Exhibit 4.1
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CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 2003
AMONG
XXXXX NURSERIES, INC., ENVIRO-SAFE LABORATORIES, INC.,
AND XXXXX SGUS INC.,
AS BORROWERS,
WITH
XXXXX NURSERIES, INC.,
AS FUNDS ADMINISTRATOR,
THE LENDERS SIGNATORY HERETO FROM TIME TO TIME,
AS LENDERS,
DEUTSCHE BANK TRUST COMPANY AMERICAS,
AS AGENT
FLEET CAPITAL CORPORATION,
as Co-Syndication Agent,
LASALLE BUSINESS CREDIT, LLC,
as Co-Syndication Agent,
XXXXXX TRUST AND SAVINGS BANK,
as Co-Documentation Agent,
and
XXXXX FARGO BANK, N.A.,
as Co-Documentation Agent
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.....................................................2
1.1 General Definitions..........................................2
1.2 Accounting Terms and Determinations.........................36
1.3 Other Interpretive Provisions...............................36
1.4 Amendment and Restatement...................................37
ARTICLE 2 LOANS..........................................................37
2.1 Commitments; Making of Loans; Delivery of Notes.............37
2.2 Borrowing Mechanics; Interim Advances.......................38
2.3 Settlements Among the Agents and the Lenders................41
2.4 Repayment of Term Loans; Repayments and Unscheduled
Reduction of Revolving Loan Commitments.....................43
2.5 Payments and Computations...................................47
2.6 Maintenance of Account......................................49
2.7 Statement of Account........................................49
2.8 Withholding and Other Taxes.................................49
2.9 Affected Lenders............................................52
2.10 Sharing of Payments.........................................53
ARTICLE 3 LETTERS OF CREDIT..............................................54
3.1 Issuance of Letters of Credit...............................54
3.2 Procedure for Issuance......................................55
3.3 Terms of Letters of Credit..................................56
3.4 Lenders' Participation......................................57
3.5 Maturity of Drawings; Interest Thereon......................58
3.6 Payment of Amounts Drawn Under Letters of Credit;
Funding of L/C Participations...............................58
3.7 Nature of Issuing Bank's Duties.............................59
3.8 Obligations Absolute........................................60
ARTICLE 4 INTEREST, FEES AND EXPENSES....................................61
4.1 Interest on LIBOR Rate Loans................................61
4.2 Interest on Prime Rate Loans................................61
4.3 Notice of Continuation and Notice of Conversion.............62
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4.4 Interest After Event of Default.............................64
4.5 Unused Line Fee.............................................64
4.6 Letter of Credit Fees.......................................64
4.7 Reimbursement of Expenses...................................65
4.8 Authorization to Charge Borrowers' Accounts.................65
4.9 Indemnification in Certain Events...........................66
4.10 Calculations and Determinations.............................66
ARTICLE 5 CONDITIONS PRECEDENT...........................................67
5.1 Conditions to Closing Date..................................67
5.2 Conditions to Each Credit Event.............................73
ARTICLE 6 REPRESENTATIONS AND WARRANTIES.................................73
6.1 Organization and Qualification..............................74
6.2 Solvency....................................................74
6.3 Rights in Collateral; Priority of Liens.....................74
6.4 No Conflict.................................................74
6.5 Enforceability..............................................75
6.6 Consents....................................................75
6.7 Financial Data..............................................75
6.8 Locations of Offices, Records and Inventory.................75
6.9 Fictitious Business Names...................................76
6.10 Subsidiaries................................................76
6.11 No Judgments or Litigation..................................76
6.12 Environmental Matters.......................................76
6.13 Labor Matters...............................................77
6.14 Compliance with Law.........................................77
6.15 ERISA.......................................................77
6.16 Intellectual Property.......................................78
6.17 Licenses and Permits........................................78
6.18 Title to Property...........................................78
6.19 Governmental Regulations....................................79
6.20 Borrowers' Taxes and Tax Returns............................79
6.21 Status of Accounts..........................................80
6.22 Material Contracts and Restrictions.........................80
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6.23 Affiliate Transactions......................................80
6.24 Accuracy and Completeness of Information....................80
6.25 No Adverse Change or Event..................................80
6.26 Accounts....................................................81
ARTICLE 7 AFFIRMATIVE COVENANTS..........................................81
7.1 Financial Information.......................................81
7.2 Inventory...................................................84
7.3 Corporate Existence and Compliance with Laws................84
7.4 ERISA.......................................................85
7.5 Books and Records...........................................85
7.6 Collateral Records..........................................86
7.7 Security Interests..........................................86
7.8 Maintenance of Properties; Insurance; Application of Net
Insurance/Condemnation Proceeds.............................87
7.9 Borrowers' Taxes............................................89
7.10 Environmental Matters.......................................89
7.11 Use of Proceeds.............................................90
7.12 Fiscal Year.................................................90
7.13 Notification of Certain Events..............................90
7.14 Intellectual Property.......................................91
7.15 Maintenance of Property.....................................91
7.16 Further Assurances..........................................91
7.17 Changes in Market...........................................91
ARTICLE 8 NEGATIVE COVENANTS.............................................91
8.1 Financial Covenants.........................................92
8.2 Capital Expenditures........................................93
8.3 No Additional Indebtedness..................................93
8.4 Liens.......................................................94
8.5 Restrictions on Fundamental Changes; Asset Sales and
Acquisitions................................................95
8.6 No Restricted Payments......................................97
8.7 No Investments; Joint Ventures..............................97
8.8 No Affiliate Transactions...................................98
8.9 Limitation on Transactions Under ERISA......................98
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8.10 Material Amendments of Material Contracts...................99
8.11 Additional Restrictive Covenants............................99
8.12 Contingent Obligations......................................99
8.13 Changes in Collateral Locations............................100
8.14 New Accounts...............................................100
8.15 Limitation on Derivative Transactions......................101
8.16 No Excess Cash.............................................101
8.17 Conduct of Business........................................101
ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES................................102
9.1 Events of Default..........................................102
9.2 Acceleration and Cash Collateralization....................104
9.3 Remedies...................................................105
9.4 Actions in Concert.........................................105
ARTICLE 10 THE AGENT.....................................................106
10.1 Appointment of Agent.......................................106
10.2 Nature of Duties of Agent..................................106
10.3 Lack of Reliance on the Agent..............................107
10.4 Certain Rights of the Agent................................107
10.5 Reliance by the Agent......................................107
10.6 Indemnification of Agent...................................108
10.7 The Agent in its Individual Capacity.......................108
10.8 Holders of Notes...........................................108
10.9 Successor Agent............................................108
10.10 Collateral Matters.........................................109
10.11 Actions with Respect to Defaults...........................110
10.12 Delivery of Information....................................111
ARTICLE 11 MISCELLANEOUS.................................................111
11.1 SUBMISSION TO JURISDICTION; WAIVERS........................111
11.2 JURY TRIAL.................................................112
11.3 GOVERNING LAW..............................................112
11.4 Delays; Partial Exercise of Remedies.......................112
11.5 Notices....................................................113
11.6 Assignability..............................................113
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11.7 Confidentiality............................................116
11.8 Indemnification............................................117
11.9 Entire Agreement; Successors and Assigns...................118
11.10 Amendments, Etc............................................118
11.11 Nonliability of Agent and Lenders..........................119
11.12 Counterparts...............................................119
11.13 Effectiveness..............................................119
11.14 Severability...............................................119
11.15 Headings Descriptive.......................................120
11.16 Maximum Rate...............................................120
11.17 Right of Setoff............................................120
11.18 Defaulting Lender..........................................121
11.19 Rights Cumulative..........................................122
11.20 Third Party Beneficiaries..................................122
11.21 Joint and Several Liability of Borrowers...................122
11.22 Appointment and Authorization of Funds Administrator.......124
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EXHIBITS
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EXHIBIT A Form of Assignment and Assumption Agreement
EXHIBIT B-1 Form of Term Note
EXHIBIT B-2 Form of Revolving Note
EXHIBIT C-1 Form of Notice of Borrowing
EXHIBIT C-2 Form of Notice of Continuation
EXHIBIT C-3 Form of Notice of Conversion
EXHIBIT D Form of Compliance Certificate
EXHIBIT E Form of Borrowing Base Certificate
EXHIBIT F Form of Letter of Credit Request
EXHIBIT G Form of Opinion of Borrowers' Counsel
EXHIBIT H Form of Opinion of O'Melveny & Xxxxx LLP
EXHIBIT I Form of Holdings Guaranty
EXHIBIT J Form of Subsidiary Guaranty
EXHIBIT K Form of Security Agreement
SCHEDULES
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SCHEDULE A Lenders; Commitments; Lending Offices
SCHEDULE B, PART 1.1 EBITDA Adjustments
SCHEDULE B, PART 3.1 Existing Letters of Credit
SCHEDULE B, PART 5.1C Corporate and Capital Structure; Ownership
SCHEDULE B, PART 5.1L Mortgaged Properties
SCHEDULE B, PART 6.1 Jurisdictions Qualified to Do Business
SCHEDULE B, PART 6.8 Principal Places of Business; Chief Executive
Offices; Locations of Books and Records; Other
Locations of Collateral
SCHEDULE B, PART 6.9 Fictitious Business Names
SCHEDULE B, PART 6.10 Subsidiaries
SCHEDULE B, PART 6.11 Outstanding Judgments; Orders; Waivers
SCHEDULE B, PART 6.12 Environmental Matters
SCHEDULE B, PART 6.15 ERISA Matters
SCHEDULE B, PART 6.16 Intellectual Property
SCHEDULE B, PART 6.18 Real Estate
SCHEDULE B, PART 6.20 Tax Matters
SCHEDULE B, PART 6.22 Material Contracts
SCHEDULE B, PART 6.23 Affiliate Transactions
SCHEDULE B, PART 6.26 Bank Accounts
SCHEDULE B, PART 8.3 Existing Indebtedness
SCHEDULE B, PART 8.4 Existing Liens
SCHEDULE B, PART 8.7 Investments
SCHEDULE B, PART 8.11 Permitted Restrictive Covenants
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CREDIT AGREEMENT
This Credit Agreement is dated as of September 30, 2003 and entered
into by and among Xxxxx Nurseries, Inc., a California corporation ("COMPANY"),
Enviro-Safe Laboratories, Inc., a Florida corporation ("ENVIRO-SAFE"), and Xxxxx
SGUS Inc., a Nevada corporation ("XXXXX SGUS" and, together with Company and
Enviro-Safe, each individually referred to herein as a "BORROWER" and
collectively as "BORROWERS" with Company acting in its capacity as Funds
Administrator for the Borrowers), each of the Lenders from time to time party
hereto, Deutsche Bank Trust Company Americas, acting in its capacity as
contractual representative for the Lenders hereunder (in such capacity, the
"AGENT"), Fleet Capital Corporation, as Co-Syndication Agent, LaSalle Business
Credit, LLC, as Co-Syndication Agent, Xxxxxx Trust and Savings Bank, as
Co-Documentation Agent and Xxxxx Fargo Bank, N.A., as Co-Documentation Agent.
Capitalized terms used in this Credit Agreement shall have the meanings ascribed
to them in SECTION 1.1.
RECITALS
WHEREAS, Company, Agent and certain lenders (the "EXISTING LENDERS")
are party to the Amended and Restated Credit Agreement dated as of June 26, 1998
(as amended through the date hereof, the "EXISTING CREDIT AGREEMENT");
WHEREAS, the Existing Lenders propose to transfer and assign all of
their rights and obligations under the Existing Credit Agreement to the Agent,
the Lenders hereunder propose to acquire the Commitments and Loans as set forth
on SCHEDULE A annexed hereto from the Agent and concurrently with such
acquisition, the Borrowers, the Lenders and the Agent desire, subject to the
terms and conditions set forth herein, to amend and restate the Existing Credit
Agreement in its entirety as set forth herein;
WHEREAS, the proceeds of the amended and restated secured credit
facilities set forth herein will continue to be used by Borrowers (i) to provide
working capital for Borrowers and their Subsidiaries and to provide funds for
other general corporate purposes of Borrowers and their Subsidiaries, (ii) to
provide for letter of credit requirements of Borrowers and their Subsidiaries
and (iii) together with the proceeds from the issuance of unsecured senior notes
in an original aggregate principal amount of at least $175,000,000 (the "SENIOR
NOTES"), to provide funds to redeem all of Company's existing 12-3/4% Senior
Subordinated Notes due 2005 in an aggregate principal amount of $78,000,000 (the
"SUBORDINATED NOTES");
WHEREAS, Holdings is the parent company to the Borrowers and will
continue to guaranty the Obligations of Borrowers hereunder and under the other
Credit Documents and to continue to secure its obligations under such guaranty
with a security interest in and lien upon substantially all of its existing and
after-acquired personal property and Real Property;
WHEREAS, Borrowers will continue to secure their Obligations hereunder
and under the other Credit Documents with a security interest in and lien upon
substantially all of their existing and after-acquired personal property and
Real Property.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified:
"ACCOUNTS" shall mean, with respect to any Person, all of such Person's
accounts, whether existing now or in the future, including, without limitation,
(A) all accounts receivable of such Person or other accounts of such Person
created by, or arising from or related to the sales of goods or rendition of
services made by such Person whether under its own name, under any of its trade
names, or through any of its divisions, or in the name of any other Person, (B)
all unpaid seller's rights of such Person (including rescission, replevin,
reclamation and stoppage in transit) relating to the foregoing or arising
therefrom, (C) all rights of such Person to any goods represented by any of the
foregoing, including returned or repossessed goods, (D) all reserves and credit
balances held by such Person with respect to any such accounts receivable or
account debtors and (E) all Guarantees or collateral for any of the foregoing.
"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning ascribed to
that term in Section 302 of ERISA.
"ACT OF BANKRUPTCY" shall have the meaning ascribed to that term in the
definition of "Eligible Accounts Receivable".
"ADJUSTED LIBOR RATE" shall mean, for any Interest Period, the rate
obtained by dividing (A) the LIBOR Rate for such Interest Period by (B) a
percentage equal to 1 MINUS any increase in the stated maximum rate (stated as a
decimal) of all reserves, if any, required to be maintained from and after the
Closing Date against "Eurocurrency liabilities" as specified in Regulation D (or
against any other category of liabilities which includes deposits by reference
to which the interest rate on LIBOR Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any Lender to United States residents).
"AFFILIATE" shall mean, with respect to any Person, any Person which
directly or indirectly through one or more intermediaries Controls, is
Controlled by, or is under common Control with, such Person, or any Person who
is a director or officer of such Person or any Subsidiary of such Person.
"AGENT" shall have the meaning ascribed to that term in the preamble to
this Credit Agreement and shall include any successor Agent appointed pursuant
to SECTION 10.9.
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
such Lender's LIBOR Lending Office in the case of a LIBOR Rate Loan, and such
Lender's Domestic Lending Office in the case of a Prime Rate Loan.
"APPLICABLE MARGIN" shall mean, at any time with respect to any LIBOR
Rate Loan or Prime Rate Loan, as the case may be, a percentage per annum equal
to the applicable percentage amount set forth below for such Loan with respect
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to LEVEL I, PROVIDED that commencing with the delivery of the first compliance
certificate that is required to be delivered pursuant to SECTION 7.1(E) that
occurs at least six months after the Closing Date, from and after any Start Date
to and including the corresponding End Date, the Applicable Margin with respect
to LIBOR Rate Loans and Prime Rate Loans, respectively, shall be a percentage
per annum equal to the applicable percentage per annum set forth below, but only
if, as of the Test Date for such Start Date, the Borrowers shall have obtained
the Leverage Ratio indicated below:
APPLICABLE MARGIN
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Revolving Loans Term Loans
------------------------ ------------------------
Prime Rate LIBOR Rate Prime Rate LIBOR Rate
Leverage Ratio Loans Loans Loans Loans
---------------------------- ---------- ---------- ---------- ----------
Level I Greater than or equal to 1.75% 2.75% 2.25% 3.25%
4.25 to 1.00
Level II Less than 4.25 to 1.00 but 1.50% 2.50% 2.00% 3.00%
greater than or equal to
3.75 to 1.00
Level III Less than 3.75 to 1.00 but 1.25% 2.25% 1.75% 2.75%
greater than or equal to
3.25 to 1.00
Level IV Less than 3.25 to 1.00 but 1.00% 2.00% 1.50% 2.50%
greater than or equal to
2.75 to 1.00
Level V Less than 2.75 to 1.00 0.75% 1.75% 1.25% 2.25%
PROVIDED, that, notwithstanding the foregoing, if the Borrowers shall fail to
deliver the compliance certificate that is required to be delivered pursuant to
SECTION 7.1(e), from the date on which such compliance certificate was so
required to be delivered until the date of actual delivery thereof, the
Applicable Margin shall be a percentage per annum equal to the applicable
percentage amount set forth above with respect to LEVEL I. If a Default or an
Event of Default shall exist at the time any reduction in the Applicable Margin
is to be implemented, that reduction shall be deferred until the date on which
such Default or Event of Default is cured or waived and at all times during the
existence of such Default or Event of Default, the Applicable Margin shall be a
percentage per annum equal to the applicable percentage amounts set forth above
with respect to LEVEL I.
"APPLICABLE MARGIN PERIOD" shall mean each period which shall commence
on the next Business Day following receipt by the Agent of financial statements
and compliance certificate required to be delivered pursuant to SECTION 7.1(b)
and 7.1(e) and which shall end on the earlier of (i) the date of actual delivery
of the next financial statements and compliance certificate pursuant to SECTION
7.1(b) and 7.1(e) and (ii) the latest date on which the next financial
statements and compliance certificate are required to be delivered pursuant to
SECTION 7.1(b) and 7.1(e).
"APPROVED FUND" means a Fund that is administered or managed by (i) a
Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an
entity that administers or manages a Lender.
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"ASSET SALE" means the sale by any Borrower or any of its Subsidiaries
to any Person other than a Borrower of (i) any of the stock of any Borrower or
any of such Borrower's Subsidiaries, (ii) substantially all of the assets of any
division or line of business of such Borrower or any of its Subsidiaries, or
(iii) any other assets (whether tangible or intangible) of such Borrower or any
of its Subsidiaries (other than (a) inventory sold in the ordinary course of
business, (b) any other assets, other than machinery or equipment, to the extent
that the aggregate value of such assets sold in any single transaction or
related series of transactions is equal to $250,000 or less, (c) machinery or
equipment, to the extent that the aggregate value of machinery or equipment sold
in any single transaction or related series of transactions is equal to $500,000
or less and (d) equipment sold in Sale/Leaseback Transactions, to the extent
that the aggregate value of such equipment so sold in any year is equal to
$500,000 or less).
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean an assignment and
assumption agreement substantially in the form of EXHIBIT A entered into by an
assigning Lender and an assignee Lender, and which has been accepted by the
Agent, in accordance with SECTION 11.6.
"AUDITORS" shall mean a nationally-recognized firm of independent
certified public accountants selected by the Borrowers and reasonably
satisfactory to the Agent. For purposes of this Credit Agreement, the Borrowers'
current firm of independent certified public accountants, PricewaterhouseCoopers
LLP, shall be deemed to be satisfactory to the Agent.
"AVERAGE TOTAL DEBT" shall mean, as at the last day of any Fiscal
Quarter, the aggregate amount of all Indebtedness of the Consolidated Entity
determined in accordance with GAAP as of the last day of such Fiscal Quarter;
PROVIDED that for purposes of calculating the amount of such Indebtedness
derived from Revolving Loans, the average of the Revolving Loans as of the last
day of each month over a rolling twelve-month period shall be used.
"BANKRUPTCY DEFAULT" shall mean a Default which is such by virtue of
SECTION 9.1(e)(ii).
"BORROWER" and "BORROWERS" shall have the meanings ascribed to such
terms in the preamble to this Credit Agreement.
"BORROWER'S ACCOUNT" and "BORROWERS' ACCOUNTS" shall have the meanings
ascribed to such terms in SECTION 2.6.
"BORROWER TAXES" shall have the meaning ascribed to that term in
SECTION 6.20(b).
"BORROWING" shall mean a borrowing consisting of Loans of the same Type
advanced, continued or converted on the same day by the Lenders or the Agent.
"BORROWING BASE" shall mean:
(a) Subject to CLAUSES (b) AND (c) below, at any time, the amount equal
at such time to:
(i) eighty five percent (85%) of the Value of Eligible
Accounts Receivable of each Borrower net of any Dilution Reserves, PLUS
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(ii) the lesser of eighty-five percent (85%) of the Net
Orderly Liquidation Value of all Inventory or fifty-five percent (55%)
of the Value of Eligible Inventory (net of reserves established for
shrinkage of Inventory) of each Borrower, MINUS
(iii) the aggregate total exposure of each Borrower under all
secured Derivative Contracts, each of which shall be marked to market
as of the date of each calculation of the Borrowing Base; MINUS
(iv) the amount of any reserves established by the Agent
pursuant to CLAUSE (b) below (but without duplication of any reserves,
deductions or ineligibility categories already established for the same
purpose); MINUS
(v) the then outstanding amount of the Reserved Lagoon Valley
Proceeds.
(b) The Agent at any time in the exercise of its Permitted Discretion
shall be entitled to (i) establish and increase or decrease reserves against
Eligible Accounts Receivable and Eligible Inventory, (ii) reduce the advance
rates to be applied under CLAUSES (a)(i) AND (ii) above to a level below the
rates stated therein or (following any such reduction or following any increase
in such advance rates pursuant to CLAUSE (c) below) restore such advance rates
to any level equal to or below the advance rates stated in CLAUSES (a)(i) and
(ii) above, (iii) impose additional restrictions (or eliminate any such
additional restrictions) to the standards of eligibility set forth in the
respective definitions of "Eligible Accounts Receivable" and "Eligible
Inventory" and (iv) establish and increase or decrease a reserve in the amount
of interest payable by the Borrowers hereunder, including interest on Loans and
drawings under Letters of Credit. Except as otherwise agreed upon by the Agent
and Borrowers with respect to reserves for shrinkage, the initial determinations
of eligibility with respect to Accounts Receivable and Inventory shall be based
on the report of FTI Consulting Service, Inc. dated as of June 30, 2003.
(c) The Agent at any time in the exercise of its Permitted Discretion
shall be entitled, with the consent of all of the Lenders, to increase the
advance rates to a level above the rates stated in CLAUSES (A)(I) and (II)
above.
"BORROWING BASE CERTIFICATE" shall have the meaning ascribed to that
term in SECTION 7.1(e).
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
legal holiday on which commercial banks in New York, New York, are generally
closed. When used in connection with LIBOR Rate Loans, this definition will also
exclude any day on which commercial banks are not open for dealing in Dollar
deposits in the London (England, U.K.) interbank market. When used in connection
with any Letter of Credit, this definition will also exclude any day on which
the applicable Issuing Bank is not open for the general conduct of its business.
"CAPITAL EXPENDITURES" shall mean, of any Person for any period, the
sum of (a) all expenditures capitalized by such Person for financial statement
purposes in accordance with GAAP PLUS, without duplication, (b) the entire
principal amount of any debt (including obligations under capitalized leases)
assumed or incurred by such Person in connection with any such expenditures,
PROVIDED that, (x) in connection with the purchase or other acquisition of any
asset (the "REPLACEMENT ASSET") by Borrowers or any of their Subsidiaries
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substantially concurrently with the sale of, or pursuant to an exchange for or
trade-in of, any existing asset of such Borrower or such Subsidiary of like kind
and character (the "REPLACED ASSET"), there shall be included in Capital
Expenditures only the excess, if any, of the gross purchase price of the
Replacement Asset over the credit given by the seller of the Replacement Asset
for the trade-in or exchange of the Replaced Asset or the amount of proceeds
received from the sale of the Replaced Asset, as the case may be, and (y) for
purposes of SECTION 8.2 only, insurance proceeds and any other payments received
on account of any casualty loss applied to the repair or replacement of the
property affected by such casualty loss shall not constitute Capital
Expenditures; provided further that Capital Expenditures shall not include any
expenditures to the extent such expenditures constitute a reinvestment of the
Reserved Lagoon Valley Proceeds or expenditures of up to $1,000,000 in aggregate
cash payments from the Irvine Company related to the relocation of certain
operations in Irvine located on property leased to Company by the Irvine Company
and reinvested in another nursery location.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person
"CAPITAL SECURITY" shall mean, with respect to any Person, (a) any
share of capital stock of or other unit of ownership interest in such Person and
(b) any security convertible into, or any option, warrant or other right to
acquire, any share of capital stock of or other unit of ownership interest in
such Person.
"CARRY BACK EXPENDITURES" shall mean Capital Expenditures made or
incurred by Borrowers and their Subsidiaries during the period from the first
day of any Fiscal Year through the last day in February of such Fiscal Year
pursuant to a binding commitment entered into in the immediately preceding
Fiscal Year pursuant to which commitment Borrowers commenced the applicable
project and made or incurred Capital Expenditures in such immediately preceding
Fiscal Year for such project. For purposes of calculating the financial
covenants set forth in Sections 8.1 and 8.2 of this Agreement and for purposes
of calculating Excess Cash Flow, any Carry Back Expenditures shall be deemed to
be Capital Expenditures made or incurred in such immediately preceding Fiscal
Year and shall not be included as Capital Expenditures in the Fiscal Year in
which actually made or incurred.
"CASH COLLATERAL ACCOUNT" shall have the meaning ascribed to that term
in SECTION 8.7(h).
"CASH EQUIVALENTS" shall mean (a) securities issued, guarantied or
insured by the United States or any of its agencies with maturities of not more
than one year from the date acquired, (b) certificates of deposit with
maturities of not more than one year from the date acquired issued by a U.S.
federal or state chartered commercial bank of recognized standing, which has
capital and unimpaired surplus in excess of $250,000,000 and which bank or its
holding company has a short-term commercial paper rating of at least A-1 or the
equivalent by Standard & Poor's Corporation and at least P-1 or the equivalent
by Xxxxx'x Investors Services, Inc., (c) reverse repurchase agreements with
terms of not more than seven days from the date acquired, for securities of the
type described in CLAUSE (a) above and entered into only with commercial banks
having the qualifications described in CLAUSE (b) above, (d) commercial paper,
other than commercial paper issued by any Borrower or any Affiliate of any
Borrowers, issued by any Person incorporated under the laws of the United States
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or any state thereof and rated at least A-1 or the equivalent thereof by
Standard & Poor's Corporation and at least P-1 or the equivalent thereof by
Xxxxx'x Investors Services, Inc., in each case with maturities of not more than
one year from the date acquired, and (e) investments in money market funds which
have net assets of at least $250,000,000 and at least eighty-five percent (85%)
of whose assets consist of securities and other obligations of the type
described in CLAUSES (a) THROUGH (d) above.
"CHANGE OF CONTROL" shall mean one or more of the following events:
(a) a change shall occur in the Board of Directors of Holdings
so that a majority of the Board of Directors of Holdings ceases to consist of
the individuals who constituted the Board of Directors of Holdings on the
Closing Date (or individuals whose election or nomination for election was
approved by a vote of at least a majority of the directors then in office who
either were directors of Holdings on the Closing Date or whose election or
nomination for election previously was so approved); or
(b) any Person or Group (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission), other than MDCP and its Affiliates,
shall become or be the owner, directly or indirectly, beneficially or of record,
of shares representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of Holdings on a fully
diluted basis, unless MDCP and its Affiliates shall own and continue to so own
capital stock representing not less than a majority of such aggregate ordinary
voting power; or
(c) MDCP shall cease to own, directly or indirectly,
beneficially or of record, at least (i) 20% of each of the Holdings Common Stock
and any other class of voting stock of Holdings or (ii) 50% of the Holdings
Common Stock owned by MDCP on the Closing Date; or
(d) Holdings shall cease to beneficially own and control 100%
of the issued and outstanding shares of capital stock of Company or shall cease
to have the ability to elect all of the Board of Directors of Company; or
(e) a "CHANGE OF CONTROL" or similar event occurs under the
terms of any Indebtedness permitted pursuant to SECTION 8.3(G) or any other
document or agreement evidencing Indebtedness of the Borrowers or any of their
Subsidiaries (other than the Obligations).
"CLOSING DATE" shall mean the date on or before October 31, 2003 on
which all the conditions set forth in SECTION 5.1 are satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the regulations issued thereunder.
"COLLATERAL" shall mean any and all assets and rights and interests in
or to property of each Borrower and each of the other Credit Parties, whether
real or personal, tangible or intangible, on which a Lien is granted or
purported to be granted to Agent or any Lender pursuant to the Credit Documents.
"COLLATERAL ACCESS AGREEMENTS" shall mean any landlord waivers,
mortgagee waivers, bailee letters and any similar usage, access or
7
acknowledgment agreements of any Person, such as a warehouseman, processor,
lienholder or lessor, in possession of any assets of any Borrower or any other
Credit Party, in each case in form and substance reasonably satisfactory to the
Agent.
"COLLATERAL DOCUMENTS" shall mean the Security Agreement, the Control
Agreements, the Mortgages and all other contracts, instruments and other
documents now or hereafter executed and delivered in connection with this Credit
Agreement, pursuant to which Liens are granted or are purported to be granted to
the Agent in the Collateral for the benefit of some or all of the Agent, the
Lenders and the Issuing Banks.
"COMMITMENT" of any Lender shall, subject to SECTION 11.18(c)(ii), mean
the amount set forth opposite such Lender's name on SCHEDULE A, under the
heading "Commitment," as such amount may be reduced from time to time or
terminated pursuant to the terms of this Credit Agreement.
"CONSOLIDATED ENTITY" shall mean the Borrowers and each of their
respective Subsidiaries which are such by virtue of CLAUSE (a) of the definition
thereof.
"CONSOLIDATED NET INCOME" shall mean for any period the consolidated
net income of the Consolidated Entity for such period.
"CONTINGENT OBLIGATION" as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Derivative Contracts. Contingent Obligations shall include (a) the direct
or indirect guaranty, endorsement (otherwise than for collection or deposit in
the ordinary course of business), co-making, discounting with recourse or sale
with recourse by such Person of the obligation of another, (b) the obligation to
make take-or-pay or similar payments if required regardless of non-performance
by any other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (Y) to maintain the solvency or any balance sheet
item, level of income or financial condition of another if, in the case of any
agreement described under subclauses (X) or (Y) of this sentence, the primary
purpose or intent thereof is as described in the preceding sentence. The amount
of any Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTINUATION" shall have the meaning ascribed to that term in SECTION
4.3.
"CONTROL" shall mean, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of
8
management and policies of a business, whether through the ownership of voting
securities, by contract or otherwise either alone or in conjunction with others
or any group. The words "CONTROLLING" and "CONTROLLED" have correlative
meanings.
"CONTROL AGREEMENT" shall mean an agreement in writing, in form and
substance reasonably satisfactory to Agent, by and among Agent, the applicable
Credit Party and any financial institution, securities intermediary, commodity
intermediary or other Person who has custody, control or possession of any
receipts on Accounts, deposits or investment property of such Credit Party,
pursuant to which such financial institution, securities intermediary, commodity
intermediary or such other Person acknowledges that such financial institution,
securities intermediary, commodity intermediary or other Person has custody,
control or possession of such receipts, deposits or investment property on
behalf of Agent, that it will comply with entitlement orders originated by Agent
with respect to such receipts, deposits or investment property, or other
instructions of Agent, or (as the case may be) apply any amounts distributed on
account of such assets as directed by Agent, in each case, without the further
consent of such Credit Party and including such other terms and conditions as
Agent may require.
"CONVERT," "CONVERSION" and "CONVERTED" each shall refer to a
conversion of Loans of one Type into Loans of another Type pursuant to SECTION
4.3.
"COVERED TAXES" shall have the meaning ascribed to that term in SECTION
2.8(a).
"CREDIT AGREEMENT" shall mean this credit agreement, dated as of the
date hereof, as the same may be modified, amended, extended, restated, amended
and restated or supplemented from time to time.
"CREDIT DOCUMENTS" shall mean, collectively, this Credit Agreement, the
Notes, Letters of Credit, each L/C Application, each of the Collateral
Documents, each Guaranty, the Fee Letter and all other documents, agreements,
instruments and certificates now or hereafter executed and delivered in
connection herewith or therewith, as the same may be modified, amended,
extended, restated, amended and restated or supplemented from time to time.
"CREDIT EVENT" shall mean (A) the making of a Loan and/or (B) the
issuance of any Letter of Credit.
"CREDIT PARTY" OR "CREDIT PARTIES" shall mean, individually or
collectively as the context requires, Holdings, each Borrower and each other
Person (other than the Lenders, the Agent and the Issuing Banks) party to the
Credit Documents (other than the Collateral Access Agreements, the Control
Agreements and any opinions of counsel delivered to the Agent, any Lender or any
Issuing Bank in connection with any Credit Document).
"DBT ACCOUNT" shall have the meaning ascribed to that term in SECTION
2.5(b).
"DBTCO." shall mean Deutsche Bank Trust Company Americas, New York
banking corporation, acting in its individual capacity, and its successors and
assigns.
"DEFAULT" shall mean an event, condition or default which with the
giving of notice, the passage of time or both would be an Event of Default.
9
"DEFAULTING LENDER" shall have the meaning ascribed to that term in
SECTION 11.18(b).
"DEPOSITORY ACCOUNTS" shall have the meaning ascribed to that term in
SECTION 2.5(b)(i).
"DERIVATIVE CONTRACT" shall mean an agreement, whether or not in
writing and including any master agreement, documenting, evidencing or relating
to any Derivative Transaction between any Borrower, or any Subsidiary of any
Borrower, and another Person.
"DERIVATIVE TRANSACTION" shall mean (a) an interest-rate transaction,
including an interest-rate swap, basis swap, forward rate agreement, interest
rate option (including a cap, collar, and floor), and any other instrument
linked to interest rates that gives rise to similar credit risks (including
when-issued securities and forward deposits accepted), (b) an exchange-rate
transaction, including a cross-currency interest-rate swap, a forward
foreign-exchange contract, a currency option, and any other instrument linked to
exchange rates that gives rise to similar credit risks, (c) an equity derivative
transaction, including an equity-linked swap, an equity-linked option, a forward
equity-linked contract, and any other instrument linked to equities that gives
rise to similar credit risk and (d) a commodity (including precious metal)
derivative transaction, including a commodity-linked swap, a commodity-linked
option, a forward commodity-linked contract, and any other instrument linked to
commodities that gives rise to similar credit risks.
"DILUTION" means, for any period with respect to all Borrowers, the
fraction, expressed as a percentage, the numerator of which is the aggregate
amount of reductions in the Accounts of the Borrowers for such period other than
by reason of dollar-for-dollar cash payment and by reason of prepetition
adjustments resulting from the insolvency proceedings and related store closures
of K-Mart Corporation, and the denominator of which is the aggregate dollar
amount of the sales of the Borrowers for such period other than prepetition
sales to K-Mart Corporation.
"DILUTION RESERVES" means, in the event that Dilution with respect to
the Accounts of the Borrowers for the immediately preceding twelve month period
exceeds five and one quarter percent (5.25%), the reserves which shall be
established by the Agent in an amount equal to such excess over five and one
quarter percent.
"DISBURSEMENT ACCOUNT" and "DISBURSEMENT ACCOUNTS" shall have the
meanings ascribed to such terms in Section 2.2(a).
"DISBURSEMENT ACCOUNT BANK" shall mean those banks listed as
"Disbursement Account Banks" on SCHEDULE B, PART 6.26 or any other bank selected
from time to time by the Funds Administrator and reasonably acceptable to the
Agent.
"DOL" shall mean the United States Department of Labor and any
successor department or agency.
"DOLLARS" and the sign "$" shall each mean freely transferable lawful
money of the United States of America.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
10
name on SCHEDULE A, as such schedule may be amended from time to time, or in the
relevant Assignment and Assumption Agreement.
"DOMESTIC SUBSIDIARY" means any Subsidiary of Company that is
incorporated or organized under the laws of the United States of America, any
state thereof or in the District of Columbia.
"EBITDA" shall mean, for any fiscal period, without duplication, (a)
Consolidated Net Income (other than extraordinary items) of the Consolidated
Entity for such period, PLUS (b) the amount of all Interest Expense, income tax
expense, depreciation and amortization, including amortization of any goodwill
or other intangibles, for such period, to the extent deducted in calculating
Consolidated Net Income for such period, PLUS (c) certain adjustments not to
exceed in each case the lesser of the amounts actually incurred or the amounts
set forth for the periods in SCHEDULE B, PART 1.1 related to (x) the insolvency
and related store closures of K-Mart Corporation, and (y) cash severance
payments made by Company, and PLUS or MINUS (as the case may be) (d)(i) any
other non-cash charges including any non-cash goodwill impairment charges,
marked to market expenses for Derivative Contracts and write-offs in connection
with fixed assets; PROVIDED there shall be excluded any such non-cash charges
which require an accrual of or a reserve for cash charges for any future period
and (ii) any gains and losses attributable to any fixed asset sales, which have
been, in the case of either CLAUSE (i) or (ii), subtracted or added, as the case
may be, in calculating Consolidated Net Income for such period, all determined
in accordance with GAAP; PROVIDED FURTHER that in no event shall any gains or
losses attributable to the Sun Gro Sale be included in any calculation of
EBITDA.
"EFFECTIVE DATE" shall mean, as applied to an L/C Notice of Drawing,
the Business Day on which the Agent receives such L/C Notice of Drawing if such
notice is received by it not later than 12:00 noon (eastern standard time) on
such day and, if received after such time, the next succeeding Business Day.
"ELIGIBLE ACCOUNTS RECEIVABLE" shall mean Accounts of a Borrower
payable in Dollars. In determining the amount to be so included, the face amount
of such Accounts shall exclude any such Accounts that the Agent determines to be
ineligible pursuant to the definition of the term "Borrowing Base" set forth
herein. For purposes of this definition of Eligible Accounts Receivable,
references to invoices shall mean and include invoices reflected on the internal
records and information systems of Borrowers, including invoices reflected in
the "future" column on Borrowers' internal records and information systems.
Unless otherwise approved in writing by the Agent, no Account of any Borrower
shall be deemed to be an Eligible Account Receivable if:
(a) it arises out of a sale made by such Borrower to an
Affiliate of such or any other Borrower or an employee of any Borrower;
or
(b) the Account is unpaid more than (i) 60 days after the
original payment due date and/or (ii) except as set forth in clause (c)
below, 120 days after the original invoice date; or
(c) (i) the Account is unpaid at the earlier to occur of (x)
60 days after the original payment due date or (y) 180 days after the
invoice date, with respect to Accounts the account debtor on which is
11
an independent garden center or garden center chain and for which the
invoice provides that payment is due more than 30 days but less than or
equal to 180 days from the date of such invoice; PROVIDED that the
aggregate amount of all such Accounts that may constitute Eligible
Accounts Receivable shall not exceed 35% of all Eligible Accounts
Receivable; or (ii) the invoice for the Account provides that payment
is due more than 180 days after the invoice date;
(d) it is from the same account debtor (or any Affiliate
thereof) and fifty percent (50%) or more, in face amount, of all
Accounts from such account debtor (and any Affiliate thereof) are
ineligible pursuant to CLAUSES (b) or (c)(i) above; or
(e) the Account, when aggregated with all other Accounts of
such account debtor (and any Affiliate thereof), exceeds (i) thirty
percent (30%) of all Eligible Accounts Receivable in the case of Home
Depot Inc.; (ii) thirty percent (30%) of all Eligible Accounts
Receivable in the case of Xxxx'x Companies, Inc.; and (iii) fifteen
percent (15%) of all Eligible Accounts Receivable in the case of any
other account debtor, in face value of all Accounts of the Borrowers
combined then outstanding, to the extent of such excess, PROVIDED that
Accounts supported or secured by an irrevocable letter of credit in
form and substance reasonably satisfactory to the Agent, issued by a
financial institution reasonably satisfactory to the Agent, and duly
transferred to the Agent (together with sufficient documentation to
permit direct draws by the Agent) shall be excluded to the extent of
the face amount of such letter of credit for the purposes of such
calculation; or
(f) (i) the account debtor is also a creditor of such
Borrower, (ii) the account debtor has disputed its liability on, or the
account debtor has made any claim with respect to, such Account or any
other Account due from such account debtor to such Borrower, which has
not been resolved or (iii) the Account otherwise is or may reasonably
be expected to become subject to any right of setoff by the account
debtor; PROVIDED that any Account deemed ineligible pursuant to this
CLAUSE (f) shall only be ineligible to the extent of the amount owed by
such Borrower to the account debtor, the amount of such dispute or
claim, or the amount of such setoff, as applicable; or
(g) the account debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or if a decree or
order for relief has been entered by a court having jurisdiction over
the account debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or if any other petition
or other application for relief under the federal bankruptcy laws has
been filed by or against the account debtor, or if the account debtor
has filed a certificate of dissolution under applicable state law or
shall be liquidated, dissolved or wound-up, or shall authorize or
commence any action or proceeding for dissolution, winding-up or
liquidation, or if the account debtor has failed, suspended business,
declared itself to be insolvent, is generally not paying its debts as
they become due or has consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs (any such act or event an
"ACT OF BANKRUPTCY"), unless the payment of Accounts from such account
debtor is secured by assets of, or guaranteed by, in either case in a
12
manner satisfactory to the Agent, a Person with respect to which an Act
of Bankruptcy has not occurred and that is acceptable to the Agent or,
if the Account from such account debtor arises subsequent to a decree
or order for relief with respect to such account debtor under the
federal bankruptcy laws, as now or hereafter in effect, the Agent shall
have determined that the timely payment and collection of such Account
will not be impaired; or
(h) the sale is to an account debtor outside of the United
States, Canada or Puerto Rico, unless (i) such account debtor has
supplied such Borrower with an irrevocable letter of credit in form and
substance reasonably satisfactory to the Agent, issued by a financial
institution reasonably satisfactory to the Agent and which has been
duly transferred to the Agent (together with sufficient documentation
to permit direct draws by the Agent) or (ii) such Account is subject to
credit insurance payable to Agent issued by an insurer and on terms and
in an amount reasonably acceptable to Agent; or
(i) the sale to the account debtor is on a xxxx-and-hold or
consignment basis or, other than sales of color bedding products made
from the Borrowers' nurseries, the sale to the account debtor is on a
guarantied sale, sale-and-return, sale on approval or made pursuant to
any other written agreement providing for repurchase or return; or
(j) the Agent determines in its Permitted Discretion that
collection of such Account is insecure or that such Account may not be
paid by reason of the account debtor's financial inability to pay; or
(k) the account debtor is the United States of America, any
State or any political subdivision, department, agency or
instrumentality thereof, unless such Borrower duly assigns its rights
to payment of such Account to the Agent pursuant to the Assignment of
Claims Act of 1940 (31 U.S.C. ss. 3727 et seq.) or complies with any
similar State or local law as Agent shall require; or
(l) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor or the
services giving rise to such Account have not been performed by such
Borrower and accepted by the account debtor or the Account otherwise
does not represent a final sale; or
(m) any documentation relating to the Account does not comply
with all applicable legal requirements, including, where applicable,
the Federal Consumer Credit Protection Act, the Federal Truth in
Lending Act and Regulation Z of the Board of Governors of the Federal
Reserve System; or
(n) the Agent does not have a valid and perfected first
priority security interest in such Account or the Account does not
otherwise conform to the representations and warranties contained in
the Credit Agreement, any Security Agreement or any of the other
Collateral Documents; or
(o) the Accounts are subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit of
the applicable account debtor; or
13
(p) the Accounts are evidenced by or arise under any
instrument or chattel paper unless such instruments or chattel paper
have been pledged to Agent containing such endorsement as Agent shall
require; or
(q) the account debtor has a presence in a State requiring the
filing of Notice of Business Activities Report or similar report in
order to permit such Borrower to seek judicial enforcement in such
State of payment of such Account unless such Borrower has qualified to
do business in such State or has filed a Notice of Business Activities
Report or equivalent report for the then current year or such failure
to file and inability to seek judicial enforcement is capable of being
remedied without any material delay or material cost; or
(r) the Account consists of progress xxxxxxxx (such that the
obligation of the account debtor with respect to such Account is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto);
(s) the account debtor is owed amounts in respect of trade
promotions or rebates, but only to the extent of such owed amounts;
(t) the sale to the account debtor is subject to cash in
advance or cash on delivery terms; or
(u) the Account is deemed by the Agent in its Permitted
Discretion to be otherwise ineligible for inclusion in the calculation
of the Borrowing Base.
"ELIGIBLE INVENTORY" shall mean Inventory of a Borrower that consists
of raw materials, work in progress and finished goods. In determining the amount
to be so included, the amount of such Inventory shall exclude any Inventory that
the Agent determines to be ineligible pursuant to the definition of the term
"Borrowing Base" set forth herein. Unless otherwise approved in writing by the
Agent, no Inventory of any Borrower shall be deemed Eligible Inventory if:
(a) the Inventory has been returned or rejected by such
Borrower's customers and is not otherwise saleable; or
(b) the Inventory is not owned solely by such Borrower or such
Borrower does not have good, valid and marketable title thereto; or
(c) the Inventory is in transit to a location other than to a
customer; or
(d) the Inventory is not stored on property that is either (i)
owned or leased by such or any other Borrower or (ii) owned or leased
by a warehouseman that has contracted with such Borrower to store
Inventory on such warehouseman's property (PROVIDED that, with respect
to Inventory of any Borrower, (A) stored on property leased by a
Borrower, such Borrower shall have delivered to the Agent a Collateral
Access Agreement executed by the lessor of such property (provided that
failure to deliver a Collateral Access Agreement referred to in this
clause (A) for the Atlantic Greenhouses property located in
Pipersville, Pennsylvania, the property owned by the Irvine Unified
School District in Irvine, California, and the Hillsboro Landfill
property located in Hillsboro, Oregon, shall not render the applicable
items ineligible for 120 days from the Closing Date to the extent that
14
Agent establishes reserves in an amount at least equal to four months
rent payable thereunder, (B) stored on property owned or leased by a
warehouseman, such Borrower shall have delivered to the Agent a
Collateral Access Agreement executed by such warehouseman) and (C)
stored on property owned by such Borrower which is subject to a
mortgage in favor of any Person other than Agent or any Lender, such
Borrower shall have delivered to the Agent a Collateral Access
Agreement executed by the mortgagee of such property; or
(e) the Inventory is not subject to a valid and perfected
first priority security interest in favor of the Agent except, with
respect to Eligible Inventory stored at sites described in CLAUSE
(d)(ii) of this sentence, for Liens for normal and customary
warehousing charges; or
(f) the Inventory is obsolete or slow moving (in each case as
determined by the Agent in its Permitted Discretion) or the Inventory
does not otherwise conform to the representations and warranties
contained in the Credit Agreement, the Security Agreement or any of the
other Collateral Documents; or
(g) the Inventory was not produced, in any material respect,
in accordance with or does not meet all standards imposed by all
Requirements of Law or by any government agency, or department or
division thereof, having regulatory authority over such goods or their
production, use or sale; or
(h) the Inventory consists of spare parts for equipment,
packaging and shipping materials or supplies used or consumed in a
Borrower's business; or
(i) the Inventory is purchased or sold on consignment; or
(j) the Inventory is located outside the United States of
America or Canada (PROVIDED that, with respect to Inventory in Canada,
Agent has determined in its Permitted Discretion that it has a valid
and perfected first priority security interest in such Inventory); or
(k) the Inventory is subject to a license agreement or other
arrangement with a third party which, in Agent's determination in its
Permitted Discretion, restricts the ability of Agent to exercise its
rights under any of the Credit Documents with respect to such Inventory
unless such third party has entered into an agreement in form and
substance satisfactory to Agent in its Permitted Discretion permitting
Agent to exercise its rights with respect to such Inventory or Agent
has otherwise agreed to allow such Inventory to be eligible in Agent's
Permitted Discretion; or
(l) the Inventory is deemed by the Agent in its Permitted
Discretion to be otherwise ineligible for inclusion in the calculation
of the Borrowing Base.
"END DATE" shall mean, for any Applicable Margin Period, the last day
of such Applicable Margin Period.
15
"ENVIRONMENTAL CLAIMS" shall mean all accusations, allegations, notices
of violation, liens, claims, demands, suits, or causes of action for any damage,
including, without limitation, personal injury or property damage, arising out
of or related to Environmental Conditions or pursuant to applicable
Environmental Laws. By way of example only (and not by way of limitation),
Environmental Claims include (i) claims for violations of or obligations under
any contract related to applicable Environmental Laws or Environmental
Conditions between the Borrower or any Subsidiary and any other person, (ii)
claims for actual or threatened damages to natural resources, (iii) claims for
the recovery of response costs, or administrative or judicial orders directing
the performance of investigations, responses or remedial actions under any
Environmental Laws, (iv) claims pursuant to applicable Environmental Laws or
Environmental Conditions for restitution, contribution, or indemnity, (v) claims
for fines, penalties or liens against property pursuant to applicable
Environmental Laws or Environmental Conditions, (vi) claims pursuant to
applicable Environmental Laws or arising out of Environmental Conditions for
injunctive relief or other orders or notices of violation from federal, state or
local agencies or courts, and (vii) with regard to any present or former
employees, claims relating to exposure to or injury from Environmental
Conditions.
"ENVIRONMENTAL CONDITIONS" shall mean releases or threatened releases
into or present in the environment (whether or not at the Real Estate),
including natural resources (E.G., flora and fauna), soil, surface water, ground
water, any present or potential drinking water supply, subsurface strata or
ambient air of Hazardous Materials, relating to or arising out of the use,
handling, storage, treatment, disposal, recycling, generation, or transportation
of Hazardous Materials by the Borrower or any Subsidiary, or by their respective
agents, representatives, employees or independent contractors when acting in
such capacity on behalf of the Borrower or any Subsidiary. With respect to
Environmental Claims by third parties, Environmental Conditions also include the
exposure of persons to Hazardous Materials at the work place or the exposure of
persons or property to Hazardous Materials migrating from or otherwise emanating
from the Facilities.
"ENVIRONMENTAL LAWS" shall mean all applicable federal, state and local
laws, statutes, ordinances, regulations, rules, judgments, orders, notice
requirements, published guidance or policy documents or Requirements of Law
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground water, land
surface, flora, fauna or subsurface strata), including, without limitation,
those relating to emissions, discharges, releases or threatened releases of
Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
"EQUIPMENT" shall mean, with respect to any Person, all of such
Person's equipment, including machinery, equipment, office equipment and
supplies, computers and related equipment, furniture, furnishings, tools,
tooling, jigs, dies, fixtures, manufacturing implements, fork lifts, trucks,
trailers, motor vehicles, and other equipment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
and all final or temporary regulations promulgated thereunder and published,
generally applicable rulings entitled to precedential effect.
16
"ERISA AFFILIATE" shall mean any Person required at any relevant time
to be aggregated with any Borrower or any Subsidiary of any Borrower under
Sections 414(b), (c), (m) or (o) of the Code.
"EVENTS OF DEFAULT" shall have the meaning ascribed to that term in
ARTICLE 9 of this Credit Agreement.
"EXCESS AVAILABILITY" shall mean (a) the lesser of the aggregate amount
of the Revolving Loan Commitments and the Borrowing Base, MINUS (b) the
aggregate of outstanding Revolving Loans, MINUS (c) the aggregate amount of
outstanding Letters of Credit.
"EXCESS CASH FLOW" shall mean, for any Fiscal Year, EBITDA of the
Borrowers and their Subsidiaries for such Fiscal Year MINUS (without
duplication) (a) the sum of (i) all federal, state and foreign income taxes paid
or payable in cash by the Borrowers and their Subsidiaries for such Fiscal Year,
(ii) all Capital Expenditures made in accordance with SECTION 8.2 during such
Fiscal Year by the Borrowers and their Subsidiaries (net of the proceeds of any
related Asset Sale or the proceeds or assumption of any related Indebtedness
permitted to be incurred hereunder) including any Carry Back Expenditures, (iii)
all Interest Expense, other than in respect of any intercompany indebtedness,
paid or payable in cash by the Borrowers and their Subsidiaries for such Fiscal
Year, (iv) any voluntary and scheduled payments made by the Borrowers of
principal with respect to all Indebtedness, including payments under Capital
Leases, but excluding payments of Revolving Loans which do not reduce
Commitments, for such Fiscal Year, (v) any net increase in the difference
between (a) current assets (other than cash and Cash Equivalents) and net
current deferred tax assets and (b) current liabilities of the Borrowers and
their Subsidiaries (excluding therefrom (x) the current portion of any long term
debt, (y) any accrued and unpaid interest and (z) any income taxes payable and
net current deferred tax liabilities) since the last Business Day of the
preceding Fiscal Year and (vi) the amount of rent reduction received from the
Irvine Company for such Fiscal Year as a result of the relocation of certain of
the Company's operations in Irvine to another nursery location not to exceed
$2,000,000 in the aggregate; and PLUS (without duplication) (b) any net decrease
in the difference between (a) current assets (other than cash and Cash
Equivalents) and net current deferred tax assets and (b) current liabilities of
the Borrowers and their Subsidiaries (excluding therefrom (x) the current
portion of any long term debt, (y) any accrued and unpaid interest and (z) any
income taxes payable and net current deferred tax liabilities) since the last
Business Day of the preceding Fiscal Year; PROVIDED that in no event shall the
Sun Gro Canadian Tax Receivable be included for any purpose in the determination
of Excess Cash Flow. To the extent Carry Back Expenditures are included pursuant
to the foregoing CLAUSE (a)(ii) for any Fiscal Year, such Carry Back
Expenditures may not thereafter be included as Capital Expenditures pursuant to
such CLAUSE (a)(ii) in the following Fiscal Year in which such Carry Back
Expenditures were actually made or incurred.
"EXISTING L/C" shall have the meaning ascribed to that term in SECTION
3.1(c).
"EXPENSES" shall mean all present and future expenses incurred by or on
behalf of the Agent, in its capacity as Agent, in connection with the Credit
Agreement, any other Credit Document or otherwise, whether incurred heretofore
or hereafter, which expenses shall include, without being limited to, the cost
of record searches, the fees and expenses of attorneys and paralegals, all costs
and expenses incurred by the Agent in opening bank accounts and lockboxes,
depositing checks, receiving and transferring funds, and any charges imposed on
the Agent due to insufficient funds of deposited checks and the Agent's standard
17
fee relating thereto, collateral examination fees and expenses, fees and
expenses of accountants, appraisers, field examiners or other consultants,
experts or advisors employed or retained by the Agent, fees and expenses
incurred by the Agent in connection with the assignments of or sales of
participations in the Loans, title insurance premiums, real estate survey costs,
fees and taxes relative to the filing of financing statements, costs of
preparing and recording any Mortgages or any other Collateral Documents, all
expenses and costs referred to in ARTICLE 4 of this Credit Agreement, all other
fees and expenses required to be paid pursuant to the Fee Letter and all fees
and expenses incurred in connection with releasing Collateral and the amendment
or termination of any of the Credit Documents.
"EXPIRATION DATE" shall mean the earlier of (a) September 30, 2008 and
(B) the date of the termination or reduction to zero (0) of the Commitments.
"EXPOSURE" shall have the meaning ascribed to that term in the
definition of "Majority Lenders".
"FACILITIES" means any and all Real Property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Borrowers or their Subsidiaries or any of
their respective predecessors or Affiliates.
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating interest
rate per annum equal, for each day during such period, to the weighted average
of the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by it.
"FEE LETTER" shall mean that certain letter agreement dated August 21,
2003 between the Agent and the Company and providing for the payment of certain
fees in connection with this Credit Agreement.
"FEES" shall mean the Unused Line Fee, the Letter of Credit Fees and
the Issuing Bank Fees, and, without duplication, all fees payable by the
Borrowers under the Fee Letter.
"FINANCIAL STATEMENTS" shall mean the consolidated balance sheets,
statements of operations, statements of cash flows and statements of changes in
shareholder's equity of the Consolidated Entity for the period specified.
"FISCAL QUARTER" shall mean a fiscal quarter of the Borrowers
consisting of a period of thirteen weeks (other than the last Fiscal Quarter of
Fiscal Year 2004, which shall be fourteen weeks) of any Fiscal Year.
"FISCAL YEAR" shall mean the fiscal year of the Borrowers ending on the
Sunday nearest to the last day of the calendar year.
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"FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the ratio of
(a) (i) EBITDA MINUS Capital Expenditures MINUS income and franchise taxes paid
in cash, in each case for such period, to (ii) Fixed Charges for such period.
"FIXED CHARGES" shall mean, for any period, without duplication, the
sum of the following for the Consolidated Entity: (a) Interest Expense paid in
cash; and (b) scheduled payments of principal with respect to all Indebtedness,
including payments under Capital Leases, but excluding payments of Revolving
Loans which do not reduce the Commitments (it being understood that mandatory
prepayments pursuant to SECTION 2.4(b)(iii) are not scheduled payments for
purposes of this definition) and excluding any payments made to redeem the
existing Subordinated Notes.
"FLOOD HAZARD PROPERTY" means a parcel of Real Estate subject to a
Mortgage located in an area designated by the Federal Emergency Management
Agency as having special flood or mud slide hazards.
"FOREIGN LENDER" shall mean any Lender or Issuing Bank organized under
the laws of a jurisdiction outside of the United States.
"FOREIGN SUBSIDIARY" means any Subsidiary of any Borrower that is not a
Domestic Subsidiary.
"FUND" means any Person (other than a natural Person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"FUNDING BANK" shall have the meaning ascribed to that term in SECTION
4.9.
"FUNDS ADMINISTRATOR" shall mean Xxxxx Nurseries, Inc. in its capacity
as borrowing agent and funds administrator for the Borrowers hereunder and under
each of the other Credit Documents.
"GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time.
"GOVERNING BODY" means the board of directors or other body having the
power to direct or cause the direction of the management and policies of a
Person that is a corporation, partnership, trust or limited liability company.
"GOVERNING DOCUMENTS" shall mean, as to any Person, the certificate or
articles of incorporation and by-laws or other organizational or governing
documents of such Person.
"GOVERNMENTAL AUTHORITY" shall mean 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.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, registration,
authorization, plan, directive, consent, order or consent decree of or from, or
notice to, any Government Authority.
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"GUARANTY" of any Person means any Liability, contingent or otherwise,
of such Person (other than an endorsement for collection or deposit in the
ordinary course of business) (a) to pay any Liability of any other Person or to
otherwise protect, or having the practical effect of protecting, the holder of
any such Liability against loss (whether such obligation arises by virtue of
such Person being a partner of a partnership or participant in a joint venture
or by agreement to pay, to keep well, to maintain solvency, assets, level of
income or other financial condition, to purchase assets, goods, securities or
services or to take or pay, or otherwise) or (b) incurred in connection with the
issuance by a third Person of a Guaranty of any Liability of any other Person
(whether such obligation arises by agreement to reimburse or indemnify such
third Person or otherwise). The word "Guarantee" when used as a verb has the
correlative meaning.
"HAZARDOUS MATERIALS" shall mean (a) any chemical, material or
substance (whether solid, liquid or gas) at any time defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste,"
"infectious waste," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or words of similar import under any applicable
Environmental Laws; (b) any oil, petroleum, petroleum fraction or petroleum
derived substance; (c) any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, natural
gas or geothermal resources; (d) any flammable substances or explosives; (e) any
radioactive materials; (f) asbestos in any form; (g) urea formaldehyde foam
insulation; (h) electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million; (i) pesticides; and (j) radon.
"HIGHEST LAWFUL RATE" shall mean, at any time when any Obligations
shall be outstanding hereunder, the maximum nonusurious interest rate, that then
may be contracted for, taken, reserved, charged or received on the Obligations
owing under this Credit Agreement or any of the other Credit Documents, under
(a) the laws of the State of New York (or the law of any other jurisdiction
whose laws may be mandatorily applicable notwithstanding other provisions of
this Credit Agreement and the other Credit Documents) or (b) if higher,
applicable federal laws, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges under this
Credit Agreement and any other Credit Documents executed in connection herewith,
and any available exemptions, exceptions and exclusions.
"HOLDINGS" means Xxxxx Horticulture, Inc., a Delaware corporation.
"HOLDINGS COMMON STOCK" means the common stock of Holdings, par value
"$.01 per share.
"HOLDINGS GUARANTY" means the Holdings Guaranty, of even date herewith
executed by Holdings substantially in the form of EXHIBIT I.
"IMMATERIAL CREDIT PARTY" shall mean any Subsidiary of any Credit Party
identified as an Immaterial Credit Party on SCHEDULE B, PART 6.10 and any
Subsidiary of any Credit Party formed or acquired after the Closing Date and
designated by Borrowers as an Immaterial Subsidiary on SCHEDULE B, PART 6.10
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which may be delivered by Borrowers from time to time, in each case which
Subsidiary (a) does not own assets with an aggregate value of greater than
$3,000,000 (excluding the Sun Gro Canadian Tax Receivable) and (b) does not
generate revenues of greater than $3,000,000 in any single Fiscal Year; PROVIDED
that all Immaterial Credit Parties in the aggregate do not own assets with an
aggregate value of greater than $7,000,000 or generate revenues of greater than
$7,000,000 in any single Fiscal Year or such amount in excess of $7,000,000 as
may be approved in writing by the Agent.
"INDEBTEDNESS" of any Person means (in each case, whether such
obligation is with full or limited recourse) (a) any obligation of such Person
for borrowed money, (b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument, (c) any obligation of such Person
to pay the deferred purchase price of property or services, except a trade
account payable that arises in the ordinary course of business but only if and
so long as the same is payable on customary trade terms, (d) any obligation of
such Person as lessee under a capital lease, (e) any Mandatorily Redeemable
Obligation of such Person owned by any Person other than such Person or a
Subsidiary of such Person (the amount of such Mandatorily Redeemable Obligation
to be determined for this purpose as the higher of the liquidation preference of
and the amount payable upon redemption of such Mandatorily Redeemable
Obligation), (f) any obligation of such Person to purchase securities or other
property that arises out of or in connection with the sale of the same or
substantially similar securities or property, and (g) any Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien on any asset of such Person.
Obligations under Derivative Contracts constitute Contingent Obligations and not
Indebtedness.
"INTELLECTUAL PROPERTY" shall mean, with respect to any Person, all of
such Person's now owned and hereafter arising or acquired: patents, patent
rights, patent applications, copyrights, works which are the subject matter of
copyrights, copyright registrations, trademarks, trade names, trade styles,
trademark and service xxxx applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; and trade secret rights, copyright
rights, rights in works of authorship, domain names and domain name
registrations; software and contract rights relating to software, in whatever
form created or maintained.
"INTEREST EXPENSE" shall mean the aggregate consolidated interest
expense of the Consolidated Entity paid in cash in respect of Indebtedness
determined on a consolidated basis in accordance with GAAP, including
amortization of original issue discount on any Indebtedness and of all fees
payable in connection with the incurrence of such Indebtedness (to the extent
included in interest expense), the interest portion of any deferred payment
obligation and the interest component of any capital lease obligations.
"INTEREST PERIOD" shall mean a period, commencing, in the case of the
first Interest Period applicable to a LIBOR Rate Loan, on the date of the making
of, or conversion into, such Loan, and, in the case of each subsequent,
successive Interest Period applicable thereto, on the last day of the
immediately preceding Interest Period. The duration of each such Interest Period
shall be one, two, three or six months, in each case as the Funds Administrator
21
may, in an appropriate Notice of Borrowing, Notice of Continuation or Notice of
Conversion, select; PROVIDED that the Funds Administrator may not select any
Interest Period that ends after the Expiration Date. Whenever the last day of
any Interest Period would otherwise occur on a day other than a Business Day,
the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, PROVIDED that if such extension would cause the last
day of such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding Business Day.
"INTERIM ADVANCE" shall mean a Loan made by the Agent to the Borrowers
pursuant to SECTION 2.2(b)(i).
"INTERIM ADVANCE PERIOD" shall have the meaning ascribed to that term
in SECTION 2.2(b)(i).
"INTERNAL REVENUE SERVICE" or "IRS" shall mean the United States
Internal Revenue Service and any successor agency.
"INVENTORY" shall mean, with respect to any Person, all of such
Person's inventory, including: (a) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in such Person's
business; (b) all goods, wares and merchandise, finished or unfinished, held for
sale or lease or leased or furnished or to be furnished under contracts of
service; and (c) all goods returned or repossessed by such Person.
"INVESTMENT" shall mean, as applied to an investment of or by any
Person, all Guaranties by such Person of any Liabilities of another Person, all
expenditures made and all Liabilities incurred (contingently or otherwise) for
or in connection with the acquisition of stock or other ownership interests or
Indebtedness of, or for loans, advances, capital contributions or transfers of
property to, another Person. In determining the aggregate amount of Investments
outstanding at any particular time, (a) the amount of any Investment represented
by a Guaranty shall be taken at not less than the principal amount of the
Liabilities to which such Guaranty is applicable and still outstanding; (b)
there shall be deducted in respect of each such Investment any amount received
as a return of capital (but only by sale, repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (c) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise; and (d) there
shall not be deducted from the original amount of any Investment, and such
Investment shall be deemed to continue to be "outstanding" in such original
amount notwithstanding, any (i) decrease in the market value thereof or (ii)
amount thereof that may have been forgiven, released, cancelled or otherwise
nullified or held to be invalid.
"ISSUING BANK" shall mean (a) any Lender and (b) any Affiliate of a
Lender that, in either case, is acceptable to the Agent and the Funds
Administrator and has agreed in writing to issue a Letter of Credit for the
account of the Borrower under this Credit Agreement; PROVIDED however that Agent
or any of its Affiliates shall not be obligated to issue any commercial Letters
of Credit until such time as it notifies the Funds Administrator otherwise.
"ISSUING BANK FEES" shall have the meaning ascribed to that term in
SECTION 4.6(b).
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"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; PROVIDED
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LAGOON VALLEY PROPERTY" means that certain real property owned by
Company located in Vacaville, California.
"L/C APPLICATION" shall mean, as applied to any Issuing Bank, (a) the
form then generally used by such Issuing Bank as the form to be used by a Person
requesting such Issuing Bank to issue an irrevocable standby or commercial
letter of credit (as the case may be) and (b) any agreement between such Issuing
Bank and such Person pursuant to which such Person agrees to reimburse such
Issuing Bank for amounts disbursed by such Issuing Bank under the letter of
credit to which such application relates (each a "REIMBURSEMENT AGREEMENT").
"L/C INTEREST RATE" shall have the meaning ascribed to that term in
SECTION 3.5(b).
"L/C NOTICE OF DRAWING" shall mean the date on which the Issuing Bank
provides Agent with notice that a drawing has been made under a Letter of
Credit.
"L/C PARTICIPATION" shall have the meaning ascribed to that term in
SECTION 3.4.
"L/C PARTICIPATION FUNDING AMOUNT" shall have the meaning ascribed to
that term in SECTION 3.6(b)(i)(A).
"L/C PARTICIPATION FUNDING DATE" shall have the meaning ascribed to
that term in SECTION 3.6(b)(ii).
"L/C PARTICIPATION FUNDING NOTICE" shall have the meaning ascribed to
that term in SECTION 3.6(b)(i)(A).
"LENDER" shall, subject to SECTION 11.18(c)(ii), mean (a) each Person
listed as a "Lender" on the signature pages hereof and (b) each Person that has
been assigned any or all of the rights and obligations of a Lender pursuant to
SECTION 11.6.
"LETTER OF CREDIT" shall mean all letters of credit (whether commercial
or stand-by and whether for the purchase of inventory, equipment or otherwise)
issued for the account of the Borrower by an Issuing Bank pursuant to ARTICLE 3
of this Credit Agreement and all amendments, renewals, extensions or
replacements thereof.
"LETTER OF CREDIT FEES" shall have the meaning ascribed to that term in
SECTION 4.6(a).
"LETTER OF CREDIT OBLIGATIONS" shall mean, at any time, the sum of (a)
the aggregate undrawn face amounts of all Letters of Credit outstanding at such
time, PLUS (b) the aggregate unreimbursed amount of all drawings under Letters
of Credit.
"LETTER OF CREDIT REQUEST" shall have the meaning ascribed to that term
in SECTION 3.2(a).
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"LEVERAGE RATIO" shall mean, as at the last day of any Fiscal Quarter,
the ratio of Average Total Debt as of the last day of such Fiscal Quarter to
EBITDA for the twelve month period ending as of the last day of such Fiscal
Quarter.
"LIABILITY" of any Person shall mean (in each case, whether with full
or limited recourse) any indebtedness, liability, obligation, covenant or duty
of or binding upon, or any term or condition to be observed by or binding upon,
such Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under contract, Requirement of Law,
or otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
"LIBOR LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its "LIBOR Lending Office" opposite its name
on SCHEDULE A or in the relevant Assignment and Acceptance Agreement (or, if no
such office is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify to the
Funds Administrator and the Agent.
"LIBOR MARGIN" shall mean, at any time, the Applicable Margin for LIBOR
Rate Loans at such time.
"LIBOR RATE" shall mean, with respect to any Interest Period, (a) the
rate per annum for Dollar deposits approximately equal to the principal amount
of the LIBOR Rate Loans for which the LIBOR Rate is being determined and with
maturities comparable to the Interest Period for which such LIBOR Rate would
apply, which appears on the Telerate Page 3750 at approximately 11:00 A.M.,
London time, on the day that is two (2) Business Days prior to the first day of
such Interest Period and (b) if no such rate so appears on the Telerate Page
3750, an interest rate per annum equal to the rate (rounded upward to the
nearest whole multiple of one-sixteenth (1/16) of one percent (1.00%) per annum,
if such rate is not such a multiple) of the offered quotation, if any, to first
class banks in the London (U.K.) interbank market by Deutsche Bank for Dollar
deposits of amounts in immediately available funds comparable to the principal
amount of the LIBOR Rate Loans for which the LIBOR Rate is being determined with
maturities comparable to the Interest Period for which such LIBOR Rate will
apply as of approximately 10:00 A.M. two (2) Business Days prior to the
commencement of such Interest Period. The term "TELERATE PAGE 3750" shall mean
the display designated as Page 3750 on the Telerate Services (or such other page
as may replace such page on such service for the purpose of displaying a
comparable rate).
"LIBOR RATE LOAN" shall mean a Loan that bears, or is to bear, interest
by reference to the LIBOR Rate.
"LIEN(S)" shall mean (a) any lien, claim, charge, pledge, security
interest, deed of trust, mortgage, other encumbrance or other arrangement having
the practical effect of the foregoing or other preferential arrangement of any
other kind and shall include the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement and
(b) in addition, in the case of any investment property, any contract or other
arrangement, express or implied, under which any Person has the right to control
such investment property.
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"LINE OF CREDIT" shall mean, at any time, an amount equal to the
aggregate amount, at such time, of the Commitments.
"LOANS" shall mean amounts advanced by Agent or a Lender pursuant to
SECTION 2.1, 2.2(b), 2.2(c), 3.6(a) or any other provision of this Credit
Agreement.
"LOCKBOXES" shall have the meaning ascribed to that term in SECTION
2.5(b)(i).
"MAJORITY LENDERS" shall mean, at any time, those Lenders having more
than 50% of the aggregate amount of the Commitments or, if the Commitments shall
have expired or been terminated, Lenders having more than 50% of the aggregate
amount of the outstanding Exposures; and for this purpose, a Lender's "Exposure"
shall mean the aggregate amount of such Lender's outstanding Loans plus such
Lender's Proportionate Share of outstanding Letter of Credit Obligations.
"MANDATORILY REDEEMABLE OBLIGATION" shall mean a Liability of any
Borrower or any Subsidiary of any Borrower, or a Liability of another Person
Guaranteed by any Borrower or any Subsidiary of any Borrower, to the extent
that, in either case, it is redeemable, payable or required to be purchased or
otherwise retired or extinguished (a) at a fixed or determinable date, whether
by operation of sinking fund or otherwise, (b) at the option of any Person other
than such Borrower or such Subsidiary or (c) upon the occurrence of a condition
not solely within the control of such Borrower or such Subsidiary, such as a
redemption required to be made out of future earnings.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the business, prospects, operations, results of operations, assets, liabilities
or condition (financial or otherwise) of the Credit Parties, taken as a whole,
(b) the value of Collateral or the amount which the Agent, the Lenders or any
Issuing Bank would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral, (c) any
Credit Party's ability to perform its obligations under the Credit Documents to
which it is a party or (d) the rights and remedies of the Agent, the Lenders or
any Issuing Bank under any Credit Document.
"MATERIAL CONTRACT" shall mean any contract, lease, license, indenture,
agreement, commitment or other arrangement (other than the Credit Documents),
whether written or oral, to which any Borrower or any Subsidiary of any Borrower
is a party with respect to which breaches, performances, nonperformances,
cancellations or failures to renew by any party thereto could reasonably be
expected to have a Material Adverse Effect.
"MDCP" means Madison Dearborn Capital Partners, L.P., a Delaware
limited partnership and Madison Dearborn Capital Partners II, L.P., a Delaware
limited partnership.
"MORTGAGES" shall mean the mortgage(s) or deed(s) of trust granted by
any Credit Party in favor of the Agent and the leasehold mortgage(s) granted by
any Credit Party in favor of the Agent.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Sections 3(37) or 400l(a)(3) of ERISA and (a) which is, or within the
immediately preceding six (6) years was, contributed to by any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate or (b) with respect to which
any Borrower or any Subsidiary of any Borrower may incur any liability.
25
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, cash
payments (including any cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable, lease, sublease or otherwise, but only as
and when so received) received from such Asset Sale, net of any bona fide direct
costs incurred in connection with such Asset Sale, including (A) income or other
taxes reasonably estimated to be actually payable within two years of the date
of such Asset Sale as a result of any gain recognized in connection with such
Asset Sale and (B) payment of the outstanding principal amount of, premium or
penalty, if any, and interest on any Indebtedness (other than the Loans) that is
secured by a Lien on the Capital Security or assets subject to such Asset Sale
and that is required to be repaid under the terms thereof as a result of such
Asset Sale; PROVIDED that up to $1,000,000 in aggregate cash payments from the
Irvine Company related to the relocation of certain operations in Irvine
previously located on property leased to Company by the Irvine Company to
another nursery location and reinvested in another nursery location shall not
constitute Net Asset Sale Proceeds.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any cash payments or
proceeds received by the Borrower or any of its Subsidiaries or the Agent (a)
under any property damage or casualty insurance policy in respect of a covered
loss thereunder or (b) as a result of the taking of any assets of the Borrower
or any of its Subsidiaries by any Person pursuant to the power of eminent
domain, condemnation or otherwise, or pursuant to a sale of any such assets to a
purchaser with such power under threat of such a taking, in each case net of any
actual and reasonable documented costs incurred by the Borrower or any of its
Subsidiaries in connection with the adjustment or settlement of any claims of
the Borrower or such Subsidiary in respect thereof.
"NET ORDERLY LIQUIDATION VALUE" shall mean, as determined by the Agent
in good faith based on an appraisal conducted in accordance with SECTIONS 7.2 OR
7.5, the Value of the Borrower's Inventory that is estimated to be recoverable
in an orderly liquidation of such Inventory net of liquidation expenses. The
initial Net Orderly Liquidation Values shall be based on the appraisal report
dated June 30, 2003 of Hilco Appraisal Services, LLC.
"NET SECURITIES PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses) from the issuance of
Capital Securities of or incurrence of Indebtedness by Holdings or any of its
Subsidiaries; provided that Net Securities Proceeds shall exclude cash proceeds
received from the issuance of Capital Securities by Holdings or its Subsidiaries
to MDCP or the incurrence of subordinated Indebtedness by Holdings or its
Subsidiaries to MDCP.
"NOTES" shall mean the Term Notes and the Revolving Notes.
"NOTICE OF BORROWING" shall have the meaning ascribed to that term in
SECTION 2.2(a)(i).
"NOTICE OF CONTINUATION" shall have the meaning ascribed to that term
in SECTION 4.3(a).
"NOTICE OF CONVERSION" shall have the meaning ascribed to that term in
SECTION 4.3(b).
"OBLIGATIONS" shall mean (a) the unpaid principal of and interest on
the Loans and the Notes, (b) the obligation of the Borrowers to pay to an
Issuing Bank the amounts of all drawings together with interest accrued thereon
at the L/C Interest Rate, made under Letters of Credit of such Issuing Bank, (c)
the Fees, (d) the Expenses, (e) all other Liabilities of the respective Credit
26
Parties to the Agent and any Lender (in its capacity as such and not in its
capacity as an Issuing Bank), which may arise under, out of, or in connection
with, the Credit Agreement, the Notes, any other Credit Document or any other
document made, delivered or given in connection herewith or therewith, and (f)
all other Liabilities of the respective Borrowers to an Issuing Bank under all
its L/C Applications and Letters of Credit. As used in CLAUSES (a), (b) AND (c)
and wherever else the determination of the amount of "interest" is relevant,
"interest" shall include interest accruing on or after the filing of, or what
would have accrued but for the filing of, any petition in bankruptcy, or the
commencement of any insolvency, reorganization, or like proceeding, relating to
any Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding.
"OTHER TAXES" shall have the meaning ascribed to that term in SECTION
2.8(b).
"PAYMENT" shall have the meaning ascribed to that term in SECTION 2.10.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"PERMITTED DISCRETION" shall mean the Agent's judgment exercised in
good faith based upon its consideration of any factor which the Agent believes
in good faith: (a) will or could adversely affect in any material respect the
value of any Collateral, the enforceability or priority of the Agent's Liens
thereon or the amount which the Agent, the Lenders or any Issuing Bank would be
likely to receive (after giving consideration to delays in payment and costs of
enforcement) in the liquidation of such Collateral; (b) suggests that any
collateral report or financial information delivered to the Agent by any Person
on behalf of any Borrower is incomplete, inaccurate or misleading in any
material respect; (c) increases in any material respect the likelihood of a
bankruptcy, reorganization or other insolvency proceeding involving any Credit
Party (other than any Immaterial Credit Party) or any of the Collateral; or (d)
creates or reasonably could be expected to create a Default or Event of Default.
In exercising such judgment, the Agent may consider such factors already
included in or tested by the definition of Eligible Accounts Receivable or
Eligible Inventory, as well as any other factors deemed relevant and appropriate
by the Agent. The burden of establishing lack of good faith hereunder shall be
on the Borrowers.
"PERMITTED ENCUMBRANCES" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by
ERISA, any such Lien relating to or imposed in connection with any Environmental
Claim, and any such Lien expressly prohibited by any applicable terms of any of
the Collateral Documents):
1. Liens for Borrower's Taxes not yet due and payable or which
are being diligently contested in good faith by such Borrower
by appropriate proceedings, PROVIDED that in any such case an
adequate reserve is being maintained by such Borrower for the
payment of same;
2. statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law, in each case incurred in the ordinary course
of business (a) for amounts not yet overdue or (b) for amounts
that are overdue and that (in the case of any such amounts
overdue for a period in excess of 15 days) are being contested
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in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be
required by GAAP or by law shall have been made for any such
contested amounts, and (2) in the case of a Lien with respect
to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the
Collateral subject to such Lien;
3. Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced and are continuing
with respect to any portion of the Collateral on account
thereof;
4. any attachment or judgment Lien not constituting an Event of
Default under SECTION 9.1(i);
5. leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents;
6. easements, rights-of-way, restrictions, encroachments, and
other minor defects or irregularities in title, in each case
which (i) are set forth and described on Lender's title
policies and (ii) do not and will not interfere in any
material respect with the ordinary conduct of the business of
Borrowers or any of their Subsidiaries or result in a material
diminution in the value of any Collateral as security for the
Obligations;
7. any (a) interest or title of a lessor or sublessor under any
lease or on the property which is the subject of such lease to
the extent such lease is permitted hereunder, (b) restriction
or encumbrance that the interest or title of such lessor or
sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee
under such lease;
8. Liens arising from filing UCC financing statements relating
solely to leases permitted by this Credit Agreement;
9. Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in
connection with the importation of goods;
10. any zoning or similar law or right reserved to or vested in
any governmental office or agency to control or regulate the
use of any Real Property;
11. Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the
ordinary course of business of Borrowers and any of their
Subsidiaries; and
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12. licenses of patents, trademarks and other intellectual
property rights granted by Borrowers or any of their
Subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary conduct
of the business of Borrowers or such Subsidiary.
"PERMITTED HEDGING TRANSACTIONS" shall mean a Derivative Contract
designed to hedge against fluctuations in interest rates or currency values not
for purposes of speculation entered into by a Borrower with a Person that is a
Lender or its Affiliate at the time such agreement is entered into.
"PERMITTED RESTRICTIVE COVENANT" shall mean (a) any covenant or
restriction contained in any Credit Document, (b) any covenant or restriction
binding upon any Person at the time such Person becomes a Subsidiary of any
Borrower if the same is not created in contemplation thereof, (c) any covenant
or restriction of the type contained in SECTION 8.11 that is contained in any
contract evidencing or providing for the creation of or concerning Indebtedness
secured by any Purchase Money Lien so long as such covenant or restriction is
limited to the property purchased therewith and proceeds thereof, (d) any
covenant or restriction described in SCHEDULE B, PART 8.11, but only to the
extent such covenant or restriction is there identified by specific reference to
the provision of the contract in which such covenant or restriction is contained
or (e) any covenant or restriction that (I) is not more burdensome than an
existing Permitted Restrictive Covenant permitted by CLAUSE (b), (c) or (d)
above; (ii) is contained in a contract constituting a renewal, extension or
replacement of the Contract in which such existing Permitted Restrictive
Covenant is contained; and (iii) is binding only on the Person or Persons bound
by such existing Permitted Restrictive Covenant.
"PERSON" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, entity, party or government (including
any division, agency or department thereof), and, as applicable, the successors,
heirs and assigns of each.
"PLAN" shall mean any employee benefit plan (within the meaning of
Section 3(3) of ERISA), whether oral or written, maintained or contributed to by
any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate, or with
respect to which any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate, may incur liability.
"PRIME LENDING RATE" shall mean the rate that DBTCo. announces from
time to time in New York, New York as its prime lending rate in the United
States, as in effect from time to time. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. DBTCo. and each of the other Lenders may make commercial loans
or other loans at rates of interest at, above or below the Prime Lending Rate.
"PRIME RATE LOAN" shall mean a Loan that bears, or is to bear, interest
by reference to the Prime Lending Rate.
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"PRO FORMA BASIS" means, for purposes of giving effect to any
transaction during any period on a PRO FORMA basis, that such transaction (and
any other transactions that occurred during such period) shall be deemed to have
occurred as of the first day of the four Fiscal Quarter period most recently
ended immediately prior to the date of such transaction with respect to which
Agent has received the relevant financial information. As used in this
definition, "transaction" shall mean an acquisition permitted under SECTION
8.5(h) or a disposition of any assets or operations in an amount for any such
transaction or series of related transactions exceeding $1,000,000, and the
incurrence, assumption, and/or repayment of any Indebtedness in connection
therewith. Calculations made on a pro forma basis shall be made in accordance
with Regulation S-X of the Securities and Exchange Commission and such
calculations shall be made after giving effect to the incurrence, assumption or
repayment of any Indebtedness in connection with such transaction.
"PROHIBITED TRANSACTION" shall mean any transaction that is prohibited
under Code Section 4975 or ERISA Section 406 and not exempt under Code Section
4975 or ERISA Section 408.
"PROPORTIONATE SHARE" shall mean, subject to SECTION 11.18(c)(ii), (a)
with respect to all payments, computations and other matters relating to the
Term Loan Commitment or the Term Loan of any Lender, the percentage obtained by
dividing (x) the Term Exposure of that Lender by (y) the aggregate Term Exposure
of all Lenders, (b) with respect to all payments, computations and other matters
relating to the Revolving Loan Commitment or the Revolving Loans of any Lender
or any Letters of Credit issued or participations therein purchased by any
Lender, the percentage obtained by dividing (x) the Revolving Exposure of that
Lender by (y) the aggregate Revolving Exposure, and (c) for all other purposes
with respect to each Lender, the percentage obtained by dividing (x) the sum of
the Term Exposure of that Lender plus the Revolving Exposure of that Lender by
(y) the sum of the aggregate Term Exposure of all Lenders plus the aggregate
Revolving Exposure of all Lenders, in any such case as the applicable percentage
may be adjusted by assignments permitted pursuant to SECTION 11.6. The initial
Proportionate Share of each Lender for purposes of each of CLAUSES (a), (b) AND
(c) of the preceding sentence is set forth opposite the name of that Lender in
SCHEDULE A.
"PURCHASE MONEY LIENS" shall mean Liens on any item of Equipment or
Real Estate of any Credit Party acquired after the date of this Credit Agreement
to secure the purchase price thereof, PROVIDED that: (a) each such Lien shall
attach only to the property to be acquired and proceeds thereof; and (b) the
debt incurred in connection with such acquisitions shall not exceed one hundred
percent (100%) of the amount of the purchase price of such items of Equipment or
Real Estate then being financed.
"REAL ESTATE" shall mean all Real Property, together with all fixtures,
improvements and other structures thereon.
"REAL PROPERTY" means all real property from time to time owned in fee
by any Credit Party and all rights, title and interest in and to any and all
leases of real property as to which any Credit Party has a leasehold interest,
including without limitation any such fee or leasehold interests acquired by any
Credit Party after the date hereof.
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"REDUCED RATE" shall have the meaning ascribed to that term in SECTION
2.8(e), relating to backup withholding tax.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto.
"REIMBURSEMENT AGREEMENT" shall have the meaning ascribed to that term
in CLAUSE (b) of the definition of "L/C Application."
"REPORTABLE EVENT" shall mean any of the events described in Section
4043 of ERISA and the regulations thereunder, for which notice to the PBGC has
not been waived.
"REQUIREMENT OF LAW" shall mean, as to any Person, the Governing
Documents of such Person, and any law, treaty, rule, regulation, direction,
ordinance or guideline or determination of a court or other Governmental
Authority or determination of an arbitrator, 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.
"RESERVED LAGOON VALLEY PROCEEDS" shall mean an amount equal to up to
$15,100,000 in Net Asset Sale Proceeds received by Company upon the sale of
Company's Lagoon Valley Property which amount has been designated by Company as
the "Reserved Lagoon Valley Proceeds." The amount of the Reserved Lagoon Valley
Proceeds shall be reduced from time to time to the extent reinvested in land and
land improvements used in the business of the Borrowers. Borrowers shall deliver
an officer's certificate to Agent monthly or at any other time at the Borrowers'
option which officer's certificate shall describe the amount and type of
reinvestment made up to the date of such officer's certificate. The Reserved
Lagoon Valley Proceeds shall be reduced by the amount of the reinvestment
evidenced by such officer's certificate.
"RESTRICTED PAYMENT" means, with respect to any Person, (a) any payment
with respect to or on account of any of the Capital Securities of such Person,
including any dividend or other distribution on, any payment of interest on or
principal of, and any payment on account of any purchase, redemption,
retirement, exchange, defeasance or conversion of, or on account of any claim
relating to or arising out of the offer, sale or purchase of, any such Capital
Securities and (b) any optional payment or prepayment on or redemption,
retirement, (including by making payments to a sinking or analogous fund),
repurchase, defeasance or other acquisition of, any Indebtedness (other than
Indebtedness pursuant to this Credit Agreement). For the purposes of this
definition, a "payment" shall include the transfer of any asset or the
incurrence of any Indebtedness or other Liability (the amount of any such
payment to be the fair market value of such asset or the amount of such
obligation, respectively) but shall not include the issuance by such Person to
the holders of a class or series of a class of its Capital Securities of the
same class and, if applicable, series, other than, in the case of any Borrower
or any Subsidiary of any Borrower, Mandatorily Redeemable Obligations.
"RETIREE WELFARE PLAN" means, at any time, a welfare plan (as defined
in Section 3(1) of ERISA) that provides for continuing coverage or benefits for
31
any participant or any beneficiary of a participant after such participant's
termination of employment, other than continuation coverage PROVIDED pursuant to
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary of the participant.
"REVOLVING EXPOSURE" shall mean at any time an amount equal to such
Lender's Revolving Loan Commitment or, if the Revolving Loan Commitments shall
have expired or been terminated, an amount equal to the sum of (a) a Lender's
Proportionate Share of outstanding Letter of Credit Obligations and (b) such
Lender's outstanding Revolving Loans.
"REVOLVING LOAN" shall mean amounts advanced by the Agent or a Lender
pursuant to SECTION 2.1(a)(ii).
"REVOLVING LOAN COMMITMENT" of any Lender shall, subject to SECTION
11.18(c)(ii), mean the amount set forth opposite such Lender's name on SCHEDULE
A, under the heading "Revolving Loan Commitment," as such amount may be reduced
from time to time or terminated pursuant to the terms of this Credit Agreement
and "Revolving Loan Commitments" means such commitments of all Lenders in the
aggregate.
"REVOLVING NOTE" shall mean a promissory note of the Borrower payable
to the order of any Lender, in the form of EXHIBIT B-2, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Revolving Loan
Commitments or Revolving Loans made by such Lender or acquired by such Lender
pursuant to SECTION 11.6.
"REVOLVING UTILIZATION" shall mean at any time an amount equal to the
sum of (A) a Lender's Proportionate Share of outstanding Letter of Credit
Obligations and (B) such Lender's outstanding Revolving Loans.
"SALE/LEASEBACK TRANSACTION" shall mean an arrangement relating to
equipment owned by the Borrowers or any of their Subsidiaries on or after the
Closing Date whereby such Borrower or such Subsidiary transfers such equipment
to a Person and the Borrower or such Subsidiary leases it from such Person
within 120 days after the initial acquisition of such equipment by the Borrower
or Subsidiary.
"SECURITY AGREEMENT" means the Security Agreement executed and
delivered by the Agent, Holdings and Borrowers on the Closing Date or to be
executed and delivered by additional Borrowers or Domestic Subsidiaries from
time to time after the Closing Date in accordance with SECTION 7.7,
substantially in the form of EXHIBIT K annexed hereto, as such Security
Agreement may be further amended, supplemented or otherwise modified from time
to time.
"SENIOR NOTE INDENTURE" means the indenture dated as of September 30,
2003 between Company, as issuer, and The Bank of New York, as trustee, pursuant
to which the Senior Notes have been issued, as amended and/or supplemented in
accordance with Section 8.10.
"SENIOR NOTES" shall have the meaning ascribed to that term in the
recitals to this Credit Agreement.
"SENIOR REFINANCING INDEBTEDNESS" shall have the meaning ascribed to
that term in SECTION 8.3(g).
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"SERVING AFFILIATE" shall mean an Affiliate of a Lender that is an
Issuing Bank.
"SETTLEMENT DATE" shall have the meaning ascribed to that term in
SECTION 2.3(b)(i).
"START DATE" shall mean, with respect to any Applicable Margin Period,
the first day of such Applicable Margin Period.
"SUBORDINATED NOTE INDENTURE" shall mean the indenture dated as of
October 19, 1995 between Company, as issuer, Holdings and Xxxxx SGUS, and IBJ
Xxxxxxxxx Bank & Trust Company, as trustee, as amended and/or supplemented on or
prior to the Closing Date.
"SUBORDINATED NOTES" shall have the meaning ascribed to that term in
the recitals to this Credit Agreement.
"SUBSIDIARY" means, with respect to any Person at any time (a) any
other Person the accounts of which would be consolidated with those of such
first Person in its consolidated financial statements as of such time, and (b)
any other Person (i) that is, at such time, Controlled by, or (ii) securities of
which having ordinary voting power to elect a majority of the board of directors
(or other persons having similar functions), or other ownership interests of
which ordinarily constituting a majority voting interest, are at such time,
directly or indirectly, owned or Controlled by such first Person, or by one or
more of its Subsidiaries, or by such first Person and one or more of its
Subsidiaries.
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty to be executed and
delivered by Domestic Subsidiaries from time to time after the Closing Date in
accordance with SECTION 7.7, substantially in the form of EXHIBIT J annexed
hereto, as such Subsidiary Guaranty may be further amended, supplemented or
otherwise modified from time to time.
"SUN GRO CANADIAN TAX RECEIVABLE" means the U.S. dollar equivalent of
any refund from the Canadian Customs and Revenue Agency of the $8,338,861
Canadian tax payment, or any portion thereof, that was submitted in November of
2002 in connection with the Sun Gro Sale and shall include any accrued interest
paid by the Canadian Customs and Revenue Agency in connection with any such
refund.
"SUN GRO SALE" shall mean the transaction involving the disposition of
the assets and liabilities of Sun Gro Horticulture Canada Ltd and Sun Gro
Horticulture, Inc. occurring on or about March 2002.
"SYNDICATION DATE" shall mean the earlier of (a) the date which is
ninety (90) days after the Closing Date and (b) the date on which the Agent
notifies the Funds Administrator that the primary syndication has been
completed, as determined by the Agent in its sole discretion, which notice shall
be promptly given.
"TAX TRANSFEREE" shall have the meaning ascribed to that term in
SECTION 2.8(a).
"TAXES" shall have the meaning ascribed to that term in SECTION 2.8(a).
33
"TERMINATION EVENT" shall mean (a) a Reportable Event with respect to
any Title IV Plan or Multiemployer Plan; (b) the withdrawal of any Borrower, any
Subsidiary of any Borrower or any ERISA Affiliate from a Title IV Plan during a
plan year in which such entity was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA; (c) the providing of notice of intent to terminate
a Title IV Plan in a distress termination described in Section 4041(c) of ERISA
or the treatment of any amendment as a termination under Section 4041(e) of
ERISA; (d) the institution by the PBGC of proceedings to terminate a Title IV
Plan or Multiemployer Plan; (e) any event or condition (i) that might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan, or (ii)
that may result in termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA; or (f) the partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of any Borrower, any Subsidiary of any Borrower
or any ERISA Affiliate from a Multiemployer Plan.
"TERM EXPOSURE" shall mean at any time an amount equal to such Lender's
Term Loan Commitment or, if the Term Loan Commitments shall have expired or been
terminated, an amount equal to such Lender's outstanding Term Loans.
"TERM LOAN" shall mean amounts advanced by the Agent or a Lender
pursuant to SECTION 2.1(a)(i).
"TERM LOAN COMMITMENT" of any Lender shall, subject to SECTION
11.18(c)(ii), mean the amount set forth opposite such Lender's name on SCHEDULE
A, under the heading "Term Loan Commitment," as such amount may be reduced from
time to time or terminated pursuant to the terms of this Credit Agreement and
"Term Loan Commitments" means such commitments of all Lenders in the aggregate.
"TERM NOTE" shall mean a promissory note of the Borrower payable to the
order of any Lender, in the form of EXHIBIT B-1, evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from the Term Loan
Commitments or Term Loans made by such Lender or acquired by such Lender
pursuant to SECTION 11.6.
"TEST DATE" shall mean, with respect to any Start Date, the last day of
the most recent fiscal quarter of the Consolidated Entity ended immediately
prior to such Start Date.
"TEST PERIOD" shall mean each period of four consecutive fiscal
quarters of the Consolidated Entity then last ended (in each case taken as one
accounting period).
"TITLE IV PLAN" shall mean an employee pension benefit plan as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan) for which the funding
requirements under Section 412 of the Code or Section 302 of ERISA is, or within
the immediately preceding six (6) years was, in whole or in part, the
responsibility of any Borrower, any Subsidiary of any Borrower or any ERISA
Affiliate.
"TOTAL COMMITMENTS" shall mean the aggregate of the Commitments of all
the Lenders, which in the aggregate shall not exceed $185,000,000.
"TOTAL EXPOSURE" shall mean, at any time, the sum of the Total
Revolving Exposure and the Total Term Exposure.
34
"TOTAL REVOLVING EXPOSURE" shall mean at any time the aggregate
Revolving Exposure of all Lenders.
"TOTAL TERM EXPOSURE" shall mean at any time the aggregate Term
Exposure of all Lenders.
"TOTAL REVOLVING UTILIZATION" shall mean at any time the aggregate
Revolving Utilization of all Lenders.
"TYPE" shall mean, with respect to any Loan, whether such Loan is a
LIBOR Rate Loan or a Prime Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York; PROVIDED that if, with respect to any financing
statement or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the Liens granted to the Agent pursuant to the
applicable Credit Document is governed by the Uniform Commercial Code as in
effect in a jurisdiction of the United States other than the State of New York.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in
such other jurisdiction for purposes of the provisions of this Credit Agreement,
each Credit Document and any financing statement relating to such perfection or
effect of perfection or non-perfection.
"UNFUNDED PENSION LIABILITY" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all assets of
such Title IV Plan allocable to such benefits in accordance with Title IV of
ERISA, all determined as of the most recent valuation date for each such Title
IV Plan using the actuarial assumptions for funding purposes in effect under
such Title IV Plan, and (b) for a period of 5 years following a transaction
which might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Borrower,
Subsidiary of any Borrower or any ERISA Affiliate as a result of such
transaction.
"UNUSED LINE FEE" shall have the meaning ascribed to that term in
SECTION 4.5.
"VALUE" shall mean, as determined by Agent in good faith, (A) with
respect to Eligible Accounts Receivable, the gross face amount of Eligible
Accounts Receivable less the sum of (i) sales, excise or similar taxes included
in the amount thereof and (ii) returns, discounts, claims, credits, charges and
allowances of any nature at any time issued, owing, granted, outstanding,
available or claimed with respect thereto and (B) with respect to Eligible
Inventory, the lower of (i) cost computed on a first-in first-out basis in
accordance with GAAP or (ii) market value.
"WELFARE PLAN" means a Plan described in Section 3(1) of ERISA.
"WHOLLY OWNED SUBSIDIARY" shall mean, with respect to any Person, any
Subsidiary of such Person all of the Capital Securities of which (except
directors' qualifying shares) are, directly or indirectly, owned or Controlled
by such Person or one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more of such Subsidiaries.
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1.2 ACCOUNTING TERMS AND DETERMINATIONS.
Unless otherwise defined or specified herein, all accounting terms used
herein shall have the meanings customarily given in accordance with GAAP, and
all financial computations to be made under this Credit Agreement shall, unless
otherwise specifically PROVIDED herein, be made in accordance with GAAP applied
on a basis consistent in all material respects with the Financial Statements
delivered to the Agent on the Closing Date. All accounting determinations for
purposes of determining compliance with SECTION 8.1 shall be made in accordance
with GAAP as in effect on the Closing Date and applied on a basis consistent in
all material respects with the Financial Statements delivered to the Agent on
the Closing Date. The Financial Statements required to be delivered hereunder
from and after the Closing Date and all financial records shall be maintained in
accordance with GAAP as in effect from time to time. If at any time any change
in GAAP would affect the computation of any financial ratio or requirement set
forth in any Credit Document, and Borrowers, Agent and Majority Lenders shall so
request, Agent and Borrowers shall negotiate in good faith to amend such ratio
or requirement to preserve the original intent thereof in light of such change
in GAAP (subject to the approval of Majority Lenders), PROVIDED that, until so
amended, such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and Borrowers shall provide to Agent
reconciliation statements PROVIDED for in SECTION 7.1(f). If any Borrower shall
change its method of inventory accounting from the first-in-first-out method,
all calculations necessary to determine compliance with the covenants contained
herein shall be made as if such method of inventory accounting had not been so
changed.
1.3 OTHER INTERPRETIVE PROVISIONS.
Terms not otherwise defined herein which are defined in the UCC shall
have the meanings given them in the UCC. The words "hereof" "herein" and
"hereunder" and words of similar import when used in this Credit Agreement shall
refer to this Credit Agreement as a whole and not to any particular provision of
this Credit Agreement, and references to Article, Section, Annex, Schedule,
Exhibit and like references are references to this Credit Agreement unless
otherwise specified. Any item or list of items set forth following the word
"including," "include" or "includes" is set forth only for the purpose of
indicating that, regardless of whatever other items are in the category in which
such item or items are "included," such item or items are in such category, and
shall not be construed as indicating that the items in the category are limited
to such items or to items similar to such items. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived or
cured in accordance with SECTION 11.10. Except as otherwise specified herein,
all references herein (a) to any Person shall be deemed to include such Person's
successors and assigns, (b) to any Requirement of Law defined or referred to
herein shall be deemed references to such Requirement of Law or any successor
Requirement of Law as the same may have been or may be amended or supplemented
from time to time, (c) to any Credit Document or Collateral Document defined or
referred to herein shall be deemed references to such Credit Document or
Collateral Document (and, in the case of any Note or any other instrument, any
instrument issued in substitution therefor) as the terms thereof may have been
or may be amended, supplemented, waived or otherwise modified from time to time,
PROVIDED that, in the case of any L/C Application or Letter of Credit, any such
amendment, supplement, waiver or other modification shall have been approved in
writing by the Agent and (d) to any other document, agreement, instrument or
contract shall include references to all amendments, supplements, waivers or
36
other modifications thereto to the extent not otherwise prohibited under the
terms of this Credit Agreement. Whenever the context so requires, the neuter
gender includes the masculine or feminine, the masculine gender includes the
feminine, and the singular number includes the plural, and vice versa. Except as
otherwise specified herein, all references to the time of day shall be deemed to
be to New York City time as then in effect.
1.4 AMENDMENT AND RESTATEMENT.
On the Closing Date upon satisfaction of the conditions set forth in
SECTION 5.1 hereof, the Lenders shall purchase and assume from the Agent, at
par, without recourse, and/or make, as the case may be, the Term Loan
Commitments, the Term Loans, the Revolving Loan Commitments and the outstanding
Revolving Loans, in each case as set forth on SCHEDULE A annexed hereto, which
Term Loan Commitments, Term Loans, Revolving Loan Commitments, Revolving Loans
and the Existing Credit Agreement shall thereupon be immediately amended and
restated in their entirety as Term Loan Commitments, Term Loans, Revolving Loan
Commitments and/or Revolving Loans hereunder and shall be governed by the terms
of this Agreement all as more particularly described herein. The Lenders are not
subject to or bound by any of the terms or provisions of the Existing Credit
Agreement. The parties acknowledge and agree that this Credit Agreement and the
other Credit Documents do not constitute a novation, payment and reborrowing, or
termination of any of the obligations of any of the Borrowers under the Existing
Credit Agreement and that all such obligations are in all respects continued and
outstanding as obligations under this Agreement and the Notes with only the
terms being modified from and after the Closing Date as provided in this Credit
Agreement, the Notes and the other Credit Documents. In addition, this Credit
Agreement shall not release, limit or impair in any way the priority of any
security interests and liens held by Agent for the benefit of the Lenders
against any assets of Holdings, Borrowers or any of the Borrower's Subsidiaries
arising under the Existing Credit Agreement or the other existing loan
documents. Notwithstanding the foregoing, the parties agree that the MDCP
Guaranty and the MDCP II Guaranty (as such terms are defined in the Existing
Credit Agreement) are terminated and released.
ARTICLE 2
LOANS
-----
2.1 COMMITMENTS; MAKING OF LOANS; DELIVERY OF NOTES.
(a) COMMITMENTS. Subject to the terms and conditions of this Credit
Agreement and in reliance upon the representations and warranties of the
Borrowers herein set forth, each Lender hereby severally agrees to purchase
and/or make the Loans described in CLAUSES (i) AND (ii) below.
(i) Term Loans. Each Lender severally agrees to purchase,
assume and/or lend to Borrowers, jointly and severally, on the Closing
Date, in an amount not exceeding such Lender's Proportionate Share of
the aggregate amount of the Term Loan Commitments. The amount of each
Lender's Term Loan Commitment is set forth opposite its name on
SCHEDULE A annexed hereto and the aggregate amount of the Term Loan
Commitments is $40,000,000; PROVIDED that the Term Loan Commitments of
each Lender shall be adjusted to give effect to any assignments of the
37
Term Loan Commitments pursuant to SECTION 11.6. Term Loans under this
SECTION 2.1(a)(i) which are subsequently repaid or prepaid may not be
reborrowed.
(ii) Revolving Loans. Each Lender severally agrees to
purchase, assume and/or make from time to time Revolving Loans to the
Borrowers, jointly and severally, on and after the Closing Date and to
and excluding the Expiration Date, in an aggregate amount not exceeding
such Lender's Proportionate Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in
SECTION 7.11. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on SCHEDULE A annexed hereto
and the aggregate original amount of the Revolving Loan Commitments is
$145,000,000; PROVIDED that the Revolving Loan Commitments of each
Lender shall be adjusted to give effect to any assignments of the
Revolving Loan Commitments pursuant to SECTION 11.6; and PROVIDED,
FURTHER that the amount of the Revolving Loan Commitments shall be
reduced from time to time by the amount of any reductions thereto made
pursuant to SECTION 2.4. Each Lender's Revolving Loan Commitment shall
expire on the Expiration Date and all Revolving Loans and all other
amounts owed hereunder with respect to the Revolving Loans and the
Revolving Loan Commitments shall be paid in full no later than that
date. Amounts borrowed under this SECTION 2.1(a)(ii) may be repaid and
reborrowed to but excluding the Expiration Date, subject to the
conditions set forth in SECTION 5.2 and the other terms or conditions
of this Credit Agreement and the other Credit Documents. Anything
contained in this Credit Agreement to the contrary notwithstanding, in
no event shall any Lender be required to make any Revolving Loan if,
after giving effect to such Revolving Loan, (A) the aggregate amount of
the Revolving Utilization of such Lender would exceed the Revolving
Loan Commitment of such Lender or (B) the Total Revolving Utilization
would exceed the lesser of (x) the aggregate of all Revolving Loan
Commitments and (y) subject to SECTION 2.2(b), the Borrowing Base.
(b) Delivery of Notes. If requested by a Lender, the Borrowers
hereby agree to execute and deliver to such Lender a Term Note and/or a
Revolving Note, as applicable, to evidence the Loans and Commitments to
the Borrowers by such Lender.
2.2 BORROWING MECHANICS; INTERIM ADVANCES.
(a) Except as provided in SECTIONS 2.2(b), 2.3(b) AND 3.6(a),
Borrowings shall be made on notice from the Funds Administrator to the Agent,
given not later than 12:00 noon (eastern standard time) on the Business Day on
which a proposed Borrowing consisting of Prime Rate Loans is requested to be
made and on the third Business Day prior to the date of any proposed Borrowing
consisting of LIBOR Rate Loans is requested to be made.
(i) Each Notice of Borrowing shall be given by, alternatively,
telephone, facsimile or electronic E-mail transmission, and, if by
telephone or electronic E-mail transmission, confirmed in writing on
the same Business Day to the extent requested by Agent, substantially
in the form of EXHIBIT C-1 (the "NOTICE OF BORROWING"). Each Notice of
Borrowing shall be irrevocable by and binding on the Funds
Administrator and the Borrowers.
38
(ii) The Funds Administrator shall notify the Agent in writing
of the names of the officers of the Funds Administrator authorized to
request Loans on behalf of the Borrowers and specifying which of those
officers are also, or, if none are, the other officers that are,
authorized to direct the disbursement of Loans in a manner contrary to
standing disbursement instructions, and shall provide the Agent with a
specimen signature of each such officer. In the absence of a
specification of those officers who are authorized to vary standing
disbursement instructions, the Agent may assume that each officer
authorized to request Loans also has such authority. The Agent shall be
entitled to rely conclusively on the authority of such officers of the
Funds Administrator to request Loans on behalf of the Borrowers, or to
vary standing disbursement instructions, until the Agent receives
written notice to the contrary. The Agent shall have no duty to verify
the authenticity of the signature appearing on any Notice of Borrowing
or other writing delivered pursuant to this SECTION 2.2(a) and, with
respect to an oral or electronic E-mail request for Loans, the Agent
shall have no duty to verify the identity of any individual
representing himself as one of the officers of the Funds Administrator
authorized to make such request on behalf of the Borrowers. Neither the
Agent nor any of the Lenders shall incur any liability to the Funds
Administrator or any of the Borrowers as a result of (a) acting upon
any telephonic or electronic E-mail notice referred to in this SECTION
2.2(a) if the Agent believes in good faith such notice to have been
given by a duly authorized officer of the Funds Administrator or other
individual authorized to request Loans on behalf of the Borrowers or to
direct the disbursement thereof in a manner contrary to standing
disbursement instructions, or (b) otherwise acting in good faith under
this SECTION 2.2(a) and an advance made and disbursed pursuant to any
such telephonic or electronic E-mail notice shall be deemed to be a
Loan for all purposes of this Credit Agreement.
(iii) In its Notice of Borrowing, the Funds Administrator may
request one or more Borrowings on a single day. Each such Borrowing
shall, unless otherwise specifically PROVIDED herein, consist entirely
of Loans of the same Type and shall, in the case of a Borrowing of
LIBOR Rate Loans, be in an aggregate amount for all Lenders of not less
than $1,000,000 or an integral multiple of $100,000 in excess thereof.
The right of the Funds Administrator to choose LIBOR Rate Loans is
subject to the provisions of SECTION 4.3(c).
(iv) Notwithstanding anything to the contrary herein
contained, during the period commencing on and including the Closing
Date and ending on the Syndication Date, Borrowers may only request
that Revolving Loans be made as Prime Rate Loans or LIBOR Rate Loans
with the same 30-day Interest Period.
The Funds Administrator has informed the Agent that it has checking
accounts in the name of Company (each, a "DISBURSEMENT ACCOUNT" and
collectively, the "DISBURSEMENT ACCOUNTS") with the Disbursement Account Banks
for the purpose of paying trade payables and other operating expenses and to
fund other operating needs of the Borrowers which Disbursement Accounts are
identified on SCHEDULE B, PART 6.26. Each Disbursement Account shall be subject
to a Control Agreement in form and substance reasonably satisfactory to the
Agent unless otherwise identified on SCHEDULE B, PART 6.26 and permitted by
SECTION 8.14. The Lenders hereby authorize the Agent, and so long as the
39
conditions for Borrowing specified in SECTION 2.1(a) and in ARTICLE 5 are
satisfied or so long as an Interim Advance Period exists, the Agent on behalf of
the Lenders may but shall not be obligated to make Loans to cover the respective
amounts of checks presented for payment and other disbursements from any
Disbursement Account. Advice from the Disbursement Account Bank of amounts
required to cover such amounts for any Borrower will be deemed sufficient notice
of Borrowing. All of such Borrowings shall be of Prime Rate Loans.
(b)
(i) In the event that the Borrowers are unable to comply with
(A) the Borrowing Base limitation set forth in clause (B)(y) of the
last sentence of SECTION 2.1(a)(ii), or (B) the conditions precedent
set forth in SECTION 5.2 to a Credit Event, the Revolving Lenders
authorize the Agent, in its sole discretion, to make Revolving Loans
("INTERIM ADVANCES") to the Borrowers during the period commencing on
the date the Agent first receives a Notice of Borrowing requesting an
Interim Advance until the earliest of (1) the FIFTEENTH (15TH) Business
Day after such date, (2) the date the Borrowers are again able to
comply with such Borrowing Base limitation and conditions precedent, or
obtains an amendment or waiver with respect thereto and (3) the date
the Majority Lenders instruct the Agent, or the Agent determines, to
cease making Interim Advances (in each case, the "INTERIM ADVANCE
PERIOD").
(ii) The Agent shall not, in any event, (a) make any Interim
Advance during any Interim Advance Period if, after giving effect to
such Interim Advance, Total Revolving Utilization would exceed one
hundred ten percent (110%) of Total Revolving Utilization on the first
day of such Interim Advance Period (calculated without giving effect to
Interim Advances made on such day) and (b) make any Interim Advance if,
after giving effect to such Interim Advance, Total Revolving
Utilization would exceed the Revolving Loan Commitments.
(iii) All amounts received by the Agent during an Interim
Advance Period on account of the Obligations, whether in the form of
payments from any Borrower, collections on the Collateral or otherwise,
shall, so long as any Interim Advances made during such Interim Advance
Period are outstanding, be applied by the Agent, FIRST, to the
repayment of such Interim Advances and, SECOND, in accordance with
SECTION 2.5(C).
(c) The failure of any Lender to make the Loan to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.
(d) In addition to being evidenced, as provided in SECTION 2.6, by the
Borrowers' Accounts, each Lender's Loans and the Borrowers' joint and several
obligations to repay such Loans with interest in accordance with the terms of
this Credit Agreement shall be evidenced by this Credit Agreement, the records
of such Lender and such Lender's Note. The records of each Lender shall be prima
facie evidence of such Lender's Loans and accrued interest thereon and of all
payments made in respect thereof.
40
(e) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with ARTICLE 4, on
outstanding Loans which it has funded to the Agent; PROVIDED that in the case of
interest accrued but unpaid at the time of a Bankruptcy Default and interest
accruing thereafter and during a Bankruptcy Default, such Lender shall be
entitled to receive only its Proportionate Share of amounts actually received by
the Agent in respect of such interest; PROVIDED FURTHER that if any amount
received by the Agent in respect of such interest and distributed by it is
thereafter recovered from the Agent, such Lender shall, upon request, repay to
the Agent its Proportionate Share of the amount so recovered to the extent
received by it, but without interest (unless the Agent is required to pay
interest on the amount recovered, in which case such Lender shall be required to
pay interest at a like rate).
(f) Notwithstanding the obligation of the Funds Administrator to send
written confirmation of a Notice of Borrowing made by telephone or electronic
E-mail transmission if and when requested by the Agent, in the event that the
Agent agrees to accept a Notice of Borrowing made by telephone or electronic
E-mail transmission, such Notice of Borrowing shall be binding on the Funds
Administrator and each Borrower whether or not written confirmation is sent by
the Funds Administrator or requested by the Agent. The Agent may act prior to
the receipt of any requested written confirmation, without any liability
whatsoever, based upon telephonic or electronic E-mail notice believed by the
Agent in good faith to be from the Funds Administrator or its agents. The
Agent's records of the terms of any telephonic or electronic E-mail transmission
Notices of Borrowing shall be conclusive on the Funds Administrator, each
Borrower and the Lenders in the absence of gross negligence or willful
misconduct on the part of the Agent in connection therewith.
2.3 SETTLEMENTS AMONG THE AGENTS AND THE LENDERS.
(a) Except as provided in SECTION 2.3(b), the Agent shall give to each
Lender prompt notice of each Notice of Borrowing by telecopy or facsimile
transmission. No later than 3:00 P.M. (eastern standard time) on the date of
receipt of each Notice of Borrowing (unless such Notice of Borrowing specifies
the Closing Date as the date of Borrowing, in which case no later than 11:00
A.M. on the Closing Date), each Lender will make available for the account of
its Applicable Lending Office, to the Agent at the address of the Agent set
forth on SCHEDULE A, in immediately available funds, its Proportionate Share of
such Borrowing requested to be made. Unless the Agent shall have been notified
by any Lender prior to the date of Borrowing that such Lender does not intend to
make available to the Agent its portion of the Borrowing to be made on such
date, the Agent may assume that such Lender will make such amount available to
the Agent on the Settlement Date and the Agent, in reliance upon such
assumption, may but shall not be obligated to make available the amount of the
Borrowing to be provided by such Lender. If and to the extent such Lender shall
not have so made available to the Agent its Proportionate Share on such date and
the Agent shall have so made available to the Borrowers a corresponding amount
on behalf of such Lender, the Agent may recover such amount on demand from such
Lender in accordance with SECTION 11.18. If such Lender does not pay such
corresponding amount promptly upon the Agent's demand therefor, the Agent may
promptly notify the Funds Administrator and the Borrowers shall immediately
repay such corresponding amount to the Agent together with accrued interest
thereon at the applicable rate or rates provided in SECTIONS 4.1, 4.2, AND 4.4.
41
(b) Unless the Majority Lenders have instructed the Agent to the
contrary, the Agent on behalf of the Lenders may but shall not be obligated to
make Prime Rate Loans under SECTION 2.2 without prior notice of the proposed
Borrowing to the Lenders, subject to the following settlement arrangements:
(i) The amount of each Revolving Lender's Proportionate Share
of Revolving Loans shall be computed weekly (or more frequently in the
Agent's discretion) and shall be adjusted upward or downward on the
basis of the amount of outstanding Revolving Loans as of 5:00 P.M.
(eastern standard time) on the last Business Day of the period
specified by the Agent (such date, the "SETTLEMENT DATE"). The Agent
shall deliver to each of the Revolving Lenders promptly after the
Settlement Date a summary statement of the amount of outstanding
Revolving Loans for such period. The Revolving Lenders shall transfer
to the Agent, or, subject to SECTION 11.18(c)(i), the Agent shall
transfer to the Revolving Lenders, such amounts as are necessary so
that (after giving effect to all such transfers) the amount of
Revolving Loans made by each Revolving Lender shall be equal to such
Revolving Lender's Proportionate Share of the aggregate amount of
Revolving Loans outstanding as of such Settlement Date. During a
Bankruptcy Default, amounts required to be transferred by the Revolving
Lenders to the Agent shall, instead of constituting Revolving Loans to
the Borrowers, be in the form of participations purchased by the
Revolving Lenders in the outstanding Revolving Loans of DBTCo., acting
as Agent. If the summary statement is received by the Revolving Lenders
prior to 12:00 noon (eastern standard time) on any Business Day, each
Revolving Lender shall make the transfers described above in
immediately available funds no later than 3:00 P.M. (eastern standard
time) on the day such summary statement was received; and if such
summary statement is received by the Revolving Lenders after 12:00 noon
(eastern standard time) on such day, each Revolving Lender shall make
such transfers no later than 3:00 P.M. (eastern standard time) on the
next succeeding Business Day. The obligation of each of the Revolving
Lenders to transfer such funds shall be irrevocable and unconditional
and without recourse to or warranty by the Agent. Each of the Agent and
the Revolving Lenders agrees to xxxx its books and records on the
Settlement Date to show at all times the dollar amount of its
Proportionate Share of the outstanding Revolving Loans.
(ii) To the extent that the settlement described above shall
not yet have occurred, upon repayment of Revolving Loans by the
Borrowers, the Agent may first apply such amounts repaid directly to
the amounts made available by the Agent pursuant to this SECTION
2.3(b).
(iii) Because the Agent on behalf of the Revolving Lenders may
be advancing and/or may be repaid Revolving Loans prior to the time
when the Revolving Lenders will actually advance and/or be repaid
Revolving Loans, interest with respect to Revolving Loans shall be
allocated by the Agent to each Revolving Lender and the Agent in
accordance with the amount of Revolving Loans actually advanced by and
repaid to each Revolving Lender and the Agent and shall accrue from and
including the date such Loans are so advanced to but excluding the date
such Revolving Loans are either repaid by the Borrowers in accordance
with SECTION 2.4 or actually settled by the applicable Revolving Lender
as described in this SECTION 2.3(b).
42
2.4 REPAYMENT OF TERM LOANS; REPAYMENTS AND UNSCHEDULED REDUCTION OF
REVOLVING LOAN COMMITMENTS.
(a) SCHEDULED PAYMENTS OF TERM LOANS. The Borrowers shall make
principal payments of the Term Loans in installments on the dates and in the
amounts set forth below:
Scheduled Repayment
Date of Term Loans
-------------------------- --------------------
June 30, 2004 $1,904,762.00
September 30, 2004 $1,904,762.00
December 31, 2004 $1,904,762.00
June 30, 2005 $1,904,762.00
September 30, 2005 $1,904,762.00
December 31, 2005 $1,904,762.00
June 30, 2006 $1,904,762.00
September 30, 2006 $1,904,762.00
December 31, 2006 $1,904,762.00
June 30, 2007 $1,904,762.00
September 30, 2007 $1,904,762.00
December 31, 2007 $1,904,762.00
June 30, 2008 $1,904,762.00
September 30, 2008 $15,238,094.00
TOTAL $40,000,000.00
; PROVIDED that the scheduled installments of principal of the Term Loans set
forth above shall be reduced in connection with any voluntary or mandatory
prepayments of the Term Loans in accordance with SECTION 2.4(b); and PROVIDED,
FURTHER, that the Term Loans and all other amounts owed hereunder with respect
to the Term Loans shall be paid in full no later than the Expiration Date, and
the final installment payable by the Borrowers in respect of the Term Loans on
such date shall be in an amount, if such amount is different from that specified
above, sufficient to repay all amounts owing by the Borrowers under this Credit
Agreement with respect to the Term Loans.
(b) PREPAYMENTS OF TERM LOANS; UNSCHEDULED REDUCTIONS OF REVOLVING
LOAN COMMITMENTS.
(i) VOLUNTARY PREPAYMENTS OF TERM LOANS. The Borrowers may,
upon not less than one Business Day's prior written or telephonic
notice, in the case of Prime Rate Loans, and three Business Days' prior
written notice or telephonic notice, in the case of LIBOR Rate Loans,
in each case given to the Agent by 12:00 noon on the date required and,
if given by telephone, promptly confirmed in writing to the Agent
(which original written or telephonic notice the Agent will promptly
43
transmit by telefacsimile or telephone to each Lender), at any time and
from time to time prepay any Term Loans on any Business Day in whole or
in part in an aggregate minimum amount of $1,000,000 and in integral
multiples of $100,000 in excess of that amount; PROVIDED, however, that
any LIBOR Rate Loan may be prepaid on a day other than the expiration
of the Interest Period applicable thereto only to the extent the
Borrowers pay the amounts due pursuant to SECTION 4.7(b) caused by such
prepayment. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due
and payable on the prepayment date specified therein. Any such
voluntary prepayment shall be applied as specified in SECTION
2.4(b)(v).
(ii) VOLUNTARY REDUCTIONS OF REVOLVING LOAN COMMITMENTS. The
Borrowers may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to the Agent (which original
written or telephonic notice the Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount up to
the amount by which the Revolving Loan Commitments exceed the Total
Revolving Utilization at the time of such proposed termination or
reduction; PROVIDED that any such partial reduction of the Revolving
Loan Commitments shall be in an aggregate minimum amount of $1,000,000
and integral multiples of $100,000 in excess of that amount. The
Borrowers' notice to the Agent shall be irrevocable and shall designate
the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination
or reduction of the Revolving Loan Commitments shall be effective on
the date specified in the Borrowers' notice and shall reduce the
Revolving Loan Commitment of each Lender proportionately to its
Proportionate Share.
(iii) MANDATORY PREPAYMENTS. The Loans shall be prepaid in the
amounts and under the circumstances set forth below, all such
prepayments to be applied as set forth below or as more specifically
provided in SECTION 2.4(b)(v):
(1) PREPAYMENTS AND REDUCTIONS FROM NET ASSET SALE PROCEEDS.
No later than the first Business Day after receipt by any Credit Party
or any of its Subsidiaries of any Net Asset Sale Proceeds in respect of
any Asset Sale other than the Reserved Lagoon Valley Proceeds,
Borrowers shall either (1) prepay the Loans in an aggregate amount
equal to such Net Asset Sale Proceeds or (2), so long as no Default or
Event of Default shall have occurred and be continuing and to the
extent that aggregate Net Asset Sale Proceeds from the Closing Date
through the date of determination do not exceed $20,000,000, deliver to
Agent an officer's certificate setting forth (x) that portion of such
Net Asset Sale Proceeds that such Credit Party or Subsidiary intends to
reinvest in land, equipment or other productive assets used in the
business of Borrowers and their Subsidiaries within 365 days of such
date of receipt and (y) the proposed use of such portion of the Net
Asset Sale Proceeds and such other information with respect to such
reinvestment as Agent may reasonably request; PROVIDED, however, that
to the extent such amount of Net Asset Sale Proceeds is not reinvested
within the 365-day period, Borrowers shall, on the last day of such
365-day period prepay the Loans by the aggregate amount equal to such
amount of Net Asset Sale Proceeds not so applied. No later than the
first Business Day following the date of receipt of the Reserved Lagoon
Valley Proceeds, Borrowers shall prepay the Revolving Loans (without
any permanent reduction in the Revolving Loan Commitments) in an amount
equal to such Reserved Lagoon Valley Proceeds.
44
(2) PREPAYMENTS AND REDUCTIONS FROM NET INSURANCE/CONDEMNATION
PROCEEDS. No later than the first Business Day following the date of
receipt by Agent or by any Credit Party or any of its Subsidiaries of
any Net Insurance/Condemnation Proceeds that are required to be applied
to prepay the Loans pursuant to the provisions of SECTION 7.8,
Borrowers shall prepay the Loans in an aggregate amount equal to the
amount of such Net Insurance/Condemnation Proceeds.
(3) PREPAYMENTS AND REDUCTIONS DUE TO ISSUANCE OF EQUITY
SECURITIES. On the date of receipt of the Net Securities Proceeds from
the issuance of any Capital Securities of Holdings or any of its
Subsidiaries after the Closing Date, Borrowers shall prepay the Loans
in an aggregate amount equal to 50% of such Net Securities Proceeds.
(4) PREPAYMENTS AND REDUCTIONS DUE TO ISSUANCE OF
INDEBTEDNESS. On the date of receipt of the Net Securities Proceeds
from the issuance of any Indebtedness of Holdings or any of its
Subsidiaries after the Closing Date, other than Indebtedness permitted
pursuant to SECTION 8.3 and SECTION 8.17, Borrowers shall prepay the
Loans in an aggregate amount equal to such Net Securities Proceeds.
(5) PREPAYMENTS AND REDUCTIONS FROM EXCESS CASH FLOW. In the
event that there shall be Excess Cash Flow for any Fiscal Year
(commencing with Fiscal Year ending on or about December 31, 2004),
Borrowers shall, no later than June 30 of the following Fiscal Year,
prepay the Loans in an aggregate amount equal to 25% of such Excess
Cash Flow.
(6) PREPAYMENTS AND REDUCTIONS. If, following the receipt by
Borrowers or any of their Subsidiaries of any Net Asset Sale Proceeds,
Net Insurance Condemnation Proceeds or Net Securities Proceeds,
Borrowers are required to apply or cause to be applied any portion of
such proceeds to prepay any Indebtedness permitted pursuant to SECTION
8.3(G), then notwithstanding anything in this SECTION 2.4(B)(III) to
the contrary, Borrowers shall prepay the Loans so as to eliminate any
obligation to prepay such Indebtedness.
(7) CALCULATIONS OF NET PROCEEDS AMOUNTS; ADDITIONAL
PREPAYMENTS AND REDUCTIONS BASED ON SUBSEQUENT CALCULATIONS.
Concurrently with any prepayment of the Loans pursuant to SECTION
2.4(b)(iii)(1)-(6), Borrowers shall deliver to Agent an Officer's
Certificate demonstrating the calculation of the amount of the
applicable Net Asset Sale Proceeds, Net Insurance/Condemnation
Proceeds, Net Securities Proceeds, or Excess Cash Flow, as the case may
be, that gave rise to such prepayment. In the event that Borrowers
shall subsequently determine that the actual amount was greater than
the amount set forth in such Officer's Certificate, Borrowers shall
promptly make an additional prepayment of the Loans in an amount equal
to the amount of such excess, and Borrowers shall concurrently
therewith deliver to Agent an Officer's Certificate demonstrating the
derivation of the additional amount resulting in such excess.
45
(iv) MANDATORY PREPAYMENTS DUE TO RESTRICTIONS ON COMMITMENTS.
The Loans shall be prepaid in the amounts and under the circumstances
set forth below, all such prepayments to be applied as set forth below:
(1) Except during an Interim Advance Period, the amount by
which the Total Revolving Utilization would exceed the Borrowing Base
at any time, shall be immediately due and payable without the necessity
of any notice or demand. Repayments of such excess amounts shall be
applied, FIRST, to the repayment of Revolving Loans, SECOND, to the
payment of outstanding reimbursement obligations with respect to
Letters of Credit, and, THIRD, to the securing, with cash or Cash
Equivalents as provided in the second paragraph of SECTION 9.2 (but
without the requirement of any demand provided for in such paragraph),
of the Letter of Credit Obligations (in each case to the extent the
same are such by virtue of CLAUSE (A) of the definition thereof).
(2) On the Expiration Date, the Commitment of each Lender
shall automatically be reduced to zero and may not be reinstated and
all outstanding Loans and other Obligations shall be immediately due
and payable.
(3) The amount by which the Total Revolving Utilization
exceeds the aggregate amount of the Revolving Loan Commitments at any
time shall be immediately due and payable without the necessity of any
notice or demand. Repayments of such excess amounts shall be applied,
FIRST, to the repayment of the Revolving Loans, SECOND, to the payment
of outstanding reimbursement obligations with respect to Letters of
Credit, and, THIRD, to the securing, with cash or Cash Equivalents as
provided in the second paragraph of SECTION 9.2 (but without the
requirement of any demand provided for in such paragraph), of the
Letter of Credit Obligations (in each case to the extent the same are
such by virtue of CLAUSE (a) of the definition thereof).
(v) APPLICATION OF PREPAYMENTS.
(1) Application of Voluntary Prepayments by Type of
Loans and Order of Maturity. Any voluntary prepayments of the Term Loans
pursuant to SECTION 2.4(b)(i) shall be applied first to reduce the next two
succeeding unpaid scheduled installments of principal of the Term Loans set
forth in SECTION 2.4(a) that are unpaid at the time of such prepayment in the
forward order of maturity and thereafter to reduce each such remaining unpaid
scheduled installment of principal of the Term Loans on a pro rata basis in
accordance with SECTION 2.4(b)(vi).
(2) Application of Mandatory Prepayments by Type of
Loans. Any amounts required to be applied as a mandatory prepayment of the Loans
pursuant to SECTION 2.4(b)(iii) shall be applied FIRST, to prepay the Term Loans
to the full extent thereof, and SECOND to the extent of any remaining portion of
such amount, to prepay the Revolving Loans to the full extent thereof (without
any reduction in Revolving Loan Commitments).
(vi) Application of Mandatory Prepayments of Term
Loans to Scheduled Installments of Principal Thereof. Any mandatory prepayments
of the Term Loans pursuant to SECTION 2.4(b)(iii) shall be applied to reduce
each remaining unpaid scheduled installment of principal of the Term Loans set
forth in SECTION 2.4(a) on a pro rata basis (in accordance with the respective
unpaid principal amounts thereof).
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(vii) AVOIDANCE OF BREAK FUNDING COSTS. The
Borrowers may, to the extent necessary to avoid any charge under SECTION 4.7(b)
that would otherwise result from the prepayment of any LIBOR Rate Loan on a day
other than the last day of the Interest Period for such LIBOR Rate Loan, be
permitted to make a cash deposit in amount equal to such prepayment in the Cash
Collateral Account to be held by the Agent and applied to such prepayment on the
last day of the Interest Period for such LIBOR Rate Loan; PROVIDED that (a) no
Event of Default shall have occurred and be continuing, (b) the applicable LIBOR
Rate Loan shall continue to bear interest as specified in ARTICLE 4 to (but not
including) the date on which the applicable LIBOR Rate Loan is actually repaid
(any interest accruing in respect of the funds deposited in the Cash Collateral
Account to be applied to such interest or otherwise credited to the Borrower)
and (c) if an Event of Default shall occur prior to the date on which the amount
so deposited is applied to the prepayment of the applicable LIBOR Rate Loan, the
Agent shall be entitled to exercise all rights and remedies afforded to it
hereunder and under the Collateral Documents in respect of the cash so
deposited.
2.5 PAYMENTS AND COMPUTATIONS.
(a) (i) The Borrowers shall, subject, in the case of payments
in respect of Letters of Credit, to SECTION 2.5(a)(ii), make each
payment under the Credit Documents and under the Notes not later than
2:00 P.M. (eastern standard time) on the day when due in Dollars to the
Agent at its address designated in or pursuant to SECTION 11.5 in
immediately available funds. The obligations of the Borrowers to the
Lenders with respect to such payments shall be discharged by making
such payments to the Agent pursuant to this SECTION 2.5 or by the
Agent, in its discretion, adding such payments to the principal amount
of the Loans outstanding by charging such payments to the applicable
Borrower's Account pursuant to SECTION 2.6.
(ii) Amounts payable by the Borrowers in respect of
any Letter of Credit should be made by the Borrowers to the Agent until
the Funds Administrator shall have received notice from the Agent that
the Agent has received payments equal to the aggregate amount of all
drawings thereunder, PLUS interest thereon from the date such drawings
were disbursed at the L/C Interest Rate.
(b) (i) The Company has established and shall continue to
maintain, at a financial institution acceptable to the Agent, a lockbox
(the "LOCKBOX") that shall be subject to a Control Agreement providing,
among other things, that all receipts in the Lockbox shall be
transferred at the end of each day into an account (the "DBT ACCOUNT")
maintained by the Agent at DBTCo. The Company shall deliver such
notices to account debtors and take all such other actions as may
reasonably be necessary to cause all account debtors on the Accounts of
the Borrowers to remit payments to such Lockbox. The Company has
established and shall maintain depository accounts at the financial
institutions listed in SCHEDULE B, PART 6.26 and identified as blocked
accounts thereon (the "DEPOSITORY ACCOUNTS") that shall be subject to
47
Control Agreements providing, among other things, that all amounts in
the Depository Accounts shall be transferred at the end of each day to
the DBT Account. In the event that any Borrower receives any check,
cash, note or other instrument representing payment of an Account
(other than an item delivered to the Lockbox), such Borrower shall hold
such item in trust for Agent and shall, as soon as practicable (and in
any event within one Business Day) after receipt thereof, cause such
item to be deposited into a Depository Account.
(ii) The closing of any Lockbox or Depository Account
and the termination of any Control Agreement shall require in each case
the prior written consent of the Agent.
(c) (i) All amounts received by the Agent for distribution
hereunder shall, subject to SECTION 2.2(b)(iii), SECTION 2.4(b)(i), AND
SECTION 2.4(b)(v) be distributed in the following order and, if to
Lenders, according to each Lender's Proportionate Share with respect to
each category set forth below:
FIRST, to the payment of any Fees, Expenses or other
Obligations due and payable to the Agent, solely in
its capacity as Agent, under any of the Credit
Documents, including amounts advanced by the Agent on
behalf of the Lenders pursuant to SECTION 2.3(b) and
other than those Obligations specifically referred to
in this SECTION 2.5(c)(i);
SECOND, during a Bankruptcy Default, to the payment
of the unpaid principal amounts of the drawings under
Letters of Credit payable to each Issuing Bank,
solely in its capacity as Issuing Bank, together with
accrued but unpaid interest thereon at the L/C
Interest Rate;
THIRD, to the ratable payment of any Fees and other
Obligations due and payable to the Lenders under any
of the Credit Documents, other than to a Lender in
its capacity as an Issuing Bank and other than those
Obligations specifically referred to in this SECTION
2.5(c)(i).
FOURTH, to the ratable payment of interest due on the
Loans;
FIFTH, to the ratable payment of principal due on the
Term Loans to be applied to the remaining scheduled
installments on a pro rata basis;
SIXTH, to the ratable payment of principal on the
Revolving Loans;
SEVENTH, to the ratable payment of other Liabilities
not specifically referred to in this SECTION 2.5(c)
due and payable to the Issuing Banks under L/C
Applications and Letters of Credit; and
EIGHTH, to the ratable payment of other Liabilities
(including Obligations in respect of any Permitted
Hedging Transactions) not specifically referred to in
this SECTION 2.5(c) due and payable to the Lenders
(in their capacities as such, and not in their
capacity as an Issuing Bank) under the Credit
Documents.
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(ii) Each Person receiving a payment from the Agent
pursuant to SECTION 2.5(c)(i) shall, for all purposes of this Credit
Agreement and other Credit Documents, be deemed to have applied that
payment in the order specified in SECTION 2.5(c)(i).
2.6 MAINTENANCE OF ACCOUNT.
The Agent shall maintain a separate account on its books and records in
the name of each Borrower (each a "BORROWER'S ACCOUNT" and collectively, the
"BORROWERS' ACCOUNTS") in which each Borrower will be charged or credited with
(w) the proceeds, if any, of each Loan received by or for the account of such
Borrower, (x) payments made to the Agent on account of the Obligations of such
Borrower, whether from collection of proceeds of Collateral or otherwise, (y)
the aggregate face amount of all outstanding Letters of Credit (or an
appropriate allocation thereof, if the Letters of Credit are issued for the
direct benefit of more than one Borrower) issued for the benefit of such
Borrower, and (z) all other Fees, Expenses and other Obligations attributable to
such Borrower as determined by Agent. In no event shall prior recourse to any
Accounts or other Collateral be a prerequisite to the Agent's right to demand
payment of any Obligation upon its maturity.
2.7 STATEMENT OF ACCOUNT.
After the end of each month, the Agent shall send the Funds
Administrator a statement accounting for the charges, loans, advances and other
transactions occurring among and between the Agent, the Lenders, the Funds
Administrator and the Borrowers during that month. The monthly statements shall,
absent manifest error, be an account stated, which 15 days after the delivery
thereof to the Funds Administrator, shall be final, conclusive and binding on
the Borrowers; PROVIDED that any failure to so record any transaction or any
error in so recording shall not limit or otherwise affect any Borrower's duty to
pay the Obligations.
2.8 WITHHOLDING AND OTHER TAXES.
(a) Any and all payments by the Borrowers hereunder, under the Notes or in
respect of Letters of Credit which are made to or for the benefit of any Lender
(whether in its capacity as a Lender or an Issuing Bank, and as used in SECTION
2.8, the term "LENDER" shall mean a Lender in each such capacity, and shall also
include each Serving Affiliate of such Lender) or the Agent shall be made, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings and penalties, interests
and all other liabilities with respect thereto (collectively, "TAXES"),
excluding, (i) in the case of each such Lender or the Agent, Taxes imposed on
its net income (including any Taxes imposed on branch profits) and franchise
taxes imposed on it by the jurisdiction under the laws of which such Lender, or
the Agent (as the case may be) is organized or any political subdivision
thereof, (ii) in the case of each such Lender, Taxes imposed on its net income
(including any Taxes imposed on branch profits) and franchise Taxes imposed on
it by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof, (iii) in the case of any Foreign Lender, any
Taxes that would apply to a payment hereunder, under the Notes or in respect of
Letters of Credit made to such Foreign Lender as of the Closing Date, and (iv)
if any Person acquires any interest in this Credit Agreement, any Note or any
L/C Participation pursuant to the provisions hereof, or a Lender or the Agent
49
changes the office in which any Loan or any L/C Participation is made, accounted
for or booked, to an office outside the United States, or a Lender if an Issuing
Bank, changes the office at which any Letter of Credit is maintained to an
office outside the United States (any such Person, or such Lender or the Agent
in that event, being referred to as a "TAX TRANSFEREE"), any Taxes to the extent
that they would apply to a payment to such Tax Transferee as of the date of the
acquisition of such interest or change in office, as the case may be, except to
the extent Covered Taxes (as defined below) would have resulted from such
payments made hereunder, under the Notes or in respect of Letters of Credit made
to a Lender or the Agent immediately prior to such acquisition of such interest
or such change in office (all such nonexcluded Taxes being hereinafter referred
to as "COVERED TAXES"). If any Borrower shall be required by law to deduct or
withhold any Covered Taxes from or in respect of any sum payable hereunder,
under any Note or in respect of any Letter of Credit to or for the benefit of
any Lender, the Agent or any Tax Transferee, (a) the sum payable shall be
increased as may be necessary so that after making all required deductions or
withholdings of Covered Taxes (including deductions or withholdings of Covered
Taxes applicable to additional sums payable under this SECTION 2.8) such Lender,
the Agent or such Tax Transferee, as the case may be, receives an amount equal
to the sum it would have received had no such deductions or withholdings been
made, (b) such Borrower shall make such deductions or withholdings and (c) such
Borrower shall pay the full amount so deducted or withheld to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, each Borrower agrees to pay any present or future
stamp, recording, documentary, excise, privilege, property, intangible or
similar levies that arise at any time or from time to time (i) from any payment
made under any and all Credit Documents, (ii) from the transfer of the rights of
any Lender under any Credit Documents to any transferee or (iii) from the
execution or delivery by the Funds Administrator or any Borrower of, or from the
filing or recording or maintenance of, or otherwise with respect to the exercise
by the Agent or the Lenders of their rights under, any and all Credit Documents
(hereinafter referred to as "OTHER TAXES").
(c) The Borrowers will jointly and severally indemnify each Lender, the
Agent, and any Tax Transferee for the full amount of (i) Covered Taxes imposed
on or with respect to amounts payable hereunder, under any Note or in respect of
any Letter of Credit, (ii) Other Taxes and (iii) any Taxes imposed by any
jurisdiction on amounts payable under this SECTION 2.8, paid by such Lender, the
Agent or such Tax Transferee, as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto
whether or not such Taxes were correctly or legally asserted by the relevant
taxing or other Governmental Authority; PROVIDED, however the Borrowers shall
not be liable for any amounts set forth in clauses (i) through (iii) above if
such Lender, Agent or Tax Transferee fails to timely and properly comply with
the provisions of SECTION 2.8(e), SECTION 2.8(f), and SECTION 2.8(g) as such
provisions may be applicable to such Lender, Agent or Tax Transferee. Payment
under this indemnification shall be made within thirty (30) days from the date
such Lender, the Agent or such Tax Transferee certifies and sets forth in
reasonable detail the calculation thereof as to the amount and type of such
Taxes. Any such certificate submitted by such Lender, the Agent or such Tax
Transferee in good faith to the Funds Administrator shall, absent manifest
error, be final, conclusive and binding on all parties 15 days after delivery
thereof to the Funds Administrator.
(d) Within 60 days after the date of payment of any Covered Taxes or
Other Taxes, the Funds Administrator will furnish to the Agent, at its address
referred to in SECTION 11.5, the original or a certified copy of a receipt
evidencing payment thereof.
50
(e) On or before the Closing Date, each Foreign Lender shall deliver to
the Agent and the Funds Administrator two valid, duly completed copies of IRS
Form W-8BEN or W-8ECI or successor applicable form, as the case may be, and any
other required form, certifying that such Foreign Lender is entitled to receive
payments under this Credit Agreement, the Notes or any Letter of Credit payable
to it without deduction or withholding of any United States federal income taxes
or with such withholding imposed at a reduced rate (the "REDUCED RATE") and
establishing an exemption from United States backup withholding tax. Each such
Foreign Lender shall also deliver to the Agent and the Funds Administrator two
further copies of said forms or other manner of required certification, as the
case may be, on or before the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from a required withholding of United States federal income tax or
entitlement to having such withholding imposed at the Reduced Rate or after the
occurrence of any event requiring a change in the most recent form previously
delivered by it to the Funds Administrator and the Agent, and such extensions or
renewals thereof as may reasonably be requested by the Funds Administrator and
the Agent, certifying that such Foreign Lender is entitled to receive payments
under this Credit Agreement, the Notes or any Letter of Credit payable to it
without deduction or withholding of any United States federal income taxes or
with such withholding imposed at a Reduced Rate, and establishing an exemption
from United States backup withholding tax, unless in any such case any change in
a tax treaty to which the United States is a party, or any change in law or
regulation of the United States or official interpretation thereof has occurred
after the Closing Date and prior to the date on which any such delivery would
otherwise be required that renders any such forms inapplicable or that would
prevent such Foreign Lender from duly completing and delivering any such form
with respect to it, and such Foreign Lender advises the Funds Administrator and
the Agent that it is not capable of receiving payments without any deduction,
withholding of United States federal income tax or with such withholding at the
Reduced Rate, as the case may be.
(f) If a Tax Transferee that is organized under the laws of a
jurisdiction outside of the United States acquires an interest in this Credit
Agreement or any Note or L/C Participation or a Lender changes the office
through which Loans or any L/C Participation are made, accounted for or booked,
to an office outside the United States or a Foreign Lender if an Issuing Bank,
changes the office at which any Letter of Credit is maintained to an office
outside the United States, the transferor, or the applicable Lender, in the case
of a change of office, shall cause such Tax Transferee to agree that, on or
prior to the effective date of such acquisition or change, as the case may be,
it will deliver to the Funds Administrator and the Agent two valid, duly
completed copies of IRS Form W-8BEN or W-8ECI or successor applicable form, as
the case may be, and any other required form, certifying that such Tax
Transferee is entitled to receive payments under this Credit Agreement, the
Notes and any Letter of Credit payable to it without deduction or withholding of
United States federal income tax or with such withholding imposed at a Reduced
Rate and establishing an exemption from United States backup withholding tax.
Each Tax Transferee further undertakes to deliver two further copies of the said
forms or other manner of required certification, as the case may be, on or
before the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from a
required withholding of United States federal income tax or entitlement to
having such withholding imposed at the Reduced Rate or after the occurrence of
any event requiring a change in the most recent form previously delivered by it
to the Funds Administrator and the Agent, and such extensions or renewals
thereof as may reasonably be requested by the Funds Administrator and the Agent,
certifying that such Tax Transferee is entitled to receive payments under this
Credit Agreement, the Notes and any Letter of Credit without deduction or
51
withholding of any United States federal income taxes or with such withholding
imposed at the Reduced Rate and establishing an exemption from United States
backup withholding tax, unless any change in treaty, law or regulation or
official interpretation thereof has occurred after the effective date of such
acquisition or change and prior to the date on which any such delivery would
otherwise be required that renders any such forms inapplicable or that would
prevent such Tax Transferee from duly completing and delivering any such form
with respect to it, and such Tax Transferee advises the Funds Administrator and
the Agent that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax or with such withholding at the
Reduced Rate, as the case may be.
(g) Each non-Foreign Lender shall, (i) deliver to the Agent and the
Funds Administrator a valid, duly completed IRS Form W-9 or successor applicable
form and renew or update any such form on or before such form expires, becomes
obsolete or is otherwise required to be resubmitted, or (ii) otherwise establish
an exemption from United States backup withholding tax to the reasonable
satisfaction of Agent.
(h) If any Taxes for which any Borrower would be required to make
payment under this SECTION 2.8 are imposed, the applicable Lender or the Agent,
as the case may be, shall use its best efforts to avoid or reduce such Taxes by
taking any appropriate action (including assigning its rights hereunder to a
related entity or a different office) which would not in the sole opinion of
such Lender or the Agent be otherwise disadvantageous to such Lender or the
Agent, as the case may be.
(i) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers contained
in this SECTION 2.8 shall survive the payment in full of the Obligations.
(j) Each Lender shall cause each of its Serving Affiliates that is a
Foreign Lender to take the actions required to be taken by such Serving
Affiliate as a Foreign Lender under SECTION 2.8(e), (f) AND (g).
2.9 AFFECTED LENDERS.
If any Borrower is obligated to pay to any Lender (whether in its
capacity as a Lender or an Issuing Bank) or any Serving Affiliate of such Lender
any amount under SECTIONS 2.8, 4.9 or 4.3(C)(I)(B), or if any Lender is a
Defaulting Lender, the Borrowers may, if no Default or Event of Default then
exists, replace such Lender or Serving Affiliate with another lender acceptable
to the Agent, and such Lender hereby agrees to be so replaced or to cause such
Serving Affiliate to be replaced, subject to the following:
(a) (i) The obligations of the Borrowers hereunder to the
Lender to be replaced (in its capacity as a Lender, and including such
increased or additional costs incurred from the date of notice to the
Funds Administrator of such increase or additional costs through the
date such Lender is replaced hereunder) shall be paid in full to such
Lender concurrently with such replacement; and
52
(ii) the obligations of the Borrowers hereunder to
the Lender to be replaced in its capacity as an Issuing Bank, or to its
Serving Affiliate in such capacity, shall continue until (A) each
Letter of Credit issued by that Person has expired or been drawn in
full, (B) all outstanding reimbursement obligations with respect to
Letters of Credit, together with interest thereon at the L/C Interest
Rate, shall have been paid in full, and (C) all Liabilities under each
L/C Application, to the extent due, have been paid in full and, to the
extent not due, been secured to the satisfaction of such Person, to the
extent due, have been paid in full and, to the extent not due, been
secured to the satisfaction of such Person.
(b) If such replacement is a result of increased costs under SECTIONS
2.8 OR 4.9 the replacement Lender shall be a bank or other financial institution
that is not subject to such increased costs which caused the Borrowers' election
to replace any Lender hereunder, and each such replacement Lender shall execute
and deliver to the Agent such documentation satisfactory to the Agent pursuant
to which such replacement Lender is to become a party hereto, conforming to the
provisions of SECTION 11.6, with a Commitment equal to that of the Lender being
replaced and shall make Loans in the aggregate principal amount equal to the
aggregate outstanding principal amount of the Loans of the Lender being
replaced;
(c) Upon such execution of such documents referred to in CLAUSE (b) and
repayment of the amounts referred to in CLAUSE (a), the replacement lender shall
be a "Lender" with a Commitment as specified herein above and the Lender being
replaced shall cease to be a "Lender" hereunder, except with respect to
indemnification provisions under this Credit Agreement, which shall survive as
to such replaced Lender and except to the extent such Lender continues to be an
Issuing Bank pursuant to SECTION 2.9(a)(ii);
(d) The Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this SECTION 2.9, but at no time shall the Agent
be obligated to initiate any such replacement;
(e) Any Lender replaced under this SECTION 2.9 shall be replaced at the
Borrowers' sole cost and expense and at no cost or expense to the Agent or any
of the Lenders; and
(f) If the Borrowers propose to replace any Lender pursuant to this
SECTION 2.9 because the Lender seeks reimbursement under either SECTION 2.8 or
4.9 then it must also replace any other Lender who seeks similar levels of
reimbursement (as a percentage of such Lender's Commitment) under such Sections.
2.10 SHARING OF PAYMENTS.
(a) (i) If any Lender (including a Lender in its capacity as
an Issuing Bank) shall obtain any payment (whether voluntary,
involuntary, and whether through the exercise of any right of set-off
by virtue of its claim in any applicable bankruptcy, insolvency or
other similar proceeding being deemed secured by a Liability owed by it
to any Credit Party, including a claim deemed secured under Section 506
of the Bankruptcy Code, or otherwise) (each a "PAYMENT"), on account of
(A) the Loans made by it, (B) its L/C Participations or (C) any of the
other Obligations due and payable to it in excess of its Proportionate
Share of payments on account of the Loans or L/C Participations or such
53
other Obligations obtained by all the Lenders, such Lender shall
forthwith purchase from the other Lenders such participations in the
Loans made by them, in their participation in Letters of Credit or
their other such Obligations as shall be then due and payable as shall
be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; HOWEVER, PROVIDED that if all or any
portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded
and each such Lender shall repay to the purchasing Lender the purchase
price to the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of (1) the
amount of such Lender's required repayment to (2) the total amount so
recovered from the purchasing Lender) of any interest or other amount
paid or payable by the purchasing Lender in respect to the total amount
so recovered. Each Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this SECTION 2.10 may, to
the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of
such Borrower in the amount of such participation.
(ii) For purposes of this SECTION 2.10, the
unreimbursed drawings under Letters of Credit issued by an Issuing Bank
shall be deemed to constitute "Loans" made by such Issuing Bank, and
such Issuing Bank agrees that it shall apply all Payments received by
it in its capacity as an Issuing Bank to the payment or the
collateralization of the Liabilities of the Borrowers to it that
constitute unreimbursed drawings under Letters of Credit issued by it
before applying them to any other Liabilities due it.
(b) If an Issuing Bank is an Affiliate of a Lender, such Lender shall
cause such Affiliate to comply with the provisions of SUBSECTION (a) of SECTION
2.10 as fully as though such Affiliate were a Lender subject to such subsection.
ARTICLE 3
LETTERS OF CREDIT
-----------------
3.1 ISSUANCE OF LETTERS OF CREDIT.
(a) The Funds Administrator may from time to time request the
Agent to direct an Issuing Bank to issue a Letter of Credit for the account of a
Borrower. No such request shall be granted if, after such issuance:
(i) (A) Total Revolving Utilization would exceed the lesser of
(1) the Revolving Loan Commitments and (2) the Borrowing Base or (B)
Letter of Credit Obligations would exceed $10,000,000;
(ii) (A) (1) any order, judgment or decree of any Governmental
Authority or arbitrator shall enjoin or restrain such Borrower from
procuring, such Issuing Bank from issuing, or a Lender from acquiring
an L/C Participation in, such Letter of Credit, or (2) any Requirement
of Law applicable to such Borrower, such Issuing Bank or a Lender or
any request or directive (whether or not having the force of law) from
54
any Governmental Authority with jurisdiction over such Borrower, such
Issuing Bank or a Lender shall prohibit, or request that, any such
Person refrain from procuring, issuing or acquiring an L/C
Participation in, such Letter of Credit, as applicable, or, from
performing its obligations under such Letter of Credit or its L/C
Participation thereunder, as applicable;
(B) any Requirement of Law applicable to
such Issuing Bank or a Lender or any request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over such Issuing Bank or a Lender
shall impose upon such Issuing Bank or such Lender (1) any
restriction or reserve or capital requirement or (2) any cost
or expense with respect to, in the case of such Issuing Bank,
such Letter of Credit and, in the case of such Lender, such
L/C Participation (for which such Issuing Bank or such Lender
shall not otherwise be compensated) not in effect as of the
Closing Date, and which such Issuing Bank or such Lender deems
in good faith to be material to it;
(iii) any Lender is a Defaulting Lender, unless the Agent and
Issuing Bank have entered into satisfactory arrangements with the
Borrowers to eliminate the Agent's and such Issuing Bank's risk with
respect to such Lender, including cash collateralization of such
Lender's Proportionate Share of Letter of Credit Obligations; or
(iv) Agent has determined that any of the conditions set forth
in SECTION 5.2 shall not be satisfied.
(b) The Agent may assume, as to any Borrower, any Issuing Bank and
any Lender, that none of the conditions specified in SECTION 3.1(A) are
applicable as to such Person, unless the Agent shall have received a notice from
such Person specifically entitled "Notice under SECTION 3.1(A)," specifying the
condition or conditions that are applicable to such Person. Any such notice
shall continue in effect until the Agent shall have received from the Person
originally sending such notice a subsequent notice, entitled "Revocation of
Notice under SECTION 3.1(A)," stating that the condition or conditions specified
in such Person's earlier notice are no longer applicable.
(c) Each of the letters of credit set forth on SCHEDULE B, PART
3.1 (each, an "EXISTING L/C") has been issued under the Existing Credit
Agreement and shall continue to constitute Letters of Credit hereunder, subject
to each of the terms and conditions of this Credit Agreement and each other
Credit Document. Each Revolving Lender shall be deemed to have irrevocably and
unconditionally acquired from the Issuing Bank an L/C Participation in each such
Existing L/C, in each case in accordance with SECTION 3.4, including, without
limitation, the right to be secured by and entitled to the benefits of the
Collateral.
3.2 PROCEDURE FOR ISSUANCE.
(a) The Funds Administrator may from time to time request the
Agent to direct the issuance of a Letter of Credit by delivering to the Agent a
request for the issuance of a Letter of Credit in the form of EXHIBIT F annexed
hereto (the "LETTER OF CREDIT REQUEST") no later than 1:00 P.M. (New York City
time) at least three (3) Business Days (or such shorter period as may be agreed
55
to by the Agent and the applicable Issuing Bank requested to issue such Letter
of Credit) in advance of the proposed date of issuance. Prior to the date of
issuance of each Letter of Credit, the Funds Administrator shall provide to the
Agent a precise description of the documents and the text of any certificate to
be presented by the beneficiary of such Letter of Credit. Agent and the Issuing
Bank shall have the right to make any changes to any format and text prior to
the issuance of any Letter of Credit. In the event that the Agent, in its sole
discretion, elects not to issue such Letter of Credit, it shall promptly so
notify the Funds Administrator and the Funds Administrator may then submit the
Letter of Credit Request to another Issuing Bank. If all Issuing Banks elect not
to issue such Letter of Credit, then (i) in the case of a standby Letter of
Credit, notwithstanding the prior election of Agent not to issue such Letter of
Credit, Agent shall be the Issuing Lender with respect to such Letter of Credit
and (ii) in the case of a commercial Letter of Credit, notwithstanding the prior
election of Fleet National Bank ("FLEET") not to issue such Letter of Credit,
Fleet shall be the Issuing Lender with respect to such Letter of Credit,
notwithstanding the fact that the Letter of Credit Obligations with respect to
such Letter of Credit and with respect to all other Letters of Credit issued by
Agent or Fleet, as the case may be, when aggregated with such Lender's Revolving
Utilization, may exceed such Lender's Revolving Loan Commitment then in effect.
If any Issuing Bank shall so request, the Funds Administrator shall in addition
to the Letter of Credit Request, submit to the Issuing Bank such Issuing Bank's
standard L/C Application; PROVIDED that in the event of a conflict between the
covenants, terms and conditions of any such L/C Application and the covenants,
terms and conditions of this Credit Agreement, the covenants, terms and
conditions of this Credit Agreement shall govern. Promptly after the issuance of
or amendment of any standby Letter of Credit, the Issuing Bank shall promptly
notify the Agent and Funds Administrator, in writing, of such issuance or
amendment, and such notice will be accompanied by a copy of such issuance or
amendment. Promptly upon receipt of such notice, the Agent shall notify each
other Lender of such issuance or amendment, and if so requested by any Lender,
the Agent shall provide such Lender with a copy of such issuance or amendment.
With regards to commercial Letters of Credit, each Issuing Lender shall on the
first Business Day of each week furnish the Agent, as the case may be (with a
copy to Borrowers), by facsimile, with a report of the daily aggregate
outstanding commercial Letters of Credit issued by such Issuing Lender.
(b) The transmittal by the Funds Administrator of each Letter of
Credit Request shall be deemed to be a representation and warranty made by each
of the Borrowers, both at the time of such transmittal and at the time of the
issuance of the requested Letter of Credit, that the Letter of Credit may be
issued in accordance with and will not violate any of the requirements of
SECTION 3.1.
3.3 TERMS OF LETTERS OF CREDIT.
The Agent shall not direct the issuance of any Letter of Credit unless:
(a) if it is a standby Letter of Credit its term does not exceed
the earlier of the date which is (i) five Business Days prior to the Expiration
Date or (ii) one year after the date of issuance of such standby Letter of
Credit; PROVIDED that the immediately preceding clause (ii) shall not prevent
any Issuing Lender from agreeing that a standby Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year unless such Issuing Lender elects not to extend for any such additional
period; or;
56
(b) if it is a commercial Letter of Credit its term does not
exceed the earlier of the date which is (i) the date which is 30 days prior to
the Expiration Date and (ii) the date which is 180 days from the date of
issuance of such commercial Letter of Credit;
(c) the Letter of Credit is denominated in United States Dollars
and allows for payments on a sight basis only.
3.4 LENDERS' PARTICIPATION.
(a) Immediately upon issuance by any Issuing Bank of a Letter of
Credit, each Revolving Lender shall be deemed to have irrevocably and
unconditionally acquired from such Issuing Bank, without recourse or warranty,
an undivided interest and participation (an "L/C PARTICIPATION"), to the extent
of such Lender's Proportionate Share, in such Issuing Bank's rights to be paid
the principal amount of, together with interest accrued on, drawings under such
Letter of Credit and in any security therefor or Guaranty pertaining thereto.
(b) (i) Each Issuing Bank shall, subject to SECTION 3.4(c), remit
to the Agent, for the account of each Revolving Lender such Lender's
Proportionate Share of each payment of principal and interest (to the extent
such interest does not exceed the L/C Interest Rate) received by such Issuing
Bank on account of any drawing under such Letter of Credit (A) with respect to
which such Issuing Bank has delivered an L/C Notice of Drawing to the Agent
during a Bankruptcy Default and (B) that is received by such Issuing Bank on or
after the date of such L/C Notice of Drawing; PROVIDED, that in the event that
any such payment received by any Issuing Bank shall be required to be returned
by such Issuing Bank, such Lender shall return to such Issuing Bank the portion
thereof previously distributed by it to the Agent, but without interest thereon
(unless such Issuing Bank is required to pay interest on the amount returned, in
which case such Lender shall be required to pay interest at the same rate).
(ii) (A) Payments required to be made by any Issuing Bank to
the Agent for the account of a Revolving Lender, together with interest
thereon at the rate specified in SECTION 3.4(b)(ii)(B), shall be made
to the Agent, if the amount in respect of which the payment is to be
made to the Agent is received by such Issuing Bank on or before 1:00
P.M. of such Issuing Bank's time on a Business Day, on the day received
and, if received after such time, on or before 11:00 A.M. of such
Issuing Bank's time, on the next succeeding Business Day.
(B) Interest shall be payable by each Issuing Bank on amounts
required to be paid by it to the Agent pursuant to SECTION
3.4(B)(II)(A) from the date such payments are due until such amounts
are paid in full at, for the first three Business Days, the Federal
Funds Rate, and, thereafter, the Prime Lending Rate.
(c) Until an Issuing Bank shall have received from a Revolving
Lender, or the Agent on behalf of such Lender, payment in full of the amount
required to be paid by such Lender to such Issuing Bank pursuant to SECTION
3.6(b)(ii), such Issuing Bank may hold all amounts otherwise payable by it to
the Agent for the account of such Lender pursuant to SECTION 3.4(b)(i) as
collateral to secure such Lender's obligation to make such payment to it.
(d) No Issuing Bank shall:
57
(i) Without the prior written consent of the Agent, release
any collateral securing any Borrower's obligation to pay the amount of
such drawing and interest accrued thereon; or
(ii) Without the prior written consent of the Agent, amend,
modify or waive any other right or condition under the L/C Application,
including any Reimbursement Agreement.
3.5 MATURITY OF DRAWINGS; INTEREST THEREON.
(a) Drawings under any Letter of Credit shall, notwithstanding
anything to the contrary contained therein or in the related L/C Application,
mature and become due and payable, and shall be repaid to the Agent for the
account of the applicable Issuing Bank by the Borrowers in full, together with
interest accrued thereon, from the date and at the rate specified in SECTION
3.5(B), on the Effective Date of the L/C Notice of Drawing in respect of such
drawing.
(b) Borrowers shall, notwithstanding anything to the contrary
contained in any Letter of Credit or in the related L/C Application, pay
interest on the outstanding principal amount of each drawing under such Letter
of Credit at a rate per annum equal to the rate set forth in SECTION 4.2 (the
"L/C INTEREST RATE") from the date such drawing is disbursed by the applicable
Issuing Bank to the date such drawing is reimbursed by the Borrowers. Interest
on each such drawing shall be payable when such drawing shall be due (whether at
maturity, by reason of acceleration or otherwise) and, prior to such time, on
demand.
3.6 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT; FUNDING OF L/C
PARTICIPATIONS.
In the event of any drawing under any Letter of Credit, the applicable
Issuing Bank may deliver an L/C Notice of Drawing to the Agent and Borrowers and
the Agent shall:
(a) unless a Bankruptcy Default exists, treat each L/C Notice of
Drawing on its Effective Date as a Notice of Borrowing requesting Prime Rate
Loans in a principal amount equal to the amount of such drawing PLUS interest on
the amount of such drawing at the L/C Interest Rate from the day such drawing
was disbursed until the date of such L/C Notice of Drawing (unless such drawing
was disbursed and repaid on the same day, in which case interest shall be
payable for such day); and each such L/C Notice of Drawing shall have the same
force and effect as a Notice of Borrowing given by the Funds Administrator for
and on behalf of the Borrowers, except that the conditions to borrowing
specified in SECTION 2.2 and SECTION 5.2 (other than that a Bankruptcy Default
shall not exist) shall not apply;
(b)
(i) (A) during a Bankruptcy Default, on the Effective Date of
an L/C Notice of Drawing, notify (an "L/C PARTICIPATION FUNDING
NOTICE") each Revolving Lender of the amount of such drawing, and of
interest accrued thereon at the L/C Interest Rate from the date
specified in such L/C Notice of Drawing as the date such drawing was
disbursed by the applicable Issuing Bank to the L/C Participation
Funding Date and of such Lender's Proportionate Share of such amount
(an "L/C PARTICIPATION FUNDING AMOUNT").
58
(B) The Agent shall give an L/C Participation Funding Notice
to each Revolving Lender not later than 3:00 P.M. (eastern standard
time) time on the day the Agent receives an L/C Notice of Drawing, if
such Notice of Drawing was received by it at or before 12:00 noon
(eastern standard time) on a Business Day and, if not, not later than
12:00 noon (eastern standard time) on the next succeeding Business Day.
(ii) Each Revolving Lender shall make available to the Agent
for the benefit of the applicable Issuing Bank an amount equal to such
Lender's L/C Participation Funding Amount in immediately available
funds, not later than 1:00 P.M. on the Business Day (the "L/C
PARTICIPATION FUNDING DATE") next succeeding the date of the applicable
L/C Participation Funding Notice, together with interest on such amount
from the L/C Participation Funding Date until such amount is paid in
full at, for the first three Business Days, the Federal Funds Rate and,
thereafter, the Base Rate.
(iii) In the event that any Revolving Lender fails to make
available to the Agent such Lender's L/C Participation Funding Amount
as provided in SECTION 3.6(b)(ii), the Agent may, but shall not be
obligated to, fund the amount of such Lender's L/C Participation
Funding Amount and recover such amount on demand from such Lender in
accordance with SECTION 11.18.
(iv) The Agent shall distribute to each Revolving Lender which
has paid all amounts payable by it under this SECTION 3.6(b) with
respect to any Letter of Credit such Lender's Proportionate Share of
all payments subsequently received by the Agent from or for the account
of the Borrowers in reimbursement of the principal amount of all
drawings thereunder PLUS interest thereon from the date such drawings
were disbursed at the L/C Interest Rate, PROVIDED that in the event
that any such payment received by the Agent for the account of any
Issuing Bank shall be required to be returned by the Agent, such Lender
shall return to the Agent the portion thereof previously distributed by
the Agent to it, but without interest thereon (unless the Agent or such
Issuing Bank is required to pay interest on the amount returned, in
which case the Lender shall be required to pay interest at the same
rate).
(v) If a Bankruptcy Default occurs at or after the time the
Agent receives an L/C Notice of Drawing and before the Agent has given
the applicable L/C Participation Funding Notice, or, if it has given
such notice, before all of the Revolving Lenders have funded their L/C
Participation Funding Amounts, a Bankruptcy Default shall be deemed to
"exist", and the provisions of SECTION 3.6(b) shall be applicable.
3.7 NATURE OF ISSUING BANK'S DUTIES.
In determining whether to pay under any Letter of Credit, the Issuing
Bank issuing such Letter of Credit shall be responsible only to determine that
the documents and certificates required to be delivered under such Letter of
Credit have been delivered and that they comply on their face with the
requirements of such Letter of Credit. As between the Borrowers, any Issuing
Bank and each Lender, the Borrowers assume all risks of the acts and omissions
of any Issuing Bank other than as a result of gross negligence or willful
misconduct as determined by the final judgment of a court of competent
jurisdiction, or misuse of any Letter of Credit by the respective beneficiaries
of such Letter of Credit. In furtherance and not in limitation of the foregoing,
59
neither any Issuing Bank, the Agent nor any of the Lenders shall be responsible
other than as a result of gross negligence or willful misconduct as determined
by the final judgment of a court of competent jurisdiction (a) for the form,
validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of or
any drawing honored under any Letter of Credit even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged, (b) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit, or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason, (c) for failure of the
beneficiary of any Letter of Credit to strictly comply with conditions required
in order to draw upon such Letter of Credit, (d) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, telecopy, facsimile or otherwise, whether or not they
be in cipher, (e) for errors in interpretation of technical terms, (f) for any
loss or delay in the transmission or otherwise of an document required in order
to make a drawing under any Letter of Credit, or of the proceeds thereof and (g)
for the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing honored under such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Bank under or in connection with any Letter
of Credit shall not create any liability on the part of the Agent or any Lender
to any Borrower.
3.8 OBLIGATIONS ABSOLUTE.
The joint and several obligations of the Borrowers to reimburse each
Issuing Bank for drawings honored under a Letter of Credit issued by such
Issuing Bank, together with interest as herein provided, and the obligations of
the Revolving Lenders under SECTION 3.6 shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Credit
Agreement, without any reduction or deduction whatsoever, including any
reduction or deduction for any set-off, recoupment or counterclaim, under all
circumstances including the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit;
(b) the existence of any claim, set-off, defense or other right
which any Borrower or any Affiliate of any Borrower may have at any time against
a beneficiary or any transferee of any Letter of Credit (or any Persons for whom
any such beneficiary or transferee may be acting), the applicable Issuing Bank,
any Lender or any other Person, whether in connection with this Credit
Agreement, the transactions contemplated herein or any unrelated transaction;
(c) any draft, demand, certificate or any other documents
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit Documents;
60
(e) payment by the applicable Issuing Bank under any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit;
(f) failure of any drawing under a Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of any
drawing; or
(g) the fact that a Default or an Event of Default shall have
occurred and be continuing;
PROVIDED that no payment by a Borrower or a Revolving Lender to any Issuing Bank
shall constitute a waiver or release by such Borrower or such Lender of any
right it may have against such Issuing Bank, including, in the case of a
Borrower, a claim that such Issuing Bank acted with willful misconduct or gross
negligence as determined by the final judgment of a court of competent
jurisdiction in determining whether documents presented under a Letter of Credit
complied with the terms of such Letter of Credit.
ARTICLE 4
INTEREST, FEES AND EXPENSES
---------------------------
4.1 INTEREST ON LIBOR RATE LOANS.
Subject to the provisions of SECTION 4.4, each LIBOR Rate Loan shall
bear interest on its unpaid principal amount at a rate per annum equal to the
applicable Adjusted LIBOR Rate PLUS the Applicable Margin, as the same may be
adjusted pursuant to the provisions of the definition of Applicable Margin. Such
interest shall be payable on the last day of each Interest Period with respect
to such LIBOR Rate Loan (or, in the case of Interest Periods in excess of three
months on each of the ninetieth (90th) day and the last day of such Interest
Period), at the date of Conversion of such LIBOR Rate Loan (or a portion
thereof) to a Prime Rate Loan and at maturity of such LIBOR Rate Loan, and after
maturity of such LIBOR Rate Loan (whether by acceleration or otherwise), upon
demand. The Agent upon determining the Adjusted LIBOR Rate for any Interest
Period shall promptly notify the Funds Administrator and the Lenders by
telephone (confirmed promptly in writing) or in writing thereof. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
4.2 INTEREST ON PRIME RATE LOANS.
Subject to the provisions of SECTION 4.4, each Prime Rate Loan shall
bear interest on its unpaid principal amount at a rate per annum equal to the
Base Rate PLUS the Applicable Margin, as the same may be adjusted pursuant to
the provisions of the definition of Applicable Margin. Such interest shall be
payable monthly as of the end of each month, at the date of conversion of such
Prime Rate Loan (or a portion thereof) to a LIBOR Rate Loan and at maturity of
such Prime Rate Loan, and after maturity of such Prime Rate Loan (whether by
acceleration or otherwise), upon demand. In the event of any change in said Base
Rate, the rate hereunder shall change, effective as of the day the Base Rate
changes. Each determination by the Agent of any interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
61
4.3 NOTICE OF CONTINUATION AND NOTICE OF CONVERSION.
(a) With respect to any Borrowing consisting of LIBOR Rate Loans,
the Borrowers may (so long as no Default or Event of Default has occurred and is
continuing, subject to the provisions of SECTION 4.3(c)), elect to maintain such
Borrowing or any portion thereof as consisting of LIBOR Rate Loans by selecting
a new Interest Period for such Borrowing, which new Interest Period shall
commence on the last day of the immediately preceding Interest Period. Each
selection of a new Interest Period (a "CONTINUATION") shall be made by notice
given not later than 12:00 noon on the third Business Day prior to the date of
any such Continuation relating to LIBOR Rate Loans, by the Funds Administrator
to the Agent. Such notice by the Funds Administrator of a Continuation (a
"NOTICE OF CONTINUATION") shall be in substantially the form of EXHIBIT C-2,
specifying (i) the date of such Continuation, (ii) the aggregate amount of Loans
subject to such Continuation and (iii) the duration of the selected Interest
Period, all of which shall be specified in such manner as is necessary to comply
with all limitations on Loans outstanding hereunder. The Borrowers may elect to
continue more than one Borrowing consisting of LIBOR Rate Loans by combining
such Borrowings into one Borrowing and selecting a new Interest Period pursuant
to this SECTION 4.3(a); PROVIDED that each of the Borrowings so combined shall
consist of Loans having Interest Periods ending on the same date. If the
Borrowers shall fail to select a new Interest Period for any Borrowing
consisting of LIBOR Rate Loans in accordance with this SECTION 4.3(a), such
Loans will automatically, on the last day of the then existing Interest Period
therefor, Convert into Prime Rate Loans.
(b) The Borrowers may on any Business Day (so long as no Default
or Event of Default has occurred and is continuing), upon notice (each such
notice, a "NOTICE OF CONVERSION") given by the Funds Administrator to the Agent,
and subject to the provisions of SECTION 4.3(c), Convert the entire amount of or
a portion of all Loans of one Type comprising the same Borrowing into Loans of
another Type; however, PROVIDED that any Conversion of any LIBOR Rate Loans into
Loans of another Type shall be made on, and only on, the last day of an Interest
Period for such LIBOR Rate Loans unless the Borrowers pay the amounts due
pursuant to Section 4.7(b) caused by such repayment and, upon Conversion of any
Loans into Loans of another Type, the Borrowers shall pay accrued interest to
the date of Conversion on the principal amount Converted. Each such Notice of
Conversion shall be given not later than 12:00 noon on the Business Day prior to
the date of any proposed Conversion into Prime Rate Loans and on the third
Business Day prior to the date of any proposed Conversion into LIBOR Rate Loans.
Subject to the restrictions specified above, each Notice of Conversion shall be
in substantially the form of EXHIBIT C-3 hereto specifying (i) the requested
date of such Conversion, (ii) the Type of Loans to be Converted, (iii) the
portion of such Type of Loan to be Converted, (iv) the Type of Loan such Loans
are to be Converted into and (v) if such Conversion is into LIBOR Rate Loans,
the duration of the Interest Period of such Loan. Each Conversion shall be in an
aggregate amount for the Loans of all Lenders of not less than $1,000,000 or any
integral multiple of $100,000 in excess thereof. The Borrowers may elect to
Convert the entire amount of or a portion of all Loans of one Type comprising
more than one Borrowing into Loans of another Type by combining such Borrowings
into one Borrowing consisting of Loans of another Type; PROVIDED that if the
Borrowings so combined consist of LIBOR Rate Loans, such Loans shall have
Interest Periods ending on the same date.
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(c) Notwithstanding anything contained in SUBSECTIONS (a) AND (b)
above or elsewhere in this Credit Agreement to the contrary,
(i) (A) if the Agent is unable to determine the LIBOR Rate for
LIBOR Rate Loans comprising any requested Borrowing, Continuation or
Conversion, the right of the Borrowers to select or maintain LIBOR Rate
Loans for such Borrowing or any subsequent Borrowing shall be suspended
until the Agent shall notify the Funds Administrator and the Lenders
that the circumstances causing such suspension no longer exist, and
each Loan comprising such Borrowing shall be a Loan of a Type that is
unaffected by such circumstances, as selected by the Borrowers pursuant
to this Credit Agreement;
(B) if a Lender shall, at any time, notify the Agent that,
because of a change in applicable law after the date such Lender became
a Lender, it has become unlawful for such Lender to participate in any
requested Borrowing, Continuation or Conversion of LIBOR Rate Loans, to
continue its LIBOR Rate Loans, or to comply with its obligations
hereunder in respect thereof, that Lender's obligation to participate
in any such requested Borrowing, Continuation or Conversion shall be
discharged by such Lender's making its participation therein in the
form of a Prime Rate Loan, and any of such Lender's LIBOR Rate Loans
not otherwise being converted shall be converted into Prime Rate Loans
on the earlier of (1) the last day of the applicable Interest Period
and (2) the last day such Lender may lawfully continue to maintain
LIBOR Rate Loans, PROVIDED that any Prime Rate Loan that, but for this
CLAUSE (b), would have been a LIBOR Rate Loan shall constitute part of
the Borrowing of which any such LIBOR Rate Loan was or would have been
a part;
(ii) if the Majority Lenders shall, at least one Business Day
before the date of any requested Borrowing, Continuation or Conversion,
notify the Agent that the making, maintaining or continuation of their
LIBOR Rate Loans has become impracticable, or would cause such Lenders
material hardship, as a result of contingencies occurring after the
date of this Agreement which materially and adversely affect the LIBOR
market or the position of such Lenders in that market, then, the right
of the Borrowers to select LIBOR Rate Loans for such Borrowing shall be
suspended until the Agent shall notify the Funds Administrator and the
Lenders that the circumstances causing such suspension no longer exist,
and each Loan comprising such Borrowing shall be a Loan of a Type that
is unaffected by such circumstances, as selected by the Borrowers
pursuant to this Credit Agreement;
(iii) Until the Syndication Date, the Borrowers may not choose
LIBOR Rate Loans for any Borrowing other than as provided in SECTION
2.2(a)(iv), and no Prime Rate Loans may be converted into LIBOR Rate
Loans or LIBOR Rate Loans continued as LIBOR Rate Loans other than
LIBOR Rate Loans with the same 30-day Interest Period; and
(iv) the Borrowers shall borrow, prepay, convert and continue
Loans in a manner such that (A) the aggregate principal amount of LIBOR
Rate Loans having the same Interest Period shall at all times be not
less than $1,000,000, (B) there shall not be, at any one time, more
63
than twenty Interest Periods in effect at any time and (C) no payment
of LIBOR Rate Loans will have to be made prior to the last day of an
applicable Interest Period in order to repay the Loans in the amounts
and on the date specified in SECTION 2.4(b)(iv)(2).
(d) Each Notice of Continuation and Notice of Conversion shall be
irrevocable by and binding on the Borrowers.
4.4 INTEREST AFTER EVENT OF DEFAULT.
At the election of Agent or the Majority Lenders, Interest on any
amount of overdue interest on or overdue principal of the Loans, and interest on
the amount of principal under the Loans outstanding as of the date an Event of
Default occurs, and at all times thereafter until the earlier of the date upon
which (a) all Obligations have been paid and satisfied in full or (b) such Event
of Default shall not be continuing, shall be payable on demand at a rate per
annum equal to the rate at which the Loans are bearing interest pursuant to
SECTIONS 4.1 AND 4.2 above, PLUS two percent (2.0%). In the event of any change
in said applicable interest rate, the rate hereunder shall change, effective as
of the day the applicable interest rate changes, so as to remain two percent
(2.0%) per annum above the then applicable interest rate.
4.5 UNUSED LINE FEE.
The Borrowers shall pay to the Agent, for distribution to each Lender
in proportion to that Lender's Proportionate Share of the Revolving Loans, an
unused line fee for the period from and including the Closing Date to and
excluding the Expiration Date (the "UNUSED LINE FEE") equal to the average of
the daily excess of the Revolving Loan Commitments over the Total Revolving
Utilization MULTIPLIED by a rate per annum equal to the percentage (the "UNUSED
LINE FEE PERCENTAGE") set forth in the table below opposite the unused portion
of the Revolving Loan Commitments (expressed as a percentage) for the applicable
month, such unused line fees to be calculated on the basis of a 360-day year and
the actual number of days elapsed and to be payable monthly in arrears on the
first Business Day of each month commencing on the first such date to occur
after the Closing Date, and on the Expiration Date.
------------------------------------------------- ------------------------------
Applicable Unused Portion Unused Line Fee Percentage
------------------------------------------------- ------------------------------
Less than 33% 0.250%
------------------------------------------------- ------------------------------
Greater than or equal to 33% and less than 66% 0.375%
------------------------------------------------- ------------------------------
Greater than or equal to 66% 0.625%
------------------------------------------------- ------------------------------
4.6 LETTER OF CREDIT FEES.
(a) The Agent shall be entitled to charge to the account of the
Funds Administrator on the first Business Day of the month immediately
succeeding each Fiscal Quarter, for distribution to each Lender in proportion to
that Lender's Proportionate Share of the Revolving Loans, a fee in an amount
equal to the LIBOR Margin for Revolving Loans with respect to all standby and
commercial Letters of Credit on the daily weighted average undrawn amounts
outstanding during the immediately preceding Fiscal Quarter; PROVIDED that from
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the date an Event of Default occurs, and at all times thereafter until the
earlier of the date upon which (A) all Obligations have been paid and satisfied
in full and (B) such Event of Default shall not be continuing, such fee shall be
equal to two (2%) percent per annum above the LIBOR Margin, otherwise applicable
hereunder and shall be payable on demand (such fees, the "LETTER OF CREDIT
FEES"); and
(b) The Agent shall be entitled to charge to the account of the
Funds Administrator on the first Business Day of the month immediately
succeeding each Fiscal Quarter, a fee for the benefit of the Issuing Bank equal
to the greater of (X) $500 per annum and (Y) 0.25% per annum with respect to all
standby and commercial Letters of Credit on the daily undrawn amounts
outstanding during the immediately preceding Fiscal Quarter (the "FRONTING
FEE"). In addition to the Fronting Fee, the Agent shall be entitled to charge
the account of the Funds Administrator, as and when incurred, the customary
charges, fees, costs and expenses of the Issuing Bank for the issuance,
transfer, amendment or payment of any Letter of Credit (the "ISSUING BANK
FEES"). Each determination of the Fronting Fee and Issuing Bank Fees shall be
made by the Issuing Bank and provided in writing to the Agent and shall be
conclusive and binding for purposes of Agent's right to collect and distribute
such fees, absent manifest error.
4.7 REIMBURSEMENT OF EXPENSES.
(a) From and after the Closing Date, the Borrowers shall promptly
reimburse the Agent for all Expenses of the Agent as the same are incurred by
the Agent and upon receipt of invoices therefor and, if requested by the Funds
Administrator, such reasonable backup materials and information as any Borrower
shall reasonably request.
(b) The Borrowers shall pay to each Lender, upon request, such
amount or amounts as such Lender determines in good faith are necessary to
compensate it for any loss, cost or expense incurred by it as a result of (I)
any payment, prepayment or conversion of a LIBOR Rate Loan on a date other than
the last day of an Interest Period for such LIBOR Rate Loan or (II) a LIBOR Rate
Loan for any reason not being made or converted, or any payment of principal
thereof or interest thereon not being made, on the date therefor determined in
accordance with the applicable provisions of this Credit Agreement. At the
election of such Lender, and without limiting the generality of the foregoing,
but without duplication, such compensation on account of losses may include an
amount equal to the excess of (A) the interest that would have been received
from the Borrowers under and in accordance with the terms of this Credit
Agreement on any amounts to be reemployed during an Interest Period or its
remaining portion over (B) the interest component of the return that such Lender
determines it could have obtained had it placed such amount on deposit in the
interbank Dollar market selected by it for a period equal to such Interest
Period or its remaining portion.
4.8 AUTHORIZATION TO CHARGE BORROWERS' ACCOUNTS.
Each Borrower hereby authorizes the Agent to charge such Borrower's
Account with the amount of all Fees, Expenses and other payments to be paid
hereunder, under the Fee Letter and under the other Credit Documents as and when
such payments become due and agrees that it shall pay interest thereon from the
date such amount is to be charged to such Borrower's Account to the date the
same is paid (whether by the making of a Loan or otherwise) at the then
applicable rate for Prime Rate Loans. Each Borrower confirms that any charges
which the Agent may so make to such Borrower's Account as herein provided will
be made as an accommodation to the Borrowers and solely at the Agent's
discretion.
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4.9 INDEMNIFICATION IN CERTAIN EVENTS.
If after the Closing Date, either (a) any change in or in the
interpretation of any law or regulation is introduced, including with respect to
reserve requirements, applicable to DBTCo., Deutsche Bank or any other banking
or financial institution from whom any of the Lenders borrows funds or obtains
credit (a "FUNDING BANK"), the Agent or any of the Lenders, or (b) the Agent, a
Funding Bank or any of the Lenders complies with any future guideline or request
from any central bank or other Governmental Authority or (c) the Agent, a
Funding Bank or any of the Lenders determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or the Agent, a Funding Bank or any of the Lenders complies with any
request or directive regarding capital adequacy (whether of not having the force
of law) of any such authority, central bank or comparable agency, and in the
case of any event set forth in this CLAUSE (c), such adoption, change or
compliance has or would have the direct or indirect effect of reducing the rate
of return on any of the Lenders' capital as a consequence of its obligations
hereunder or under any L/C Participation to a level below that which such Lender
could have achieved but for such adoption, change or compliance (taking into
consideration the Agent's or such Funding Bank's or Lender's policies as the
case may be with respect to capital adequacy) by an amount deemed by such Lender
to be material, or any of the foregoing events described in CLAUSES (a), (b) OR
(c) increases the cost to the Agent, or any of the Lenders of (i) funding or
maintaining the Line of Credit; or (ii) acquiring or maintaining any L/C
Participation in any Letter of Credit, or reduces the amount receivable in
respect thereof, or in respect of such Letter of Credit, by the Agent, the
Issuing Bank of such Letter of Credit or any Lender, then the Borrowers shall
upon demand by the Agent, pay to the Agent, for the account of each applicable
Lender or, as applicable, an Issuing Bank or a Funding Bank, additional amounts
sufficient to indemnify such Person against such increase in cost or reduction
in amount receivable. A certificate as to the amount of such increased cost and
setting forth in reasonable detail the calculation thereof shall, if requested
by the Funds Administrator, be submitted to the Funds Administrator by the
Person making such claim, and upon 15 days after delivery of such certificate to
the Funds Administrator shall be conclusive absent manifest error.
4.10 CALCULATIONS AND DETERMINATIONS.
(a) All calculations of (i) interest hereunder and (ii) Fees,
shall be made by the Agent, on the basis of a year of 360 days, or, if such
computation would cause the interest and fees chargeable hereunder to exceed the
Highest Lawful Rate, 365/366 days, in each case to the extent applicable for the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which such interest or fees are payable.
(b) In making the determinations contemplated by ARTICLE 4, the
Agent and each Lender may make such estimates, assumptions, allocations and the
like that such Person in good faith determines to be appropriate.
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(c) Each determination by the Agent of an interest rate or payment
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
ARTICLE 5
CONDITIONS PRECEDENT
--------------------
5.1 CONDITIONS TO CLOSING DATE.
The Closing Date is subject to the satisfaction or waiver, immediately
prior thereto or concurrently therewith, of the following conditions precedent:
(a) Credit Party Documents. On or before the Closing Date,
Borrowers shall, and shall cause each other Credit Party to, deliver to Agent
the following with respect to Borrowers or such Credit Party, as the case may
be, each, unless otherwise noted, dated the Closing Date:
(i) Copies of the Governing Documents of such Person,
certified by the Secretary of State of its jurisdiction of organization
or, if such document is of a type that may not be so certified,
certified by the secretary or similar officer of the applicable Credit
Party, together with a good standing certificate from the Secretary of
State of its jurisdiction of organization and each other state in which
such Person is qualified to do business and, to the extent generally
available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each dated
a recent date prior to the Closing Date;
(ii) Resolutions of the Governing Body of such Person
approving and authorizing the execution, delivery and performance of
the Credit Documents to which it is a party, certified as of the
Closing Date by the secretary or similar officer of such Person as
being in full force and effect without modification or amendment;
(iii) Signature and incumbency certificates of the officers of
such Person executing the Credit Documents to which it is a party;
(iv) Executed originals of the Credit Documents to which such
Person is a party; and
(v) Such other documents as Agent may reasonably request.
(b) Fees. The Agent and each of the Lenders shall have received
payment in full of those Fees and Expenses referred to in the Fee Letter and in
ARTICLE 4 payable to them on or before the Closing Date (or an irrevocable
authorization to pay such Fees or Expenses out of the proceeds of the Loans).
(c) Corporate and Capital Structure; Ownership; Management.
(i) Corporate Structure. The corporate organizational
structure of Holdings and its Subsidiaries shall be as previously
approved by Agent and set forth on SCHEDULE B, PART 5.1C annexed hereto
or as otherwise satisfactory to Agent.
(ii) Capital Structure and Ownership. The capital structure
and ownership of Holdings and Company shall be as previously approved
by Agent and set forth on SCHEDULE B, PART 5.1C annexed hereto or as
otherwise satisfactory to Agent.
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(iii) Shareholders' Agreements. Agent shall have received
copies and shall be satisfied with the form and substance of any
shareholders' agreements between Holdings or Company and the
shareholders defined therein.
(d) Representations and Warranties; Performance of Agreements.
Borrowers shall have delivered to Agent an officer's certificate, in form and
substance satisfactory to Agent, to the effect that the representations and
warranties in SECTION 6 are true, correct and complete in all material respects
on and as of the Closing Date to the same extent as though made on and as of
that date (or, to the extent such representations and warranties specifically
relate to an earlier date, that such representations and warranties were true,
correct and complete in all material respects on and as of such earlier date)
and that Borrowers shall have performed in all material respects all agreements
and satisfied all conditions which this Credit Agreement provides shall be
performed or satisfied by them on or before the Closing Date except as otherwise
disclosed to and agreed to in writing by Agent.
(e) Financial Statements; Pro Forma Financial Statements. On or
before the Closing Date, Lenders shall have received from Borrowers (i) audited
financial statements of Borrowers and their Subsidiaries for Fiscal Years ended
on or about December 31 of 2002, 2001 and 2000, consisting of consolidated
balance sheets and the related consolidated statements of income, stockholders'
equity and cash flows for each such Fiscal Year, (ii) unaudited financial
statements of Borrowers and their Subsidiaries consisting of consolidated
balance sheets and the related consolidated statements of income and cash flows
for the fiscal quarters ended not later than 45 days prior to the Closing Date
and monthly financial statements for any fiscal period of less than three months
and more than 30 days prior to the Closing Date; (iii) pro forma consolidated
balance sheet of Borrowers and their Subsidiaries as at the Closing Date
prepared in accordance with GAAP and reflecting the consummation of the
financings and other transactions contemplated hereby, and (iv) projected
financial statements consisting of consolidated balance sheets and the related
consolidated statements of income and cash flows for the five-year period after
the Closing Date, all of the foregoing in clauses (i) through (iv) to be
substantially consistent with any financial statements previously delivered to
Agent and, substantially consistent with any projected financial results for
such periods previously delivered to Agent and otherwise in form and substance
satisfactory to Agent.
(f) Opinions of Counsel to Credit Parties. Lenders shall have
received originally executed copies of one or more favorable written opinions of
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP, counsel for Credit Parties, in form and
substance reasonably satisfactory to Agent and its counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinions
designated in EXHIBIT G annexed hereto and as to such other matters as Agent
acting on behalf of Lenders may reasonably request (this Credit Agreement
constituting a written request by Borrowers to such counsel to deliver such
opinions to Lenders).
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(g) Opinion of Agent's Counsel. Lenders shall have received
originally executed copies of a favorable written opinion of O'Melveny & Xxxxx
LLP, counsel to Agent, dated as of the Closing Date, substantially in the form
of EXHIBIT H annexed hereto.
(h) Evidence of Insurance. Agent shall have received and approved
evidence of insurance coverage in amount and scope, and the insurance carriers
shall have delivered endorsements in form and substance, satisfactory to the
Agent (i) naming the Agent as loss payee to the extent required by SECTION
7.8(b), and (ii) naming the Agent and the Lenders as the insured for title
insurance policies.
(i) Necessary Governmental Authorizations and Consents; Expiration
of Waiting Periods, Etc. Borrowers shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the transactions contemplated by the
Credit Documents and the continued operation of the business conducted by
Borrowers and their Subsidiaries in substantially the same manner as conducted
prior to the Closing Date. Each such Governmental Authorization and consent
shall be in full force and effect, except in a case where the failure to obtain
or maintain a Governmental Authorization or consent, either individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority that would restrain,
prevent or otherwise impose adverse conditions on the transactions contemplated
by the Credit Documents or the financing thereof. No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect to any
of the foregoing shall be pending, and the time for any applicable Government
Authority to take action to set aside its consent on its own motion shall have
expired.
(j) Environmental Reports. Agent shall have received reports and
other information, in form, scope and substance satisfactory to Agent, regarding
environmental matters relating to Borrowers and their Subsidiaries and the
Facilities, which reports shall include a Phase I environmental assessment for
each of the Facilities currently owned, leased, operated or used by Borrowers
and their Subsidiaries and designated by Agent which (a) conforms to the ASTM
Standard Practice for Environmental Site Assessments: Phase I Environmental Site
Assessment Process, E 1527, and (b) was conducted no more than six months prior
to the Closing Date by one or more environmental consulting firms reasonably
satisfactory to Agent.
(k) Security Interests in Personal and Mixed Property. To the
extent not otherwise satisfied prior to the Closing Date, Agent shall have
received evidence satisfactory to it that Holdings and Borrowers shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, documents and instruments, and
made or caused to be made all such filings and recordings (other than the filing
or recording of items described in clauses (ii), (iii) and (iv) below) that may
be necessary or, in the opinion of Agent, desirable in order to create and/or
continue in favor of Agent, for the benefit of Lenders, a valid and (upon such
filing and recording) perfected first priority security interest in the entire
personal and mixed property Collateral. Such actions shall include the
following:
(i) Stock Certificates and Instruments. To the extent not
previously delivered to Agent, delivery to Agent of (a) certificates
(which certificates shall be accompanied by irrevocable undated stock
powers, duly endorsed in blank and otherwise satisfactory in form and
substance to Agent) representing all Capital Securities pledged
pursuant to the Security Agreement and (b) all promissory notes or
other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Agent) evidencing any Collateral;
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(ii) Lien Searches and UCC Termination Statements. Delivery to
Agent of (a) the results of a recent search, by a Person satisfactory
to Agent, of all effective UCC financing statements and fixture filings
and all judgment and tax lien filings which may have been made with
respect to any personal or mixed property of any Credit Party, together
with copies of all such filings disclosed by such search, and (b) UCC
termination statements duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to terminate
any effective UCC financing statements or fixture filings disclosed in
such search (other than any such financing statements or fixture
filings in respect of Liens permitted to remain outstanding pursuant to
the terms of this Credit Agreement).
(iii) UCC Financing Statements and Fixture Filings. To the
extent not previously delivered to Agent, delivery to Agent of UCC
financing statements and/or amendments thereto and, where appropriate,
fixture filings, duly executed by each applicable Credit Party (if
required) with respect to all personal and mixed property Collateral of
such Credit Party, for filing in all jurisdictions as may be necessary
or, in the opinion of Agent, desirable to perfect or continue the
perfection of the security interests created in such Collateral
pursuant to the Collateral Documents;
(iv) PTO Cover Sheets, Etc. To the extent not previously
delivered to Agent, delivery to Agent of all cover sheets or other
documents or instruments required to be filed with the PTO in order to
create or continue or perfect or continue to perfect Liens in respect
of any Intellectual Property Collateral;
(v) Control Agreements. Delivery to Agent of such control
agreements with financial institutions and other Persons in order to
perfect Liens in respect of Depository Accounts and Disbursement
Accounts and other Collateral pursuant to the Collateral Documents;
(vi) Opinions of Local Counsel. Delivery to Agent of an opinion of counsel
(which counsel shall be reasonably satisfactory to Agent) under the
laws of each jurisdiction in which any Credit Party or any
personal or
mixed property Collateral is located with respect to the creation and
perfection of the security interests in favor of Agent in such
Collateral and such other matters governed by the laws of such
jurisdiction regarding such security interests as Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Agent.
(l) Mortgages. To the extent not previously delivered to Agent,
Agent shall have received from Borrowers:
(i) Mortgages. Fully executed and notarized Mortgages, or
amendments to previously recorded Mortgages in proper form for
recording in all appropriate places in all applicable jurisdictions,
encumbering each Real Property Asset listed in SCHEDULE B, PART 5.1L
annexed hereto (each a "MORTGAGED PROPERTY" and, collectively, the
"MORTGAGED PROPERTIES");
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(ii) Opinions of Local Counsel. An opinion of counsel (which
counsel shall be reasonably satisfactory to Agent) in each state in
which a Mortgaged Property is located with respect to the
enforceability of the Mortgages to be recorded or recorded in such
state and such other matters as Agent may reasonably request, in each
case in form and substance reasonably satisfactory to Agent;
(iii) Landlord Consents and Estoppels; Recorded Leasehold
Interests. In the case of each Mortgaged Property consisting of a
leasehold property, (a) a landlord consent and estoppel with respect
thereto in form and substance either (i) reasonably satisfactory to
Agent or (2) required by the lease demising such leasehold property,
and (b) evidence that such leasehold property is a recorded leasehold
interest;
(iv) Title Insurance. (a) ALTA mortgagee title insurance
policies or unconditional commitments therefor (the "MORTGAGE
POLICIES") issued by a title company satisfactory to Agent with respect
to the Mortgaged Properties listed in SCHEDULE B, PART 5.1L annexed
hereto, in amounts not less than the respective amounts designated
therein with respect to any particular Mortgaged Properties, insuring
fee simple title to, or a valid leasehold interest in, each such
Mortgaged Property vested in such Credit Party and assuring Agent that
the applicable Mortgages create or continue valid and enforceable first
priority mortgage Liens on the respective Mortgaged Properties
encumbered thereby, subject only to a standard survey exception and
Permitted Encumbrances, which Mortgage Policies (1) shall include an
endorsement for mechanics' liens, for future advances under this Credit
Agreement and for any other matters reasonably requested by Agent and
(2) shall provide for affirmative insurance and such reinsurance as
Agent may reasonably request, all of the foregoing in form and
substance reasonably satisfactory to Agent; and (b) evidence
satisfactory to Agent that such Credit Party has (i) delivered to the
title company all certificates and affidavits required by the title
company in connection with the issuance of the Mortgage Policies and
(ii) paid to the title company or to the appropriate governmental
authorities all expenses and premiums of the title company in
connection with the issuance of the Mortgage Policies and all recording
and stamp taxes (including mortgage recording and intangible taxes)
payable in connection with recording the Mortgages in the appropriate
real estate records;
(v) Title Reports. With respect to each Mortgaged Property
listed in SCHEDULE B, PART 5.1L annexed hereto, a title report issued
by the title company with respect thereto, and satisfactory in form and
substance to Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
of all recorded documents listed as exceptions to title or otherwise
referred to in the Mortgage Policies or in the title reports delivered
pursuant to SECTION 5.1(l)(v);
(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to whether (1) any Mortgaged Property is a
Flood Hazard Property and (2) the community in which any such Flood
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Hazard Property is located is participating in the National Flood
Insurance Program, (b) if there are any such Flood Hazard Properties,
such Credit Party's written acknowledgement of receipt of written
notification from Agent (1) as to the existence of each such Flood
Hazard Property and (2) as to whether the community in which each such
Flood Hazard Property is located is participating in the National Flood
Insurance Program, and (c) in the event any such Flood Hazard Property
is located in a community that participates in the National Flood
Insurance Program, evidence that Borrowers have obtained flood
insurance in respect of such Flood Hazard Property to the extent
required under the applicable regulations of the Board of Governors of
the Federal Reserve System.
(m) Matters Relating to Existing Indebtedness of Borrowers.
(i) Redemption of Existing Subordinated Notes. Company shall
have given irrevocable notice of redemption of all of its existing
Subordinated Notes for aggregate consideration, including accrued
interest and premiums, not to exceed $87,000,000.
(ii) Existing Indebtedness to Remain Outstanding. Agent shall
have received an officer's certificate of Borrowers stating that, after
giving effect to the transactions described in this SECTION 5.1(m), the
Indebtedness of Credit Parties (other than Indebtedness under the
Credit Documents, the Senior Notes and the Subordinated Notes) shall
consist of no more than $1,000,000 in aggregate principal amount of
outstanding Indebtedness. The terms and conditions of all such
Indebtedness shall be in form and in substance satisfactory to Agent.
(n) Changes in Market. There shall not have occurred and be
continuing a material adverse change in the market for syndicated bank credit
facilities, or a material disruption of, or material adverse change in,
financial, banking or capital market conditions, in each case since the date
hereof, as reasonably determined by the Agent and there shall not exist any
competing offering, placement or arrangement for any debt security other than
the Senior Notes or financing contemplated by the Credit Documents.
(o) Unused Availability. On or before the Closing Date, Borrowers
shall have delivered to Agent a Borrowing Base Certificate substantially in the
form of EXHIBIT E annexed hereto, prepared as of a recent date prior to the
Closing Date. After giving pro forma effect to the extensions of credit on the
Closing Date, if any, and the payment of all costs, fees and expenses incurred
by or for the account of the Borrowers in connection with the execution and
delivery of this Credit Agreement and the other Credit Documents, there shall be
Excess Availability of at least $35,000,000.
(p) Collateral Audits and Appraisals. Agent shall have received
(i) a final collateral audit report of all Inventory and Accounts of the
Borrowers and their Subsidiaries, including the accounts payable and management
information systems of the Borrowers and their Subsidiaries, in form, scope and
substance satisfactory to the Agent and performed by auditors satisfactory to
the Agent and (ii) final appraisal reports concerning the Net Orderly
Liquidation Value of the Inventory and of the Real Estate of the Borrowers and
their Subsidiaries, in form, scope and substance satisfactory to the Agent and
performed by appraisers satisfactory to the Agent.
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(q) Senior Notes. The Borrowers shall have issued the Senior Notes
in an original aggregate principal amount of not less than $175,000,000. The
documentation evidencing the Senior Notes and the terms of the Senior Notes
shall be satisfactory in form and substance to the Agent.
(r) Additional Documents. The Funds Administrator and each
Borrower shall have executed and delivered to the Agent all such other documents
which the Agent determines are reasonably necessary to consummate the
transactions contemplated hereby.
5.2 CONDITIONS TO EACH CREDIT EVENT.
On the date of each Credit Event (including the initial Credit Event),
both immediately before and immediately after giving effect thereto and to the
application of the proceeds therefrom, the following statements shall be true to
the satisfaction of the Agent (and each request for a Credit Event, shall
constitute a representation and warranty by each Borrower that on the date of
such Credit Event, immediately before and immediately after giving effect
thereto and to the application of the proceeds therefrom, such statements are
true):
(a) The representations and warranties contained in this Credit
Agreement and in each other Credit Document are true and correct in all material
respects on and as of the date of such Credit Event as though made on and as of
such date, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date);
(b) No event has occurred and is continuing, or could reasonably
be expected to result from such Credit Event or the application of the proceeds
thereof, which would constitute a Default or an Event of Default;
(c) immediately after giving effect to the Credit Event, the Total
Revolving Utilization would not exceed the lesser of (X) the aggregate of all
Revolving Loan Commitments and (Y) subject to SECTION 2.2(B), the Borrowing
Base; and
(d) In the case of the issuance of any Letter of Credit, none of
the events set forth in SECTION 3.1 has occurred and is continuing or would
result from the issuance of such Letter of Credit.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Agent and the Lenders to enter into this Credit Agreement
and each Issuing Bank to issue Letters of Credit, each Borrower, with respect to
itself, each of the other Borrowers and each of their respective Subsidiaries,
hereby represents and warrants to the Agent, the Lenders and each Issuing Bank:
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6.1 ORGANIZATION AND QUALIFICATION.
Each Credit Party (a) is duly organized, validly existing and in good
standing under the laws of the state of its organization, (b) has the power and
authority to own its properties and assets and to transact the businesses in
which it presently is, or proposes to be, engaged and (c) is duly qualified and
is authorized to do business and is in good standing in each jurisdiction where
it presently is, or proposes to be, engaged in business except to the extent
where failure to be so qualified or authorized or in good standing could not
reasonably be expected to have a Material Adverse Effect. SCHEDULE B, PART 6.1
lists the exact legal name of each Credit Party, the State of incorporation of
each such Person, the organizational identification number of each such Person,
the federal employer identification number of each such Person and all
jurisdictions in which each such Person is qualified to do business as foreign
corporations.
6.2 SOLVENCY.
The fair saleable value of the assets of the Borrowers and their
Subsidiaries on a consolidated basis exceeds all their probable liabilities,
including those to be incurred pursuant to this Credit Agreement and the other
Credit Documents. The Borrowers and their Subsidiaries on a consolidated basis
(a) do not have unreasonably small capital in relation to the business in which
they are, or propose to be, engaged and (b) have not incurred, and do not
believe that they will incur after giving effect to the transactions
contemplated by this Credit Agreement and the other Credit Documents, debts
beyond their ability to pay such debts as they become due.
6.3 RIGHTS IN COLLATERAL; PRIORITY OF LIENS.
Each Credit Party owns the property provided in the scope of the Lien
granted by it as Collateral under the Credit Documents, free and clear of any
and all Liens in favor of third parties, except for those listed on SCHEDULE B,
PART 8.4 and other Liens permitted under SECTION 8.4. Upon the proper filing of
the UCC financing statements, and the taking of the other actions specified in
SECTION 5.1(k) and SECTION 5.1(l), the Liens granted pursuant to the Credit
Documents will constitute the valid and enforceable first, prior and perfected
Liens on the Collateral, except, in the case of priorities, for prior Liens set
forth in CLAUSES (b), (c), (d) AND (e) of SECTION 8.4 and Liens identified on
SCHEDULE B, PART 8.4 as prior to the Agent's Liens.
6.4 NO CONFLICT.
The execution, delivery and performance by each Credit Party of each
Credit Document to which it is a party: (a) are within its corporate power; (b)
are duly authorized by all necessary corporate action; (c) are not in
contravention of any Requirement of Law or any material indenture, contract,
lease, agreement, instrument or other commitment to which it is a party or by
which it or any of its properties are bound; (d) are not in contravention of any
provision set forth in any Governing Documents, (e) do not require the consent,
registration or approval of any Governmental Authority or any other Person
(except such as have been duly obtained, made or given, and are in full force
and effect); and (f) will not, except as contemplated herein, result in the
imposition of any Liens upon any of its properties.
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6.5 ENFORCEABILITY.
The Credit Agreement and all of the other Credit Documents to which any
Credit Party is a party are the legal, valid and binding obligations of such
Credit Party, and are enforceable against each of them in accordance with their
terms, except as such enforceability may be limited by (a) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (b) general principles of equity.
6.6 CONSENTS.
No consent or authorization of, filing with or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with any Credit Event hereunder, the grant of the Liens pursuant to
the Credit Documents, the continuing operations of any Credit Party or with the
execution, delivery, performance, validity or enforceability of this Credit
Agreement, the Notes or the other Credit Documents, except for the filing of the
UCC financing statements and consents or authorizations which have been obtained
or filings which have been made and which, in each case, are in full force and
effect.
6.7 FINANCIAL DATA.
The Borrowers have furnished or caused to be furnished to the Lenders
the Financial Statements set forth in SECTION 5.1(e). All such statements other
than pro forma financial statements were prepared in conformity with GAAP and
fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Neither Borrowers
nor any of their Subsidiaries has (and will not have following the funding of
the initial Credit Event) any contingent obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that, as of the Closing Date, is not reflected in the foregoing financial
statements or the notes thereto and, as of any Credit Event subsequent to the
Closing Date, is not reflected in the most recent financial statements delivered
to Agent pursuant to SECTION 7.1 or the notes thereto and that, in any such
case, is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Borrowers or any of their
Subsidiaries.
6.8 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
The exact name and address of the principal place of business and chief
executive office of each Credit Party is set forth on SCHEDULE B, PART 6.8.
There is no location at which any Credit Party has any Collateral (except for
miscellaneous office equipment, vehicles and Inventory in transit in the
ordinary course of business) other than those locations identified on SCHEDULE
B, PART 6.8. The books and records of each Credit Party, and all of their
respective chattel paper and records of Accounts, are maintained exclusively at
such locations. To the extent any such locations are not owned, SCHEDULE B, PART
6.8 also sets forth the purpose of such location (e.g., warehouse, processing
plant, sales office, etc.), the legal names of the owners and/or operators
thereof; and the address and phone numbers of such owners and/or operators or
representatives. None of the receipts received by any Credit Party from any
warehouseman or processor states that the goods covered thereby are to be
delivered to bearer or to the order of a named person or to a named person and
such named person's assigns.
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6.9 FICTITIOUS BUSINESS NAMES.
Except as set forth on SCHEDULE B, PART 6.9, no Credit Party has used
any corporate or fictitious name during the five (5) years preceding the date
hereof, other than the corporate name under which it has executed this Credit
Agreement.
6.10 SUBSIDIARIES.
The only Subsidiaries of each Credit Party are those listed on SCHEDULE
B, PART 6.10. The record and beneficial owner of all of the issued and
outstanding Capital Securities of each of the Subsidiaries is listed on SCHEDULE
B, PART 6.10. There are no proxies, irrevocable or otherwise, with respect to
such Capital Securities, and no Capital Securities of any Subsidiary of any
Credit Party are or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, Capital Securities of any Subsidiary of any Credit Party, and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
of any Credit Party is or may become bound to issue additional Capital
Securities convertible into or exchangeable for such Capital Securities. All of
such shares listed on SCHEDULE B, PART 6.10 are owned by a Credit Party free and
clear of any Liens other than in favor of Agent.
6.11 NO JUDGMENTS OR LITIGATION.
No judgments, orders, writs or decrees are outstanding against any
Credit Party nor is there now pending or, to the best of any Borrower's
knowledge, threatened any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against any Credit Party except
such judgments, orders, writs, decrees, pending or threatened litigation,
contested claims, investigations, arbitrations and governmental proceeds which
could not individually or in the aggregate be reasonably expected to have a
Material Adverse Effect on the Credit Parties taken as a whole. Except as set
forth on SCHEDULE B, PART 6.11, there is no pending, or, to the best of any
Borrower's knowledge, threatened litigation, claim, investigation, arbitration
or governmental proceeding by or against any Credit Party that seeks damages in
excess of $1,000,000 or that seeks injunctive relief.
6.12 ENVIRONMENTAL MATTERS.
Except as disclosed on SCHEDULE B, PART 6.12, (i) no material
Environmental Claims are pending or, to the knowledge of any Borrower,
threatened against any Credit Party; (ii) each Credit Party is in compliance in
all material respects with all Environmental Laws; and (iii) no Borrower has
knowledge of any material release or threatened material release of any
Hazardous Material at any Facilities, or at any other location where any Credit
Party has arranged for disposition of Hazardous Materials.
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6.13 LABOR MATTERS.
(a) There are no material labor controversies pending or, to the
best of any knowledge of any Borrower, threatened between any Credit Party and
any of their respective employees.
(b) No Credit Party is engaged in any unfair labor practice. There
is (i) no unfair labor practice complaint pending against any Credit Party or,
to the best knowledge of any Borrower, threatened against any of them, before
the National Labor Relations Board, and no significant grievance or significant
arbitration proceeding arising out of or under collective bargaining agreements
is so pending against any Credit Party or, to the best knowledge of any
Borrower, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against any Credit Party or, to the best knowledge
of any Borrower, threatened against any of them and (iii) to the best of any
Borrower's knowledge, no union representation question with respect to the
employees of any Credit Party and no union organizing activities.
6.14 COMPLIANCE WITH LAW.
No Credit Party has violated or failed to comply with any Requirement
of Law the failure of which to comply would have individually or in the
aggregate at any time a Material Adverse Effect.
6.15 ERISA.
(a) SCHEDULE B, PART 6.15 lists (i) all ERISA Affiliates and (ii)
all Plans and separately identifies all Title IV Plans, Multiemployer Plans, and
Retiree Welfare Plans. Except with respect to Multiemployer Plans, each Plan
which is intended to be qualified under Section 401 of the Code has been
determined by the IRS to so qualify, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the
Code, and to any Borrower's knowledge nothing has occurred that would cause the
loss of such qualification or tax-exempt status. Except as could not reasonably
be expected to have a Material Adverse Effect, each Plan is in compliance with
the applicable provisions of ERISA and the Code, including the timely filing of
all reports required under the Code or ERISA. No Credit Party nor any ERISA
Affiliate has failed to make any contribution or pay any amount due as required
by either Section 412 of the Code or Section 302 of ERISA or the terms of any
such Title IV Plan. Except as could not be reasonably be expected to have a
Material Adverse Effect, no Prohibited Transaction, in connection with any Plan
has occurred that would subject any Credit Party to a material tax under Section
502(l) of ERISA or Section 4975 of the Code, and no event has occurred with
respect to a Plan which would subject any Credit Party to any material liability
under Section 502(l) of ERISA.
(b) Except as set forth in SCHEDULE B, PART 6.15: (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no Termination Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Borrower, threatened claims (other than claims for benefits
in the normal course), sanctions, actions or lawsuits, asserted or instituted
against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) within
the last five years no Title IV Plan has been terminated, whether or not in a
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"standard termination" as that term is used in Section 4041(b)(1) of ERISA, nor
has any Title IV Plan (determined at any time within the past five years) with
Unfunded Pension Liabilities been transferred outside of the "controlled group"
(within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate (determined at such time).
6.16 INTELLECTUAL PROPERTY.
Each Credit Party owns or licenses or otherwise has the right to use
all Intellectual Property necessary for the operation of its business as
presently conducted. As of the date hereof, no Credit Party has any Intellectual
Property registered, or subject to pending applications, in the United States
Patent and Trademark Office or any similar office or agency in the United
States, any State thereof, any political subdivision thereof or in any other
country, other than those described in SCHEDULE B, PART 6.16 and has not granted
any licenses with respect thereto other than as set forth in SCHEDULE B, PART
6.16. No event has occurred which permits or would permit after notice or
passage of time or both, the revocation, suspension or termination of such
rights which revocation, suspension or termination could be reasonably likely to
cause a Material Adverse Effect. To the best of any Borrower's knowledge, no
slogan or other advertising device, product, process, method, substance or other
Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by any Credit Party infringes
any patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or, to any Borrower's knowledge, threatened against or
affecting any Credit Party contesting its right to sell or use any such
Intellectual Property. SCHEDULE B, PART 6.16 sets forth all of the agreements or
other arrangements of each Credit Party pursuant to which any such Person has a
license or other right to use any trademarks, logos, designs, representations or
other Intellectual Property owned by another person as in effect on the date
hereof and the dates of the expiration of such agreements or other arrangements
of such Person as in effect on the date hereof (collectively, together with such
agreements or other arrangements as may be entered into by any Credit Party
after the date hereof, the "I.P. LICENSE AGREEMENTS" and individually, an "I.P.
LICENSE AGREEMENT"). No Intellectual Property at any time used by any Credit
Party which is owned by another Person, or owned by any Credit Party is subject
to any Lien in favor of any Person other than Agent or is affixed to any
Eligible Inventory, except to the extent permitted under the term of the License
Agreements listed on SCHEDULE B, PART 6.16.
6.17 LICENSES AND PERMITS.
Each Credit Party has obtained and holds in full force and effect, all
franchises, licenses, leases, permits, certificates, authorizations,
qualifications, easements, rights of way and other rights and approvals the
failure of which to obtain or hold could reasonably be likely in the aggregate
for all such failures to have a Material Adverse Effect. No Credit Party is in
violation in any material respect of the terms of any such franchise, license,
lease, permit, certificate, authorization, qualification, easement, right of
way, right or approval.
6.18 TITLE TO PROPERTY.
All Real Property owned or leased by any Credit Party is identified on
SCHEDULE B, PART 6.18. Each Credit Party has good and marketable title in fee
simple to, or a valid leasehold interest in, all its Real Estate, and good title
to all its personal property, and none of such property is subject to any Lien,
except Permitted Encumbrances.
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6.19 GOVERNMENTAL REGULATIONS.
No Credit Party is (a) an investment company or a company controlled by
an investment company within the meaning of the Investment Company Act of 1940,
as amended, (b) a holding company or a Subsidiary of a holding company, or an
Affiliate of a holding company or of a Subsidiary of a holding company, within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or
(c) subject to any other law which purports to regulate or restrict its ability
to borrow money or to consummate the transactions contemplated by this Credit
Agreement or the other Credit Documents or to perform its obligations hereunder
or thereunder.
6.20 BORROWERS' TAXES AND TAX RETURNS.
(a) Except as set forth on SCHEDULE B, PART 6.20, each Credit
Party (and any affiliated, consolidated or combined group of which any Credit
Party are now or have been members) have timely filed (inclusive of any
permitted extensions) with the appropriate taxing authorities all material
returns (including information returns) in respect of Borrower Taxes required to
be filed through the date hereof and will timely file (inclusive of any
permitted extensions) any such returns required to be filed on and after the
date hereof. All such returns filed are complete and accurate in all material
respects. Except as specified in SCHEDULE B, PART 6.20, no Credit Party, nor any
affiliated, consolidated or combined group of which Credit Party are now or were
members, have requested any extension of time within which to file returns
(including information returns) in respect of any Borrower Taxes as of the
Closing Date.
(b) All material taxes, assessments, fees and other governmental
charges (including any penalties or interest thereon) payable by any Credit
Party (and any affiliated group of which any Credit Party is now or has been a
member) in respect of their incomes, franchises, businesses, properties or
otherwise (collectively, "BORROWER TAXES") in respect of periods beginning prior
to the date hereof, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in SCHEDULE B, PART
6.20 or in the Financial Statements, and no Credit Party has any liability for
Borrower Taxes in excess of the amounts so paid or reserves so established.
(c) Except as set forth in SCHEDULE B, PART 6.20, no deficiencies
for Borrower Taxes have been claimed, proposed or assessed by any taxing or
other Governmental Authority against any Credit Party and no Liens for Borrower
Taxes have been filed. Except as set forth in SCHEDULE B, PART 6.20, there are
no pending or, to the best of the knowledge of any Borrower, threatened audits,
investigations or claims for or relating to any liability in respect of Borrower
Taxes, and there are no matters under discussion with any taxing or other
Governmental Authority with respect to Borrower Taxes which are likely to result
in a material additional liability for Borrower Taxes. Either the federal income
tax returns of each Borrower have been audited by the Internal Revenue Service
and such audits have been closed, or the period during which any assessments may
be made by the Internal Revenue Service has expired without waiver or extension,
for all years up to and including the Fiscal Year ended December 31, 1999 except
to the extent of utilization of net operating losses from previous years. Except
as set forth in SCHEDULE B, PART 6.20, no extension of a statute of limitations
relating to Borrower Taxes is in effect with respect to any Credit Party.
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(d) Except as set forth on SCHEDULE B, PART 6.20, no Credit Party
has any obligation under any tax sharing agreement or agreement regarding
payments in lieu of Borrower Taxes.
6.21 STATUS OF ACCOUNTS.
Each Eligible Account of each Borrower is based on an actual and bona
fide sale and delivery of goods or rendition of services to customers, made by
such Borrower in the ordinary course of its businesses; the goods and inventory
being sold by any Borrower and the Accounts created thereby are the exclusive
property of such Borrower and are not and shall not be subject to any Lien
whatsoever other than those arising under the Security Agreements and such
Borrower's customers have accepted the goods or services.
6.22 MATERIAL CONTRACTS AND RESTRICTIONS.
SCHEDULE B, PART 6.22 contains a true, correct and complete list of all
the Material Contracts currently in effect on the date hereof. None of the
Material Contracts contain any restrictions set forth in SECTION 8.11 and all of
the Material Contracts are in full force and effect, and Borrowers are not in
material default thereunder and the other party thereto, to any Borrower's
knowledge, is not in material default thereunder.
6.23 AFFILIATE TRANSACTIONS.
Except as set forth on SCHEDULE B, PART 6.23, no Credit Party is a
party to or bound by any agreement or arrangement (whether oral or written) to
which any Affiliate of any Credit Party is a party except (a) in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and (b) upon fair and reasonable terms no less favorable in any
material respect to such Credit Party than it could obtain in a comparable
arm's-length transaction with an unaffiliated Person.
6.24 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information furnished by or on behalf of any Credit Party
in writing to the Agent, any Lender, or the Auditors for purposes of or in
connection with this Credit Agreement or any of the other Credit Documents, or
any transaction contemplated hereby or thereby is or will be true and accurate
in all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time.
6.25 NO ADVERSE CHANGE OR EVENT.
Since December 31, 2002 and after giving effect to the transactions
contemplated hereby, no change in the business, assets, condition (financial or
otherwise), operations, liabilities (whether contractual, environmental or
otherwise), properties, projections or prospects of the Borrowers taken as a
whole has occurred, and no event has occurred or failed to occur, that has had
or could reasonably be expected to have, either alone or in conjunction with all
other such changes, events and failures, a Material Adverse Effect on the Credit
Parties taken as a whole.
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6.26 ACCOUNTS.
Except for the DBT Account and the accounts set forth on SCHEDULE B,
PART 6.26, no Borrower and no Subsidiary of any Borrower maintains or otherwise
has any (a) checking, savings or other accounts at any bank or other financial
institution, (b) investment account, securities account, commodity account or
any similar account with any securities intermediary or commodity intermediary
or (c) other account where money is or may be deposited or maintained with any
Person. SCHEDULE B, PART 6.26 sets forth the name of each financial institution,
securities intermediary, commodity intermediary or other Person at which any
account described above is maintained, the account number for each such account,
the purpose of each such account, and if such account is not subject to a
Control Agreement, the provision of the Credit Agreement so permitting.
ARTICLE 7
AFFIRMATIVE COVENANTS
---------------------
Until the Expiration Date and payment and satisfaction of all
Obligations:
7.1 FINANCIAL INFORMATION.
The Borrowers shall furnish or cause to be furnished to the Lenders the
following information within the following time periods:
(a) YEAR-END FINANCIALS: as soon as available and in any event
within ninety (90) days after the end of each Fiscal Year of the Borrowers (i)
audited Financial Statements as of the close of the Fiscal Year and for the
Fiscal Year, together with comparisons to the Financial Statements for the prior
year and to the most recent projections with respect to such Fiscal Year
delivered pursuant to CLAUSE (d) of this SECTION 7.1, in each case accompanied
by (a) an unqualified opinion of the Auditors, which opinion shall be in scope
and substance satisfactory to the Agent, (b) such Auditors' "Management Letter"
to the Borrowers, (c) a written statement signed by the Auditors stating that in
the course of the regular audit of the business of the respective Borrowers
which audit was conducted by the Auditors in accordance with generally accepted
auditing standards, the Auditors have not obtained any knowledge of the
existence of any Default or Event of Default under any provision of this Credit
Agreement, or, if such Auditors shall have obtained from such examination any
such knowledge, they shall disclose in such written statement the existence of
the Default or Event of Default and the nature thereof, it being understood that
such Auditors shall have no liability, directly or indirectly, to anyone for
failure to obtain knowledge of any such Default or Event of Default, and (ii) a
narrative discussion of the consolidated financial condition and results of
operations and the consolidated liquidity and capital resources of Borrowers for
such Fiscal Year prepared by the chief executive officer or chief financial
officer of the Borrowers and their Subsidiaries; provided that to the extent
that the Borrowers' annual report on Form 10-K shall satisfy the requirement in
this clause (ii), the Agent will accept such Form 10-K in lieu of such item.
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(b) QUARTERLY FINANCIALS: as soon as available and in any event
within forty-five (45) days after the end of each fiscal quarter of the
Borrowers (except the last fiscal quarter of any Fiscal Year) (i) Financial
Statements as at the end of and for such period and for the Fiscal Year to date,
together with comparisons to the Financial Statements for the same periods in
the prior year and to the most recent projections with respect to such Fiscal
Year delivered pursuant to CLAUSE (d) of this SECTION 7.1, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by the chief
executive officer or chief financial officer of the Borrowers and their
Subsidiaries as having been prepared in accordance with GAAP, and (ii) a
narrative discussion of the consolidated financial condition and results of
operations and the consolidated liquidity and capital resources of Borrowers for
such period and for the Fiscal Year to date prepared by the chief executive
officer or chief financial officer of the Borrowers and their Subsidiaries;
provided that to the extent that the Borrowers' quarterly report on Form 10-Q
shall satisfy the requirement in this clause (ii), the Agent will accept such
Form 10-Q in lieu of such item.
(c) MONTHLY FINANCIALS: as soon as available and in any event
within thirty (30) days after the end of each month (except the last month of
any fiscal quarter, with respect to which such reports shall be delivered within
forty-five (45) days after the end of the month (other than the last quarter of
the Fiscal Year with respect to which such reports shall be delivered within
ninety (90) days after the end of the month)), (i) consolidated balance sheets
for the Consolidated Entity as at the end of such month and consolidated
statements of operations and cash flows for such month and for the Fiscal Year
to date, together with a comparison to the consolidated balance sheets,
statements of operations and statements of cash flows for the same periods in
the prior year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief executive officer or chief financial officer of
the Borrowers and their Subsidiaries as having been prepared in accordance with
GAAP, and (ii) an executive summary describing the operations of the Borrowers
and their Subsidiaries in the form prepared for presentation to senior
management for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month;
(d) PROJECTIONS AND BUDGET: not later than thirty (30) days after
the end of each Fiscal Year (i) beginning with the Fiscal Year ending on or
about December 31, 2003, a capital and operating expense budget and projections
of the financial condition and results of operations of the Consolidated
Entities, prepared on a monthly basis for the current Fiscal Year, including,
but not limited to, projected balance sheets, consolidated statements of
operations, consolidated statements of cash flows and consolidated statements of
changes in shareholders' equity for such Fiscal Years; PROVIDED however that if
at any time during such Fiscal Year, management of the Borrowers determine that
the financial projections no longer accurately reflect in any material respect
the projected financial results for such Fiscal Year, as soon as practicable,
provide to the Agent revised consolidated projections for such Fiscal Year;
(e) OFFICER'S AND COMPLIANCE CERTIFICATES: together with each
delivery of financial statements of Borrowers and their Subsidiaries pursuant to
subdivisions (a) and (b) above, (i) an officer's certificate of Borrowers
stating that the signers have reviewed the terms of this Credit Agreement and
have made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Borrowers and their Subsidiaries
during the accounting period covered by such financial statements and that such
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review has not disclosed the existence during or at the end of such accounting
period, and that the signers do not have knowledge of the existence as at the
date of such officer's certificate, of any condition or event that constitutes
an Default or Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
Borrowers have taken, are taking and propose to take with respect thereto; and
(b) a Compliance Certificate substantially in the form of EXHIBIT D
demonstrating in reasonable detail compliance during and at the end of the
applicable accounting periods with the restrictions contained in SECTION 8.1 of
this Credit Agreement in each case to the extent compliance with such
restrictions is required to be tested at the end of the applicable accounting
period;
(f) RECONCILIATION STATEMENTS: if, as a result of any change in
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in SECTION 5.1(E), the consolidated
financial statements of Borrowers and their Subsidiaries delivered pursuant to
clauses (a), (b), (c) and (d) of this SECTION 7.1 will differ in any material
respect from the consolidated financial statements that would have been
delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first delivery of
financial statements pursuant to clauses (a), (b), (c) and (d) of this SECTION
7.1 following such change, consolidated financial statements of Borrowers and
their Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the two full Fiscal Years immediately preceding the Fiscal Year
in which such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to clauses (a), (b), (c) and (d) of
this SECTION 7.1 following such change, if required pursuant to SECTION 1.2, a
written statement of the chief accounting officer or chief financial officer of
Borrowers setting forth the differences (including any differences that would
affect any calculations relating to the financial covenants set forth in SECTION
8.1) which would have resulted if such financial statements had been prepared
without giving effect to such change;
(g) TAX RETURNS: a copy of the state and federal income tax
returns of each Borrower and each Subsidiary of each Borrower within thirty (30)
days after they are filed with the appropriate taxing authorities, if and when
requested by any Lender;
(h) BORROWING BASE CERTIFICATE: promptly upon request by the Agent
or at the Borrowers' option at any time and in any event within ten (10)
Business Days after the last Business Day of each month, a borrowing base
certificate in the form of EXHIBIT E (the "BORROWING BASE CERTIFICATE") with all
supporting detail as Agent may from time to time require, duly completed,
detailing Borrowers' understanding as to which Accounts or Inventory constitute
Eligible Accounts Receivable and Eligible Inventory as of the last day of such
month (or such other date as the Agent may specify in such request), and
certified by the chief executive officer or chief financial officer of the
Borrowers and their Subsidiaries and subject only to adjustment upon completion
of the normal year-end audit of physical inventory. In addition, each Borrowing
Base Certificate shall have attached to it such additional schedules and/or
other information as the Agent may request;
(i) EVENTS OF DEFAULT: promptly and in any event within five (5)
Business Days after an officer of the Borrowers becomes aware of the occurrence
of a Default or Event of Default, a certificate of the chief executive officer
or chief financial officer of the Borrowers and their Subsidiaries specifying
the nature thereof and the proposed response thereto, each in reasonable detail;
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(j) COMPARISONS: within thirty (30) days after the end of each
month (except the last month of any fiscal quarter, with respect to which such
reports shall be delivered within forty-five (45) days after the end of the
month (other than the last quarter of the Fiscal Year with respect to which such
reports shall be delivered within ninety (90) days after the end of the month)),
a comparison of the actual results of consolidated operations, consolidated cash
flows and capital expenditures for each Borrower for such month and for the
period from the beginning of the current Fiscal Year through the end of such
month (I) with amounts projected for such month and for the period from the
beginning of the current Fiscal Year through the end of such month pursuant to
SECTION 7.1(D) above and (II) with actual results of operations, cash flow and
capital expenditures for such Borrower and each of its Subsidiaries for the same
periods of the prior Fiscal Year;
(k) SEC FILINGS: promptly upon the earlier of the mailing or
filing thereof, copies of all 00-Xx, 00-Xx, 0-Xx, proxy statements, annual
reports, quarterly reports, registration statements and any other filings or
other communications made by any Borrower to holders of its publicly traded
securities or the Securities Exchange Commission from time to time pursuant to
the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933,
as amended;
(l) CONSOLIDATING FINANCIAL STATEMENTS:In the event that any
Person becomes a Subsidiary of any Borrower, other than an Immaterial Credit
Party, after the date of this Agreement, upon the Agent's request, the Borrowers
shall provide consolidating Financial Statements; and
(m) FURTHER INFORMATION: from time to time, such further
information regarding the Collateral, business affairs and prospects and
financial condition of each Borrower and each Subsidiary of each Borrower as the
Agent may reasonably request.
7.2 INVENTORY.
Upon the request of the Agent from time to time, each Borrower shall
provide to the Agent written statements listing items of Inventory in reasonable
detail as requested by the Agent. Each Borrower shall conduct or cause to be
conducted annually a physical count of the Inventory and, a copy of such count
shall be promptly supplied to the Agent accompanied by a report of the value
(valued at the first-in-first-out method) of such Inventory. Upon reasonable
notice by the Agent, each Borrower shall conduct such a physical count at such
other times during normal business hours and as of such dates as the Agent shall
reasonably request. In addition to, and not in limitation of, the foregoing, at
any time and from time to time the Agent may conduct (or engage third parties to
conduct) during normal business hours such field examinations, appraisals,
verifications and evaluations of the Inventory as the Agent shall deem necessary
or appropriate in the exercise of its sole discretion upon reasonable notice by
the Agent.
7.3 CORPORATE EXISTENCE AND COMPLIANCE WITH LAWS.
Each Borrower shall, and shall cause each of its Subsidiaries to, (A)
maintain its corporate existence (except to the extent permitted in SECTION 8.5
hereof) and maintain in full force and effect all licenses, bonds, franchises,
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leases, trademarks and qualifications to do business, and all patents, contracts
and other rights, the failure of which to so maintain would cause in the
aggregate a Material Adverse Effect, (B) continue in, and limit their operations
to, the same general lines of business as presently conducted by it, and (C)
comply, in all material respects, with all Requirements of Law applicable to its
business, its operations and to the Collateral.
7.4 ERISA.
Each Borrower shall deliver to the Agent, at such Borrower's expense,
the following information at the times specified below:
(a) within thirty (30) days after the filing thereof with the DOL,
Internal Revenue Service or PBGC, copies of each annual report (form 5500
series), including SCHEDULE B thereto, filed with respect to each Title IV Plan;
(b) within thirty (30) days after receipt by such Borrower, any
Subsidiary of such Borrower or any ERISA Affiliate of each actuarial report for
any Title IV Plan, Multiemployer Plan or Retiree Welfare Plan and each annual
report for any Multiemployer Plan, copies of each such report;
(c) within ten (10) days after the occurrence thereof,
notification of any increase in the benefits of any existing Title IV Plan or
the establishment of any new Title IV Plan or the commencement of contributions
to any Title IV Plan to which such Borrower, any Subsidiary of such Borrower or
any ERISA Affiliate was not previously contributing;
(d) within ten (10) days prior to (i) the filing of a notice with
the PBGC with respect to any Reportable Event which requires by regulation 30
days advance notice and (ii) the date of the Reportable Event for any Reportable
Event which by regulation post-event notice is required to be filed with the
PBGC, a description of the facts and circumstances which constitute the
Reportable Event for which a filing with the PBGC is required under Section 4043
of ERISA; and
(e) within three (3) days after the occurrence thereof, any event
or condition referred to in CLAUSES (i) THROUGH (vii) of SECTION 9.1(k), whether
or not such event or condition shall constitute an Event of Default.
Each Borrower and its Subsidiaries shall establish, maintain and
operate all Plans to comply in all material respects with the provisions of
ERISA, the Code, and all other Requirements of Law, other than to the extent
that such Borrower or any such Subsidiary (i) is in good faith contesting by
appropriate proceedings the validity or application of any such provision, law,
rule, regulation or interpretation and (ii) has made an adequate reserve or
other appropriate provision therefor as required in order to be in conformity
with GAAP.
7.5 BOOKS AND RECORDS.
Each Borrower agrees to maintain, and to cause each of its Subsidiaries
to maintain, books and records, including those pertaining to the Collateral, in
such detail, form and scope as is consistent with good business practice. Each
Borrower agrees that the Agent or its agents may conduct an audit and appraisal
of all Inventory and Accounts during normal business hours and upon reasonable
notice under the circumstances not more frequently than once during each
twelve-month period after the Closing Date (exclusive of the audits and
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appraisals to be conducted in Section 5.1(p) (collectively, the "Base Audit")),
each such audit and appraisal to be substantially similar in scope and substance
to the Base Audit; provided that at the request of Agent or Majority Lenders,
the Agent or its agents may conduct an audit of all Inventory and Accounts
during normal business hours and upon reasonable notice under the circumstances
twice during each twelve-month period; PROVIDED further that at any time on and
after the occurrence of a Default which has not otherwise been waived pursuant
to SECTION 11.10 or at any other time at the Agent's Permitted Discretion, Agent
shall have the option to conduct such audits and appraisals on a more frequent
basis. Each Borrower further agrees that the Agent or its agents may enter upon
the premises of such Borrower or any Subsidiary of such Borrower during normal
business hours and upon reasonable notice under the circumstances to (a) inspect
and/or copy (at such Borrower's expense) any and all records pertaining thereto
and (b) discuss the business affairs and prospects and financial condition of
such or any other Borrower and each Subsidiary of such or any other Borrower
with any officers, employees and directors of such Borrower or such Subsidiary
or with the Auditors.
7.6 COLLATERAL RECORDS.
Each Borrower agrees to execute and deliver, and to cause each of its
Subsidiaries to execute and deliver, to the Agent, from time to time, solely for
the Agent's convenience in maintaining a record of the Collateral, such written
statements and schedules as the Agent may reasonably require, including those
described in SECTION 7.1 of this Credit Agreement, designating, identifying or
describing the Collateral in reasonable detail. The failure by any Borrower or
any Subsidiary of any Borrower, however, to promptly give the Agent such
statements or schedules shall not affect, diminish, modify or otherwise limit
the Liens on the Collateral granted pursuant to the Credit Documents.
7.7 SECURITY INTERESTS.
(a) Each Borrower shall, and shall cause each of its Subsidiaries
to, defend the Collateral against all material claims and demands of all Persons
at any time claiming the same or any interest therein. Each Borrower shall, and
shall cause each of its Subsidiaries to, comply with the requirements of all
state and federal laws in order to grant to the Agent, the Lenders and the
Issuing Banks valid and perfected first priority security interests subject to
CLAUSES (b), (c), (d) AND (e) of SECTION 8.4 and Liens identified on SCHEDULE B,
PART 8.4 as being prior to Agent's Liens in the Collateral, with perfection, in
the case of any investment property, being effected by giving the Agent control
of such investment property and by the filing of a UCC financing statement with
respect to such investment property. The Agent is hereby authorized by each
Borrower to file any UCC financing statements covering the Collateral whether or
not such Borrower's signatures appear thereon.
(b) In the event that any Person becomes a Domestic Subsidiary of
Parent or of Borrowers after the date hereof, Borrowers will promptly within 30
days after such date notify Agent of that fact and cause such Domestic
Subsidiary to execute and deliver to Agent a joinder agreement to become a
Borrower under this Credit Agreement or to execute and deliver a counterpart of
a Subsidiary Guaranty, and in either case to execute and deliver such Mortgages,
Security Agreements and other Credit Documents and to take all such further
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actions and execute all such further documents and instruments (including
actions, documents and instruments comparable to those described in SECTION
5.1(k) and SECTION 5.1(l)) as may be necessary or, in the opinion of Agent,
desirable to create in favor of Agent, for the benefit of Lenders, a valid and
perfected first priority Lien on all of the personal and mixed property assets
of such Subsidiary described in the applicable forms of Collateral Documents. In
addition, as provided in the Security Agreement, such Borrower shall, or shall
cause the Subsidiary that owns the Capital Securities of such Person, to execute
and deliver to Agent a supplement to the Security Agreement and to deliver to
Agent all certificates representing such Capital Securities of such Person
(accompanied by irrevocable undated stock powers, duly endorsed in blank).
(c) In the event that any Person becomes a Foreign Subsidiary of
any Parent or any Borrower after the date hereof, such Borrower will promptly
notify Agent of that fact and, if such Subsidiary is directly owned by a
Borrower or a Domestic Subsidiary, cause such Subsidiary to execute and deliver
to Agent such documents and instruments and take such further actions (including
actions, documents and instruments comparable to those described in SECTION
5.1(K) as may be necessary, or in the reasonable opinion of Agent, desirable to
create in favor of Agent, for the benefit of Lenders, a valid and perfected
first priority Lien on 66% of the capital stock of such Foreign Subsidiary.
(d) From and after the Closing Date, in the event that any
Borrower or any of its or Parent's Domestic Subsidiaries acquires any Real
Property, such Borrower or such Subsidiary shall, as soon as practicable after
the acquisition of such Real Property execute and deliver a Mortgage with
respect to such Real Property and take all such further actions and execute all
such further documents and instruments (including actions, documents, and
instruments comparable to those described in SECTION 5.1(l)) as may be necessary
or desirable, in the judgment of Agent, to effectively create a valid and
enforceable first priority Lien on such Real Property in favor of Agent (or such
other trustee as may be required or desired under local law) for the benefit of
Lenders.
7.8 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET
INSURANCE/CONDEMNATION PROCEEDS.
(a) MAINTENANCE OF PROPERTIES. Borrowers will, and will cause each
of their Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of Borrowers and their Subsidiaries
(including all Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof.
(b) INSURANCE. Borrowers will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, and casualty insurance with respect to
liabilities, losses or damage in respect of the assets, properties and
businesses of Borrowers and their Subsidiaries as may customarily be carried or
maintained under similar circumstances by corporations of established reputation
engaged in similar businesses, in each case in such amounts (giving effect to
self-insurance), with such deductibles, covering such risks and otherwise on
such terms and conditions as shall be customary for corporations similarly
situated in the industry. Without limiting the generality of the foregoing,
Borrowers will maintain or cause to be maintained (i) flood insurance with
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respect to each Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, in each case in compliance
with any applicable regulations of the Board of Governors of the Federal Reserve
System, and (ii) replacement value casualty insurance on the Collateral
constituting property, plant and equipment under such policies of insurance,
with such insurance companies, in such amounts, with such deductibles, and
covering such risks as are at all times satisfactory to Agent in its
commercially reasonable judgment. Each such policy of insurance covering the
Collateral shall (a) name Agent for the benefit of Lenders as an additional
insured thereunder as its interests may appear and (b) contain a loss payable
clause or endorsement, reasonably satisfactory in form and substance to Agent,
that names Agent for the benefit of Lenders as the loss payee thereunder for any
covered loss in excess of $1,000,000 and provides for at least 30 days prior
written notice to Agent of any modification or cancellation of such policy.
(c) Application of Net Insurance/Condemnation Proceeds.
(i) NET INSURANCE/CONDEMNATION PROCEEDS RECEIVED BY BORROWERS.
Upon receipt by Borrowers or any of their Subsidiaries of any Net
Insurance/Condemnation Proceeds, (a) so long as no Default or Event of
Default shall have occurred and be continuing, Borrowers shall, or
shall cause one or more of their Subsidiaries to, promptly and
diligently apply such Net Insurance/Condemnation Proceeds to pay or
reimburse the costs of repairing, restoring or replacing the assets in
respect of which such Net Insurance/Condemnation Proceeds were received
or, to the extent not so applied, to prepay the Loans as provided in
SECTION 2.4(b)(iii), and (b) if a Default or Event of Default shall
have occurred and be continuing, Borrowers shall apply an amount equal
to such Net Insurance/Condemnation Proceeds to prepay the Loans as
provided in SECTION 2.4(b)(iii).
(ii) NET INSURANCE/CONDEMNATION PROCEEDS RECEIVED BY AGENT.
Upon receipt by Agent of any Net Insurance/Condemnation Proceeds as
loss payee, (a) if and to the extent Borrowers would have been required
to apply such Net Insurance/Condemnation Proceeds (if it had received
them directly) to prepay the Loans, Agent shall, and Borrowers hereby
authorize Agent to, apply such Net Insurance/Condemnation Proceeds to
prepay the Loans as provided in SECTION 2.4(b)(iii), and (b) to the
extent the foregoing clause (a) does not apply, Agent shall hold such
Net Insurance/Condemnation Proceeds pursuant to the terms of the
Security Agreement and, so long as Borrowers or any of their
Subsidiaries proceeds diligently to repair, restore or replace the
assets of Borrowers or such Subsidiary in respect of which such Net
Insurance/Condemnation Proceeds were received, Agent shall promptly
upon request by Borrowers disburse to Borrowers or such Subsidiary from
the Collateral Account, to the extent of any such Net
Insurance/Condemnation Proceeds remaining therein in respect of the
applicable covered loss, amounts necessary to pay the cost of such
repair, restoration or replacement after the receipt by Agent of
invoices or other documentation reasonably satisfactory to Agent
relating to the amount of costs so incurred and the work performed
(including, if required by Agent, lien releases and architects'
certificates); PROVIDED, however that if at any time Agent reasonably
determines (a) that such Borrower or such Subsidiary is not proceeding
diligently with such repair, restoration or replacement or (b) that
such repair, restoration or replacement cannot be completed with the
Net Insurance/Condemnation Proceeds then held by Agent for such
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purpose, together with funds otherwise available to Borrowers for such
purpose, or that such repair, restoration or replacement cannot be
completed within 365 days after the receipt by Agent of such Net
Insurance/Condemnation Proceeds (provided that if Agent determines that
only 25% of the Net Insurance/Condemnation Proceeds shall remain at the
end of such 365-day period to be reinvested, Agent may grant such
Borrower or such Subsidiary an additional 180 days to complete such
repair, restoration or replacement), Agent shall, and Borrowers hereby
authorize Agent to, apply such Net Insurance/ Condemnation Proceeds to
prepay the Loans as provided in SECTION 2.4(b)(iii).
7.9 BORROWERS' TAXES.
Each Borrower agrees to pay, when due, and to cause each of its
Subsidiaries to pay when due, all Borrower Taxes lawfully levied or assessed
against such Borrower, any Subsidiary of such Borrower or any of their
properties, including any of the Collateral, before any penalty or interest
accrues thereon; PROVIDED that, unless such Borrower's Taxes have become a tax
or ERISA Lien on any of the assets of such Borrower or any such Subsidiary, no
such Borrower Taxes need be paid if the same is being contested, in good faith,
by appropriate proceedings promptly instituted and diligently conducted, the
Agent is advised in writing of such fact and of details relevant thereto, and if
an adequate reserve or other appropriate provision shall have been made therefor
as required in order to be in conformity with GAAP.
7.10 ENVIRONMENTAL MATTERS.
(a) Each Borrower shall, and shall cause each of its Subsidiaries
to, conduct its business so as to comply in all material respects with all
Environmental Laws, including without limitation, compliance in all material
respects with the terms and conditions of all permits and governmental
authorizations, except to the extent that any such Person is contesting, in good
faith by appropriate legal proceedings, any such Environmental Law or
interpretation thereof or application thereof.
(b) If any Borrower or any Subsidiary of any Borrower shall
receive written notice of any Environmental Claim with respect to any such
Person, the Borrowers shall provide the Agent with a copy of such notice within
ten (10) days after the receipt thereof. Within ten (10) days after any Borrower
or any Subsidiary of any Borrower learns of the enactment or promulgation of any
Environmental Law which reasonably could be expected to have a Material Adverse
Effect, the Borrowers shall provide the Agent with notice thereof. Each Borrower
shall, and shall cause each of its Subsidiaries to, promptly take all reasonable
actions necessary to prevent the imposition of any Liens other than Permitted
Encumbrances on any Real Estate arising out of or related to any environmental
matters. At the written request of the Agent (which request will not be made
unless (i) the Agent receives notice pursuant to this SECTION 7.10(B), (ii) the
Agent otherwise reasonably believes any Borrower or any of its Subsidiaries may
be in material violation of an Environmental Law or (iii) an Event of Default
has occurred and is continuing), at the sole cost and expense of the Borrowers,
the Borrowers shall retain an environmental consulting firm, satisfactory to the
Agent in its commercially reasonable judgment, to conduct an environmental
review, audit or investigation of the specific items as requested by the Agent
relating to the Real Estate and provide to the Agent a copy of any reports
delivered in connection therewith. At the request of the Agent, the Borrowers
shall provide the Agent with any additional information relating to
environmental matters and any potential related liability resulting therefrom as
the Agent may reasonably request.
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(c) For purposes of SECTION 6.12 and this SECTION 7.10, "material"
means any noncompliance or basis of liability that, individually or in the
aggregate for all noncompliances or liabilities, reasonably would be expected to
subject any Borrower or any of its Subsidiaries to costs or liability in excess
of $2,000,000 in the aggregate.
7.11 USE OF PROCEEDS.
The initial Loans made to the Borrowers hereunder shall be used by the
Borrowers (i) to fund the Refinancing, (ii) to pay the costs and expenses of the
transactions contemplated by this Credit Agreement which are due and payable on
the Closing Date, including the Fees and Expenses due on the Closing Date
pursuant to ARTICLE 4, and (iii) for ongoing working capital needs of the
Borrowers; and the proceeds of any subsequent Loans made hereunder shall be used
by the Borrowers solely for the Borrowers' working capital requirements and
other corporate purposes, including, without limitation, capital expenditures
and acquisitions to the extent permitted hereby. The Borrowers shall not use any
portion of the proceeds of any such Loans for the purpose of purchasing or
carrying any "margin stock" (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) in any manner which violates the
provisions of Regulation U or X of said Board of Governors or for any other
purpose in violation of any applicable statute or regulation, or of the terms
and conditions of this Credit Agreement.
7.12 FISCAL YEAR.
Each Borrower agrees to maintain its Fiscal Year on the same basis as
in effect on the Closing Date unless otherwise required by law, in which case
such Borrower will give the Agent at least thirty (30) days prior written notice
thereof.
7.13 NOTIFICATION OF CERTAIN EVENTS.
Each Borrower agrees that it shall promptly (but, in the case of CLAUSE
(G), in any event within five (5) Business Days after an officer of such
Borrower learns of any such proceeding, change, development or event) notify the
Agent of:
(a) any Material Contract of such Borrower or any of its
Subsidiaries that is terminated or amended in any material respect or any new
Material Contract that is entered into (in which event such Borrower shall
provide the Agent with a copy of such Material Contract);
(b) any material change or amendment of the material terms upon
which suppliers of such Borrower or any of its Subsidiaries do business with
such Borrower or Subsidiary;
(c) the entry of any order, judgment or decree in excess of
$1,000,000 against such Borrower or any of its Subsidiaries or any of their
respective properties or assets;
(d) receipt by such Borrower or any of its Subsidiaries of any
notification of a material violation of any Requirement of Law from any
Governmental Authority;
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(e) the enactment or promulgation of any Requirement of Law or any
other actual or prospective change, development or event which in each case has
had or could reasonably be expected to have a Material Adverse Effect;
(f) any proceedings being instituted or non-frivolous threat of
the institution of such proceedings by or against such Borrower or any of its
Subsidiaries, before any Governmental Authority or arbitrator which is seeking
injunctive relief or damages in excess of $1,000,000; and
(g) any Event of Default or Default.
7.14 INTELLECTUAL PROPERTY.
Each Borrower shall, and shall cause each of its Subsidiaries to, do
and cause to be done all things necessary to preserve and keep in full force and
effect all of such Person's Intellectual Property except for such Intellectual
Property that is obsolete, unnecessary to any Credit Party's business or having
nominal value.
7.15 MAINTENANCE OF PROPERTY.
Each Borrower agrees to keep, and to cause each of its Subsidiaries to
keep, all tangible property useful and necessary to its respective businesses in
good working order and condition (ordinary wear and tear excepted) in accordance
with their past operating practices and not to commit or suffer any waste with
respect to any of its properties that are useful and necessary to its respective
businesses.
7.16 FURTHER ASSURANCES.
Each Borrower shall take, and shall cause each of its Subsidiaries to
take, all such further actions and execute all such further documents and
instruments as the Agent may at any time reasonably determine in its sole
discretion to be necessary or desirable to further carry out and consummate the
transactions contemplated by the Credit Documents, to cause the execution,
delivery and performance of the Credit Documents to be duly authorized and to
perfect or protect the Liens (and the priority status thereof) of the Agent on
the Collateral.
7.17 CHANGES IN MARKET.
Each Borrower agrees that the Agent shall be entitled, after
consultation with the Borrowers, to change the terms and conditions, pricing and
structure of the credit facilities extended hereunder if the Agent determines
that such changes are advisable to ensure the successful initial syndication of
the Credit facilities, PROVIDED, that the Total Commitments remain unchanged.
ARTICLE 8
NEGATIVE COVENANTS
------------------
Until the Expiration Date and payment and satisfaction of all
Obligations, each Borrower agrees that:
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8.1 FINANCIAL COVENANTS.
(a) MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrowers shall have
at the end of each Fiscal Quarter set forth below a Fixed Charge Coverage Ratio,
calculated on a Pro Forma Basis, for the twelve month period then ended of not
less than the ratio set forth below opposite each such Fiscal Quarter;
FISCAL QUARTER MINIMUM FIXED CHARGE
-------------- COVERAGE RATIO
--------------
4th Fiscal Quarter, Fiscal Year 2003 1.35:1.00
1st Fiscal Quarter, Fiscal Year 2004 1.35:1.00
2nd Fiscal Quarter, Fiscal Year 2004 1.10:1.00
3rd Fiscal Quarter, Fiscal Year 2004 1.05:1.00
4th Fiscal Quarter, Fiscal Year 2004 1.05:1.00
1st Fiscal Quarter, Fiscal Year 2005 1.05:1.00
2nd Fiscal Quarter, Fiscal Year 2005 1.05:1.00
3rd Fiscal Quarter, Fiscal Year 2005 1.05:1.00
4th Fiscal Quarter, Fiscal Year 2005 1.05:1.00
1st Fiscal Quarter, Fiscal Year 2006 1.10:1.00
and each Fiscal Quarter thereafter
(b) MAXIMUM LEVERAGE RATIO. The Borrowers shall not permit the
Leverage Ratio, calculated on a Pro Forma Basis, as of the last day of the
following Fiscal Quarters to exceed the ratio set forth below opposite each such
Fiscal Quarter:
FISCAL QUARTER MAXIMUM LEVERAGE RATIO
-------------- ----------------------
4th Fiscal Quarter, Fiscal Year 2003 5.95:1.00
1st Fiscal Quarter, Fiscal Year 2004 5.95:1.00
2nd Fiscal Quarter, Fiscal Year 2004 5.95:1.00
3rd Fiscal Quarter, Fiscal Year 2004 5.95:1.00
4th Fiscal Quarter, Fiscal Year 2004 5.85:1.00
1st Fiscal Quarter, Fiscal Year 2005 5.75:1.00
2nd Fiscal Quarter, Fiscal Year 2005 5.50:1.00
3rd Fiscal Quarter, Fiscal Year 2005 5.40:1.00
4th Fiscal Quarter, Fiscal Year 2005 5:20:1.00
1st Fiscal Quarter, Fiscal Year 2006 5.05:1.00
2nd Fiscal Quarter, Fiscal Year 2006 4.85:1.00
3rd Fiscal Quarter, Fiscal Year 2006 4.80:1.00
4th Fiscal Quarter, Fiscal Year 2006 4.65:1.00
1st Fiscal Quarter, Fiscal Year 2007 4:70:1.00
2nd Fiscal Quarter, Fiscal Year 2007 4.50:1.00
and each Fiscal Quarter thereafter
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8.2 CAPITAL EXPENDITURES.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, make or incur Capital Expenditures in any Fiscal Year, including
any Carry Back Expenditures deemed made or incurred in such Fiscal Year, in the
aggregate for all Borrowers and their respective Subsidiaries combined, in
excess of the corresponding amount ("MAXIMUM CAPITAL EXPENDITURE") set forth
opposite such Fiscal Year set forth below opposite such period; PROVIDED that
the Maximum Capital Expenditure for any period shall be increased by an amount
equal to the excess (the "CARRY FORWARD Amount"), if any, of the Maximum Capital
Expenditure for the previous period over the actual amount of Capital
Expenditures for such previous period; PROVIDED however, that in no event shall
the Carry Forward Amount exceed 25% of the Maximum Capital Expenditure for such
previous period:
FISCAL YEAR MAXIMUM CAPITAL EXPENDITURE
----------- ---------------------------
2003 $7,600,000
2004 $14,200,000
2005 $16,400,000
2006 $16,400,000
2007 $16,400,000
2008 $23,200,000
No Borrowers shall, or shall permit any of its Subsidiaries
to, directly or indirectly, make any Capital Expenditures that are not directly
related to the businesses conducted on the Closing Date by such Borrower or such
Subsidiary.
8.3 NO ADDITIONAL INDEBTEDNESS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, incur, create, assume or suffer to exist any Indebtedness other
than:
(a) Indebtedness in respect of Capital Leases and Indebtedness
secured by Purchase Money Liens not to exceed, in the aggregate for all
Borrowers and their respective Subsidiaries combined, $5,000,000 outstanding at
any one time, such Indebtedness to be from parties and to have terms and
conditions reasonably satisfactory to the Agent;
(b) Indebtedness arising under this Credit Agreement and the other
Credit Documents;
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(c) Borrowers and their Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by SECTION 8.12 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(d) Borrowers and their Subsidiaries which are Credit Parties may
become and remain liable with respect to Indebtedness to any other Borrower or
Subsidiary;
(e) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of the Borrowers' businesses; PROVIDED that such
indebtedness is extinguished within five Business Days of its incurrence;
(f) Indebtedness described on SCHEDULE B, PART 8.3 and any
refinancing of such Indebtedness; PROVIDED that (i) the aggregate principal
amount of such Indebtedness is not increased and such refinancing is on terms
and conditions that are no more restrictive than the terms and conditions of the
Indebtedness being refinanced and (ii) the terms of such Indebtedness and
refinancings thereof are not otherwise amended or modified in a manner adverse
to the interests of any Borrower, any Subsidiary of any Borrower or the Lenders;
(g) Borrowers may become and remain liable with respect to
Indebtedness evidenced by the Senior Notes, and any refinancing thereof;
PROVIDED that such refinancing Indebtedness shall (i) have the same obligor or
obligors as the Senior Notes, (ii) be unsecured, (iii) have a maturity no
earlier than six months after the Expiration Date, (iv) have a yield that is not
higher than that of the Senior Notes, (v) be in an aggregate principal amount
not less than the amount sufficient to prepay the then outstanding aggregate
principal amount of the Senior Notes plus the amount of accrued and unpaid
interest thereon plus any premium thereon; and (vi) contain terms and conditions
no less favorable in any material respect to Borrowers and Lenders than the
Senior Notes (such refinancing Indebtedness being herein referred to as the
"SENIOR REFINANCING INDEBTEDNESS");
(h) Company may become and remain liable with respect to
Indebtedness to Holdings in an aggregate amount not to exceed $10,000,000
(excluding any pay in kind interest) the interest on which shall be payable in
kind and the payment on which shall be subordinated to the Obligations;
(i) Borrowers and their Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not to
exceed $5,000,000 at any time outstanding; and
(j) Company may remain liable with respect to the Subordinated
Notes until such notes are redeemed in accordance with the irrevocable notice of
redemption delivered pursuant to SECTION 5.1(m)(i).
8.4 LIENS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, mortgage, assign, pledge, transfer, create, incur, assume, suffer
to exist or otherwise permit any Lien (whether as a result of a purchase money
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or title retention transaction, or other security interest, judgment or
otherwise) to exist on any of its property, assets, revenues or goods, whether
real, personal or mixed, whether now owned or hereafter acquired, except for the
following:
(a) Liens granted by any Credit Party pursuant to any Credit
Document, including Permitted Hedging Transactions;
(b) Liens listed on SCHEDULE B, PART 8.4 encumbering only the
assets described therein and the proceeds thereof;
(c) Permitted Encumbrances;
(d) Liens securing Indebtedness permitted under SECTION 8.3(A);
(e) Transfers permitted by SECTION 8.5; and
(f) Extensions and renewals of the foregoing permitted Liens
subject to the limitations set forth above; PROVIDED that the aggregate amount
of such extended or renewed Liens is not increased and such extended or renewed
Liens are on terms and conditions no more restrictive than the terms and
conditions of the Liens being extended or renewed.
8.5 RESTRICTIONS ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, alter the corporate, capital or legal structure of any Borrower or any of
its Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or fixed assets, whether
now owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(a) any Subsidiary of any Borrower may be merged with or into any
Borrower or any other wholly owned Subsidiary of any Borrower, and any Borrower
may be merged with or into any other Borrower provided that in the case of such
a merger between a Subsidiary and a Borrower, such Borrower shall be the
continuing or surviving Person; any Subsidiary may be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to any Borrower;
(b) Borrowers and their Subsidiaries may make Capital Expenditures
permitted under SECTION 8.2;
(c) Borrowers and their Subsidiaries may sell or otherwise dispose
of assets in transactions that do not constitute Asset Sales; PROVIDED that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and Borrowers and their Subsidiaries may lease or
sublease spare or surplus property;
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(d) Company may sell or otherwise dispose of (i) Enviro-Safe or
all or substantially all of its assets, provided that (x) Enviro-Safe shall
immediately cease to be a Borrower, (y) the consideration received shall be in
an amount at least equal to the fair market value thereof (as reasonably
determined by the Board of Directors of Company) and (z) upon receipt of such
Net Asset Sale Proceeds, the Company shall apply such Net Asset Sale Proceeds in
accordance with SECTION 2.4(b)(iii)(1) and (ii) the Lagoon Valley Property
provided that (x) the consideration received shall be in an amount at least
equal to the fair market value thereof (as reasonably determined by the Board of
Directors of Company) and (y) the Borrowers prepay the Revolving Loans in
accordance with SECTION 2.4(b)(iii)(1);
(e) Liens permitted by SECTION 8.4;
(f) Borrowers and their Subsidiaries may make Sale/Leaseback
Transactions; provided that the gross cash proceeds of such Sale/Leaseback
Transaction are at least equal to the fair market value of the property that is
the subject of such Sale/Leaseback Transaction; and the proceeds of such
Sale/Leaseback Transaction shall be applied as required by SECTION
2.4(b)(iii)(1);
(g) Borrowers and their Subsidiaries may make other Asset Sales in
an aggregate amount not to exceed $20,000,000; PROVIDED that (x) the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof (as reasonably determined by the Board of
Directors of Company if such Asset Sale involves assets with a value in excess
of $5.0 million); (y) at least 75% of the consideration received shall be cash
or Cash Equivalents; and (z) the proceeds of such Asset Sales shall be applied
as required by SECTION 2.4(b)(iii)(1).
(h) Borrowers and their Subsidiaries may acquire the business,
property or fixed assets of, or all of the stock or other evidence of beneficial
ownership of any Person engaged in the nursery business or businesses reasonably
related thereto; PROVIDED that (a) the contemplated acquisition is neither
contested nor hostile nor opposed by the board of directors of the targeted
company or business; (b) no Default or Event of Default has occurred and is then
continuing; (c) after giving effect (including, without limitation, any
limitation on any assumed or acquired Indebtedness) to such acquisition and
Indebtedness incurred in connection therewith, Borrowers are in compliance with
their financial covenants, calculated on a Pro Forma Basis; PROVIDED that for
purposes of calculating the Leverage Ratio, the aggregate earnings attributable
to acquired businesses or companies whose financials are unreviewed and
unaudited shall not exceed 10% of EBITDA before giving effect to the
consolidation with such acquired businesses or companies and that Borrowers
deliver to Agent prior to the consummation of such acquisition a compliance
certificate demonstrating such pro forma covenant compliance; (d) the provisions
of CLAUSES (b) AND (c) OF SECTION 7.7 of this Credit Agreement are complied with
respect to any such acquisition; (e) Borrowers shall have provided evidence
reasonably satisfactory to the Agent that on a Pro Forma Basis (after giving
effect to any such acquisition) Excess Availability will be at least $35,000,000
on the date of such acquisition and for at least six months thereafter; and (f)
Borrowers obtain Agent's and Majority Lenders' consents to any acquisition or
series of related acquisitions in excess of $3,000,000 and to aggregate
acquisitions in excess of $10,000,000, in each case, plus the amount of any
payments received on the Sun Gro Canadian Tax Receivable and not utilized to
make Restricted Payments pursuant to CLAUSE (c) of SECTION 8.6, and, to the
extent such consent is required, shall have delivered to Agent, on a timely
basis prior to the consummation of such acquisition, such historical and pro
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forma projected financial statements (which projected financial statements shall
be prepared on a quarterly basis for the succeeding twelve-month period and on
an annual basis for the period commencing after such twelve-month period and
concluding on the Expiration Date), sources and uses analysis, pro forma
covenant calculations and such other due diligence information as may be
reasonably requested by Agent or Lenders; subject to completion of such due
diligence to the reasonable satisfaction of Agent and Majority Lenders, Agent
and Majority Lenders hereby agree to approve or disapprove acquisitions as soon
as reasonably practicable but in any event within ten Business Days of receipt
of such information; and (g) Borrowers and their Subsidiaries will not incur or
assume in connection with any such contemplated acquisition any material
environmental or other material contingent liability.
8.6 NO RESTRICTED PAYMENTS.
Each Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Payment; PROVIDED that (a) Borrowers may make
payments of regularly scheduled interest in respect of the Senior Notes and the
Senior Refinancing Indebtedness in accordance with the terms of and to the
extent required by the indenture pursuant to which the Senior Notes and the
Senior Refinancing Indebtedness were issued; (b) any Subsidiary of any Borrower
may make a dividend or distribution to such Borrower, and (c) so long as no
Default or Event of Default shall have occurred and be continuing or shall be
caused thereby, Borrowers may make Restricted Payments to Holdings (X) in an
aggregate principal amount not to exceed $500,000 in any Fiscal Year in order to
permit Holdings to pay customary and usual general administrative costs and
expenses, (Y) in an aggregate principal amount not to exceed in the aggregate
$2,000,000 in any Fiscal Year or $3,000,000 during the term of this Credit
Agreement plus the amount of any payments received on the Sun Gro Canadian Tax
Receivable and not utilized to make acquisitions pursuant to SECTION 8.5(H), in
order to permit Holdings to repurchase outstanding Holdings Common Stock from
holders other than MDCP or its affiliates, PROVIDED that after giving pro forma
effect to such repurchase, there shall be Excess Availability of at least
$40,000,000; and (Z) in an amount necessary to permit Holdings to discharge the
consolidated tax liabilities of Holdings and its Subsidiaries. Notwithstanding
any of the foregoing to the contrary, Borrowers may make Restricted Payments to
redeem the existing Subordinated Notes from the proceeds of the Senior Notes.
8.7 NO INVESTMENTS; JOINT VENTURES.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, make any Investment in any Person, including any Joint Venture,
other than:
(a) Advances or loans made in the ordinary course of business to
employees not to exceed in the aggregate for all Borrowers and their respective
Subsidiaries combined, $500,000 in the aggregate outstanding at any one time;
(b) Borrowers and their Subsidiaries may make and own Investments
in Cash Equivalents subject to the requirements of SECTION 8.16;
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(c) Borrowers and their Subsidiaries may continue to own the
Investments owned by them as of the Closing Date in any of their Subsidiaries;
(d) Borrowers and their Subsidiaries may make intercompany loans
to the extent permitted under SECTION 8.3(d);
(e) Borrowers and their Subsidiaries may make Capital Expenditures
permitted by SECTION 8.2 and Borrowers and their Subsidiaries may make
acquisitions to the extent permitted under SECTION 8.5;
(f) Borrowers and their Subsidiaries may incur and remain liable
with respect to Contingent Obligations permitted under SECTION 8.12;
(g) Borrowers and their Subsidiaries may continue to own the
Investments owned by them and described in SCHEDULE B, PART 8.7;
(h) Borrowers and their Subsidiaries may make short-term
Investments in a Depository Account held with the Agent in respect of surplus
cash pursuant to SECTION 8.16; PROVIDED that such Depository Account shall be in
the name of the Agent and within the Agent's sole dominion and control (the
"CASH COLLATERAL ACCOUNT") and held by the Agent for the benefit of the Lenders;
(i) Borrowers may acquire securities in connection with the
satisfaction or enforcement of Indebtedness or claims due and owing to Borrowers
or any of their Subsidiaries or as security for any such Indebtedness or claim;
and
(j) Borrowers and their Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time $5,000,000.
8.8 NO AFFILIATE TRANSACTIONS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, enter into any transaction with, including the purchase, sale or
exchange of property or the rendering of any service to any other Borrower or
Subsidiary of a Borrower or other Affiliate of a Borrower and whether or not
such transaction would otherwise be permitted under any of the other provisions
of the Credit Documents, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or such Subsidiary's business, as the
case may be, and upon fair and reasonable terms no less favorable in any
material respect to such Borrower or such Subsidiary than could be obtained in a
comparable arms-length transaction with an unaffiliated Person, other than as
set forth on SCHEDULE B, PART 6.23.
8.9 LIMITATION ON TRANSACTIONS UNDER ERISA.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly:
(a) amend, or permit any ERISA Affiliate to amend, a Title IV Plan
resulting in an increase in current liability for the plan year such that any of
such Borrower, any Subsidiary of such Borrower or any ERISA Affiliate is
required to provide security to such a Title IV Plan under Section 40l(a)(29) of
the Code;
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(b) cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the Code or Section 302 or 4068 of
ERISA or cause or permit to occur a Termination Event the extent such
Termination Event could reasonably be expected to have a Material Adverse
Effect;
(c) allow the Unfunded Pension Liabilities of a Title IV Plan or
all Title IV Plans to increase to a level which could reasonably be expected to
require contributions to such Title IV Plans to have a Material Adverse Effect;
or
(d) adopt or terminate any Retiree Welfare Plan if either such
adoption or termination could reasonably be expected to result in a Material
Adverse Effect.
8.10 MATERIAL AMENDMENTS OF MATERIAL CONTRACTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, without the prior written consent of the Agent, amend, modify,
cancel or terminate or permit the amendment, modification, cancellation or
termination of, any of the Material Contracts if any such action would be
materially adverse to the interests of the Credit Parties, the Agent or the
Lenders.
8.11 ADDITIONAL RESTRICTIVE COVENANTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
(a) any consensual restriction limiting the ability (whether by covenant, event
of default, subordination or otherwise and including any such the effect of
which is to require the providing of equal and ratable security to any other
Person in the event a Lien is granted to or for the benefit of the Agent and the
Lenders) to (i) pay dividends or make any other distributions on shares of its
Capital Securities held by any Borrower or any other Subsidiary of any Borrower;
(ii) pay any Liability owed to any Borrower or any other Subsidiary or any
Borrower; (iii) make any loans or advances to or other Investments in any
Borrower or in any other Subsidiary of any other Borrower; or (iv) create or
permit to exist any Lien upon the assets of any Borrower or any Subsidiary of
any Borrower, other than Liens permitted under SECTION 8.4; or (b) any
contractual obligation which may restrict or inhibit the Agent's rights or
ability to sell or otherwise dispose of the Collateral or any part thereof after
the occurrence of an Event of Default; other than Permitted Restrictive
Covenants and other than under the Senior Note Indenture, the Subordinated Note
Indenture and any Senior Refinancing Indebtedness.
8.12 CONTINGENT OBLIGATIONS.
Each Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or become or remain liable with respect to
any Contingent Obligation, except:
(a) Borrowers may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit;
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(b) Borrowers and their Subsidiaries may become and remain liable
with respect to Contingent Obligations arising under their respective
Guaranties;
(c) Borrowers and their Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(d) Borrowers may become and remain liable with respect to
Contingent Obligations arising under Permitted Hedging Transactions;
(e) Borrowers and their Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of guaranties of Indebtedness
permitted by SECTION 8.3(g) provided that each guarantor of such Indebtedness
(whether or not a Borrower or a Subsidiary of a Borrower) also guaranties the
Obligations; and Borrowers and their Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any other Indebtedness of
Borrowers or any of their Subsidiaries permitted by SECTION 8.3; and
(f) Borrowers and their Subsidiaries may become and remain liable
with respect to other Contingent Obligations; PROVIDED that the maximum
aggregate liability, contingent or otherwise, of Company and its Subsidiaries in
respect of all such Contingent Obligations shall at no time exceed $5,000,000.
8.13 CHANGES IN COLLATERAL LOCATIONS.
No Borrower shall, or shall permit any of its Subsidiaries to, open or
establish any new location within the United States or Canada unless such Person
(a) provides Agent with thirty (30) days prior written notice of any such new
location, (b) delivers to Agent, duly executed by the appropriate Person(s)
where applicable, such Collateral Access Agreements and other agreements,
documents and instruments as Agent shall require to protect Agent's interests in
the Collateral at such location and (c) delivers to Agent such amendments to
SCHEDULE B, PARTS 6.1 AND 6.8 as are required to make such disclosures complete
and accurate. Each Borrower shall give the Agent thirty (30) days prior written
notice of any change in the location of any Collateral or in the location of its
chief executive office or place of business from the locations specified in
SCHEDULE B, PART 6.8. Each Borrower agrees to advise the Agent promptly, in
sufficient detail, of any substantial changes relating to the type, quantity or
quality of the Collateral, or any event which singly or in the aggregate
reasonably be expected to have a Material Adverse Effect on the value of the
Collateral or on the Liens granted for the benefit of the Agent, the Lenders and
the Issuing Banks thereon.
8.14 NEW ACCOUNTS.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, open or otherwise have any new or existing checking, savings,
investment, securities or commodity account or any other type of account at a
bank, securities intermediary, commodity intermediary or any other financial
institution except (a) accounts used by such person solely to fund payroll
obligations, (b) xxxxx cash accounts that do not exceed a balance of $25,000 in
the aggregate for Borrowers and their Subsidiaries and (c) such other accounts
for which Agent has received (i) ten (10) days prior written notice before the
opening thereof and (ii) if requested by Agent, a duly executed Control
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Agreement, other than with respect to any Disbursement Accounts for which Agent
has made such request but after reasonable best efforts on the part of the
Borrowers to obtain such duly executed Control Agreements, Borrowers are unable
to do so; PROVIDED however that Borrowers otherwise comply with clause (b) of
SECTION 8.16 with respect to such Disbursement Accounts. Prior to opening any
new account under this SECTION 8.14, Borrowers shall deliver to Agent such
amendments to SCHEDULE B, PART 6.26 as is required to make such disclosure
complete and accurate.
8.15 LIMITATION ON DERIVATIVE TRANSACTIONS.
No Credit Party shall, or shall permit any of its Subsidiaries to,
enter into any Derivative Transaction other than Permitted Hedging Transactions.
8.16 NO EXCESS CASH.
No Borrower shall, or shall permit any of its Subsidiaries to, directly
or indirectly, maintain in the aggregate in all of the accounts described in
SCHEDULE B, PART 6.26, the Disbursement Accounts, the Depository Accounts or
otherwise, total cash balances and Cash Equivalents in excess of $10,000,000 at
any time during which any Revolving Loans are outstanding, any such excess to be
immediately applied to the repayment of the Revolving Loans; PROVIDED, HOWEVER,
that the Borrowers shall, solely to the extent necessary to avoid the incurrence
of any reimbursable losses, costs or expenses described in SECTION 4.7(b), be
permitted to deposit such excess in the Cash Collateral Account as set forth in
SECTION 8.7(h); PROVIDED further that during the months of March and April of
each year, the Borrowers may maintain an additional $5,000,000 in such accounts
for the payment of discretionary compensation. In addition, no Borrower shall,
nor shall any Borrower permit any of its Subsidiaries to, directly or
indirectly, (a) maintain in any payroll Disbursement Account total collected
cash balances and Cash Equivalents for any pay period in excess of the amount
reasonably expected to be payable from such payroll Disbursement Account for
such period or (b) maintain in any Disbursement Account not subject to a Control
Agreement total collected cash balances and Cash Equivalents on any day in an
aggregate amount for all such accounts (when aggregated with all amounts
retained in any account pursuant to CLAUSE (b) of SECTION 8.14) in excess of
$1,000,000 in the aggregate for the Borrowers and their Subsidiaries.
8.17 CONDUCT OF BUSINESS.
From and after the Closing Date, each Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by such Borrower and its Subsidiaries on the Closing Date
or any other business similar, related to or incidental thereto and (ii) such
other lines of business as may be consented to by Majority Lenders. Holdings
shall not engage in any business or activity other than (i) owning the capital
stock of Company and its Subsidiaries, (ii) entering into and performing its
obligations under the Senior Notes documents and entering into and performing
its obligations under and in accordance with the Credit Documents to which it is
a party, and (iii) engaging in activities and incurring liabilities necessary or
incidental to discharging its obligations as a holding company for its
Subsidiaries or incurring liabilities under such Senior Notes documentation and
the Credit Documents to which it is a party; PROVIDED that Holdings may issue
and remain liable with respect to notes to MDCP the interest on which shall be
payable-in-kind ("PIK NOTES") which shall be subordinated in right of payment to
the Obligations in an aggregate amount not to exceed $10,000,000 (excluding any
pay in kind interest) the proceeds of which shall be used by Holdings for the
purpose of making capital contributions or subordinated loans to the Company
permitted pursuant to SECTION 8.3(h).
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ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
------------------------------
9.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an Event
of Default hereunder (whatever the reason for such event and whether it shall be
voluntary or involuntary, or within or without the control of any Borrower, any
Subsidiary of any Borrower or any other Credit Party, or be effected by
operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental or nongovernmental body):
(a) failure by any Borrower to pay any installment of principal of
or interest on any Loan when due, whether at stated maturity, by acceleration,
by notice of voluntary prepayment, by mandatory prepayment or otherwise; failure
by any Borrower to pay when due any amount payable to an Issuing Lender in
reimbursement of any drawing under a Letter of Credit; or failure by any
Borrower to pay any fee or any other amount due under this Agreement within five
days after the date due; or.
(b) failure of any Borrower or any Subsidiary of any Borrower to
perform, comply with or observe any term, covenant or agreement applicable to it
contained in SECTION 2.4(b)(iii) or in ARTICLE 7 OR ARTICLE 8;
(c) (i) any representation or warranty made by any Borrower, any
Subsidiary of any Borrower or any other Credit Party under this Credit Agreement
or under any other Credit Document shall prove to have been incorrect or
misleading in any material respect when made or deemed made; or
(ii) any Borrower or any Subsidiary of any Borrower or any
other Credit Party shall fail to comply with any covenant contained in
this Credit Agreement (other than under a provision covered by SECTION
9.1(a) OR (b) above) or the other Credit Documents, which failure to
comply is not cured within fifteen (15) Business Days of its
occurrence;
(d) dissolution, liquidation, winding up or cessation of any
Credit Party's businesses other than that of an Immaterial Credit Party, or the
failure of any Credit Party other than an Immaterial Credit Party to meet its
debts as they mature, or the calling of one or more meetings of any Credit
Party's major creditors other than that of an Immaterial Credit Party for
purposes of obtaining a moratorium on payment or a compromise of such Credit
Party's debts;
(e) (i) the insolvency (however defined) of any Credit Party other
than an Immaterial Credit Party; or
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(ii) the commencement by or against any Credit Party
other than an Immaterial Credit Party of any bankruptcy, insolvency,
arrangement, reorganization, receivership or similar proceedings under
any federal or state law and, in the event any such proceeding is
commenced against any Credit Party, such proceeding is not dismissed
within thirty (30) days;
(f) a Change of Control shall have occurred; or
(g) (i) failure of any Borrower or any of its Subsidiaries to pay
when due any principal of or interest on one or more Indebtedness (other than
Indebtedness referred to in SECTION 9.1(A)) or Contingent Obligations in an
aggregate principal amount of $5,000,000 or more, beyond the end of any grace
period PROVIDED therefor; or (ii) the occurrence of a default or event of
default (in each case which shall continue beyond the expiration of any
applicable grace periods) which permits, or could permit, the acceleration of
the maturity of, any note, agreement or instrument evidencing any other
Indebtedness or Contingent Obligations of any Borrower or any Subsidiary of any
Borrower, or the nonpayment of such Indebtedness or Contingent Obligations when
due, and the individual principal amount of all such Indebtedness or Contingent
Obligations with respect to which a default or an event of default has occurred,
or the maturity of which is permitted to be accelerated, or which is then due,
exceeds $5,000,000 or more in the aggregate;
(h) the occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect on
the Credit Parties taken as a whole;
(i) any money judgment, writ or warrant of attachment or similar
process involving in the aggregate at any time an amount in excess of $5,000,000
(not adequately covered by insurance by a solvent and unaffiliated insurance
company as determined by the Agent) shall be entered or filed against any
Borrower or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 60 days (or
in any event later than five days prior to the date of any proposed sale
thereunder); or
(j) any covenant, agreement or obligation of any party contained
in or evidenced by any of the Credit Documents shall cease to be enforceable in
accordance with its terms, or any party (other than the Agent or the Lenders, in
its capacity as such, and not in its capacity as an Issuing Bank) to any Credit
Document shall deny or disaffirm its obligations under any of the Credit
Documents, or any Credit Document shall be cancelled, terminated, revoked or
rescinded by any Credit Party without the express prior written consent of the
Agent, or any action or proceeding shall have been commenced by any such Person
(other than the Agent or a Lender, in its capacity as such, and not in its
capacity as an Issuing Bank) seeking to cancel, revoke, rescind or disaffirm the
obligations of any party to any Credit Document, or any court or other
Governmental Authority shall issue a judgment, order, decree or ruling to the
effect that any of the obligations of any party to any Credit Document are
illegal, invalid or unenforceable; or
(k) any Termination Event shall occur with respect to any Title IV
Plan of any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate,
(ii) any Accumulated Funding Deficiency, whether or not waived, shall exist with
respect to any Title IV Plan, (iii) any Borrower or any Subsidiary of any
Borrower shall engage in any Prohibited Transaction involving any such Title IV
Plan, (iv) any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate
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shall be in "default" (as defined in ERISA Section 4219(c)(5)) with respect to
payments owing to any Multiemployer Plan as a result of such Person's complete
or partial withdrawal (as described in ERISA Section 4203 or 4205) therefrom,
(v) any Borrower, any Subsidiary of any Borrower or any ERISA Affiliate shall
fail to pay when due an amount that is payable by it to the PBGC or to any Title
IV Plan under Title IV of ERISA, (vi) a proceeding shall be instituted by a
fiduciary of any such Title IV Plan against any Borrower, any Subsidiary of any
Borrower or any ERISA Affiliate to enforce ERISA Section 515 and such proceeding
shall not have been dismissed within 30 days thereafter or (vii) any other event
or condition shall occur or exist with respect to any such Title IV Plan, except
that no event or condition referred to in CLAUSES (i) THROUGH (viii) shall
constitute an Event of Default if it, together with all other such events or
conditions at the time existing, has not subjected, and in the reasonable
determination of the Majority Lenders will not subject, any Borrower or any
Subsidiary of any Borrower to any liability that, alone or in the aggregate with
all such liabilities for all such Persons, exceeds $5,000,000.
9.2 ACCELERATION AND CASH COLLATERALIZATION.
Upon the occurrence of an Event of Default and which is continuing, the
Agent may, but shall upon the request of the Majority Lenders, and by delivery
of notice to the Funds Administrator from the Agent, take any or all of the
following actions: (a) declare all Obligations to be immediately due and payable
(except with respect to any Event of Default set forth in SECTION 9.1(e), in
which case all Obligations shall automatically become immediately due and
payable without the necessity of any notice or other demand) without
presentment, demand, protest or any other action or obligation of the Agent or
any Lender; and (b) immediately terminate the Commitments hereunder.
In addition, upon demand by the Agent or the Majority Lenders upon the
occurrence of any Event of Default and which is continuing, the Borrowers shall
deposit with the Agent with cash or Cash Equivalents in an amount equal to 110%
of the Letter of Credit Obligations. Such deposit shall be held by the Agent as
security for, and to provide for the payment of, Letter of Credit Obligations.
If at any time after acceleration of the maturity of the Obligations,
the Borrowers shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in SECTION 4.4) and all Events of
Default and Defaults (other than nonpayment of principal of and accrued interest
on the Loans and other Obligations due and payable solely by virtue of
acceleration) shall be remedied or waived, then by written notice to the Funds
Administrator, the Majority Lenders may elect, in the sole discretion of such
Majority Lenders, to rescind and annul the acceleration and its consequences and
return any cash collateral; but such action shall not affect any subsequent
Default or Event of Default or impair any right or remedy consequent thereon.
The provisions of the preceding sentence are intended merely to bind the Lenders
to a decision which may be made at the election of the Majority Lenders; they
are not intended to benefit the Borrowers and do not give any Borrower the right
to require the Lenders to rescind or annul any acceleration hereunder or to
return any cash collateral, even if the conditions set forth herein are met.
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9.3 REMEDIES.
From and after the occurrence of any Event of Default which is
continuing, the Agent may, in addition to exercising any other rights and
remedies now or hereafter existing under any Credit Document or applicable law:
(a) remove from any premises where same may be located any and all documents,
instruments, files and records (including the copying of any computer records),
and any receptacles or cabinets containing same, relating to any or all of the
Collateral, or the Agent may use (at the expense of the Borrowers) such of the
supplies or space of any Borrower at any Borrower's place of business or
otherwise, as may be necessary to properly administer and control any or all of
the Collateral or the handling of collections and realizations thereon; (b)
bring suit, in the name of a Borrower or the Lenders and generally shall have
all other rights respecting any or all of the Collateral, including the right
to: accelerate or extend the time of payment, settle, compromise, release in
whole or in part any amounts owing on any or all of the Collateral and issue
credits in the name of a Borrower or the Lenders; and (c) foreclose the security
interests created pursuant to the Credit Documents by any available judicial
procedure, or to take possession of any or all of the Collateral without
judicial process and enter any premises where any Collateral may be located for
the purpose of taking possession of or removing same. The Agent shall have the
right, without notice or advertisement, to sell, lease, or otherwise dispose of
all or any part of the Collateral, whether in its then condition or after
further preparation or processing, in the name of a Borrower or the Lenders, or
in the name of such other party as the Agent may designate, either at public or
private sale or at any broker's board, in lots or in bulk, for cash or for
credit, with or without warranties or representations, and upon such other terms
and conditions as the Agent in its sole discretion may deem advisable, and the
Agent or any other Lender shall have the right to purchase at any such sale. If
any Collateral shall require rebuilding, repairing, maintenance or preparation,
the Agent shall have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting such Collateral in such saleable form as
the Agent shall deem appropriate. Each Borrower agrees, at the request of the
Agent, to assemble the Collateral and to make it available to the Agent at
places which the Agent shall select, whether at the premises of such or any
other Borrower or elsewhere, and to make available to the Agent the premises and
facilities of such Borrower for the purpose of the Agent's taking possession of,
removing or putting the Collateral in saleable form. However, if notice of
intended disposition of any Collateral is required by law, it is agreed that ten
(10) days notice shall constitute reasonable notification. The Agent is hereby
granted a license to use all Intellectual Property, computer software programs,
data bases, processes and materials used by each Borrower in connection with its
businesses or in connection with the Collateral unless such grant would cause a
breach or default thereunder. The net cash proceeds resulting from the Agent's
exercise of any of the foregoing rights (after deducting all charges, costs and
expenses, including reasonable attorneys' fees) shall be applied by the Agent to
the payment of the Obligations, whether due or to become due, in such order as
the Agent may elect, and pending such payment shall be held as security for such
payment. Each Borrower shall remain liable to the Agent and the Lenders for any
deficiencies. The enumeration of the foregoing rights is not intended to be
exhaustive and the exercise of any right shall not preclude the exercise of any
other rights, all of which shall be cumulative.
9.4 ACTIONS IN CONCERT.
Anything in this Credit Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender shall take any action
to protect or enforce its rights arising out of this Credit Agreement or the
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other Credit Documents (including exercising any rights of setoff) without first
obtaining the prior written consent of Agent, it being the intent of Lenders
that any such action to protect or enforce rights under this Credit Agreement
and the other Credit Documents shall be taken in concert and at the direction or
with the consent of Agent or Majority Lenders.
ARTICLE 10
THE AGENT
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10.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates DBTCo. as its contractual
representative to act as herein specified. Each Lender hereby irrevocably
authorizes, and each holder of a Note or an L/C Participation by the acceptance
of such Note or participation shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Credit
Agreement, the other Credit Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to perform such
duties hereunder and thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent shall hold all Collateral and all
payments of principal, interest, Fees, charges and Expenses received pursuant to
this Credit Agreement or any other Credit Document for the benefit of the
Lenders and the Issuing Banks to be distributed as PROVIDED herein. The Agent
may perform any of its duties hereunder by or through its agents or employees.
(b) The provisions of this ARTICLE 10 are solely for the benefit
of the Agent, the Lenders and the Issuing Banks, and none of the Credit Parties
shall have any rights as a third party beneficiary of any of the provisions
hereof (other than SECTION 10.9). In performing its functions and duties under
this Credit Agreement, the Agent shall act solely as agent of the Lenders and
the Issuing Banks and does not assume and shall not be deemed to have assumed
any obligation toward or relationship of agency or trust with or for any Credit
Party.
10.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement and the other Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted by it as such hereunder or in
connection herewith, unless caused by its or their gross negligence or willful
misconduct. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Credit Agreement or the other
Credit Documents a fiduciary relationship in respect of any Lender or any
Issuing Bank, and nothing in this Credit Agreement or the other Credit
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Credit Agreement or the
other Credit Documents except as expressly set forth herein or therein.
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10.3 LACK OF RELIANCE ON THE AGENT.
(a) Independently and without reliance upon the Agent, any Lender
or any Issuing Bank, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial or other
condition and affairs of each Credit Party in connection with the taking or not
taking of any action in connection herewith and (ii) its own appraisal of (A)
the creditworthiness of each Credit Party, and (B) the Collateral, and, except
as expressly provided in this Credit Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
or any Issuing Bank with any credit or other information with respect thereto,
whether coming into its possession before the initial Credit Event or at any
time or times thereafter.
(b) The Agent shall not be responsible to any Lender or Issuing
Bank for any recitals, statements, information, representations or warranties
herein or in any other Credit Document or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or sufficiency
of this Credit Agreement or any other Credit Document or the financial or other
condition of any Credit Party. The Agent shall not be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Credit Agreement or any other Credit Document,
or the financial condition of any Credit Party, or the existence or possible
existence of any Default or Event of Default, unless specifically requested to
do so in writing by any Lender or Issuing Bank, as the case may be.
10.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the Lenders
at any time. If the Agent shall request instructions from the Lenders with
respect to any act or action (including the failure to act) in connection with
this Credit Agreement, the Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received instructions
from the Majority Lenders (or, to the extent required pursuant to SECTION 11.10,
all Lenders), and the Agent shall not incur liability to any Person by reason of
so refraining. Without limiting the foregoing, no Lender or Issuing Bank shall
have any right of action whatsoever against the Agent as a result of the Agent
acting or refraining from acting hereunder in accordance with the instructions
of the Majority Lenders.
10.5 RELIANCE BY THE AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex or facsimile transmission, E-mail, telecopier message, cablegram, order or
other documentary, teletransmission or telephone message believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person.
The Agent may consult with legal counsel (including counsel for the Borrowers
with respect to matters concerning the Borrowers), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts. The Agent may, but shall not be
required to, rely on Borrowing Base Certificates and any other schedules or
reports delivered to the Agent in connection herewith in determining the amount
of the Borrowing Base and the then eligibility of Accounts and Inventory of the
Borrowers. Reliance thereon by the Agent from time to time shall not be deemed
to limit the right of the Agent to revise advance rates or standards of
eligibility as provided in the definition of the term "Borrowing Base" set forth
herein.
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10.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the
Borrowers, each Lender will reimburse and indemnify the Agent, in proportion to
its respective Commitment, for and against any and all Liabilities, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever (including all Expenses) which may be imposed on, incurred by or
asserted against the Agent, in any way relating to or arising out of this Credit
Agreement or any other Credit Document; PROVIDED that no Lender, shall be liable
for any portion of such Liabilities, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent it is
determined by a judgment of a court that is binding on the Agent, final and not
subject to review on appeal, to be the result of acts or omissions on the part
of the Agent, constituting gross negligence or willful misconduct.
10.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement, the
Loans made by it and the Notes issued to it, and its participation in Letters of
Credit, the Agent shall have the same rights and powers hereunder as any other
Lender or holder of a Note or participation interests and may exercise the same
as though it was not performing the duties specified herein; and the terms
"Lenders," "Majority Lenders," "holders of Notes," or any similar terms shall,
unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, acquire
equity interests in, and generally engage in any kind of banking, trust,
financial advisory or other business with any Borrower or any Affiliate of any
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from any Borrower for services in connection
with this Credit Agreement and otherwise without having to account for the same
to the Lenders or any Issuing Bank.
10.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with the Agent. Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note, shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefore.
10.9 SUCCESSOR AGENT.
(a) The Agent may, upon thirty (30) Business Days' notice to the
Lenders and the Funds Administrator, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this SECTION
10.9) by giving written notice thereof to the Lenders and the Funds
Administrator. Upon such resignation, the Majority Lenders shall have the right,
upon five (5) days' notice to the Funds Administrator, to appoint a successor
Agent. If no successor Agent (i) shall have been so appointed by the Majority
Lenders and (ii) shall have accepted such appointment, within thirty (30) days
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after the retiring Agent's giving of notice of resignation, then, upon five (5)
days' notice, the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent. Resignation of the Agent under this Credit Agreement shall also
constitute a resignation of the Agent under the other Credit Documents and
appointment of a successor Agent shall constitute an appointment of the
successor Agent under all other Credit Documents.
(b) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Credit Agreement. After any retiring Agent's resignation hereunder as
Agent, the provisions of this ARTICLE 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Credit
Agreement. The retiring Agent shall assign to the successor Agent all liens
granted under the Collateral Documents and deliver to the successor Agent all
pledged Collateral in its possession, and take all such other actions, at the
expense of Borrowers, as may be reasonably requested to effect the succession of
the successor Agent under the Credit Documents.
(c) In the event of a material breach by the Agent of its duties
hereunder, the Agent may be removed by the Majority Lenders for cause and the
provisions of this SECTION 10.9 shall apply to the appointment of a successor
Agent. Such removal of the Agent shall also operate, if at the time any such
Person is serving as such, as a removal of DBTCo. and each of its Serving
Affiliates, if any, as an Issuing Bank, subject to SECTION 10.9(d).
(d) No removal of DBTCo., Deutsche Bank, any Lender or any of
their respective Serving Affiliates pursuant to SECTION 10.9(c), as an Issuing
Bank, shall be effective unless its Liabilities under each Letter of Credit are
secured with cash or by letters of credit in form and substance, and issued by
issuers, satisfactory to DBTCo., Deutsche Bank or such Serving Affiliate.
10.10 COLLATERAL MATTERS.
(a) Each Lender and each Issuing Bank authorizes and directs the
Agent to enter into the Collateral Documents for the benefit of such Person.
Each Lender and each Issuing Bank hereby agrees, and each holder of any Note by
the acceptance thereof will be deemed to agree, that, except as otherwise set
forth in SECTION 11.10, any action taken by the Majority Lenders in accordance
with the provisions of this Credit Agreement or the Collateral Documents, and
the exercise by the Majority Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders and all the Issuing Banks. The
Agent is hereby authorized on behalf of all of the Lenders and all the Issuing
Banks, without the necessity of any notice to or further consent from any Lender
or any Issuing Bank from time to time prior to an Event of Default, to take any
action with respect to any Collateral or Collateral Documents which may be
necessary to perfect and maintain perfected the Liens upon the Collateral
granted pursuant to the Collateral Documents.
(b) Each Lender and each Issuing Bank hereby authorize the Agent,
at its option and in its discretion, to release or subordinate, as applicable,
any Lien granted to or held by the Agent upon any Collateral (i) upon
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termination of the Commitments and payment and satisfaction of all of the
Obligations at any time arising under or in respect of this Credit Agreement or
the other Credit Documents or the transactions contemplated hereby or thereby,
(ii) constituting property being sold or disposed of upon receipt of the
proceeds of such sale by the Agent, if the Funds Administrator certifies to the
Agent that such sale or disposition is made in compliance with SECTION 8.5 (and
the Agent may rely conclusively on any such certificate, without further
inquiry) or (iii) that is subject to a Purchase Money Lien permitted under
SECTION 8.4(d) or (iv) if approved, authorized or ratified in writing by the
Majority Lenders, unless such release or subordination is required to be
approved by all of the Lenders pursuant to SECTION 11.10. Upon request by the
Agent at any time, each Lender and each Issuing Bank will confirm in writing the
Agent's authority to release or subordinate particular types or items of
Collateral pursuant to this SECTION 10.10.
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to in
writing by the Majority Lenders (or all Lenders, if such release is required to
be approved by all of the Lenders pursuant to SECTION 11.10), and upon at least
five (5) Business Days' prior written request by the Funds Administrator, the
Agent shall (and is hereby irrevocably authorized by each Lender and each
Issuing Bank, to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Agent for the benefit of the Agent, the
Lenders and the Issuing Banks herein or pursuant hereto upon the Collateral that
was sold or transferred; PROVIDED that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to or create any Liability or entail any consequence other than the
release of such Liens without recourse or warranty and (ii) such release shall
not in any manner discharge, affect or impair the Obligations or any Liens upon
(or obligations of any Borrower or any Credit Party in respect of) all interests
retained by any Borrower or any Credit Party, including the proceeds of the
sale, all of which shall continue to constitute part of the Collateral. In the
event of any sale or transfer of Collateral, or any foreclosure with respect to
any of the Collateral, the Agent shall be authorized to deduct all of the
Expenses reasonably incurred by the Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) The Agent shall have no obligation whatsoever to any Lender,
any Issuing Bank or any other Person to assure that the Collateral exists or is
owned by any Borrower or any Subsidiary thereof or is cared for, protected or
insured or that the Liens granted to the Agent herein or in any of the
Collateral Documents or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise or to continue exercising at
all or in any manner or under any duty of care, disclosure or fidelity any of
the rights, authorities and powers granted or available to the Agent in this
SECTION 10.10 or in any of the Collateral Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Agent may act in any manner it may deem appropriate, in its sole
discretion, given the Agent's own interest in the Collateral as one of the
Lenders and that the Agent shall have no duty or liability whatsoever to the
Lenders, except for its gross negligence or willful misconduct.
10.11 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action with
respect to a Default or Event of Default as shall be directed by the Majority
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Lenders; PROVIDED that until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable and in the best interests of the Lenders and the Issuing Banks;
and, further, PROVIDED that the Agent shall not be required under any
circumstances to take any action that, in its judgment, (A) is contrary to any
provision of the Credit Documents or applicable law or (B) will expose it to any
liability or expense against which it has not been indemnified to its
satisfaction. If any indemnity furnished to Agent for any purpose shall, in the
opinion of Agent, be insufficient or become impaired, Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
10.12 DELIVERY OF INFORMATION.
The Agent shall not be required to deliver to any Lender or any Issuing
Bank originals or copies of any documents, instruments, notices, communications
or other information received by the Agent from the Funds Administrator, any
Borrower, any Subsidiary of any Borrower, the Majority Lenders, any Lender, any
Issuing Bank or any other Person under or in connection with this Credit
Agreement or any other Credit Document except (a) as specifically provided in
this Credit Agreement or any other Credit Document and (b) as specifically
requested from time to time in writing by any Lender, or any Issuing Bank with
respect to a specific document, instrument, notice or other written
communication received by and in the possession of the Agent at the time of
receipt of such request and then only in accordance with such specific request.
ARTICLE 11
MISCELLANEOUS
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11.1 SUBMISSION TO JURISDICTION; WAIVERS.
EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NONEXCLUSIVE 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, IN EACH CASE LOCATED IN NEW YORK, 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;
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(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 SUCH
BORROWER AT THE ADDRESS OF THE FUNDS ADMINISTRATOR SET FORTH IN SECTION 11.5 OR
AT SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO;
(d) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
OR ANY LENDER TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY BORROWER OR THE FUNDS ADMINISTRATOR, OR THEIR RESPECTIVE PROPERTY IN
THE COURTS OF OTHER JURISDICTIONS.
(e) WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY BE RELEVANT
TO, SUCH ACTION OR PROCEEDING; AND
(f) WAIVES DUE DILIGENCE, DEMAND, PRESENTMENT AND PROTEST AND ANY
NOTICES THEREOF AS WELL AS NOTICE OF NONPAYMENT.
11.2 JURY TRIAL.
THE FUNDS ADMINISTRATOR, THE BORROWERS, THE AGENT, EACH ISSUING BANK
AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE OTHER CREDIT DOCUMENTS OR
ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
11.3 GOVERNING LAW.
THE RIGHTS AND DUTIES OF THE FUNDS ADMINISTRATOR, THE BORROWERS, THE
AGENT, EACH ISSUING BANK AND THE LENDERS UNDER THIS CREDIT AGREEMENT, THE NOTES
(INCLUDING MATTERS RELATING TO THE MAXIMUM PERMISSIBLE RATE) AND THE OTHER
CREDIT DOCUMENTS SHALL PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION
5-1401 BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK), WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES.
11.4 DELAYS; PARTIAL EXERCISE OF REMEDIES.
No delay or omission of the Agent, any Issuing Bank or any Lender to
exercise any right or remedy hereunder or under any of the other Credit
Documents, whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a waiver of any
such Event of Default. No single or partial exercise by the Agent, any Issuing
Bank or any Lender of any right or remedy shall preclude any other or further
exercise thereof, or preclude any other right or remedy.
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11.5 NOTICES.
Except as otherwise PROVIDED herein, all notices and correspondence
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, or by overnight delivery service, with all charges prepaid,
to the following addresses, if to the Agent, or any of the Lenders, then to
Deutsche Bank Trust Company Americas, 000 Xxxxx Xxxxxxxxx Xxxxx, Xxxx Xxxx
XXX00-0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Portfolio Manager, Structured
Debt, if to any Issuing Bank, to the address specified in the applicable L/C
Application with a copy to the Agent, Attn: Xxxxx Xxxxxxx, facsimile number
(000) 000-0000, and if to the Funds Administrator or any Borrower, then to the
Funds Administrator at Xxxxx Nurseries, Inc., 00000 Xxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attention: Chief Financial Officer or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to the
Agent, or any of the Lenders, at (000) 000-0000, if to an Issuing Bank, as
specified in the applicable L/C Application with a copy to the Agent, Attn:
Xxxxx Xxxxxxx, facsimile number (000) 000-0000, and if to the Funds
Administrator or any Borrower at (000) 000-0000. All such notices and
correspondence shall be deemed given (a) if sent by certified or registered
mail, three (3) Business Days after being postmarked, (b) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused and (c) if sent by facsimile transmission, when receipt of such
transmission is acknowledged except, in the case of a notice from the Agent to
the Funds Administrator under SECTION 9.2, such notice shall be deemed given
when sent by facsimile transmission.
11.6 ASSIGNABILITY.
(a) The Borrowers shall not have the right to assign this Credit
Agreement or any interest therein except with the prior written consent of the
Agent and all the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the
account of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased costs to the
Borrowers.
(c) Each Lender may assign to one or more banks, other financial
institutions or investment funds all or a portion of its rights and obligations
under this Credit Agreement, the Notes and the other Credit Documents; PROVIDED
that, except in the case of an assignment to a Federal Reserve Bank (which may
be made without condition or restriction), (i) such assignment shall be for a
fixed and not varying percentage of the assigning Lender's Loans, L/C
Participations and Commitment, (ii) if such assignment is not to another Lender,
or to an Affiliate of the assigning Lender or another Lender or an Approved Fund
of any Lender, the Agent shall consent to, and so long as no Default or Event of
Default shall have occurred and be continuing, the Funds Administrator shall
consent to, such assignment, (iii) for each such assignment, the parties thereto
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Assumption Agreement, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500 payable by such assignee to Agent and (iv) except for
any assignment covering all or the remaining portion of an assigning Lender's
rights and obligations under this Credit Agreement, the Notes and the other
Credit Documents, no such assignment shall be for less than $5,000,000 of the
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assigning Lender's Commitment, unless such assignment is to a then-current
holder of a Note. Upon such execution and delivery of the Assignment and
Assumption Agreement to the Agent, from and after the date specified as the
effective date in the Assignment and Assumption Agreement (the "ACCEPTANCE
DATE"), (A) the assignee thereunder shall be a party hereto, and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Assumption Agreement, such assignee shall have the rights and
obligations of a Lender hereunder and (B) the assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Assumption Agreement, relinquish its rights (other than
any rights it may have pursuant to SECTION 11.8, which rights will survive) and
be released from its obligations (other than any obligations it may have
pursuant to SECTION 11.7, which obligations will survive under this Credit
Agreement (and, in the case of an Assignment and Assumption Agreement covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Credit Agreement, such Lender shall cease to be a party hereto).
(d) By executing and delivering an Assignment and Assumption
Agreement, the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Assumption Agreement, the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or any other Credit Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Credit Agreement, the Notes, or any other Credit Document; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower, any
other Credit Parties or any Issuing Bank, the value of the Collateral, or the
performance or observance by (A) any Borrower or any other Credit Parties of any
of its obligations under this Credit Agreement or any other Credit Document, or
(B) any Issuing Bank of any of its obligations under any Letter of Credit; (iii)
such assignee confirms that it has received a copy of this Credit Agreement,
together with copies of the Financial Statements referred to in SECTION 7.1 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption
Agreement; (IV) such assignee will continue, independently and without reliance
upon the Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, to make its
own credit decisions in taking or not taking action under this Credit Agreement;
(V) such assignee appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under this Credit Agreement and the
other Credit Documents as are delegated to the Agent by their terms, together
with such powers as are reasonably incidental thereto; and (VI) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Credit Agreement are required to be
performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in SECTION
11.5 a copy of each Assignment and Assumption Agreement delivered to and
accepted by it and a 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 (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Funds Administrator, the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register and copies of each Assignment
and Assumption shall be available for inspection by any Borrower or any Lender
at any reasonable time and from time to time upon reasonable prior notice.
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(f) Upon its receipt of an Assignment and Assumption Agreement
executed by an assigning Lender, together with the Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Assumption Agreement has
been completed and is in substantially the form of EXHIBIT A hereto, (i) accept
such Assignment and Assumption Agreement, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Funds
Administrator. Within five (5) Business Days after its receipt of such notice,
the Borrowers shall execute and deliver to the Agent in exchange for the
surrendered Note or Notes a new Note or Notes to the order of the assignee in an
amount equal to the Commitment assumed by it pursuant to such Assignment and
Assumption Agreement and, if the assigning Lender has retained a Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
re-evidence the Indebtedness outstanding under the old Note or Notes and shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the Closing Date and shall
otherwise be in substantially the form of the Note or Notes subject to such
assignments.
(g) Each Lender may sell participations (without the consent of
the Agent, any Borrower or any other Lender) to one or more parties in or to all
or a portion of its rights and obligations under this Credit Agreement
(including all or a portion of its Commitment, the Loans owing to it and the
Note or Notes held by it); PROVIDED that (i) such Lender's obligations under
this Credit Agreement (including its Commitment to the Borrowers hereunder)
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Credit
Agreement, (iv) the Funds Administrator, the Borrowers, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Credit Agreement
and such Notes and (v) such Lender shall not transfer, grant, assign or sell any
participation under which the participant shall have rights to approve any
amendment or waiver of this Credit Agreement except to the extent such amendment
or waiver would (A) extend the final maturity date or the date for the payments
of any installment of fees or principal or interest of any Loans or Letter of
Credit reimbursement obligations in which such participant is participating; (B)
reduce the amount of any installment of principal of the Loans or the amount of
any drawing under any Letter of Credit in which such participant is
participating; (C) except as otherwise expressly provided in this Credit
Agreement, reduce the interest rate applicable to the Loans or the amount of any
drawing under any Letter of Credit in which such participant is participating;
or (D) except as otherwise expressly provided in this Credit Agreement, reduce
any Fees payable hereunder in which such participant participates. Each Lender
selling or granting a participation, including a participation sold pursuant to
SECTION 2.10, shall indemnify the Borrowers and the Agent for any Taxes and
Liabilities that either may sustain as a result of such Lender's failure to
withhold and pay any Taxes applicable to payments by such Lender to its
participant in respect of such participation.
(h) Each Lender agrees that, without the prior written consent of
the Borrowers and the Agent, it will not make any assignment hereunder in any
manner or under any circumstances that would require registration or
qualification of, or filings in respect of, any Loan, Note or other Obligation
under the securities laws of the United States of America or of any
jurisdiction.
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(i) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may disclose any
information in its possession regarding any Borrower, subject to the
confidentiality provisions of SECTION 11.7.
11.7 CONFIDENTIALITY.
Each Lender agrees that it will use its reasonable best efforts not to
disclose without the prior consent of the Borrowers (other than to its
employees, auditors, advisors, Affiliates and counsel, or to another Lender if
the disclosing Lender or such disclosing Lender's holding or parent company in
its sole discretion determines that any such party should have access to such
information) any information with respect to any Borrower or any of its
Subsidiaries, which is furnished pursuant to this Credit Agreement, PROVIDED
that any Lender may disclose any such information (a) as has become generally
available to the public, (b) as may be required or appropriate in any report,
statement or testimony submitted to or examination conducted by any Governmental
Authority having or claiming to have jurisdiction over such Lender, (c) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation, (d) in order to comply with any Requirement of
Law, (e) to any prospective or actual transferee or participant in connection
with any contemplated transfer or participation of any of the Notes or
Commitments or any interest therein by such Lender provided that such Person
agrees to be bound by the confidentiality provisions hereof, (f) to other
financial institutions with respect to which the respective Lender has a
contractual relationship in accordance with such Lender's regular banking
procedures, PROVIDED that each such other financial institution agrees to be
bound by the confidentiality provisions contained in this SECTION 11.7, (g) to
any nationally recognized rating agency that requires access to information
regarding the respective Lender's investment portfolio in connection with such
rating agency's issuance of ratings with respect to such Lender, PROVIDED that
such Lender advises such rating agency of the confidential nature of such
information, (h) as may be required or appropriate in connection with
protecting, preserving, exercising or enforcing (or planning to exercise or
enforce) any of its rights in, under or related to the Collateral or the Credit
Documents and (i) as may be required or appropriate in consulting with any
Person with respect to any of the foregoing matters; provided that, unless
specifically prohibited by applicable law or court order, each Lender shall use
its best efforts to notify Borrowers of any request by any Governmental
Authority or representative thereof (other than any such request in connection
with any examination of the financial condition of such Lender by such
Governmental Authority) for disclosure of any such non-public information prior
to disclosure of such information and shall use its best efforts to afford
Borrowers the opportunity to object to such disclosure. Notwithstanding anything
to the contrary set forth herein or in any other written or oral understanding
or agreement to which the parties hereto are parties or by which they are bound,
the parties acknowledge and agree that (i) any obligations of confidentiality
contained herein and therein do not apply and have not applied from the
commencement of discussions between the parties to the tax treatment and tax
structure of the transactions contemplated hereby, and (ii) each party hereto,
including the Agent, each Lender, each Borrower and each of their respective
Affiliates (and each of their respective employees, representatives, or other
agents), are hereby authorized to disclose to any and all Persons, without
limitation of any kind, the "tax treatment" and "tax structure" (in each case,
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within the meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to any such Person relating to such tax
treatment and tax structure; provided, however, that each party recognizes that
the privilege each has to maintain, in its sole discretion, the confidentiality
of a communication relating to the transaction contemplated hereby, including a
confidential communication with its attorney or a confidential communication
with a federally authorized tax practitioner under section 7525 of the Code, is
not intended to be affected by the foregoing; provided further that, with
respect to any document or similar item that in either case contains information
concerning the tax treatment or tax structure of the transactions contemplated
hereby as well as other information, this authorization shall only apply to such
portions of the document or similar item that relate to the tax treatment or tax
structure of the Loans and transactions contemplated hereby.
11.8 INDEMNIFICATION.
The Borrowers shall and hereby agree jointly and severally to
indemnify, defend and hold harmless the Agent, each Issuing Bank and each of the
Lenders and their respective directors, officers, agents, employees, counsel,
advisors and Affiliates from and against (a) any and all losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred by any of
them (except to the extent that it is finally judicially determined to have
resulted from their own gross negligence or willful misconduct) (including, but
not limited to, reasonable attorneys' fees and expert fees) (collectively,
"LOSSES") arising out of or by reason of any litigations, investigations, claims
or proceedings which arise out of or are in any way related to (i) this Credit
Agreement or the transactions contemplated hereby; (ii) the issuance of Letters
of Credit; (iii) the failure of an Issuing Bank to honor a drawing under any
Letter of Credit, as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority; (iv) any actual or proposed use by any Borrower of (A)
the proceeds of any Loans or (B) any Letter of Credit; or (v) the Agent's, the
Lenders' or any Issuing Bank's entering into this Credit Agreement, the other
Credit Documents or any other agreements and documents relating thereto,
including amounts paid in-settlement, court costs and the fees and disbursements
of counsel incurred in connection with any such litigation, investigation, claim
or proceeding or any advice rendered in connection with any of the foregoing;
and (b) any Losses in any way related to this Credit Agreement, the Borrowers,
any Facility, any Real Estate, or any other location where any Credit Party has
arranged for disposition of Hazardous Materials that arise directly or
indirectly from or in connection with any Environmental Laws. If and to the
extent that the Obligations of the Borrowers hereunder are unenforceable for any
reason, the Borrowers hereby jointly and severally agree to make the maximum
contribution to the payment and satisfaction of such Obligations which is
permissible under applicable law. The Borrowers' joint and several Obligations
hereunder shall survive any termination of this Credit Agreement and the other
Credit Documents and the payment in full of the Obligations, and are in addition
to, and not in substitution of, any other of its Obligations. In addition, the
Borrowers shall, upon demand, pay to the Agent and each Lender all costs and
expenses (including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Agent or such Lender in (i) enforcing or
defending its rights under or in respect of this Credit Agreement, the other
Credit Documents or any other document or instrument now or hereafter executed
and delivered in connection herewith, (ii) collecting the Loans, (iii)
foreclosing or otherwise collecting upon the Collateral or any part thereof and
(iv) obtaining any legal, accounting or other advice in connection with any of
the foregoing.
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11.9 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
This Credit Agreement and the other Credit Documents constitute the
entire agreement among the Funds Administrator, the Borrowers, the Agent and the
Lenders (in their capacities as such and not in their capacity, if any, as an
Issuing Bank), supersedes any prior agreements among them, and shall bind and
benefit the Funds Administrator, the Borrowers, the Agent and the Lenders and
their respective successors and permitted assigns.
11.10 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Credit Agreement or any
other Credit Document, nor consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders (or by the Agent on their behalf), or if the
Lenders shall not be parties thereto, by the parties thereto and consented to by
the Majority Lenders (or by the Agent on their behalf), and each such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; PROVIDED, that, notwithstanding the foregoing:
(a) no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, (i) amend or waive, or consent to any departure from,
the provisions of CLAUSE (c) of the definition of the term Borrowing Base or
(ii) include the Sun Gro Canadian Tax Receivable in the Borrowing Base.
(b) no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following: (i) increase the Commitments
of the Lenders or subject the Lenders to any additional obligations (except
pursuant to an increase in Commitments or obligations arising under SECTION 11.6
hereof); (ii) except as otherwise expressly provided in this Credit Agreement,
reduce the principal of, or interest on, the Notes or any drawing under any
Letter of Credit or any fees hereunder; (iii) postpone any date fixed for any
payment in respect of principal of, or interest on, the Notes or for the
reimbursement of any drawing under any Letter of Credit or any fees hereunder;
(iv) change the percentage of the Commitments, or any minimum requirement
necessary for the Lenders or the Majority Lenders to take any action hereunder;
(v) amend or waive this SECTION 11.10, or change the definition of Majority
Lenders; or (vi) except in connection with the financing, refinancing, sale or
other disposition of any Collateral of the Borrowers permitted under this Credit
Agreement, release Agent's Liens on all or substantially all of the Collateral
or release all or substantially all of Holdings and any Subsidiary Guarantor
from their obligations under the Holding's Guaranty and any Subsidiary Guaranty
and, PROVIDED that no amendment, waiver or consent affecting the rights or
duties of the Agent or any Issuing Bank under, (x) in the case of the Agent, any
term or provision of this Credit Agreement and (y) in the case of any Issuing
Bank, (1) SECTIONS 3.3, 3.4, 3.6 AND 3.8 of this Credit Agreement, (2) any
Letter of Credit or (3) any L/C Application, shall in any event be effective,
unless in writing and signed by the Agent or such Issuing Bank, as applicable,
in addition to the Lenders required hereinabove to take such action.
Notwithstanding any of the foregoing to the contrary, the consent of the
Borrowers shall not be required for any amendment, modification or waiver of the
provisions of ARTICLE 10 (other than the provisions of SECTION 10.9). In
addition, the Borrowers and the Lenders hereby authorize the Agent to modify
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this Credit Agreement by unilaterally amending or supplementing SCHEDULE A from
time to time in the manner requested by the Borrowers, the Agent or any Lender
in order to reflect any assignments or transfers of the Loans as provided for
hereunder; however, PROVIDED that the Agent shall promptly deliver a copy of any
such modification to the Funds Administrator and each Lender.
(c) If a Defaulting Lender exists or, in connection with any
proposed amendment, modification, waiver or termination (a "Proposed Change")
requiring the consent of all affected Lenders, the consent of Majority Lenders
is obtained, but the consent of other Lenders whose consent is required is not
obtained (any such Lender whose consent is not obtained being referred to as a
"NON-CONSENTING LENDER"), then, in respect of any Defaulting Lender or
Non-Consenting Lender (so long as Agent is not a Non-Consenting Lender), at
Funds Administrator's request, Agent or a Person reasonably acceptable to Agent
shall have the right with Agent's consent and in Agent's sole discretion (but
shall have no obligation) to purchase from such Defaulting Lender or
Non-Consenting Lender, as applicable, and such Defaulting Lender or
Non-Consenting Lender, as applicable, agrees that it shall, upon Agent's
request, sell and assign to Agent or such Person, all of the Commitments of such
Defaulting Lender or Non-Consenting Lender, as applicable, for an amount equal
to the principal balance of all Loans held by such Defaulting Lender or
Non-Consenting Lender, as applicable, and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment and Assumption Agreement.
11.11 NONLIABILITY OF AGENT AND LENDERS.
The relationship between the Borrowers and the Lenders and the Agent
shall be solely that of borrower and lender. Neither the Agent, any Lender or
any Issuing Bank shall have any fiduciary responsibilities to the Funds
Administrator or any Borrower. Neither the Agent, any Lender or any Issuing Bank
undertakes any responsibility to the Borrowers to review or inform the Borrowers
of any matter in connection with any phase of any Borrowers' business or
operations.
11.12 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
11.13 EFFECTIVENESS.
This Credit Agreement shall become effective on the date on which all
of the parties hereto shall have signed a copy hereof (whether the same or
different copies) and shall have delivered the same to the Agent pursuant to
SECTION 11.5 or, in the case of the Lenders, shall have given to the Agent
written or facsimile notice (actually received) at such office that the same has
been signed and mailed to it.
11.14 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement or
the Notes or the other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
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11.15 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this Credit
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Credit Agreement.
11.16 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent and
the Lenders hereby agree that all agreements among them under this Credit
Agreement and the other Credit Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Agent or any Lender for the use, forbearance, or detention of the money
loaned to the Borrowers and evidenced hereby or thereby or for the performance
or payment of any covenant or obligation contained herein or therein, exceed the
Highest Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance any Lender should ever receive anything
of value deemed interest by applicable law which would exceed the Highest Lawful
Rate, such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then outstanding
Obligations and not to the payment of interest, or if such excessive interest
exceeds the principal unpaid balance then outstanding hereunder and such other
then outstanding Obligations, such excess shall be refunded to the Borrowers.
All sums paid or agreed to be paid to the Agent or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of the
Borrowers to the Agent or any Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such Indebtedness until payment in full so that the actual rate of
interest on account of all such Indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such Indebtedness. The terms and provisions
of this Section shall control every other provision of this Credit Agreement,
the other Credit Documents and all agreements among the Borrowers, the Agent and
the Lenders.
11.17 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender may have under applicable law, each Lender shall, subject to SECTION 9.4,
upon the occurrence and during the continuance of any Event of Default and
whether or not such Lender has made any demand or the Obligations of any Credit
Party are matured, have the right to appropriate and apply to the payment of the
Obligations of such Credit Party all deposits (general or special, time or
demand, provisional or final) then or thereafter held by and other Indebtedness
or property then or thereafter owing by such Lender, including any and all
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amounts in any Depository Account, the DBT Account or the Disbursement Account.
For purposes of this SECTION 11.17, the Obligations of a Credit Party to a
Lender shall include, as fully as though such Obligations were the direct
Obligations of such Credit Party to such Lender, the Obligations of such Credit
Party in which such Lender has an L/C Participation, in each case, to the extent
of such participation. No Lender may exercise such rights without the prior
written consent of Agent or the Majority Lenders pursuant to SECTION 9.4. Any
amount received as a result of the exercise of such rights shall be reallocated
as set forth in SECTION 2.10.
11.18 DEFAULTING LENDER.
(a) Unless the Agent shall have received notice from a Lender,
prior to the time specified in such Section, that such Lender will not make
available to the Agent a Loan required to be made by it pursuant to SECTION 2.2
or its L/C Participation Funding Amount pursuant to SECTION 3.6(b)(ii), the
Agent may assume that such Lender has made such amounts available to the Agent
in accordance with such Sections and the Agent in its sole discretion may, in
reliance upon such assumption, make available to the Borrowers or the applicable
Issuing Bank a corresponding amount on behalf of such Lender.
(b) If any amount referred to in SUBSECTION (a) of this SECTION
11.18 or in SECTION 2.3 is not made available to the Agent by a Lender (a
"DEFAULTING LENDER") and the Agent has made such amount available to the
Borrowers or an Issuing Bank, the Agent shall be entitled to recover such amount
on demand from such Defaulting Lender together with interest as hereinafter
provided. If such Defaulting Lender does not pay such amount forthwith upon the
Agent's demand therefore, the Agent shall promptly notify the Funds
Administrator and the Borrowers shall immediately (but in no event later than
five Business Days after such demand) pay such amount to the Agent together with
interest calculated as hereinafter provided. The Agent shall also be entitled to
recover from such Defaulting Lender and/or the Borrowers, as the case may be,
(I) interest on such amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrowers to the
date such amount is recovered by the Agent, at a rate per annum equal to either
(A) if paid by such Defaulting Lender, the overnight Federal Funds Rate or (B)
if paid by the Borrowers, the then applicable rate of interest, calculated in
accordance with SECTION 4.1 OR SECTION 4.2, PLUS (ii) in each case, an amount
equal to any costs (including legal expenses) and losses incurred as a result of
the failure of such Defaulting Lender to provide such amount as provided in this
Credit Agreement. Nothing herein shall be deemed to relieve any Lender from its
duty to fulfill its obligations hereunder or to prejudice any rights which the
Borrowers or any Issuing Bank, may have against any Lender as a result of any
default by such Lender hereunder, including the right of the Borrowers to seek
reimbursement from any Defaulting Lender for any amounts paid by the Borrowers
under CLAUSE (ii) above on account of such Defaulting Lender's default.
(c) (i) Notwithstanding anything contained herein to the
contrary, so long as any Lender is a Defaulting Lender or has rejected
its Commitment, the Agent shall not be obligated to transfer to such
Lender (A) any payments made by the Borrowers to the Agent for the
benefit of such Lender or (B) any amounts contemplated by SECTION
2.3(b)(i); and, such Lender shall not be entitled to the sharing of any
payments pursuant to SECTION 2.10. Amounts otherwise payable to such
Lender under SECTION 2.10 shall instead be paid to the Agent.
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(ii) For purposes of voting or consenting to matters with
respect to the Credit Documents and determining Proportionate Share,
such Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero (0).
(iii) This SECTION 11.18(c) shall remain effective with
respect to a Defaulting Lender until (a) the Obligations under this
Credit Agreement shall have been declared or shall have become
immediately due and payable or (b) the Majority Lenders, the Agent and
the Borrowers shall have waived such Lender's default in writing.
(iv) No Lender's Commitment shall be increased or otherwise
affected, and performance by the respective Borrowers shall not be
excused, by the operation of this SECTION 11.18(c). Any payments of
principal or interest which would, but for this SUBSECTION (c), be paid
to any Lender, shall be paid to the Lenders who shall not be in default
under their respective Commitments and who shall not have rejected any
Commitment, for application to the Loans then due and payable or to the
other Obligations then due and payable or to provide cash collateral to
secure Obligations not then due and payable in such manner and order as
shall be determined by the Agent.
11.19 RIGHTS CUMULATIVE.
Each of the rights and remedies of the Agent, each Issuing Bank and the
Lenders under the Credit Documents shall be in addition to all of their other
rights and remedies under the Credit Documents and applicable law, and nothing
in the Credit Documents shall be construed as limiting any such rights or
remedies.
11.20 THIRD PARTY BENEFICIARIES.
Each Issuing Bank shall be deemed to be a third party beneficiary of
its rights under this Credit Agreement, PROVIDED that, except as otherwise
provided in SECTION 11.10, such rights may be amended or waived, and any
departure therefrom by any Credit Party consented to, without their respective
consents.
11.21 JOINT AND SEVERAL LIABILITY OF BORROWERS.
(a) Each of the Borrowers shall be jointly and severally liable
hereunder and under each of the other Credit Documents with respect to all
Obligations, regardless of which of the Borrowers actually receives the proceeds
of the Loans or the benefit of any other extensions of credit hereunder, or the
manner in which the Funds Administrator, the Borrowers, the Agent, the Lenders
or any of the Issuing Banks account therefore in their respective books and
records. In furtherance and not in limitation of the foregoing, (i) each
Borrower's obligations and liabilities with respect to proceeds of Loans which
it receives or Letters of Credit issued for its account, and related fees, costs
and expenses, and (ii) each Borrower's obligations and liabilities arising as a
result of the joint and several liability of the Borrowers hereunder with
respect to proceeds of Loans received by, or Letters of Credit issued for the
account of, any of the other Borrowers, together with the related fees, costs
and expenses, shall be separate and distinct obligations, both of which are
primary obligations of such Borrower. Neither the joint and several liability
of, nor the Liens granted to the Agent under the Collateral Documents by, any of
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the Borrowers shall be impaired or released by (A) the failure of the Agent, any
Lender or any Issuing Bank, any successors or assigns thereof, or any holder of
any Note or any of the Obligations to assert any claim or demand or to exercise
or enforce any right, power or remedy against the Funds Administrator, any
Borrower, any Subsidiary of any Borrower, any other Person, the Collateral or
otherwise; (B) any extension or renewal for any period (whether or not longer
than the original period) or exchange of any of the Obligations or the release
or compromise of any obligation of any nature of any Person with respect
thereto; (C) the surrender, release or exchange of all or any part of any
property (including without limitation the Collateral) securing payment,
performance and/or observance of any of the Obligations or the compromise or
extension or renewal for any period (whether or not longer than the original
period) of any obligations of any nature of any Person with respect to any such
property; (D) any action or inaction on the part of the Agent, any Lender or any
Issuing Bank, or any other event or condition with respect to any other
Borrower, including any such action or inaction or other event or condition,
which might otherwise constitute a defense available to, or a discharge of, such
Borrower, or a guarantor or surety of or for any or all of the Obligations; and
(E) any other act, matter or thing (other than payment or performance of the
Obligations) which would or might, in the absence of this provision, operate to
release, discharge or otherwise prejudicially affect the obligations of such
Borrower or any other Borrower.
(b) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, to the extent the joint obligations of
a Borrower shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of Section 548 of Chapter 11 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law) then the
Obligations of each Borrower hereunder shall be limited to the maximum amount
that is permissible under applicable law (whether federal or state and
including, without limitation, the federal Bankruptcy Code).
(c) To the extent that any Borrower shall make a payment under
this SECTION 11.21 of all or any of the Obligations (other than Loans made to
that Borrower for which it is primarily liable) (a "Guarantor Payment") that,
taking into account all other Guarantor Payments then previously or concurrently
made by any other Borrower, exceeds the amount that such Borrower would
otherwise have paid if each Borrower had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Borrower's
"Allocable Amount" (as defined below) (as determined immediately prior to such
Guarantor Payment) bore to the aggregate Allocable Amounts of each of the
Borrowers as determined immediately prior to the making of such Guarantor
Payment, then, following indefeasible payment in full in cash of the Obligations
and termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment. As of
any date of determination, the "Allocable Amount" of any Borrower shall be equal
to the maximum amount of the claim that could then be recovered from such
Borrower under this SECTION 11.21 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law. This SECTION 11.21(c) is intended only to
define the relative rights of Borrowers and nothing set forth in this SECTION
11.21(c) is intended to or shall impair the obligations of Borrowers, jointly
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and severally, to pay any amounts as and when the same shall become due and
payable in accordance with the terms of this Credit Agreement, including SECTION
11.21(a). Nothing contained in this SECTION 11.21(c) shall limit the liability
of any Borrower to pay the Loans made directly or indirectly to that Borrower
and accrued interest, Fees and Expenses with respect thereto for which such
Borrower shall be primarily liable. The parties hereto acknowledge that the
rights of contribution and indemnification hereunder shall constitute assets of
the Borrower to which such contribution and indemnification is owing. The rights
of the indemnifying Borrowers against other Credit Parties under this SECTION
11.21(c) shall be exercisable upon the full and indefeasible payment of the
Obligations and the termination of the Commitments.
(d) The liability of Borrowers under this SECTION 11.21 is in
addition to and shall be cumulative with all liabilities of each Borrower to
Agent and Lenders under this Credit Agreement and the other Credit Documents to
which such Borrower is a party, without any limitation as to amount.
11.22 APPOINTMENT AND AUTHORIZATION OF FUNDS ADMINISTRATOR.
(a) Each Borrower hereby designates, appoints, authorizes and
empowers Company as its agent to act as specified in the capacity of Funds
Administrator under this Credit Agreement and each of the other Credit Documents
and Company hereby acknowledges such designation, authorization and empowerment,
and accepts such appointment. Each Borrower hereby irrevocably authorizes and
directs the Funds Administrator to take such action on its behalf under the
respective provisions of this Credit Agreement and the other Credit Documents,
and any other instruments, documents and agreements referred to herein or
therein, and to exercise such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of the Funds
Administrator by the respective terms and provisions hereof and thereof, and
such other powers as are reasonably incidental thereto, including, without
limitation, to take the following actions for and on such Borrower's behalf:
(i) to submit on behalf of each Borrower Notices of Borrowing,
Notices of Conversion and Notices of Continuation to Agent in
accordance with the provisions of this Credit Agreement, each such
notice to be submitted by the Funds Administrator to Agent as soon as
practicable after its receipt of a request to do so from a Borrower;
and
(ii) to submit on behalf of each Borrower requests for the
issuance of Letters of Credit in accordance with the provisions of this
Credit Agreement, each such request for the issuance of a Letter of
Credit to be submitted by the Funds Administrator as soon as
practicable after its receipt of a request to do so from any Borrower.
The Funds Administrator is further authorized and directed by each of
the Borrowers to take all such actions on behalf of such Borrower
necessary to exercise the specific powers granted in CLAUSES (i) and
(ii) above and to perform such other duties hereunder and under the
other Credit Documents, and deliver such documents as delegated to or
required of the Funds Administrator by the terms hereof or thereof.
Agent and each Lender may regard any notice or other communication
pursuant to any Credit Documents from the Funds Administrator as a
notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or
Borrowers hereunder to the Funds Administrator on behalf of such
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Borrower or Borrowers. Each Borrower agrees that each notice, election,
representation and warranty, covenant, agreement and undertaking made
on its behalf by the Funds Administrator shall be deemed for all
purposes to have been made by such Borrower and shall be binding upon
and enforceable against such Borrower to the same extent as if the same
had been made directly by such Borrower.
(b) The Funds Administrator may perform any of its duties
hereunder or under any of the other Credit Documents by or through its agents or
employees.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
BORROWERS:
----------
XXXXX NURSERIES, INC.,
a California corporation, individually, as
a Borrower and as Funds Administrator
By: /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Title: Chief Financial Officer, Secretary
and Treasurer
ENVIRO-SAFE LABORATORIES, INC., a Florida
corporation
By: /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Title: Chief Financial Officer, Secretary
and Treasurer
XXXXX SGUS INC., a Nevada corporation
By: /S/ XXXXXXX X. XXXXXXXX
--------------------------------------
Title: Chief Financial Officer, Secretary
and Treasurer
AGENT:
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Agent
By: /s/ ILLEGIBLE
--------------------------------------
Title: Director
Annex II
LENDERS:
--------
DEUTSCHE BANK TRUST COMPANY AMERICAS
By: ILLEGIBLE
--------------------------------------
Title: Director
FLEET CAPITAL CORPORATION, as Co-
Syndication Agent, LC Issuing Bank and
Lender
By: ILLEGIBLE
--------------------------------------
Title: Executive Vice President
XXXXXX TRUST AND SAVINGS BANK, as Co-
Documentation Agent and Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
LASALLE BUSINESS CREDIT, LLC, as Co-
Syndication Agent and Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
XXXXX FARGO BANK, N.A., as Co-
Documentation Agent and Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
2
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK, B.A. "RABOBANK
INTERNATIONAL", NEW YORK BRANCH, as Lender
By: ILLEGIBLE
--------------------------------------
Title: Executive Director
By: /S/ XXX XXXXX
--------------------------------------
Title: Managing Director
PNC BANK, NATIONAL ASSOCIATION, as Lender
By: /S/ XXXXXXX X. XXXX
--------------------------------------
Title: Vice President
GMAC COMMERCIAL FINANCE LLC, as Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC., as
Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
WHITEHALL BUSINESS CREDIT CORPORATION, as
Lender
By: ILLEGIBLE
--------------------------------------
Title: Vice President
3
NATIONAL CITY BANK, as Lender
By: /S/ XXX XXXXXXX
--------------------------------------
Title: Vice President
4
