts trial balance of each
Borrower to such Borrower's most recent Borrowing Base Certificate, general
ledger and monthly Financial Statements delivered pursuant to Annex E, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
F-1
(ii) a reconciliation of the perpetual inventory by location of
each Borrower to such Borrower's most recent Borrowing Base Certificate,
general ledger and monthly Financial Statements delivered pursuant to Annex
E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of that
accounts payable aging to each Borrower's general ledger and monthly
Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion;
(iv) a reconciliation of the outstanding Loans as set forth in
the monthly Loan Account statement provided by Agent to each Borrower's
general ledger and monthly Financial Statements delivered pursuant to Annex
E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly or
annual Financial Statements delivered pursuant to Annex E, (i) a listing of
government contracts of each Borrower subject to the Federal Assignment of
Claims Act of 1940; and (ii) a list of any applications for the registration of
any Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to Agent the
results of each physical verification, if any, that such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person to
have made on their behalf, of all or any portion of their Inventory (and, if a
Default or an Event of Default has occurred and is continuing, each Borrower
shall, upon the request of Agent, conduct, and deliver the results of, such
physical verifications as Agent may require);
(f) Each Borrower, at its own expense, shall deliver to Agent such
appraisals of its assets as Agent may request at any time after the occurrence
and during the continuance of a Default or an Event of Default, such appraisals
to be conducted by an appraiser, and in form and substance reasonably
satisfactory to Agent; and
(g) Such other reports, statements and reconciliations with respect
to the Borrowing Base, Collateral or Obligations of any or all Credit Parties as
Agent shall from time to time request in its reasonable discretion.
F-2
ANNEX G (Section 6.10)
to
CREDIT AGREEMENT
FINANCIAL COVENANTS
Borrowers shall not breach or fail to comply with any of the following
financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied:
(a) Maximum Capital Expenditures. Borrowers and their Subsidiaries on
a consolidated basis shall not make Capital Expenditures during the following
periods that exceed in the aggregate the amounts set forth opposite each of such
periods:
Period Maximum Capital Expenditures per Period
------ ---------------------------------------
November 1, 2001 through October 31, 2002 4,000,000
November 1, 2002 through October 31, 2003 4,300,000
November 1, 2003 through October 31, 2004 4,500,000
November 1, 2004 through October 31, 2005 4,800,000
November 1, 2005 through October 31, 2006 5,000,000
(b) Minimum Debt Service Coverage Ratio. Borrowers and their
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Debt Service Coverage Ratio for the 12-month period
(or with respect to the first period, the 9-month period) then ended of not less
than the following:
Period Ratio
------ -----
November 1, 2001 through July 31, 2002 1.50x
November 1, 2001 through October 31, 2002 1.50x
February 1, 2002 through January 31, 2003 1.25x
May 1, 2002 through April 30, 2003 1.10x
August 1, 2002 through July 31, 2003 1.10x
November 1, 2002 through October 31, 2003 1.25x
February 1, 2003 through January 31, 2004 1.25x
May 1, 2003 through April 30, 2004 1.25x
August 1, 2003 through July 31, 2004 1.25x
November 1, 2003 through October 31, 2004 1.50x
Each Fiscal Quarter thereafter 1.50x
(c) Maximum Merchandise Purchases. Borrowers and their Subsidiaries,
on a consolidated basis shall not make Merchandise Purchases of uniforms which
will be rented and not sold, during any of the six-month periods set forth below
that exceed in the aggregate the lesser of (x) 19.5% of rental revenue for any
such period and (y) the amounts set forth below opposite such period:
G-1
Period Amount
------ ------
February 1, 2002 through July 31, 2002 11,000,000
May 1, 2002 through October 31, 2002 11,000,000
August 1, 2002 through January 31, 2003 11,500,000
November 1, 2002 through April 30, 2003 11,500,000
February 1, 2003 through July 31, 2003 11,500,000
May 1, 2003 through October 31, 2003 11,500,000
August 1, 2003 through January 31, 2004 12,000,000
November 1, 2003 through April 30, 2004 12,000,000
February 1, 2004 through July 31, 2004 12,000,000
May 1, 2004 through October 31, 2004 12,000,000
August 1, 2005 through January 31, 2005 12,500,000
November 1, 2005 through April 30, 2005 12,500,000
As of the end of each Fiscal Quarter thereafter
for the six-month period then ended 13,000,000
(d) Minimum EBITDA plus Merchandise Amortization. Borrowers and their
Subsidiaries on a consolidated basis shall have at the end of each Fiscal
Quarter set forth below, EBITDA plus Merchandise Amortization for any six-month
period then ended of not less than the amount set forth opposite such period:
Period Minimum EBITDA plus
------ Merchandise Amortization
------------------------
February 1, 2002 through July 31, 2002 $19,750,000
May 1, 2002 through October 31, 2002 $18,500,000
August 1, 2002 through January 31, 2003 $19,000,000
November 1, 2002 through April 30, 2003 $19,500,000
February 1, 2003 through July 31, 2003 $19,500,000
May 1, 2003 through October 31, 2003 $19,500,000
August 1, 2003 through January 31, 2004 $20,000,000
November 1, 2003 through April 30, 2004
and each Fiscal Quarter thereafter $20,500,000
Unless otherwise specifically provided herein, any accounting term
used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. If any "Accounting Changes" (as defined
below) occur and such changes result in a change in the calculation of the
financial covenants, standards or terms used in the Agreement or any other Loan
Document, then Borrowers, Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating
Borrowers' and their Subsidiaries' financial condition shall be the
G-2
same after such Accounting Changes as if such Accounting Changes had not been
made; provided, however, that the agreement of Requisite Lenders to any required
amendments of such provisions shall be sufficient to bind all Lenders.
"Accounting Changes" means (i) changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions), (ii)
changes in accounting principles concurred in by any Borrower's certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal (in whole or in part) of such reserves; and (iv) the reversal of any
reserves established as a result of purchase accounting adjustments. All such
adjustments resulting from expenditures made subsequent to the Closing Date
(including capitalization of costs and expenses or payment of pre-Closing Date
liabilities) shall be treated as expenses in the period the expenditures are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required amendments, then after
appropriate amendments have been executed and the underlying Accounting Change
with respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of such
Accounting Change, refer to GAAP, consistently applied after giving effect to
the implementation of such Accounting Change. If Agent, Borrowers and Requisite
Lenders cannot agree upon the required amendments within 30 days following the
date of implementation of any Accounting Change, then all Financial Statements
delivered and all calculations of financial covenants and other standards and
terms in accordance with the Agreement and the other Loan Documents shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial Covenant contained in this
Annex G shall be deemed to have occurred as of any date of determination by
Agent or as of the last day of any specified measurement period, regardless of
when the Financial Statements reflecting such breach are delivered to Agent.
G-3
ANNEX H (Section 9.9(a))
to
CREDIT AGREEMENT
WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 000000000
Account #: 00000000
Account Name: GECC/CAF Depository
Reference: CFC Xxxxx International Enterprises Corp.
H-1
ANNEX I (Section 11.10)
to
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at
General Electric Capital Corporation
000 Xxxxxxx Xxxxxx, 00 Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: E. Xxxxxx Xxxx, Account Manager
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
and
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Corporate Counsel - Commercial Finance
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
(B) If to any Borrower, to Borrower Representative, at
Xxxxx International Enterprises Corp.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxxx Xxxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-1
with copies to:
Bond, Xxxxxxxxx & Xxxx, LLP
Xxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. XxXxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
with copies to:
Xxxxxx Godward LLP
One Freedom Square
Reston Town Center
00000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-2
ANNEX J (from Annex A - Commitments definition)
to
CREDIT AGREEMENT
Lenders
-------
Revolving Loan Commitment
(including a Swing Line Commitment
of $3,000,000)
$18,000,000 General Electric Capital Corporation
Term A Loan Commitment:
$7,000,000 General Electric Capital Corporation
Term B Loan Commitment:
$20,000,000 Gladstone Capital Corporation
$10,000,000 General Electric Capital Corporation
J-1
