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EXHIBIT 10.1
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CREDIT AGREEMENT
AMONG
HOME INTERIORS & GIFTS, INC.
CERTAIN LENDERS
NATIONSBANK, N.A., AS ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK, AS SYNDICATION AGENT
NATIONAL WESTMINSTER BANK, PLC, AS DOCUMENTATION AGENT
AND
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
SOCIETE GENERALE
CITICORP USA, INC.
AS CO-AGENTS
June 4, 1998
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NATIONSBANC XXXXXXXXXX SECURITIES LLC, AS ARRANGER
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TABLE OF CONTENTS
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ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Amendments and Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 2 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.1 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.5 Prepayment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.6 Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.7 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.8 Payment of Principal of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.9 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.10 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.11 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 2.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.13 Calculation of LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.14 Booking Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 2.16 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
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ARTICLE 3 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.1 Conditions Precedent to the Initial Advances and the Initial Letters of Credit . . . . . . . 52
Section 3.2 Conditions Precedent to All Advances and Letters of Credit . . . . . . . . . . . . . . . . . 54
Section 3.3 Conditions Precedent to Conversions and Continuations . . . . . . . . . . . . . . . . . . . 55
ARTICLE 4 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 5 General Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 5.7 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 5.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 5.9 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 5.10 Environmental Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 6 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.1 Quarterly Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . . . 67
Section 6.2 Annual Financial Statements and Information; Certificate of No Default . . . . . . . . . . . 67
Section 6.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
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Section 6.4 Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 6.5 Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . . . . . . 69
Section 6.6 ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 6.7 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE 7 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.4 Liquidation, Merger, New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.5 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.6 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.7 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.8 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.9 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.10 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.11 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.12 Amendments and Waivers of Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . . 77
Section 7.13 Amendment of Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE 8 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
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ARTICLE 9 Changes in Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.1 LIBOR Basis Determination Inadequate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.4 Effect On Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.6 Replacement of Lenders under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 10 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.2 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.3 Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE 11 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.4 Determination by the Lenders Conclusive and Binding . . . . . . . . . . . . . . . . . . . . 90
Section 11.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.9 Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 11.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
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Section 11.12 No Liability of Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 11.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 11.14 No Duties of Syndication Agent, Documentation Agent or Co-Agents . . . . . . . . . . . . . . 95
SECTION 11.15 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 11.16 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 11.17 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
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Schedules and Exhibits
Schedule 1: Commitments and Specified Percentages
Schedule 2: LIBOR Lending Offices
Schedule 3: Existing Liens
Schedule 4: Existing Litigation and Material Liabilities
Schedule 5: Subsidiaries
Schedule 6: Existing Investments
Schedule 7: Existing Indebtedness
Schedule 8: Authorization, Qualification and Good Standing
Schedule 9: Labor Matters
Schedule 10: Environmental Reports
Schedule 11: Taxes
Exhibit A: Revolving Credit Note
Exhibit B: Facility A Term Loan Note
Exhibit C: Facility B Term Loan Note
Exhibit D: Security Agreement
Exhibit E: Compliance Certificate
Exhibit F: Assignment Agreement
Exhibit G: Subsidiary Guaranty
Exhibit H: Swing Line Note
Exhibit I: Deed of Trust
Exhibit J: Intellectual Property Security Agreement and Assignment
Exhibit K: Notice of Borrowing
Exhibit L: Notice of Continuation/Conversion
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of June 4, 1998, among HOME INTERIORS &
GIFTS, INC., a Texas corporation (the "Borrower"), the Lenders from time to
time party hereto, THE CHASE MANHATTAN BANK, as syndication agent, NATIONAL
WESTMINSTER BANK, PLC, as documentation agent, THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, as a co-agent, SOCIETE GENERALE, as a co-agent, CITICORP USA, INC.,
as a co-agent, and NATIONSBANK, N.A., as administrative agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower the funds to
(a) consummate the Home Interiors Recapitalization (as hereinafter defined),
(b) pay certain fees and expenses related to the Home Interiors
Recapitalization, and (c) finance the ongoing working capital and general
corporate requirements of the Borrower and its Subsidiaries. The Lenders have
agreed to provide a portion of such financing, subject to the terms and
conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, (ii) except as permitted by Section 7.3(d) hereof with respect to a
newly-formed corporation and Section 7.4(b) hereof with respect to an existing
Subsidiary of the Borrower, makes any corporation a Subsidiary of the Borrower
or such Subsidiary, or causes any corporation, other than a Subsidiary of the
Borrower or such Subsidiary, to be merged into the Borrower or such Subsidiary
(or agrees to be merged into any other corporation other than a wholly-owned
Subsidiary of the Borrower or such Subsidiary), or (iii) agrees to purchase all
or more than 50% of the assets of any Person, pursuant to a merger, purchase of
assets or other reorganization providing for the delivery or issuance to the
holders of such Person's then outstanding securities or other equity interests,
in exchange for such securities, of cash or securities of the Borrower or such
Subsidiary, or any combination thereof, or (b) purchases in one
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transaction or a series of related transactions all or more than 50% of the
business or assets of any Person or of any operating division of any Person.
"Acquisition Consideration" means the consideration given by the
Borrower or any of its Subsidiaries for an Acquisition, including but not
limited to the sum of (without duplication) (a) the fair market value of any
cash, property or services given (other than Capital Stock issued in respect of
the Acquisition), plus (b) the amount of any indebtedness for borrowed money
and Capitalized Lease Obligations assumed, incurred or guaranteed in connection
with such Acquisition by the Borrower or any of its Subsidiaries that is a
Subsidiary immediately prior to such Acquisition.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for
such Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR
Advance for such Interest Period.
"Adjustment Date" means, for purposes of the Applicable Base Rate
Margin, the Applicable LIBOR Rate Margin, the Commitment Fee payable pursuant
to Section 2.4(a) hereof and the Letter of Credit fees payable pursuant to
Section 2.16(f)(i) hereof, the date of receipt by the Administrative Agent of
the financial statements required to be delivered pursuant to Section 6.1 or
6.2 hereof, as applicable, and the Compliance Certificate required pursuant to
Section 6.3 hereof.
"Administrative Agent" means NationsBank, N.A., a national banking
association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Advance" means any amount advanced or deemed advanced by a Lender to
the Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"Affected LIBOR Advances" has the meaning specified in Section 2.5(h)
hereof.
"Affiliate" means any Person that, directly or indirectly, through one
or more Persons, Controls or is Controlled By or Under Common Control with such
Person, or a Person who Controls or is Controlled By, such Person, or in the
case of any Lender which is an investment fund, the investment advisor thereof
and any investment fund having the same investment advisor.
"Agreement" means this Credit Agreement, as amended, modified,
supplemented or restated from time to time.
"Agreement Date" means the date of this Agreement.
"Applicable Base Rate Margin" means the following per annum
percentages, applicable in the following situations:
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Facility A Term Loan
Advances and Facility B Term
Revolving Loan
Applicability Advances Advances
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(a) The Leverage Ratio is greater than or equal to
4.75 to 1 0.75 1.25
(b) The Leverage Ratio is greater than or equal to
4.25 to 1 but less than 4.75 to 1 0.50 1.00
(c) The Leverage Ratio is greater than or equal to
3.75 to 1 but less than 4.25 to 1 0.25 0.75
(d) The Leverage Ratio is greater than or equal to
3.25 to 1 but less than 3.75 to 1 0.00 0.75
(e) The Leverage Ratio is less than 3.25 to 1 0.00 0.75
The Applicable Base Rate Margin payable by the Borrower on the Base Rate
Advances outstanding hereunder shall be adjusted on each Adjustment Date as
tested by using the Leverage Ratio for the most recent four fiscal quarters.
If the financial statements required pursuant to Section 6.1 or 6.2 hereof, as
applicable, and the related Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable Base Rate Margin
shall be determined as if the Leverage Ratio is greater than or equal to 4.75
to 1 until such time as such financial statements and Compliance Certificate
are received. Notwithstanding the foregoing, the Applicable Base Rate Margin
from and after the Agreement Date until and including the Adjustment Date
determined following the date of receipt of the audited financial statements
for the fiscal year ending December 31, 1998 and related Compliance Certificate
shall be determined as if the Leverage Ratio is greater than or equal to 4.75
to 1.
"Applicable Environmental Laws" means applicable laws pertaining to
health or the environment, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, "CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 (as
amended from time to time, "RCRA"), the Texas Water Code, and the Texas Solid
Waste Disposal Act.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies
or regulatory agencies applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all courts and
arbitrators in proceedings or actions to which the Person in question is a
party, and (b) in respect of contracts relating to interest or finance charges
that are made or performed in the State of Texas,
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"Applicable Law" shall mean the laws of the United States of America, including
without limitation 12 USC Sections 85 and 86(a), as amended from time to time,
and any other statute of the United States of America now or at any time
hereafter prescribing the maximum rates of interest on loans and extensions of
credit, and the laws of the State of Texas, including, without limitation,
Article 5069-IH, Title 79, Revised Civil Statutes of Texas, 1925, as amended
("Art. IH"), if applicable, and if Art. IH is not applicable, Article 5069-ID,
Title 79, Revised Civil Statutes, 1925, as amended ("Art. ID"), and any other
statute of the State of Texas now or at any time hereafter prescribing maximum
rates of interest on loans and extensions of credit; provided that the parties
hereto agree that the provisions of Chapter 346 of the Texas Finance Code, as
amended, shall not apply to Advances, this Agreement, the Notes or any other
Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
Facility A Term Loan
Advances and Facility B
Revolving Term Loan
Applicability Advances Advances
------------- ------------------- ----------
(a) The Leverage Ratio is greater than or equal to
4.75 to 1 2.00 2.50
(b) The Leverage Ratio is greater than or equal to
4.25 to 1 but less than 4.75 to 1 1.75 2.25
(c) The Leverage Ratio is greater than or equal to
3.75 to 1 but less than 4.25 to 1 1.50 2.00
(d) The Leverage Ratio is greater than or equal to
3.25 to 1 but less than 3.75 to 1 1.25 2.00
(e) The Leverage Ratio is less than 3.25 to 1 1.00 2.00
The Applicable LIBOR Rate Margin payable by the Borrower on the LIBOR Advances
outstanding hereunder shall be adjusted on each Adjustment Date as tested by
using the Leverage Ratio for the most recent four fiscal quarters. If the
financial statements required pursuant to Section 6.1 or 6.2 hereof, as
applicable, and the related Compliance Certificate are not received by the
Administrative Agent by the date required, the Applicable LIBOR Rate Margin
shall be determined as if the Leverage Ratio is greater than or equal to 4.75
to 1 until such time as such financial statements and Compliance Certificate
are received. Notwithstanding the foregoing, the Applicable LIBOR Rate Margin
from and after the Agreement Date until and including the Adjustment Date
determined following the date of receipt of the audited financial statements
for the fiscal quarter ending December 31, 1998 and the
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related Compliance Certificates shall be determined as if the Leverage Ratio is
greater than or equal to 4.75 to 1.
"Applicable Specified Percentages" means the Revolving Credit
Specified Percentage, the Facility A Term Loan Specified Percentage, the
Facility B Term Loan Specified Percentage, or the Total Specified Percentage,
as applicable in the context used.
"Assignee" has the meaning specified in Section 11.6(d) hereof.
"Assignment Agreement" shall have the meaning ascribed thereto in
Section 11.6 hereof and substantially in the form of Exhibit F hereto.
"Authorized Signatory" means the chief executive officer, the
president, any vice president, the treasurer, the chief financial officer, any
assistant treasurer, the secretary, or any assistant secretary or controller as
may be or is designated in writing by the Borrower, or any of its Subsidiaries
to execute documents, agreements and instruments on behalf of the Borrower or
any Subsidiary, and to request Advances hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Base Rate Margin, or (b) the sum of (i) the
Prime Rate on such day plus (ii) the Applicable Base Rate Margin. The Base
Rate Basis shall be adjusted automatically as of the opening of business on the
effective date of each change in the Prime Rate or Federal Funds Rate, as
applicable, to account for such change.
"Borrower" has the meaning assigned to such term in the preamble.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of business in Dallas, Texas and (b) with respect to any LIBOR
Advance, for the transaction of international business (including dealings in
Dollar deposits) in London, England.
"Candle Making Joint Venture" means that certain joint venture of the
Borrower to be engaged in the making of candles in which the Borrower will
initially contribute real estate and equipment having a fair market value not
to exceed $2,500,000 in aggregate amount.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capital Leases at
the cost of the item) computed in accordance with GAAP, consistently applied
(excluding any such asset acquired (x) in connection with normal replacement
and maintenance programs properly expensed in accordance with GAAP, (y) with
the proceeds of
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any casualty insurance or any condemnation award (with such expenditures to be
made in accordance with and as permitted by Section 2.5(c) hereof) and (z) with
the cash proceeds of any asset sale made pursuant to Section 7.5 hereof).
"Capital Leases" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13, dated November 1976, as amended.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital
stock in any Person that is a corporation, each class of partnership interest
in any Person that is a partnership, and each class of membership interest in
any Person that is a limited liability company.
"Capitalized Lease Obligations" means that portion of any obligation
of the Borrower or any of its Subsidiaries as lessee under a lease which at the
time would be required to be capitalized on a balance sheet prepared in
accordance with GAAP.
"Cash and Cash Equivalents" means with respect to the Borrower and
each of its Subsidiaries (a) cash, (b) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than six months from the
date of acquisition, (c) certificates of deposit and eurodollar time deposits
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000, (d) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) entered into with any financial
institution meeting the qualifications specified in clause (c) above, and (e)
commercial paper issued by any Lender or the Borrower corporation of any
Lender, and commercial paper rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group, a Division of XxXxxx-Xxxx, Inc., a New York corporation
or P-1 or the equivalent thereof by Xxxxx'x Investors Service, Inc. and in each
case maturing within six months after the date of acquisition.
"Change of Control" means the earlier to occur of (a) Xxxxx Muse, its
principals and their Affiliates and the management of the Borrower and its
Subsidiaries ("HMTF") shall cease to have the power, directly or indirectly, to
vote or direct the voting of securities having a majority of the ordinary
voting power for the election of directors of the Borrower, provided that the
occurrence of the foregoing event shall not be deemed a Change of Control if
(i) at any time prior to the consummation of an Initial Public Offering, and
for any reason whatsoever, (A) HMTF otherwise has the right to designate (and
does so designate) a majority of the board of directors of the Borrower or (B)
HMTF and their employees, directors and officers (the "HMTF Group") own of
record and beneficially an amount of common stock of the Borrower equal to at
least 50% of the amount of common stock of the Borrower owned by the HMTF Group
of record and beneficially as of the Closing Date and such ownership by the
HMTF Group represents the largest single block of voting securities of the
Borrower held by any Person or related group for purposes of section 13(d) of
the
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Securities Exchange Act of 1934, as amended or (ii) at any time after the
consummation of an Initial Public Offering, and for any reason whatsoever, (A)
no "Person" or "group" (as such terms are used in sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), excluding the HMTF Group,
shall become the "beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5
under such Act), directly or indirectly, of more than the greater of (x) 15% of
the shares outstanding or (y) the percentage of the then outstanding voting
stock of the Borrower owned beneficially by the HMTF Group and (B) the board of
directors of the Borrower shall consist of a majority of the Continuing
Directors and (b) any Change of Control as defined in any document pertaining
to the Senior Subordinated Notes.
"Co-Agents" means The Prudential Insurance Company of America, Societe
Generale, and Citicorp USA, Inc.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral granted by any Person to the
Administrative Agent to secure the Obligations.
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
"Commitments" means, collectively, the Revolving Credit Commitment,
the Facility A Term Loan Commitment and the Facility B Term Loan Commitment.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit E, appropriately completed.
"Consulting Agreements" means, collectively, that certain (a)
Financial Advisory Agreement, dated as of June 4, 1998, among the Borrower,
each Guarantor and Xxxxx, Muse & Co. Partners, L.P. and (b) Monitoring and
Oversight Agreement, dated as of June 4, 1998, among the Borrower, each
Guarantor and Xxxxx, Muse & Co. Partners, L.P., each as in effect as of the
Agreement Date, and with only such amendments or modifications thereto after
the Agreement Date which do not materially affect the interest of the Lenders
or otherwise reasonably acceptable to the Administrative Agent.
"Continuing Directors" means the directors of the Borrower on the
Closing Date, after giving effect to the Home Interiors Merger and the other
transactions contemplated hereby, and each other director, if, in each case,
such other directors' nominations for election to the board of directors of the
Borrowers are recommended by a majority of the then Continuing Directors or
such other director receives the vote of HMTF in his or her election by the
stockholders of the Borrower.
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"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any Person which
beneficially owns, directly or indirectly, 25% or more (in number of votes) of
the securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Xxxxxxx Investments" means Xxxxxxx Investments, Inc., a Texas
corporation.
"Current Assets" means at any date, the amount which, in conformity
with GAAP, would be set forth opposite the caption "Total Current Assets" (or
any like caption) on a consolidated balance sheet of the Borrower and its
Subsidiaries at such date, except that there shall be excluded therefrom Cash
and Cash Equivalents.
"Current Liabilities" means at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "Total Current
Liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, except that there shall be excluded
therefrom the current portion of (a) all Advances, and (b) all long-term
Indebtedness for borrowed money (including Capitalized Lease Obligations) in
each case, to the extent included therein.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
"Deed of Trust" means any fee simple deed of trust or mortgage, as
applicable, relating to the real fee owned property of the Borrower and each of
its Subsidiaries required to be pledged to the Administrative Agent, in
substantially the form set forth in Exhibit I hereto, as amended, modified,
renewed, supplemented or restated from time to time.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, regardless of whether there shall have occurred any passage of
time or giving of notice that would be necessary in order to constitute such
event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a)
with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Base Rate Basis plus two percent or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis
plus two percent.
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"Determining Lenders" means, on any date of determination, any
combination of Lenders whose Total Specified Percentages aggregate more than
50%; provided, however, in the event that all of the Commitments have been
terminated, "Determining Lenders" means, on any date of determination, any
combination of Lenders having more than 50% of the Advances (other than Swing
Line Advances) then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a stock dividend) on, and (b) any purchase, redemption
or other acquisition or retirement for value by such Person of any shares of
Capital Stock of such Person.
"Documentation Agent" means National Westminster Bank, PLC.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than
a Foreign Subsidiary.
"EBITDA" means, for any period, determined in accordance with GAAP on
a consolidated basis for the Borrower and its Subsidiaries, the sum of (without
duplication) (a) Pretax Net Income (excluding therefrom, to the extent included
in determining Pretax Net Income, any items of extraordinary gain, including
net gains on the sale of assets other than asset sales in the ordinary course
of business, and adding thereto, to the extent included in determining Pretax
Net Income, any items of extraordinary loss, including net losses on the sale
of assets other than asset sales in the ordinary course of business), plus (b)
to the extent included in determining Pretax Net Income, interest expense
(including the amortization or write-off of debt discount and issuance costs
and commissions and discounts and other fees and charges associated with
Indebtedness), plus (c) to the extent included in determining Pretax Net
Income, depreciation and amortization, plus (d) to the extent included in
determining Pretax Net Income, other non-cash charges, minus (e) for any period
prior to the Agreement Date included in the calculation of EBITDA, interest and
investment income, minus (f) to the extent included in determining Pretax Net
Income, other non-cash credits, minus (g) cash payments made with respect to
non-cash charges added back in determining EBITDA in any prior period which
would otherwise be excluded in determining EBITDA, plus (h) to the extent
included in determining Pretax Net Income, one-time transaction expenses
incurred in connection with the Home Interiors Recapitalization which are not
capitalized or amortized pursuant to GAAP.
"Environmental Reports" has the meaning specified in Section 4.1(q)
hereof.
"Equity Offering" means any offering, sale or issuance of Capital
Stock of the Borrower other than in respect of the exercise of stock options of
such stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
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"ERISA Event" means, with respect to the Borrower and its
Subsidiaries, (a) a Reportable Event (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC under regulations issued under
Section 4043 of ERISA) with respect to a Plan, (b) the withdrawal of any such
Person or any member of its Controlled Group from a 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 filing of a notice of intent to
terminate under Section 4041(c) of ERISA, (d) the institution of proceedings to
terminate a Plan by the PBGC, (e) the failure to make required contributions
which would result in the imposition of a Lien under Section 412 of the Code or
Section 302 of ERISA, (f) a withdrawal from a Multiemployer Plan, or (g) any
other event or condition which would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan or the imposition of
any liability under Title IV of ERISA other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1,
provided that any requirement for notice or lapse of time has been satisfied.
"Excess Cash Flow" means, for the Borrower and its Subsidiaries on a
consolidated basis for any period, an amount equal to (without duplication) (a)
Net Income for such period, plus (b) depreciation and amortization for such
period, plus (c) any decreases in Working Capital for such period, minus (d)
for any period prior to the Agreement Date included in the calculation of
Excess Cash Flow, interest and investment income for such period, plus or minus
as the case may be, (e) any items of extraordinary loss, including net losses
on the sale of assets other than asset sales in the ordinary course of
business, and any items of extraordinary gain, including net gains on the sale
of assets other than asset sales in the ordinary course of business (in each
case to the extent such extraordinary gain or loss is included in Net Income),
minus (f) scheduled payments of Indebtedness for such period, minus (g) actual
Capital Expenditures during such period (excluding, however, the portion of
such Capital Expenditures, if any, financed by purchase money debt (other than
the Advances) or Capitalized Lease Obligations), minus (h) any increases in
Working Capital for such period, minus (i) the cash portion of any Acquisition
Consideration paid during such period.
"Facility A Term Loan Advance" means an Advance made pursuant to
Section 2.1(b) hereof.
"Facility A Term Loan Commitment" means the commitments of the
Lenders, subject to the terms and conditions hereof, to make Facility A Term
Loan Advances up to an aggregate principal amount of $200,000,000, as
terminated pursuant to Section 2.1(b) hereof.
"Facility A Term Loan Maturity Date" means June 30, 2004, or the
earlier date of acceleration of the Facility A Term Loan Advances pursuant to
Section 8.2 hereof.
"Facility A Term Loan Note" means any promissory note of the Borrower
evidencing Facility A Term Loan Advances hereunder, substantially in the form
of Exhibit B hereto, together with any extension, renewal or amendment thereof,
or substitution therefor.
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"Facility A Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1 hereto as its Facility A
Term Loan Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Facility B Term Loan Advance" means an Advance made pursuant to
Section 2.1(c) hereof.
"Facility B Term Loan Commitment" means the commitments of the
Lenders, subject to the terms and conditions hereof, to make Facility B Term
Loan Advances up to an aggregate principal amount of $100,000,000, as
terminated pursuant to Section 2.1(c) hereof.
"Facility B Term Loan Maturity Date" means June 30, 2006, or the
earlier date of acceleration of the Facility B Term Loan Advances pursuant to
Section 8.2 hereof.
"Facility B Term Loan Note" means any promissory note of the Borrower
evidencing Facility B Term Loan Advances hereunder, substantially in the form
of Exhibit C hereto, together with any extension, renewal or amendment thereof,
or substitution therefor.
"Facility B Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1 hereto as its Facility B
Term Loan Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of Dallas on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to
the Administrative Agent by three federal funds brokers of recognized standing
selected by it.
"Fee Letter" has the meaning specified in Section 2.4(b) hereof.
"Financial Statements" has the meaning specified in Section 4.1(j)(i)
hereof.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the Laws of any state of the United States of America or the
District of Columbia.
"Form 4224" has the meaning specified in Section 2.15(e) hereof.
"Form 1001" has the meaning specified in Section 2.15(e) hereof.
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"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the rules and regulations of the Securities
and Exchange Commission, or their successors which are applicable in the
circumstances as of the date of determination, except that for purposes of
Sections 7.8 and 7.9 hereof, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the Financial Statements. In the event that any "Accounting
Change" (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and delivered by
the Borrower, the Administrative Agent and the Determining Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred. The
term "Accounting Changes" refers to changes in accounting principles required
by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants or, if applicable, the Securities and Exchange Commission
(or successors thereto or agencies with similar functions).
"Guarantor" means each direct and indirect Domestic Subsidiary of the
Borrower which executes a Subsidiary Guaranty.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including, without
limiting the foregoing, any reimbursement obligations with respect to amounts
which may be drawn by beneficiaries of outstanding letters of credit and (b) an
agreement, direct or indirect, contingent or otherwise, to maintain net worth,
working capital, earnings or other financial performance of another Person.
"Xxxxx Muse" means HMTF Operating, Inc., a Texas corporation.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the weekly rate ceiling described in and computed in accordance with the
provisions of
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Art. ID.003, or (b) if the parties subsequently contract as allowed by
Applicable Law, the quarterly ceiling or the annualized ceiling computed
pursuant to Art. ID.008; provided, however, that at any time the weekly rate
ceiling, the quarterly ceiling or the annualized ceiling shall be less than 18%
per annum or more than 24% per annum, the provisions of Art. ID.009(a) and (b)
shall control for purposes of such determination, as applicable.
"HM/RB Partners, L.P. Cash Contribution" means the contribution of
cash by HM/RB Partners, L.P. to the Borrower in an amount equal to the
remainder of $195,000,000 minus the amount, if any, that the Home Interiors
Rollover Equity exceeds $80,000,000.
"HMTF" has the meaning specified in the definition of "Change of
Control".
"HMTF Group" has the meaning specified in the definition of "Change of
Control".
"Home Interiors Merger" means the merger of Xxxxxxx Investments with
and into the Borrower, with the Borrower as the surviving corporation.
"Home Interiors Merger Agreement" means that certain Agreement and
Plan of Merger, dated as of April 13, 1998, by and among the Borrower and
Xxxxxxx Investments, as amended, modified and supplemented.
"Home Interiors Merger Documents" means the Home Interiors Merger
Agreement and all other contracts, agreements or documents executed or
delivered in connection with the Home Interiors Merger, as amended, modified or
supplemented.
"Home Interiors Recapitalization" means, collectively, (a) the HM/RB
Partners, L.P. Cash Contribution, (b) the Home Interiors Stock Redemption, and
(c) the issuance by the Borrower of the Senior Subordinated Notes.
"Home Interiors Rollover Equity" means the outstanding Capital Stock
of the Borrower retained by existing shareholders of the Borrower and not
redeemed pursuant to the Home Interiors Stock Redemption, which amount shall
not be less than $80,000,000.
"Home Interiors Stock Redemption" means the redemption by the Borrower
of up to $845,000,000 of its outstanding Capital Stock from existing
shareholders of the Borrower.
"Increased Costs" has the meaning specified in Section 9.3(a) hereof.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (other than current trade payables and
accrued expenses incurred in the
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ordinary course of such Person's business), (e) all obligations secured by any
Lien on any property or asset owned by such Person, whether or not the
obligation secured thereby shall have been assumed, (f) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, all
obligations in respect of letters of credit, bankers' acceptances and similar
instruments, and all obligations under Interest Hedge Agreements, (g) the
principal portion of all obligations of such Person under any Synthetic Lease,
and (h) any Guaranty of such Person of any obligation of another Person
constituting obligations of a type set forth above. The amount of any such
indebtedness of any Person described in clause (e) shall be deemed to be the
lesser of such (i) indebtedness and (ii) the fair market value of such asset or
property encumbered, as determined by such Person in good faith.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Initial Public Offering" means an underwritten public offering by the
Borrower of Capital Stock of the Borrower or any Subsidiary thereof pursuant to
a registration statement filed with the Securities and Exchange Commission in
accordance with the Securities Act of 1933, as amended.
"Intellectual Property Security Agreement" means the Intellectual
Property Security Agreement and Assignment executed by the Borrower and each of
its Subsidiaries, substantially in the form of Exhibit J hereto, as amended,
modified, renewed, supplemented or restated from time to time.
"Interest Coverage Ratio" means for any date of determination, the
ratio of (a) EBITDA to (b) cash interest expense of the Borrower and its
Subsidiaries (including cash interest expense pursuant to Capitalized Lease
Obligations, but excluding amortization or write-off of debt discount, issuance
costs and commissions and discounts and other fees and charges associated with
Indebtedness), in each case for the immediately preceding four consecutive
fiscal quarters. Notwithstanding the immediately preceding sentence, for
purposes of the calculation of the Interest Coverage Ratio prior to June 30,
1999, cash interest expense shall be determined by annualizing the amount of
cash interest paid from June 30, 1998 until such date of determination.
"Interest Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, exchange rates or forward rates applicable to
such party's assets, liabilities or exchange transactions, including, but not
limited to, dollar-denominated or cross- currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options, puts and
warrants, as the same may be amended or modified and in effect from time to
time, and any and all cancellations, buy backs, reversals, terminations or
assignments of any of the foregoing.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter, and if
available to all Lenders, nine or twelve months
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thereafter (as the Borrower shall select); provided, however, that all of the
foregoing provisions are subject to the following:
(a) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(c) the Borrower may not select any Interest Period in
respect of Advances having an aggregate principal amount less than
$2,000,000; and
(d) there shall be outstanding at any one time no more
than ten Interest Periods in the aggregate.
"Investment" means any (a) Acquisition or (b) any other direct or
indirect acquisition of assets of any Person which is not an Acquisition, or
any other direct or indirect purchase or other acquisition of, or beneficial
interest in, Capital Stock or other securities of any other Person, or any
direct or indirect loan, advance (other than advances to employees for moving
and travel expenses, drawing accounts and similar expenditures in the ordinary
course of business), capital contribution to, or investment in any other
Person, including without limitation the occurrence or sufferance of
Indebtedness or the purchase of accounts receivable of any other Person that
are not current assets or do not arise in the ordinary course of business. The
amount of any equity Investment shall be the original cost of such Investment
plus the cost of all additions thereto and the amount of any debt Investment
shall be the outstanding principal amount thereof, in each case without any
adjustments for increases or decreases in value, or write-ups, write- downs or
write-offs with respect to such Investment.
"Issuing Bank" means NationsBank, N.A. in its capacity as issuer of
the Letters of Credit.
"Law" means any statute, law, ordinance, regulation, rule, order,
writ, injunction or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of any of the
Commitments or is owed any part of the Obligations (including the
Administrative Agent in its individual capacity), and each Assignee that
hereafter becomes party hereto pursuant to Section 11.6 hereof, subject to the
limitations set forth therein.
"L/C Cash Collateral Account" has the meaning specified in Section
2.16(g) hereof.
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"L/C Related Documents" has the meaning specified in Section 2.16(e)
hereof.
"Letter of Credit" has the meaning specified in Section 2.16(a)
hereof, provided that letters of credit which have been cash collateralized
(excluding, however, pursuant to the L/C Cash Collateral Account) or for which
back-up letters of credit have been obtained, in each case in a manner
reasonably acceptable to the Administrative Agent, shall no longer be
considered Letters of Credit.
"Letter of Credit Agreement" has the meaning specified in Section
2.16(b) hereof.
"Letter of Credit Facility" means the amount of Letters of Credit the
Issuing Bank may issue pursuant to Section 2.16(a) hereof.
"Leverage Ratio" means, for any date of determination, the ratio of
(a) Total Debt as of the date of determination to (b) EBITDA for the
immediately preceding four consecutive fiscal quarters. For purpose of
calculation of the Leverage Ratio only, with respect to assets not owned at all
times during the four fiscal quarters immediately preceding the date of
calculation of EBITDA, there shall be (i) included in EBITDA the pro forma
EBITDA of any assets acquired during any such four fiscal quarters as if
acquired at the beginning of the four fiscal quarters preceding the date of
calculation and (ii) excluded from EBITDA the EBITDA of any assets disposed of
during any of such fiscal quarters as if disposed of at the beginning of the
four fiscal quarters preceding the date of calculation.
"LIBOR Advance" means an Advance bearing interest at the LIBOR Basis.
"LIBOR Basis" means with respect to any LIBOR Advance, a per annum
interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b) the
sum of the Adjusted LIBOR Rate plus the Applicable LIBOR Rate Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 2 attached hereto, and such
other office of the Lender or any of its affiliates hereafter designated by
notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any Interest Period the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If for any reason such rate is not available, the term
"LIBOR Rate" shall mean, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) appearing on Reuters Screen LIBO Page as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the
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applicable rate shall be the arithmetic mean of all such rates (rounded
upwards, if necessary, to the nearest 1/100th of 1%).
"Lien" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement or other encumbrance of any kind in respect of such
property.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement
or other instrument.
"Loan Documents" means this Agreement, the Notes, if any, the Security
Agreement, the Fee Letter, any Interest Hedge Agreements entered into with any
Lender or any Affiliate of any Lender, each Subsidiary Guaranty, the
Intellectual Property Security Agreement, the Deeds of Trust, and any other
agreement executed, delivered or performable by any Obligor in connection
herewith or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that
has a material adverse effect in or on (a) the business, assets, financial
condition, results of operations, or prospects of the Borrower and its
Subsidiaries taken as a whole, (b) the validity or enforceability of any Loan
Documents or (c) the rights or remedies of the Lenders or the Administrative
Agent under any of the Loan Documents.
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, the Lenders are permitted to charge on the Obligations.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group has any obligation or
liability (contingent or otherwise) under Title IV of ERISA.
"NationsBank" means NationsBank, N.A., a national banking association,
in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any governmental or other regulatory authority or any Person necessary or
appropriate to enable the Borrower or any of its Subsidiaries to maintain and
operate its business and properties, provided a failure to have such license,
permit, consent, approval or authorization could reasonably be expected to
result on a Material Adverse Effect.
"Negative Pledge" means any agreement, contract or other arrangement
whereby the Borrower or any of its Subsidiaries is prohibited from, or would
otherwise be in default as a result
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of, creating, assuming, incurring or suffering to exist, directly or
indirectly, any Lien on any of its assets.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset by or of, or the issuance of Capital Stock
to, any Person or any Recovery Event, the amount of cash received by such
Person in connection with such transaction after deducting therefrom the
aggregate, without duplication, of the following amounts to the extent properly
attributable to such transaction or to any asset that may be the subject
thereof: (i) reasonable brokerage commissions, legal fees, finder's fees,
financial advisory fees, fees for solvency opinions, accounting fees,
underwriting fees, investment banking fees, survey, title insurance,
appraisals, notaries and other similar commissions and fees, and expenses, in
each case, to the extent paid, payable or reimbursed by such Person; (ii)
filing, recording or registration fees or charges or similar fees or charges
paid by such Person; (iii) taxes paid or payable by such Person or any
shareholder, partner or member of such Person to governmental taxing
authorities as a result of such sale or other disposition (after taking into
account any available tax credits or deductions or any tax sharing
arrangements); (iv) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Obligations)
that is secured by a Lien on the asset in question; and (v) any reserve for
adjustment in respect of the price of any such sale, lease, transfer or other
disposition of such asset or assets.
"Net Income" means net profit (or loss) after taxes of the Borrower
and its Subsidiaries, on a consolidated basis, determined in accordance with
GAAP.
"Non-Consenting Lender" has the meaning specified in Section 9.6
hereof.
"Non-Funding Lender" has the meaning specified in Section 9.6 hereof.
"Notes" means, collectively, the Revolving Credit Notes, the Facility
A Term Loan Notes, the Facility B Term Loan Notes and the Swing Line Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(d) hereof.
"Notice of Issuance" has the meaning specified in Section 2.16(b)
hereof.
"Obligations" means all obligations of any nature (whether matured or
unmatured, fixed or contingent, including the Reimbursement Obligations) of the
Borrower or any of its Subsidiaries to any Lender or any Affiliate of any
Lender under any of the Loan Documents as they may be amended from time to
time.
"Obligor" means the Borrower and each Guarantor.
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"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Other Taxes" has the meaning specified in Section 2.15(b) hereof.
"Ownership Information" has the meaning specified in Section 11.6(j)
hereof.
"Participant" has the meaning specified in Section 11.6(c) hereof.
"Participation" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance; provided, however, if the Interest Period for any LIBOR Advance
exceeds three months, "Payment Date" shall also mean each day which is three
months, or a whole multiple thereof after the first day of such Interest
Period.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Issuance" means (a) the issuance by the Borrower of shares
of Capital Stock as dividends on issued and outstanding Capital Stock of the
same class of the Borrower or pursuant to any dividend reinvestment plan, (b)
the issuance by the Borrower of options or other equity securities of the
Borrower to outside directors, members of management or employees of the
Borrower or any Subsidiary of the Borrower, (c) the issuance of securities as
interest or dividends on pay-in-kind debt or preferred equity securities in
accordance with the terms permitted hereunder and under the other Loan
Documents, (d) the issuance to the Borrower or any Subsidiary (or any director,
with respect to such director's qualifying shares) by any of its Subsidiaries
of any of their respective Capital Stock, in each case with respect to this
clause (d) to the extent such Capital Stock issued to the Borrower or any
Domestic Subsidiary is pledged to the Administrative Agent pursuant to the
applicable Loan Document, (e) the issuance by the Borrower of shares of its
Capital Stock in connection with an Acquisition, (f) cash payments made in lieu
of fractional shares of the Borrower's Capital Stock in an aggregate amount not
to exceed $200,000 in aggregate amount during the term of this Agreement, and
(g) the issuance by the Borrower of additional shares of Capital Stock of the
Borrower to infuse additional capital into the Borrower in an aggregate amount
not to exceed $25,000,000 during the term of this Agreement.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of the Lenders or the
Administrative Agent to secure the Obligations hereunder;
(b) (i) Liens on real estate for ad valorem taxes not yet
delinquent, (ii) Liens on leasehold interests created by the lessor in
favor of any mortgagee of the leased premises, and
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(iii) Liens for taxes, assessments, governmental charges, levies or
claims not yet delinquent, or in each case for clauses (i) and (iii)
that are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside
on such Person's books in accordance with GAAP, but only so long as no
foreclosure, restraint, sale or similar proceedings have been
commenced with respect thereto that has not been stayed;
(c) Liens of carriers, landlords, warehousemen,
mechanics, laborers and materialmen and other similar Liens incurred
in the ordinary course of business for sums not overdue for a period
of more than 60 days or being contested in good faith, if such reserve
or appropriate provision, if any, as shall be required by GAAP shall
have been made therefor;
(d) (i) Liens incurred in the ordinary course of business
in connection with worker's compensation, unemployment insurance or
similar legislation and (ii) deposits to secure the performance of
bids, trade contracts (other than for borrowed money), leases,
statutory obligations, insurance contracts, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) Easements, right-of-way, restrictions and other
similar encumbrances on the use of real property which do not
materially interfere with the ordinary conduct of the business of such
Person or which are set forth in any title policy or "marked up"
commitment thereof delivered pursuant hereto and reasonably acceptable
to the Administrative Agent;
(f) Liens created to secure the purchase price of assets
acquired by such Person or created to secure Indebtedness permitted by
Section 7.1(c) hereof, which is incurred solely for the purpose of
financing the acquisition of such assets and incurred at the time of
acquisition or within 90 days thereafter, so long as each such Lien
shall at all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so long as
any such Lien remains solely on the asset or assets acquired and the
amount of Indebtedness related thereto is not increased;
(g) Liens in respect of judgments or awards for which
appeals or proceedings for review are being prosecuted and in respect
of which a stay of execution upon any such appeal or proceeding for
review shall have been secured not constituting an Event of Default
under Section 8.1(h) hereof, provided that (i) such Person shall have
established adequate reserves for such judgments or awards, (ii) such
judgments or awards shall be fully insured and the insurer shall not
have denied coverage, or (iii) such judgments or awards shall have
been bonded to the satisfaction of the Determining Lenders;
(h) Any Liens which are described on Schedule 3 hereto,
and Liens resulting from the refinancing, renewal, or extension of the
related Indebtedness, provided that the Indebtedness secured thereby
shall not be increased and the Liens shall not cover additional assets
of the Borrower (other than after-acquired title in or on such
property and proceeds of the existing collateral in accordance with
the document creating such Lien);
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(i) Liens arising from precautionary Uniform Commercial
Code financing statements with respect to operating leases or
consignment arrangements in the ordinary course of business;
(j) Liens in favor of banking institutions arising by
operation of law encumbering deposits (including the right of setoff)
held by such banking institution incurred in the ordinary course of
business and which are within the general parameters customary in the
banking industry;
(k) Liens existing on any property or asset at the time
of acquisition thereof by the Borrower and its Subsidiaries or
existing on the property or assets of any Person that becomes a
Subsidiary after the Agreement Date at the time such Person becomes a
Subsidiary (provided, that (x) such Lien is not created in
contemplation of or in connection with such acquisition or such Person
becoming a Subsidiary, as the case may be, (y) such Lien shall not
apply to any other property or assets of the Borrower or its
Subsidiaries and (z) such Lien shall secure only those obligations
which it secures on the date of such acquisition or the date such
Person becomes a Subsidiary, as the case may be);
(l) Any obligations or duties affecting any of the
property of the Borrower or its Subsidiaries to any municipality or
public authority with respect to any franchise, grant, license or
permit which do not materially impair the use of such property for the
purposes for which it is held and do not materially impair the value
of the Collateral;
(m) Liens on property of the Borrower and its
Subsidiaries in favor of landlords securing licenses, subleases and
leases permitted hereunder and not interfering with the business of
the Borrower or any of its Subsidiaries;
(n) Licenses, leases or subleases permitted hereunder
granted to others but not interfering in any material respect with any
rights to the Collateral or with the business of the Borrower or any
of its Subsidiaries; and
(o) Liens not otherwise permitted hereunder which secure
obligations not to exceed $3,000,000 in aggregate amount outstanding
at any time.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA subject to Title IV of ERISA or Section 412 of the Code (other than a
Multiemployer Plan) pursuant to which any employees of the Borrower, its
Subsidiaries or any member of their Controlled Group participate.
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"Pretax Net Income" means net profit (or loss) before taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in Dollars
to United States residents of varying degrees of creditworthiness and being
quoted at such time by the Reference Lender as its "prime rate;" it being
understood that such rate may not be the lowest rate of interest charged by the
Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
December, beginning June 30, 1998.
"Recovery Event" means any settlement of or payment in respect of any
property insurance or casualty insurance claim or any condemnation proceeding
in or deed in lieu thereof relating to any Collateral, excluding any such
settlement or payment which, together with any related settlement or payment,
yields gross proceeds to the Borrower or any of its Subsidiaries of less than
$5,000,000.00.
"Reference Lender" means NationsBank; provided that if NationsBank's
portion of the Commitments shall terminate and it shall have no Advances
outstanding hereunder, NationsBank shall cease to be the Reference Lender, and
the Administrative Agent (after consultation with Borrower) shall, with notice
to the Borrower and the Lenders, designate another Lender as the Reference
Lender.
"Register" has the meaning specified in Section 11.6(j) hereof.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit and not
theretofore reimbursed by the Borrower.
"Reinvestment Deferred Amount" means with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Borrower or any of its
Subsidiaries in connection therewith which are not applied to prepay the
Advances.
"Reinvestment Event" means any Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice" means a written notice by an Authorized
Signatory stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends to use
all or a specified portion of the Net Cash Proceeds of a Recovery Event to
acquire assets useful in its business.
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"Reinvestment Prepayment Amount" means with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto less any
amount expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrower's business.
"Reinvestment Prepayment Date" means with respect to any Reinvestment
Event, the earlier of (a) the date occurring 365 days after such Reinvestment
Event and (b) the date on which the Borrower shall have determined not to, or
shall have otherwise ceased to, acquire assets useful in the Borrower's
business with all or any portion of the relevant Reinvestment Deferred Amount.
"Related Fund" means, with respect to any Lender which is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release Date" means the date on which the Notes have been paid, all
other Obligations due and owing have been paid and performed in full, and the
Commitments have been terminated.
"Reportable Event" shall have the meaning set forth in Section 4043(b)
of ERISA.
"Required Facility A Term Loan Lenders" means, on any date of
determination, any combination of Lenders having more than 50% of the Facility
A Term Loan Advances then outstanding.
"Required Facility B Term Loan Lenders" means, on any date of
determination, and combination of Lenders having more than 50% of the Facility
B Term Loan Advances then outstanding.
"Required Revolving Credit Lenders" means, on any date of
determination, any combination of Lenders whose Revolving Credit Specified
Percentages aggregate more than 50%, provided, however, in the event that the
Revolving Credit Commitment has terminated, "Required Revolving Credit Lenders"
means, on any date of determination, any combination of Lenders having more
than 50% of the Revolving Credit Advances then outstanding.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted LIBOR Rate (as the case may be) is to be determined, or (ii) any
category of extensions of credit or other assets which include LIBOR Advances.
The Adjusted LIBOR Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
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"Restricted Payments" means, collectively, (a) Dividends, (b) any
payment or prepayment of principal, interest, premium or penalty on any of the
Senior Subordinated Notes of the Borrower or any of its Subsidiaries or any
defeasance, redemption, purchase, repurchase or other acquisition or retirement
for value, in whole or in part, of any of the Senior Subordinated Notes
(including, without limitation, the setting aside of assets or the deposit of
funds therefor) of the Borrower or any of its Subsidiaries, and (c) any payment
of any management, advisory, consulting or similar fees to any Affiliate of the
Borrower or any of its Subsidiaries other than an (i) Obligor and (ii) pursuant
to the Consulting Agreements.
"Revolving Commitment Fee" has the meaning specified in Section 2.4(a)
hereof.
"Revolving Commitment Maturity Date" means June 30, 2004, or the
earlier date of termination in whole of the Revolving Credit Commitment
pursuant to Section 2.6 or 8.2 hereof.
"Revolving Credit Advance" means an Advance made pursuant to Section
2.1(a) hereof.
"Revolving Credit Commitment" means $40,000,000.00, as reduced or
terminated pursuant to Sections 2.6 or 8.2 hereof.
"Revolving Credit Note" means any Promissory Note of the Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof,
or substitution therefor.
"Revolving Credit Specified Percentage" means, as to any Lender, the
percentage indicated beside its name on Schedule 1 hereto as its Revolving
Credit Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Rights" means rights, remedies, powers and privileges.
"Security Agreement" means that certain security agreement executed by
the Borrower and each of its Subsidiaries, substantially in the form of Exhibit
D hereto, as amended, modified, renewed, supplemented or restated from time to
time.
"Senior Subordinated Notes" means (a) those certain senior
subordinated notes of the Borrower due 2008 to be issued by the Borrower in
connection with the Home Interiors Recapitalization which shall be subordinated
to the Obligations on the terms set forth in the Senior Subordinated Notes
Indenture and (b) all senior subordinated notes of the Borrower issued in
exchange for the Senior Subordinated Notes on terms substantially identical to
the terms of the Senior Subordinated Notes.
"Senior Subordinated Notes Indenture" means that certain Indenture,
dated as of June 4, 1998, by and among the Borrower, certain of its
Subsidiaries as guarantors, and United States Trust Company of New York, as
Trustee.
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"Solvent" means, with respect to any Person, that the fair value of
the assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time,
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability discounted to
present value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Xxxxxxx, Xxxxxxx & Xxxxxxx,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as applicable or as the context
requires, the Revolving Credit Specified Percentage, the Facility A Term Loan
Specified Percentage or the Facility B Term Loan Specified Percentage.
"Subsidiary" of any Person means any corporation, partnership, limited
liability company, joint venture, trust or estate or other Person of which (or
in which) more than 50% of:
(a) the outstanding Capital Stock having voting power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time Capital Stock of any other class
or classes of such corporation shall or might have voting power upon
the occurrence of any contingency),
(b) the interest in the capital or profits of such
partnership or joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Subsidiary Guaranty" means that certain Subsidiary Guaranty executed
by each Domestic Subsidiary of the Borrower, substantially in the form of
Exhibit G hereto, as amended, modified, renewed, supplemented or restated from
time to time.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(d)
hereof.
"Swing Line Bank" means NationsBank, N.A. and any successor thereto
appointed in accordance with Section 10.1(b) hereof.
"Swing Line Facility" has the meaning specified in Section 2.1(d)
hereof.
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"Swing Line Note" means the Swing Line Note of the Borrower payable to
the order of the Swing Line Bank, evidencing Swing Line Advances hereunder,
substantially in the form of Exhibit H hereto, together with any extension,
renewal or amendment thereof or substitution therefor.
"Syndication Agent" means The Chase Manhattan Bank.
"Synthetic Lease" means any synthetic lease, tax retention generating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
"Taxes" has the meaning specified in Section 2.15 hereof.
"Term Loan Advance" means a Facility A Term Loan Advance or a Facility
B Term Loan Advance.
"Total Debt" means, as of any date of determination, determined for
the Borrower and its Subsidiaries on a consolidated basis, without duplication,
(a) indebtedness for borrowed money, (b) obligations evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations to pay the
deferred purchase price of property or services other than trade payables
incurred in the ordinary course of business, and (d) Capitalized Lease
Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 1 hereto as its Total Specified
Percentage, or as adjusted or specified in any amendment to this Agreement or
in any Assignment Agreement, as adjusted to account for any permanent
reductions in the Revolving Credit Commitment and any payments of Facility A
Term Loan Advances or Facility B Term Loan Advances which result in a reduction
of the outstanding Facility A Term Loan Advances or outstanding Facility B Term
Loan Advances.
"Tribunal" means any (a) state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency,
department, commission, board, bureau, or instrumentality of a governmental or
other regulatory or public body or authority or (b) private arbitration board
or panel.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time.
"Unused Portion" means an amount equal to the result of (a) the
Revolving Credit Commitment minus (b) the sum of (i) the outstanding Revolving
Credit Advances plus (ii) outstanding Reimbursement Obligations in respect of
the Letters of Credit.
"Working Capital" means Current Assets minus Current Liabilities.
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Section 1.2 Amendments and Renewals. Each definition of an
agreement in this Article 1 shall include such agreement as amended to date,
and as amended or renewed from time to time in accordance with its terms.
Section 1.3 Construction. The terms defined in this Article 1
(except as otherwise expressly provided in this Agreement) for all purposes
shall have the meanings set forth in Section 1.1 hereof, and the singular shall
include the plural, and vice versa, unless otherwise specifically required by
the context. All accounting terms used in this Agreement which are not
otherwise defined herein shall be construed in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries, unless otherwise
expressly stated herein.
ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Revolving Credit Advances. Each Lender severally agrees, upon
the terms and subject to the conditions of this Agreement, to make Revolving
Credit Advances to the Borrower from time to time in an aggregate amount not to
exceed its Revolving Credit Specified Percentage of the Revolving Credit
Commitment less its Revolving Credit Specified Percentage of the aggregate
amount of all (i) Reimbursement Obligations then outstanding (assuming
compliance with all conditions to drawing) and (ii) Swing Line Advances then
outstanding for the purposes set forth in Section 5.8 hereof. Subject to
Section 2.9 hereof, Revolving Credit Advances may be repaid and then
reborrowed. Notwithstanding any provision in any Loan Document to the
contrary, in no event shall the principal amount of all outstanding Revolving
Credit Advances, Reimbursement Obligations and Swing Line Advances exceed the
Revolving Credit Commitment.
(b) Facility A Term Loan Advances. Each Lender severally agrees,
upon the terms and subject to the conditions of this Agreement, to make
Facility A Term Loan Advances to the Borrower on the Agreement Date in an
aggregate amount not to exceed its Facility A Term Loan Specified Percentage of
the Facility A Term Loan Commitment for the purposes set forth in Section 5.8
hereof. Notwithstanding any provision in any Loan Document to the contrary, in
no event shall the principal amount of all outstanding Facility A Term Loan
Advances exceed the Facility A Term Loan Commitment. Immediately upon the
making of the Facility A Term Loan Advance, the Facility A Term Loan Commitment
shall be automatically terminated. Facility A Term Loan Advances may not be
repaid and then reborrowed.
(c) Facility B Term Loan Advances. Each Lender severally agrees,
upon the terms and subject to the conditions of this Agreement, to make
Facility B Term Loan Advances to the Borrower on the Agreement Date in an
aggregate amount not to exceed its Facility B Term Loan Specified Percentage of
the Facility B Term Loan Commitment for the purposes set forth in Section 5.8
hereof.
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Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the principal amount of all outstanding Facility B Term Loan Advances
exceed the Facility B Term Loan Commitment. Immediately upon the making of the
Facility B Term Loan Advance, the Facility B Term Loan Commitment shall be
automatically terminated. Facility B Term Loan Advances may not be repaid and
then reborrowed.
(d) Swing Line Advances. The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, advances ("Swing Line Advances") to the Borrower from
time to time on any Business Day during the period from the Agreement Date to
the Revolving Commitment Maturity Date in an aggregate principal amount not to
exceed at any time outstanding the lesser of (a) $10,000,000 or (b) an amount
equal to the Revolving Credit Commitment minus (i) the aggregate principal
amount of Revolving Credit Advances then outstanding and (ii) the aggregate
amount of all Reimbursement Obligations then outstanding (the "Swing Line
Facility"). Each Swing Line Advance shall be in an amount not less than
$100,000. Within the limits of the Swing Line Facility and subject to the
terms hereof, Swing Line Advances may be repaid and then reborrowed.
(e) Type and Number of Advances. Any Advance, other than a Swing
Line Advance, shall, at the option of the Borrower as provided in Section 2.2
hereof (and, in the case of LIBOR Advances, subject to availability and to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding to any Lender, at any one
time, more than ten LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances (other
than Swing Line Advances), the Borrower, through an Authorized Signatory, shall
give the Administrative Agent prior to 11:00 a.m., Dallas, Texas time, on the
date of any proposed Base Rate Advance irrevocable written notice, or
irrevocable telephonic notice followed immediately by written notice, in
substantially the form of Exhibit K hereto (a "Notice of Borrowing") (provided,
however, that the Borrower's failure to confirm any telephonic notice in
writing shall not invalidate any notice so given), of its intention to borrow
or reborrow a Base Rate Advance hereunder. Such Notice of Borrowing shall
specify the requested funding date, which shall be a Business Day, the amount
of the proposed aggregate Base Rate Advances to be made by the Lenders, and
whether such Advance is a Revolving Credit Advance, Facility A Term Loan
Advance or Facility B Term Loan Advance.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow or reborrow a LIBOR Advance hereunder. Notice shall be
given to the Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in
order for such Business Day to count toward the minimum number of Business
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Days required. LIBOR Advances shall in all cases be subject to availability
and to Article 9 hereof. For LIBOR Advances, the Notice of Borrowing shall
specify the requested funding date, which shall be a Business Day, the amount
of the proposed aggregate LIBOR Advances to be made by Lenders, whether such
Advance is a Revolving Credit Advance, Facility A Term Loan Advance or Facility
B Term Loan Advance, and the Interest Period selected by the Borrower, provided
that no such Interest Period shall extend past the Revolving Commitment
Maturity Date, the Facility A Term Loan Maturity Date or the Facility B Term
Loan Maturity Date, as appropriate, or prohibit or impair the Borrower's
ability to comply with Section 2.5 or 2.8 hereof.
(c) Swing Line Advances. In the case of Swing Line Advances, the
Borrower, through an Authorized Signatory, shall give the Swing Line Bank and
the Administrative Agent prior to 1:00 p.m., Dallas, Texas time, on the date of
any proposed Swing Line Advance irrevocable telephonic notice (provided,
however, (i) the Borrower shall deliver written notice at least once a week
confirming the telephonic notices given by the Borrower with respect to Swing
Line Advances during the immediately preceding week and (ii) that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), of its intention to borrow or reborrow a Swing
Line Advance. Such notice of borrowing shall specify (i) the requested funding
date, which shall be a Business Day and (ii) the amount of the proposed Swing
Line Advance.
(d) Continuation/Conversion. Subject to Sections 2.1 and 2.9
hereof, the Borrower shall have the option (i) to convert at any time all or
any part of the outstanding Base Rate Advances to LIBOR Advances and all or any
part of the outstanding LIBOR Advances to Base Rate Advances or (ii) upon
expiration of any Interest Period applicable to a LIBOR Advance, to continue
all or any portion of such LIBOR Advance equal to $2,000,000 and integral
multiples of $500,000 in excess of that amount as a LIBOR Advance and the
succeeding Interest Period(s) of such continued LIBOR Advance shall commence on
the last day of the Interest Period of the LIBOR Advance to be continued;
provided, however, (A) LIBOR Advances may be converted into Base Rate Advances
at any time only if the Borrower concurrently reimburses the Lenders in
accordance with Section 2.9 hereof and (B) notwithstanding anything in this
Agreement to the contrary, no outstanding Advance may be continued as, or
converted into, a LIBOR Advance when any Event of Default has occurred and is
continuing. Not later than 11:00 a.m., Dallas, Texas time on the date of any
proposed continuation of or a conversion to a Base Rate Advance and not later
than 11:00 a.m., Dallas, Texas time at least three Business Days prior to any
proposed continuation of or conversion to a LIBOR Advance, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent
irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice, in substantially the form of Exhibit L hereto (a
"Notice of Continuation/Conversion") (provided, however, that the Borrower's
failure to confirm any telephonic notice in writing shall not invalidate any
notice so given), stating (i) the proposed conversion/continuation date (which
shall be a Business Day), (ii) the amount of the Advance to be
converted/continued, (iii) in the case of a conversion to, or a continuation
of, a LIBOR Advance, the requested Interest Period, and (iv) in the case of a
conversion of a Base Rate Advance to a LIBOR Advance or continuation of a LIBOR
Advance, stating that no Event of Default has occurred and is continuing. If
the Borrower shall fail to give any notice in accordance with this Section
2.2(d) prior to the expiration of any then-relevant Interest
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Period with respect to any LIBOR Advance, the Borrower shall be deemed
irrevocably to have requested that such LIBOR Advance be converted to a Base
Rate Advance in the same principal amount.
(e) Minimum Amounts. The aggregate amount of Base Rate Advances
(other than Swing Line Advances) to be made by the Lenders on any day shall be
in a principal amount which is at least $1,000,000 and which is an integral
multiple of $500,000; provided, however, that such amount may equal the unused
amount of the applicable Commitment. The aggregate amount of LIBOR Advances
having the same Interest Period and to be made by the Lenders on any day shall
be in a principal amount which is at least $2,000,000 and which is an integral
multiple of $500,000.
(f) Notice and Disbursement. The Administrative Agent shall
promptly notify the Lenders of each notice (other than with respect to a Swing
Line Advance) received from the Borrower pursuant to this Section. Each Lender
shall, not later than noon, Dallas, Texas time, on the date of any Advance,
deliver to the Administrative Agent, at its address set forth herein, such
Lender's Revolving Credit Specified Percentage, Facility A Term Loan Specified
Percentage and Facility B Term Loan Specified Percentage, as the case may be,
of such Advance in immediately available funds in accordance with the
Administrative Agent's instructions. Prior to 2:00 p.m., Dallas, Texas time,
on the date of any Advance hereunder, the Administrative Agent shall, subject
to satisfaction of the conditions set forth in Article 3, disburse the amounts
made available to the Administrative Agent by the Lenders by (i) transferring
such amounts by wire transfer pursuant to the Borrower's instructions, or (ii)
in the absence of such instructions, crediting such amounts to the account of
the Borrower maintained with the Administrative Agent. All Revolving Credit
Advances shall be made by each Lender according to its Revolving Credit
Specified Percentage. All Facility A Term Loan Advances shall be made by each
Lender according to its Facility A Term Loan Specified Percentage. All
Facility B Term Loan Advances shall be made by each Lender in accordance with
its Facility B Term Loan Specified Percentage.
(g) Swing Line Advances. The Swing Line Bank shall, not later
than 2:00 p.m., Dallas, Texas time, on the date of any Swing Line Advance,
deliver to the Administrative Agent at its address set forth herein, the amount
of such Swing Line Advance in immediately available funds in accordance with
the Administrative Agent's instructions. Prior to 2:30 p.m., Dallas, Texas
time, on the date of any Swing Line Advance, the Administrative Agent shall,
subject to the conditions set forth in Article 3, disburse the amount made
available to the Administrative Agent by the Swing Line Bank by (i)
transferring such amounts by wire transfer pursuant to the Borrower's
instruction or (ii) in the absence of such instructions, crediting such amounts
to the account of the Borrower maintained with the Administrative Agent.
Forthwith upon demand by the Swing Line Bank at any time, including after a
Default or Event of Default, and in any event upon the making of the direction
specified by Section 8.2 to authorize the Administrative Agent to declare the
Advances due and payable pursuant to the provisions of Section 8.2, each
Lender, including the Swing Line Bank, notwithstanding the failure of the
Borrower at such time to satisfy each condition specified in Article 3, shall
make by 12:00 noon (Dallas, Texas time) on the first Business Day following
receipt by such Lender of notice from the Swing Line Bank, a Revolving Credit
Advance which is a Base Rate Advance in an amount
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equal to the product of (i) the Revolving Credit Specified Percentage of such
Lender times (ii) the aggregate outstanding principal amount of the Swing Line
Advances. The proceeds of such Revolving Credit Advances shall be applied by
the Administrative Agent to repay the outstanding Swing Line Advances.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of the Base Rate Advances outstanding from
time to time, until such Base Rate Advances are due (whether at
maturity, by reason of acceleration, by scheduled reduction, or
otherwise) and repaid at a simple interest rate per annum equal to the
Base Rate Basis for the Base Rate Advances as in effect from time to
time, provided that interest on the Base Rate Advances shall not
exceed the Maximum Amount. If at any time the Base Rate Basis would
exceed the Highest Lawful Rate, interest payable on the Base Rate
Advances shall be limited to the Highest Lawful Rate, but the Base
Rate Basis shall not thereafter be reduced below the Highest Lawful
Rate until the total amount of interest accrued on the Base Rate
Advances equals the amount of interest that would have accrued if the
Base Rate Basis had been in effect at all times.
(ii) Interest on the Base Rate Advances shall be computed
on the basis of a year of 365 or 366 days, as applicable, for the
number of days actually elapsed, and shall be payable in arrears on
each Quarterly Date and on the Revolving Commitment Maturity Date, the
Facility A Term Loan Maturity Date or the Facility B Term Loan
Maturity Date, as appropriate.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the unpaid
principal amount of each LIBOR Advance, from the date such Advance is
made until it is due (whether at maturity, by reason of acceleration,
by scheduled reduction, or otherwise) and repaid, at a rate per annum
equal to the LIBOR Basis for such Advance. The Administrative Agent,
whose determination shall be controlling in the absence of manifest
error, shall determine the LIBOR Basis on the second Business Day
prior to the applicable funding date and shall notify the Borrower and
the Lenders of such LIBOR Basis.
(ii) Subject to Section 11.9 hereof, interest on each
LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Revolving Commitment Maturity Date,
the Facility A Term Loan Maturity Date and the Facility B Term Loan
Maturity Date, as appropriate.
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(c) On Swing Line Advances.
(i) The Borrower shall pay interest on the outstanding
principal amount of such Swing Line Advance, from the date such Swing
Line Advance is made until it is due (whether at maturity, by reason
of acceleration or otherwise) and repaid, at an interest rate per
annum equal to the sum of (A) the Base Rate Basis in effect from time
to time minus (B) the Commitment Fee (specified as a percentage) then
in effect, but in no event higher than the Highest Lawful Rate.
(ii) Subject to Section 11.9 hereof, interest on Swing
Line Advances shall be computed on the basis of a 365 or 366-day year,
as applicable, for the actual number of days elapsed, and shall be
payable in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date.
(d) Interest if No Notice of Selection of Interest Rate Basis. If
the Borrower fails to give the Administrative Agent timely notice of its
selection of a LIBOR Advance or an Interest Period for a LIBOR Advance, or if
for any reason a determination of a LIBOR Basis for any Advance is not timely
concluded due to the fault of the Borrower, the Base Rate Basis shall apply to
the applicable Advance.
(e) Interest After an Event of Default. (i) After an Event of
Default specified in Section 8.1(b) hereof and during any continuance thereof,
automatically and without any action by the Administrative Agent or any Lender,
the Obligations shall bear interest at a rate per annum equal to the Default
Rate. Such interest shall be payable on the earlier of demand or the Revolving
Commitment Maturity Date, the Facility A Term Loan Maturity Date or the
Facility B Term Loan Maturity Date, as appropriate, and shall accrue until the
earlier of (i) waiver or cure (to the satisfaction of the Determining Lenders)
of the applicable Event of Default, (ii) agreement by the Lenders affected
thereby to rescind the charging of interest at the Default Rate, or (iii)
payment in full of the Obligations. The Lenders shall not be required to
accelerate the maturity of the Advances, to exercise any other rights or
remedies under the Loan Documents, or to give notice to the Borrower of the
decision to charge interest at the Default Rate.
Section 2.4 Fees.
(a) Revolving Commitment Fee. Subject to Section 11.9 hereof, the
Borrower agrees to pay to the Administrative Agent, for the ratable account of
the Lenders, a commitment fee on the daily average Unused Portion (the
"Commitment Fee") at the following per annum percentages, applicable in the
following situations:
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Applicability Percentage
------------- ----------
(i) The Leverage Ratio is greater than or equal to 4.25 to 1 0.500%
(ii) The Leverage Ratio is less than 4.25 to 1 0.375%
The Commitment Fee shall be payable in arrears on each Quarterly Date and on
the Revolving Commitment Maturity Date. The Commitment Fee shall be adjusted
on each Adjustment Date. If the financial statements required pursuant to
Section 6.1 or 6.2 hereof, as applicable, and the Compliance Certificate
required pursuant to Section 6.3 hereof are not received by the Administrative
Agent by the date required, the Commitment Fee shall be determined as if the
Leverage Ratio is greater than or equal or 4.25 to 1 until such time as such
financial statements and Compliance Certificate are received. Notwithstanding
the foregoing, from and including the Agreement Date to and including the
Adjustment Date following the date of receipt by the Administrative Agent of
the audited financial statements for December 31, 1998 and related Compliance
Certificate, the Commitment Fee shall be determined as if the Leverage Ratio is
greater than or equal to 4.25 to 1. Subject to Section 11.9 hereof, the
Commitment Fee shall be calculated on the basis of a 360-day year for the
actual number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the account of the
Administrative Agent and one of its Affiliates, the fees provided for in the
letter agreement (the "Fee Letter"), dated as of the Agreement Date, between
the Borrower and the Administrative Agent on the dates and in the amounts
specified therein.
Section 2.5 Prepayment and Payments.
(a) Voluntary LIBOR Advance Prepayments. Upon three Business
Days' prior telephonic notice (to be promptly followed by written notice) by an
Authorized Signatory to the Administrative Agent, LIBOR Advances may be
voluntarily prepaid but only so long as the Borrower concurrently reimburses
the Lenders in accordance with Section 2.9 hereof. Any notice of prepayment
shall be irrevocable unless such notice is given in connection with a refunding
of Advances under this Agreement in full and a termination of this Agreement,
in which case the parties hereto acknowledge that such refunding may occur on a
date after the date given in such notice as a result of normal delay with
respect to such refunding; provided, however, the Borrower shall reimburse each
Lender (to the extent required) in accordance with Section 2.9 hereof.
(b) Mandatory Prepayment. On or before the date of any reduction
of the Revolving Credit Commitment, the Borrower shall first, prepay applicable
outstanding Revolving Credit Advances and second, prepay Swing Line Advances in
an amount necessary to reduce the sum of outstanding Revolving Credit Advances,
Swing Line Advances and Reimbursement Obligations to an amount less than or
equal to the Revolving Credit Commitment as so reduced. To the extent required
by the preceding sentence, the Borrower shall first prepay all Base Rate
Advances and shall thereafter prepay LIBOR Advances. To the extent that any
prepayment requires that a LIBOR Advance be repaid on a date other than the
last day of its Interest Period, the Borrower shall
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reimburse each Lender in accordance with Section 2.9 hereof. To the extent
that aggregate outstanding Revolving Credit Advances, Reimbursement
Obligations, and Swing Line Advances exceed the Revolving Credit Commitment
after any reduction thereof, the Borrower shall repay any such excess amount
and all accrued interest attributable to such excess Revolving Credit Advances
on the date of such reduction.
(c) Prepayments from Sales of Assets. Within 10 Business Days of
the receipt of Net Cash Proceeds from the sale or disposition by the Borrower
or any of its Subsidiaries of any assets (including the Capital Stock of any
Subsidiary) (other than any such sales or dispositions permitted under Sections
7.5(a) through (j) hereof), the Borrower shall prepay Facility A Term Loan
Advances and Facility B Term Loan Advances in an aggregate principal amount
equal to the lesser of (A) 100% of such Net Cash Proceeds received or (B) an
amount, if any, which would result in the Leverage Ratio being less than 3.50
to 1 after such prepayment. Each such prepayment shall be applied as provided
in Section 2.5(g) hereof.
(d) Prepayments from Excess Cash Flow. Commencing on March 31,
1999 and on each March 31 thereafter, the Borrower shall prepay Facility A Term
Loan Advances and Facility B Term Loan Advances in an aggregate principal
amount equal to the lesser of (i) 70% of Excess Cash Flow, if any, for the
fiscal year ending immediately preceding each such March 31 (or in the case of
the fiscal year ending December 31, 1998, for the period from July 1, 1998
through December 31, 1998) or (ii) an amount, if any, which would result in the
Leverage Ratio being less than 3.50 to 1 after such prepayment. Each such
prepayment shall be applied as provided in Section 2.5(g) hereof.
(e) Prepayment from Recovery Events. Within 10 Business Days
after receipt of Net Cash Proceeds by the Borrower or any of its Subsidiaries
from any Recovery Event, unless a Reinvestment Notice shall have been delivered
in respect thereof, the Borrower shall prepay Facility A Term Loan Advances and
Facility B Term Loan Advances in an aggregate principal amount of 100% of such
Net Cash Proceeds received, provided that if a Reinvestment Notice shall be
delivered in respect thereof, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied to
payment of the Advances on the Reinvestment Prepayment Date. Each such
prepayment shall be applied as provided in Section 2.5(g) hereof.
(f) Prepayment from Sales of Capital Stock. Concurrently with the
receipt of Net Cash Proceeds from the sale or disposition by the Borrower or
any of its Subsidiaries to any Person (other than to the Borrower or any of its
Subsidiaries) of any Capital Stock of the Borrower other than a Permitted
Issuance, the Borrower shall prepay the Facility A Term Loan Advances and the
Facility B Term Loan Advances in an aggregate principal amount equal to the
lesser of (A) 50% of such Net Cash Proceeds or (B) an amount, if any, which
would result in the Leverage Ratio being less than 3.50 to 1 after such
prepayment. Each such prepayment shall be applied as provided in Section
2.5(g) hereof.
(g) Payments, Generally. Any partial payment of a (i) Base Rate
Advance shall be in a principal amount which is at least $100,000 and which is
an integral multiple of $100,000 and (ii) a
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LIBOR Rate Advance shall be in a principal amount which is at least $1,000,000
and which is an integral multiple of $500,000, and to the extent that any
payment of a LIBOR Advance is made on a date other than the last day of its
Interest Period, the Borrower shall reimburse each Lender (to the extent
required) in accordance with Section 2.9 hereof. Any voluntary prepayment of
any Term Loan Advance shall be allocated among the Facility A Term Loan
Advances and the Facility B Term Loan Advances pro rata based on the
outstanding principal amount of the Facility A Term Loan Advances and the
Facility B Term Loan Advances and applied to the then remaining installments of
the Facility A Term Loan Advances and the Facility B Term Loan Advances pro
rata based on the number of then remaining installments in respect of the
Facility A Term Loan Advances and the Facility B Term Loan Advances (i.e. each
then remaining installment of the applicable Term Loan Advance shall be reduced
by an amount equal to the aggregate amount to be applied to such Term Loan
Advances divided by the number of the then remaining installments for such Term
Loan Advances), provided that if the amount to be applied to any installment
required by this Agreement would exceed the then remaining amount of such
installment, then an amount equal to such excess shall be applied to the
remaining installments in the order of maturity after giving effect to all
prior reductions thereto (including the amount of prepayments theretofore
allocated pursuant to the preceding portion of this sentence); provided,
further, however, notwithstanding the foregoing, until the aggregate amount of
voluntary prepayments of Term Loan Advances exceed $20,000,000, voluntary
prepayment of Term Loan Advances may be applied to any scheduled installment
payments of Facility A Term Loan Advances or Facility B Term Loan Advances, at
the Borrower's discretion. Any prepayments required to be made pursuant to
Sections 2.5(c), (d), (e) or (f) hereof shall (i) include and be applied to
accrued interest to the date of such prepayment on the principal amount
prepaid, (ii) be allocated among the Facility A Term Loan Advances and the
Facility B Term Loan Advances, pro rata based on the outstanding principal
amount of the Facility A Term Loan Advances and the Facility B Term Loan
Advances and applied to the then remaining installments of the Facility A Term
Loan Advances and the Facility B Term Loan Advances pro rata based on the
number of then remaining installments in respect of the Facility A Term Loan
Advances and the Facility B Term Loan Advances (i.e. each then remaining
installment of the applicable Term Loan Advance shall be reduced by an amount
equal to the aggregate amount to be applied to such Term Loan Advances divided
by the number of the then remaining installments for such Term Loan Advance),
provided that if the amount to be applied to any installment required by this
Agreement would exceed the then remaining amount of such installment, then an
amount equal to such excess shall be applied to the remaining installments in
the order of maturity after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence), (iii) not be subject to the notice and
minimum payment provisions of this Section 2.5; provided, however, the Borrower
shall be required to reimburse each Lender for any loss, cost or expense
incurred by each Lender in connection with any such prepayment as set forth in
Section 2.9 hereof if any prepayment results in a LIBOR Advance being paid on a
day other than the last day of an Interest Period for such LIBOR Advance, and
(iv) be applied first to Base Rate Advances, if any, and then to LIBOR
Advances. With respect to any voluntary payment of Term Loan Advances made by
the Borrower within fifteen days of any Quarterly Date on which amortization of
any Term Loan Advance is required, the Borrower shall have the right to
designate
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such payment as a prepayment or as payment of the Term Loan Advances required
to be made on such Quarterly Date.
(h) Notwithstanding the foregoing provisions of this Section 2.5,
if at any time the mandatory prepayment of any Advances pursuant to this
Agreement would result, after giving effect to the procedures set forth in this
Agreement, in the Borrower incurring costs under Section 2.9 hereof as a result
of LIBOR Advances ("Affected LIBOR Advances") being prepaid other than on the
last day of an Interest Period applicable thereto, which costs are required to
be paid pursuant to Section 2.9 hereof, then, the Borrower may, in its sole
discretion, initially deposit a portion (up to 100%) of the amounts that
otherwise would have been paid in respect of the Affected LIBOR Advances with
the Administrative Agent (which deposit must be equal in amount to the amount
of the Affected LIBOR Advances not immediately prepaid) to be held as security
for the obligations of the Borrower to make such mandatory prepayment pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Administrative Agent, with such cash collateral
to be directly applied upon the first occurrence (or occurrences) thereafter of
the last day of an Interest Period applicable to the relevant Advance that is a
LIBOR Advance (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such Advance equal to the
Affected LIBOR Advances not initially repaid pursuant to this sentence.
Section 2.6 Reduction of Commitments.
(a) Voluntary Reduction. The Borrower shall have the right, upon
not less than 2 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify
the Lenders, to terminate or reduce the Revolving Credit Commitment, in whole
or in part. Each partial termination shall be in an aggregate amount which is
at least $5,000,000 and which is an integral multiple of $100,000, and no
voluntary reduction in the Revolving Credit Commitment shall cause any LIBOR
Advance to be repaid prior to the last day of its Interest Period, unless the
Borrower shall reimburse each Lender (to the extent required) in accordance
with Section 2.9 hereof.
(b) Mandatory Reduction. On the Revolving Commitment Maturity
Date, the Revolving Credit Commitment shall automatically reduce to zero.
(c) General Requirements. Upon any reduction of the Revolving
Credit Commitment pursuant to this Section, the Borrower shall immediately make
a repayment of applicable Advances in accordance with Section 2.5(b) hereof.
The Borrower shall reimburse each Lender for any loss or out-of-pocket expense
incurred by each Lender in connection with any such payment, as set forth in
Section 2.9 hereof to the extent applicable. The Borrower shall not have any
right to rescind any termination or reduction, except as otherwise provided in
the last sentence of Section 2.5(a) hereof. Once reduced, the Revolving Credit
Commitment may not be increased or reinstated.
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Section 2.7 Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender prior to
the date of any proposed Advance (which notice shall be effective upon receipt)
that such Lender does not intend to make the proceeds of such Advance available
to the Administrative Agent, the Administrative Agent may assume that such
Lender has made such proceeds available to the Administrative Agent on such
date, and the Administrative Agent may in reliance upon such assumption (but
shall not be required to) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall be entitled
to recover such amount on demand from such Lender (or, if such Lender fails to
pay such amount forthwith upon such demand, from the Borrower) together with
interest thereon in respect of each day during the period commencing on the
date such amount was available to the Borrower and ending on (but excluding)
the date the Administrative Agent receives such amount from the Lender, with
interest thereon at a per annum rate equal to the lesser of (i) the Highest
Lawful Rate or (ii) the Federal Funds Rate. No Lender shall be liable for any
other Lender's failure to fund an Advance hereunder.
Section 2.8 Payment of Principal of Advances.
(a) Revolving Credit Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Revolving Credit Advances shall be due and payable on the Revolving Commitment
Maturity Date.
(b) Facility A Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility A Term Loan Advances shall be repaid on each Quarterly Date (except as
provided in the last sentence of Section 2.5(g) hereof) and on the Facility A
Term Loan Maturity Date in such amounts as set forth next to each such date
below:
Amount of Reduction of Facility A
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
September 30, 1998 $6,250,000
December 31, 1998 $6,250,000
March 31, 1999 $6,250,000
June 30, 1999 $6,250,000
September 30, 1999 $6,250,000
December 31, 1999 $6,250,000
March 31, 2000 $6,250,000
June 30, 2000 $6,250,000
September 30, 2000 $7,500,000
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December 31, 2000 $7,500,000
March 31, 2001 $7,500,000
June 30, 2001 $7,500,000
September 30, 2001 $8,750,000
December 31, 2001 $8,750,000
March 31, 2002 $8,750,000
June 30, 2002 $8,750,000
September 30, 2002 $10,000,000
December 31, 2002 $10,000,000
March 31, 2003 $10,000,000
June 30, 2003 $10,000,000
September 30, 2003 $11,250,000
December 31, 2003 $11,250,000
March 31, 2004 $11,250,000
June 30, 2004 $11,250,000
or such other amount of Facility A Term Loan
Advances then outstanding
(c) Facility B Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility B Term Loan Advances shall be repaid on each Quarterly Date (except as
provided in the last sentence of Section 2.5(g) hereof) and on the Facility B
Term Loan Maturity Date in such amounts as set forth next to each such date
below:
Amount of Reduction of Facility B
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
September 30, 1998 $250,000
December 31, 1998 $250,000
March 31, 1999 $250,000
June 30, 1999 $250,000
September 30, 1999 $250,000
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December 31, 1999 $250,000
March 30, 2000 $250,000
June 30, 2000 $250,000
September 30, 2000 $250,000
December 31, 2000 $250,000
March 31, 2001 $250,000
June 30, 2001 $250,000
September 30, 2001 $250,000
December 31, 2001 $250,000
March 31, 2002 $250,000
June 30, 2002 $250,000
September 30, 2002 $250,000
December 31, 2002 $250,000
March 31, 2003 $250,000
June 30, 2003 $250,000
September 30, 2003 $250,000
December 31, 2003 $250,000
March 31, 2004 $250,000
June 30, 2004 $250,000
September 30, 2004 $11,250,000
December 31, 2004 $11,250,000
March 31, 2005 $11,250,000
June 30, 2005 $11,250,000
September 30, 2005 $12,250,000
December 31, 2005 $12,250,000
March 31, 2006 $12,250,000
June 30, 2006 $12,250,000
or such other amount of Facility B Term Loan
Advances then outstanding
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(d) Swing Line Advances. To the extent not otherwise required to
be paid earlier as provided herein, the outstanding principal amount of each
Swing Line Advance shall be due and payable on the Revolving Commitment
Maturity Date.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or
incur any losses or reasonable out-of- pocket expenses in connection with (a)
failure by the Borrower to borrow any LIBOR Advance after having given notice
of its intention to borrow in accordance with Section 2.2 hereof (whether by
reason of the Borrower's election not to proceed or the non-fulfillment of any
of the conditions set forth in Article 3 hereof), (b) any prepayment for any
reason of any LIBOR Advance in whole or in part (including a prepayment
pursuant to Section 9.3(b) hereof) on other than the last day of an Interest
Period applicable to such LIBOR Advance, (c) any prepayment of any of its LIBOR
Advances that is not made on any date specified in a notice of prepayment given
by the Borrower, or (d) the selling by NationsBank of its rights and
obligations under this Agreement to an Assignee within 180 days after the
Agreement Date, the Borrower agrees to pay to any such Lender, upon its demand,
an amount sufficient to compensate such Lender for all such losses and
out-of-pocket expenses (provided that with respect to sales pursuant to clause
(d) above, NationsBank shall only be reimbursed for the lost profits and
reasonable expenses incurred by it in connection with the re- employment of
funds prepaid as a result of such a sale), subject to Section 11.9 hereof.
Such Lender's good faith determination of the amount of such losses or
out-of-pocket expenses, calculated in its usual fashion, absent manifest error,
shall be controlling. Such losses shall include, without limiting the
generality of the foregoing, lost profits and reasonable expenses incurred by
such Lender in connection with the re-employment of funds prepaid, repaid,
converted or not borrowed, converted or paid, as the case may be. Upon request
of the Borrower, such Lender shall provide a certificate setting forth the
amount to be paid to it by the Borrower hereunder and calculations therefor.
The covenants set forth in this Section 2.9 shall survive termination of this
Agreement and the repayment of Advances in full and other amounts payable
hereunder for a period of nine months thereafter.
Section 2.10 Manner of Payment.
(a) Payment Timing and Type. Each payment (including prepayments)
by the Borrower of the principal of or interest on the Advances, fees, and any
other amount owed under this Agreement or any other Loan Document shall be made
not later than 12:00 noon (Dallas, Texas time) on the date specified for
payment under this Agreement to the Administrative Agent at the Administrative
Agent's office, in Dollars constituting immediately available funds.
(b) Non-Business Day Payments. If any payment under this
Agreement or any other Loan Document shall be specified to be made upon a day
which is not a Business Day, it shall be made on the next succeeding day which
is a Business Day, unless, with respect to a payment due in respect of a LIBOR
Advance, such Business Day falls in another calendar month, in which case
payment shall
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be made on the preceding Business Day. Any extension of time shall in such
case be included in computing interest and fees, if any, in connection with
such payment.
(c) Payments without Deduction. The Borrower agrees to pay
principal, interest, fees and all other amounts due under the Loan Documents
without deduction for set-off or counterclaim or any deduction whatsoever.
(d) Apportionment of Payments.
(i) Prior to (A) the occurrence of an Event of Default
and (B) delivery by the Determining Lenders of the notice to the
Administrative Agent referred to in Section 2.10(d)(ii)(B) below, all
payments in respect of the Obligations shall be applied in the
following order:
(1) first, to pay the Administrative Agent's fees and
expenses incurred on behalf of the Lenders then due
and payable;
(2) second, to pay all other fees then due and payable in
respect of the Advances and the Reimbursement
Obligations under the Loan Documents;
(3) third, to pay all other amounts other than principal
and interest (including, without limitation, expense
reimbursements and indemnities) not otherwise
referred in clauses (1) and (2) immediately preceding
then due and payable in respect of the Advances and
the Reimbursement Obligations under the Loan
Documents;
(4) fourth, to pay interest then due and payable on the
Advances and the Reimbursement Obligations, to be
applied in accordance with the Applicable Specified
Percentages (except that (A) prior to the Lenders
making a Revolving Credit Advance pursuant to Section
2.2(g) hereof, all interest due and payable on the
Swing Line Advances shall be payable to the Swing
Line Bank and (B) at such time, if any, that the
Lenders make a Revolving Credit Advance pursuant to
Section 2.2(g) hereof, the Administrative Agent shall
distribute all interest payments in respect of Swing
Line Advances to the Lenders in accordance with their
respective Revolving Credit Specified Percentages).
(5) fifth, to pay principal then due and payable on the
Advances and Reimbursement Obligations, to be applied
in accordance with Applicable Specified Percentages
(except that (A) prior to the Lenders making a
Revolving Credit Advance pursuant to Section 2.2(g)
hereof, all principal due and payable on the Swing
Line Advances shall be payable to the Swing Line Bank
and (B) at such time, if any, that the Lenders make a
Revolving Credit
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Advance pursuant to Section 2.2(g) hereof, the
Administrative Agent shall distribute all principal
payments in respect of Swing Line Advances to the
Lenders in accordance with their respective Revolving
Credit Specified Percentages).
(ii) After (A) the occurrence of an Event of Default and
(B) the Determining Lenders shall have delivered the notice to the
Administrative Agent to apply payments in respect of the Obligations
as provided in this Section 2.10(d)(ii), all payments in respect of
the Obligations and (proceeds of Collateral and payments under any
Subsidiary Guaranty) shall be applied in the following order:
(1) first, to pay the Administrative Agent's fees and
expenses incurred on behalf of the Lenders then due
and payable;
(2) second, to pay all other fees then due and payable in
respect of the Advances and the Reimbursement
Obligations under the Loan Documents;
(3) third, to pay all other amounts other than principal
and interest (including; without limitation, expense
reimbursements and indemnities) not otherwise
referred to in clauses (1) and (2) immediately
preceding then due and payable in respect of the
Advances and the Reimbursement Obligations under the
Loan Documents;
(4) fourth, to pay interest then due and payable on the
Advances and the Reimbursement Obligations, to be
applied in accordance with each Lenders' Total
Specified Percentage; and
(5) fifth, to pay principal then due and payable on the
Advances and Reimbursement Obligations, and in the
case of proceeds of Collateral and payments under any
Subsidiary Guaranty, to pay any other obligations to
any Secured Party (as defined in the Security
Agreement) not covered in first through four above,
ratably among the Secured Parties in accordance with
the aggregate principal amount of Advances and the
Reimbursement Obligations and, in the case of
proceeds of Collateral or payments under any
Subsidiary Guaranty, the obligations secured or
guaranteed thereby, owed to each Secured Party.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 2 attached hereto.
Each Lender shall have the right at any time and from time to time to designate
a different office of itself or of any Affiliate as such Lender's LIBOR Lending
Office, and to transfer any outstanding LIBOR Advance to such LIBOR Lending
Office. No such designation or transfer shall result in any liability on the
part of the Borrower for increased costs or expenses resulting solely from such
designation or transfer (except any such
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transfer which is made by a Lender pursuant to Section 9.2 or 9.3 hereof, or
otherwise for the purpose of complying with Applicable Law).
Section 2.12 Sharing of Payments. Any Lender obtaining a payment
(whether voluntary or involuntary, due to the exercise of any right of set-off,
or otherwise) on account of its Advances (other than pursuant to Section
2.4(b), 2.15, 2.16(d), 9.3 or 9.5) in excess of its share of payments made by
the Borrower according to (a) before the Determining Lenders have delivered the
notice to the Administrative Agent referred to in Section 2.10(d)(ii)(B) above,
its Applicable Specified Percentage, and (b) after the Determining Lenders have
delivered the notice to the Administrative Agent referred to in Section
2.10(d)(ii)(B) above, its Total Specified Percentage, then in each case, such
Lender shall purchase from each other Lender such participation in the Advances
made by such other Lender as shall be necessary to cause such purchasing Lender
to share a ratable portion of the excess payment with each other Lender (based
on its Applicable Specified Percentage if the Determining Lenders have not
delivered notice to the Administrative Agent referred to in Section
2.10(d)(ii)(B) above, and based on its Total Specified Percentage if the
Determining Lenders have delivered notice to the Administrative Agent referred
to in Section 2.10(d)(ii)(B) above); provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery, but without interest. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
Section, to the fullest extent permitted by law, may exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
Section 2.14 Booking Loans. Any Lender may make, carry or
transfer Advances at, to or for the account of any of its branch offices or the
office of any Affiliate. No such action shall result in any liability on the
part of the Borrower from such action (except any such action which is made by
a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the purpose of
complying with Applicable Law).
Section 2.15 Taxes.
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(a) Any and all payments by the Borrower and each other Obligor
hereunder and under the other Loan Documents (including, without limitation,
payments pursuant to Sections 2.9, 5.9, 9.3, 9.5, 11.2 hereof and this Section
2.15) shall be made, in accordance with Section 2.10, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges and withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Administrative Agent, taxes
imposed on, based upon or measured by its overall net income, net worth or
capital, and franchise taxes, doing business taxes or minimum taxes imposed on
it, (i) by the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized and in which it has its
applicable lending office or any political subdivision thereof; (ii) by any
other jurisdiction, or any political subdivision thereof, other than those
imposed solely by reason of (A) an asserted relation of such jurisdiction to
the transactions contemplated by this Agreement, (B) the activities of the
Borrower in such jurisdiction, or (C) the activities in connection with the
transactions contemplated by this Agreement or any other Loan Document of a
Lender or the Administrative Agent; (iii) by reason of failure by the Lender or
the Administrative Agent to comply with the requirements of paragraph (e) of
this Section 2.15; and (iv) in the case of any Lender, any Taxes in the nature
of transfer, stamp, recording or documentary taxes resulting from a transfer
(other than as a result of foreclosure) by such Lender of all or any portion of
its interest in this Agreement, the Notes or any other Loan Documents (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent, (x) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.15) such Lender or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (y) the Borrower shall make such deductions and (z) the Borrower shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than Taxes described in clause (iv) of the first sentence
of Section 2.15(a)) that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document (hereinafter referred to as "Other
Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.15) paid by such Lender or the Administrative
Agent (as the case may be) and all liabilities (including penalties, additions
to tax, interest and reasonable expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted, other than penalties, additions to tax, interest and expenses arising
as a result of gross negligence on the part of such Lender or the
Administrative Agent, provided, however, that the Borrower shall have no
obligation to indemnify such Lender or the Administrative Agent unless and
until such Lender or the Administrative Agent shall have delivered to the
Borrower a certificate setting forth in reasonable detail the basis of the
Borrower's obligation to indemnify such Lender or the Administrative Agent
pursuant to this Section 2.15. This
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indemnification shall be made within 30 days from the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent the original or a certified
copy of a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment hereunder, the Borrower will furnish to the
Administrative Agent a certificate from each appropriate taxing authority if
available, stating that such payment is exempt from or not subject to Taxes,
provided, however, that such certificate need only be given if: (i) the
Borrower makes any payment from any account located outside the United States,
or (ii) the payment is made by a payor that is not a United States Person. For
purposes of this Section 2.15 the terms "United States" and "United States
Person" shall have the meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall (except as provided in Section 2.15(e)(vi)
hereof), no later than the Agreement Date (or, in the case of a Lender
which becomes a party hereto pursuant to Section 11.6 after the
Agreement Date, the date upon which such Lender becomes a party
hereto) deliver to the Borrower through the Administrative Agent, with
a copy to the Administrative Agent:
(A) if any lending office is located in the
United States of America, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"),
(B) if any lending office is located outside the
United States of America, two (2) accurate and complete signed
originals of Internal Revenue Service Form 1001 or any
successor thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such lending office or lending offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its lending office
or lending offices or selects an additional lending office it shall,
at the same time or reasonably promptly thereafter but only to the
extent the forms previously delivered by it hereunder are no longer
effective, deliver to the Borrower through the Administrative Agent,
with a copy to the Administrative Agent, in replacement for the forms
previously delivered by it hereunder:
(A) if such changed or additional lending office
is located in the United States of America, two (2) accurate
and complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete
signed originals of Form 1001, in each case indicating that
such Lender is on the date of delivery thereof
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entitled to receive payments of principal, interest and fees
for the account of such changed or additional lending office
under this Agreement free from withholding of United States
Federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in clause (ii) above) requiring a change in the most recent
Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Borrower through the
Administrative Agent with a copy to the Administrative Agent, two (2)
accurate and complete original signed copies of Form 4224 or Form 1001
in replacement for the forms previously delivered by such Lender;
(iv) it shall, promptly upon the request of the Borrower
to that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes;
(v) it shall notify the Borrower within 30 days after any
event (including an amendment to, or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority, or by ruling applicable to such
Lender of any governmental authority charged with the interpretation
or administration of any law) shall occur that results in such Lender
no longer being capable of receiving payments without any deduction or
withholding of United States federal income tax; and
(vi) if such Lender is not a "bank" or other person
described in Section 881(c)(3) of the Code and cannot deliver either
Form 4224 or Form 1001, a statement that such Lender is not a "bank"
under Section 881(c)(3)(A) of the Code and two original copies of
Internal Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender.
(f) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.15 shall survive termination of this Agreement and
the payment in full of the Advances and all other amounts payable hereunder for
a period of one year thereafter.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.15 shall use its reasonable best efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
materially disadvantageous to such Lender.
(h) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that (i) it
will take all reasonable actions by all usual
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means to maintain all exemptions, if any, available to it from United States
withholding taxes (whether available by treaty, existing administrative waiver,
by virtue of the location of any Lender's lending office) and (ii) otherwise
cooperate with the Borrower to minimize amounts payable by the Borrower under
this Section 2.15; provided, however, the Lenders and the Administrative Agent
shall not be obligated by reason of this Section 2.15(h) to contest the payment
of any Taxes or Other Taxes or to disclose any information regarding its tax
affairs or tax computations or reorder its tax or other affairs or tax or other
planning. Subject to the foregoing, to the extent the Borrower pays sums
pursuant to this Section 2.15 and the Lender or the Administrative Agent
receives a refund of any or all of such sums, such refund shall be applied to
reduce any amounts then due and owing under this Agreement or, to the extent
that no amounts are due and owing under this Agreement at the time such refunds
are received, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower, provided that no Default or Event of Default is
in existence at such time.
Section 2.16 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Bank shall, if so requested, issue, letters of credit to be
denominated in Dollars (the "Letters of Credit") for the account of the
Borrower or for the joint account of the Borrower and any of its Subsidiaries
from time to time on any Business Day from the date of the initial Advance
until the Revolving Commitment Maturity Date in an aggregate maximum amount
(assuming compliance with all conditions to drawing) not to exceed, at any time
outstanding, the lesser of (i) $15,000,000 (the "Letter of Credit Facility")
and (ii) the sum of (A) the Revolving Credit Commitment, minus (B) the
aggregate principal amount of Revolving Credit Advances and Swing Line Advances
then outstanding. No Letter of Credit shall have an expiration date (including
all rights of renewal) later than the earlier of (i) 5 Business Days before the
Revolving Commitment Maturity Date or (ii) one year after the date of issuance
thereof (provided that any Letter of Credit with a one-year term may provide
for the renewal thereof for additional one-year periods, which in no event
extend beyond the date referred to in clause (i) of this sentence).
Immediately upon the issuance of each Letter of Credit, the Issuing Bank shall
be deemed to have sold and transferred to each Lender, and each Lender shall be
deemed to have purchased and received from the Issuing Bank, in each case
irrevocably and without any further action by any party, an undivided interest
and participation in such Letter of Credit, each drawing thereunder and the
obligations of the Borrower under this Agreement in respect thereof in an
amount equal to the product of (x) such Lender's Revolving Credit Specified
Percentage times (y) the maximum amount available to be drawn under such Letter
of Credit (assuming compliance with all conditions to drawing). Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.16(a), repay any Revolving Credit Advances resulting from drawings
thereunder pursuant to Section 2.16(c) and request the issuance of additional
Letters of Credit under this Section 2.16(a).
(b) Request for Issuance. Each Letter of Credit shall be issued
upon notice, given not later than 11:00 a.m. (Dallas, Texas time) on the third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall
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be issued upon notice given in accordance with the terms of any separate
agreement between the Borrower and the Issuing Bank in form and substance
reasonably satisfactory to the Borrower and the Issuing Bank providing for the
issuance of Letters of Credit pursuant to this Agreement and containing terms
and conditions not inconsistent with this Agreement (a "Letter of Credit
Agreement"), provided that if any such terms and conditions are inconsistent
with this Agreement, this Agreement shall control. Each such notice of
issuance of a Letter of Credit by the Borrower (a "Notice of Issuance") shall
be by telex, telecopier or cable, specifying therein, in the case of a Letter
of Credit, the requested (A) date of such issuance (which shall be a Business
Day), (B) maximum amount of such Letter of Credit, (C) expiration date of such
Letter of Credit, (D) name and address of the beneficiary of such Letter of
Credit, (E) form of such Letter of Credit and (F) such other information as
shall be required pursuant to the relevant Letter of Credit Agreement. If the
requested terms of such Letter of Credit are acceptable to the Issuing Bank in
its reasonable discretion, the Issuing Bank will, upon fulfillment of the
applicable conditions set forth in Article 3 hereof, make such Letter of Credit
available to the Borrower at its office referred to in Section 11.1 or as
otherwise agreed with the Borrower in connection with such issuance. At the
request of any Lender, but no more than once each calendar month, the
Administrative Agent shall obtain from the Issuing Bank and deliver to such
requesting Lender a summary report of the issued and outstanding Letters of
Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of an Revolving Credit Advance,
which shall bear interest at the Base Rate Basis, in the amount of such draft
(but without any requirement for compliance with the conditions set forth in
Article 3 hereof). In the event that a drawing under any Letter of Credit is
not reimbursed by the Borrower by 11:00 a.m. (Dallas, Texas time) on the first
Business Day after such drawing, the Issuing Bank shall promptly notify
Administrative Agent and each other Lender. Each such Lender shall, on the
first Business Day following such notification, make a Revolving Credit Advance
(or, if as a result of any Debtor Relief Law, the Lenders are prohibited from
making a Revolving Credit Advance, each Lender shall fund its participation
purchased pursuant to Section 2.16(a) hereof by making such amount available to
the Administrative Agent), which shall bear interest at the Base Rate Basis,
and shall be used to repay the applicable portion of the Issuing Bank's Advance
with respect to such Letter of Credit, in an amount equal to the amount of its
participation in such drawing for application to reimburse the Issuing Bank
(but without any requirement for compliance with the applicable conditions set
forth in Article 3 hereof) and shall make available to the Administrative Agent
for the account of the Issuing Bank, by deposit at the Administrative Agent's
office, in same day funds, the amount of such Advance. In the event that any
Lender fails to make available to the Administrative Agent for the account of
the Issuing Bank the amount of such Advance, the Issuing Bank shall be entitled
to recover such amount on demand from such Lender together with interest
thereon at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
or (ii) the Federal Funds Rate.
(d) Increased Costs. If the adoption, effectiveness, phase-in or
applicability after the Agreement of any Law (or any provision thereof) or if
any change in any Law or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration
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thereof shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit or guarantees issued
by, or assets held by, or deposits in or for the account of, the Issuing Bank
or any Lender or (ii) impose on the Issuing Bank or any Lender any other
condition regarding this Agreement or such Lender or any Letter of Credit, and
the result of any event referred to in the preceding clause (i) or (ii) shall
be to increase the cost to the Issuing Bank of issuing or maintaining any
Letter of Credit or to any Lender of purchasing any participation therein or
making any Advance pursuant to Section 2.16(c) hereof, then, upon demand by the
Issuing Bank or such Lender, the Borrower shall, subject to Section 11.9
hereof, pay to the Issuing Bank or such Lender, from time to time as specified
by the Issuing Bank or such Lender, additional amounts that shall be sufficient
to compensate the Issuing Bank or such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
by the Issuing Bank or such Lender, shall include in reasonable detail the
basis for the demand for additional compensation and shall be controlling for
all purposes, absent manifest error. The obligations of the Borrower under
this Section 2.16(d) shall survive termination of this Agreement. The Issuing
Bank or any Lender claiming any additional compensation under this Section
2.16(d) shall use reasonable efforts (consistent with legal and regulatory
restrictions) to reduce or eliminate any such additional compensation which may
thereafter accrue and which efforts would not, in the sole discretion of the
Issuing Bank or such Lender, be otherwise disadvantageous.
(e) Obligations Absolute. The obligations of the Borrower under
this Agreement with respect to any Letter of Credit, any Letter of Credit
Agreement and any other agreement or instrument relating to any Letter of
Credit or any Revolving Credit Advance pursuant to Section 2.16(c) hereof shall
be unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances unless such circumstance is caused by the gross
negligence or willful misconduct of the Issuing Bank:
(i) any lack of validity or enforceability of this
Agreement, any other Loan Document, any Letter of Credit Agreement,
any Letter of Credit or any other agreement or instrument relating
thereto (collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of
the Borrower in respect of the Letters of Credit or any Revolving
Credit Advance pursuant to Section 2.16(c) hereof or (B) any other
amendment or waiver of or any consent to departure from all or any of
the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Related
Documents or any unrelated transaction;
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(iv) any statement or any other document presented under a
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;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any payment made
upon the Issuing Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.16(c) hereof; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including, without
limitation, any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor,
other than the Issuing's Bank gross negligence or wilful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of each
Lender a fee (which shall be payable quarterly in arrears on each
Quarterly Date and on the Revolving Commitment Maturity Date) equal to
the product of (A) an amount equal to the remainder of (y) 100% of the
applicable LIBOR Rate Margin for Revolving Credit Advances in effect
from time to time minus (z) 0.250% multiplied by (B) the average daily
amount available for drawing under all Letters of Credit. Subject to
Section 11.9 hereof, such fee shall be computed on the basis of a
360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank a per annum fronting fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Revolving
Commitment Maturity Date) in an amount equal to the product of (A)
0.250% multiplied by (B) the average daily amount available for
drawing under all outstanding Letters of Credit. Subject to Section
11.9 hereof, such fee shall be computed on the basis of a 360-day year
for the actual number of days elapsed.
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(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and within
thirty days of demand by the Administrative Agent pursuant to Section
8.2(c) (but in the case of an Event of Default specified in Section
8.1(f) or (g) hereof immediately and without any demand or taking of
any other action by the Administrative Agent or any Lender), the
Borrower will (A) pay to the Administrative Agent in immediately
available funds an amount equal to the maximum amount then available
to be drawn under the Letters of Credit then outstanding or (B)
deliver to the Issuing Bank back-up letters of credit acceptable to
the Issuing Bank which, together with any funds deposited in the L/C
Cash Collateral Account, are in an amount equal to the maximum amount
then available to be drawn under the Letters of Credit then
outstanding. Any amounts so received by the Administrative Agent
shall be deposited by the Administrative Agent in a deposit account
maintained by the Administrative Agent (the "L/C Cash Collateral
Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the
Administrative Agent (for the benefit of the Issuing Bank and
Lenders), and creates in the Administrative Agent's favor (for the
benefit of the Issuing Bank and Lenders) a Lien in, all money,
instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all
proceeds thereof. The L/C Cash Collateral Account shall be under the
sole dominion and control of the Administrative Agent and the Borrower
shall have no right to withdraw or to cause the Administrative Agent
to withdraw any funds deposited in the L/C Cash Collateral Account.
At any time and from time to time, upon the Administrative Agent's
request, the Borrower promptly shall execute and deliver any and all
such further instruments and documents, including UCC financing
statements, as may be necessary, appropriate or desirable in the
Administrative Agent's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or intended
to be created by this paragraph (ii) and of the rights and powers
herein granted. The Borrower shall not create or suffer to exist any
Lien on any amounts or investments held in the L/C Cash Collateral
Account other than the Lien granted under this paragraph (ii).
(iii) The Administrative Agent shall (A) apply any funds in
the L/C Cash Collateral Account on account of Reimbursement
Obligations when the same become due and payable if and to the extent
that the Borrower shall fail directly to pay such Reimbursement
Obligations and (B) after the Revolving Commitment Maturity Date,
apply any proceeds remaining in the L/C Cash Collateral Account first
to pay any unpaid Obligations then outstanding hereunder and then to
refund any remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar
month, may direct the Administrative Agent to invest the funds held in
the L/C Cash Collateral Account (so long as the aggregate amount of
such funds exceeds any relevant minimum investment requirement) in (A)
direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof and
(B) one or more other types of investments
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permitted by the Administrative Agent, in each case with such
maturities as the Borrower, with the consent of the Administrative
Agent, may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. In the absence of any such direction from the Borrower,
the Administrative Agent shall invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in one or more
types of investments with such maturities as the Administrative Agent
may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. All such investments shall be made in the Administrative
Agent's name for the account of the Lenders, subject to the ownership
interest therein of the Borrower. The Borrower recognizes that any
losses or taxes with respect to such investments shall be borne solely
by the Borrower, and the Borrower agrees to hold the Administrative
Agent and the Lenders harmless from any and all such losses and taxes.
Administrative Agent may liquidate any investment held in the L/C Cash
Collateral Account in order to apply the proceeds of such investment
on account of the Reimbursement Obligations (or on account of any
other Obligation then due and payable, as the case may be) without
regard to whether such investment has matured and without liability
for any penalty or other fee incurred (with respect to which the
Borrower hereby agrees to reimburse the Administrative Agent) as a
result of such application.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit. The obligation of each Lender to make the initial
Advance and the obligations of the Issuing Bank to issue any Letter of Credit
issued on the Agreement Date, is subject to (i) receipt by the Administrative
Agent of each of the following, in form and substance reasonably satisfactory
to each Lender, with a copy (except for the Notes) for each Lender, and (ii)
satisfaction of the following conditions:
(a) a loan certificate of each Obligor certifying as to the
accuracy of its representations and warranties in the Loan Documents,
certifying that no Default has occurred and is continuing, and including a
certificate of incumbency with respect to each officer executing any Loan
Document, and including (i) a copy of the articles or certificate of
incorporation (or other similar organizational documents) of such Obligor
certified to be true, complete and correct by the secretary of state of its
state of incorporation or organization, (ii) a copy of the by-laws, partnership
agreement or other similar governance document of such Obligor, as in effect on
the Agreement Date, (iii) a copy of the resolutions of such Obligor authorizing
it to execute, deliver and perform the Loan Documents to which it is a party
and all other transactions contemplated thereby, and (iv) a copy of a
certificate of good standing and a certificate of existence for its state of
incorporation and each state in which it is qualified to do business;
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(B) a duly executed Revolving Credit Note, Facility A Term Loan
Note and Facility B Term Loan Note payable to the order of each Lender with a
related Commitment and in an amount for each Lender equal to its Specified
Percentage of each such Commitment, respectively, and which has specifically
requested such Note;
(c) the duly executed Swing Line Note, payable to the order of the
Swing Line Bank in the amount of the Swing Line Facility;
(d) UCC-11 searches in appropriate jurisdictions where Collateral
is located;
(e) opinion of counsel to the Borrower and each Subsidiary
(including foreign counsel with respect to any Capital Stock of a Foreign
Subsidiary as Collateral) addressed to the Lenders;
(f) reimbursement to the Administrative Agent for Special
Counsel's reasonable and customary fees (on an hourly basis) and expenses
incurred through the date hereof;
(g) any fees required to be paid pursuant to the Fee Letter;
(h) duly executed and completed Security Agreements and
Intellectual Property Security Agreements executed by the Borrower and each of
its Domestic Subsidiaries, granting a first priority perfected Lien in all
Collateral covered thereby, together with related financing statements, stock
powers, stock certificates evidencing ownership of (i) 100% of the issued and
outstanding Capital Stock of each Domestic Subsidiary and (ii) 65% of the
issued and outstanding Capital Stock of each Foreign Subsidiary, and insurance
certificates listing the Administrative Agent as loss payee and additional
insured and otherwise in a form required by the Collateral Documents;
(i) a duly executed and completed Subsidiary Guaranty by each
Domestic Subsidiary;
(j) duly executed and completed Deeds of Trusts, together with
such environmental reports and title insurance policies or commitments as shall
be required by the Administrative Agent, in form or substance reasonably
satisfactory to the Administrative Agent and Special Counsel;
(k) simultaneously with the making of the initial Advance,
executed UCC-3 Termination Statements to be filed in appropriate jurisdictions
to terminate all Liens against assets of the Borrower and its subsidiaries
other than Permitted Liens;
(l) all Home Interiors Merger Documents, which shall be on terms
and conditions acceptable to the Administrative Agent;
(m) the Home Interiors Recapitalization shall have occurred
contemporaneously pursuant to terms and conditions of the Home Interiors Merger
Documents;
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(n) evidence reasonably satisfactory to the Administrative Agent,
that contemporaneously with the Home Interiors Recapitalization (i) the
Borrower shall receive contemporaneously (A) at least $200,000,000 in gross
proceeds from the sale of the Senior Subordinated Notes and (B) the HM/RB
Partners, L.P. Cash Contribution; (iii) the aggregate amount of Total Debt does
not exceed $505,000,000; and (iv) the Unused Portion shall be equal to or
greater than $35,000,000;
(o) a pro forma balance sheet of the Borrower and its Subsidiaries
as of the Agreement Date, taking into account the Home Interiors
Recapitalization, and such other information relating to the Home Interiors
Recapitalization as the Administrative Agent shall reasonably request;
(p) all requisite approvals or consents of all Tribunals or third
parties with respect to the Home Interiors Recapitalization and the other
transactions contemplated hereby to the extent required shall have been
obtained (but excluding any approvals or consents that could not reasonably be
expected to have a Material Adverse Effect);
(q) after giving effect to the Home Interiors Recapitalization,
there shall have occurred no material adverse change in the business, assets,
operations, prospects or condition (financial or otherwise) of the Borrower and
its Subsidiaries, taken as a whole, since December 31, 1997; and
(r) such other documents, instruments and certificates as the
Administrative Agent or any Lender may reasonably require in connection with
the transactions contemplated hereby.
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit. The obligation of each Lender to make each Advance hereunder
(including the initial Advance) and the obligation of the Issuing Bank to issue
or extend each Letter of Credit (including the initial Letter of Credit) is
subject to fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance or issuance or extension:
(a) With respect to each Advance and each issuance of a Letter of
Credit, all of the representations and warranties of the Borrower under this
Agreement, which, pursuant to Section 4.2 hereof, are made at and as of the
time of such Advance or Letter of Credit, shall be true and correct at such
time in all material respects, both before and after giving effect to the
application of the proceeds of such Advance or Letter of Credit;
(b) There shall not exist a Default or Event of Default hereunder;
(c) The aggregate Advances and Letters of Credit, after giving
effect to such proposed Advance or Letter of Credit, shall not exceed the
maximum principal amount then permitted to be outstanding hereunder;
(d) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing any Letter of Credit;
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(e) There shall be no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Subsidiaries, or in any of their respective properties, which could
reasonably be expected to have a Material Adverse Effect; and
(f) There shall have occurred no material adverse change in the
business, assets, condition (financial or otherwise) or results of operations
of the Borrower and its Subsidiaries, taken as a whole since the date of the
last financial statements delivered pursuant to Section 6.2(a) hereof.
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Sections 2.2(g) and 2.16(c) hereof (or
fund its participation in respect of Letters of Credit pursuant to Section
2.16(c) hereof) shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, (i) the occurrence of any
Default or Event of Default, (ii) the failure of the Borrower to satisfy any
condition set forth in this Section 3.2, or (iii) any other circumstance,
happening or event whatsoever, except that the conditions precedent set forth
in Section 3.1 and 3.2 hereof with respect to the Swing Line Advance or the
Letter of Credit for which such Revolving Credit Advance is made pursuant to
Section 2.2(g) or 2.16(c) hereof (or participation funded) shall have been
satisfied in full at the time of the making of such Swing Line Advance or the
issuance or extension of such Letter of Credit.
Section 3.3 Conditions Precedent to Conversions and
Continuations. The obligation of the Lenders to convert any existing Base Rate
Advance into a LIBOR Advance or to continue any existing LIBOR Advance is
subject to the condition precedent that on the date of such conversion or
continuation no Event of Default shall have occurred and be continuing or would
result from the making of such conversion or continuation. The acceptance of
the benefits of each such conversion and continuation shall constitute a
representation and warranty by the Borrower to each of the Lenders that no
Event of Default shall have occurred and be continuing or would result from the
making of such conversion or continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date,
the respective jurisdiction of incorporation or organization and percentage
ownership by the Borrower or another Subsidiary of the Subsidiaries listed on
Schedule 5 are true and correct. All of the outstanding Capital Stock of the
Borrower and its Subsidiaries is validly issued, fully paid and non-assessable.
Each of the Borrower and its Subsidiaries is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of its state of organization. Each of the Borrower and its
Subsidiaries has the corporate or other legal power and authority to own its
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properties and to carry on its business as now being and hereafter proposed to
be conducted. Each of the Borrower and its Subsidiaries is authorized to do
business, duly qualified and in good standing in the jurisdictions set forth in
Schedule 8 and no qualification or authorization is necessary in any other
jurisdictions in which the character of its properties or the nature of its
business requires such qualification or authorization except where the failure
to be so qualified or authorized would not have a Material Adverse Effect.
(b) Authorization. The Borrower has the corporate power and has
taken all necessary corporate action to authorize it to borrow hereunder and
enter into the Home Interiors Recapitalization. Each Obligor has corporate or
other legal power and has taken all necessary corporate or other legal action
to execute, deliver and perform the Loan Documents to which it is party in
accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Document has been duly executed and delivered
by the Obligor executing it. Each of the Loan Documents to which an Obligor is
a party is a legal, valid and binding respective obligation of such Obligor,
enforceable in accordance with its terms, subject, to enforcement of remedies,
to the following qualifications: (i) equitable principles generally, and (ii)
Debtor Relief Laws (insofar as any such law relates to the bankruptcy,
insolvency or similar event of such Obligor).
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by each Obligor of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, do not and will not (i) require any consent or approval
other than (x) those already obtained, (y) consents under immaterial
contractual obligations, the failure to obtain which could not reasonably be
expected to have a Material Adverse Effect, and (z) UCC and mortgage filings in
connection with the Loan Documents, (ii) violate any material Applicable Law,
the result of which could not reasonably be expected to have a Material Adverse
Effect, (iii) conflict with, result in a breach of, or constitute a default
under the certificate of incorporation, by-laws, partnership agreement,
operating agreement or other similar governing document or agreement of such
Obligor, (iv) conflict with, result in a breach of, or constitute a default
under any Necessary Authorization, indenture, agreement or other instrument, to
which such Obligor is a party or by which they or their respective properties
may be bound, or (v) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired by
such Obligor other than the Liens created pursuant to the Loan Documents.
(d) Business. The Borrower and its Subsidiaries are engaged
primarily in the business of the manufacture, direct selling, direct marketing
or home furnishings business and activities reasonably related, ancillary or
complimentary thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure
to so comply could not reasonably be expected to have a Material Adverse
Effect.
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(g) Title to Properties. The Borrower and its Subsidiaries have
good and indefeasible title to, or a valid leasehold interest in, all of their
material assets. None of their assets are subject to any Liens, except
Permitted Liens. No financing statement or other Lien filing (except relating
to Permitted Liens and other Liens for which releases and UCC-3 Termination
Statements have been obtained pursuant to Section 3.1(l) hereof) is on file in
any state or jurisdiction that names the Borrower or any of its Subsidiaries as
debtor or covers (or purports to cover) any assets of the Borrower or any of
its Subsidiaries, except for Indebtedness permitted hereunder or with respect
to which the requirements of Section 3.1(l) hereof have been satisfied. The
Borrower and its Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 4 hereto, as of
the Agreement Date, there is no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower, or in any
other manner relating directly and adversely to the Borrower or any of its
Subsidiaries, or any of their properties, in, before, or by any Tribunal which
if adversely determined could reasonably be expected to have a Material Adverse
Effect.
(i) Taxes. Except as set forth in Schedule 11 hereto, all federal
and other material tax returns of the Borrower and its Subsidiaries required by
law to be filed have been duly filed or extensions have been timely filed, and
all federal and other material taxes, assessments and other governmental
charges or levies upon the Borrower, its Subsidiaries or any of their
respective properties, income, profits and assets, which are due and payable,
have been paid, unless the same are being contested in good faith by
appropriate proceedings, with adequate reserves established therefor, and no
Lien (other than a Permitted Lien) has attached and no foreclosure, distraint,
sale or similar proceedings have been commenced that have not been vacated,
discharged, bonded or stayed. The charges, accruals and reserves on the books
of the Borrower and its Subsidiaries in respect of their taxes are, in the
judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
(i) The Borrower has heretofore delivered to Lenders the
audited consolidated balance sheets of the Borrower as at December 31,
1997, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve-month
period then ended (the "Financial Statements"). The Financial
Statements were prepared in conformity with GAAP and fairly present,
in all material respects, the financial position of the Borrower and
its Subsidiaries as at the date thereof and the combined results of
operations and cash flows for the period covered thereby.
(ii) The projected consolidated financial statements of
the Borrower, delivered to the Lenders prior to or on the Agreement
Date are based on good faith estimates and assumptions made by the
management of the Borrower and believed to be reasonable at the
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time made, it being recognized by the Lenders that such projections as
to future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may
differ from the projected results.
(iii) The financial statements of the Borrower and its
Subsidiaries delivered to the Lenders pursuant to Section 6.1 and 6.2
hereof fairly present in all material respects their respective
financial condition and their respective results of operations as of
the dates and for the periods shown, all in accordance with GAAP,
subject to normal year-end adjustments. The latest of such financial
statements reflects all material liabilities, direct and contingent,
of the Borrower and each Subsidiary of the Borrower that are required
to be disclosed in accordance with GAAP.
(k) No Adverse Change. Since the date of the Financial Statements
and thereafter any financial statements delivered pursuant to Section 6.2(a)
hereof, no event or circumstance has occurred or arisen which could reasonably
be expected to have as a Material Adverse Effect.
(l) ERISA. None of the Borrower or any of its Subsidiaries
maintains or contributes to any Plan or Multiemployer Plan pursuant to which
employees of the Borrower or any of its Subsidiaries participate other than
those disclosed to the Administrative Agent in writing. Each such Plan (other
than any Multiemployer Plan) is in compliance in all material respects with the
applicable provisions of ERISA, the Code and any other Applicable Law, except
where the failure to comply could not reasonably be expected to have a Material
Adverse Effect. No accumulated funding deficiency (as defined in Section
412(a) of the Code) with respect to a Plan has occurred (without regard to any
waiver granted under Section 412 of the Code), the result of which could
reasonably be expected to have Material Adverse Effect. None of the Borrower
or any member of its Controlled Group has failed to make any contribution or
pay any amount due or owing as required under the terms of any Plan or
Multiemployer Plan, the result of which could reasonably be expected to have
Material Adverse Effect. There has been no ERISA Event, the result of which
could reasonably be expected to have a Material Adverse Effect. The present
value of the benefit liabilities, as defined in Title IV of ERISA, of each Plan
subject to Title IV of ERISA (other than a Multiemployer Plan) of the Borrower
and each member of its Controlled Group does not exceed by more than $500,000
the present value of the assets of each such Plan as of the most recent
valuation date using each such Plan's actuarial assumptions at such date.
There are no pending, or to the Borrower's knowledge threatened, claims,
lawsuits or actions (other than routine claims for benefits in the ordinary
course) asserted or instituted against, and neither the Borrower nor any member
of its Controlled Group has knowledge of any threatened litigation or claims
against, the assets of any Plan or its related trust or against any fiduciary
of a Plan with respect to the operation of such Plan the result of which could
reasonably be expected to have a Material Adverse Effect. None of the
Borrower, any member of its Controlled Group, or any organization to which the
Borrower or any member of its Controlled Group is a successor or parent
corporation within the meaning of ERISA Section 4069(b), has engaged in a
transaction within the meaning of ERISA Section 4069 the result of which could
reasonably be expected to have Material Adverse Effect.
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(m) Compliance with Regulations T, U and X. The Borrower is not
engaged principally or as one of its important activities in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations T, U and X of the Board of Governors of the
Federal Reserve System, and no proceeds of any Advances or Letters of Credit
will be used, directly or indirectly, to purchase or carry any such margin
stock. No more than 25% of the assets of the Borrower and its Subsidiaries
will be margin stock. Neither the making of any Advances, the issuance of any
Letters of Credit nor the application of any proceeds thereof will violate, or
be inconsistent with, the provisions of Regulations T, U and X of the Board of
Governors of the Federal Reserve System.
(n) Necessary Authorization. The Borrower and its Subsidiaries
are not required to obtain any Necessary Authorization that has not already
been obtained from, or effect any material filing or registration that has not
already been effected with, any federal, state or local regulatory authority in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective
terms, including any borrowing hereunder.
(o) Absence of Default. No event has occurred or failed to occur,
which has not been remedied or waived, the occurrence or non-occurrence of
which constitutes, or which with the passage of time or giving of notice or
both would constitute, (i) an Event of Default or (ii) a default by the
Borrower or any of its Subsidiaries under any indenture, agreement or other
instrument, or any judgment, decree or order to which the Borrower or any of
its Subsidiaries or by which they or any of their respective properties is
bound, the result of which with respect to any default set forth in clause (ii)
immediately preceding could reasonably be expected to have a Material Adverse
Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such act or requires any consent, approval, or
authorization of, or registration with, the Securities and Exchange Commission
or any other Tribunal pursuant to any provisions of such act.
(q) Environmental Matters. Except as disclosed in Borrower's
Environmental Reports, (i) neither the Borrower nor any of its Subsidiaries has
any current actual knowledge that any substance deemed hazardous by any
Applicable Environmental Law, has been installed (A) on any real property fee
title to which is now owned by the Borrower or any of its Subsidiaries or (B)
by Borrower or any of its Subsidiaries on any real property leased by the
Borrower or any of its Subsidiaries, in either case in a manner which could
give rise to a violation of Applicable Environmental Laws which could
reasonably be expected to have a Material Adverse Effect; (ii) the Borrower and
its Subsidiaries are not in material violation of or subject to any existing,
pending or, to the Borrower's knowledge, threatened investigation or inquiry by
any governmental authority or
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to any material remedial obligations under any Applicable Environmental Laws
which could reasonably be expected to have a Material Adverse Effect; and (iii)
the Borrower and its Subsidiaries have obtained all permits, licenses, and
authorizations required by Applicable Environmental Laws except where failure
to obtain such permits would not have a Material Adverse Effect. The Borrower
and its Subsidiaries have taken reasonable steps to determine, and the Borrower
and its Subsidiaries have no current actual knowledge, that any hazardous
substances or solid wastes have been disposed of or otherwise released (y) on
or to the real property fee title to which is owned by the Borrower or any of
its Subsidiaries or (z) by Borrower or any of its Subsidiaries on or to any
real property leased by Borrower or any of its Subsidiaries, all within the
meaning of the Applicable Environmental Laws, which could reasonably be
expected to have a Material Adverse Effect. For purposes of this Section
4.1(q), the Borrower's Environmental Reports means those Environmental
Assessments prepared by Law Engineering in anticipation of the transaction
hereunder and listed on Schedule 10 hereto.
(r) Certain Fees. No broker's, finder's or other fee or
commission will be payable by the Borrower (other than to the Lenders hereunder
and HMTF and its Affiliates) with respect to the making of the Commitments or
the Advances hereunder. The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender from and against any claims, demand,
liability, proceedings, costs or expenses asserted with respect to or arising
in connection with any such fees or commissions.
(s) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the
right to use all patents, trademarks, service marks, trade names, copyrights,
and other rights, free from Liens (except Permitted Liens), that are necessary
for the operation of their business as presently conducted and as proposed to
be conducted other than those of which the failure to obtain or to apply for
could not reasonably be expected to have a Material Adverse Effect. Nothing
has come to the current actual knowledge of the Borrower or any of its
Subsidiaries to the effect that (i) any process, method, part or other material
presently contemplated to be employed by the Borrower or any of its
Subsidiaries infringes any valid and enforceable patent, trademark, service
xxxx, trade name, copyright, license or other right owned by any other Person,
or (ii) there is pending or overtly threatened any claim or litigation against
or affecting the Borrower or any of its Subsidiaries contesting its right to
sell or use any such process, method, part or other material, in each case
which could reasonably be expected to result in a Material Adverse Effect.
(t) Disclosure. All factual information, reports, financial
statements, exhibits and schedules furnished in writing by the Borrower or any
of its Subsidiaries to the Administrative Agent or any Lender in connection
with this Agreement or the other Loan Documents prior to or on the Agreement
Date is, and all other such factual written information furnished by or on
behalf of the Borrower or any of its Subsidiaries to the Administrative Agent
or any Lender after the Agreement Date will be, true and accurate in all
material respects (or, in the case of projections based on reasonable estimates
and assumptions) on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make
such information not
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materially misleading at such time in light of the circumstances under which
such information was provided. There is no fact known to the Borrower and not
known to the public generally that could reasonably be expected to have a
Material Adverse Effect, which has not been set forth in this Agreement or in
the documents, certificates and statements furnished to the Lenders by or on
behalf of the Borrower hereof in connection with the transactions contemplated
hereby or thereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries
on a consolidated basis are, Solvent.
(v) Labor Relations. Except as set forth on Schedule 9 hereto, as
of the Agreement Date neither the Borrower nor any of its Subsidiaries is a
party to a collective bargaining agreement or similar agreement, and the
Borrower and each of its Subsidiaries is in compliance in all material respects
with all Laws respecting employment and employment practices, terms and
conditions of employment, wages and hours and other laws related to the
employment of its employees, and there are no arrears in the payment of wages,
withholding or social security taxes, unemployment insurance premiums or other
similar obligations of the Borrower or any of its Subsidiaries or for which the
Borrower or any such Subsidiary may be responsible other than in the ordinary
course of business. There is no strike, work stoppage or labor dispute with
any union or group of employees pending or overtly threatened involving
Borrower or any of its Subsidiaries which could reasonably be expected to have
a Material Adverse Effect.
(w) Common Enterprise. The Borrower and its Subsidiaries are
engaged in the businesses set forth in Section 4.1(d) hereof. These operations
require financing on a basis such that the credit supplied can be made
available from time to time to the Borrower and various of its Subsidiaries, as
required for the continued successful operation of the Borrower and its
Subsidiaries as a whole. The Borrower and its Subsidiaries expect to derive
benefit (and the boards of directors of the Borrower and its Subsidiaries have
determined that the Borrower and its Subsidiaries may reasonably be expected to
derive benefit), directly or indirectly, from the credit extended by the
Lenders hereunder, both in their separate capacities and as members of the
group of companies, since the successful operation and condition of the
Borrower and its Subsidiaries is dependent on the continued successful
performance of the functions of the group as a whole.
(x) Year 2000 Compliance. To the extent that such problem could
reasonably be expected to cause a Material Adverse Effect, the Borrower is (i)
developing a review and assessment of all areas within its and each of its
Subsidiaries' business and operations that could be adversely affected by the
"Year 2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its Subsidiaries may be unable to recognize and perform
properly date-sensitive involving certain dates prior to and any date after
December 31, 1999), (ii) developing a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (iii) to date, implementing that plan in
accordance with that timetable. The Borrower reasonably believes that all
computer applications that are material to its or any of its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date- sensitive functions for all dates before and after January 1, 2000
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(that is, be "Year 2000 Compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a Material Adverse Effect.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance, and each shall be true and correct when made,
except to the extent (a) previously fulfilled in accordance with the terms
hereof, (b) applicable to a specific date or otherwise subsequently
inapplicable, or (c) previously waived in writing by the Determining Lenders
with respect to any particular factual circumstance. All such representations
and warranties shall survive, and not be waived by, the execution hereof by any
Lender, any investigation or inquiry by any Lender, or by the making of any
Advance under this Agreement.
ARTICLE 5
General Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 5.1 Preservation of Existence and Similar Matters . The
Borrower shall, and shall cause each Subsidiary to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
(a) its existence, and (b) all rights, franchises, licenses, authorizations,
consents, privileges and all other Necessary Authorizations from federal, state
and local governmental bodies and any tribunal (regulatory or otherwise), the
loss of which could reasonably be expected to have a Material Adverse Effect;
and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The
Borrower and its Subsidiaries shall (a) engage primarily in the businesses set
forth in Section 4.1(d) hereof, and (b) comply in all material respects with
the requirements of all material Applicable Law.
Section 5.3 Maintenance of Properties. The Borrower shall, and
shall cause each Subsidiary to, maintain or cause to be maintained all its
material properties (whether owned or held under lease) in reasonably good
repair, working order and condition, taken as a whole, and from time
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to time make or cause to be made all appropriate repairs, renewals and
replacements as Borrower shall in good xxxxx xxxx necessary.
Section 5.4 Accounting Methods and Financial Records. The
Borrower shall, and shall cause each Subsidiary to, maintain a system of
accounting established and administered in accordance with GAAP, keep adequate
records and books of account in which complete entries will be made and all
transactions reflected in accordance with sound business practices, and keep
accurate and complete records of its respective assets. The Borrower and each
of its Subsidiaries shall maintain a fiscal year ending on the last day of
December.
Section 5.5 Insurance.
(a) The Borrower shall, and shall cause each Subsidiary to,
maintain insurance from responsible companies in such amounts and against such
risks (but including in any event public liability, business interruption and
flood as to any portion of the real estate Collateral which shall at any time
be located in an identified "flood prone" area in which flood insurance has
been made available pursuant to the Federal Flood Protection Act of 1973 as
amended) as shall be customary and usual in the industry for companies of
similar size and capability. Each insurance policy shall provide for at least
30 days' prior notice to the Administrative Agent of any proposed termination
or cancellation of such policy, whether on account of default or otherwise and
name the Administrative Agent as loss payee or additional insured, as the case
may be.
(b) The Borrower shall furnish, upon request of the Administrative
Agent, evidence of the insurance required to be maintained in accordance with
Section 5.5(a) hereof in form and content reasonably satisfactory to the
Administrative Agent. If the Borrower or any of its Subsidiaries fails to
maintain the insurance required to be maintained in accordance with Section
5.5(a) hereof, the Administrative Agent may at its option obtain insurance on
the Collateral, and any premium thereby paid by the Administrative Agent shall
become part of the Obligation and shall bear interest at the lesser of the (i)
Base Rate Basis and (ii) Highest Lawful Rate. In the event that the
Administrative Agent maintains such substitute insurance, the additional
premium for such insurance shall be due on demand and payable by the Borrower
to the Administrative Agent in accordance with any notice delivered to the
Borrower by the Administrative Agent.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and
shall cause each Subsidiary to, pay and discharge all material taxes,
assessments and governmental charges or levies imposed upon it or its income or
properties prior to the date of delinquency, and to pay all lawful material
claims for labor, materials and supplies which, if unpaid, might become a Lien
upon any of its properties; in each case unless such tax, assessment, charge,
levy or claim is being diligently contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
appropriate books in accordance with GAAP, but only so long as no Lien (other
than a Permitted Lien) shall attach with respect thereto and no foreclosure,
distraint, sale or similar proceedings shall have been commenced which has not
been vacated, discharged, bonded or stayed.
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Section 5.7 Visits and Inspections. The Borrower shall, and
shall cause each of its Subsidiaries to, permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries (i) as often as the Administrative Agent
or any Lender shall reasonably deem advisable, and (ii) at reasonable times,
(b) audit, inspect and make extracts from and copies of the Borrower's and each
such Subsidiary's books and records, and (c) discuss with the Borrower's and
each such Subsidiary's directors, officers, employees and auditors its
business, assets, liabilities, financial positions, results of operations and
business prospects. After the occurrence and during the continuance of an
Event of Default, the Borrower shall pay the reasonable expenses related to
inspections and audits performed by the Administrative Agent. Prior to the
occurrence of an Event of Default, all such visits and inspections shall be
conducted during normal business hours and shall not be conducted more often
than once per fiscal quarter. Following the occurrence and during the
continuance of an Event of Default, such visits and inspections shall be
conducted at any time requested by the Administrative Agent or any Lender
without any requirement for advance notice.
Section 5.8 Use of Proceeds. The Borrower shall use the proceeds
of Advances and the Letters of Credit to (a) consummate the Home Interiors
Recapitalization, (b) pay certain fees and expenses related to the Home
Interiors Recapitalization, and (c) finance the ongoing working capital and
general corporate requirements of the Borrower and its Subsidiaries, including
Acquisitions permitted hereunder.
SECTION 5.9 INDEMNITY.
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(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, THE ISSUING BANK, EACH OF THEIR
RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH
AFFILIATES') OFFICERS, DIRECTORS, TRUSTEES, EMPLOYEES, AGENTS, ATTORNEYS,
SHAREHOLDERS AND CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN
CONNECTION WITH THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE
CONDITIONS SET FORTH HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY,
"INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, REASONABLE COSTS,
REASONABLE EXPENSES AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH
INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO), IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL
AND WHETHER BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER
COMMON LAW OR AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE, ARISING
FROM OR CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER,
OR ANY OF ITS SUBSIDIARIES OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE
PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR
ANY OF ITS SUBSIDIARIES), IN ANY MANNER RELATING TO OR ARISING OUT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR
ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT HERETO OR THERETO,
INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF ANY
NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE MATTERS
RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE ADMINISTRATIVE AGENT OR ANY
LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE
ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (I) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, AND (II) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER
LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
AND (III) LEGAL FEES OF ANY LENDER EXCEPT AS OTHERWISE PROVIDED IN SECTION 11.2
HEREOF (COLLECTIVELY, "INDEMNIFIED MATTERS").
(b) IN ADDITION, THE BORROWER SHALL PERIODICALLY, UPON REQUEST,
REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND
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OTHER ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY
INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER. THE REIMBURSEMENT, INDEMNITY AND CONTRIBUTION OBLIGATIONS UNDER THIS
SECTION SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY OTHERWISE
HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH INDEMNITEE, AND
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS,
HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE ADMINISTRATIVE AGENT,
THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS.
Section 5.10 Environmental Law Compliance. The Borrower and its
Subsidiaries shall comply with all Applicable Environmental Laws, except for
non-compliance the result of which could not reasonably be expected to have a
Material Adverse Effect.
Section 5.11 Further Assurances. At any time or from time to time
upon reasonable request by the Administrative Agent, the Borrower or any of its
Subsidiaries shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. At the time of delivery of the
financial statements set forth in Sections 6.1 and 6.2 hereof, if the
information provided therein has changed since the last delivery thereof, the
Borrower agrees to update and deliver to the Administrative Agent Schedule 5
hereto(with respect to the identities, jurisdictions of organization and
ownership of the Borrower's Subsidiaries). The Borrower agrees to update the
information on Schedule 2 to the Security Agreements promptly upon discovery
that the information provided therein is not complete and correct. The
Borrower agrees to execute and deliver, or cause its Subsidiaries to execute
and deliver, to the Administrative Agent Deeds of Trust, in substantially the
form of Exhibit I hereto with respect to any fee owned real property hereafter
acquired by the Borrower or any Subsidiary, as applicable, with a fair market
value in excess of $500,000 at the time of acquisition thereof, together with
any existing surveys and environmental reports in form reasonably satisfactory
to the Administrative Agent and title insurance thereon in form and amount (not
to exceed the fair market value thereof) reasonably satisfactory to the
Administrative Agent, and such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request with respect thereto.
Section 5.12 Subsidiaries. At any time that any Person becomes a
Domestic Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of
the Obligations and Collateral Documents granting a first priority Lien in all
unencumbered assets of such Subsidiary required by the Determining Lenders to
be pledged, except, to the extent applicable, for Permitted Liens, to secure
the Obligations, (b) 100% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (c) the Lenders shall receive such board
resolutions, officer's certificates, corporate
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and other documents and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clauses (a) and
(b) above. At any time that any Person becomes a direct Foreign Subsidiary,
(a) 65% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations and (b) the Lenders shall receive such board resolutions, officers'
certificates, corporate and other documents and opinions of counsel as the
Administrative Agent shall reasonably request in connection with the action
described in the immediately preceding clause (a) above.
ARTICLE 6
Information Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled), the Borrower shall furnish or cause to be furnished to
each Lender:
Section 6.1 Quarterly Financial Statements and Information.
Within 45 days after the end of each of the first three fiscal quarters of each
fiscal year, an unaudited consolidated balance sheet of the Borrower and its
Subsidiaries as at the end of such fiscal quarter and the related unaudited
consolidated statement of operations for such fiscal quarter and for the
elapsed portion of the year ended with the last day of such fiscal quarter, and
an unaudited consolidated statement of cash flow of the Borrower and its
Subsidiaries for the elapsed portion of the year ended with the last day of
such fiscal quarter; all of which shall be certified by the chief executive
officer or chief financial officer or other officer of the Borrower reasonably
acceptable to the Administrative Agent, to be, in his or her opinion acting
solely in his or her capacity as an officer of the Borrower, complete and
correct in all material respects and to present fairly, in accordance with
GAAP, the financial position and results of operations of the Borrower and its
Subsidiaries as at the end of and for such fiscal quarter, and for the elapsed
portion of the year ended with the last day of such fiscal quarter, subject
only to normal year-end adjustments.
Section 6.2 Annual Financial Statements and Information;
Certificate of No Default.
(a) Within 90 days after the end of each fiscal year, (i) a copy
of the consolidated balance sheets of the Borrower and its Subsidiaries, as of
the end of the current and prior fiscal year and (ii) the consolidated
statements of operations of the Borrower and its Subsidiaries and consolidated
statements of changes in shareholders' equity of the Borrower and its
Subsidiaries, and consolidated statements of cash flow of the Borrower and its
Subsidiaries for such fiscal year, all of which are prepared in accordance with
GAAP, and certified by independent certified public accounts reasonably
acceptable to the Lenders (provided, however, any "big five" public accounting
firm shall be acceptable to the Lenders), whose opinion shall be in scope and
substance in accordance with generally accepted auditing standards and shall be
unqualified.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants certifying
that no Default or Event of Default under
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Sections 7.1, 7.2, 7.3, 7.5, 7.6, 7.8, 7.9 and 7.11 was detected during the
examination of the books and records of the Borrower and its Subsidiaries.
(c) As soon as available, but in any event within 90 days
following the end of each fiscal year, a copy of the annual consolidated
operating budget of the Borrower for such current fiscal year.
Section 6.3 Compliance Certificate. At the time financial
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, the
Compliance Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, a copy of (i) all
material final management letters submitted to any Obligor by accountants in
connection with any annual, interim or special audit, (ii) each financial
statement, report, notice or proxy statement sent by any Obligor to
stockholders generally, and (iii) each regular, periodic or other report and
any registration statement (other than statements on Form S-8) or prospectus
(or material written communication in respect of any thereof) filed by any
Obligor with any securities exchange, with the Securities and Exchange
Commission or any successor agency;
(b) Promptly upon becoming aware that (i) the holder(s) of any
note(s) or other evidence of indebtedness or other security of the Borrower or
any of its Subsidiaries in excess of $5,000,000 in the aggregate has given
notice or taken any action with respect to a breach, failure to perform,
claimed default or event of default thereunder, (ii) any occurrence or
non-occurrence of any event which constitutes or which with the passage of time
or giving of notice or both could constitute a material breach by the Borrower
or any of its Subsidiaries under any material agreement or instrument other
than this Agreement to which the Borrower or any of its Subsidiaries is a party
or by which any of their properties may be bound, or (iii) any event,
circumstance or condition which could reasonably be expected to be classified
as a Material Adverse Effect, a written notice specifying the details thereof
(or the nature of any claimed default or event of default) and what action is
being taken or is proposed to be taken with respect thereto;
(c) Promptly upon becoming aware that any party to any Capitalized
Lease Obligations or any other lease obligations of the Borrower or any of its
Subsidiaries, in each case, in excess of $5,000,000, has given notice or taken
any action with respect to a breach, failure to perform, claimed default or
event of default thereunder, a written notice specifying the details thereof
(or the nature of any claimed default or event of default) and what action is
being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt thereof, information with respect to and
copies of any notices received from any federal, state or local regulatory
agencies or any tribunal relating to any order, ruling, law, information or
policy that relates to a breach of or noncompliance with any Law by the
Borrower or any of its Subsidiaries, or might result in the payment of money by
any Obligor in an
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amount of $5,000,000 or more in the aggregate, or otherwise have a Material
Adverse Effect, or result in the loss or suspension of any Necessary
Authorization; and
(e) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents or further information regarding
the assets, business, liabilities, financial position, projections, results of
operations or business prospects of the Borrower or any of its Subsidiaries, as
the Administrative Agent or any Lender may reasonably request.
Section 6.5 Notice of Litigation, Default and Other Matters;
Deliveries.
(a) Prompt notice of the following events after the Borrower has
knowledge or notice thereof:
(i) The commencement of all proceedings and
investigations by or before any governmental body, and all actions and
proceedings in any court or before any arbitrator involving claims for
damages (including punitive damages) in excess of $5,000,000 (after
deducting the amount with respect to which creditworthy insurance
companies have not denied coverage), against or in any other way
relating directly to the Borrower or any of its Subsidiaries, or any
of their respective properties or businesses and which if adversely
determined could reasonably be expected to have a Material Adverse
Effect;
(ii) Promptly upon the happening of any condition or event
of which the Borrower has knowledge which constitutes a Default, a
written notice specifying the nature and period of existence thereof
and what action is being taken or is proposed to be taken with respect
thereto; and
(iii) Any change with respect to the business, assets,
liabilities, financial position, results of operations or prospective
business of the Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(b) Promptly deliver to the Administrative Agent, together with
the delivery of each Compliance Certificate, Instruments (as defined in the
Security Agreement), duly endorsed as required by the Security Agreement, such
that the aggregate principal amount of all Instruments owned by the Borrower
and its Subsidiaries and not delivered to the Administrative Agent shall not
exceed $5,000,000.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event within 30 days after the Borrower or
any member of its Controlled Group has knowledge that any ERISA Event has
occurred, a written notice describing such event and describing what action is
being taken or is proposed to be taken with respect thereto, together with a
copy of any notice of event that is given to the PBGC;
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(b) Promptly and in any event within three Business Days after
receipt thereof by the Borrower or any member of its Controlled Group, copies
of each notice received by the Borrower or any member of its Controlled Group
of the PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(c) Promptly upon the request of the Administrative Agent, copies
of each annual report (including Schedule B thereto, if applicable) with
respect to each Plan covering employees of the Borrower or any of its
Subsidiaries;
(d) Promptly, and in any event within 10 Business Days after
receipt thereof, a copy of any correspondence the Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Multiemployer Plan or Plan subject to Section 4064
of ERISA concerning potential withdrawal liability pursuant to Section 4064,
4219 or 4202 of ERISA;
(e) Notification within three Business Days after the Borrower or
any member of its Controlled Group knows that the Borrower or any such member
of its Controlled Group has filed or intends to file a notice of intent to
terminate any Plan under a distress termination within the meaning of Section
4041(c) of ERISA and a copy of such notice; and
(f) Within three Business Days after receipt of written notice of
commencement thereof, notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any member of
its Controlled Group with respect to any Plan, which, in the aggregate, if
adversely determined could reasonably be expected to have a Material Adverse
Effect.
Section 6.7 Year 2000 Compliance. The Borrower will promptly
notify the Administrative Agent in the event the Borrower discovers or
determines that any computer application that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant on a
timely basis, except to the extent that such failure could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE 7
Negative Covenants
So long as any of the Obligations are outstanding and unpaid or any
Commitment is outstanding (whether or not the conditions to borrowing have been
or can be fulfilled):
Section 7.1 Indebtedness. The Borrower shall not, and shall not
permit any of its Subsidiaries to, create, assume, incur or otherwise become or
remain obligated in respect of, or permit to be outstanding, or suffer to exist
any Indebtedness, except:
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(a) Indebtedness under the Loan Documents;
(b) Accounts payable, accrued liabilities and deferred taxes
incurred in the ordinary course of business;
(c) Indebtedness, including in respect of Capitalized Lease
Obligations, incurred to purchase, or to finance the purchase of, assets which
constitute property, plant and equipment, not to exceed $10,000,000 in
aggregate principal amount outstanding at any time;
(d) Interest hedging obligations under Interest Hedge Agreements,
provided that such Interest Hedge Agreements were entered into in the ordinary
course of business for the purpose of limiting risks that arise in the ordinary
course of business;
(e) Indebtedness (including as the result of intercompany
transfers made in the ordinary course of business) owing (i) among the
Obligors, (ii) from any direct Foreign Subsidiary to the Borrower or any
Domestic Subsidiary, (iii) from any indirect Foreign Subsidiary to the
Borrower, any Domestic Subsidiary or any Foreign Subsidiary in an aggregate
principal amount not to exceed, together with Investments (excluding
Indebtedness) in indirect Foreign Subsidiaries pursuant to Section 7.3(d)(iii)
hereof, $15,000,000; provided, that (A) all such intercompany Indebtedness
shall be noted in the books and records and (B) all such intercompany
Indebtedness owed by the Borrower, any Obligor or any direct Foreign Subsidiary
shall be subordinated to the Obligations pursuant to terms reasonably
acceptable to the Determining Lenders;
(f) (i) Indemnities and guaranties (including guaranties of
Indebtedness if such Indebtedness is permitted hereunder) made in the ordinary
course of business provided such indemnities and guaranties could not
individually or in the aggregate have a Material Adverse Effect, (ii)
guaranties of (A) real property leases and (B) personal property leases, (iii)
indemnities in favor of the Persons issuing title insurance policies, (iv)
indemnities made in the Home Interiors Merger Documents, the Loan Documents,
the Consulting Agreements or in any agreements contemplated thereunder or
thereby and (v) in the corporate charter and/or bylaws or other constituent
documents of the Borrower and its Subsidiaries;
(g) Indebtedness existing on the Agreement Date which is described
on Schedule 7 hereto, including renewals, refinancings or extensions (but no
increases in the principal amount thereof other than pursuant to the instrument
creating such Indebtedness) thereof;
(h) Indebtedness in respect of endorsement of negotiable
instruments in the ordinary course of business;
(i) Indebtedness, including guaranties thereof, in respect of the
Senior Subordinated Notes;
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(j) Indebtedness (i) of the Borrower or any of its Subsidiaries to
the seller in any Acquisition or (ii) assumed in connection with any
Acquisition;
(k) At any time following the termination of the Revolving Credit
Commitment and following payment in full of principal of and interest on the
Revolving Credit Advances, the Swing Line Advances, the Reimbursement
Obligations and all other fees and other amounts payable herewith in respect of
the Revolving Credit Advances, the Swing Line Advances and the Letters of
Credit, Indebtedness of the Borrower or its Subsidiaries in respect of
unsecured revolving lines of credit in aggregate amount outstanding not to
exceed $40,000,000 at any one time;
(l) Indebtedness of all Foreign Subsidiaries of the Borrower for
working capital purposes and overdraft facilities in an aggregate amount not to
exceed $15,000,000 at any one time outstanding; and
(m) Other Indebtedness not to exceed $20,000,000 in aggregate
amount outstanding at any time;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
(c), (j) or (m) above may be incurred if, immediately before or after giving
effect to the incurrence thereof, any Default or Event of Default shall have
occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit
any of its Subsidiaries to, create, assume, incur, permit or suffer to exist,
directly or indirectly, any Lien on any of its assets, whether now owned or
hereafter acquired, except Permitted Liens. Except with respect to the Senior
Subordinated Notes, the Senior Subordinated Notes Indenture, and Indebtedness
permitted by Sections 7.1(c), (g), (j)(ii), (k), (l), or (m) hereof (provided
that such agreement relates only to any assets purchased or acquired with the
proceeds of such Indebtedness), the Borrower shall not, and shall not permit
any of its Subsidiaries to enter into a Negative Pledge with another Person.
Section 7.3 Investments. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Investment, except that the
Borrower may make, purchase or otherwise acquire and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable and trade credit that arise in the
ordinary course of business;
(c) Investments in existence on the Agreement Date which are
described on Schedule 6 hereto and including any extensions and renewals
thereof;
(d) Investments in (i) Domestic Subsidiaries (A) which have
executed a Subsidiary Guaranty and Collateral Documents granting a first
priority Lien in all unencumbered assets of such Subsidiary required by the
Determining Lenders to be pledged, to secure the Obligations, (B) 100%
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of whose Capital Stock shall be pledged to secure the Obligations and (C) which
have delivered to the Lenders such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request, (ii) direct Foreign Subsidiaries 65% of whose
Capital Stock shall be pledged to secure the Obligations, (iii) indirect
Foreign Subsidiaries not to exceed $15,000,000 in aggregate amount outstanding
at any time, and (iv) the Borrower (including, in each of clauses (i), (ii) and
(iii) any new Subsidiary);
(e) Investments permitted under Sections 7.1, 7.4, 7.7 and 7.11
hereof;
(f) The Home Interiors Merger and the Home Interiors
Recapitalization and the transactions contemplated thereby;
(g) Loans and advances by the Borrower and any of its Subsidiaries
to their respective displayers and independent contractors in an aggregate
principal amount not to exceed $5,000,000 at any one time outstanding;
(h) Investments in Interest Hedge Agreements;
(i) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of and other disputes
with, customers and suppliers arising in the ordinary course of business;
(j) Loans and advances by the Borrower and any of its Subsidiaries
to its suppliers in an aggregate principal amount not exceeding $9,000,000 at
any one time outstanding;
(k) Investments in respect of the Candle Making Joint Venture not
to exceed $5,000,000 in aggregate amount;
(l) Other Investments not to exceed in aggregate amount
outstanding at any time 3% of annual net sales of the Borrower and its
Subsidiaries for the most recent fiscal year, without regard to any write down
or write up thereof; and
(m) Acquisitions, if (i) immediately after giving effect to the
proposed transaction the Unused Portion shall be no less than $10,000,000, (ii)
such Acquisition shall not be opposed by the board of directors of the Person
being acquired, (iii) the Lenders shall have received written notice thereof at
least 15 Business Days prior to the date of such Acquisition, (iv) the
Administrative Agent shall have received at least 10 Business Days prior to the
date of such Acquisition a Compliance Certificate setting forth the covenant
calculations both immediately prior to and after giving effect to the proposed
Acquisition, (v) the assets, property or business acquired shall be in the
business described in Section 4.1(d) hereof and the Administrative Agent for
the benefit of the Lenders shall have a first priority Lien in substantially
all of such assets (or, if less than substantially all of such assets, such
assets required by the Determining Lenders to be pledged), except for Permitted
Liens,
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(vi) if such Acquisition results in a Domestic Subsidiary, (A) such Subsidiary
shall execute a Subsidiary Guaranty of the Obligations and Collateral Documents
granting a first priority Lien in substantially all of such assets (or, if less
than substantially all of such assets, all assets required by the Determining
Lenders to be pledged), except for Permitted Liens to secure the Obligations,
(B) 100% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations and (C) the Administrative Agent on behalf of the Lenders shall
have received such board resolutions, officer's certificates and opinions of
counsel as the Administrative Agent shall reasonably request in connection with
the actions described in clauses (A) and (B) above, (vii) if such Acquisition
results in a Foreign Subsidiary, (A) 65% of such Subsidiary's Capital Stock
shall be pledged to secure the Obligations and (B) the Administrative Agent on
behalf of the Lenders shall have received such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with clause (A) immediately preceding and
(viii) the aggregate Acquisition Consideration expended during any period of
four consecutive fiscal quarters (commencing July 1, 1998) shall not exceed
$25,000,000.
provided, however, (A) that no Investment otherwise permitted by clauses (e)
and (m) above shall be permitted if, immediately before or after giving effect
thereto, any Default or Event of Default shall have occurred and be continuing,
and (B) notwithstanding anything in this Section 7.4 to the contrary,
Investments in indirect Foreign Subsidiaries shall not exceed $15,000,000 in
aggregate amount outstanding at any time.
Section 7.4 Liquidation, Merger, New Subsidiaries. The Borrower
shall not, and shall not permit any of its Subsidiaries to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower
which is an Obligor, (ii) a Subsidiary of the Borrower which is not an Obligor
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower,
and (iii) a Subsidiary of the Borrower may dissolve if substantially all of its
assets have been conveyed pursuant to Section 7.5(e) hereof; or
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, (ii) with respect to a merger or consolidation involving
a Subsidiary of the Borrower which is an Obligor and not the Borrower, such
Subsidiary shall be the surviving corporation, or such merger or consolidation
shall be a part of an Acquisition permitted by Section 7.3 hereof or part of a
disposition permitted by Section 7.5 hereof, and (iii) no Default or Event of
Default shall then be in existence or occur as a result of such transaction.
Section 7.5 Sale of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, sell (including for discount or
otherwise), lease, transfer or otherwise dispose of assets, except (a) sales of
inventory and other assets sold in the ordinary course of business, (b) sales
or other dispositions of worn-out or obsolete assets or assets no longer useful
in the conduct of the
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Borrower's business in the ordinary course of business, (c) sales of Cash and
Cash Equivalents in the ordinary course of business, (d) sales of assets in
which the Net Cash Proceeds thereof are used within 365 days of such sale to
purchase assets of similar value and quality and business utility to those
assets sold, provided that the aggregate amount of Net Cash Proceeds
outstanding and pending reinvestment pursuant to this clause (d) shall not
exceed $5,000,000 at any time, (e) sales and dispositions (i) from any Domestic
Subsidiary to the Borrower or any other Domestic Subsidiary and (ii) from any
Foreign Subsidiary to the Borrower or any of its Subsidiaries, (f) transfers
resulting from any casualty or condemnation of property or assets, (g) the sale
or discount of overdue accounts receivable in the ordinary course of business,
in connection with the compromise or collection thereof, (h) licenses or
sublicenses of intellectual property and general intangibles and licenses,
leases or subleases of other property in each case in the ordinary course of
business and which do not materially interfere with the business of the
Borrower and its Subsidiaries, (i) the sale of assets in respect of the Candle
Making Joint Venture not to exceed $2,500,000 in aggregate amount, (j) sales of
assets during any fiscal year the aggregate Net Cash Proceeds of which do not
exceed $1,000,000 and (k) asset sales, the Net Cash Proceeds of which are
applied in accordance with Section 2.5(c) hereof.
Section 7.6 Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly declare,
pay or make any Restricted Payments, except (a) Dividends payable by a
Subsidiary to the Borrower or another Subsidiary, (b) Dividends payable in
stock and not cash, (c) regularly scheduled payments of interest on the Senior
Subordinated Notes, (d) Restricted Payments as the result of the repurchase of
the Capital Stock of the Borrower or other securities of the Borrower from
outside directors, employees or members of management of the Borrower or any
Subsidiary of the Borrower, in an aggregate amount not to exceed $20,000,000
during the term of this Agreement, net of the proceeds received by the Borrower
and its Subsidiaries as a result of any resales of any such Capital Stock or
other securities, (e) Restricted Payments as a result of a purchase of Capital
Stock made in order to fulfill the obligations of the Borrower or its
Subsidiaries under an employee stock purchase plan or similar plan covering
employees of the Borrower or any Subsidiary as from time to time in effect in
an aggregate net amount not to exceed $10,000,000 during the term of this
Agreement, (f) Permitted Issuances, (g) Restricted Payments made pursuant to
the Home Interiors Recapitalization and the Home Interiors Merger and (h)
management, advisory, consulting and similar fees to any Affiliate of the
Borrower or any of its Subsidiaries other than (i) an Obligor and (ii) pursuant
to the Consulting Agreements, subject to Section 7.7 hereof; provided, further,
however, the Borrower shall not pay or make any Restricted Payments permitted
by this Section 7.6 unless there shall exist no Default prior to or after
giving effect to any such proposed Restricted Payment.
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Section 7.7 Affiliate Transactions.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time engage in any transaction with an Affiliate (other
than the Borrower or any of its Subsidiaries), nor make an assignment or other
transfer of any of its assets or properties to any Affiliate (other than the
Borrower or any of its Subsidiaries), unless such transaction is (i) otherwise
permitted under this Agreement, (ii) in the ordinary course of business of the
Borrower and the relevant Subsidiary of the Borrower, as the case may be, and
(iii) upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate.
(b) In addition, notwithstanding the foregoing, the Borrower and
its Subsidiaries shall be entitled to make the following payments and/or enter
into the following: (i) the payment of reasonable and customary fees and
reimbursement of expenses payable to the directors of the Borrower; (ii) the
payment of fees and expenses pursuant to the Consulting Agreements; and (iii)
the employment arrangements with respect to the procurement of services of
directors, officers and employees in the ordinary course of business and the
payment of reasonable fees in connection therewith.
Section 7.8 Leverage Ratio. The Borrower shall not permit the
Leverage Ratio to be greater than (a) 5.60 to 1 at the end of any fiscal
quarter occurring during the period from the Agreement Date through September
30, 1999, (b) 5.10 to 1 at the end of any fiscal quarter occurring during the
period from and including December 31, 1999 through September 30, 2000, (c)
4.50 to 1 at the end of any fiscal quarter occurring during the period from and
including December 31, 2000 through September 30, 2001, and (d) 3.90 to 1 at
December 31, 2001 and at the end of any fiscal quarter thereafter.
Section 7.9 Interest Coverage Ratio. The Borrower shall not
permit the Interest Coverage Ratio to be less than (a) 2.00 to 1 at the end of
any fiscal quarter occurring during the period from and including September 30,
1998 through September 30, 1999, (b) 2.15 to 1 at the end of any fiscal quarter
occurring during the period from and including December 31, 1999 through
September 30, 2000, and (c) 2.40 to 1 at December 31, 2000 and at the end of
any fiscal quarter thereafter.
Section 7.10 Sale and Leaseback. The Borrower shall not, and
shall not permit any of its Subsidiaries to, enter into any arrangement whereby
it sells or transfers any of its assets, and thereafter rents or leases such
assets, provided that this Section 7.10 hereof does not prohibit any sale and
leaseback resulting from the incurrence of any lease or purchase money
financing in respect of any capital assets entered into within 90 days of the
acquisition of such capital asset for the purpose of providing permanent
financing of such capital asset permitted under Section 7.1 hereof.
Section 7.11 Capital Expenditures. The Borrower shall not permit
the Capital Expenditures to be paid or incurred by it and its Subsidiaries to
exceed (a) $5,000,000 in aggregate amount during the period from the Agreement
Date to and including December 31, 1998 and (b) 1.50% of cumulative net
revenues of the Borrower and its Subsidiaries from and after January 1, 1999;
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provided however, notwithstanding the immediately preceding, the Borrower and
its Subsidiaries may also make additional Capital Expenditures during the term
of this Agreement not to exceed $12,500,000 in aggregate amount.
Section 7.12 Amendments and Waivers of Senior Subordinated Notes.
The Borrower shall not, and shall not permit any Subsidiary to, change or amend
(or take any action or fail to take any action the result of which is an
effective amendment or change) or accept any waiver or consent with respect to,
any document, instrument or agreement relating to the Senior Subordinated Notes
that would result in (a) an increase in the principal, interest, overdue
interest, fees or other amounts payable under the Senior Subordinated Notes,
(b) an acceleration in any date fixed for payment or prepayment of principal,
interest, fees or other amounts payable under the Senior Subordinated Notes
(including, without limitation, as a result of any redemption), (c) a change in
the definition of "Change of Control" or "Change in Control" or similar event
or circumstance, however defined or designated, as provided in the Senior
Subordinated Notes which would result in such definition being more restrictive
than such definition in this Agreement, (d) a change in any of the
subordination provisions of the Senior Subordinated Notes, (e) a change in any
covenant, term or provision in the Senior Subordinated Notes which would result
in such term or provision being more restrictive than the terms of this
Agreement and the other Loan Documents or (f) a change in any term or provision
of the Senior Subordinated Notes that could have, in any material respect, an
adverse effect on the interest of the Lenders.
Section 7.13 Amendment of Organizational Documents. The Borrower
shall not, and shall not permit any of its Subsidiaries to, amend its articles
of incorporation, bylaws or other applicable organizational documents in any
manner that could reasonably be expected to have a Material Adverse Effect.
ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under any Loan Document
shall prove to have been incorrect or misleading in any material respect when
made;
(b) The Borrower shall fail to pay (i) principal of any Advance
when due and (ii) interest under any Advance or under any Loan Document or any
fees payable hereunder or any other costs, fees, expenses or other amounts
payable hereunder or under the other Loan Documents, when due,
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which failure to pay with respect to clause (ii) above is not cured within five
days after such amounts become due in accordance with the terms hereof;
(c) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any agreement or covenant contained in Section
5.1(a) or Article 7 hereof;
(d) The Borrower or any of its Subsidiaries shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured within a period of 30 days after written notice
thereof from the Administrative Agent;
(e) The Borrower or any of its Subsidiaries shall default or
breach in the performance or observance of any agreement or covenant not
specifically referred to elsewhere in this Section 8.1 (after the expiration of
any applicable notice and cure or grace period) in any of the Loan Documents
(other than this Agreement) and such default or breach shall not be cured
within a period of 30 days after written notice thereof from the Administrative
Agent;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of the Borrower or any of its Subsidiaries or a
substantial part of the property or assets of the Borrower or any of its
Subsidiaries under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable Federal or state bankruptcy law or
other similar law, (ii) the appointment of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or similar official of the Borrower or any of
its Subsidiaries, or of any substantial part of any of their respective
property or assets, or (iii) the winding-up or liquidation of the affairs of
the Borrower or any of its Subsidiaries, and any such proceeding or petition
shall continue unstayed and in effect for a period of 60 consecutive days;
(g) The Borrower or any of its Subsidiaries shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal
or state bankruptcy law or other similar law, (ii) consent to the institution
of proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Borrower or
any of its Subsidiaries or of any substantial part of their respective
properties, (iii) file an answer admitting the material allegations filed
against it in any such proceeding, (iv) make a general assignment for the
benefit of creditors, (v) fail generally to pay its debts as they become due,
or (vi) take any action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against the Borrower or any of its Subsidiaries for the payment of money which
exceeds $5,000,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied against property of the Borrower or
any of its Subsidiaries which, together with all other such property of the
Borrower and its Subsidiaries subject to other such process, exceeds in value
$5,000,000 in the aggregate, and if such judgment or award is not insured or,
within 45 days after the entry, issue or levy thereof, such
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judgment, warrant or process shall not have been paid or discharged or stayed
pending appeal, or if, after the expiration of any such stay, such judgment,
warrant or process shall not have been paid or discharged;
(i) (i) the Borrower or any member of its Controlled Group shall
incur any accumulated funding deficiency, as defined in Section 412 of the
Code; (ii) the Borrower or any member of its Controlled Group shall incur any
withdrawal liability as a result of a complete or partial withdrawal within the
meaning of Section 4063, 4203 or 4205 of ERISA; (iii) the Borrower or any
member of its Controlled Group shall fail to make a required contribution by
the due date under Section 412 of the Code or Section 302 of ERISA which would
result in the imposition of a Lien under Section 412 of the Code or Section 302
of ERISA; (iv) the Borrower or any member of its Controlled Group shall notify
the PBGC of an intent to terminate a Plan under Section 4201(c) of ERISA, or
the PBGC shall institute proceedings to terminate, any Plan; (v) a trustee
shall be appointed by a court of competent jurisdiction to administer any Plan
or the assets thereof; (vi) the benefits of any Plan shall be increased, or the
Borrower or any member of its Controlled Group shall begin to maintain, or
begin to contribute to, any Plan; or (vii) any ERISA Event with respect to a
Plan shall have occurred; provided, however, that the events listed in
subsections (i) through (vii) above shall constitute Events of Default only if,
as of the date thereof or any subsequent date, the amount of liability that the
Borrower is likely to incur in the aggregate under ERISA or any other provision
of law with respect to all such Plans, computed by the actuary of the Plan
taking into account any applicable rules and regulations of the PBGC at such
time, and based on the actuarial assumptions used by the Plan, resulting from
or otherwise associated with such event could reasonably be expected to have a
Material Adverse Effect;
(j) Any Obligor shall challenge in any manner whatsoever the
validity or enforceability of all or any portion of the Loan Documents or the
Collateral;
(k) The Borrower or any of its Subsidiaries shall default in any
payment in respect of Indebtedness beyond any grace period provided with
respect thereto, or shall default in the performance of any agreement or
instrument under which such Indebtedness is created or evidenced beyond any
applicable grace period, or any other event or condition shall occur in respect
of such Indebtedness, if the effect of such default, event or condition is to
permit or cause the holder of such Indebtedness (or a trustee on behalf of any
such holder) to cause such Indebtedness to become due, repurchased or redeemed
prior to its date of maturity, provided that a default, event or condition of
the type described above in this Section 8.1(k) shall not constitute an Event
of Default under this Agreement unless, at such time, one or more defaults,
events or conditions of the type described above in this Section 8.1(k) shall
have occurred and be continuing with respect to Indebtedness the outstanding
amount of which exceeds in the aggregate $10,000,000;
(l) Any provision of any Loan Document shall for any reason cease
to be valid and binding on or enforceable against any party to it (other than
the Administrative Agent or any Lender) in all material respects unless
released by the Administrative Agent at the direction of the Determining
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Lenders or all Lenders or as otherwise permitted by the terms of this Agreement
or the other Loan Documents;
(m) Any Collateral Document shall for any reason (other than as
expressly provided or permitted pursuant to the terms thereof) cease to create
a valid and perfected first priority Lien in any Collateral, and if such
invalidity is amenable to cure, the relevant Obligor shall have failed to cure
such invalidity within 30 days after notice from the Administrative Agent; or
(n) A Change of Control shall have occurred.
Section 8.2 Remedies. If an Event of Default shall have occurred
and shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent shall, (i) upon the direction of
the Required Revolving Credit Lenders, terminate the Revolving Credit
Commitment, and/or (ii) upon the direction of the Determining Lenders,
terminate the Commitments and/or declare the principal of and interest on the
Advances and all Obligations and other amounts owed under the Loan Documents to
be forthwith due and payable without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived, anything in the Loan
Documents to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default specified in
Section 8.1(f) or (g) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitments
shall forthwith terminate, all without any action by the Administrative Agent,
any Lender or any holders of the Notes and without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may demand upon the Borrower to, and within 30 days of
such demand (but in the case of an Event of Default specified in Section 8.1(f)
or (g) hereof, immediately and without any demand or taking of any other action
by the Administrative Agent or any Lender), the Borrower shall, pay to the
Administrative Agent in same day funds at the office of the Administrative
Agent in such demand for deposit in the L/C Cash Collateral Account, an amount
equal to the maximum amount available to be drawn under the Letters of Credit
then outstanding and/or provide back-up letters of credit satisfactory to the
Issuing Bank in an amount, together with any funds deposited in the L/C Cash
Collateral Account, equal to the maximum amount available to be drawn under the
Letters of Credit then outstanding.
(d) The Administrative Agent, and the Lenders may exercise all of
the post-default rights granted to them under the Loan Documents or under
Applicable Law.
(e) The rights and remedies of the Administrative Agent and the
Lenders hereunder shall be cumulative, and not exclusive.
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ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with
respect to any proposed LIBOR Advance for any Interest Period, any Lender
reasonably determines that (i) deposits in Dollars (in the applicable amount)
are not being offered to that Lender in the relevant market for such Interest
Period or (ii) the LIBOR Rate for such proposed LIBOR Advance does not
adequately cover the cost to such Lender of making and maintaining such
proposed LIBOR Advance for such Interest Period, such Lender shall forthwith
give notice thereof to the Borrower, whereupon until such Lender notifies the
Borrower that the circumstances giving rise to such situation no longer exist
(which such Lender agrees to promptly when the circumstances giving rise to
such determination no longer exist), the obligation of such Lender to make
LIBOR Advances shall be suspended.
Section 9.2 Illegality. If any applicable law, rule or
regulation, or any change therein or adoption thereof, or interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency, shall make it unlawful or impossible for
such Lender (or its LIBOR Lending Office) to make, maintain or fund its LIBOR
Advances, such Lender shall so notify the Borrower and the Administrative
Agent. Before giving any notice to the Borrower pursuant to this Section, the
notifying Lender shall designate a different LIBOR Lending Office or other
lending office if such designation will avoid the need for giving such notice
and will not, in the reasonable judgment of the Lender, be disadvantageous to
the Lender. Upon receipt of such notice, notwithstanding anything contained in
Article 2 hereof, the Borrower shall repay in full the then outstanding
principal amount of each LIBOR Advance owing to the notifying Lender, together
with accrued interest thereon, on either (a) the last day of the Interest
Period applicable to such Advance, if the Lender may lawfully continue to
maintain and fund such Advance to such day, or (b) immediately, if the Lender
may not lawfully continue to fund and maintain such Advance to such day.
Concurrently with repaying each affected LIBOR Advance owing to such Lender if
the Borrower does not terminate this Agreement, notwithstanding anything
contained in Article 2 hereof, the Borrower shall borrow a Base Rate Advance
from such Lender, and such Lender shall make such Base Rate Advance, in an
amount such that the outstanding principal amount of the Advances owing to such
Lender shall equal the outstanding principal amount of the Advances owing
immediately prior to such repayment.
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Section 9.3 Increased Costs.
(a) If the adoption, effectiveness, phase-in or applicability
after the Agreement Date of any Law (or any provision thereof) or any change in
the interpretation or administration thereof after the Agreement Date by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by any Lender (or its
LIBOR Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office)
to any Tax (net of any tax benefit engendered thereby and excluding
any taxes referred to in clauses (i) through (iv) of Section 2.15(a)
hereof) with respect to its LIBOR Advances or its obligation to make
such Advances, or shall change the basis of taxation of payments to a
Lender (or to its LIBOR Lending Office) of the principal of or
interest on its LIBOR Advances or in respect of any other amounts due
under this Agreement, as the case may be, or its obligation to make
such Advances (except for changes in the rate of tax on the overall
net income, net worth or capital of the Lender and franchise taxes,
doing business taxes or minimum taxes imposed upon such Lender); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the United States market
for certificates of deposit or the London interbank market any other
condition affecting its LIBOR Advances or its obligation to make such
Advances;
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, in each case by an amount deemed by a
Lender to be material ("Increased Costs"), then, within 15 days after demand by
a Lender, the Borrower agrees to pay to such Lender such additional amount as
will compensate such Lender for such Increased Costs, subject to Section 11.9
hereof. The affected Lender will as soon as practicable notify the Borrower of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different LIBOR Lending Office or other lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable judgment of the affected Lender made in good
faith, be disadvantageous to such Lender. Notwithstanding the foregoing, any
Lender's demand for Increased Costs shall not include any Increased Costs with
respect to any period more than 90 days prior to the date that such Lender has
knowledge or should have knowledge of such Increased Costs.
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(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder and
calculations therefor (and certifying that such Lenders generally charging such
costs to similarly situated borrowers) shall be controlling in the absence of
manifest error. In determining such amount, a Lender may use any reasonable
averaging and attribution methods. If a Lender demands compensation under this
Section, the Borrower may at any time, upon at least five Business Days' prior
notice to the Lender, after reimbursement to the Lender by the Borrower in
accordance with this Section of all costs incurred, prepay in full the then
outstanding LIBOR Advances of the Lender, together with accrued interest
thereon to the date of prepayment, along with any reimbursement required under
Section 2.9 hereof. Concurrently with prepaying such LIBOR Advances, the
Borrower shall borrow a Base Rate Advance from the Lender, and the Lender shall
make such Base Rate Advance, in an amount such that the outstanding principal
amount of the Advances owing to such Lender shall equal the outstanding
principal amount of the Advances owing immediately prior to such prepayment.
The obligation of the Borrower pursuant to this Section 9.3 shall survive
termination of this Agreement in full and all other amounts payable hereunder
and repayment of the Advances in full for a period of nine months thereafter.
Section 9.4 Effect On Base Rate Advances. If notice has been
given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a
Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be
repaid or prepaid, then, unless and until the Lender notifies the Borrower that
the circumstances giving rise to such repayment no longer apply which such
Lender agrees to do when the circumstances giving rise to such suspension no
longer exist, all Advances which would otherwise be made by such Lender as
LIBOR Advances shall be made instead as Base Rate Advances.
Section 9.5 Capital Adequacy. If either (a) the adoption or
applicability after the Agreement Date of any Law (or any provision thereof) or
the introduction of or any change in or in the interpretation of any Law after
the Agreement Date or (b) compliance by a Lender with any Law or any guideline
or request from any central bank or other governmental authority (whether or
not having the force of law) adopted, phased-in or made applicable after the
Agreement Date affects or would affect the amount of capital required or
expected to be maintained by a Lender or any corporation controlling such
Lender, and such Lender determines that the amount of such capital is increased
by or based upon the existence of such Lender's commitment or Advances
hereunder and other commitments or advances of such Lender of this type, then,
within 30 days after written notice and demand by such Lender, subject to
Section 11.9, the Borrower shall pay to such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender with respect to such circumstances, to the extent that such Lender
reasonably determines in good faith such increase in capital to be allocable to
the existence of such Lender's portion of the Commitments hereunder. A
certificate as to such amounts submitted to the Borrower by a Lender hereunder,
shall, in the absence of manifest error, be conclusive and binding for all
purposes.
Section 9.6 Replacement of Lenders under Certain Circumstances.
If at any time (a) the Borrower becomes obligated to pay additional amounts
described in Sections 2.15, 9.2, 9.3, or 9.5 hereof, or any Lender ceases to
make LIBOR Advances pursuant to such sections, (b) any Lender
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becomes insolvent and its assets become subject to a receiver, liquidator,
trustee, custodian or other Person having similar powers, (c) any Lender
becomes a "Non-Consenting Lender" (as defined below in this Section 9.6) or (d)
any Lender becomes a "Non-Funding Lender" (as defined below in this Section
9.6), then the Borrower may replace such Lender by causing such Lender to (and
such Lender shall be obligated to) assign pursuant to Section 11.6 all of its
rights and obligations under this Agreement to a Lender or other entity
selected by the Borrower and reasonably acceptable to the Administrative Agent
for a purchase price equal to the outstanding principal amount of such Lender's
Advances and all accrued interest and fees and other amounts payable hereunder
(including amounts payable under Sections 9.2, 9.3 or 9.5 hereof as though such
Advances were being paid instead of being purchased). In the event that (x)
the Borrower or the Administrative Agent has requested the Lenders to consent
to a departure or waiver of any provisions of the Loan Documents or to agree to
any amendment thereto, (y) the consent, waiver or amendment in question
requires the agreement of all Lenders in accordance with the terms of Section
11.10 hereof or all the Lenders with respect to a certain class of the Advances
and (z) Determining Lenders or more than 50% of the class of such Lenders have
agreed to such consent, waiver or amendment then any lender who does not agree
to such consent, waiver or amendment shall be deemed a "Non- Consenting
Lender". In the event that any Lender has (y) failed to make any Advance
required to be made by it hereunder or (z) given notice to the Administrative
Agent that it will not make, or that it has disaffirmed or repudiated any
obligation to make, any Advance required to be made by it hereunder such Lender
shall be deemed a "Non-Funding Lender". The Borrower's right to replace a
Non-Funding Lender pursuant to this Section 9.6 is, and shall be, in addition
to, and not in lieu of, all other rights and remedies available to the Borrower
against such Non-Funding Lender under this Agreement, at law, in equity, or by
statute.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, unless and until the Administrative Agent
shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative action, as it
may deem advisable and in the best interests of the Lenders; to arrange the
means whereby the proceeds of the Advances of the Lenders are to be made
available to the Borrower; to distribute promptly to each Lender information,
requests and documents received from the Borrower, and each payment (in like
funds received) with respect to any of such Lender's Advances, fee or other
amount; and to deliver to the Borrower requests, demands, approvals and
consents received from the Lenders. Administrative Agent agrees to promptly
distribute to each Lender, at such Lender's address set forth below
information, requests, documents and payments received from the Borrower. The
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Administrative Agent agrees to promptly notify the Lenders of any receipt of
cash collateral or back-up letter of credit which would cause any Letter of
Credit to no longer be considered a Letter of Credit hereunder. The
Administrative Agent shall have no fiduciary relationship in respect of any
Lender by reason of this Agreement or any other Loan Document. The
Administrative Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement. The duties of the Administrative Agent
are mechanical and administrative in nature.
(b) Replacement of Administrative Agent. Should the
Administrative Agent or any successor Administrative Agent ever cease to be a
Lender hereunder, or should the Administrative Agent or any successor
Administrative Agent ever resign as Administrative Agent, or should the
Administrative Agent or any successor Administrative Agent ever be removed with
cause or without cause by the action of the Determining Lenders (other than the
Administrative Agent), then the Lender appointed by the other Lenders (with the
consent of the Borrower, which consent shall not be unreasonably withheld)
shall forthwith become the Administrative Agent, and the Borrower and the
Lenders shall execute such documents as such successors to the Administrative
Agent may reasonably request to reflect such change. If the Administrative
Agent also then serves in the capacity of the Swing Line Bank or the Issuing
Bank, such resignation or removal shall constitute resignation or removal of
the Swing Line Bank and the Issuing Bank and the successor Administrative Agent
shall serve in the capacity of the Swing Line Bank and the Issuing Bank. Any
resignation or removal of the Administrative Agent or any successor
Administrative Agent shall become effective upon the appointment by the Lenders
of a successor Administrative Agent; provided, however, if no successor
Administrative Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation or the Lenders' removal of the retiring Administrative
Agent, then the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent, which shall be a commercial bank
organized under the Laws of the United States of America or of any State
thereof and having a combined capital and surplus of at least $500,000,000 with
the consent of the Borrower, which consent will not be unreasonably withheld.
Upon the acceptance of any appointment as the Administrative Agent hereunder by
a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under the Loan Documents.
Notwithstanding any Administrative Agent's resignation or removal hereunder,
the provisions of this Article shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was the Administrative
Agent under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on
its Total Specified Percentage, of any expenses paid by the Administrative
Agent directly and solely in connection with any of the Loan Documents if
Administrative Agent does not receive reimbursement therefor from other sources
within 60 days after the date incurred, unless payment of such fees is being
diligently disputed by such Lender or the Borrower in good faith. Any amount
so paid by the Lenders to the Administrative Agent shall be returned by the
Administrative Agent pro rata to each paying Lender to the extent later paid by
the Borrower or any other Person on the Borrower's behalf to the Administrative
Agent.
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(d) Delegation of Duties. The Administrative Agent may execute
any of its duties hereunder by or through officers, directors, employees,
attorneys or agents, and shall be entitled to (and shall be protected in
relying upon) advice of counsel concerning all matters pertaining to its duties
hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent
and its officers, directors, employees, attorneys and agents shall be entitled
to rely and shall be fully protected in relying on any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or
teletype message, statement, order, or other document or conversation
reasonably believed by it or them in good faith to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of counsel selected the Administrative Agent. The
Administrative Agent may, in its reasonable judgment, deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless a written
notice of assignment, negotiation or transfer thereof shall have been filed
with the Administrative Agent.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent
shall not be compelled to do any act hereunder or to take any action towards
the execution or enforcement of the powers hereby created or to prosecute or
defend any suit in respect hereof, unless indemnified to its satisfaction
against loss, cost, liability and expense. The Administrative Agent shall not
be responsible in any manner to any Lender for the effectiveness,
enforceability, genuineness, validity or due execution of any of the Loan
Documents, or for any representation, warranty, document, certificate, report
or statement made herein or furnished in connection with any Loan Documents, or
be under any obligation to any Lender to ascertain or to inquire as to the
performance or observation of any of the terms, covenants or conditions of any
Loan Documents on the part of the Borrower. TO THE EXTENT NOT REIMBURSED BY
THE BORROWER, EACH LENDER HEREBY SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE
ADMINISTRATIVE AGENT, PRO RATA ACCORDING TO ITS TOTAL SPECIFIED PERCENTAGE,
FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND/OR DISBURSEMENTS OF
ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR
INCURRED BY THE ADMINISTRATIVE AGENT IN ANY WAY WITH RESPECT TO ANY LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THE
LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE AGENT),
EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION TO RESULT FROM GROSS NEGLIGENCE
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OR WILFUL MISCONDUCT BY THE ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN
THIS SECTION 10.1(F) SHALL SURVIVE TERMINATION OF THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder,
the Advances made by it and the Notes issued to it, the Administrative Agent
shall have the same rights as a Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent or any Lender may accept
deposits from, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower and any of its Affiliates, and any Person
who may do business with or own securities of the Borrower or any of its
Affiliates, all as if the Administrative Agent were not the Administrative
Agent hereunder and without any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based upon the financial statements referred to in
Sections 4.1(j), 6.1 and 6.2 hereof, and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based upon 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 and the other Loan Documents.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders (and where
the Borrowers's consent is required, the Borrower); consequently, no Person
shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply
with such provisions.
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ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement
shall be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answerback received), or three days
after deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one day after being entrusted to a reputable
commercial overnight delivery service, or one day after being delivered to the
telegraph office or sent out by telex addressed to the party to which such
notice is directed at its address determined as provided in this Section. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrower, at:
Home Interiors & Gifts, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, Xx.
(ii) If to the Administrative Agent, at:
NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx
with a copy to:
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NationsBank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Oxford
(iii) If to a Lender, at its address or facsimile number
shown below its name on the signature pages hereof,
or if applicable, set forth in its Assignment
Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses and reasonable
attorneys' fees of the Administrative Agent in connection with the
administration of the transactions contemplated in this Agreement and the other
Loan Documents and the preparation, negotiation, execution and delivery of any
waiver, amendment or consent by the Administrative Agent relating to this
Agreement or the other Loan Documents; and
(c) all (i) costs and out-of-pocket expenses and attorneys' fees
of the Administrative Agent incurred for enforcement, collection,
restructuring, refinancing and "work-out", or otherwise incurred in obtaining
performance under the Loan Documents, which in each case shall include without
limitation fees and expenses of consultants, legal counsel for the
Administrative Agent, and administrative fees for the Administrative Agent; and
(ii) from and after the occurrence and during the continuance of an Event of
Default, all costs and out-of-pocket expenses of each Lender, including legal
fees of one counsel for all the Lenders.
Section 11.3 Waivers. The rights and remedies of the Lenders
under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Administrative Agent or any Lender in exercising any
right shall operate as a waiver of such right. The Lenders expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any funding of a request for an Advance or issuance of a Letter
of Credit. In the event that any Lender decides to fund an Advance at a time
when the Borrower is not in strict compliance with the terms of this Agreement,
such decision by such Lender shall not be deemed to constitute an undertaking
by the Lender to fund any further requests for Advances or preclude the Lenders
from exercising any rights available under
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the Loan Documents or at law or equity. Any waiver or indulgence granted by
the Lenders shall not constitute a modification of this Agreement, except to
the extent expressly provided in such waiver or indulgence, or constitute a
course of dealing by the Lenders at variance with the terms of the Agreement
such as to require further notice by the Lenders of the Lenders' intent to
require strict adherence to the terms of the Agreement in the future. Any such
actions shall not in any way affect the ability of the Administrative Agent or
the Lenders, in their discretion, to exercise any rights available to them
under this Agreement or under any other agreement, whether or not the
Administrative Agent or any of the Lenders are a party thereto, relating to the
Borrower.
Section 11.4 Determination by the Lenders Conclusive and Binding.
Any calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall when made, absent
manifest error, be controlling.
Section 11.5 Set-Off. 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 continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee or participant
in any Note is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or any other Person, any such notice being
hereby expressly waived, to set-off, appropriate and apply any deposits
(general or special (except trust and escrow accounts), time or demand,
including without limitation Indebtedness evidenced by certificates of deposit,
in each case whether matured or unmatured) and any other Indebtedness at any
time held or owing by such Lender or holder to or for the credit or the account
of the Borrower, against and on account of the Obligations and other
liabilities of the Borrower to such Lender or holder, irrespective of whether
or not (a) the Lender or holder shall have made any demand hereunder, or (b)
the Lender or holder shall have declared the principal of and interest on the
Advances and other amounts due hereunder to be due and payable as permitted by
Section 8.2, provided, however, such Lender shall promptly notify the Borrower
and the Administrative Agent after any such set-off and the application made by
such Lender. Any sums obtained by any Lender or by any assignee, participant
or subsequent holder of any Note shall be subject to pro rata treatment and
shared as provided in Section 2.12 hereof.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of all of the Lenders.
(b) No Lender shall be entitled to assign its interest in this
Agreement, its Notes (if any) or its Advances, except as hereinafter set forth.
(c) Each Lender may sell participations to one or more banks or
other entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and any Note
or Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Specified Percentage of the
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Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, and
(v) no Participant under any such Participation shall have any right to approve
any amendment or waiver of any provision of any Loan Document, or any consent
to any departure by the Borrower therefrom, except to the extent that such
amendment, waiver or consent would (A) reduce the amount or postpone any date
fixed for payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder or (B) increase the commitment of any
Participant. The Lenders may, subject to Section 11.13 hereof, provide copies
of all financial information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more banks, financial
institutions or entities other than the Borrower or an Affiliate of the
Borrower (an "Assignee") its rights and obligations under this Agreement and
the other Loan Documents; provided, however, that (i) each such assignment
shall be subject to the prior written consent of the Administrative Agent and
Borrower, which consent shall not be unreasonably withheld (provided, however,
notwithstanding anything herein to the contrary, no consent of the Borrower or
the Administrative Agent is required for any assignment (A) during any time
that an Event of Default specified in Section 8.1(f) or (g) hereof shall have
occurred, (B) during any time that any other Event of Default has occurred and
is continuing for a period of 30 consecutive days, (C) to an Affiliate of a
Lender, (D) to an existing Lender hereunder or (E) to a Related Fund), (ii) the
applicable Lender, the Administrative Agent and Assignee shall execute and
deliver to the Administrative Agent an Assignment and Acceptance Agreement (an
"Assignment Agreement") in substantially the form of Exhibit F hereto, together
with any Notes subject to such assignment, (iii) the Assignee or the assigning
Lender, as the case may be, shall deliver to the Administrative Agent a
processing fee of $3,500; and (iv) no such Assignment shall be in an amount of
less than $5,000,000, unless the portion of the Commitments or Advances of a
Lender is less than $5,000,000, in which case such assignment may be in the
total amount of such Lender's portion of the Commitments or Advances. Upon
such execution, delivery and acceptance from and after the effective date
specified in each Assignment Agreement, which effective date shall be at least
three Business Days after the execution thereof and the recordation of the
information therein in the Register pursuant to Section 11.6(j) hereof, (A) the
Assignee thereunder shall be party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, have the rights and obligations of a Lender hereunder and (B) the
applicable Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment Agreement, relinquish such
rights and be released from such obligations under this Agreement.
(e) Notwithstanding anything in clause (d) above to the contrary,
(i) any Lender may assign and pledge all or any portion of its Advances to any
Federal Reserve Bank as collateral security pursuant to Regulation A of F.R.S.
Board and any Operating Circular issued by such Federal Reserve Bank and (ii)
any Lender that is a fund may at any time assign or pledge all or any portion
of its rights
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under this Agreement to secure such Lender's Indebtedness; provided, however,
that no such assignment under this clause (e) shall release the assignor Lender
from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a
Lender and an Assignee, and any Note or Notes subject to such assignment, the
Borrower shall, within five Business Days after its receipt of such Assignment
Agreement, at no expense to the Borrower, execute and deliver to the
Administrative Agent in exchange for any such surrendered Notes new Notes to
the order of such Assignee in an amount equal to the portion of the Advances
and Commitments assigned to it pursuant to such Assignment Agreement and new
Notes to the order of the Administrative Agent in an amount equal to the
portion of the Advances and Commitments retained by it hereunder. Such new
Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Notes, shall be dated the effective date
of such Assignment Agreement and shall otherwise be in substantially the form
of Exhibit A, B or C hereto, as applicable. The Administrative Agent agrees to
promptly return the surrendered Notes marked "exchanged" to the Borrower.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the Assignee or Participant or proposed assignee or
Participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower, provided such Person agrees in writing to be
bound by the standards set forth in Section 11.14 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Assignee or Participant shall be entitled to receive any greater payment
under Section 2.15 or Section 9.3 than such assigning or participating Lender
or any other Lender would have been entitled to receive with respect to the
interest assigned or participated to such Assignee or Participant.
(j) The Administrative Agent shall maintain at its address
referred to in Section 11.1 a copy of each Assignment Agreement delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders, any U.S. taxpayer identification number,
the applicable Specified Percentages of the Lenders (the "Ownership
Information"), whether such Lender is an original Lender or the assignee of
another Lender pursuant to an Assignment Agreement and the effective date and
amount of each Assignment Agreement delivered to and accepted by it and the
parties thereto. Any transfer of an ownership interest in any Advance (whether
or not evidenced by a Note), including any right to principal or interest
payable with respect to such Advance, shall be subject to and conditioned upon
the due recordation of such transfer and Ownership Information with respect to
the transferee in the Register and such transfer shall be effective only upon
such recordation (and not prior thereto). The entries in the Register shall be
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conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes hereof.
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Severability. Any provision of this Agreement which
is for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to receive, collect or apply,
as interest on the Obligations, any amount in excess of the Maximum Amount. If
any Lender or participant ever receives, collects or applies, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Borrower and the Lenders shall, to
the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Amount, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and,
in such event, the Lenders shall not be subject to any penalties provided by
any laws for contracting for, charging or receiving interest in excess of the
Maximum Amount. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. The provisions of this
Agreement may not be amended, modified or waived except by the written
agreement of the Borrower and the Determining Lenders; provided, however, that
no such amendment, modification or waiver shall be made
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(a) without the consent of each Lender affected thereby, if it would (i)
increase any Specified Percentage or commitment of any Lender, or (ii) extend
or postpone the date of maturity of, extend or postpone the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal or interest on, or reduce the rate of interest on, any Advance, the
Reimbursement Obligations or other amount owing under any Loan Documents, or
(iii) reduce the fees payable hereunder to which such Lender is entitled, or
(iv) waive or extend the date for payment of any of the Obligations, (b)
without the consent of all Lenders, if it would (i) release all or
substantially all of the Guarantors or all or substantially all of the
Collateral, (ii) revise this Section 11.11 or (iii) amend the definition of
"Determining Lenders," "Revolving Credit Percentage", "Facility A Term Loan
Specified Percentage", "Facility B Term Loan Specified Percentage", "Total
Specified Percentage", "Required Revolving Credit Lender", "Required Facility A
Term Loan Lender", or "Required Facility B Term Loan Lender"; (c) without the
consent of the Required Revolving Credit Lenders, amend, modify or waive any
condition precedent to an extension of a Revolving Credit Advance under Section
3.2 hereof; (d) without the consent of the Administrative Agent, if it would
alter the rights, duties or obligations of the Administrative Agent; (e)
without the consent of the Issuing Bank, if it would alter the rights, duties
or obligations of the Issuing Bank; or (f) without the consent of the Swing
Line Bank, if it would alter rights, duties or obligations of the Swing Line
Bank. Notwithstanding anything in this Agreement to the contrary, no amendment,
waiver or consent that changes the application of payments or prepayments to,
or allocations of payments or prepayments between, the Facility A Term Loan
Advances and the Facility B Term Loan Advances and no waiver of any mandatory
prepayments pursuant to Sections 2.5(c) (d), (e) or (f) hereof may be made
without the express written consent of the Required Facility A Term Loan
Lenders and Required Facility B Term Loan Lenders. Neither this Agreement nor
any term hereof may be amended orally, nor may any provision hereof be waived
orally but only by an instrument in writing signed by the Administrative Agent
and, in the case of an amendment, by the Borrower.
Section 11.12 No Liability of Issuing Bank. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any Lender nor any of their respective officers or directors
shall be liable or responsible for: (a) the use that may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Issuing Bank against presentation of documents that do not
comply with the terms of a Letter of Credit, including failure of any documents
to bear any reference or adequate reference to the Letter of Credit, except for
any payment made upon the Issuing Bank's gross negligence or willful
misconduct; or (d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit, except that the Borrower shall have a
claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under
a Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the
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terms and conditions of the Letter of Credit. In furtherance and not in
limitation of the foregoing, the Issuing Bank may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
Section 11.13 Confidentiality. Each Lender and the Administrative
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers and employees) to use reasonable efforts to keep confidential, in
accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking or investment
practices, any non-public information supplied to it by the Borrower or any of
its Affiliates pursuant to this Agreement, provided that nothing herein shall
limit the disclosure of any such information (a) to the extent required by
statute, rule, regulation or judicial process, (b) to counsel for any Lender or
the Administrative Agent, (c) to bank or other examiners, regulatory bodies
(including the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access
to information about any Lender's investment portfolio), auditors or
accountants of any Lender, (d) to the Administrative Agent or any other Lender
or any Affiliate thereof, (e) in connection with any Litigation relating to the
transactions contemplated by the Loan Documents to which any one or more of
Lenders is a party, (f) to the extent necessary in connection with the exercise
of any Right under this Agreement or any other Loan Document, or (g) to any
Assignee or Participant (or prospective Assignee or Participant) or to any
direct or indirect contractual counterparties in swap agreements or to the
professional advisors of such swap counterparties so long as such Assignee or
Participant (or prospective Assignee or Participant) or direct or indirect
contractual counterparties in swap agreements or such swap counterparties'
professional advisors agrees in writing to be bound by the provisions of this
Section 11.13. Non-public information does not include information that (a)
was publicly known prior to the time of disclosure by the Borrower or any of
its Subsidiaries, (b) after disclosure by the Borrower to any Lender or the
Administrative Agent becomes publicly known through no act or omission by any
Lender or the Administrative Agent or by any Person acting on behalf of any
Lender or the Administrative Agent or (c) otherwise becomes known to any Lender
or the Administrative Agent other than through disclosure by the Borrower or
any of its Subsidiaries or Affiliates or any of their respective
representatives or consultants.
Section 11.14 No Duties of Syndication Agent, Documentation Agent
or Co-Agents. The Borrower and the Lenders acknowledge that the Syndication
Agent, the Documentation Agent and the Co-Agents shall have no duties,
responsibilities or liabilities in their capacities as Syndication Agent,
Documentation Agent and Co-Agents.
SECTION 11.15 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS AND THE
APPLICABLE FEDERAL LAWS OF THE UNITED STATES OF AMERICA. THE LOAN DOCUMENTS
ARE PERFORMABLE IN DALLAS, DALLAS COUNTY, TEXAS, AND BORROWER AND EACH SURETY,
GUARANTOR, ENDORSER AND ANY OTHER PARTY EVER LIABLE FOR PAYMENT
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OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN DOCUMENTS, JOINTLY AND SEVERALLY
WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT EXCLUDING ANY OTHER
JURISDICTION, THE BORROWER AND EACH LENDER AGREE THAT THE STATE AND FEDERAL
COURTS OF TEXAS LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER
PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS PROPERTY TO THE JURISDICTION OF
ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT, ACTION OR PROCEEDING OR JUDGMENT
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 11.16 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.17 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: HOME INTERIORS & GIFTS, INC.
By:
-------------------------------
Xxxxxx X. Xxxxxx, Xx.
Chief Executive Officer
105
ADMINISTRATIVE AGENT: NATIONSBANK, N.A., as Administrative
Agent
By:
-------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Senior Vice President
106
SYNDICATION AGENT: THE CHASE MANHATTAN BANK, as
Syndication Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
107
DOCUMENTATION AGENT: NATIONAL WESTMINSTER BANK, PLC, as
Documentation Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
108
CO-AGENTS: THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, as Co-Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
109
SOCIETE GENERALE, as Co-Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
110
CITICORP USA, INC., as Co-Agent
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
111
LENDERS: NATIONSBANK, N.A., as a Lender
By:
------------------------------------
Xxxxxx X. Xxxxxxx, Xx.
Senior Vice President
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx
Senior Vice President
112
THE CHASE MANHATTAN BANK, as a Lender
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn:
----------------------------------
----------------------------------
113
NATIONAL WESTMINSTER BANK Plc, as a
Lender
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn:
---------------------------------
---------------------------------
114
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
as a Lender
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Xxxxx Xxxxx, Xxxxx 0000X
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention:
---------------------------
---------------------------
115
SOCIETE GENERALE, as a Lender
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
----------------------------
----------------------------
116
CITICORP USA, INC., as a Lender
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxx Xxxxxx, 0xx Xxxxx, Xxxx 0
Xxx Xxxx, Xxx Xxxx 00000
Attention:
----------------------------
----------------------------
000
XXXX XXX, XXXXX, N.A.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention:
----------------------------
----------------------------
118
BANKERS TRUST COMPANY
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
One Bankers Trust Plaza, 34th Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
----------------------------
----------------------------
119
BHF-BANK AKTIENGESELLSCHAFT
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention:
----------------------------
----------------------------
120
CREDITANSTALT CORPORATE FINANCE, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention:
----------------------------
----------------------------
121
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-----------------------------------
Xxxxx X. Xxxxx
Duly Authorized Signatory
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Duly Authorized Signatory
122
XXXXXX FINANCIAL, INC.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxx Xxxxxx
XX0 - 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention:
----------------------------
----------------------------
000
XXXXXXXX XXXX XXXX XX XXXXXXXX
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx #X00X
Xxxxxxxxxx, Xxxxxxxx 00000
Attention:
----------------------------
----------------------------
124
BALANCED HIGH-YIELD FUND I LTD.
By: BHF-BANK Aktiengesellschaft,
acting through its New York Branch,
as attorney-in-fact
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
x/x XXX-Xxxx Xxxxxxxxxxxxxxxxxx, Xxx
Xxxx Branch
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention:
----------------------------
----------------------------
125
KZH-ING-2 CORPORATION
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx Xxxxxxxxxx 00000
Attention:
----------------------------
----------------------------
with a copy to:
Xxxx Xxxxxxxxxxx
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
126
DELANO COMPANY
By: Pacific Investment Management
Company, as its Investment
Advisor
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
--------------------------
with a copy to:
Xxxxxxxx Xxxxxxxxx
Xxxxxx & Xxxxx
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
