1
Exhibit 10.1
EXECUTION COPY
================================================================================
$110,000,000
CREDIT AGREEMENT
among
NBC ACQUISITION CORP.,
NEBRASKA BOOK COMPANY, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
THE CHASE MANHATTAN BANK,
as Administrative Agent,
Syndication Agent,
Documentation Agent and
Collateral Agent
Dated as of February 13, 1998
CHASE SECURITIES INC.,
as Arranger
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................... 2
1.1 Defined Terms................................................... 2
1.2 Other Definitional Provisions................................... 33
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................ 33
2.1 Term Loan Commitments........................................... 34
2.2 Procedure for Term Loan Borrowing............................... 34
2.3 Repayment of Term Loans......................................... 34
2.4 Revolving Credit Commitments.................................... 36
2.5 Procedure for Revolving Credit Borrowing........................ 36
2.6 Swing Line Commitment........................................... 37
2.7 Procedure for Swing Line Borrowing; Refunding of
Swing Line Loans ............................................. 37
2.8 Repayment of Loans; Evidence of Debt............................ 39
2.9 Commitment Fees, etc. .......................................... 40
2.10 Termination or Reduction of Revolving Credit Commitments....... 40
2.11 Optional Prepayments........................................... 40
2.12 Mandatory Prepayments and Commitment Reductions................ 41
2.13 Conversion and Continuation Options............................ 42
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches...... 43
2.15 Interest Rates and Payment Dates............................... 43
2.16 Computation of Interest and Fees............................... 44
2.17 Inability to Determine Interest Rate........................... 44
2.18 Pro Rata Treatment and Payments................................ 44
2.19 Requirements of Law............................................ 47
2.20 Taxes.......................................................... 48
2.21 Indemnity...................................................... 49
2.22 Illegality..................................................... 50
2.23 Change of Lending Office....................................... 50
2.24 Replacement of Lenders under Certain Circumstances............. 50
SECTION 3. LETTERS OF CREDIT.............................................. 51
3.1 L/C Commitment.................................................. 51
3.2 Procedure for Issuance of Letter of Credit...................... 51
3.3 Commissions, Fees and Other Charges............................. 52
3.4 L/C Participations.............................................. 52
3.5 Reimbursement Obligation of the Borrower........................ 53
3.6 Obligations Absolute............................................ 53
3.7 Letter of Credit Payments....................................... 54
3.8 Applications.................................................... 54
SECTION 4. REPRESENTATIONS AND WARRANTIES................................. 54
4.1 Financial Condition............................................. 54
-i-
3
Page
----
4.2 No Change....................................................... 57
4.3 Corporate Existence; Compliance with Law........................ 57
4.4 Corporate Power; Authorization; Enforceable Obligations......... 57
4.5 No Legal Bar.................................................... 57
4.6 No Material Litigation.......................................... 58
4.7 No Default...................................................... 58
4.8 Ownership of Property; Liens.................................... 58
4.9 Intellectual Property........................................... 58
4.10 Taxes.......................................................... 58
4.11 Federal Regulations............................................ 58
4.12 Labor Matters.................................................. 59
4.13 ERISA.......................................................... 59
4.14 Investment Company Act; Other Regulations...................... 59
4.15 Subsidiaries................................................... 59
4.16 Use of Proceeds................................................ 60
4.17 Environmental Matters.......................................... 60
4.18 Accuracy of Information, etc................................... 61
4.19 Security Documents............................................. 61
4.20 Solvency....................................................... 62
4.21 Senior Indebtedness............................................ 62
4.22 Regulation H................................................... 62
SECTION 5. CONDITIONS PRECEDENT........................................... 62
5.1 Conditions to Initial Extension of Credit....................... 62
5.2 Conditions to Each Extension of Credit.......................... 66
SECTION 6. AFFIRMATIVE COVENANTS.......................................... 67
6.1 Financial Statements............................................ 67
6.2 Certificates; Other Information................................. 68
6.3 Payment of Obligations.......................................... 70
6.4 Conduct of Business and Maintenance of Existence, etc. ......... 70
6.5 Maintenance of Property; Insurance.............................. 70
6.6 Inspection of Property; Books and Records; Discussions.......... 71
6.7 Notices......................................................... 71
6.8 Environmental Laws.............................................. 72
6.9 Interest Rate Protection........................................ 72
6.10 Additional Collateral, etc..................................... 73
6.11 Post-Closing Matters........................................... 74
SECTION 7. NEGATIVE COVENANTS............................................. 75
7.1 Financial Covenants............................................. 75
7.2 Limitation on Indebtedness...................................... 78
7.3 Limitation on Liens............................................. 79
7.4 Limitation on Fundamental Changes............................... 81
7.5 Limitation on Sale of Assets.................................... 81
7.6 Limitation on Dividends......................................... 81
-ii-
4
Page
----
7.7 Limitation on Capital Expenditures.............................. 82
7.8 Limitation on Investments, Loans and Advances................... 83
7.9 Limitation on Optional Payments and Modifications of
Debt Instruments, etc. ....................................... 84
7.10 Limitation on Transactions with Affiliates..................... 84
7.11 Limitation on Sales and Leasebacks............................. 84
7.12 Limitation on Changes in Fiscal Periods........................ 84
7.13 Limitation on Negative Pledge Clauses.......................... 84
7.14 Limitation on Restrictions on Subsidiary Distributions......... 85
7.15 Limitation on Lines of Business................................ 85
7.16 Limitation on Amendments to Merger Agreement................... 85
7.17 Limitation on Activities of Holdings........................... 85
SECTION 8. EVENTS OF DEFAULT.............................................. 86
SECTION 9. THE ADMINISTRATIVE AGENT....................................... 89
9.1 Appointment..................................................... 89
9.2 Delegation of Duties............................................ 90
9.3 Exculpatory Provisions.......................................... 90
9.4 Reliance by Administrative Agent................................ 90
9.5 Notice of Default............................................... 91
9.6 Non-Reliance on Administrative Agent and Other Lenders.......... 91
9.7 Indemnification................................................. 91
9.8 Administrative Agent in Its Individual Capacity................. 92
9.9 Successor Administrative Agent.................................. 92
9.10 Authorization to Release Liens................................. 93
SECTION 10. MISCELLANEOUS................................................. 93
10.1 Amendments and Waivers......................................... 93
10.2 Notices........................................................ 94
10.3 No Waiver; Cumulative Remedies................................. 94
10.4 Survival of Representations and Warranties..................... 95
10.5 Payment of Expenses............................................ 95
10.6 Successors and Assigns; Participations and Assignments......... 96
10.7 Adjustments; Set-off........................................... 98
10.8 Counterparts................................................... 99
10.9 Severability................................................... 99
10.10 Integration................................................... 99
10.11 GOVERNING LAW................................................. 99
10.12 Submission To Jurisdiction; Waivers........................... 99
10.13 Acknowledgements..............................................100
10.14 WAIVERS OF JURY TRIAL.........................................100
10.15 Confidentiality...............................................100
-iii-
5
ANNEXES:
A Pricing Grid
SCHEDULES:
1.1A Commitments; Addresses for Notices
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.9 Intellectual Property
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B-1 Form of Borrower Compliance Certificate
B-2 Form of Holdings Compliance Certificate
C-1 Form of Borrower Closing Certificate
C-1 Form of Holdings Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
J-1 Form of Weekly Borrowing Base Certificate
J-2 Form of Monthly Borrowing Base Certificate
J-3 Supporting Documentation and Additional Reports for Borrowing Base
Certificates
-iv-
6
CREDIT AGREEMENT, dated as of February 13, 1998, among NBC
Acquisition Corp., a Delaware corporation ("Holdings"), Nebraska Book Company,
Inc., a Kansas corporation (the "Borrower"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders") and THE CHASE MANHATTAN BANK, as administrative agent,
syndication agent, documentation agent and collateral agent (in such capacities,
the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, (i) NBC Merger Corp., a Delaware corporation ("Merger
Sub"), is an indirect wholly-owned subsidiary of HWH Capital Partners, L.P., a
Delaware limited partnership ("HWH Capital Partners"), and (ii) Xxxx Wheat &
Partners Incorporated, a Delaware corporation (the "Sponsor"), is the advisor of
HWH Capital Partners;
WHEREAS, the Borrower is a direct wholly-owned subsidiary of
Holdings;
WHEREAS, pursuant to the Merger Agreement, dated as of January 6,
1998, among Merger Sub, Holdings and each executing shareholder named therein
(together with all the exhibits, schedules, annexes and amendments thereto and
all other documents delivered in connection therewith, the "Merger Agreement"),
on the Closing Date (as defined below) (i) Merger Sub will merge (the "Merger")
with and into Holdings with Holdings being the surviving corporation and (ii)
substantially all of the existing indebtedness of Holdings and its subsidiaries
will be repaid (the foregoing transactions, the financings described herein and
all other transactions related thereto being referred to herein collectively as
the "Transactions");
WHEREAS, in connection with the Transactions, Holdings will be
capitalized with at least $95,000,000 in cash which shall consist of (i) an
aggregate of at least $50,002,680 of common equity from HWH Capital Partners and
certain senior executive officers of the Borrower (the "Management Investors")
and (ii) $44,997,320 in gross cash proceeds from the issuance by Holdings of an
aggregate principal amount of $76,000,000 of 10 3/4% senior discount debentures
due 2009 in a Rule 144A private placement (the "Holdings Discount Debentures");
WHEREAS, in connection with the Transactions, the Borrower will
receive $110,000,000 in gross cash proceeds from the issuance by the Borrower of
8 3/4% senior subordinated unsecured notes due 2008 (the "Senior Subordinated
Notes") in a Rule 144A private placement and Holdings will contribute all of the
net cash proceeds it receives from the Holdings Discount Debentures to the
Borrower as common equity;
WHEREAS, in connection with the Transactions, the Borrower has
requested the Lenders to establish senior credit facilities aggregating
$110,000,000 and the Lenders are willing to make such credit facilities
available upon and subject to the terms and conditions hereinafter set forth;
and
7
2
WHEREAS, in connection with the Transactions, the Borrower will pay
a dividend to Holdings in an amount equal to the aggregate principal amount of
the Loans (as defined below) made on the Closing Date;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Account": any right to payment for goods sold or leased or for
services rendered, whether or not earned by performance.
"Acquisition Advance Amount": $10,000,000; provided any Revolving
Extensions of Credit made under the Acquisition Advance Amount may be used
only to finance acquisitions permitted pursuant to subsection 7.8(h)
hereof or to replace cash used to make any such acquisition. For purposes
of calculating usage of the Acquisition Advance Amount, the purchase price
with respect to an acquisition shall be deemed to be the amount reported
by the Borrower to the Administrative Agent as the excess of the actual
purchase price paid in cash over the amount added to the Borrowing Base as
a result of and after giving effect to such acquisition.
"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": The Chase Manhattan Bank, in its capacity as
administrative agent.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Aggregate Exposure": with respect to any Lender, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender's
Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit.
"Aggregate Exposure Percentage" with respect to any Lender, the
ratio (expressed as a percentage) of such Lender's Aggregate Exposure to
the Aggregate Exposure of all Lenders.
8
3
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
--------- ----------
Revolving Credit Loans 1.25% 2.25%
Swing Line Loans 1.25% N/A
Tranche A Term Loans 1.25% 2.25%
Tranche B Term Loans 1.50% 2.50%
provided, that on and after the first Adjustment Date occurring after the
completion of four full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans, Swing
Line Loans and Tranche A Term Loans will be determined pursuant to the
Pricing Grid, and provided further, in the event that on the last day of
any fiscal quarter the Consolidated Senior Debt to EBITDA Ratio exceeds
3.0 to 1.0, then for the period from the Adjustment Date for such fiscal
quarter to the next succeeding Adjustment Date, all of the foregoing
Applicable Margins shall be increased by .25% per annum.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Arranger": Chase Securities Inc.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5).
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment over (b) such Lender's Revolving
Extensions of Credit; provided, that in calculating any Lender's Revolving
Extensions of Credit for the purpose of determining such Lender's
Available Revolving Credit Commitment pursuant to Section 2.9(a), the
aggregate principal amount of Swing Line Loans then outstanding shall be
deemed to be zero.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds
9
4
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean the rate of interest per annum publicly announced
from time to time by Chase as its prime or base rate in effect at its
principal office in New York City (the Prime Rate not being intended to be
the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors); "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator of which is
one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; and
"Three-Month Secondary CD Rate" shall mean, for any day, the secondary
market rate for three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New
York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Reference Lender from three New York City
negotiable certificate of deposit dealers of recognized standing selected
by it. Any change in the Base Rate due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such
change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Bookstore": any business establishment that has as its primary
business the sale of textbooks.
"Borrower": as defined in the recitals hereto.
"Borrower Pro Forma Financial Statements": as defined in Section
4.1(a)(ii).
"Borrower Projections": as defined in Section 6.2(c)(ii).
"Borrowing Base": at the time of any determination an amount equal
to the sum, without duplication, of (a) the sum of (i) 60% of Eligible
Accounts Receivable in respect of Standard Sales Invoices at such time and
(ii) 85% of Eligible Accounts Receivable in respect of Buy-Fund Invoices
at such time, (b) 55% of Wholesale Inventory that constitutes Eligible
Inventory at such time, (c) 55% of Retail Inventory that constitutes
Eligible Inventory at such time, (d) 55% of Information Systems
10
5
Inventory that constitutes Eligible Inventory at such time (provided,
however, that the amount added to the Borrowing Base in respect of such
Information Systems Inventory shall not at any time exceed $500,000) and,
(e) if the time of such determination is (i) during the Peak Period, the
sum of (A) the Over Advance Amount then in effect and (B) an amount equal
to 55% of Buy-Funds at such time and (ii) during the Non-Peak Period, the
lesser of (A) $1,000,000 and (B) an amount equal to 55% of Buy-Funds at
such time. The Borrowing Base at any time shall be determined by reference
to the most recent Borrowing Base Certificate delivered to the
Administrative Agent pursuant to Section 6.2(g), absent any error in such
Borrowing Base Certificate. In the event that at any time after the date
hereof (a) the Borrower materially alters any of its accounting policies
or procedures, (b) there occurs a material change in the Borrower's
customer base or (c) there occurs a material change in the nature of the
Borrower's Inventory, then the Administrative Agent will be entitled,
after notice to and agreement with the Borrower and upon the approval of
the Majority Revolving Credit Lenders, to adjust the eligibility criteria
and reserves in respect of Eligible Accounts Receivable and Eligible
Inventory.
"Borrowing Base Certificate": the collective reference to the Weekly
Borrowing Base Certificate and the Monthly Borrowing Base Certificate.
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17.
"Business Day": (i) for all purposes other than as covered by clause
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) and which
is also a day for trading by and between banks in Dollar deposits in the
interbank eurodollar market.
"Buy-Funds": the aggregate amount of cash in the possession of the
Borrower's buyers conducting book-buys during any buy-back period at an
educational institution or commercial Bookstore, less the aggregate amount
represented by outstanding drafts issued by the Borrower in respect of
purchases of used books during such buy-back period.
"Buy-Fund Invoice": an invoice resulting from the sale or advance by
the Borrower to, or the agreement by the Borrower with, an educational
institution or commercial Bookstore in respect of used books that (a) have
been purchased by the Borrower during any buy-back period at such
educational institution or commercial Bookstore and (b) are designated to
remain on the campus of such educational institution or on the premises of
such commercial Bookstore, in each case net of any commission owed by the
Borrower to such educational institution or commercial Bookstore in
respect of such sale.
11
6
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America
or any state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Ratings Services ("S&P") or P-1 by Xxxxx'x Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally,
and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States government; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed
by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth
or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A
by Moody's; (f) securities with maturities of six months or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition; or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
12
7
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution in
the United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board as in effect from time to time) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more.
"Chase": The Chase Manhattan Bank.
"Closing Date": February 13, 1998 or such later date not beyond
March 1, 1998 on which the conditions precedent set forth in Section 5.1
shall have been satisfied.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum; provided, that on and
after the first Adjustment Date occurring after the completion of four
full fiscal quarters of the Borrower after the Closing Date, the
Commitment Fee Rate will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrower and which is treated as a single employer under Section 414 of
the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated January 1998 and furnished to the Lenders.
13
8
"Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, 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.
"Consolidated Current Liabilities": at any date, all amounts which
would, in conformity with GAAP, 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, but excluding (a) the
current portion of any Funded Debt of the Borrower and its Subsidiaries
and (b) without duplication of clause (a) above, all Indebtedness
consisting of Revolving Extensions of Credit to the extent otherwise
included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) interest expense, amortization or
writeoff of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness
(including the Loans), (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary, unusual or non-recurring
expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business) and (f) any other non-cash charges, and minus, to the extent
included in the statement of such Consolidated Net Income for such period,
the sum of (i) interest income, (ii) any extraordinary, unusual or
non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the
ordinary course of business) and (iii) any other non-cash income, all as
determined on a consolidated basis.
"Consolidated Fixed Charge Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period less the aggregate amount
actually paid by the Borrower and its Subsidiaries in cash during such
period on account of Capital Expenditures to (b) Consolidated Fixed
Charges for such period; provided that for purposes of calculating
Consolidated EBITDA of the Borrower and its Subsidiaries for any period,
the Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries during such period shall be included on a pro forma basis,
including the effect of identified business synergies, for such period
(assuming the consummation of each such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the
first day of such period) if the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the
period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated (i) have been previously provided to the Administrative Agent
and the Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit by
14
9
independent certified public accountants of nationally recognized standing
or (B) have been found reasonably acceptable by the Administrative Agent.
"Consolidated Fixed Charges": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period, (b)
provision for cash income taxes made by the Borrower or any of its
Subsidiaries on a consolidated basis in respect of such period and (c)
scheduled payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loans).
"Consolidated Interest Coverage Ratio": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period; provided that for purposes of calculating
Consolidated EBITDA of the Borrower and its Subsidiaries for any period,
the Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries during such period shall be included on a pro forma basis,
including the effect of identified business synergies, for such period
(assuming the consummation of each such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the
first day of such period) if the consolidated balance sheet of such
acquired Person and its consolidated Subsidiaries as at the end of the
period preceding the acquisition of such Person and the related
consolidated statements of income and stockholders' equity and of cash
flows for the period in respect of which Consolidated EBITDA is to be
calculated (i) have been previously provided to the Administrative Agent
and the Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (B) have
been found reasonably acceptable by the Administrative Agent.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements to the extent such
net costs are allocable to such period in accordance with GAAP) net of
cash interest income received during such period.
"Consolidated Leverage Ratio": as at the last day of any period of
four consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt
on such day to (b) Consolidated EBITDA for such period; provided that for
purposes of calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period, the Consolidated EBITDA of any Person
acquired by the Borrower or its Subsidiaries during such period shall be
included on a pro forma basis, including the effect of identified business
synergies, for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period
15
10
preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for the
period in respect of which Consolidated EBITDA is to be calculated (i)
have been previously provided to the Administrative Agent and the Lenders
and (ii) either (A) have been reported on without a qualification arising
out of the scope of the audit by independent certified public accountants
of nationally recognized standing or (B) have been found reasonably
acceptable by the Administrative Agent.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Senior Debt": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP (other
than Revolving Extensions of Credit made under the Borrowing Base and the
Senior Subordinated Notes).
"Consolidated Senior Debt to EBITDA Ratio": as at the last day of
any period of four consecutive fiscal quarters, the ratio of (a)
Consolidated Senior Debt on such day to (b) Consolidated EBITDA for such
period; provided that for purposes of calculating Consolidated EBITDA of
the Borrower and its Subsidiaries for any period, the Consolidated EBITDA
of any Person acquired by the Borrower or its Subsidiaries during such
period shall be included on a pro forma basis, including the effect of
identified business synergies, for such period (assuming the consummation
of each such acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements of
income and stockholders' equity and of cash flows for the period in
respect of which Consolidated EBITDA is to be calculated (i) have been
previously provided to the Administrative Agent and the Lenders and (ii)
either (A) have been reported on without a qualification arising out of
the scope of the audit by independent certified public accountants of
nationally recognized standing or (B) have been found reasonably
acceptable by the Administrative Agent.
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such
date, determined on a
16
11
consolidated basis in accordance with GAAP (other than Revolving
Extensions of Credit made under the Borrowing Base).
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": as defined in Section 8(j) hereof.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Defaulted Account": as defined in the definition of the "Eligible
Accounts Receivable".
"Disposition": with respect to any Property, any sale, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "Dispose" and "Disposed of" shall have correlative meanings.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized
under the laws of any jurisdiction within the United States of America.
"ECF Percentage": 75%; provided, that, with respect to each fiscal
year of the Borrower ending on or after March 31, 2000, the ECF Percentage
shall be reduced to 50% if the Consolidated Leverage Ratio as of the last
day of such fiscal year is not greater than 4.0 to 1.0.
"Eligible Accounts Receivable": at the time of any determination,
the gross outstanding balance at such time, determined in accordance with
GAAP and stated on a basis consistent with the historical practices of the
Borrower as of the date hereof, of Accounts of the Borrower, including the
aggregate amount of all Past-due Addbacks less, as applicable and without
duplication, the aggregate amount of (i) all charge-backs for returns,
(ii) all finance agreements, (iii) all trade discounts, (iv) all finance
charges, late fees and other fees that are unearned, (v) the aggregate
amount of all reserves for service fees and such other fees or commissions
or similar amounts that the Borrower has agreed to pay and (vi) at the
discretion of the Administrative Agent, a dilution reserve, reasonably
determined by the Administrative Agent based upon the calculations set
forth in the most recent Borrowing Base Certificate delivered by the
Borrower, in an amount equal to the product of (A) the amount, expressed
as a percentage, by which dilution of Eligible Accounts Receivable in
respect of Standard Sales Invoices exceeds 25% and (B) the amount that
would constitute Eligible
17
12
Accounts Receivable prior to the implementation of the reserve
contemplated by this clause (vi). Notwithstanding the foregoing, an
Account shall not be included in this definition of Eligible Accounts
Receivable if, at the time of any determination, without duplication:
(a) the Borrower has not complied with all material
requirements of applicable Federal, state and local and laws, rules,
regulations and orders (including all laws, rules, regulations and
orders of any governmental or judicial authority relating to truth
in lending, billing practices, fair credit reporting, equal credit
opportunity, debt collection practices and consumer debtor
protection) applicable to such Account (or any related contracts) or
affecting the collectibility of such Account:
(b)(i) such Account is not assignable or requires consent of
the Account debtor and such a requirement of consent is enforceable
law or (ii) a first priority security interest in such Account in
favor of the Administrative Agent for the ratable benefit of the
Lenders has not been obtained and fully perfected by filing Uniform
Commercial Code financing statements against the Borrower;
(c) such Account is subject to any Lien whatsoever, other than
Liens expressly permitted by Section 7.3;
(d) the Borrower, in order to be entitled to collect such
Account, is required to perform any additional service for, or
perform or incur any additional obligation to, the Account debtor,
except the portion of such Account that has arisen in respect of the
sale of any Information Systems Inventory;
(e) such Account does not constitute a legal, valid and
binding irrevocable payment obligation of the Account debtor to pay
the balance thereof in accordance with its terms or is subject to
any defense, setoff, recoupment or counterclaim;
(f) the Account debtor is an Affiliate, division or employee
of the Borrower;
(g)(i) if such Account (A) is an account of the United States
Government or any of its agencies or instrumentalities, (B) is
subject to any Lien pursuant to the Federal Assignment of Claims Act
and (C) the Administrative Agent has not received an assignment of
claims in form and substance satisfactory to it within 45 days of
the creation of such Account or (ii) such Account is (A) an account
of the government of any state of the United States or any political
subdivision thereof or any agency or instrumentality of any of the
foregoing and (B) a first priority security interest in such account
in favor of the Administrative Agent for the ratable benefit of
18
13
the Lenders has not been obtained and fully perfected by filing
Uniform Commercial Code financing statements against the Borrower;
(h) an estimated or accrual loss has been recognized in
respect of such Account, as determined in accordance with the
Borrower's usual business practice (each such Account, a "Defaulted
Account");
(i) 20% or more of the aggregate outstanding amount of all
Accounts from the Account debtor in respect of such Account and its
Affiliates constitute Defaulted Accounts;
(j) any representation or warranty contained in this Agreement
or in any other Loan Documents applicable either to Accounts in
general or to any such specific Account shall prove to have been
false or misleading in any material respect when made or deemed made
with respect to such Account;
(k) 50% or more of the outstanding amount of all Accounts from
the Account debtor have become, or have been determined by the
Administrative Agent to be, ineligible pursuant to subparagraph (m)
below;
(l) the Account debtor (i) has filed a petition for relief
under the United States Bankruptcy Code (or similar action under any
successor law or under any comparable law), (ii) has made a general
assignment for the benefit of creditors, (iii) has filed against it
any petition or other application for relief under the United States
Bankruptcy Code (or similar action under any successor law or under
any comparable law), (iv) has failed, suspended business operations,
become insolvent, called a meeting of its creditors for the purpose
of obtaining any financial concession or accommodation or (v) had or
suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs;
(m)(i) any portion of such Account has remained unpaid 120 or
more days past the original invoice date thereof or (ii) the
Borrower has reason to believe that all or a material portion of
such Account is uncollectible (in the reasonable discretion of the
Administrative Agent);
(n) in respect of Buy-Fund Invoices, any portion of such
Account has remained unpaid 31 or more days past the original
invoice date therefor;
(o) the sale represented by such Account is to an Account
debtor organized or located outside the states of the United States,
the District of Columbia or Canada unless, in the case of any
Account debtor controlled by an entity organized or located outside
one of the states of the United States or the District of Columbia,
the Administrative Agent has, for the benefit of the Lenders, a
valid, legal and perfected first-priority security interest in such
Account;
19
14
(p) the Account debtor is a supplier or creditor of the
Borrower (but only to the extent of the lesser of (i) the amount
owing from such Account debtor to the Borrower pursuant to Accounts
that are otherwise eligible and (ii) the amount owing to such
Account debtor by the Borrower);
(q) such Account is not denominated in dollars or is payable
outside the United States;
(r) if applicable, the sale represented by such Account is on
a xxxx-and- hold, undelivered sale, guaranteed sale, sale-or-return,
consignment or sale-on- approval basis or is subject to any right of
return (other than (i) in the ordinary course of business or (ii) a
standard right of claim for defective goods for which neither the
related Account debtor has made a claim nor the Borrower has any
basis to believe that such Account debtor is entitled to such a
claim), charge-back or setoff;
(s) the Administrative Agent believes, in its reasonable
discretion, that the collection of such Account may not be paid and
the Administrative Agent shall so notify the Borrower;
(t) the Borrower is in default, in any material respect, in
the performance or observance of any of the terms of any agreement
giving rise to such Account;
(u) the Borrower does not have good and marketable title to
such Account as sole owner of such Account;
(v) such Account does not arise from the sale and delivery of
goods or provision of services in the ordinary course of business of
the Borrower to the Account debtor;
(w) such Account is on terms other than those normal or
customary in the business or the Borrower;
(x) if such Account were to constitute an Eligible Accounts
Receivable, 15% or more of all Eligible Accounts Receivables would
be owing from the Account debtor in respect of such Account debtor
or any of its Affiliates;
(y) any amounts payable under or in connection with such
Account are evidenced by chattel paper, promissory notes, agreements
to repay cash advances or other instruments, unless such chattel
paper, promissory notes, agreements or instruments have been
endorsed and delivered to the Administrative Agent;
(z) such Account has been paid by a check that has been
returned for insufficient funds;
20
15
(aa) the Account debtor is a third party credit card company
or a debit card company;
(bb) such Account is not subject to the standard credit and
collection policies of the Borrower;
(cc) such Account has been placed with an attorney or other
third party for collection; or
(dd) the aggregate credit balances of the Borrower on an
Account debtor by Account debtor basis of all Accounts have remained
unpaid for the past due amounts referenced in subparagraphs (m) and
(n) above.
"Eligible Inventory": at any date of determination thereof, the
value (determined at the lowest of cost or market or the written-down
value in accordance with the Borrower's historical practice in accordance
with GAAP) at such date of all inventories ("Inventory") of the Borrower
owned by the Borrower and in the possession of the Borrower or any
warehouseman, bailee, agent or processor of the Borrower, including any
educational institution or commercial Bookstore, net of (i) any
interdivisional profit, (ii) any amounts payable by the Borrower in
respect of commissions, processing fees or other charges, (iii) any
advance payments and unliquidated progress xxxxxxxx in respect of such
Inventory, (iv) the Obsolescence Reserve and (v) the RTV Reserve.
Notwithstanding the foregoing, Inventory shall not constitute Eligible
Inventory if, without duplication:
(a) such item of Inventory is not assignable or a first
priority security interest in such item of Inventory in favor of the
Administrative Agent for the ratable benefit of the Lenders has not
been obtained and fully perfected by filing Uniform Commercial Code
financing statements against the Borrower;
(b) such item of Inventory is subject to any Lien whatsoever,
other than Liens expressly permitted by Section 7.3 of this
Agreement;
(c) there shall have occurred any event that, or any condition
with respect to such item of Inventory, would substantially impede
the ability of the Borrower to continue to use or sell such item of
Inventory in the normal course of business;
(d) any claim disputing the title of the Borrower to, or right
to possession of or dominion over, such item of Inventory shall have
been asserted;
(e) any representation or warranty contained in this Agreement
or in any other Loan Document applicable to either Inventory in
general or to such specific item of Inventory has been breached with
respect to such item of Inventory;
21
16
(f) the Borrower does not have good and marketable title as
sole owner of such item of Inventory;
(g) such item of Inventory is located outside of the United
States;
(h) such item of Inventory is evidenced by an Account;
(i) such item of Inventory consists of packing, packaging
and/or shipping supplies or materials;
(j) such item of Inventory has been shipped to a customer,
even if on a consignment or "sale or return" basis;
(k) such item of Inventory consists of obsolete Information
Systems Inventory or Retail Inventory, including books and related
materials with titles classified as slow-moving;
(l) such item of Inventory consists of any unsaleable
Inventory;
(m) such item of Inventory is located on a leasehold, or is in
the possession or control of any warehouseman, bailee, agent or
processor, unless (i) the applicable lessor, warehouseman, bailee,
agent or processor (including any educational institution or
commercial Bookstore), has been notified of the Lien granted under
the Security Documents and the Borrower has used its commercially
reasonable efforts to induce such lessor, warehouseman, bailee,
agent or processor to enter into a Landlord Waiver or (ii) (A) the
Administrative Agent shall have received an opinion, in form and
substance acceptable to and from local counsel approved by the
Administrative Agent, and addressed to the Administrative Agent, the
Issuing Bank and the Lenders, to the effect that there is no law in
the jurisdiction where such Inventory is located that would allow
Inventory located on such leasehold, or in the possession or control
of such warehouseman, bailee, agent or processor, to be subjected to
any Lien in favor of the applicable lessor, warehouseman, bailee,
agent or processor arising by operation of law and (B) the
Administrative Agent shall have received a certificate of a
Responsible Officer of the Borrower certifying that there is no term
or condition of any agreement or other document governing the
relationship between the Borrower and the applicable lessor,
warehouseman, bailee, agent or processor that provides for any such
Lien;
(n) such item of Inventory consists of food, beverages or
sundries;
(o) such item of Inventory consists of cigarettes;
(p) such item of Inventory is to be sold by the Borrower from
a vending machine; or
22
17
(q) such item of Inventory has been determined by the
Administrative Agent, exercising its reasonable discretion, to be
unacceptable because (i) the Administrative Agent believes that such
item of Inventory is not readily saleable under the customary terms
on which it is usually sold or (ii) such item of Inventory (other
than Information Systems Inventory) is not of a type typically sold
by campus Bookstores.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Dow Xxxxx Markets screen as of 11:00
A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750
of the Dow Xxxxx Markets screen (or otherwise on such service), the
"Eurodollar Base Rate" for purposes of this definition shall be determined
by reference to such other comparable publicly available service for
displaying eurodollar rates as may be selected by the Administrative Agent
or, in the absence of such availability, by reference to the rate at which
Chase is offered Dollar deposits at or about 11:00 A.M., New York City
time, two Business Days prior to the beginning of such Interest Period in
the interbank eurodollar market where its eurodollar and foreign currency
and exchange operations are then being conducted for delivery on the first
day of such Interest Period for the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in
23
18
accordance with the following formula (rounded upward to the nearest
1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) an amount equal to the amount of all
non-cash charges (including depreciation and amortization) deducted in
arriving at such Consolidated Net Income, (iii) an amount equal to the
aggregate net non-cash loss on the Disposition of Property by the Borrower
and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income, (iv) the net increase during
such fiscal year (if any) in deferred tax accounts of the Borrower and its
Subsidiaries and (v) decreases in Consolidated Working Capital for such
fiscal year over (b) the sum, without duplication, of (i) an amount equal
to the amount of all non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account
of Capital Expenditures, (iii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account
of acquisitions (net of any debt incurred in such fiscal year in
connection with such acquisition and without duplication of any amounts
included in clause (b)(ix) below), (iv) the aggregate amount of all
prepayments of Revolving Credit Loans and Swing Line Loans during such
fiscal year to the extent accompanying permanent optional reductions of
the Revolving Credit Commitments, (v) the aggregate amount of all optional
prepayments of the Term Loans during such fiscal year, (vi) the aggregate
amount of all regularly scheduled principal payments of Funded Debt
(including, without limitation, the Term Loans) of the Borrower and its
Subsidiaries made during such fiscal year (other than in respect of any
revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (vii) an amount equal to
the aggregate net non-cash gain on the Disposition of Property by the
Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in
arriving at such Consolidated Net Income, (viii) the net decrease during
such fiscal year (if any) in deferred tax accounts of the Borrower and
(ix) increases in Consolidated Working Capital for such fiscal year
(without duplication of any amounts included in clause (b)(iii) above).
"Excess Cash Flow Application Date": as defined in Section 2.12(c).
24
19
"Excluded Foreign Subsidiaries": any Foreign Subsidiary in respect
of which either (i) the pledge of all of the Capital Stock of such
Subsidiary as Collateral or (ii) the guaranteeing by such Subsidiary of
the Obligations, would, in the good faith judgment of the Borrower, result
in adverse tax consequences to the Borrower.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
"Federal Funds Effective Rate"; for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all current maturities and
current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation and,
in the case of the Borrower, Indebtedness in respect of the Loans.
"Funding Office": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and
the Lenders pursuant to Section 10.2.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that for purposes
of Section 7.1, 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 most recent audited financial statements delivered
pursuant to Section 4.1(b). 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
25
20
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 Required 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.
"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 of the American Institute of
Certified Public Accountants or, if applicable, the Securities and
Exchange Commission (or successors thereto or agencies with similar
functions).
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the National
Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
26
21
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Holdings": as defined in the preamble hereto.
"Holdings Discount Debentures": as defined in the recitals hereto.
"Holdings Discount Debentures Indenture": the Indenture entered into
by Holdings in connection with the issuance of the Holdings Discount
Debentures, together with all instruments and other agreements entered
into by Holdings in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
Section 7.9.
"Holdings Pro Forma Financial Statements": as defined in Section
4.1(a)(i).
"Holdings Projections": as defined in Section 6.2(c)(i).
"HWH Capital Partners": as defined in the recitals hereto.
"Indebtedness": of any Person at any date, without duplication (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than current trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though
the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
Property), (e) all Capital Lease Obligations of such Person, (f) all
obligations of such Person, contingent or otherwise, as an account party
under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any Capital Stock (other than common
stock) of such Person, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through (g)
above; (i) all obligations of the kind referred to in clauses (a) through
(h) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, (j) for the purposes of Section
8(e) only, all obligations of such Person in respect of Interest Rate
Protection Agreements and (k) the liquidation value of any mandatorily
redeemable preferred Capital Stock of such Person or its Subsidiaries held
by any Person other than such Person and its Wholly Owned Subsidiaries.
27
22
"Information Systems Inventory": all Inventory located at the
Borrower's warehouses consisting of computer hardware and software,
including IBM point-of-sale register systems and related software.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to xxx at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each January, April, July and October to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other
than any Revolving Credit Loan that is a Base Rate Loan and any Swing Line
Loan), the date of any repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrower in its notice of borrowing
or notice of conversion, as the case may be, given with respect thereto;
and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that, all of the foregoing provisions
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date or beyond the date final
payment is due on the Tranche A Term Loans or the Tranche B Term
Loans, as the case may be,
28
23
shall end on the Revolving Credit Termination Date or such due date,
as applicable;
(iii) 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; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Borrower or any of its Subsidiaries is a party or a beneficiary on the
date hereof or becomes a party or a beneficiary after the date hereof.
"Issuing Lender": The Chase Manhattan Bank, in its capacity as
issuer of any Letter of Credit.
"Inventory": as defined in the definition of "Eligible Inventory".
"Landlord Waiver": a written agreement satisfactory in form and
substance to the Administrative Agent (i) acknowledging that Inventory
located on a leasehold or in possession or control of any warehouseman,
bailee, agent or processor is subject to the Lien granted under the
Security Documents, (ii) waiving and releasing any applicable Lien held by
such lessor, warehouseman, bailee, agent or processor with respect to such
item of Inventory (whether arising by operation of law or otherwise) and
(iii) providing the Administrative Agent with the right to receive notice
of default, the right to repossess such item of Inventory at any time upon
the occurrence or during the continuance of a Default or Event of Default
and such other rights as may be reasonably required by the Administrative
Agent.
"L/C Commitment": $10,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
29
24
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents and the
Notes.
"Loan Parties": Holdings, the Borrower and each Subsidiary of
Holdings which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Tranche A Term Loans, the Tranche B Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under such Facility
(or, in the case of the Revolving Credit Facility, prior to any
termination of the Revolving Credit Commitments, the holders of more than
50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Management Investors": as defined in the recitals hereto.
"Material Adverse Effect": a material adverse effect on (a) the
Transactions, (b) the business, operations, property, condition (financial
or otherwise), prospects (on the Closing Date only), contingent
liabilities and material agreements of the Borrower and its Subsidiaries
taken as a whole, or (c) the validity or enforceability of this Agreement
or any of the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by Holdings
and/or its Subsidiaries in excess of $1,000,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Merger": as defined in the recitals hereto.
30
25
"Merger Agreement": as defined in the recitals hereto.
"Merger Sub": as defined in the recitals hereto.
"Monthly Borrowing Base Certificate": a certificate executed and
delivered by the Borrower, substantially in the form of Exhibit J-2,
delivered pursuant to subsection 6.2(g).
"Mortgaged Properties": the owned real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders
shall be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent
for the benefit of the Lenders, substantially in the form of Exhibit D
(with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded),
as the same may be amended, supplemented or otherwise modified from time
to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance
or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.20(a).
"Non-Peak Period": the collective reference to (i) the period from
and including January 16 of any year to and including April 30 of the same
year and (ii) the period from and including September 16 of any year to
and including November 30 of the same year.
"Non-U.S. Lender": as defined in Section 2.20(d).
31
26
"Notes": the collective reference to any promissory note evidencing
Loans.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Administrative Agent or to any Lender (or, in the case of
Interest Rate Protection Agreements, any affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Interest Rate Protection Agreement entered into with any
Lender or any affiliate of any Lender or any other document made,
delivered or given in connection herewith or therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or otherwise.
"Obsolescence Reserve": an amount equal to 50% of the excess of (a)
total Wholesale Inventory held by the Borrower over (b) the Inventory
listed in the Borrower's buyers' guide; provided that during the Peak
Period such percentage shall be reduced to 25% so long as the Borrower
provides the supporting documentation and additional reports described in
Exhibit J-3 with respect to such Wholesale Inventory.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"Over Advance Amount": (i) for the period from and including January
16 of any year to and including April 30 of the same year, $0, (ii) for
the period from and including May 1 of any year to and including June 30
of the same year, $10,000,000, (iii) for the period from and including
July 1 of any year to and including August 9 of the same year, $5,000,000,
(iv) for the period from and including August 10 of any year to and
including September 15 of the same year, $10,000,000, (v) for the period
from and including September 16 of any year to and including November 30
of the same year, $0, and (vi) for the period from and including December
1 of any year to and including January 15 of next succeeding year,
$10,000,000.
"Participant": as defined in Section 10.6(b).
"Past-due Addbacks": the aggregate amount of past due credit
balances aged over 120 days from the original invoice date.
32
27
"Payment Office": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and
the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Peak Period": the collective reference to (i) the period from and
including May 1 of any year to and including September 15 of the same year
and (ii) the period from and including December 1 of any year to and
including January 15 of next succeeding year.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Primary Investors": the collective reference to the Sponsor and its
Related Parties, HWH Capital Partners and any additional investment fund
for which the Sponsor is the sole advisor or which is effectively
controlled by the Sponsor.
"Pro Forma Financial Statements": the collective reference to the
Borrower Pro Forma Financial Statements and the Holdings Pro Forma
Financial Statements.
"Properties": as defined in Section 4.17.
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of Holdings, the Borrower or any of their respective
Subsidiaries.
"Reference Lender": the Administrative Agent.
"Refunded Swing Line Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 10.6(d).
33
28
"Regulation G": Regulation G of the Board as in effect from time to
time.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Holdings, the Borrower
or any of their respective Subsidiaries in connection therewith which are
not applied to prepay the Term Loans or reduce the Revolving Credit
Commitments pursuant to Section 2.12(b) as a result of the delivery of a
Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing
and that the Borrower (directly or indirectly through a Subsidiary)
intends and expects to use all or a specified portion of the Net Cash
Proceeds of an Asset Sale or Recovery Event to acquire assets useful in
its business.
"Reinvestment Prepayment Amount": 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": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year 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 Party": with respect to the Sponsor (A) any controlling
stockholder or partner, a direct or indirect 80% (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an
individual) of the Sponsor, (B) any trust, corporation, partnership or
other entity, the controlling beneficiaries, stockholders, partners or
owners of which, directly or indirectly, consist of the Sponsor and/or
such other Persons referred to in the immediately preceding clause (A)
and/or in the succeeding clause (D), (C) any partner or stockholder of the
Sponsor as of the Closing Date who acquires any assets or voting stock of
the Borrower or Holdings pursuant to a general distribution by the Sponsor
to each of its partners or stockholders or (D) any officer or director of
the Sponsor.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
34
29
"Reportable Event": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period
is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.
2615.
"Required Lenders": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer or controller of the
Borrower.
"Retail Inventory": all Inventory located at a Bookstore consisting
of: new and used textbooks, including any related study aids; general
subject books; medical, technical and reference books; periodicals and
magazines; clothing, including school insignia items; electronics; gifts;
stationery and cards; school and office supplies and art; food, beverages
and sundries; and all other items held for resale in the ordinary course
of business.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in
Swing Line Loans and Letters of Credit, in an aggregate principal and/or
face amount not to exceed the amount set forth under the heading
"Revolving Credit Commitment" opposite such Lender's name on Schedule
1.1A, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Credit Commitments is
$50,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
35
30
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Extensions of Credit then outstanding constitutes of
the aggregate principal amount of the Total Revolving Extensions of Credit
then outstanding).
"Revolving Credit Termination Date": March 31, 2004.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding,
(b) such Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the
aggregate principal amount of Swing Line Loans then outstanding.
"RTV Reserve": at any time, an amount equal to the amount of
Inventory that is identified as to be returned to vendor.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"Senior Subordinated Note Indenture": the Indenture entered into by
the Borrower in connection with the issuance of the Senior Subordinated
Notes, together with all instruments and other agreements entered into by
the Borrower in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
Section 7.9.
"Senior Subordinated Notes": as defined in the recitals hereto.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets
of such Person will, as of such date, be greater than the amount that will
be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability on a
36
31
"claim", and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Sponsor": as defined in the recitals hereto.
"Standard Sales Invoices": the collective reference to (i) invoices
resulting from sales by the Borrower to educational institutions or
commercial Bookstores of new or used books and other instructional
educational materials and (ii) invoices resulting from sales by the
Borrower to educational institutions or commercial Bookstores of
Information Systems Inventory or other Inventory in an aggregate amount at
any time of up to 10% of the gross Accounts with respect to all invoices
to educational institutions or commercial Bookstores, excluding Buy-Fund
Invoices, provided that the percentage of the gross Accounts with respect
to invoices to educational institutions or commercial Bookstores which may
result from sales of Information Systems Inventory or other Inventory
shall be subject to revision by the Administrative Agent in its reasonable
discretion within one year after the Closing Date upon the completion of a
satisfactory field review of such Accounts and Inventory by the
Administrative Agent.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than
any Excluded Foreign Subsidiary.
"Swing Line Commitment": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000.
"Swing Line Lender": The Chase Manhattan Bank, in its capacity as
the lender of Swing Line Loans.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Participation Amount": as defined in Section 2.7.
37
32
"Term Loan Lenders": the collective reference to the Tranche A Term
Loan Lenders and the Tranche B Term Loan Lenders.
"Term Loans": the collective reference to the Tranche A Term Loans
and Tranche B Term Loans.
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments at such time.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": as to any Lender, the obligation
of such Lender, if any, to make a Tranche A Term Loan to the Borrower
hereunder in a principal amount not to exceed the amount set forth under
the heading "Tranche A Term Loan Commitment" opposite such Lender's name
on Schedule 1.1A. The original aggregate amount of the Tranche A Term Loan
Commitments is $27,500,000.
"Tranche A Term Loan Lender": each Lender which has a Tranche A Term
Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to Tranche A Term Loan Lender
at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche A Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche A
Term Loans then outstanding).
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Loan Commitment": as to Tranche B Term Loan Lender,
the obligation of such Lender, if any, to make a Tranche B Term Loan to
the Borrower hereunder in a principal amount not to exceed the amount set
forth under the heading "Tranche B Term Loan Commitment" opposite such
Lender's name on Schedule 1.1A. The original aggregate amount of the
Tranche B Term Loan Commitments is $32,500,000.
"Tranche B Term Loan Lender": each Lender which has a Tranche B Term
Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's
38
33
Tranche B Term Loans then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding); provided,
that solely for purposes of calculating the amount of each installment of
Tranche B Term Loans (other than the last installment) payable to a Term
Loan Lender pursuant to Section 2.3(b), such Term Loan Lender's Tranche B
Term Loan Percentage shall be calculated without giving effect to any
portion of any prior mandatory or optional prepayment attributable to such
Term Loan Lender's Tranche B Term Loans which shall have been declined by
such Term Loan Lender (or, in the case of any Term Loan Lender which shall
have acquired its Tranche B Term Loans by assignment from another Person,
by such other Person).
"Transactions": as defined in the recitals hereto.
"Transferee": as defined in Section 10.15.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Warehouse": any warehouses being used by the Borrower or its
Subsidiaries.
"Weekly Borrowing Base Certificate": a certificate executed and
delivered by the Borrower, substantially in the form of Exhibit J-1,
delivered pursuant to subsection 6.2(g).
"Wholesale Inventory": at any time, Inventory that is located at a
Warehouse at such time and consists of textbooks.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and their respective
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP.
39
34
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, (a) each Tranche A Term Loan Lender severally agrees to make a term loan
(a "Tranche A Term Loan") to the Borrower on the Closing Date in an amount not
to exceed the amount of the Tranche A Term Loan Commitment of such Lender and
(b) each Tranche B Term Loan Lender severally agrees to make a term loan (a
"Tranche B Term Loan") to the Borrower on the Closing Date in an amount not to
exceed the amount of the Tranche B Term Loan Commitment of such Lender. The Term
Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.13.
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Loan Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. The Term Loans made on the Closing Date shall initially be Base Rate
Loans. Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Loan Lender thereof. Not later than 12:00 Noon, New York City
time, on the Closing Date each Term Loan Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the Term Loan or Term Loans to be made by such Lender. The
Administrative Agent shall make available to the Borrower the aggregate of the
amounts made available to the Administrative Agent by the Term Loan Lenders in
immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each
Tranche A Lender shall mature in 24 consecutive quarterly installments,
commencing on July 31, 1998, each of which shall be in an amount equal to such
Lender's Tranche A Term Loan Percentage multiplied by the amount set forth below
opposite such installment:
Installment Principal Amount
----------- ----------------
July 31, 1998 $156,250
October 31, 1998 $468,750
January 31, 1999 $312,500
April 30, 1999 $312,500
July 31, 1999 $375,000
40
35
October 31, 1999 $1,125,000
January 31, 2000 $750,000
April 30, 2000 $750,000
July 31, 2000 $531,250
October 31, 2000 $1,593,750
January 31, 2001 $1,062,500
April 30, 2001 $1,062,500
July 31, 2001 $787,500
October 31, 2001 $2,362,500
January 31, 2002 $1,575,000
April 30, 2002 $1,575,000
July 31, 2002 $787,500
October 31, 2002 $2,362,500
January 31, 2003 $1,575,000
April 30, 2003 $1,575,000
July 31, 2003 $800,000
October 31, 2003 $2,400,000
January 31, 2004 $1,600,000
March 31, 2004 $1,600,000
; provided that, notwithstanding the provisions of subsection 2.18(b) but
subject to the provisions of Section 2.21, the payments of principal of the
Tranche A Term Loans scheduled to be made on April 30 of each year may be made
at any time during the period from March 15 to April 30 of such year, in one
payment only, and any such payment made during such period and designated as the
scheduled installment for April 30 of such year shall be deemed to be the
scheduled installment for April 30 of such year and shall under no circumstances
be deemed to be an optional prepayment under Section 2.11.
(b) The Tranche B Term Loan of each Tranche B Lender shall mature in
32 consecutive quarterly installments, commencing on July 31, 1998, each of
which shall be in an amount equal to such Lender's Tranche B Term Loan
Percentage multiplied by the amount set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
July 31, 1998 $125,000
October 31, 1998 $125,000
January 31, 1999 $125,000
April 30, 1999 $125,000
July 31, 1999 $125,000
October 31, 1999 $125,000
January 31, 2000 $125,000
April 30, 2000 $125,000
July 31, 2000 $125,000
October 31, 2000 $125,000
January 31, 2001 $125,000
April 30, 2001 $125,000
41
36
July 31, 2001 $125,000
October 31, 2001 $125,000
January 31, 2002 $125,000
April 30, 2002 $125,000
July 31, 2002 $125,000
October 31, 2002 $125,000
January 31, 2003 $125,000
April 30, 2003 $125,000
July 31, 2003 $125,000
October 31, 2003 $125,000
January 31, 2004 $125,000
April 30, 2004 $125,000
July 31, 2004 $1,843,750
October 31, 2004 $5,531,250
January 31, 2005 $3,687,500
April 30, 2005 $3,687,500
July 31, 2005 $1,843,750
October 31, 2005 $5,531,250
January 31, 2006 $3,687,500
March 31, 2006 $3,687,500
; provided that, notwithstanding the provisions of subsection 2.18(b) but
subject to the provisions of Section 2.21, the payments of principal of the
Tranche B Term Loans scheduled to be made on April 30 of each year may be made
at any time during the period from March 15 to April 30 of such year, in one
payment only, and any such payment made during such period and designated as the
scheduled installment for April 30 of such year shall be deemed to be the
scheduled installment for April 30 of such year and shall under no circumstances
be deemed to be an optional prepayment under Section 2.11.
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swing Line Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment;
provided that no Revolving Credit Loans shall be made if, after giving effect to
the making of such Revolving Credit Loans, the Total Revolving Extensions of
Credit would exceed the lesser of (A) the sum of (i) the Borrowing Base then in
effect plus (ii) the Acquisition Advance Amount and (B) the Total Revolving
Credit Commitments; and provided further that not more than $1,000,000 of
Revolving Extensions of Credit shall be available for borrowing on the Closing
Date. During the Revolving Credit Commitment Period the Borrower may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.5 and 2.13, provided
that no Revolving
42
37
Credit Loan shall be made as a Eurodollar Loan after the day that is one month
prior to the Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or
(b) one Business Day prior to the requested Borrowing Date, in the case of Base
Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Period therefor. Any Revolving Credit Loans made
on the Closing Date shall initially be Base Rate Loans. Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Credit Commitments are less than $1,000,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $2,500,000 or a whole
multiple of $500,000 in excess thereof; provided, that the Swing Line Lender may
request, on behalf of the Borrower, borrowings under the Revolving Credit
Commitments which are Base Rate Loans in other amounts pursuant to Section 2.7.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Revolving Credit Lender thereof. Each Revolving
Credit Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent in like funds as received by the Administrative Agent.
2.6 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make available a portion of the credit
otherwise available to the Borrower under the Revolving Credit Commitments from
time to time during the Revolving Credit Commitment Period by making swing line
loans ("Swing Line Loans") to the Borrower; provided that (i) the aggregate
principal amount of Swing Line Loans outstanding at any time shall not exceed
the Swing Line Commitment then in effect (notwithstanding that the Swing Line
Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to
the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only.
43
38
(b) The Borrower shall repay all outstanding Swing Line Loans on the
Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans. (a) Whenever the Borrower desires that the Swing Line Lender make Swing
Line Loans it shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Credit
Commitment Period). Each borrowing under the Swing Line Commitment shall be in
an amount equal to $1,000,000 or a whole multiple of $100,000 in excess thereof.
Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in
a notice in respect of Swing Line Loans, the Swing Line Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of the Swing Line Loan to be
made by the Swing Line Lender. The Administrative Agent shall make the proceeds
of such Swing Line Loan available to the Borrower on such Borrowing Date in
immediately available funds.
(b) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice given by the Swing Line Lender no later than 12:00 Noon, New York
City time, request each Revolving Credit Lender to make, and each Revolving
Credit Lender hereby agrees to make, a Revolving Credit Loan, in an amount equal
to such Revolving Credit Lender's Revolving Credit Percentage of the aggregate
amount of the Swing Line Loans (the "Refunded Swing Line Loans") outstanding on
the date of such notice, to repay the Swing Line Lender. Each Revolving Credit
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 10:00 A.M., New York City time, one Business Day after the date of
such notice. The proceeds of such Revolving Credit Loans shall be immediately
applied by the Swing Line Lender to repay the Refunded Swing Line Loans. The
Borrower irrevocably authorizes the Swing Line Lender to charge the Borrower's
accounts with the Administrative Agent (up to the amount available in each such
account) in order to immediately pay the amount of such Refunded Swing Line
Loans to the extent amounts received from the Revolving Credit Lenders are not
sufficient to repay in full such Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest in
an amount equal to (i) its Revolving Credit Percentage times (ii) the aggregate
principal amount of Swing Line Loans then outstanding which were to have been
repaid with such Revolving Credit Loans (the "Swing Line Participation Amount").
44
39
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender or the Swing Line
Lender, as the case may be, (i) the then unpaid principal amount of each
Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section 8), (ii) the then unpaid principal amount of each Swing Line
Loan of the Swing Line Lender on the Revolving Credit Termination Date (or such
earlier date on which the Loans become due and payable pursuant to Section 8)
and (iii) the principal amount of each Term Loan of such Term Loan Lender in
installments according to the amortization schedule set forth in Section 2.3 (or
on such earlier date on which the Loans become due and payable pursuant to
Section 8). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such
45
40
Loan, the Type thereof and each Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) both the amount of any sum
received by the Administrative Agent hereunder from the Borrower and each
Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loans, Revolving Credit
Loans or Swing Line Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions
as to date and principal amount.
2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrower and the Administrative Agent.
2.10 Termination or Reduction of Revolving Credit Commitments. The
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $500,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
2.11 Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate
46
41
Loans, which notice shall specify the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans or Base Rate Loans; provided, that if a
Eurodollar Loan is prepaid on any day other than the last day of the Interest
Period applicable thereto, the Borrower shall also pay any amounts owing
pursuant to Section 2.21. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof. If any such notice is
given, the amount specified in such notice shall be due and payable on the date
specified therein, together with (except in the case of Revolving Credit Loans
which are Base Rate Loans and Swing Line Loans) accrued interest to such date on
the amount prepaid. Partial prepayments of Term Loans and Revolving Credit Loans
shall be in an aggregate principal amount not less than $500,000. Partial
prepayments of the Term Loans shall be applied in the order set forth in Section
2.18. Partial prepayments of Swing Line Loans shall be in an aggregate principal
amount not less than $500,000.
2.12 Mandatory Prepayments and Commitment Reductions. (a) Unless the
Required Prepayment Lenders shall otherwise agree, if any Capital Stock shall be
issued, or Indebtedness incurred, by Holdings, the Borrower or any of their
respective Subsidiaries (excluding (i) any Capital Stock of Holdings issued to
the Primary Investors in an aggregate amount of up to $15,000,000 in order to
finance Capital Expenditures and acquisitions otherwise permitted by this
Agreement and (ii) any Indebtedness incurred in accordance with subsections
7.2(a), (b), (c), (d), (e), (f), (g) and (h) as in effect on the date of this
Agreement), an amount equal to 100% of the Net Cash Proceeds thereof shall be
applied on the date of such issuance or incurrence toward the prepayment of the
Term Loans and the reduction of the Revolving Credit Commitments as set forth in
Section 2.12(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date Holdings, the Borrower or any of their respective Subsidiaries shall
receive Net Cash Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.12(d); provided, that, notwithstanding the foregoing, (i) the aggregate Net
Cash Proceeds of Asset Sales and Recovery Events that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$1,000,000 in any fiscal year of the Borrower, or $2,000,000 in any fiscal year
of the Borrower immediately succeeding a fiscal year of the Borrower as of the
last day of which the Consolidated Leverage Ratio is less than or equal to 4.0
to 1.0, and (ii) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loans and the reduction of
the Revolving Credit Commitments as set forth in Section 2.12(d); and provided
further, that notwithstanding the foregoing, such Net Cash Proceeds which are
not subject to a Reinvestment Notice shall not be required to be applied toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments until the date upon which the aggregate amount of such Net Cash
Proceeds received by Holdings, the Borrower and their respective Subsidiaries
and not previously applied toward the prepayment of the Term Loans and the
reduction of the Revolving Credit Commitments shall exceed $1,000,000.
(c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrower commencing with the fiscal year ending
March 31, 1999, there
47
42
shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash Flow
Application Date, apply the ECF Percentage of such Excess Cash Flow toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(d). Each such prepayment and commitment
reduction shall be made on a date (an "Excess Cash Flow Application Date") no
later than three months after the date on which the financial statements of the
Borrower referred to in Section 6.1(a), for the fiscal year with respect to
which such prepayment is made, are required to be delivered to the Lenders.
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section 2.12 shall be applied,
first, to the prepayment of the Term Loans and, second, to reduce permanently
the Revolving Credit Commitments. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans
and/or Swing Line Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Credit Commitments
as so reduced, provided that if the aggregate principal amount of Revolving
Credit Loans and Swing Line Loans then outstanding is less than the amount of
such excess (because L/C Obligations constitute a portion thereof), the Borrower
shall, to the extent of the balance of such excess, replace outstanding Letters
of Credit and/or deposit an amount in cash in a cash collateral account
established with the Administrative Agent for the benefit of the Lenders on
terms and conditions satisfactory to the Administrative Agent. The application
of any prepayment pursuant to this Section 2.12 shall be made first to Base Rate
Loans and second to Eurodollar Loans. Each prepayment of the Loans under this
Section 2.12 (except in the case of Revolving Credit Loans that are Base Rate
Loans and Swing Line Loans) shall be accompanied by accrued interest to the date
of such prepayment on the amount prepaid. Partial prepayments of the Term Loans
shall be applied in the order set forth in Section 2.18.
(e) If, at any time the Total Revolving Extensions of Credit exceeds
the lesser of (A) the sum of (i) the Borrowing Base in effect on such date plus
(ii) the Acquisition Advance Amount and (B) the Total Revolving Credit
Commitments, the Borrower shall repay the Revolving Credit Loans to the extent
of such excess, provided that if the aggregate principal amount of Revolving
Credit Loans then outstanding is less than the amount of such excess (because
L/C Obligations constitute a portion thereof), the Borrower shall, to the extent
of the balance of such excess, replace outstanding Letters of Credit and/or
deposit an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent.
(f) The Borrower agrees that during each calendar year there shall
be a period of at least 30 consecutive days during which there are no Revolving
Extensions of Credit outstanding (other than Revolving Extensions of Credit made
under the Acquisition Advance Amount).
2.13 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period
48
43
with respect thereto. The Borrower may elect from time to time to convert Base
Rate Loans to Eurodollar Loans by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election (which notice shall
specify the length of the initial Interest Period therefor), provided that no
Base Rate Loan under a particular Facility may be converted into a Eurodollar
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and provided, further, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $2,500,000 or a whole multiple of $500,000
in excess thereof and (b) no more than ten Eurodollar Tranches shall be
outstanding at any one time.
2.15 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin (it being understood that Eurodollar Loans bear
interest from and including the first day of each Interest Period to but not
including the last day of such Interest Period).
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or
49
44
not overdue) shall bear interest at a rate per annum which is equal to (x) in
the case of the Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section 2.15 plus 2% or (y) in the
case of Reimbursement Obligations, the rate applicable to Base Rate Loans under
the Revolving Credit Facility plus 2%, and (ii) if all or a portion of any
interest payable on any Loan or Reimbursement Obligation or any commitment fee
or other amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount shall bear
interest at a rate per annum equal to the rate applicable to Base Rate Loans
under the relevant Facility plus 2%.
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
2.15 shall be payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.15(a) and the manner of
performing any required calculation hereunder.
2.17 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
50
45
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be made or
continued as such, nor shall the Borrower have the right to convert Loans under
the relevant Facility to Eurodollar Loans.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Tranche A Term Loan Percentages,
Tranche B Term Loan Percentages or Revolving Credit Percentages, as the case may
be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders (except as otherwise provided in Section 2.18(d)).
As among the Term Loans of any Tranche, prepayments shall be applied 75% ratably
to the respective remaining installments thereof and 25% in the direct order to
the respective next four installments thereof (or, to the extent that the
aggregate principal amount of the next four installments of the Tranche A Term
Loan Facility or the Tranche B Term Loan Facility, as the case may be, is less
than such 25%, the excess shall be applied ratably to the respective remaining
installments thereof). Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary in Section 2.12 or
2.18, so long as any Tranche A Term Loans are outstanding, each Tranche B Term
Loan Lender may, at its option, decline up to 100% of the portion of any
mandatory payment applicable to the Tranche B Term Loans of such Lender;
accordingly, with respect to the amount of any mandatory prepayment described in
Section 2.12 that is allocated to Tranche B Term Loans (such amounts, the
"Tranche B Prepayment Amount"), at any time when Tranche A Term Loans remain
outstanding, the Borrower will, in lieu of applying such amount to the
prepayment of Tranche B Term Loans, on the date specified in Section 2.12 for
such prepayment, give the Administrative Agent telephonic notice (promptly
confirmed in writing) requesting that the Administrative Agent prepare and
provide to each Tranche B Lender a notice (each, a "Prepayment Option Notice")
as described below. As promptly as practicable after receiving such notice from
the Borrower, the Administrative Agent will send to each
51
46
Tranche B Lender a Prepayment Option Notice, which shall be in the form of
Exhibit H, and shall include an offer by the Borrower to prepay on the date
(each a "Prepayment Date") that is five Business Days after the date of the
Prepayment Option Notice, the relevant Term Loans of such Lender by an amount
equal to the portion of the Prepayment Amount indicated in such Lender's
Prepayment Option Notice as being applicable to such Lender's Tranche B Term
Loans. On the Prepayment Date (i) the Borrower shall pay to the Administrative
Agent the aggregate amount necessary to prepay that portion of the outstanding
relevant Term Loans in respect of which Tranche B Lenders have accepted
prepayment as described above (such Lenders, the "Accepting Lenders"), and such
amount shall be applied to reduce the Tranche B Prepayment Amounts, with respect
to each Accepting Lender and (ii) the Borrower shall pay to the Administrative
Agent an amount equal to 100% of the portion of the Tranche B Prepayment Amount
not accepted by the Accepting Lenders, and such amount shall be applied to the
prepayment of the Tranche A Term Loans.
(e) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Payment Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.18(f) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility (in lieu of interest otherwise
provided for hereunder), on demand, from the Borrower.
52
47
(g) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.19 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.20 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase, relative to the date
hereof, the cost to such Lender, by an amount which such Lender deems to be
material, of making, converting into, continuing or maintaining Eurodollar Loans
or issuing or participating in Letters of Credit, or to reduce, relative to the
date hereof, any amount receivable hereunder in respect thereof, then, in any
such case, the Borrower shall promptly pay such Lender, upon its demand, any
additional amounts necessary to compensate such Lender for such increased cost
or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.19, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of
53
48
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction;
provided that the Borrower shall not be required to compensate a Lender pursuant
to this paragraph for any amounts incurred more than six months prior to the
date that such Lender notifies the Borrower of such Lender's intention to claim
compensation therefor; and provided further that, if the circumstances giving
rise to such claim have a retroactive effect, then such six-month period shall
be extended to include the period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.19 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section 2.19 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.20 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on the Administrative Agent or any Lender as a result
of a present or former connection between the Administrative Agent or such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section, (ii) that are United
States withholding taxes imposed on amounts payable to such Lender (including
United States withholding taxes with respect to amounts payable under this
Section 2.20) under laws in effect at the time the Lender becomes a party to
this Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to Section 2.20(a) or
(iii) that is imposed as a result of an event occurring after the Lender becomes
a Lender other than a
54
49
change in law or regulation or the introduction of any law or regulation or a
change in interpretation or administration of any law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.20 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(d) Each Lender (or Participant) that is not a United States person
as defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit I and a Form W-8, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision of this Section 2.20(d), a Non-U.S. Lender shall not be required
to deliver any form pursuant to this Section 2.20(d) that such Non-U.S. Lender
is not legally able to deliver.
(e) If the Administrative Agent or any Lender receives a refund in
respect of Non-Excluded Taxes or Other Taxes paid by the Borrower, which in the
good faith judgment of such Lender is allocable to such payment, it shall
promptly pay such refund, together with any other amounts paid by the Borrower
in connection with such refunded Non-Excluded Taxes or Other Taxes, to the
Borrower, net of all out-of-pocket expenses of such Lender incurred in obtaining
such refund, provided, however, that the Borrower agrees to promptly return such
refund to the Administrative Agent or the applicable Lender, as the case may be,
55
50
if it receives notice from the Administrative Agent or applicable Lender that
such Administrative Agent or Lender is required to repay such refund. Each of
the Administrative Agent and each Lender agrees that it will contest such
Non-Excluded Taxes, Other Taxes or liabilities if (i) the Borrower furnishes to
it an opinion of reputable tax counsel acceptable to the Administrative Agent or
such Lender to the effect that such Non-Excluded Taxes or Other Taxes were
wrongfully or illegally imposed and (ii) the Administrative Agent or such Lender
determines, in sole discretion, that it would not be disadvantaged or prejudiced
in any manner whatsoever as a result of such contest.
2.21 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 2.21
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
2.22 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.19 or 2.20(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any
56
51
Loans affected by such event with the object of avoiding the consequences of
such event; provided, that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this Section 2.23 shall affect or postpone any of the obligations of
any Borrower or the rights of any Lender pursuant to Section 2.19 or 2.20(a).
2.24 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.19 or 2.20 or (b) defaults
in its obligation to make Loans hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Default or Event of Default shall have occurred and
be continuing at the time of such replacement, (iii) prior to any such
replacement, such Lender shall have taken no action under Section 2.23 so as to
eliminate the continued need for payment of amounts owing pursuant to Section
2.19 or 2.20, (iv) the replacement financial institution shall purchase, at par,
all Loans and other amounts owing to such replaced Lender on or prior to the
date of replacement, (v) the Borrower shall be liable to such replaced Lender
under Section 2.21 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 10.6 (provided that the Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.19 or 2.20, as the case may be,
and (ix) any such replacement shall not be deemed to be a waiver of any rights
which the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
of Credit") for the account of the Borrower on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance (i) the L/C Obligations would exceed the L/C Commitment, (ii) the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero or (iii) the Total Revolving Extensions of Credit would exceed the sum
of (x) the Borrowing Base then in effect plus (y) the Acquisition Advance
Amount. Each Letter of Credit shall (i) be denominated in Dollars and (ii)
expire no later than the earlier of (x) the first anniversary of its date of
issuance and (y) the date which is five Business Days prior to the Revolving
Credit Termination Date, provided that any Letter of Credit with a one-year term
may provide for the renewal thereof for additional one-year periods (which shall
in no event extend beyond the date referred to in clause (y) above).
57
52
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
3.3 Commissions, Fees and Other Charges. (a) The Borrower will pay a
commission on all outstanding Letters of Credit at a per annum rate equal to the
Applicable Margin then in effect with respect to Eurodollar Loans under the
Revolving Credit Facility, shared ratably among the Revolving Credit Lenders and
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrower shall pay to the Issuing Lender for its own
account a fronting fee of 1/4 of 1% per annum, payable quarterly in arrears on
each L/C Fee Payment Date after the Issuance Date.
(b) In addition to the foregoing fees and commissions, the Borrower
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrower in accordance with
58
53
the terms of this Agreement, such L/C Participant shall pay to the Issuing
Lender upon demand at the Issuing Lender's address for notices specified herein
an amount equal to such L/C Participant's Revolving Credit Percentage of the
amount of such draft, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans under the Revolving Credit Facility. A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Section from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full at the
rate set forth in Section 2.15(c). Each drawing under any Letter of Credit shall
(unless an event of the type described in clause (i) or (ii) of Section 8(f)
shall have occurred and be continuing with respect to the Borrower, in which
case the procedures specified in Section 3.4 for funding by L/C Participants
shall apply) constitute a request by the Borrower to the Administrative Agent
for a borrowing
59
54
pursuant to Section 2.5 of Base Rate Loans (or, at the option of the
Administrative Agent and the Swing Line Lender in their sole discretion, a
borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date of
such drawing.
3.6 Obligations Absolute. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into
this Agreement and to make the Loans and issue or participate in the Letters of
Credit, Holdings and the Borrower hereby jointly and severally represent and
warrant to the Administrative Agent and each Lender that:
60
55
4.1 Financial Condition. (a) (i) The unaudited pro forma
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
December 31, 1997 (including the notes thereto) (the "Holdings Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on December 31, 1997) to
(i) the consummation of the Transactions, (ii) the Loans to be made on the
Closing Date, the Senior Subordinated Notes to be issued on the Closing Date and
the Holdings Discount Debentures to be issued on the Closing Date, and the use
of proceeds of each thereof, (iii) the payment of fees and expenses in
connection with the foregoing and (iv) material acquisitions consummated during
the last two fiscal years of Holdings. The Holdings Pro Forma Balance Sheet has
been prepared based on the best information available to Holdings as of the date
of delivery thereof, and presents fairly in all material respects on a pro forma
basis the estimated financial position of Holdings and its consolidated
Subsidiaries as at December 31, 1997, assuming that the events specified in the
preceding sentence had actually occurred on such date, prepared in accordance
with Regulation S-X under the Securities Act of 1933, as amended (the
"Securities Act"). The unaudited pro forma consolidated statement of operations
of Holdings and its Subsidiaries for the nine-month period ended December 31,
1997 (including the notes thereto) (the "Holdings Pro Forma Income Statement";
collectively with the Holdings Pro Forma Balance Sheet, the "Holdings Pro Forma
Financial Statements"), copies of which have heretofore been furnished to each
Lender, has been prepared giving effect (as if such events had occurred on the
first day of such nine-month period) to (i) the consummation of the
Transactions, (ii) the Loans to be made on the Closing Date, the Senior
Subordinated Notes to be issued on the Closing Date and the Holdings Discount
Debentures to be issued on the Closing Date, and the use of proceeds of each
thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Holdings Pro Forma Income Statement has been prepared based on
the best information available to Holdings as of the date of delivery thereof,
and presents fairly in all material respects on a pro forma basis the estimated
consolidated financial condition of Holdings and its consolidated Subsidiaries
as at December 31, 1997 and the consolidated results of their operations for the
nine-month period then ended assuming that the events specified in the preceding
sentence had actually occurred on the first day of such nine-month period,
prepared in accordance with Regulation S-X under the Securities Act.
(ii) The unaudited pro forma consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at December 31, 1997 (including
the notes thereto) (the "Borrower Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, has been prepared giving effect
(as if such events had occurred on December 31, 1997) to (i) the consummation of
the Transactions, (ii) the Loans to be made on the Closing Date and the Senior
Subordinated Notes to be issued on the Closing Date and the use of proceeds of
each thereof, (iii) the equity contributions to be made by Holdings to the
Borrower, (iv) the payment of fees and expenses in connection with the foregoing
and (v) material acquisitions consummated during the last two fiscal years of
the Borrower. The Borrower Pro Forma Balance Sheet has been prepared based on
the best information available to the Borrower as of the date of delivery
thereof, and presents fairly in all material respects on a pro forma basis the
estimated financial position of the Borrower and its consolidated Subsidiaries
as at December 31, 1997, assuming that the events specified in the preceding
sentence had actually occurred on such date, prepared in accordance with
Regulation S-X under the Securities Act. The unaudited pro forma consolidated
statement of
61
56
operations of the Borrower and its Subsidiaries for the nine-month period ended
December 31, 1997 (including the notes thereto) (the "Borrower Pro Forma Income
Statement"; collectively with the Borrower Pro Forma Balance Sheet, the
"Borrower Pro Forma Financial Statements"), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events had
occurred on the first day of such nine-month period) to (i) the consummation of
the Transactions, (ii) the Loans to be made on the Closing Date and the Senior
Subordinated Notes to be issued on the Closing Date and the use of proceeds of
each thereof and (iii) the payment of fees and expenses in connection with the
foregoing. The Borrower Pro Forma Income Statement has been prepared based on
the best information available to the Borrower as of the date of delivery
thereof, and presents fairly in all material respects on a pro forma basis the
estimated consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at December 31, 1997 and the consolidated results of their
operations for the nine-month period then ended assuming that the events
specified in the preceding sentence had actually occurred on the first day of
such nine-month period, prepared in accordance with Regulation S-X under the
Securities Act.
(b) (i) The audited consolidated balance sheets of Holdings and its
consolidated Subsidiaries as at March 31, 1995, March 31, 1996 and March 31,
1997, and the related consolidated statements of income and of cash flows for
the fiscal year ended March 31, 1997, the seven months ended March 31, 1996, the
five months ended August 31, 1995 and the fiscal year ended March 31, 1995,
reported on by and accompanied by an unqualified report from Xxxxxx Xxxxxxxx LLP
or Deloitte & Touche LLP, as the case may be, present fairly in all material
respects the consolidated financial condition of Holdings and its consolidated
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of Holdings and its consolidated
Subsidiaries as at December 31, 1997, and the related unaudited consolidated
statements of income and cash flows for the nine-month period ended on such
date, present fairly in all material respects the consolidated financial
condition of Holdings and its consolidated Subsidiaries as at such date, and the
consolidated results of its operations and its consolidated cash flows for the
nine-month period then ended (subject to normal year-end audit adjustments). All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firms of accountants
and disclosed therein). Holdings and its Subsidiaries do not have any material
Guarantee Obligations, material contingent liabilities or material liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, which are
not reflected in the most recent financial statements (including the notes
thereto) referred to in this paragraph (b)(i). During the period from March 31,
1997 to and including the date hereof, there has been no Disposition by Holdings
or any of its Subsidiaries of any material part of its business or Property.
(ii) The audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as at March 31, 1995, March 31, 1996 and March 31,
1997, and the related consolidated statements of income and of cash flows for
the fiscal year ended March 31, 1997, the seven months ended March 31, 1996, the
five months ended August 31,
62
57
1995 and the fiscal year ended March 31, 1995, reported on by and accompanied by
an unqualified report from Xxxxxx Xxxxxxxx LLP or Deloitte & Touche LLP, as the
case may be, present fairly in all material respects the consolidated financial
condition of the Borrower and its consolidated Subsidiaries as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the respective fiscal years then ended. The unaudited consolidated balance sheet
of the Borrower and its consolidated Subsidiaries as at December 31, 1997, and
the related unaudited consolidated statements of income and cash flows for the
nine-month period ended on such date, present fairly in all material respects
the consolidated financial condition of the Borrower and its consolidated
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the nine-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Borrower and its
Subsidiaries do not have any material Guarantee Obligations, material contingent
liabilities or material liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, which are not reflected in the most recent
financial statements (including the notes thereto) referred to in this paragraph
(b)(ii). During the period from March 31, 1997 to and including the date hereof,
there has been no Disposition by the Borrower or any of its Subsidiaries of any
material part of its business or Property.
4.2 No Change. Since March 31, 1997 there has been no development or
event which has had or could reasonably be expected to have a Material Adverse
Effect.
4.3 Corporate Existence; Compliance with Law. Each of Holdings, the
Borrower and their respective Subsidiaries (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification, except where the failure to be so qualified could
not reasonably be expected to have a Material Adverse Effect, and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Transactions and the borrowings hereunder or with the
execution, delivery, performance,
63
58
validity or enforceability of this Agreement or any of the Loan Documents,
except (i) consents, authorizations, filings and notices described in Schedule
4.4, which consents, authorizations, filings and notices have been obtained or
made and are in full force and effect and (ii) the filings referred to in
Section 4.19. Each Loan Document has been duly executed and delivered on behalf
of each Loan Party party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or conveyance or similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (whether enforcement is
sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any material Contractual Obligation of Holdings, the
Borrower or any of their respective Subsidiaries and will not result in, or
require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
No Requirement of Law or Contractual Obligation applicable to the Borrower or
any of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Holdings or the Borrower, threatened by or against Holdings,
the Borrower or any of their respective Subsidiaries or against any of their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of their
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the Borrower and
their respective Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other Property, and none of such Property is subject to any
Lien except as permitted by Section 7.3.
4.9 Intellectual Property. Each of Holdings, the Borrower and each
of their respective Subsidiaries owns, or is licensed to use, all Intellectual
Property necessary for the conduct of its business as currently conducted.
Schedule 4.9 sets forth all of the Intellectual Property owned or licensed by
each of Holdings, the Borrower and each of their respective Subsidiaries on the
Closing Date. No material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity
or effectiveness of any Intellectual Property, nor does Holdings or Borrower
know of any valid basis for any such claim. The use of Intellectual Property by
Holdings, the Borrower and
64
59
their respective Subsidiaries does not infringe on the rights of any Person in
any material respect.
4.10 Taxes. Each of Holdings, the Borrower and each of their
respective Subsidiaries has filed or caused to be filed all Federal, state and
other material tax returns which are required to be filed and has paid all taxes
shown to be due and payable on said returns or on any assessments made against
it or any of its Property and all other taxes, fees or other charges imposed on
it or any of its Property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Holdings, the Borrower or their
respective Subsidiaries, as the case may be); no tax Lien has been filed, and,
to the knowledge of Holdings and the Borrower, no claim is being asserted, with
respect to any such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans or
Letters of Credit will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under Regulation G or
Regulation U as now and from time to time hereafter in effect or for any purpose
which violates the provisions of the Regulations of the Board. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in
Regulation G or Regulation U, as the case may be.
4.12 Labor Matters. There are no strikes or other labor disputes
against Holdings, the Borrower or any of their respective Subsidiaries pending
or, to the knowledge of Holdings or the Borrower, threatened that (individually
or in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the Borrower
and their respective Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect. All payments due from Holdings, the Borrower or
any of their respective Subsidiaries on account of employee health and welfare
insurance that (individually or in the aggregate) could reasonably be expected
to have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of Holdings, the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal
65
60
from any Multiemployer Plan which has resulted or could reasonably be expected
to result in a material liability under ERISA, and neither the Borrower nor any
Commonly Controlled Entity would become subject to any material liability under
ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of Holdings at the date hereof.
4.16 Use of Proceeds. The proceeds of the Term Loans shall be used
to finance a portion of the Transactions and to pay related fees and expenses.
The proceeds of the Revolving Extensions of Credit made under the Borrowing Base
shall be used to finance a portion of the Transactions and to finance the
general capital needs and general corporate purposes of the Borrower in the
ordinary course of business, provided that proceeds of Revolving Extensions of
Credit which could not otherwise be borrowed under the Borrowing Base but for
the inclusion of the Over Advance Amount therein shall not be used to finance
acquisitions permitted pursuant to subsection 7.8(h) hereof. The proceeds of
Revolving Extensions of Credit made under the Acquisition Advance Amount shall
be used to finance acquisitions permitted pursuant to subsection 7.8(h) hereof.
4.17 Environmental Matters. (a) The facilities and properties owned,
leased or operated by Holdings, the Borrower or any of their respective
Subsidiaries (the "Properties") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law, except in either
case insofar as such violation or liability, or any aggregation thereof, could
not reasonably be expected to result in the payment of a Material Environmental
Amount.
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
Holdings, the Borrower or any of their respective Subsidiaries (the "Business")
which could materially interfere with the continued operation of the Properties
or impair the fair saleable value thereof in an amount equaling or exceeding a
Material Environmental Amount. As of the Closing Date, neither Holdings, the
Borrower nor any of their respective Subsidiaries has assumed any liability of
any other Person under Environmental Laws.
66
61
(c) Neither Holdings, the Borrower nor any of their respective
Subsidiaries has received or is aware of any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Properties or the Business, nor does Holdings or the Borrower have
knowledge or reason to believe that any such notice will be received or is being
threatened, except insofar as such notice or threatened notice, or any
aggregation thereof, does not involve a matter or matters that could reasonably
be expected to result in the payment of a Material Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law, except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation thereof, could not reasonably be expected to result in the payment
of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Holdings and the Borrower, threatened, under
any Environmental Law to which Holdings, the Borrower or any of their respective
Subsidiaries is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation thereof, could not
reasonably be expected to result in the payment of a Material Environmental
Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of Holdings, the Borrower or any of their respective Subsidiaries
in connection with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws, except insofar as any such violation or liability
referred to in this paragraph, or any aggregation thereof, could not reasonably
be expected to result in the payment of a Material Environmental Amount.
4.18 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in the
materials referenced above are based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at
67
62
the time made, it being recognized by the Lenders that such financial
information as it relates to future events is not to be viewed as fact and that
actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the date hereof, the representations and warranties of
Holdings and the Borrower, and to the knowledge of Holdings and the Borrower,
the representations and warranties of all other parties to the Merger Agreement,
contained in the Merger Agreement are true and correct in all material respects.
There is no fact known to any Loan Party that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents, in the Confidential Information Memorandum or in any
other documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.19(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person.
4.20 Solvency. Each Loan Party is, and after giving effect to the
Transactions and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture and the Holdings Discount Debentures Indenture. The obligations
of each Guarantor under the Guarantee and Collateral Agreement constitute
"Guarantor Senior Indebtedness" of such Guarantor under and as defined in the
Senior Subordinated Note Indenture and the Holdings Discount Debentures
Indenture.
4.22 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban
68
63
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of
Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Borrower and each Subsidiary Guarantor, (iii) a Mortgage covering each of
the Mortgaged Properties, executed and delivered by a duly authorized
officer of each party thereto, and (iv) for the account of each relevant
Lender, Notes conforming to the requirements hereof and executed and
delivered by a duly authorized officer of the Borrower.
(b) Transactions. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory
to the Lenders:
(i) Holdings shall have been capitalized with at least
$95,000,000 in cash consisting of (x) not less than an aggregate of
$50,002,680 of common equity from HWH Capital Partners and the
Management Investors and (y) $44,997,320 in gross cash proceeds from
the issuance by Holdings of the Holdings Discount Debentures, in
each case on terms and conditions satisfactory to the Administrative
Agent.
(ii) The Borrower shall have received (x) $110,000,000 in
gross cash proceeds from the issuance of the Senior Subordinated
Notes on terms and conditions satisfactory to the Administrative
Agent and (y) from Holdings all of the net cash proceeds from the
issuance of the Holdings Discount Debentures as a common equity
contribution to the Borrower.
(iii) The Transactions shall have been consummated in
accordance with applicable law and on terms reasonably satisfactory
to the Lenders. The Merger Agreement shall have terms and conditions
reasonably satisfactory to the Lenders, and no provision of the
Merger Agreement shall have been waived, amended, supplemented or
otherwise modified in any material respect without the prior written
approval of the Administrative Agent. Substantially all of the
existing indebtedness of Holdings and its Subsidiaries shall have
been repaid on terms reasonably satisfactory to the Administrative
Agent. The capitalization and corporate structure of each Loan Party
after the Transactions shall be reasonably satisfactory to the
Lenders in all respects.
69
64
(c) Pro Forma Financial Statements; Financial Statements. The
Lenders shall have received (i) the Pro Forma Financial Statements, (ii)
audited consolidated financial statements of each of Holdings and the
Borrower referred to in the first sentence of each of subsections
4.1(b)(i) and 4.1(b)(ii) and (iii) unaudited interim consolidated
financial statements of each of Holdings and the Borrower for each fiscal
month and quarterly period ended subsequent to the date of the latest
applicable financial statements delivered pursuant to clause (ii) of this
paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Lenders,
reflect any material adverse change in the consolidated financial
condition of Holdings and its Subsidiaries and the Borrower and its
Subsidiaries, respectively, as reflected in the financial statements or
projections contained in the Confidential Information Memorandum.
(d) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary in connection with the
Transactions, the continuing operations of Holdings, the Borrower and
their respective Subsidiaries and the transactions contemplated hereby
shall have been obtained and be in full force and effect, and all
applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Transactions or the
financing contemplated hereby.
(e) Related Agreements. The Administrative Agent shall have received
(in a form reasonably satisfactory to the Administrative Agent), with a
copy for each Lender, true and correct copies, certified as to
authenticity by the Borrower, of the Merger Agreement, the Senior
Subordinated Note Indenture, the Holdings Discount Debentures Indenture
and such other documents or instruments as may be reasonably requested by
the Administrative Agent, including, without limitation, a copy of any
other debt instrument, security agreement or other material contract to
which the Loan Parties may be a party.
(f) Fees. The Lenders, the Administrative Agent and the Arranger
shall have received all fees required to be paid, and all expenses for
which invoices have been presented, on or before the Closing Date.
(g) Business Plan. The Lenders shall have received a satisfactory
business plan for fiscal years 1998-2003 and a satisfactory written
analysis of the business and prospects of the Borrower and its
Subsidiaries for the period from the Closing Date through the final
maturity of the Term Loans.
(h) Solvency Analysis. The Lenders shall have received a reasonably
satisfactory solvency opinion from an independent valuation firm
satisfactory to the Administrative Agent which shall document the solvency
of each of the Borrower and its subsidiaries and Holdings and its
subsidiaries after giving effect to the Transactions.
70
65
(i) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of Holdings or its Subsidiaries except for liens
permitted by Section 7.3.
(j) Environmental Audit. The Lenders shall have received a
reasonably satisfactory Phase I environmental site assessment pursuant to
ASTM standards with respect to the real properties owned by the Borrower
located at 0000 X. 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx (Administrative Offices
and Warehouse) and 0000 X. 00xx Xxxxxx, Xxxxxxx, Xxxxxxxx (Auxiliary
Warehouse) from a firm satisfactory to the Administrative Agent.
(k) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C,
with appropriate insertions and attachments.
(l) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Xxxx, Weiss, Rifkind, Xxxxxxx &
Xxxxxxxx, counsel to Holdings and the Borrower, substantially in the
form of Exhibit F;
(ii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Merger
Agreement, accompanied by a reliance letter in favor of the Lenders;
and
(iii) the legal opinion of local counsel in each of Iowa,
Kansas, Nebraska and Texas and of such other special and local
counsel as may be required by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(m) Pledged Stock; Stock Power; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(n) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the
71
66
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(o) Title Insurance; Flood Insurance. (i) The Administrative Agent
shall have received in respect of each Mortgaged Property a mortgagee's
title insurance policy (or policies) or marked up unconditional binder for
such insurance. Each such policy shall (A) be in an amount satisfactory to
the Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such Mortgaged
Property free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of
the Lenders as the insured thereunder; (E) be in the form of ALTA Loan
Policy - 1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies or
such other form of loan policy as is authorized in the state in which the
Mortgaged Property is located); (F) contain such endorsements and
affirmative coverage as the Administrative Agent may reasonably request
and (G) be issued by title companies reasonably satisfactory to the
Administrative Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, all charges for mortgage
recording tax, and all related expenses, if any, have been paid.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) for each Mortgaged Property which is located
in a designated flood zone, a policy of flood insurance which (1) covers
any parcel of improved real property which is encumbered by any Mortgage
(2) is written in an amount not less than the outstanding principal amount
of the indebtedness secured by such Mortgage which is reasonably allocable
to such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (3) has a term ending not
later than the maturity of the Indebtedness secured by such Mortgage and
(B) confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.
(iii) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (i) above and a copy of all
other material documents affecting the Mortgaged Properties.
(p) Insurance. The Administrative Agent shall be satisfied with the
insurance program to be maintained by Holdings and its Subsidiaries after
the Transactions and shall have received satisfactory insurance
certificates with respect thereto.
(q) Labor Matters; Other Matters. The Lenders shall be reasonably
satisfied with all labor, pension, regulatory, health and safety,
litigation, accounting and tax matters relating to Holdings and its
Subsidiaries.
72
67
(r) Collateral Audit; Borrowing Base Certificate. The Lenders shall
have received (i) a satisfactory preliminary audit prepared by Chase's
asset-based evaluating group with respect to the accounts receivable and
inventory of the Borrower and its Subsidiaries and (ii) an initial Monthly
Borrowing Base Certificate from a Responsible Officer of the Borrower
setting forth the initial Borrowing Base.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that,
so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Holdings and the Borrower shall and
shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
each Lender:
(a) (i) within 90 days after the end of each fiscal year of
Holdings, a copy of the audited consolidated balance sheet of Holdings and
its consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the
previous year, reported on without a "going concern" or like qualification
or exception, or qualification arising out of the scope of the audit, by
independent certified public accountants of nationally recognized
standing; and
(ii) within 90 days after the end of each fiscal year of the
Borrower, a copy of the audited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as at the end of such year and the
related audited consolidated statements of income and of cash flows for
such year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
73
68
qualification or exception, or qualification arising out of the scope of
the audit, by independent certified public accountants of nationally
recognized standing;
(b) (i) not later than 45 days after the end of each of the first
three quarterly periods of each fiscal year of Holdings, the unaudited
consolidated balance sheet of Holdings and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited consolidated
statements of income and of cash flows for such quarter and the portion of
the fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments); and
(ii) not later than 45 days after the end of each of the first three
quarterly periods of each fiscal year of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and of cash flows for such quarter and
the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender, or, in the case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's knowledge,
each Loan Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Loan Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly
or annual financial statements, (x) a Compliance Certificate containing
all information necessary for determining compliance by Holdings, the
Borrower and their respective Subsidiaries with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or
fiscal year of the Borrower, as the case may be, (y) to the extent not
previously
74
69
disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date) and (z)
a certificate of a Responsible Officer (1) listing all of the acquisitions
made by the Borrower and its Subsidiaries during such period, (2)
specifying which, if any, of such acquisitions were financed, in whole or
in part, with Revolving Extensions of Credit made under the Acquisition
Advance Amount during such quarter, (3) setting forth the aggregate amount
of cash used to finance acquisitions made in prior quarters which was
replaced, if any, with Revolving Extensions of Credit made under the
Acquisition Advance Amount during such quarter and (4) setting forth in
reasonable detail the calculations made by the Borrower in determining the
purchase price of such acquisitions for purposes of determining
utilization of the Acquisition Advance Amount;
(c) (i) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of Holdings, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of Holdings and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), and, as soon as available, significant revisions, if any, of such
budget and projections with respect to such fiscal year (collectively, the
"Holdings Projections"), which Holdings Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Holdings Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe
that such Holdings Projections are incorrect or misleading in any material
respect; and
(ii) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), and, as soon as available, significant revisions, if any, of such
budget and projections with respect to such fiscal year (collectively, the
"Borrower Projections"), which Borrower Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Borrower Projections are based on reasonable estimates, information and
assumptions and that such Responsible Officer has no reason to believe
that such Borrower Projections are incorrect or misleading in any material
respect;
(d) (i) within 45 days after the end of each fiscal quarter of
Holdings, a narrative discussion and analysis of the financial condition
and results of operations of Holdings and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Holdings Projections covering such periods and to the comparable periods
of the previous year; and
75
70
(ii) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Borrower Projections covering such periods and to the comparable
periods of the previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture, the Holdings Discount Debentures Indenture or
the Merger Agreement;
(f) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Borrower sends to
the holders of any class of its debt securities or public equity
securities and within five days after the same are filed, copies of all
financial statements and reports which Holdings or the Borrower may make
to, or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority;
(g) on the Closing Date, a Monthly Borrowing Base Certificate, and
thereafter (i) promptly after the end of each week (but in no event later
than the third Business Day of the following week) a Weekly Borrowing Base
Certificate as of the last day of the week most recently ended, each such
Borrowing Base Certificate to be certified as complete, true and correct
in all material respects on behalf of the Borrower by a Responsible
Officer of the Borrower, setting forth the amounts of Accounts and
Inventory of the Borrower as of the end of the previous fiscal week,
together with the other supporting documentation and additional reports
described in Exhibit J-3 and (ii) promptly after the end of each fiscal
month (but in no event later than the 12th Business Day of the following
month) a Monthly Borrowing Base Certificate as of the last day of the
month most recently ended, each such Borrowing Base Certificate to be
certified as complete, true and correct on behalf of the Borrower by a
Responsible Officer of the Borrower, setting forth the amount of Accounts,
Eligible Accounts Receivable, Inventory and Eligible Inventory of the
Borrower as of the last day of such month, together with the supporting
documentation and additional reports described in Exhibit J-3; and
(h) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Holdings, the Borrower or their respective Subsidiaries, as the
case may be.
76
71
6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions. (a) (i)
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (ii)
permit representatives of any Lender (through the Administrative Agent) upon
reasonable prior written notice to visit and inspect any of its properties and
examine and make abstracts from any of its books and records during the
Borrower's normal business hours and as often as may reasonably be desired and
to discuss the business, operations, properties and financial and other
condition of Holdings, the Borrower and their respective Subsidiaries with
officers and employees of Holdings, the Borrower and such Subsidiaries and with
their independent certified public accountants.
(b) At any time upon the reasonable request of the Administrative
Agent, permit the Administrative Agent or professionals (including consultants,
accountants and appraisers) retained by the Administrative Agent to conduct
evaluations and appraisals of (i) the Borrower's practices in the computation of
the Borrowing Base, (ii) the assets included in the Borrowing Base, (iii)
systems and procedures relating to the Borrowing Base items, and (iv) other
related procedures deemed necessary by the Administrative Agent, and pay the
reasonable fees and expenses thereof in connection therewith (including, without
limitation, the fees and expenses associated with services performed by the
Administrative Agent's Specialized Due Diligence Department and with respect to
the weekly and monthly monitoring, the fees and expenses associated with
services performed by the Administrative Agent's Collateral Monitoring
Department); provided, however, that the Administrative Agent shall not be
entitled to conduct such evaluations and appraisals more frequently than once
per year unless (x) an Event of Default has occurred and is continuing or (y)
the Administrative Agent reasonably determines in consultation with the Borrower
that a material event or material change has occurred with respect to the Loan
Parties, their inventory practices or the performance of the Collateral and that
as a result of such event or change more frequent evaluations or appraisals are
required to effectively monitor the Borrowing Base, in which case the Borrower
will permit the Administrative Agent to conduct such
77
72
evaluations and appraisals at such reasonable times and as often as may be
reasonably requested, in each case so long as any Revolving Credit Loans or
Letters of Credit shall be outstanding or shall have been requested by the
Borrower hereunder.
(c) In connection with any evaluation and appraisal relating to the
computation of the Borrowing Base, agree to make such adjustments to its
parameters for including Eligible Inventory and Eligible Accounts Receivable in
the Borrowing Base as the Administrative Agent shall reasonably require based
upon the results of such evaluation and appraisal, provided that the
Administrative Agent shall specify to the Borrower in writing the reasons for
any such additional adjustments.
6.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Borrower or any of their respective
Subsidiaries or (ii) litigation, investigation or proceeding which may
exist at any time between Holdings, the Borrower or any of their
respective Subsidiaries and any Governmental Authority, which in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting Holdings, the Borrower or
any of their respective Subsidiaries in which the amount involved is
$1,000,000 or more and not covered by insurance or in which injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC
or the Borrower or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan;
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect; and
(f) as soon as possible after a Responsible Officer of the Borrower
knows or reasonably should know thereof, the failure to make any rental
payment when due and payable with respect to any property leased by the
Borrower or any of its Domestic Subsidiaries at which Inventory of the
Borrower or any of its Domestic Subsidiaries is located.
78
73
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Holdings, the Borrower or the relevant
Subsidiary proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Interest Rate Protection. In the case of the Borrower, within
three months after the Closing Date, enter into Interest Rate Protection
Agreements to the extent necessary to provide that at least 50% of the aggregate
principal amount of (i) the Senior Subordinated Notes and (ii) the Term Loans is
subject to either a fixed interest rate or interest rate protection for a period
of not less than three years, which Interest Rate Protection Agreements shall
have terms and conditions reasonably satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc. (a) With respect to any Property
acquired after the Closing Date by Holdings, the Borrower or any of their
respective Subsidiaries (other than (x) any Property described in paragraph (b),
(c) or (d) below and (y) any Property subject to a Lien expressly permitted by
Section 7.3(g)) as to which the Administrative Agent, for the benefit of the
Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
or such other documents as the Administrative Agent deems necessary or advisable
in order to grant to the Administrative Agent, for the benefit of the Lenders, a
security interest in such Property and (ii) take all actions necessary or
advisable to grant to the Administrative Agent, for the benefit of the Lenders,
a perfected first priority security interest in such Property, including without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
(b) With respect to any interest in any real property having a value
(together with improvements thereof) of at least $1,000,000 acquired after the
Closing Date by Holdings, the Borrower or any of their respective Subsidiaries
(other than any such real property subject to a Lien expressly permitted by
Section 7.3(g)), promptly (i) execute and deliver a first priority Mortgage in
favor of the Administrative Agent, for the benefit of the Lenders, covering such
real property, (ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an
79
74
amount at least equal to the purchase price of such real estate (or such other
amount as shall be reasonably specified by the Administrative Agent) as well as
a current ALTA survey thereof, together with a surveyor's certificate and (y)
any consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such mortgage or deed of trust, each of
the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Holdings
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), the Borrower or
any of its Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
Holdings, the Borrower or any of their respective Subsidiaries, (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock,
together with undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings, the Borrower or such Subsidiary, as the case may
be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement and (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement with respect to such new Subsidiary (subject to any
existing liens on such Collateral securing Indebtedness existing at the time
such new Subsidiary is created or acquired, so long as such Indebtedness was not
incurred in anticipation of such creation or acquisition and such Lien is not
spread to encumber additional property of such Subsidiary), including, without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent, and (iv) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by Holdings, the Borrower or any of their
respective Subsidiaries, promptly (i) execute and deliver to the Administrative
Agent such amendments to the Guarantee and Collateral Agreement as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is owned by
Holdings, the Borrower or any of their respective Subsidiaries (provided that in
no event shall more than 65% of the total outstanding Capital Stock of any such
new Subsidiary be required to be so pledged), (ii) deliver to the Administrative
Agent the certificates representing such Capital Stock, together with undated
stock powers, in blank, executed and delivered by a duly authorized officer of
Holdings, the Borrower or such Subsidiary, as the
80
75
case may be, and take such other action as may be necessary or, in the opinion
of the Administrative Agent, desirable to perfect the Lien of the Administrative
Agent thereon, and (iii) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(e) Prior to entering into a lease of a facility located in the
United States in which Inventory will be located on or after the Closing Date,
the Borrower and its Subsidiaries shall obtain a Landlord Waiver from each
landlord of any such facility.
6.11 Post-Closing Matters. (a) Surveys. Subject to force majeure,
within 30 days after the Closing Date, the Borrower shall deliver to the
Administrative Agent and the title insurance company issuing the policy referred
to in subsection 5.1(o)(i) (the "Title Insurance Company"), maps or plats of an
as-built survey of the sites of the Mortgaged Properties certified to the
Administrative Agent and the Title Insurance Company in a manner satisfactory to
them, dated a date satisfactory to the Administrative Agent and the Title
Insurance Company by an independent professional licensed land surveyor
satisfactory to the Administrative Agent and the Title Insurance Company, which
maps or plats and the surveys on which they are based shall be made in
accordance with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown on such maps,
plats or surveys the following: (A) the locations on such sites of all the
buildings, structures and other improvements and the established building
setback lines; (B) the lines of streets abutting the sites and width thereof;
(C) all access and other easements appurtenant to the sites; (D) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a filed map,
a legend relating the survey to said map; and (G) the flood zone designations,
if any, in which the Mortgaged Properties are located.
(b) Landlord Waivers. Within 30 days after the Closing Date, with
respect to each property leased by the Borrower and its Subsidiaries where
Inventory is located on the Closing Date, the Borrower shall deliver to the
Administrative Agent either (i) evidence that the applicable lessor (including
any educational institution or commercial Bookstore) has been notified of the
Lien granted under the Security Documents and the Borrower has used its
commercially reasonable efforts to induce such lessor to enter into a Landlord
Waiver or (ii)(A) an opinion, in form and substance acceptable to and from local
counsel approved by the Administrative Agent, and addressed to the
Administrative Agent, the Issuing Bank and the Lenders, to the effect that there
is no law in the jurisdiction where such leasehold is located that would allow
Inventory located on such leasehold to be subjected to any Lien in favor of the
applicable lessor arising by operation of law and (B) a certificate of a
Responsible Officer of the Borrower certifying that there is no term or
condition of any agreement or other document governing the relationship between
the Borrower and the applicable lessor that provides for any such Lien.
81
76
(c) Environmental Audits. Within 30 days after the Closing Date, the
Borrower shall deliver to the Administrative Agent a reasonably satisfactory
Phase I environmental site assessment pursuant to ASTM standards with respect to
the real properties owned by the Borrower located at 0000 X Xxxxxx, Xxxxxxx,
Xxxxxxxx (Nebraska Bookstore), 0000 X. Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx
(Voertman's) and 0000 Xxxxxx Xxxxxx, Xxx Xxxxxx, Xxxx (University Bookstore)
from a firm satisfactory to the Administrative Agent.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that,
so long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Holdings and the Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
7.1 Financial Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter ending on the dates set forth below
to exceed the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
June 30, 1998 6.5 to 1.0
September 30, 1998 6.5 to 1.0
December 31, 1998 6.5 to 1.0
March 31, 1999 6.25 to 1.0
June 30, 1999 6.25 to 1.0
September 30, 1999 6.25 to 1.0
December 31, 1999 6.25 to 1.0
March 31, 2000 5.8 to 1.0
June 30, 2000 5.8 to 1.0
September 30, 2000 5.8 to 1.0
December 31, 2000 5.8 to 1.0
March 31, 2001 5.3 to 1.0
June 30, 2001 5.3 to 1.0
September 30, 2001 5.3 to 1.0
December 31, 2001 5.3 to 1.0
March 31, 2002 4.75 to 1.0
June 30, 2002 4.75 to 1.0
September 30, 2002 4.75 to 1.0
December 31, 2002 4.75 to 1.0
March 31, 2003 4.25 to 1.0
June 30, 2003 4.25 to 1.0
82
77
September 30, 2003 4.25 to 1.0
December 31, 2003 4.25 to 1.0
March 31, 2004 4.0 to 1.0
June 30, 2004 4.0 to 1.0
September 30, 2004 4.0 to 1.0
December 31, 2004 4.0 to 1.0
March 31, 2005 4.0 to 1.0
June 30, 2005 4.0 to 1.0
September 30, 2005 4.0 to 1.0
December 31, 2005 4.0 to 1.0
March 31, 2006 4.0 to 1.0
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter ending on the dates set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
June 30, 1998 1.5 to 1.0
September 30, 1998 1.5 to 1.0
December 31, 1998 1.5 to 1.0
March 31, 1999 1.5 to 1.0
June 30, 1999 1.5 to 1.0
September 30, 1999 1.5 to 1.0
December 31, 1999 1.5 to 1.0
March 31, 2000 1.7 to 1.0
June 30, 2000 1.7 to 1.0
September 30, 2000 1.7 to 1.0
December 31, 2000 1.7 to 1.0
March 31, 2001 1.85 to 1.0
June 30, 2001 1.85 to 1.0
September 30, 2001 1.85 to 1.0
December 31, 2001 1.85 to 1.0
March 31, 2002 2.05 to 1.0
June 30, 2002 2.05 to 1.0
September 30, 2002 2.05 to 1.0
December 31, 2002 2.05 to 1.0
March 31, 2003 2.20 to 1.0
June 30, 2003 2.20 to 1.0
September 30, 2003 2.20 to 1.0
December 31, 2003 2.20 to 1.0
March 31, 2004 2.25 to 1.0
June 30, 2004 2.25 to 1.0
September 30, 2004 2.25 to 1.0
December 31, 2004 2.25 to 1.0
83
78
March 31, 2005 2.25 to 1.0
June 30, 2005 2.25 to 1.0
September 30, 2005 2.25 to 1.0
December 31, 2005 2.25 to 1.0
March 31, 2006 2.25 to 1.0
; provided, that for the purposes of determining the Consolidated Interest
Coverage Ratio for the fiscal quarters of the Borrower ending June 30, 1998,
September 30, 1998 and December 31, 1998, Consolidated Interest Expense for the
relevant period shall be deemed to equal Consolidated Interest Expense for such
fiscal quarter (and, in the case of the latter two such determinations, all
fiscal quarters commencing after March 31, 1998) multiplied by 4, 2 and 4/3,
respectively.
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower ending with any fiscal quarter ending on the
dates set forth below to be less than the ratio set forth below opposite such
fiscal quarter:
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
June 30, 1998 1.0 to 1.0
September 30, 1998 1.0 to 1.0
December 31, 1998 1.0 to 1.0
March 31, 1999 1.05 to 1.0
June 30, 1999 1.05 to 1.0
September 30, 1999 1.05 to 1.0
December 31, 1999 1.05 to 1.0
March 31, 2000 1.05 to 1.0
June 30, 2000 1.05 to 1.0
September 30, 2000 1.05 to 1.0
December 31, 2000 1.05 to 1.0
March 31, 2001 1.05 to 1.0
June 30, 2001 1.05 to 1.0
September 30, 2001 1.05 to 1.0
December 31, 2001 1.05 to 1.0
March 31, 2002 1.05 to 1.0
June 30, 2002 1.05 to 1.0
September 30, 2002 1.05 to 1.0
December 31, 2002 1.05 to 1.0
March 31, 2003 1.10 to 1.0
June 30, 2003 1.10 to 1.0
September 30, 2003 1.10 to 1.0
December 31, 2003 1.10 to 1.0
March 31, 2004 1.10 to 1.0
June 30, 2004 1.10 to 1.0
September 30, 2004 1.10 to 1.0
84
79
December 31, 2004 1.10 to 1.0
March 31, 2005 1.15 to 1.0
June 30, 2005 1.15 to 1.0
September 30, 2005 1.15 to 1.0
December 31, 2005 1.15 to 1.0
March 31, 2006 1.15 to 1.0
; provided, that for the purposes of determining the Consolidated Fixed Charge
Coverage Ratio for the fiscal quarters of the Borrower ending June 30, 1998,
September 30, 1998 and December 31, 1998, Consolidated Interest Expense and
scheduled payments on account of principal of Indebtedness of the Borrower and
its Subsidiaries for the relevant period shall be deemed to equal Consolidated
Interest Expense and scheduled payments on account of principal of Indebtedness
of the Borrower and its Subsidiaries for such fiscal quarter (and, in the case
of the latter two such determinations, all fiscal quarters commencing after
March 31, 1998) multiplied by 4, 2 and 4/3, respectively.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Indebtedness secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $5,000,000 at any one time
outstanding;
(d) Capital Lease Obligations in an aggregate principal amount not
to exceed $5,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof);
(f) guarantees made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;
(g) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$110,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness; provided that such Guarantee Obligations are
subordinated to the obligations of such Subsidiary Guarantor under the
Loan Documents to the same extent as are the obligations of the Borrower
in respect of the Senior Subordinated Notes;
(h) Indebtedness of Holdings in respect of the Holdings Discount
Debentures in an aggregate principal amount not to exceed $76,000,000;
85
80
(i) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount at any one time outstanding
(for the Borrower and all Subsidiaries) not to exceed $15,000,000 less the
aggregate principal amount of Indebtedness incurred pursuant to clauses
(c) and (d) above at such time; and
(j) Indebtedness of the Borrower in respect of Interest Rate
Protection Agreements.
Notwithstanding the foregoing, no Subsidiary of Holdings will create, incur,
assume or suffer to exist any Guarantee Obligation in respect of any
Indebtedness of Holdings.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Holdings, the Borrower or
their respective Subsidiaries, as the case may be, in conformity with
GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(e), provided that no such
Lien is spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber
86
81
any Property other than the Property financed by such Indebtedness and
(iii) the amount of Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into
by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined as of
the date such Lien is incurred) of the assets subject thereto exceeds (as
to the Borrower and all Subsidiaries) $1,000,000 at any one time;
(k) any covenants, easements, restrictions, encumbrances and
exceptions contained in any mortgagee's title insurance policy referred to
in Section 5.1(o)(i); and
(l) any existing leases or subleases of all or any portion of a
Mortgaged Property and any renewals and extensions thereof, any leases or
subleases entered into upon the expiration or termination of any such
lease or sublease, and any leases or subleases hereafter entered into of
all or any portion of a Mortgaged Property not required by the Borrower
for the operation of its business.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business except:
(a) any Subsidiary of the Borrower may be merged or consolidated
with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor (provided that the Wholly Owned Subsidiary Guarantor
shall be the continuing or surviving corporation); and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor.
7.5 Limitation on Sale of Assets. Dispose of any of its Property or
business (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
87
82
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(e) the sale of other assets at fair market value provided that (i)
such assets have a fair market value not to exceed $2,000,000 for any
fiscal year of the Borrower and not exceeding $5,000,000 in the aggregate
from the Closing Date and (ii) the consideration received by Holdings, the
Borrower and their respective Subsidiaries for each such sale of assets
shall not be less than 75% cash, provided, that the requirements of
Section 2.12(d) are complied with in connection therewith.
7.6 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of Holdings, the
Borrower or any of their respective Subsidiaries or any warrants or options to
purchase any such Capital Stock, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Holdings, the Borrower or any
of their respective Subsidiaries (collectively, "Restricted Payments"), except
that:
(a) any Subsidiary of the Borrower may make Restricted Payments to
the Borrower or any Wholly Owned Subsidiary Guarantor (and if such
Subsidiary is not a Wholly Owned Subsidiary of the Borrower, to its other
holders of Capital Stock on a pro rata basis, provided that any such
Restricted Payment to such other holders of Capital Stock be attributable
only to cash flows of such Subsidiary);
(b) so long as no Default or Event of Default shall have occurred
and be continuing after giving effect to the payment of any such dividend,
on or after August 15, 2003, the Borrower may pay dividends to Holdings to
permit Holdings to pay cash interest on the Holdings Discount Debentures
in an amount not to exceed the amount of interest required to be paid in
cash by the terms of the Holdings Discount Debentures Indenture;
(c) the Borrower may pay dividends to Holdings to permit Holdings to
(i) pay corporate overhead expenses incurred in the ordinary course of
business not to exceed $250,000 in any fiscal year and (ii) pay any taxes
which are due and payable by Holdings and the Borrower as part of a
consolidated group;
(d) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may pay dividends to Holdings to permit
Holdings to purchase Holdings' common stock or common stock options from
present or former officers or employees, or the estate, heirs or legatees
of such former officers or employees, of Holdings, the Borrower or any of
their respective Subsidiaries upon the
88
83
death, disability or termination of employment of such officer or
employee, provided, that the aggregate amount of payments under this
paragraph (d) during the term of this Agreement shall not exceed
$1,000,000 per annum and $2,000,000 in the aggregate, net of any cash
proceeds received by Holdings and contributed to the Borrower in
connection with resales of any common stock or common stock options so
purchased; and
(e) the Borrower may pay dividends to Holdings on the Closing Date
(i) in an amount equal to the aggregate principal amount of the Loans made
on the Closing Date to be used by Holdings solely to finance the
Transactions and (ii) in an amount equal to any cash payments required to
be made by Merger Sub or Holdings on the Closing Date with respect to
Excess Cash (as defined in the Merger Agreement) pursuant to Section
3.01(a) of the Merger Agreement.
7.7 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure, except:
(a) Capital Expenditures of the Borrower and its Subsidiaries in the
ordinary course of business not exceeding $3,500,000 per fiscal year;
provided, that (i)(x) during the fiscal years of the Borrower ending on
March 31, 1999 and March 31, 2000, 50%, and (y) during any fiscal year of
the Borrower ending on March 31, 2001 or thereafter, 100%, of any such
amount not so expended in the fiscal year for which it is permitted, may
be carried over for expenditure in the next succeeding fiscal year and
(ii) Capital Expenditures made pursuant to this clause (a) during any
fiscal year shall be deemed made, first, in respect of amounts carried
over from the prior fiscal year pursuant to subclause (i) above and,
second, in respect of amounts permitted for such fiscal year as provided
above;
(b) in addition to the amounts permitted by clause (a) above,
Capital Expenditures of the Borrower and its Subsidiaries in the ordinary
course of business not exceeding an aggregate of $2,000,000 during the
term of this Agreement; and
(c) Capital Expenditures permitted pursuant to Section 7.8.
7.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
89
84
(d) loans and advances to employees of Holdings, the Borrower or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for Holdings, the Borrower and its Subsidiaries not to
exceed $500,000 at any one time outstanding;
(e) the Transactions;
(f) investments made by the Borrower or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount;
(g) investments by Holdings, the Borrower or any of its Subsidiaries
in the Borrower or any Person that, prior to such investment, is a Wholly
Owned Subsidiary Guarantor; and
(h) acquisitions by the Borrower or any of its Subsidiaries of the
Capital Stock of, or assets of, entities engaged in similar lines of
business as the Borrower and its Subsidiaries on the Closing Date,
provided that (i) the aggregate purchase price for all such acquisitions
shall not exceed $20,000,000, (ii) the aggregate purchase price for all
such acquisitions in any fiscal year shall not exceed $10,000,000, (iii)
no Default or Event of Default shall have occurred or be continuing after
giving effect to any such acquisition, (iv) no Indebtedness shall be
assumed by the Borrower or any of its Subsidiaries in connection with any
such acquisition except to the extent otherwise permitted pursuant to this
Agreement and (v) the Borrower shall be in pro forma compliance with the
covenants set forth in Section 7.1 after giving effect to any such
acquisition.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any payment, prepayment, repurchase,
redemption or defeasance of or otherwise defease or segregate funds with respect
to the Senior Subordinated Notes or the Holdings Discount Debentures (other than
scheduled interest payments required to be made in cash) or pay interest in cash
on the Holdings Discount Debentures prior to August 15, 2003, (b) amend, modify,
waive or otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Senior Subordinated Notes or
the Holdings Discount Debentures (other than any such amendment, modification,
waiver or other change which (i) would extend the maturity or reduce the amount
of any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon and (ii) does not involve the payment of a
consent fee), (c) designate any Indebtedness as "Designated Senior Indebtedness"
for the purposes of the Senior Subordinated Note Indenture or the Holdings
Discount Debentures Indenture or (d) amend its certificate of incorporation in
any manner determined by the Administrative Agent to be adverse to the Lenders
without the prior written consent of the Required Lenders.
7.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Wholly Owned Subsidiary Guarantor) unless such transaction
is (a) otherwise permitted under this Agreement, (b) in the
90
85
ordinary course of business of Holdings, the Borrower or such Subsidiary, as the
case may be, and (c) upon fair and reasonable terms no less favorable to
Holdings, 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. Notwithstanding the foregoing, Holdings and/or the Borrower may pay
fees to the Sponsor and HWH Capital Partners in connection with the Transactions
in an aggregate amount not to exceed $4,000,000 plus any reasonable
out-of-pocket expenses.
7.11 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by Holdings, the Borrower or any of
their respective Subsidiaries of real or personal property owned by Holdings,
the Borrower or any of their respective Subsidiaries on the Closing Date which
has been or is to be sold or transferred by Holdings, the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of Holdings, the Borrower or such Subsidiary. Notwithstanding the
foregoing, the Borrower or any its Subsidiaries may enter into any such
arrangement described in the immediately preceding sentence with respect to any
property acquired by the Borrower or such Subsidiary after the Closing Date to
the extent otherwise permitted pursuant to this Agreement, provided that such
arrangement is entered into within 90 days after such property is acquired by
the Borrower or such Subsidiary.
7.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year
of the Borrower to end on a day other than March 31 or change the Borrower's
method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
Holdings, the Borrower or any of their respective Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether
now owned or hereafter acquired, to secure the Obligations or, in the case of
any guarantor, its obligations under the Guarantee and Collateral Agreement,
other than (a) this Agreement and the other Loan Documents, (b) the Holdings
Discount Debentures Indenture and the Senior Subordinated Note Indenture and (c)
any agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby).
7.14 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) pay
dividends or make any other distributions in respect of any Capital Stock of
such Subsidiary held by, or pay any Indebtedness owed to, the Borrower or any
other Subsidiary of the Borrower, (b) make loans or advances to the Borrower or
any other Subsidiary of the Borrower or (c) transfer any of its assets to the
Borrower or any other Subsidiary of the Borrower, except for such encumbrances
or restrictions existing under or by reason of (i) any restrictions existing
under the Loan Documents or the Senior Subordinated Note Indenture and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement which
has been entered into in connection
91
86
with the Disposition of all or substantially all of the Capital Stock or assets
of such Subsidiary.
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrower and its Subsidiaries are engaged on the date of this Agreement or
which are related, ancillary or complementary thereto.
7.16 Limitation on Amendments to Merger Agreement. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities and licenses furnished to the Borrower or any of
its Subsidiaries pursuant to the Merger Agreement such that after giving effect
thereto such indemnities or licenses shall be materially less favorable to the
interests of the Loan Parties or the Lenders with respect thereto or (b)
otherwise amend, supplement or otherwise modify the terms and conditions of the
Merger Agreement or any such other documents except to the extent that any such
amendment, supplement or modification could not reasonably be expected to have a
Material Adverse Effect.
7.17 Limitation on Activities of Holdings. In the case of Holdings,
notwithstanding anything to the contrary in this Agreement or any other Loan
Document, (a) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than those
incidental to its ownership of the Capital Stock of the Borrower, (b) incur,
create, assume or suffer to exist any Indebtedness or other liabilities or
financial obligations, except (i) nonconsensual obligations imposed by operation
of law, (ii) pursuant to the Loan Documents to which it is a party, (iii)
obligations with respect to its Capital Stock and (iv) the Holdings Discount
Debentures, (c) own, lease, manage or otherwise operate any properties or assets
(including cash (other than cash received in connection with dividends made by
the Borrower in accordance with Section 7.6 pending application in the manner
contemplated by said Section) and cash equivalents) other than the ownership of
shares of Capital Stock of the Borrower or (d) own the Capital Stock of any
Subsidiary (other than the Borrower and its Subsidiaries). Notwithstanding the
foregoing, Holdings may refinance the Holdings Discount Debentures upon terms no
less favorable to the Lenders than the terms set forth in the Holdings
Debentures Indenture on the Closing Date so long as any Indebtedness incurred by
Holdings to refinance the Holdings Discount Debentures has no scheduled
principal payments prior to the final maturity of the Loans hereunder and
requires no cash payments of interest prior to August 15, 2003.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five
92
87
days after any such interest or other amount becomes due in accordance
with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a) (with respect to Holdings and the Borrower only), Section 6.7(a) or
Section 7 or (ii) an "Event of Default" under and as defined in any
Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) Holdings, the Borrower or any of their respective Subsidiaries
shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(iii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $2,500,000; or
(f) (i) Holdings, the Borrower or any of their respective
Subsidiaries shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all
93
88
or any substantial part of its assets, or Holdings, the Borrower or any of
their respective Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against
Holdings, the Borrower or any of their respective Subsidiaries any case,
proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against Holdings, the Borrower or any of their respective Subsidiaries any
case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv)
Holdings, the Borrower or any of their respective Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Borrower or any of their respective
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of their respective Subsidiaries involving
in the aggregate a liability (not paid or fully covered by insurance as to
which the relevant insurance company has acknowledged coverage) of
$2,500,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert,
94
89
or any Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) (i) Any Person or "group" (within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended) other than
the Primary Investors (A) shall have acquired beneficial ownership of a
greater percentage of Holdings' voting common stock than is then held by
the Primary Investors or (B) shall obtain the power (whether or not
exercised) to elect a majority of the Borrower's or Holdings' directors
(for purposes of this clause (i), and clause (ii)(B) below, any shares of
voting stock that are required to be voted for a nominee of any Primary
Investor shall be deemed to be held by such Primary Investor for purposes
of determining the voting power held by any Person); or (ii) (A) the board
of directors of the Borrower or Holdings shall not consist of a majority
of Continuing Directors; as used in this paragraph "Continuing Directors"
shall mean the directors of the Borrower or Holdings, as the case may be,
on the Closing Date and each other director, if such other director's
nomination for election to the board of directors of Holdings is
recommended by a majority of the then Continuing Directors or (B) the
Primary Investors shall cease to be able to elect a majority of the board
of directors of Holdings or, through Holdings, the Borrower; or (iii) the
Primary Investors shall cease to own legally and beneficially at least 80%
of each outstanding class of common stock having ordinary voting power in
the election of directors of Holdings held by them on the Closing Date (as
appropriately adjusted to give effect to any stock dividends,
subdivisions, combinations and other similar combining or diluting events
after the Closing Date); or (iv) Holdings shall cease to own legally and
beneficially 100% of each class of Capital Stock of the Borrower, free of
Liens (other than Liens created by the Security Documents); or (v) a
"change of control" as defined in the Senior Subordinated Note Indenture
or the Holdings Discount Debentures Indenture shall occur; or
(k) The Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or
the obligations of the Guarantors under the Loan Documents, as the case
may be, as provided in the Senior Subordinated Note Indenture, or any Loan
Party shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower or
Holdings, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the
95
90
request of the Majority Revolving Credit Facility Lenders, the Administrative
Agent shall, by notice to the Borrower declare the Revolving Credit Commitments
to be terminated forthwith, whereupon the Revolving Credit Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall have no duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or attorneys
in-fact selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement or any other Loan
Document (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have
96
91
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the Loan
Parties), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement and the other Loan Documents in accordance with a request
of the Required Lenders (or, if so specified by this Agreement, all Lenders),
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender,
Holdings or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
97
92
9.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of a
Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
Holdings or the Borrower and without limiting the obligation of Holdings or the
Borrower to do so), ratably according to their respective Aggregate Exposure
Percentages in effect on the date on which indemnification is sought under this
Section 9.7 (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Aggregate Exposure Percentages immediately prior
to such date), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever which may at any time (including, without limitation, at
any time following the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section 9.7 shall survive the payment of the Loans and all other amounts
payable hereunder.
98
93
9.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with any Loan Party as though the
Administrative Agent was not the Administrative Agent. With respect to its Loans
made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. After any retiring Agent's
resignation as Agent, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Borrower or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 10.1.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Administrative Agent and
each Loan Party party to the relevant Loan Document may, from time to time, (a)
enter into written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the
99
94
rights of the Lenders or of the Loan Parties hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders, or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) forgive the
principal amount or extend the final scheduled date of maturity of any Loan,
extend the scheduled date of any amortization payment in respect of any Term
Loan, reduce the stated rate of any interest, fee or letter of credit commission
payable hereunder or extend the scheduled date of any payment thereof, or
increase the amount or extend the expiration date of any Lender's Revolving
Credit Commitment, in each case without the consent of each Lender directly
affected thereby; (ii) amend, modify or waive any provision of this Section 10.1
or reduce any percentage specified in the definition of Required Lenders or
Required Prepayment Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents, release all or substantially all of the Collateral or release
Holdings or all or substantially all of the Subsidiary Guarantors from their
obligations under the Guarantee and Collateral Agreement, in each case without
the written consent of all Lenders; (iii) reduce the percentage specified in the
definition of Majority Facility Lenders without the written consent of all
Lenders under each affected Facility; (iv) amend, modify or waive any provision
of Section 9 without the written consent of the Administrative Agent; (v) amend,
modify or waive any provision of Section 3 without the written consent of the
Issuing Lender; (vii) amend, modify or waive any provision of Section 2.6 or 2.7
or increase or decrease the amount of Swing Line Commitment without the written
consent of the Swing Line Lender or (viii) amend or modify the definition of
"Acquisition Advance Amount", "Borrowing Base", "Eligible Accounts Receivable",
"Eligible Inventory" or "Over Advance Amount", in each case without the consent
of the Majority Revolving Credit Lenders. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Loan Parties, the Lenders, the Administrative
Agent and all future holders of the Loans. In the case of any waiver, the Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received by a responsible officer of the addressee, addressed as follows in the
case of Holdings, the Borrower and the Administrative Agent, and as set forth in
an administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified by
the respective parties hereto:
Holdings: NBC Acquisition Corp.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
100
95
Attention: Chief Financial Officer
Telecopy: 000-000-0000
The Borrower: Nebraska Book Company, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy: 000-000-0000
The Administrative Agent: The Chase Manhattan Bank
c/o The Loan and Agency Services Group
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: 000-000-0000
with a copy to: Chase Securities Inc.
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Telecopy: 000-000-0000
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or privilege hereunder or under the other Loan Documents
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or
101
96
reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees or any amendment, supplement or modification of, or any waiver or
consent under or in respect of, this Agreement, the other Loan Documents and any
such other documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "indemnitee") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
Holdings, the Borrower any of their respective Subsidiaries or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder to
any indemnitee with respect to indemnified liabilities (i) to the extent such
indemnified liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such indemnitee or (ii) arising from a lawsuit or
administrative proceeding against such indemnitee if the Borrower was not given
notice of such lawsuit or administrative proceeding and an opportunity to
participate in the defense thereof at its own expense. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to so waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any indemnitee. The agreements in this Section
shall survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings, the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of the Administrative Agent and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the
102
97
performance thereof, such Lender shall remain the holder of any such Loan for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.19, 2.20 and 2.21 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of Section 2.20, such Participant
shall have complied with the requirements of said Section and provided, further,
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
law, at any time and from time to time assign to any Lender or any affiliate
thereof or, with the consent of the Borrower and the Administrative Agent
(which, in each case, shall not be unreasonably withheld or delayed), to an
additional bank, financial institution or other entity (an "Assignee") all or
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit E, executed by
such Assignee, such Assignor and the Administrative Agent (and, where the
consent of the Borrower is required pursuant to the foregoing provisions, by the
Borrower) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment and/or
Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of an Assignor's
103
98
rights and obligations under this Agreement, such assigning Lender shall cease
to be a party hereto). Notwithstanding any provision of this Section 10.6, the
consent of the Borrower shall not be required for any assignment which occurs at
any time when any Event of Default shall have occurred and be continuing.
(d) The Administrative Agent shall maintain at its address referred
to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time and any Notes evidencing such Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan and any Note
evidencing such Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan whether or not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrower marked "cancelled". 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.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a person under common management with
such Lender, by the Borrower, the Administrative Agent and the Issuing Lender)
together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (except that no such registration and processing fee
shall be payable in the case of an Assignee which is already a Lender or is an
affiliate of a Lender or a Person under common management with a Lender), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. On or prior to such effective
date, the Borrower, at its own expense, upon request, shall execute and deliver
to the Administrative Agent (in exchange for the Revolving Credit Note and/or
Term Notes, as the case may be, of the assigning Lender) a new Revolving Credit
Note and/or Term Notes, as the case may be, to the order of such Assignee in an
amount equal to the Revolving Credit Commitment and/or applicable Term Loans, as
the case may be, assumed or acquired by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Revolving Credit
Commitment and/or Term Loans, as the case may be, upon request, a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or applicable
Term Loans, as the case may be, retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.
104
99
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan and/or of the Reimbursement
Obligations owing to each such other Lender, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to Holdings or
the Borrower, any such notice being expressly waived by Holdings and the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by Holdings or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise) to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of Holdings or
the Borrower. Each Lender agrees promptly to notify Holdings, the Borrower and
the Administrative Agent after any such setoff and application made by such
Lender, provided that the failure to give such notice shall not affect the
validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and
105
100
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of Holdings, the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be at its address set forth in Section
10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. Each of Holdings and the Borrower hereby
acknowledges that:
106
101
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to Holdings or the Borrower arising
out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Administrative Agent and Lenders,
on one hand, and Holdings and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among Holdings, the Borrower and the Lenders.
10.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. The Administrative Agent and each Lender
agrees to keep confidential all non-public information provided to it by any
Loan Party pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Participant or Assignee (each, a "Transferee") or prospective Transferee
which agrees to comply with the provisions of this Section, (c) to the
employees, directors, agents, attorneys, accountants and other professional
advisors of such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the Administrative Agent or such
Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in breach
of this Section 10.15, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, or (i) in
connection with the exercise of any remedy hereunder or under any other Loan
Document.
107
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
NBC ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
NEBRASKA BOOK COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Treasurer and Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Administrative Agent and as a Lender
By: /s/ Xxxxxxxx Xxxxxxx, Xx.
----------------------------------
Name: Xxxxxxxx Xxxxxxx, Xx.
Title: Vice President
BANKBOSTON
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Division Executive
CREDIT AGRICOLE INDOSUEZ
By: /s/ Xxxxx Xxxxx
----------------------------------
Name: Xxxxx Xxxxx, F.V.P.
Title: Head of orporate Banking
Chicago
By: /s/ Xxxx Xxxxxx
----------------------------------
Name: Xxxx Xxxxxx
Title: Senior Vice President
Branch Manager
THE FIRST NATIONAL
BANK OF CHICAGO
By: /s/ Xxxxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: First Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxx Xxxxxx
----------------------------------
Name: Xxxx Xxxxxx
Title: Senior Credit Analyst
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
NATIONAL CITY BANK
By: /s/ Xxxxxx X. Xxxx
----------------------------------
Name: Xxxxxx X. Xxxx
Title: Vice President
108
SOCIETE GENERALE
By: /s/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxxxxxx X. Xxxxxx
Title: V.P. and Manager
By: /s/ Xxxxxx Xxxxx
----------------------------------
Name: Xxxxxx Xxxxx
Title: Assistant Vice President
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXX XXXXXX AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: SR. VICE PRES. & DIRECTOR
XXXXX FARGO BANK
NATIONAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President
