EXECUTION COPY
Exhibit 10.14B
PAMECO CORPORATION
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$80,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MARCH 10, 1998
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GENERAL ELECTRIC CAPITAL CORPORATION,
AS AGENT
TABLE OF CONTENTS
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PAGE
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SECTION 1. DEFINITIONS.............................................. 1
1.1 Defined Terms.............................................. 1
1.2 Other Definitional Provisions.............................. 21
SECTION 2. THE AMOUNT AND TERMS OF THE TERM LOAN
FACILITY................................................. 22
2.1 Term Loan Commitments...................................... 22
2.2 Term Loan Notes............................................ 22
2.3 Procedure for Term Loan Borrowing.......................... 23
2.4 Repayment of Term Loans.................................... 23
2.5 Use of Proceeds of Term Loans.............................. 25
SECTION 3. THE AMOUNT AND TERMS OF THE REVOLVING CREDIT
FACILITY................................................. 25
3.1 Revolving Credit Commitments............................... 25
3.2 Revolving Credit Notes..................................... 25
3.3 Procedure for Revolving Credit Borrowings.................. 26
3.4 Use of Proceeds of Revolving Credit Loans.................. 27
SECTION 4. AMOUNT AND TERMS OF SWINGLINE SUB-FACILITY............... 27
4.1 Swingline Loans............................................ 27
4.2 Swingline Note............................................. 27
4.3 Procedure for Swingline Borrowings......................... 27
4.4 Participations............................................. 28
4.5 Use of Proceeds of Swingline Loans......................... 28
SECTION 5. AMOUNT AND TERMS OF LETTER OF CREDIT
SUB-FACILITY............................................. 28
5.1 Letters of Credit.......................................... 29
5.2 Fees, Expenses and Indemnification in Respect of
Letter of Credit Obligations................................... 31
SECTION 6. PROVISIONS RELATING TO CERTAIN EXTENSIONS OF
CREDIT; FEES AND PAYMENTS................................ 32
6.1 Mandatory Prepayments...................................... 32
6.2 Optional Prepayments; Termination of Revolving Credit
Commitments................................................ 34
6.3 Interest on Loans.......................................... 35
6.4 Conversion and Continuation Options........................ 35
6.5 Minimum Amounts and Maximum Number of Tranches............. 36
6.6 Indemnification in Respect of Eurodollar Loans............. 36
6.7 Unused Commitment Fee...................................... 36
6.8 Closing Fee................................................ 37
6.9 Computation of Interest and Fees........................... 37
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6.10 Inability to Determine Interest Rate...................... 37
6.11 Effective Date............................................ 38
6.12 Pro Rata Treatment and Payments........................... 38
6.13 Illegality................................................ 39
6.14 Requirements of Law....................................... 39
6.15 Taxes..................................................... 40
6.16 Application of Payments................................... 42
6.17 Adjustments; Set-off...................................... 42
6.18 Single Loan............................................... 43
SECTION 7. REPRESENTATIONS AND WARRANTIES........................... 43
7.1 Financial Condition....................................... 43
7.2 Corporate Existence; Compliance with Law.................. 44
7.3 Corporate Power; Authorization............................ 44
7.4 Enforceable Obligations................................... 44
7.5 No Legal Bar.............................................. 45
7.6 No Material Litigation.................................... 45
7.7 Federal Regulation........................................ 45
7.8 Investment Company Act.................................... 45
7.9 Disclosure................................................ 45
7.10 No Default................................................ 46
7.11 Ownership of Property; Liens.............................. 46
7.12 Taxes..................................................... 46
7.13 No Burdensome Restrictions................................ 47
7.14 ERISA..................................................... 47
7.15 Capital Stock............................................. 47
7.16 Subsidiaries; Executive Offices........................... 47
7.17 Security Documents........................................ 48
7.18 Projections............................................... 48
7.19 Labor Matters............................................. 48
7.20 Other Ventures............................................ 49
7.21 Employment and Labor Agreements........................... 49
7.22 Intellectual Property..................................... 49
7.23 No Material Adverse Effect................................ 49
7.24 Environmental Matters..................................... 49
7.25 Public Warehouses......................................... 50
SECTION 8. CONDITIONS PRECEDENT..................................... 50
8.1 Conditions to the Initial Extension of Credit.............. 50
8.2 Conditions to Each Extension of Credit..................... 53
SECTION 9. AFFIRMATIVE COVENANTS.................................... 54
9.1 Financial Statements...................................... 54
9.2 Certificates; Other Information........................... 55
9.3 Payment of Obligations.................................... 56
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9.4 Conduct of Business and Maintenance of Existence.......... 57
9.5 Maintenance of Property and Accounts; Cash Management..... 57
9.6 Maintenance of Insurance.................................. 57
9.7 Inspection of Property; Books and Records; Discussions.... 58
9.8 Notices................................................... 59
9.9 Communication with Accountants............................ 60
9.10 Lenders' Fees............................................. 60
9.11 Payment of Taxes.......................................... 60
9.12 Environmental Laws; Environmental Indemnity............... 60
9.13 Leases.................................................... 61
9.14 Additional Collateral..................................... 61
9.15 Inventory................................................. 63
9.16 Bank Accounts............................................. 63
SECTION 10. NEGATIVE COVENANTS...................................... 63
10.1 Limitation on Indebtedness................................ 63
10.2 Limitation on Liens....................................... 64
10.3 Prohibition of Fundamental Changes........................ 65
10.4 Limitation on Dividends and Restricted Payments........... 65
10.5 Limitation on Investments, Acquisitions, Loans and
Advances.................................................. 66
10.6 Limitation on Contingent Obligations...................... 66
10.7 Limitation on Sale of Assets.............................. 67
10.8 Financial Condition Covenants.............................
10.9 Fiscal Year............................................... 67
10.10 Limitation on Affiliate Transactions...................... 67
10.11 No Subsidiaries........................................... 67
10.12 Accounting Treatment...................................... 67
10.13 Maintenance of Business................................... 68
10.14 Cancellation of Claims or Indebtedness.................... 68
10.15 Environmental Matters..................................... 68
10.16 Cash Management System.................................... 68
10.17 Bank Accounts............................................. 68
SECTION 11. EVENTS OF DEFAULT....................................... 69
SECTION 12. THE AGENT............................................... 72
12.1 Appointment............................................... 72
12.2 Delegation of Duties...................................... 73
12.3 Exculpatory Provisions.................................... 73
12.4 Reliance by Agent......................................... 73
12.5 Notice of Default......................................... 73
12.6 Non-Reliance on Agent and Other Lenders................... 74
12.7 Indemnification........................................... 74
12.8 Agent in Its Individual Capacity.......................... 74
12.9 Successor Agent........................................... 75
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12.10 No Effect on any Loan Party............................... 75
SECTION 13. MISCELLANEOUS........................................... 75
13.1 Complete Agreement; Amendments and Waivers................ 75
13.2 Successors and Assigns; Participations; Purchasers........ 76
13.3 Notices................................................... 78
13.4 No Waiver; Cumulative Remedies............................ 79
13.5 Survival of Representations and Warranties................ 79
13.6 Payment of Expenses and Taxes; Indemnities................ 79
13.7 MUTUAL WAIVER OF JURY TRIAL............................... 80
13.8 SUBMISSION TO JURISDICTION; WAIVERS....................... 81
13.9 Further Assurances........................................ 81
13.10 Acknowledgements.......................................... 82
13.11 Severability.............................................. 82
13.12 Counterparts.............................................. 82
13.13 GOVERNING LAW............................................. 82
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SCHEDULES
Schedule 1 - Lending Offices and Commitments
Schedule 7.6 - Material Litigation
Schedule 7.9 - Material Adverse Effects
Schedule 7.12 - Taxes
Schedule 7.16(a) - Subsidiaries
Schedule 7.16(b) - Loan Party Offices
Schedule 7.17(c) - Filing Jurisdictions
Schedule 7.21(a) - Employment Agreements
Schedule 7.21(b) - Collective Bargaining and Labor Agreements
Schedule 7.22 - Intellectual Property Matters
Schedule 7.24 - Environmental Matters
Schedule 10.5 - Investments
Schedule 10.6 - Contingent Obligations
Schedule 10.8 - Financial Covenants
Schedule 10.17 - Bank Accounts
EXHIBITS
Exhibit A-1 - Form of Tranche A Term Note
Exhibit A-2 - Form of Tranche B Term Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit A-4 - Form of Swingline Note
Exhibit B-1 - Form of Monthly Borrowing Base Certificate
Exhibit B-2 - Form of Weekly Borrowing Base Certificate
Exhibit C - Form of Acknowledgement, Consent and Amendment
Exhibit D - Form of Closing Certificate
Exhibit E-1 - Form of Opinion of Xxxxxxxxxx Xxxxxxxx LLP
Exhibit E-2 - Form of Opinion of Xxxxxx, Xxxxxxxxx & Xxxxxxxxx
Exhibit F - Form of Commitment Transfer Supplement
Exhibit G - Form of Warehousemen Notice
Exhibit H - Form of Notice of Revolving Credit Loan Request
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of March 10, 1998,
among PAMECO CORPORATION, a Georgia corporation (the "Company"), the lenders
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listed on the signature pages hereof (together with their respective successors
and permitted assigns, the "Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION,
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a New York corporation ("GE Capital"), as agent for the Lenders (in such
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capacity, together with its successors and permitted assigns, the "Agent").
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W I T N E S S E T H :
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WHEREAS, the Company (successor by merger with Pameco Corporation
(formerly named MLX Refrigeration & Air Conditioning Group, Inc.), a Delaware
corporation, and Pameco Holdings, Inc., a Delaware corporation) is party to the
Credit Agreement, dated as of March 19, 1992 (as heretofore amended or otherwise
modified, the "Existing Credit Agreement"), with the lenders from time to time
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parties thereto and GE Capital, as agent;
WHEREAS, pursuant to the Existing Credit Agreement, the lenders
parties thereto have agreed to make and have made certain loans and other
extensions of credit to or for the account of the Company;
WHEREAS, the Company has requested that the Existing Credit Agreement
be amended and restated as provided herein; and
WHEREAS, the Lenders and the other parties hereto wish to amend and
restate the Existing Credit Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree that on the Effective
Date the Existing Credit Agreement shall be amended and restated in its entirety
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
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shall have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Adjustment Date" shall have the meaning ascribed thereto in the
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Pricing Grid.
"Affiliate" of any Person shall mean (a) any Person (other than a
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Subsidiary of such Person) that, directly or indirectly, is in control of,
is controlled by, or is under common control with, such Person or (b) any
Person who is a director or officer of (i) such Person, (ii) any Subsidiary
of such Person or (iii) any Person described in clause (a) above. For
purposes of this definition, control of a Person shall mean the power,
direct or indirect, (A) to vote 5% or more of the securities having
ordinary voting power for the election of directors of such Person or (B)
to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.
"Agent" shall have the meaning ascribed thereto in the preamble
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hereto.
"Agreement" shall mean this Amended and Restated Credit Agreement, as
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the same may be amended, supplemented or otherwise modified from time to
time.
"Applicable Margin" shall mean, on any day, for each Type of Revolving
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Credit Loan, Tranche A Term Loan and Tranche B Term Loan, the rate per
annum determined pursuant to the Pricing Grid.
"Asbestos" shall have all the meanings therefor provided under any
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Environmental Laws and shall include, without limitation, asbestos fibers
and friable asbestos, as such terms are defined under Environmental Laws.
"Asset Sale" means (a) any sale, sale-leaseback or other disposition
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to a Person by the Company or any of its Subsidiaries of any of its
property or assets (other than as described in subsections 10.7(a)-(d)) and
(b) the sale or issuance to a Person (other than to the Company or any of
its Subsidiaries, in connection with a capital contribution or otherwise)
of capital stock or other equity securities of the Company or any
Subsidiary thereof.
"Available Revolving Credit Commitment" shall mean, as to any Lender
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at any time, an amount equal to the excess, if any, of (a) such Lender's
Revolving Credit Commitment over (b) the sum of (i) the aggregate principal
amount then outstanding of Revolving Credit Loans made by such Lender and
(ii) such Lender's Revolving Credit Commitment Percentage of the
Reimbursement Obligations and Swingline Loans.
"Borrowing Base" shall mean, at any date, the amount equal to the
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lesser of (a) $50,000,000 and (b) 50% of Eligible Inventory; provided,
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however, that in no event shall the sum of the Revolving Credit Loans, the
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Swingline Loans and the Reimbursement Obligations (without duplication of
the Reimbursement Obligations deemed to have become Loans) exceed the
Borrowing Base. The Agent, at any and all times, shall be entitled to
reduce any and all of the percentages used in determining the Borrowing
Base at any time in its reasonable discretion with the consent of the
Required Lenders.
"Borrowing Base Certificate" shall mean either a Monthly Borrowing
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Base Certificate or a Weekly Borrowing Base Certificate, as applicable.
"Borrowing Date" shall mean any Business Day specified in a notice
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pursuant to subsection 2.3, 3.3, 4.3 or 5.1(a) as a date on which the
Company requests the Lenders (or in the case of Swingline Loans, the
Swingline Lender) to make Loans hereunder or GE Capital to incur Letter of
Credit Obligations.
"Business Day" shall mean a day other than a Saturday, Sunday or other
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day on which GE Capital or commercial banks in New York, New York, or
Stamford, Connecticut are authorized or required by law to close.
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"Capital Expenditures" shall mean all amounts that would, in
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accordance with GAAP, be set forth as capital expenditures on the
consolidated statement of cash flows or other similar statement of the
Company and its Consolidated Subsidiaries; provided, that for purposes of
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this definition, "Capital Expenditures" shall not include expenditures, in
an aggregate amount of up to $8,000,000, made by the Company during its
fiscal years ending February 28, 1998 and 1999 related to the upgrade of
the Company's supply chain system.
"Capital Investment" shall have the meaning ascribed to such term in
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the Receivables Purchase Agreement.
"Capital Lease" shall mean, with respect to any Person, any lease of
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any property (whether real, personal or mixed) by such Person as lessee (i)
that, in accordance with GAAP, either would be required to be classified
and accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance sheet or (ii)
which property is considered to be owned by such Person for Federal tax
purposes.
"Cash Application Date" shall mean a date no later than five Business
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Days after the earlier of (i) the date on which the financial statements of
the Company referred to in subsection 9.1(a), for the fiscal year with
respect to which such prepayment is made, are required to be delivered to
the Lenders and (ii) the date such financial statements are actually
delivered.
"Cash Equivalents" shall mean (a) securities issued or directly and
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fully guaranteed or insured by the United States Government or any agency
or instrumentality thereof having maturities of not more than 3 months from
the date of acquisition thereof, (b) time deposits and certificates of
deposit having maturities of not more than 3 months from the date of
acquisition thereof issued by any domestic commercial bank having capital
and surplus in excess of $500,000,000 that has, or the holding company of
which has, a commercial paper rating meeting the requirements specified in
clause (d) below, (c) repurchase obligations with a term of not more than
30 days for underlying securities of the types described in clauses (a) and
(b) above entered into with any bank meeting the qualifications specified
in clause (b) above, (d) commercial paper rated at least A-3 or the
equivalent thereof by Standard & Poor's Corporation or P-3 or the
equivalent thereof by Xxxxx'x Investor Services, Inc. and in either case
maturing within 3 months after the date of acquisition thereof, (e) money
market funds that (i) invest exclusively in interest bearing, short-term
money market instruments (A) having an average remaining maturity of not
more than 90 days and (B) (1) having a rating of at least A-3 or the
equivalent thereof by Standard & Poor's Corporation or P-3 or the
equivalent thereof by Xxxxx'x Investors Service, Inc. or (2) which are
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof and (ii) have a
constant net asset redemption value and (f) variable rate municipal
securities (A) for which the pricing period in effect is not more than 3
months long and (B) that have a rating of at least A-3 or the equivalent
thereof by Standard & Poor's Corporation or P-3 or the equivalent thereof
by Xxxxx'x Investor Services, Inc.
"Charges" shall mean all Federal, state, county, city, municipal,
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local, foreign or other governmental (including, without limitation, PBGC)
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taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (a) the Collateral, (b) the
Loans and other Extensions of Credit hereunder, (c) the employees of the
Company or any of its Subsidiaries, payroll, income or gross receipts, (d)
the Company's or any of its Subsidiaries' ownership or use of any of its
assets or (e) any other aspect of the business of the Company or any of its
Subsidiaries.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Collateral" shall mean (a) the collateral covered by the Security
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Agreements, the Pledge Agreements and the Subsidiary Guarantee, (b) any
collateral pledged to the Agent, for the benefit of the Lenders, pursuant
to subsection 9.14 and (c) any other property, real or personal, tangible
or intangible, now existing or hereafter acquired, that may be or become
subject to a security interest or Lien in favor of the Agent, for the
benefit of the Lenders, to secure the Loans and other Extensions of Credit
hereunder and other amounts payable hereunder or any guarantees thereof.
"Collateral Documents" shall be the collective reference to the
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Subsidiary Guarantee, the Pledge Agreements, the Security Agreements and
any guarantee or security document hereafter delivered to the Agent, for
the benefit of the Lenders (whether pursuant to subsection 9.14 or
otherwise), granting in the case of any such other security document to the
Agent, for the benefit of the Lenders, a security interest to secure the
obligations of the Company hereunder or to secure any guarantee thereof.
"Collection Account" shall mean the "GECC/CAF Depositary" account
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number 50232854 established at Bankers Trust in the name of GE Capital.
"Commitment" shall mean, as to any Lender, the sum of the Tranche A
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Term Loan Commitment, the Tranche B Term Loan Commitment and the Revolving
Credit Commitment of such Lender; collectively, as to all the Lenders, the
"Commitments".
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"Commitment Transfer Supplement" shall have the meaning ascribed
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thereto in subsection 13.2(c).
"Commonly Controlled Entity" an entity, whether or not incorporated,
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which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Company" shall have the meaning ascribed thereto in the preamble
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hereto; provided that any reference herein to "the Company" as of a date
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prior to the date Pameco Holdings, Inc., a Delaware corporation
("Holdings"), was merged with and into Pameco Corporation, a Georgia
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corporation (formerly known as New Pameco Corporation), shall be deemed to
be a reference to Holdings.
"Company Net Worth" at a particular date, shall mean all amounts which
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would be included under shareholders' equity on a consolidated balance
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sheet of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP as at such date.
"Company Pledge Agreement No. 1" shall mean the Pledge Agreement,
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dated as of April 29, 1996, made by the Company in favor of the Agent, for
the benefit of the Agent and the Lenders, pledging the shares of PSC, as
the same may be amended, supplemented or otherwise modified from time to
time.
"Company Pledge Agreement No. 2" shall mean the Pledge Agreement,
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dated as of December 1, 1997, made by the Company in favor of the Agent,
for the benefit of the Lenders, pledging the shares of PIC, as the same may
be amended, supplemented or otherwise modified from time to time.
"Company Security Agreement" shall mean the Security Agreement, dated
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as of March 19, 1992, made by the Company in favor of the Agent, for the
benefit of the Agent and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"Concentration Account" shall mean account number 03904-43 established
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in the name of the Company at NBD Bank.
"Consolidated EBITDA" for any period, shall mean the sum of (a)
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Consolidated Net Income plus (b) income tax expense plus (c) Consolidated
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Interest Expense plus (d) depreciation expense plus (e) amortization
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expense, in each case with respect to the Company and its Consolidated
Subsidiaries for such period and determined on a consolidated basis in
accordance with GAAP.
"Consolidated Fixed Charges" for any period, shall mean the aggregate
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amount (determined in accordance with GAAP on a consolidated basis) of
principal and interest (including, without limitation, Consolidated
Interest Expense) required to be paid during such period by the Company and
its Consolidated Subsidiaries in respect of tax liabilities, Capital
Leases, Capital Expenditures, Contingent Obligations and Indebtedness
(including, without limitation, in respect of the Loans, but not including
the Letter of Credit Obligations).
"Consolidated Interest Expense" for any period, shall mean the
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interest expense (including, without limitation, non-cash interest and
interest, yield or fees (other than servicing fees) payable pursuant to the
Receivables Purchase Agreement) of the Company and its Consolidated
Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" for any period, shall mean the after taxes
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consolidated net income or loss of the Company and its Consolidated
Subsidiaries as it would appear on a consolidated statement of income of
the Company and its Consolidated Subsidiaries for such period prepared in
accordance with GAAP (such consolidated net income or loss shall (a) be net
of extraordinary items and (b) include, to the extent the inclusion thereof
is in accordance with GAAP, the equity of the Company or any of its
Consolidated Subsidiaries in the net income or loss of any other Person).
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"Consolidated Senior Debt Leverage Ratio" shall mean, as at any date
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of determination, the ratio of (a) the sum of (i) the average daily
aggregate principal amount of all Indebtedness of the Company and its
Subsidiaries outstanding under this Agreement, (ii) the average daily
amount of the Capital Investment and (iii) the average daily aggregate
principal amount of all other senior Indebtedness of the Company and its
Subsidiaries, in each case for the twelve consecutive fiscal months ending
on such date (such sum, "Twelve Month Average Outstandings") to (b) the
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Consolidated EBITDA for such twelve-month period minus Capital Expenditures
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for such twelve-month period.
"Consolidated Subsidiary" shall mean a Subsidiary of the Company whose
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accounts are consolidated with those of the Company for financial reporting
purposes in accordance with GAAP.
"Consolidated Total Debt Leverage Ratio" shall mean, as at any date of
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determination, the ratio of (a) the sum of (i) the Twelve-Month Average
Outstandings for the twelve consecutive fiscal months ending on such date,
(ii) the average daily aggregate principal amount of all non-senior
Indebtedness of the Company and its Subsidiaries for such twelve-month
period and (iii) without duplication, the average daily aggregate
obligations of the Company and its Subsidiaries under Capital Leases for
such twelve-month period to (b) the Consolidated EBITDA for the twelve
consecutive fiscal months ending on such date minus Capital Expenditures
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for such twelve-month period.
"Contingent Obligation" as to any Person (the "guaranteeing Person"),
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shall mean any obligation of (a) the guaranteeing Person or (b) another
Person (including without limitation, any bank under any letter of credit)
to induce the creation of which the guaranteeing Person has issued a
guarantee, reimbursement, counterindemnity or similar obligation, in either
case guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other
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third Person (the "primary obligor") in any manner, whether directly or
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indirectly, including, without limitation, any obligation of the
guaranteeing Person, whether or not contingent, (a) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (d) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
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endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation of any
guaranteeing Person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made and (b) the maximum amount for
which such guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Contingent Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing Person may be
liable are not stated or determinable, in which case the amount of such
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Contingent Obligation shall be such guaranteeing Person's maximum
reasonably anticipated liability in respect thereof as determined by
Company in good faith.
"Contractual Obligation" of any Person, shall mean any provision of
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any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default" shall mean any of the events specified in Section 11 hereof,
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whether or not any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Dollars" and "$" shall mean dollars in lawful currency of the United
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States of America.
"Effective Date" shall have the meaning ascribed thereto in subsection
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8.1.
"Eligible Inventory" shall mean the amount equal to (x) the value of
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all inventory of the Company and its Subsidiaries held for sale or lease in
the ordinary course of business ("Inventory") which is held in any private
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warehouse, branch, master branch, hub branch, sales outlet or distribution
center, valued at the lower of cost (determined on a first-in, first-out
basis) or market value (determined by reference to the most recent
Borrowing Base Certificate provided to the Agent pursuant to subsection
9.2) times (y) the percentage of such Inventory that the Agent, in its sole
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discretion, shall deem eligible after review of such Borrowing Base
Certificate, and less such reserves as the Agent, in its sole discretion,
shall deem appropriate. Without in any way limiting the discretion of the
Agent to deem an item of Inventory eligible or ineligible, the Agent does
not currently intend to treat any item of Inventory as eligible if:
(a) any representation or warranty contained in this Agreement or
in any other Loan Document applicable to either Inventory in general
or to any such specific item of Inventory has been breached with
respect to such item of Inventory;
(b) such item of Inventory is owned by the Company or any of its
Subsidiaries and consigned to other Persons or is owned by other
Persons and consigned to the Company or any of its Subsidiaries;
(c) such item of Inventory is raw material (other than any raw
material, such as chemical refrigerants and copper pipe, which the
Company and its Subsidiaries sell in its raw state in the ordinary
course of business), work-in-process, defective or unmerchantable;
(d) such item of Inventory is not assignable or a first priority
security interest in such item of Inventory in favor of the Agent for
the benefit of the Agent and the Lenders has not been obtained or a
first priority security interest in such item of Inventory in favor of
the Agent for the benefit of the Agent and the Lenders can not be
fully perfected by possession or by filing Uniform Commercial Code
financing statements against the Company and its Subsidiaries; or
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(e) such item of Inventory is subject to any Lien whatsoever
(including, without limitation, all Inventory then located at a Public
Warehouse with respect to which (i) the Agent has not received a duly
executed Warehousemen Notice which is then in full force and effect or
(ii) the Company is in arrears on its rental and other payments),
other than (without prejudice to the reductions made pursuant to
Paragraph (d) above), Liens permitted pursuant to subsections 10.2(a),
(b) and (c).
The Agent shall have discretion to classify any item of Inventory into any
of the foregoing categories or such other categories as the Agent, in its
sole discretion, deems appropriate in determining the eligibility of such
item of Inventory.
"Enforceability Exceptions" shall have the meaning ascribed to such
-------------------------
term in subsection 7.17(a).
"Environmental Laws" shall mean any and all Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees or requirements of any Governmental Authority regulating, relating
to or imposing liability standards of conduct concerning any Hazardous
Materials or environmental protections, as now or may at any time hereafter
be in effect, including, without limitation, the Clean Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendment and Reauthorization Act of 1986, the Emergency Planning
and Community Right to Know Act, the Resource Conservation and Recovery
Act, the Safe Drinking Water Act, the Toxic Substances Control Act,
together, in each case, with each amendment, supplement or other
modification thereto, and the regulations adopted and publications
promulgated thereunder and all substitutions therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"Eurocurrency Reserve Requirements" for any day as applied to a
---------------------------------
Eurodollar Loan shall mean the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, with limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities"
in Regulation D of such Board) maintained by a member bank of such System.
"Eurodollar Assessment Rate" with respect to any date on which such
--------------------------
rate is to be determined shall mean the rate per annum most recently
determined by the Agent to be the then current net annual assessment rate
payable by the Lenders to the FDIC or any successor thereof for the
insurance of deposits in Dollars in the London interbank market.
"Eurodollar Base Rate" with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan shall mean the rate per annum equal
to the offered rate for deposits in Dollars for such Interest Period which
appears on Dow Xxxxx Markets Page 3750 as of 11:00 a.m., London time, on
the day that is two Business Days prior to the beginning of such Interest
8
Period; provided that if such rate is unavailable, "Eurodollar Base Rate"
--------
shall mean the rate per annum equal to the offered rate for deposits in
Dollars for such Interest Period which appears on the Reuters Screen LIBO
Page as of 11:00 a.m., London time, on the day that is two Business Days
prior to the beginning of such Interest Period; provided, further, that if
-------- -------
two or more such offered rates appear on Dow Xxxxx Markets Page 3750 or on
the Reuters Screen LIBO Page, as the case may be, "Eurodollar Base Rate"
shall mean the rate per annum equal to the arithmetic mean of such offered
rates (rounded upward to the nearest 1/16th of 1%).
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
----------------
which is based upon the Eurodollar Rate.
"Eurodollar Rate" with respect to each day during each Interest Period
---------------
pertaining to a Eurodollar Loan shall mean, a rate per annum determined for
such day equal to the sum of (a) the Eurodollar Assessment Rate at such
time and (b) the quotient of the Eurodollar Base Rate for such Interest
Period divided by (x) one hundred percent minus (y) the Eurocurrency
------- -- -----
Reserve Requirements (rounded upward to the nearest 1/16th of 1%).
"Event of Default" shall mean any of the events specified in Section
----------------
11, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow" shall mean for any fiscal year, Consolidated EBITDA
----------------
for such year minus the aggregate amount actually paid by the Company and
-----
its Subsidiaries in cash during such period on account of Consolidated
Fixed Charges (determined in accordance with GAAP).
"Existing Credit Agreement" shall have the meaning ascribed thereto in
-------------------------
the recitals hereto.
"Extension of Credit" shall mean (i) any Loan made to the Company
-------------------
under this Agreement (including, without limitation, the making of any
Swingline Loan by the Swingline Lender) or (ii) any Letter of Credit
Obligations issued or incurred pursuant to this Agreement, as the context
requires.
"Facilities" shall mean, collectively, (a) the Revolving Credit
----------
Commitments and the Extensions of Credit made thereunder, (b) the Tranche A
Term Loan Commitments and the Tranche A Term Loans made thereunder, and (c)
the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder.
"Fee Letter" shall mean the Fee Letter, dated as of March 10, 1998,
----------
between the Company and GE Capital.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America as in effect from time to time.
"GE Capital" shall have the meaning ascribed thereto in the preamble
----------
hereto.
9
"GE Guarantee" shall mean any guarantee or similar accommodation
------------
issued in support of a Letter of Credit issued pursuant to subsection
5.1(a) for the account or benefit of the Company in any form customarily
used at the relevant time by GE Capital for similar extensions of credit to
other borrowers.
"Global Amendment" shall mean the Acknowledgement, Consent and
----------------
Amendment to be entered into among the Loan Parties and the Agent,
substantially in the form of Exhibit C.
"Governmental Authority" shall mean any nation or government, any
----------------------
State or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Hazardous Materials" shall mean any hazardous materials, hazardous
-------------------
wastes and hazardous or toxic substances, defined or regulated as such in
or under any Environmental Law, including, without limitation, Asbestos,
gasoline and any other petroleum products (including crude oil or any
fraction thereof), and materials exhibiting the characteristics of
ignitability, corrosivity, reactivity or extraction procedure toxicity, as
such terms are defined in connection with hazardous materials or hazardous
wastes or hazardous or toxic substances in any Environmental Law.
"Indebtedness" of a Person, shall mean, without duplication, (a) all
------------
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in
the ordinary course of business and payable in accordance with customary
trade practices) or which is evidenced by a note, bond, debenture or
similar instrument, (b) all obligations of such Person under Capital
Leases, (c) all obligations of such Person in respect of acceptances issued
or created for the account of such Person, (d) all liabilities secured by
any Lien on any property owned by such Person even though such Person has
not assumed or otherwise become liable for the payment thereof and (e)
indebtedness consisting of unpaid reimbursement obligations in respect of
all letters of credit issued for the account of such Person, whether
contingent or matured; for purposes hereof, "Indebtedness" shall, with
respect to the Company and its Subsidiaries, in any event, include the
Loans, Reimbursement Obligations, Letter of Credit Obligations and the
Capital Investment.
"Index Rate" shall mean, with respect to any day, the highest prime,
----------
base, reference or other analogous rate of interest then in effect publicly
announced by any of Citibank, N.A., Xxxxxx Guaranty Trust Company of New
York and The Chase Manhattan Bank (whether or not such rate is the lowest
rate actually charged by any such bank). The Index Rate is not intended to
be the lowest rate of interest charged by any Lender for extensions of
credit to debtors.
"Index Rate Loans" shall mean loans the rate of interest applicable to
----------------
which is based upon the Index Rate.
"Insolvency" with respect to any Multiemployer Plan, shall mean the
----------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
10
"Insolvent" shall mean a condition of Insolvency.
---------
"Intellectual Property" shall have the meaning ascribed thereto in
---------------------
subsection 7.22.
"Intercreditor Agreement" shall mean the Intercreditor Agreement,
-----------------------
dated as of April 29, 1996, among GE Capital, as Agent and as operating
agent and collateral agent under the Receivables Purchase Agreement, PSC,
the Company and Redwood Receivables Corporation, as the same may be,
amended, supplemented or otherwise modified in accordance with the terms
hereof and thereof.
"Interest Coverage Ratio" shall mean, for any period of four
-----------------------
consecutive fiscal quarters, the ratio of (a) Consolidated EBITDA for such
period to (b) Consolidated Interest Expense for such period.
"Interest Payment Date" shall mean (a) as to any Index Rate Loan or
---------------------
Swingline Loan, the first Business Day of each April, July, October and
January (commencing on April 1, 1998) to occur while such Loan is
outstanding (b) as to any Eurodollar Loan (other than a Swingline Loan),
one Business Day after the last day of the Interest Period for such Loan.
"Interest Period" for any Eurodollar Loan shall mean (a) initially,
---------------
the period commencing on the borrowing or conversion date, as the case may
be, with respect to such Eurodollar Loan and ending one, two or three
months thereafter, as selected by the Company in its notice of borrowing or
notice of conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending
one, two or three months thereafter, as selected by the Company by
irrevocable notice to the Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto
provided that, all of the foregoing provisions relating to Interest Periods
--------
are subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Revolving Credit Termination Date or, in the case of Interest Periods
relating to Term Loans, beyond the date final payment is due on the
Term Loans shall (other than for purposes of subsection 6.6) end on
the Revolving Credit Termination Date or such date of final payment,
as the case may be;
(3) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day
of a calendar month; and
11
(4) the Company shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
"Inventory" shall have the meaning ascribed thereto in the definition
---------
of "Eligible Inventory" contained herein.
"L/C Fee Payment Date" shall mean the first Business Day of each
--------------------
April, July, October and January.
"Lease" shall mean any leasehold estate in real property, which
-----
leasehold estate is now owned or hereafter acquired by any Loan Party, as
lessee.
"Lenders" shall have the meaning ascribed thereto in the preamble
-------
hereto; individually, a "Lender". Unless the context otherwise requires,
------
the term "Lenders" includes the Swingline Lender.
"Lending Office" of any Lender, shall mean (a) initially, the
--------------
office(s) of such Lender designated as such on Schedule 1 hereto and (b)
thereafter, such other office of such Lender, if any, that shall be making
and/or participating in Loans and incurring and/or participating in the
Letter of Credit Obligations.
"Letter of Credit Obligations" shall mean all obligations, liabilities
----------------------------
and indebtedness incurred or issued by GE Capital at the request of the
Company, whether direct or indirect, contingent or otherwise, due or not
due, in connection with the issuance or guarantee, by GE Capital or another
Person, of letters of credit or guarantees or similar assurances,
including, without limitation, Letters of Credit and GE Guarantees. The
amount of such Letter of Credit Obligations shall equal the maximum amount
which may be payable by GE Capital thereupon or pursuant thereto, and shall
include the amount of any letter of credit or guarantee which has
previously been drawn upon and not reimbursed by the Company and the amount
of any letter of credit or guarantee which is outstanding and not drawn
upon.
"Letters of Credit" shall mean Trade Letters of Credit or Standby
-----------------
Letters of Credit, as the context shall require.
"License Agreement" shall mean the License Agreement, dated as of
-----------------
December 1, 1998, between the Company and PIC whereby PIC grants the
Company the exclusive right and license to use certain trademarks and
service marks owned by PIC.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same legal effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing).
12
"Loan Documents" shall mean this Agreement, the Notes, the Syndication
--------------
Letter Agreement, the Intercreditor Agreement, the Global Amendment and the
Collateral Documents.
"Loan Parties" shall mean the Company, PIC and each other Person who
------------
from time to time shall be a guarantor of the Loans and/or other Extensions
of Credit hereunder.
"Loans" shall mean the loans made by the Lenders to the Company
-----
pursuant to subsections 2.1, 3.1 and 4.1 and all obligations of the Company
deemed to be Loans pursuant to subsection 5.1(b); individually, a "Loan".
----
"Majority Facility Lenders" shall mean with respect to any Facility,
-------------------------
the holders of more than 66b% of the aggregate unpaid principal amount of
the Term Loans or the Total Revolving Extensions of Credit, as the case may
be, outstanding under such Facility (or, in the case of the Revolving
Credit Facility, prior to any termination of the Revolving Credit
Commitments, the holders of more than 66b% of the aggregate Revolving
Credit Commitments).
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, operations, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, (b) the
ability of any Loan Party to perform its obligations under the Loan
Documents in accordance with their respective terms or (c) the Collateral
or the Agent's Liens on the Collateral or the priority of any such Lien on
the Collateral, other than, in each case, immaterial Collateral.
"Money Market Account" shall mean the Xxxxxxxx Money Management
--------------------
Account, account number 00-00000-00, established in the name of the Company
at NBD Bank.
"Monthly Borrowing Base Certificate" shall mean a certificate,
----------------------------------
substantially in the form of Exhibit B-1, delivered pursuant to subsection
9.2(b).
"Multiemployer Plan" shall mean any Plan that is a "multiemployer
------------------
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" of any Asset Sale or of any issuance or incurrence
-----------------
by the Company or any of its Subsidiaries of Indebtedness, shall mean the
cash proceeds (including, without limitation, cash proceeds of non-cash
consideration) of such sale, issuance or incurrence net of (a) reasonable
attorneys' fees, accountants' fees, brokerage, consultant and other
customary fees and out-of-pocket expenses actually incurred in connection
with such sale, issuance or incurrence, (b) taxes paid or payable by the
Company or any of its Subsidiaries as a result thereof and (c) with respect
to any Asset Sale only, the amount of any Indebtedness that is related to
any or all of the assets being disposed of and is required to be paid in
connection with the disposition thereof (other than the Obligations).
"Notes" shall refer, collectively, to the Revolving Credit Notes, the
-----
Tranche A Term Loan Notes, the Tranche B Term Loan Notes and the Swingline
Note.
13
"Obligations" shall mean the unpaid principal amount of, and interest
-----------
on, the Loans and all other obligations, indebtedness and liabilities of
the Company to the Agent and the Lenders (including, without limitation,
Reimbursement Obligations), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with this Agreement or the
other Loan Documents and any other document executed and delivered in
connection therewith or herewith, whether on account of principal,
interest, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to the Agent) or
otherwise. "Obligations" shall include, without limitation, interest
accruing after the maturity of the Loans or Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like proceeding relating
to the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding.
"One Month Eurodollar Rate" with respect to each day during each
-------------------------
Interest Period of one calendar month pertaining to a Swingline Loan, shall
mean a rate per annum determined for such day equal to the sum of (a) the
Eurodollar Assessment Rate at such time and (b) the quotient of the
Eurodollar Base Rate for such Interest Period divided by (x) one hundred
------- --
percent minus (y) the Eurocurrency Reserve Requirements (rounded upward to
-----
the nearest 1/16th of 1%).
"Operating Lease" shall mean, as at any date, any lease of property
---------------
(whether real, personal or mixed) other than a Capital Lease.
"Participant" shall have the meaning ascribed thereto in subsection
-----------
13.2(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
"Person" shall mean an individual, a partnership, a corporation, a
------
business trust, a joint stock company, a trust, an unincorporated
association, a joint venture, a Governmental Authority or any other entity
of whatever nature.
"PIC" shall mean Pameco Investment Company, Inc., a Delaware
---
corporation.
"Plan" shall mean, at any particular time, any employee benefit plan
----
which is covered by Title IV of ERISA and in respect of which the Company
or any Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"Pledge Agreements" shall mean the Company Pledge Agreement No. 1 and
-----------------
the Company Pledge Agreement No. 2.
"Pricing Grid" shall mean the Pricing Grid attached hereto as Annex A.
------------
"Properties" shall have the meaning ascribed to such term in
----------
subsection 7.24.
14
"PSC" shall mean Pameco Securitization Corporation, a Delaware
---
corporation.
"Public Warehouse" shall mean any warehouse other than a warehouse
----------------
which is (a) owned or leased by the Company or any of its Subsidiaries or
(b) under the control and management of the Company or such Subsidiary, as
the case may be.
"Purchasing Institution" shall have the meaning ascribed thereto in
----------------------
subsection 13.2(c).
"Receivable" shall have the meaning ascribed thereto in Annex X to the
----------
Transfer Agreement and the Receivables Purchase Agreement.
"Receivables Purchase Agreement" means the Receivables Purchase and
------------------------------
Servicing Agreement, dated as of April 29, 1996, among PSC, as Seller,
Redwood Receivables Corporation, as Purchaser, the Company, as Servicer,
and GE Capital, as Operating Agent and Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
"Register" shall have the meaning ascribed thereto in subsection
--------
13.2(d).
"Reimbursement Obligations" shall mean all obligations, liabilities
-------------------------
and indebtedness of the Company, whether direct or indirect, guaranteed or
assumed, contingent or otherwise, due or not due, under this Agreement and
the other Loan Documents, to reimburse, indemnify and pay GE Capital and
the other Lenders in connection with the issuance or guarantee, by GE
Capital or another Person, of letters of credit or guarantees or similar
assurances, including, without limitation, the issuance of Letters of
Credit and GE Guarantees and the incurrence of the Letter of Credit
Obligations. Reimbursement Obligations in respect of which GE Capital or
any other Lender has made a payment shall be deemed to be Loans made to the
Company as provided in subsection 5.1(b) (whether or not the conditions
precedent to the making of a Loan are satisfied).
"Reorganization" with respect to any Multiemployer Plan, shall mean
--------------
the condition that such Plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
----------------
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ' 2615.
"Required Lenders" shall mean, at any particular time, Lenders holding
----------------
more than a majority of the aggregate unpaid principal amount of the
Extensions of Credit (including, without limitation, the participating
interests held by Revolving Credit Lenders in Swingline Loans) and the
Reimbursement Obligations (or if no amount is outstanding under the
Commitments and there are no outstanding Reimbursement Obligations, Lenders
having a majority of the Commitments); provided, that at any time there are
--------
two or more Lenders party to this Agreement, Required Lenders must be
comprised of at least two Lenders.
15
"Requirement of Law" for any Person, shall mean the Articles or
------------------
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Responsible Officer" of any Person, shall mean the chief executive
-------------------
officer and the president of such Person or, with respect to financial
matters, the chief financial officer of such Person; provided, however,
-------- -------
that for all documents and certifications delivered by the Company on the
Effective Date, "Responsible Officer" shall mean the chief financial
officer of the Company or any other duly authorized officer of the Company
reasonably acceptable to the Agent.
"Restricted Payments" shall have the meaning ascribed to such term in
-------------------
subsection 10.4 hereof.
"Revolving Credit Commitment" shall mean, as to any Lender, the
---------------------------
obligation of such Lender, if any, to make Revolving Credit Loans to the
Company, to purchase participating interests in Swingline Loans and to
incur Letter of Credit Obligations hereunder, in an aggregate amount not to
exceed the amount set forth opposite such Lender's name on Schedule 1, as
the same may be reduced from time to time pursuant to the terms hereof;
collectively, as to all Revolving Credit Lenders, the "Revolving Credit
----------------
Commitments".
-----------
"Revolving Credit Commitment Period" shall mean the period from and
----------------------------------
including the Effective Date to the Revolving Credit Termination Date.
"Revolving Credit Lender" shall mean each Lender that has a Revolving
-----------------------
Credit Loan or a Revolving Credit Commitment.
"Revolving Credit Loan" shall have the meaning ascribed thereto in
---------------------
subsection 3.1(a).
"Revolving Credit Note" shall have the meaning ascribed thereto in
---------------------
subsection 3.2.
"Revolving Credit Percentage" shall mean, as to any Revolving Credit
---------------------------
Lender, the percentage of the aggregate Revolving Credit Commitments
constituted by such Lender's Revolving Credit Commitment (or at any time
after the Revolving Credit Commitments shall have expired or terminated,
the aggregate Revolving Credit Loans and participating interests in
Swingline Loans and Letter of Credit Obligations then constituted by such
Revolving Credit Lender's Revolving Credit Loans and participation
interests in Swingline Loans and Letter of Credit Obligations).
"Revolving Credit Termination Date" shall mean March 10, 2003 or such
---------------------------------
earlier date as the Revolving Credit Commitments shall terminate pursuant
to the terms hereof (including, without limitation, pursuant to Section 11
hereof).
"Revolving Extensions of Credit" shall mean, as to any Revolving
------------------------------
Credit Lender at any time, an amount equal to the sum (without duplication)
16
of (a) the aggregate principal amount of all Revolving Credit Loans made by
such Lender (including, without limitation, its Revolving Credit Percentage
of any then outstanding Swingline Loans) then outstanding and (b) such
Lender's Revolving Credit Percentage of the Letter of Credit Obligations
then outstanding.
"Security Agreements" shall mean the Company Security Agreement, the
-------------------
Subsidiary Security Agreement and the Subsidiary Trademark Security
Agreement.
"Single Employer Plan" shall mean any Plan which is covered by Title
--------------------
IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" when used with respect to any Person, shall mean that:
-------
(a) the present fair saleable value of such Person's assets is in
excess of the total amount of such Person's liabilities;
(b) such Person is able to pay its debts as they become due; and
(c) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all businesses
in which such Person is about to engage.
"Standby Letter of Credit" shall mean a standby letter of credit
------------------------
issued to support the obligations of the Company or any of its
Subsidiaries, contingent or otherwise.
"Subordinated Demand Promissory Note" shall mean the Subordinated
-----------------------------------
Demand Promissory Note, dated as of December 1, 1997, made by the Company
in favor of PIC.
"Subsidiary" of any Person, shall mean a corporation or other entity
----------
of which shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority
of the directors of such corporation, or other Persons performing similar
functions for such entity, are owned, directly or indirectly, by such
Person. For purposes of this Agreement and the other Loan Documents,
references to Subsidiaries of the Company shall be deemed to be references
to Subsidiaries of the Company. Notwithstanding the foregoing, solely for
purposes of compliance with the covenants contained in subsections 9.14,
10.1, 10.2, 10.5, 10.7, 10.10, 10.11 and 10.13 hereof, the term
"Subsidiary" shall not be deemed to include PSC.
"Subsidiary Guarantee" shall mean the Subsidiary Guarantee, dated as
--------------------
of December 1, 1997, made by PIC in favor of the Agent, for the benefit of
the Agent and the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time.
"Subsidiary Security Agreement" shall mean the Subsidiary Security
-----------------------------
Agreement, dated as of December 1, 1997, made by PIC in favor of the Agent,
17
for the benefit of the Agent and the Lenders, as the same may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Trademark Security Agreement" shall mean the Trademark
---------------------------------------
Security Agreement, dated as of December 1, 1997, made by PIC in favor of
the Agent, for the benefit of the Agent and the Lenders, as the same may be
amended, supplemented or otherwise modified from time to time.
"Swingline Lender" shall mean GE Capital, in its capacity as a lender
----------------
of Swingline Loans hereunder.
"Swingline Loan" shall have the meaning ascribed thereto in subsection
--------------
4.1.
"Swingline Note" shall have the meaning ascribed thereto in subsection
--------------
4.2.
"Syndication Letter Agreement" shall mean the Letter Agreement dated
----------------------------
as of March 10, 1998 between the Company and GE Capital pertaining to the
completion of the syndication of the Facilities after the Effective Date.
"Syndication Memorandum" shall mean the Syndication Memorandum of the
----------------------
Company dated March 1998 and furnished to the Lenders.
"Taxes" shall have the meaning ascribed thereto in subsection 6.15(a).
-----
"Term Loans" shall mean, collectively, the Tranche A Term Loans and
----------
the Tranche B Term Loans.
"Term Notes" shall mean, collectively, the Tranche A Term Notes and
----------
the Tranche B Term Notes.
"Total Revolving Extensions of Credit" shall mean, at any time, the
------------------------------------
aggregate amount of the outstanding Revolving Extensions of Credit of all
Revolving Credit Lenders.
"Trade Letters of Credit" shall mean each documentary letter of credit
-----------------------
in respect of the purchase of goods and services by the Company or any of
its Subsidiaries in the ordinary course of business.
"Tranche" shall mean the collective reference to Eurodollar Loans
-------
whose Interest Periods begin on the same date and end on the same later
date (whether or not such Loans originally were made on the same day.)
"Tranche A Term Loan" shall have the meaning ascribed thereto in
-------------------
subsection 2.1.
"Tranche A Term Loan Commitment" shall mean, as to any Lender, the
------------------------------
obligation of such Lender, if any, to make a Tranche A Term Loan to the
Company hereunder in the amount set forth opposite such Lender's name on
Schedule 1.
"Tranche A Term Loan Lender" shall mean each Lender that has a Tranche
--------------------------
A Term Loan Commitment or that has made a Tranche A Term Loan.
18
"Tranche A Term Loan Maturity Date" shall mean March 31, 2003.
---------------------------------
"Tranche A Term Loan Percentage" shall mean, as to any Tranche A Term
------------------------------
Loan Lender, the percentage equivalent to a fraction, the numerator of
which is the Tranche A Term Loan Commitment of such Lender and the
denominator of which is the sum of the Tranche A Term Loan Commitments of
all the Tranche A Term Loan Lenders.
"Tranche A Term Note" shall have the meaning ascribed thereto in
-------------------
subsection 2.2.
"Tranche B Term Loan" shall have the meaning ascribed thereto in
-------------------
subsection 2.1.
"Tranche B Term Loan Commitment" shall mean, as to any Lender, the
------------------------------
obligation of such Lender, if any, to make a Tranche B Term Loan to the
Company hereunder in the amount set forth opposite such Lender's name on
Schedule 1.
"Tranche B Term Loan Lender" shall mean each Lender that has a Tranche
--------------------------
B Term Loan Commitment or that has made a Tranche B Term Loan.
"Tranche B Term Loan Maturity Date" shall mean March 31, 2005.
---------------------------------
"Tranche B Term Loan Percentage" shall mean, as to any Tranche B Term
------------------------------
Loan Lender, the percentage equivalent to a fraction, the numerator of
which is the Tranche B Term Loan Commitment of such Lender and the
denominator of which is the sum of the Tranche B Term Loan Commitments of
all the Tranche B Term Loan Lenders.
"Tranche B Term Note" shall have the meaning ascribed thereto in
-------------------
subsection 2.2.
"Transfer Agreement" shall mean the Receivables Transfer Agreement,
------------------
dated as of April 29, 1996, between Pameco Corporation and PSC, as the same
has been amended to date and may be further amended, supplemented or
otherwise modified from time to time.
"Transferee" shall have the meaning ascribed thereto in subsection
----------
13.2(f).
"Twelve Month Average Outstandings" shall have the meaning ascribed to
---------------------------------
such term in the definition of "Consolidated Senior Debt Leverage Ratio".
"Type" shall mean as to any Loan, its nature as an Index Rate Loan or
----
a Eurodollar Loan.
"Uniform Commercial Code" shall mean the Uniform Commercial Code from
-----------------------
time to time in effect in the relevant State.
"Unqualified Opinion" in respect of any financial statements, shall
-------------------
mean an unqualified opinion (as such term is generally defined or used in
accordance with GAAP) in respect of such financial statements, together
with any opinion in respect of such financial statements not meeting the
foregoing standard that is qualified solely as a result of a consistency
19
exception relating to a change in accounting principles with which the
independent public accountants examining such financial statements have
concurred.
"Unused Commitment Fee Rate" shall mean, on any date, the rate per
--------------------------
annum determined pursuant to the Pricing Grid.
"Warehousemen Notice" shall mean a Warehousemen Notice, substantially
-------------------
in the form of Exhibit G (with appropriate insertions), executed and
delivered by a duly authorized officer of the Public Warehouse party
thereto.
"Weekly Borrowing Base Certificate" shall mean a certificate
---------------------------------
substantially in the form of Exhibit B-2, delivered pursuant to subsection
9.2(e).
"Wholly Owned Subsidiary" with respect to any Person, shall mean any
-----------------------
Subsidiary of such Person of which such Person directly or indirectly owns
100% of the capital stock (excluding directors' qualifying shares, if any).
1.2 Other Definitional Provisions . (a) All terms defined in this
-----------------------------
Agreement shall have their defined meanings when used in the Notes or any of the
other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto unless otherwise defined therein.
(b) As used herein, in the Notes or in any of the other Loan
Documents, and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in subsection 1.1, and
accounting terms partly defined in subsection 1.1 to the extent not defined,
shall have the respective meanings given to them under GAAP. To the extent that
the definitions of accounting terms herein are inconsistent with the meanings of
such terms under GAAP, the definitions contained herein shall control.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement or in any of the other Loan Documents shall
refer to this Agreement or such other Loan Document as a whole and not to any
particular provision of this Agreement or such other Loan Document; and Section,
subsection, Schedule and Exhibit references contained in this Agreement are
references to Sections, subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
SECTION 2. THE AMOUNT AND TERMS OF THE TERM LOAN
FACILITY
2.1 Term Loan Commitments. Subject to the terms and conditions
---------------------
hereof, (a) each Tranche A Term Loan Lender severally agrees to make term loans
(each, a "Tranche A Term Loan") to the Company on the Effective Date in an
-------------------
aggregate principal amount not to exceed the amount of the Tranche A Term Loan
Commitment of such Lender and (b) each Tranche B Term Loan Lender severally
agrees to make term loans (each, a "Tranche B Term Loan") to the Company on the
-------------------
Effective Date in an aggregate principal amount not to exceed the amount of the
Tranche B Term Loan Commitment of such Lender. The Term Loans may from time to
time be Eurodollar Loans or Index Rate Loans, as determined by the Company and
notified to the Agent in accordance with subsections 2.3 and 6.4.
20
2.2 Term Loan Notes. The Tranche A Term Loan made by each Tranche A
---------------
Term Loan Lender shall be evidenced by a promissory note of the Company,
substantially in the form of Exhibit A-1 (a "Tranche A Term Note"), with
-------------------
appropriate insertions therein as to payee, date and principal amount, payable
to the order of such Lender and in a principal amount equal to the Tranche A
Term Loan of such Lender. The Tranche B Term Loan made by each Tranche B Term
Loan Lender shall be evidenced by a promissory note of the Company,
substantially in the form of Exhibit A-2 (a "Tranche B Term Note"), with
-------------------
appropriate insertions therein as to payee, date and principal amount, payable
to the order of such Lender and in a principal amount equal to the Tranche B
Term Loan of such Lender. Each Term Loan Lender is hereby authorized to record
the date, Type and amount of each payment or prepayment of principal of each of
its Term Loans, each continuation thereof, each conversion of all or a portion
thereof to another Type and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto, on the schedule annexed to and
constituting a part of its Term Note evidencing such Term Loans (or any
continuation thereof), and any such recordation shall constitute prima facie
----- -----
evidence of the accuracy of the information so recorded; provided that the
--------
failure to make any such recordings or any error in such recordation shall not
affect the Company's obligation to repay the Term Loans. Each Term Note of each
Lender shall (a) be dated the Effective Date, (b) be stated to mature in
accordance with subsection 2.4 and (c) provide for the payment of interest in
accordance with subsection 6.3.
2.3 Procedure for Term Loan Borrowing. The Company shall give the
---------------------------------
Agent irrevocable written notice (which notice must be received by the Agent
prior to 12:00 Noon, New York City time, (a) three Business Days prior to the
Effective Date, in the case of Eurodollar Loans, or (b) on the Effective Date,
in the case of Index Rate Loans), specifying (i) the amount and Type of Term
Loans to be borrowed and (ii) in the case of Eurodollar Loans, the respective
amounts of each such Type of Loan and the respective lengths of the initial
Interest Periods therefor. Each borrowing under the Term Loan Commitments shall
be in an amount equal to (x) in the case of Index Rate Loans, any amount and (y)
in the case of Eurodollar Loans, $500,000 or a whole multiple of $100,000 in
excess thereof. Upon receipt of any such notice from the Company, the Agent
shall promptly notify each Tranche A Term Loan Lender and/or Tranche B Term Loan
Lender, as the case may be, thereof. Each Tranche A Term Loan Lender and/or
Tranche B Term Loan Lender, as the case may be, will make the amount of its pro
rata share of each borrowing available to the Agent for the account of the
Company prior to 12:00 Noon, New York City time, on the Effective Date at the
Agent's depositary bank as designated by the Agent from time to time for deposit
in the Agent's depositary account, in immediately available funds. Such
borrowing will then be made available to the Company by the Agent by wiring to a
financial institution designated by the Company the aggregate of the amounts
made available to the Agent by the Term Loan Lenders and in like funds as
received by the Agent.
2.4 Repayment of Term Loans. (a) The Tranche A Term Loan of each
-----------------------
Tranche A Term Loan Lender shall mature, and the Company unconditionally
promises to pay such Tranche A Term Loan to the Agent for the account of such
Tranche A Term Loan Lender, in 20 consecutive quarterly installments, commencing
on June 30, 1998, each of which shall be in an amount equal to such Lender's
Tranche A Term Loan Percentage multiplied by the amount set forth below opposite
such installment:
21
Installment Principal Amount
----------- ----------------
June 30, 1998 $ 500,000
September 30, 1998 500,000
December 31, 1998 500,000
March 31, 1999 500,000
June 30, 1999 500,000
September 30, 1999 500,000
December 31, 1999 500,000
March 31, 2000 500,000
June 30, 2000 750,000
September 30, 2000 750,000
December 31, 2000 750,000
March 31, 2001 750,000
June 30, 2001 1,000,000
September 30, 2001 1,000,000
December 31, 2001 1,000,000
March 31, 2002 1,000,000
June 30, 2002 1,000,000
September 30, 2002 1,000,000
December 31, 2002 1,000,000
Tranche A Term Loan
Maturity Date 1,000,000
(b) The Tranche B Term Loan of each Tranche B Term Loan Lender shall
mature, and the Company unconditionally promises to pay such Tranche B Term Loan
to the Agent for the account of such Tranche B Term Loan Lender, in 28
consecutive quarterly installments, commencing on June 30, 1998, each of which
shall be in an amount equal to such Lender's Tranche B Term Loan Percentage
multiplied by the amount set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
June 30, 1998 $ 37,500
September 30, 1998 37,500
December 31, 1998 37,500
March 31, 1999 37,500
June 30, 1999 37,500
September 30, 1999 37,500
December 31, 1999 37,500
March 31, 2000 37,500
June 30, 2000 37,500
September 30, 2000 37,500
December 31, 2000 37,500
March 31, 2001 37,500
June 30, 2001 37,500
September 30, 2001 37,500
December 31, 2001 37,500
22
Installment Principal Amount
----------- ----------------
March 31, 2002 $ 37,500
June 30, 2002 37,500
September 30, 2002 37,500
December 31, 2002 37,500
March 31, 2003 37,500
June 30, 2003 1,781,250
September 30, 2003 1,781,250
December 31, 2003 1,781,250
March 31, 2004 1,781,250
June 30, 2004 1,781,250
September 30, 2004 1,781,250
December 31, 2004 1,781,250
Tranche B Term Loan
Maturity Date 1,781,250
2.5 Use of Proceeds of Term Loans. The proceeds of the Term Loans
-----------------------------
shall be used by the Company to refinance existing Indebtedness of the Company
under the Existing Credit Agreement.
SECTION 3. THE AMOUNT AND TERMS OF THE REVOLVING CREDIT
FACILITY
3.1 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions of this Agreement, each Revolving Credit Lender, severally and not
jointly, agrees to make revolving credit loans ("Revolving Credit Loans") to the
----------------------
Company from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding not to exceed the amount
equal to (i) such Revolving Credit Lender's Revolving Credit Percentage of the
lesser of (x) $50,000,000 and (y) the Borrowing Base then in effect minus (ii)
-----
such Revolving Credit Lender's Revolving Credit Percentage of the Reimbursement
Obligations and Swingline Loans to be outstanding immediately after giving
effect to the use of proceeds of such Revolving Credit Loans; provided that at
--------
no time during the Revolving Credit Commitment Period may the Total Revolving
Extensions of Credit exceed the Revolving Credit Commitments. During the
Revolving Credit Commitment Period, the Company may use the Revolving Credit
Commitments by borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be
(i) Eurodollar Loans, (ii) Index Rate Loans or (iii) a combination thereof, as
determined by the Company and notified to the Agent in accordance with
subsection 3.3, provided that no Revolving Credit Loan shall be made as a
--------
Eurodollar Loan after the day that is one month prior to the Revolving Credit
Termination Date.
3.2 Revolving Credit Notes. The Revolving Credit Loans to be made by
----------------------
each Revolving Credit Lender to the Company pursuant hereto shall be evidenced
by a promissory note of the Company, substantially in the form of Exhibit A-3
hereto (the "Revolving Credit Note"; collectively, the "Revolving Credit
--------------------- ----------------
Notes"), payable to the order of such Lender and representing the obligation of
-----
the Company to pay a principal amount equal to such Lender's Revolving Credit
Percentage of the Revolving Credit Commitments or, if less, the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Lender. Each
Revolving Credit Lender is hereby authorized to record the date, Type and amount
23
of each Revolving Credit Loan made by such Lender, each continuation thereof,
each conversion of all or a portion thereof to another Type, and the date and
amount of each Revolving Credit Loan payment or prepayment of principal thereof
and, in the case of Eurodollar Loans, the length of each Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Revolving Credit Note (or any continuation thereof), and any such recordation
shall constitute prima facie evidence of the accuracy of the information so
----- -----
recorded; provided that the failure to make any such recordation or any error in
--------
such recordation shall not affect the Company's obligation to repay the
Revolving Credit Loans.
3.3 Procedure for Revolving Credit Borrowings. The Company may
-----------------------------------------
request a borrowing under the Revolving Credit Commitments during the Revolving
Credit Commitment Period on any Business Day by giving irrevocable telephonic
notice to the Agent, promptly confirmed in writing (which telephonic notice must
be received by the Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
Revolving Credit Loans are to be initially Eurodollar Loans, or (b) on the
requested Borrowing Date, otherwise), specifying (i) the aggregate principal
amount to be borrowed, (ii) whether the borrowing is to be of Eurodollar Loans,
Index Rate Loans or a combination thereof, (iii) if the borrowing is to be
entirely or partly of Eurodollar Loans, the amount of each such Revolving Credit
Loan and the length of the initial Interest Period therefor, and (iv) the
requested Borrowing Date; provided that the procedures for the initial borrowing
--------
of Revolving Credit Loans to be made on the Effective Date may be such other
procedures as are mutually satisfactory to the Company, the Agent and the
Lenders. Any written confirmation of a telephonic notice of borrowing of
Revolving Credit Loans shall be given in the form of Exhibit H. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in the
case of Index Rate Loans, $100,000 or a whole multiple thereof (or, if the then
available Revolving Credit Commitments are less than $100,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $500,000 or a whole multiple of
$100,000 in excess thereof; provided that any borrowing of Revolving Credit
--------
Loans to be used solely to pay the aggregate amount of Swingline Loans then
outstanding may be in the aggregate principal amount of such Swingline Loans.
Upon receipt of any such notice from the Company, the Agent shall promptly
notify each Revolving Credit Lender thereof. Each Revolving Credit Lender will
make the amount of its pro rata share of each such borrowing available to the
Agent for the account of the Company prior to 12:00 Noon, New York City time, on
the Borrowing Date requested by the Company, at the Agent's depositary bank as
designated by the Agent from time to time for deposit in the Agent's depositary
account, in immediately available funds. The Agent shall then make such
borrowing available to the Company by wiring to a financial institution
designated by the Company the aggregate of the amounts made available to the
Agent by the Revolving Credit Lenders and in like funds as received by the
Agent.
3.4 Use of Proceeds of Revolving Credit Loans. The proceeds of the
-----------------------------------------
Revolving Credit Loans shall be used by the Company to pay fees and expenses
relating to this Agreement, to finance the working capital and capital
expenditure requirements of the Company and its Subsidiaries in the ordinary
course of business and to refinance Swingline Loans hereunder.
SECTION 4. AMOUNT AND TERMS OF SWINGLINE SUB-FACILITY
4.1 Swingline Loans. Subject to the terms and conditions set forth
---------------
herein, the Swingline Lender agrees to make swingline loans (individually, a
24
"Swingline Loan; collectively, the "Swingline Loans") to the Company from time
-------------- ---------------
to time prior to the Revolving Credit Termination Date, in an aggregate
principal amount at any time outstanding that will not result in (i) the
aggregate principal amount of outstanding Swingline Loans exceeding $10,000,000
or (ii) the sum of the Total Revolving Extensions of Credit exceeding the lesser
of (A) the total Revolving Credit Commitments or (B) the Borrowing Base then in
effect. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Company may borrow, prepay and, to but excluding the Revolving
Credit Termination Date, reborrow Swingline Loans. The Company shall repay each
Swingline Loan not later than seven Business Days after the Borrowing Date of
such Swingline Loan.
4.2 Swingline Note. The Swingline Loans made by the Swingline Lender
--------------
shall be evidenced by a promissory note of the Company, substantially in the
form of Exhibit A-4 (the "Swingline Note"), with appropriate insertions therein,
--------------
payable to the order of the Swingline Lender and representing the obligation of
the Company to pay the aggregate unpaid principal amount of the Swingline Loans,
with interest thereon. The Swingline Lender is hereby authorized to record the
date and amount of each Swingline Loan and the date and amount of payment or
prepayment of principal thereof on the schedule annexed to and constituting a
part of the Swingline Note (and any continuation thereof), and any such
recordation shall constitute prima facie evidence of the accuracy of the
----- -----
information so recorded; provided that the failure of the Swingline Lender to
--------
make such recordation (or any error in such recordation) shall not effect the
obligations of the Company hereunder or under the Swingline Note.
4.3 Procedure for Swingline Borrowings. To request a Swingline Loan,
----------------------------------
the Company shall notify the Agent of such request by telephone (confirmed by
telecopy), not later than 12:00 Noon, New York City time, on the day of a
proposed Swingline Loan. Each such notice shall be irrevocable and shall specify
the requested date (which shall be a Business Day) and amount of the requested
Swingline Loan. The Agent will promptly advise the Swingline Lender of any such
notice received from the Company. The Swingline Lender shall make each Swingline
Loan available to the Company by wiring to a financial institution designated by
the Company the amount of such Swingline Loan in immediately available funds
(or, in the case of a Swingline Loan made to finance the reimbursement of any
payment made by GE Capital in respect of Letter of Credit Obligations as
provided in subsection 5.1(b), by remittance to GE Capital by 3:00 p.m., New
York City time, on the requested date of such Swingline Loan).
4.4 Participations. The Swingline Lender may by written notice given
--------------
to the Agent not later than 10:00 a.m., New York City time, on any Business Day
require the Revolving Credit Lenders to acquire participations on such Business
Day in all or a portion of the Swingline Loans outstanding. Such notice shall
specify the aggregate amount of Swingline Loans in which Revolving Credit
Lenders will participate. Promptly upon receipt of such notice, the Agent will
give notice thereof to each Revolving Credit Lender, specifying in such notice
such Lender's Revolving Credit Percentage of such Swingline Loan(s). Each
Revolving Credit Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Agent, for the account of the
Swingline Lender, such Lender's Revolving Credit Percentage of such Swingline
Loan(s). Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations in Swingline Loans pursuant to this
paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or reduction or termination of the Revolving Credit Commitments, and that each
25
such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each Revolving Credit Lender shall comply with its
obligation under this paragraph by wire transfer of immediately available funds,
in the same manner as provided in subsection 3.3 with respect to Revolving
Credit Loans made by such Lender (and subsection 3.3 shall apply, mutatis
-------
mutandis, to the payment obligations of the Revolving Credit Lenders), and the
--------
Agent shall promptly pay to the Swingline Lender the amounts so received by it
from the Revolving Credit Lenders. The Agent shall notify the Company of any
participations in any Swingline Loan(s) acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan(s) shall be made to the
Agent and not to the Swingline Lender. Any amounts received by the Swingline
Lender from the Company (or other party on behalf of the Company) in respect of
a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale
of participations therein shall be promptly remitted to the Agent; any such
amounts received by the Agent shall be promptly remitted by the Agent to the
Revolving Credit Lenders that shall have made their payments pursuant to this
paragraph and to the Swingline Lender, as their interests may appear. The
purchase of participations in a Swingline Loan pursuant to this paragraph shall
not relieve the Company of any default in the payment thereof. Notwithstanding
the foregoing, a Revolving Credit Lender shall not have any obligation to
acquire a participation in a Swingline Loan pursuant to this paragraph if an
Event of Default shall have occurred and be continuing at the time such
Swingline Loan was made and such Revolving Credit Lender shall have notified the
Swingline Lender in writing, at least one Business Day prior to the time such
Swingline Loan was made, that such Event of Default has occurred and that such
Revolving Credit Lender will not acquire participations in Swingline Loans made
while such Event of Default is continuing.
4.5 Use of Proceeds of Swingline Loans. The proceeds of the
----------------------------------
Swingline Loans hereunder shall be used by the Company for any purpose for which
the proceeds of Revolving Credit Loans may be used.
SECTION 5. AMOUNT AND TERMS OF LETTER OF CREDIT SUB-FACILITY
5.1 Letters of Credit. (a) GE Capital agrees, subject to the terms
-----------------
and conditions hereinafter set forth, to incur, from time to time on written
request of the Company, Letter of Credit Obligations in respect of Letters of
Credit and GE Guarantees; provided, however, that (i) the amount of all Letter
-----------------
of Credit Obligations incurred by GE Capital at any one time outstanding
(whether or not then due and payable) shall not exceed $5,000,000 in the
aggregate and (ii) after giving effect to the incurrence of any Letter of Credit
Obligations, the sum of the outstanding Reimbursement Obligations at such time
and the then outstanding Revolving Credit Loans (without duplication of
Reimbursement Obligations deemed to have become Loans) and Swingline Loans shall
not exceed the Borrowing Base then in effect; and further provided, however,
------- -------- -------
that (i) no Letter of Credit or GE Guarantee shall have an expiration date which
is more than one year following the date of issuance thereof and (ii) GE Capital
shall be under no obligation to incur Letter of Credit Obligations in respect of
any Letter of Credit or GE Guarantee having an expiration date which is later
than the Revolving Credit Termination Date. The determination by GE Capital of
the bank or other legally authorized Person (including GE Capital) which shall
issue any letter of credit contemplated by this subsection 5.1(a) shall be made
by GE Capital, in its sole discretion. Upon the date of the issue of a Letter of
Credit or GE Guarantee hereunder, GE Capital shall be deemed, without further
action by any party hereto, to have sold to each Revolving Credit Lender, and
each Revolving Credit Lender shall be deemed, without further action by any
26
party hereto, to have irrevocably purchased from GE Capital, a participation in
such Letter of Credit or GE Guarantee and the related Letter of Credit
Obligations and Reimbursement Obligations in an amount equal to such Lender's
Revolving Credit Percentage thereof, and each Revolving Credit Lender (other
than GE Capital) shall absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and shall be unconditionally obligated to GE
Capital to pay and discharge when due, such Revolving Credit Lender's
participation interest in GE Capital's liability under such Letter of Credit
Obligations, provided that no such Revolving Credit Lender shall be liable for
--------
payment of any amount hereunder in respect of such Letter of Credit or GE
Guarantee resulting from GE Capital's gross negligence or willful misconduct.
(b) In the event that GE Capital or any Revolving Credit Lender shall
make any payment on or pursuant to a Letter of Credit Obligation, the amount of
such payment shall reduce the amount of the Letter of Credit Obligations
outstanding immediately preceding such payment, but such payment thereupon shall
be deemed to constitute a Revolving Credit Loan hereunder made to the Company on
the date of such payment (whether or not the conditions precedent to the making
of a Revolving Credit Loan are satisfied) bearing interest at the rates set
forth in subsection 6.3 payable in arrears on each Interest Payment Date.
Without limiting the obligation of the Company to reimburse GE Capital and the
other Revolving Credit Lenders for such payment, each Revolving Credit Lender
agrees that immediately following notice from GE Capital or any other Revolving
Credit Lender that GE Capital or such other Revolving Credit Lender, as the case
may be, has made any such payment, such Revolving Credit Lender shall pay to the
Agent, for the account of GE Capital or such other Revolving Credit Lender, an
amount equal to such Revolving Credit Lender's Revolving Credit Percentage of
such payment. If such Revolving Credit Lender fails to make any such payment to
the Agent in accordance with the preceding sentence, such Revolving Credit
Lender shall pay to the Agent interest in respect of such overdue amount for
each day thereafter at the rate equal to the applicable Index Rate.
(c) In the event that (i) any Revolving Credit Loan or Reimbursement
Obligation, whether or not then due and payable, shall for any reason be
outstanding on the Revolving Credit Termination Date (including, without
limitation, any occurrence of the Revolving Credit Termination Date as a result
of the occurrence of an Event of Default) or (ii) the Borrowing Base shall be
reduced to an amount which is less than the amount of outstanding Reimbursement
Obligations and outstanding Revolving Credit Loans (without duplication of
Reimbursement Obligations deemed to have become Loans) and Swingline Loans after
giving effect to such reduction, the Company will pay to the Agent, for the
account of the Revolving Credit Lenders, cash or Cash Equivalents in an amount
equal to the amount by which the sum of such Reimbursement Obligations and such
Loans exceeds the Borrowing Base. Such cash and Cash Equivalents shall be held
by the Agent, for the account of the Revolving Credit Lenders, in a cash
collateral account (the "Cash Collateral Account"). The Cash Collateral Account
-----------------------
shall be maintained at a bank designated by the Agent in the name of the Agent
(as a cash collateral account), and shall be under the sole dominion and control
of Agent and subject to the terms of this subsection 5.1. The Company hereby
pledges, and grants to the Agent for the benefit of the Lenders a security
interest in, all such cash and Cash Equivalents and other amounts held in the
Cash Collateral Account from time to time and all earnings thereof and proceeds
thereon, as security for the payment of all Obligations.
27
(d) From time to time after funds are deposited in the Cash Collateral
Account, the Agent shall apply such funds or Cash Equivalents then held in the
Cash Collateral Account and proceeds thereof and earnings thereon to the payment
or cash collateralization of the Obligations.
(e) Neither the Company nor any Person claiming on behalf of or
through the Company shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that the Agent shall
release from the Cash Collateral Account and return to the Company the amounts
described below under the circumstances described below:
(i) upon the termination of any Letter of Credit Obligations in
accordance with their terms and the payment of all amounts payable by
the Company to the Revolving Credit Lenders and GE Capital in respect
thereof, any funds remaining in the Cash Collateral Account in excess
of the then remaining Revolving Credit Loans and Reimbursement
Obligations (without duplication of Reimbursement Obligations deemed
to have become Loans) and Swingline Loans shall be returned to the
Company; and
(ii) in the event that the Borrowing Base then in effect and the
amounts then remaining in the Cash Collateral Account exceed the
amount of Revolving Credit Loans, Swingline Loans and Reimbursement
Obligations then outstanding (without duplication of Reimbursement
Obligations deemed to have become Loans) for a period of five
consecutive Business Days, such excess amount in the Cash Collateral
Account shall be returned to the Company.
(f) The Agent shall invest or cause to be invested the funds in the
Cash Collateral Account in such Cash Equivalents as the Company may direct.
Interest and earnings on the Cash Equivalents in the Cash Collateral Account
shall be the property of the Company but shall be held in the Cash Collateral
Account as Collateral (subject to release by the Agent in accordance with
subsection 5.1(e)). The Company agrees that it shall include such interest and
earnings in income of the Company for U.S. income tax purposes.
5.2 Fees, Expenses and Indemnification in Respect of Letter of Credit
-----------------------------------------------------------------
Obligations. (a) In the event that the Revolving Credit Lenders shall incur
-----------
any Letter of Credit Obligations pursuant hereto at the request or on behalf of
the Company hereunder, the Company agrees to pay to the Agent (i) all incidental
fees and charges paid by GE Capital on account of the issuance or amendments of
such Letter of Credit Obligations to the issuer, beneficiary or like party and
(ii) with respect to issued but undrawn Letter of Credit Obligations only,
computed for the period from and including the date such Letter of Credit
Obligations are incurred to the date such Letter of Credit Obligations are no
longer outstanding, a fee in an amount equal to the quotient of (A) an amount
equal to (1) the sum of the daily outstanding undrawn amount of such Letter of
Credit Obligations for the period as to which payment of such fee is made
multiplied by (2) a rate equal to 2%, divided by (B) 360. Fees payable in
respect of Letter of Credit Obligations shall be payable to the Agent quarterly
in arrears on each L/C Fee Payment Date and on the date the relevant Letter of
Credit Obligations expire or are cancelled. The Agent will pay to each
Revolving Credit Lender, promptly after receiving any payment in respect of
letter of credit fees referred to in this paragraph (a), such Revolving Credit
Lender's ratable share of such fees, other than fees payable under clause (i)
above which shall be payable to GE Capital.
28
(b) The Company hereby indemnifies and holds harmless each Revolving
Credit Lender and the Agent (which for purposes of this subsection 5.2(b) shall
include a reference to GE Capital acting in its individual capacity hereunder as
issuer of Letters of Credit and GE Guarantees) from and against, and guarantees
payment of and assumes as a primary obligor, any and all claims and damages,
losses, liabilities, costs or expenses which such Revolving Credit Lender or the
Agent may incur (or which may be claimed against such Lender or the Agent by any
Person whatsoever) by reason of or in connection with the execution and delivery
or transfer of or payment or failure to pay under any Letter of Credit or GE
Guarantee, including, without limitation, any claims, damages, losses,
liabilities, costs or expenses which GE Capital or any other Revolving Credit
Lender may incur by reason of or in connection with the failure of any Revolving
Credit Lender to fulfill or comply with its obligations to GE Capital or such
Revolving Credit Lender hereunder (but nothing herein contained shall affect any
rights which the Company may have against such defaulting Lender); provided that
--------
the Company shall not be required to indemnify any Revolving Credit Lender or
the Agent for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by the willful misconduct or gross
negligence of such Lender or the Agent in determining whether a request
presented under any Letter of Credit or a demand for payment under a GE
Guarantee complied with the terms of such Letter of Credit or GE Guarantee after
the presentation to it of a request strictly complying with the terms and
conditions of the Letter of Credit or GE Guarantee. Nothing in this subsection
5.2(b) is intended to limit the obligations of the Company under any other
provision of this Agreement.
SECTION 6. PROVISIONS RELATING TO CERTAIN EXTENSIONS OF
CREDIT; FEES AND PAYMENTS
6.1 Mandatory Prepayments. (a) (i) If, at any time and from time to
---------------------
time, the Company and its Subsidiaries shall have cash or Cash Equivalents
on deposit in bank accounts or other deposit accounts (including, without
limitation, securities accounts, but not including any accounts into which
Collections (as defined in the Receivables Purchase Agreement) are
deposited pursuant to the Receivables Purchase Agreement) with an aggregate
value in excess of $500,000 (net of any amounts on deposit to cover (x)
checks and other debits previously drawn and tendered by the Company and
its Subsidiaries but not yet cleared and (y) wire transfers which have been
irrevocably authorized to be paid at opening of business on the next
Business Day) (such excess amount, "Excess Cash on Hand"), the Company
-------------------
shall promptly (and, in any event, within one Business Day) cause such
excess amounts to be paid to the Agent to be applied in accordance with the
provisions of subsection 6.16; provided that no prepayments of Term Loans
--------
shall be required to be made pursuant to this subsection 6.1(a) except as
provided in clause (iii) below.
(ii) If, after application of Excess Cash on Hand in accordance with
the provisions of subsection 6.1(a)(i) and subsection 6.16, (x) there are
no Swingline Loans or Revolving Credit Loans outstanding, (y) the Company
and its Subsidiaries shall continue to have Excess Cash on Hand and (z) the
Company, NBD Bank and the Agent shall have entered into a Restricted
Account Agreement (as defined in Annex B hereto), in form and substance
satisfactory to the Agent, with respect to each of the Concentration
Account and the Money Market Account, the Company shall promptly (and in
29
any event, within one Business Day) cause such Excess Cash on Hand to be
deposited in the Concentration Account or the Money Market Account for the
benefit of the Lenders; provided that the Company may withdraw such funds
--------
from such accounts to make any expenditures permitted hereunder so long as
no Event of Default has occurred and is continuing.
(iii) If, after application of Excess Cash on Hand in accordance with
the provisions of subsection 6.1(a)(i) and subsection 6.16, (x) there are
no Swingline Loans or Revolving Credit Loans outstanding and (y) the
Company and its Subsidiaries shall continue to have Excess Cash on Hand,
but the Company, NBD Bank and the Agent shall have not entered into a
Restricted Account Agreement with respect to the Concentration Account and
the Money Market Account, the Company shall pay promptly to the Agent any
Excess Cash on Hand to be applied toward the prepayment of Term Loans.
(b) If (i) for any fiscal year of the Company the sum of (A) the
average daily aggregate principal amount of Indebtedness of the Company
outstanding hereunder for such fiscal year and (B) the average daily Capital
Investment during such fiscal year is greater than the sum of (X) the average
daily availability under the Revolving Credit Commitments for such fiscal year
(determined with reference to the mathematical average of the weekly Borrowing
Bases calculated for such year) and (Y) the average daily Availability (as
defined in the Receivables Purchase Agreement) for such fiscal year and (ii) as
of the last day of such fiscal year of the Company, the Consolidated Senior Debt
Leverage Ratio is greater than 3.25:1.00 for such fiscal year, the Company shall
on the relevant Cash Application Date pay 50% of Excess Cash Flow, if any, to
the Agent to be applied toward prepayment of the Term Loans; provided further
-------- -------
that no payment shall be required pursuant to this paragraph to the extent, and
only to the extent, that the amount of any such payment would exceed the
difference between (A) the sum of the average daily aggregate principal amount
of Indebtedness of the Company outstanding hereunder for such fiscal year and
the average daily Capital Investment for such fiscal year and (B) the sum of the
mathematic average of the weekly Borrowing Bases calculated for such fiscal year
and the average daily Availability for such fiscal year. The Company shall
provide a certificate in form and substance satisfactory to the Agent setting
forth calculations demonstrating its compliance with this subsection 6.1(b).
(c) Promptly (and, in any event, within one Business Day) following
the consummation of any Asset Sale by the Company or any of its Subsidiaries,
the Company or the relevant Subsidiary, as the case may be, shall cause the
purchaser to pay directly to the Agent 100% of the Net Cash Proceeds of such
Asset Sale, which amount shall be applied in accordance with the provisions of
subsection 6.16. Concurrently with the making of any such prepayments, the
Company shall deliver to the Agent a certificate of the Company's chief
financial officer demonstrating in reasonable detail its calculation of the
amount required to be prepaid.
(d) In the event that the aggregate amount of the Revolving Extensions
of Credit at any time outstanding exceeds the then applicable Borrowing Base,
then, without notice or demand, the Company shall, on such date, pay such excess
amount to the Agent for application in accordance with the provisions of
subsection 6.16 (including, without limitation, to cash collateralize any
outstanding Reimbursement Obligations in accordance with the provisions of
subsection 5.1(c)), provided that no prepayment of Term Loans shall be required
30
to be made pursuant to this subsection 6.1(d). The Company may, subject to the
terms and conditions of this Agreement, reborrow the amount of any prepayment
made under this subsection 6.1(d).
(e) If after the Effective Date any Indebtedness (other than
Indebtedness incurred pursuant to the terms of this Agreement or the Capital
Investment) shall be issued or incurred by the Company or any of its
Subsidiaries, an amount equal to 100% of such Net Cash Proceeds thereof shall
be, within three Business Days after the date of such issuance or incurrence,
first applied, if the Consolidated Total Debt Leverage Ratio calculated as of
-----
the last day of the most recently ended fiscal quarter is equal to or greater
than 5.50:1.00, toward prepayment of the Term Loans to the extent necessary to
reduce the Consolidated Total Debt Leverage Ratio to less than 5.50:1.00 and
second deposited in the Concentration Account or the Money Market Account for
------
the benefit of the Lenders; provided, that, if (i) the Company has entered into
--------
a letter of intent or other more definitive documentation for the purchase of
assets in a transaction permitted by subsection 10.5(f) and (ii) the Company,
NBD Bank and the Agent have entered into a Restricted Account Agreement with
respect to each of the Concentration Account and the Money Market Account on
terms and conditions satisfactory to the Agent, the Company shall not be
required to (x) prepay the Term Loans as required by clause first above (but
-----
shall be required to deposit 100% of such Net Cash Proceeds in the Concentration
Account or the Money Market Account within the time period prescribed above) or
(y) prepay Loans pursuant to subsection 6.1(a) and shall be entitled to withdraw
amounts from the Concentration Account and the Money Market Account to the
extent necessary to consummate such purchase; provided, further that if any
-------- -------
amounts deposited in the Concentration Account and the Money Market Account
pursuant to the preceding proviso remain in such account for more than 60 days,
such amounts shall be first applied to prepay the Term Loans to the extent
-----
necessary to reduce the Consolidated Total Debt Leverage Ratio to less than
5.50:1.00 and second applied in accordance with subsection 6.1(a).
------
Notwithstanding the foregoing, if (i) any Indebtedness shall be issued or
incurred by the Company or any of its Subsidiaries that is subordinated to the
Obligations hereunder on terms satisfactory to the Agent, (ii) the Consolidated
Total Debt Leverage Ratio is less than 5.50:1.00, (iii) the Company is in
compliance with the financial covenants set forth on Schedule 10.8 and (iv) no
Event of Default has occurred and is continuing or, after the incurrence or
issuance of such Indebtedness, would occur, this subsection 6.1(e) shall not
apply to such transaction (for the avoidance of doubt, subsection 6.1(a) shall
apply to the proceeds of such transaction).
6.2 Optional Prepayments; Termination of Revolving Credit
-----------------------------------------------------
Commitments. The Company may, at any time upon at least five Business Days'
-----------
prior irrevocable notice to the Agent, without premium or penalty, prepay all or
part of the Loans then outstanding and cash collateralize any outstanding
Reimbursement Obligations (after giving effect to any Reimbursement Obligations
terminated in a manner acceptable to the Agent) in accordance with the
provisions of subsection 5.1(c) and, simultaneously therewith, terminate the
Revolving Credit Commitments, in whole or in part, which notice shall specify
whether the prepayment is of Eurodollar Loans or Index Rate Loans, the date of
such prepayment, cash collateralization and Commitment termination. Upon receipt
of such notice, the Agent shall promptly notify each relevant Lender thereof. If
any such notice is given, the amount specified in such notice and cash
collateralization of all Reimbursement Obligations (or termination of
Reimbursement Obligations) shall be due and payable on the date specified
therein. In no event shall the Company have the right to reduce the Revolving
Credit Commitments, other than in accordance with the provisions of this
subsection 6.2. Amounts prepaid on account of Term Loans may not be reborrowed.
Partial prepayments of Term Loans shall be in an aggregate principal amount of
not less than $5,000,000 and multiples of $1,000,000 in excess thereof.
31
Any prepayment of a Eurodollar Loan (other than Swingline Loans) on a
day other than the last day of the Interest Period for such Loan shall be
subject to the provisions of subsection 6.6.
6.3 Interest on Loans. (a) Each Eurodollar Loan shall bear interest
-----------------
for each day during each Interest Period with respect thereto at a rate per
annum equal to the Eurodollar Rate determined for such day plus the Applicable
----
Margin.
(b) Each Index Rate Loan shall bear interest at a rate per annum
equal to the Index Rate plus the Applicable Margin.
----
(c) Each Swingline Loan shall bear interest at a rate per annum equal
to the One Month Eurodollar Rate plus the Applicable Margin then applicable to
----
Revolving Credit Loans that are Eurodollar Loans.
(d) During such time as any Default or Event of Default shall have
occurred and be continuing, amounts owing hereunder (including, without
limitation, interest and other amounts) shall bear interest at a rate per annum
equal to the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection 6.3 plus 2% from the date of such non-
----
payment until such amount is paid in full (as well after as before judgment).
(e) Interest on the Loans shall be due and payable by the Company in
arrears on each Interest Payment Date and on the Revolving Credit Termination
Date or date final payment is due in respect of the relevant Term Loan,
respectively; provided, that interest accruing pursuant to subsection 6.3(d)
--------
shall be payable on demand. The Company hereby authorizes the Agent to borrow on
behalf of the Company under this Agreement at any time and from time to time
(without any prior notice to or demand upon the Company) in order to pay
interest, fees and expenses owing under this Agreement.
(f) Loans which bear interest based upon the One Month Eurodollar
Rate shall not be subject to the indemnification provisions contained in
subsection 6.6 hereof.
6.4 Conversion and Continuation Options. (a) The Company may elect
-----------------------------------
from time to time to convert Eurodollar Loans (other than Swingline Loans) to
Index Rate Loans by giving the Agent prior irrevocable notice of such election
on the day such conversion is requested, provided that any such conversion of
--------
Eurodollar Loans may only be made on the last day of an Interest Period with
respect thereto. The Company may elect from time to time to convert Index Rate
Loans to Eurodollar Loans by giving the Agent at least three Business Days'
prior irrevocable notice of such election. Any such notice of conversion to
Eurodollar Loans shall specify the length of the initial Interest Period or
Interest Periods therefor. Upon receipt of any such notice the Agent shall
promptly notify each relevant Lender thereof. All or any part of outstanding
Eurodollar Loans and Index Rate Loans may be converted as provided herein,
provided that (i) no Loan may be converted into a Eurodollar Loan when any Event
--------
of Default has occurred and is continuing and the Agent has or the Majority
Facility Lenders have determined that such a conversion is not appropriate, (ii)
no Loan may be converted into a Eurodollar Loan after the date that is one month
prior to the Revolving Credit Termination Date, the Tranche A Maturity Date or
the Tranche B Maturity Date, as applicable.
32
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Company giving
notice to the Agent, in accordance with the applicable provisions of the term
"Interest Period" set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurodollar Loan
--------
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Agent has or the Majority Facility Lenders have determined
that such a continuation is not appropriate or (ii) after the date that is one
month prior to the Revolving Credit Termination Date, the Tranche A Maturity
Date or the Tranche B Maturity Date, as applicable, and provided, further, that
-------- -------
if the Company shall fail to give such notice or if such continuation is not
permitted such Loans shall be automatically converted to Index Rate Loans on the
last day of such then expiring Interest Period.
6.5 Minimum Amounts and Maximum Number of Tranches. All borrowings,
----------------------------------------------
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Tranche shall be equal to $500,000 or a whole
multiple of $100,000 in excess thereof. In no event shall there be more than
five Tranches outstanding at any time with respect to the Term Loans or five
Tranches outstanding at any time with respect to Revolving Credit Loans.
6.6 Indemnification in Respect of Eurodollar Loans. The Company
----------------------------------------------
agrees to indemnify each Lender and to hold each Lender harmless from any loss
or expense which such Lender may sustain or incur as a consequence of (a)
default by the Company in making a borrowing of, conversion into or continuation
of Eurodollar Loans after the Company has given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Company in
making any prepayment after the Company has given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (ii) the amount of interest (as reasonably determined by such
Lender) which would have accrued to such Bank on such amount by placing such
amount on deposit for a comparable period with leading banks in the interbank
eurodollar market. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
6.7 Unused Commitment Fee. The Company shall pay to the Agent for
---------------------
the account of each Revolving Credit Lender, an unused commitment fee for the
period from and including the Effective Date to the Revolving Credit Termination
Date, computed at the Unused Commitment Fee Rate on the average daily amount of
the Available Revolving Credit Commitment (without reduction for any amount of
Swingline Loans from time to time outstanding) of such Lender during the period
for which payment is made, payable quarterly in arrears on the first Business
33
Day of each April, July, October and January, commencing on April 1, 1998, and
on the Revolving Credit Termination Date.
6.8 Closing Fee. The Company shall pay to GE Capital, for its own
-----------
account, a closing fee in accordance with the terms of the Fee Letter.
6.9 Computation of Interest and Fees. (a) Commitment fees and
--------------------------------
interest shall be calculated on the basis of a 360-day year for the actual days
elapsed. The Agent shall as soon as practicable notify the Company and Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Index Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. Any change in the interest rate on a Loan
resulting from a change in the Applicable Margin shall become effective on the
relevant Adjustment Date. The Agent shall as soon as practicable notify the
Company and the Lenders of the effective date and the amount of each such change
in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Company
and the Lenders in the absence of manifest error.
6.10 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period; or
(b) the Agent shall have received notice from the Majority Facility
Lenders that the Eurodollar Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,
then the Agent shall give telecopy or telephonic notice thereof to the Company
and the relevant Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans under the relevant Facility requested to be made
on the first day of such Interest Period shall be made as Index Rate Loans, (y)
any Loans under the relevant Facility that were to have been converted on the
first day of such Interest Period to Eurodollar Loans shall be converted to or
continued as Index Rate Loans and (z) any outstanding Eurodollar Loans shall be
converted, on the first day of such Interest Period, to Index Rate Loans. Until
the circumstances giving rise to such notice have ended, no further Eurodollar
Loans under the relevant Facility shall be made or continued as such, nor shall
the Company have the right to convert Loans under the relevant Facility to
Eurodollar Loans.
6.11 Effective Date. If the Effective Date has not occurred on or
--------------
prior to March 30, 1998, the Commitments shall terminate, in which case this
Agreement shall be of no further force and effect, except as expressly provided
herein. Unless the Lenders waive or amend the provisions of the preceding
sentence, promptly after such date the Company shall reimburse GE Capital (to
the extent not previously reimbursed) for all of its reasonable out-of-pocket
34
expenses, including, without limitation, legal fees and disbursements, incurred
in connection with the Fee Letter, the Loan Documents or any of the transactions
contemplated thereby.
6.12 Pro Rata Treatment and Payments. (a) Each borrowing of Loans
-------------------------------
from the Lenders hereunder shall be made pro rata according to the respective
--- ----
Tranche A Term Loan Percentages, Tranche B Term Loan Percentages and Revolving
Credit Term Loan Percentages, as the case may be, of the relevant Lenders.
Subject to subsection 6.7, each payment by the Company on account of unused
commitment fees and Letter of Credit commissions and any reduction in the
Revolving Credit Commitments shall be made pro rata according to the respective
--- ----
Revolving Credit Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Company on
account of principal of and interest on the Term Loans under any Facility shall
be made pro rata according to the respective outstanding principal amounts of
--- ----
the Term Loans under such Facility then held by the Term Loan Lender. The amount
of each principal payment of the Term Loans shall be applied to reduce the then
remaining installments of the Term Loans pro rata based upon the then remaining
--- ----
outstanding principal amounts of such installments.
(c) Each payment (including prepayments) by the Company on account of
principal of and interest on the Revolving Credit Loans and the principal and
interest components of the Reimbursement Obligations shall be made pro rata
--- ----
according to the respective outstanding principal amounts of the Revolving
Credit Loans and Reimbursement Obligations held by each Revolving Credit Lender;
provided that appropriate adjustments shall be made in the application of
--------
payment of Reimbursement Obligations with respect to which any such Lender has
not paid for its participating interest in accordance with subsection 5.2.
(d) Each prepayment of Term Loan Facilities shall be applied to the
Term Loan Facilities ratably in accordance with the respective amounts then
outstanding under such Facilities; provided that the Company may apply any
--------
prepayment made pursuant to subsection 6.2, at its option, either (i) to prepay
Tranche A Term Loans and Tranche B Term Loans ratably in accordance with the
respective amounts then outstanding or (ii) to prepay Tranche A Term Loans;
provided, further that the Company may apply any prepayment made pursuant to
-------- -------
subsection 6.1(a), (b) or (e), at its option, either (i) to prepay Tranche A
Term Loans and the Tranche B Term Loans ratably in accordance with the
respective amounts then outstanding or (ii) to prepay the Tranche A Term Loans
and, if Tranche A Term Loans are no longer outstanding, then to prepay the
Tranche B Term Loans.
(e) All payments (including prepayments) to be made by the Company
hereunder and under the Notes, except payments to be made directly to the
Swingline Lender as expressly provided herein, whether on account of principal,
interest, fees, Reimbursement Obligations or otherwise, shall be made without
set-off or counterclaim and shall be made prior to 12:00 Noon, New York City
time, on the due date thereof to the Agent, for the account of the Lenders, at
the Agent's depositary bank as designated by the Agent from time to time for
deposit in the Agent's depositary account, in immediately available funds. The
Agent shall distribute such payments to the Lenders promptly upon receipt in
like funds as received. If any payment hereunder becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. The
35
Agent is hereby authorized to, and at its option may, make advances on behalf of
the Company for payment of all fees, expenses, charges, costs, principal,
interest and Reimbursement Obligations incurred by the Company hereunder;
provided that (a) the Agent shall have no obligation to make such advances and
--------
(b) if the Agent makes any such advances in respect of any Loans (or interest or
premium thereon), Reimbursement Obligations or expenses, charges or costs to
which any Lender is entitled, the Agent shall pay each Lender within ten days
the portion thereof to which it is entitled in accordance with this subsection
6.12. Such advances may be made when and as the Company fails to promptly pay
such fees, expenses, charges, costs, principal, interest and Reimbursement
Obligations and, at the Agent's option and to the extent permitted by law, shall
be deemed Revolving Credit Loans hereunder.
6.13 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Index Rate Loans to Eurodollar Loans shall forthwith be cancelled and
(b) such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Index Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Company shall pay to such Lender such amounts, if any, as may be
required pursuant to subsection 6.6.
6.14 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Eurodollar Loan made by it,
or change the basis of taxation of payments to such Lender in respect
thereof (except for Taxes covered by subsection 6.15 and changes in the
rate of tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Company shall promptly
pay such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduced amount receivable.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
36
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, the Company shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this subsection, it shall promptly notify the Company (with a copy
to the Agent) of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this subsection
submitted by such Lender to the Company (with a copy to the Agent) shall be
conclusive in the absence of manifest error. The agreements in this subsection
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
6.15 Taxes. (a) All payments made by the Company under this
-----
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding, in the case of the Agent and each Lender, net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Agent or such Lender, as the case may be, as a result of a present or
former connection between the jurisdiction of the government or taxing authority
imposing such tax and the Agent or such Lender (excluding a connection arising
solely from the Agent or such Lender having executed, delivered, performed its
obligations or received a payment under, or enforced, this Agreement or the
Notes) or any political subdivision or taxing authority thereof (such non-
excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required to be
-----
withheld from any amounts payable to the Agent or any Lender (or Transferee)
hereunder or under the Notes, the amounts so payable to the Agent or such Lender
(or Transferee) shall be increased to the extent necessary to yield to the Agent
or such Lender (or Transferee) (after payment of all Taxes) interest or any such
other amounts payable hereunder and under the Notes at the rates or in the
amounts specified in this Agreement and the Notes; provided, however, that no
-------- -------
such additional amount shall be paid to any Lender (or Transferee) if the
information contained in any form which such Lender (or Transferee) has agreed
to provide pursuant to subsection 6.15(b) ceases to be accurate in any relevant
respect or if such Lender (or Transferee) is unable to provide any additional
form required to be provided upon the expiration or obsolescence of such
previously delivered form, in either case as the result of any action taken by
such Lender (or Transferee) that is not related to, or caused by, any change in
any treaty, law, regulation or interpretation thereof. Whenever any Taxes are
payable by the Company, as promptly as possible thereafter the Company shall
send to the Agent for its own account or for the account of a Lender, as the
case may be, a certified copy of an original official receipt received by the
Company showing payment thereof. If the Company fails to pay any Taxes when due
to the appropriate taxing authority or fails to remit to the Agent the required
receipts or other required documentary evidence, the Company shall indemnify the
37
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable to the Agent or any Lender as a result of any such failure. The
agreements in this subsection 6.15 shall survive the termination of this
Agreement and the payment of the Notes and all other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not incorporated under the
laws of the United States of America or a state thereof agrees that prior to the
Effective Date (or prior to the date of assignment or transfer in the case of
any Transferee), it will deliver to the Company and the Agent (i) two duly
completed copies of the United States Internal Revenue Service Form 1001 or 4224
or successor form, as the case may be, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form. Each such Lender (or Transferee) also
agrees to deliver to the Company and the Agent two further copies of the said
Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or other
manner of certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be requested by the
Company or the Agent, unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Company and the Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Any Lender (or Transferee) claiming any
additional amounts payable pursuant to this subsection 6.15 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to file any
certificate or documents reasonably requested by the Company or to change the
jurisdiction of its applicable lending office if the making of such a filing or
change would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue and would not, as determined in the sole
discretion of such Lender (or Transferee) be otherwise disadvantageous to such
Lender (or Transferee).
6.16 Application of Payments. Except as set forth in the proviso
-----------------------
clause below and as provided in subsections 6.1 and 6.2, all payments made to
the Agent hereunder shall be applied by the Agent in the following order: (i)
due and payable fees and expenses, (ii) then due and payable interest payments
on the Loans, (iii) principal on the Swingline Loans, (iv) principal payments on
the Revolving Credit Loans, (v) principal payments in Term Loans and (vi) the
cash collateralization of any outstanding Reimbursement Obligations to the
extent required pursuant to subsection 5.1(c); provided, that if an Event of
--------
Default has occurred and is continuing, such payments (in the absence of a
determination by the Agent and/or the Lenders, in their sole discretion, to
apply such payments in a different manner) shall be applied by the Agent in the
following order: (i) due and payable fees and expenses and (ii) then due and
payable principal and interest payments on the Loans and cash collateralization
of any Reimbursement Obligations to the extent required pursuant to subsection
5.1(c) in such order as the Agent shall determine. The application of any
prepayment pursuant to subsection 6.1 with respect to any Facility shall be made
first to Index Rate Loans and second to Eurodollar Loans.
38
6.17 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender")
-------------------- -----------------
shall at any time receive any payment of all or part of its Loans, or interest
thereon, or Reimbursement Obligations owed to it or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in subsection 11(j), or
otherwise), in a greater proportion (as determined pursuant to and in accordance
with subsection 6.12) than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans, or interest
thereon, or Reimbursement Obligations owed to it (in each case except to the
extent that this Agreement provides the payments to be allocated to the Lenders
use under a particular Facility) such benefitted Lender shall purchase for cash
from the other Lenders such portion of each such other Lender's Loans and
Reimbursement Obligations, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders in accordance with the
provisions of subsection 6.12; provided, however, that if all or any portion of
-------- -------
such excess payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery, but without interest. The Company
agrees that each Lender so purchasing a portion of another Lender's Loans or
Reimbursement Obligations owed to it may exercise all rights of payment
(including, without limitation, rights of set-off) with respect to such portion
as fully as if such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Company, any
such notice being expressly waived by the Company to the extent permitted by
applicable law, upon any amount becoming due and payable by the Company
hereunder (including, without limitation, pursuant to Section 7) or under the
Notes (whether at the stated maturity, by acceleration or otherwise) to set-off
and appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender to or for the credit or the account of the Company. Each
Lender agrees promptly to notify the Company and the Agent after any such set-
off and application made by such Lender, provided that the failure to give such
--------
notice shall not affect the validity of such set-off and application.
6.18 Single Loan. The Loans and all of the other obligations of the
-----------
Company arising under this Agreement and the other Loan Documents shall
constitute one general obligation of the Company secured by all of the
Collateral.
SECTION 7. REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement and to make the Loans (and to participate in the Swingline Loans, the
Letters of Credit and Letter of Credit Obligations) hereunder, the Company
hereby represents and warrants to each Lender that:
7.1 Financial Condition. (a) The audited consolidated
-------------------
balance sheets of the Company and its Consolidated Subsidiaries as at February
28, 1997, and the related audited consolidated statements of income,
shareholder's equity and cash flows for the year then ended, copies of which
39
have heretofore been furnished to each Lender, are complete and correct and
present fairly the consolidated financial condition of each such Person as at
such date and the consolidated results of its operations and its consolidated
cash flows for the fiscal period then ended. All such financial statements have
been prepared in accordance with GAAP applied consistently throughout the
periods involved. The Company and its Consolidated Subsidiaries do not have any
material Contingent Obligation, contingent liability or liability for taxes or
long-term lease or unusual forward or long-term commitment likely (individually
or in the aggregate) to result in a Material Adverse Effect that is not
reflected in said financial statements or in the notes thereto. During the
period from February 28, 1997 to and including the date hereof there has been no
sale, transfer or other disposition by the Company or any of its Consolidated
Subsidiaries of any material part of its business or property and no purchase or
other acquisition of any business or property (including any capital stock of
any other Person) material in relation to the consolidated financial condition
of the Company and its Consolidated Subsidiaries at February 28, 1997, except as
disclosed in the Syndication Memorandum
(b) Except as disclosed in the Syndication Memorandum, there has been
no material adverse change in the business, operations, property or condition
(financial or otherwise) of the Company and its Consolidated Subsidiaries taken
as a whole since February 28, 1997.
(c) Except as disclosed in the registration statement (file number
333-24043) of the Company on Form S-1, as amended as of the date hereof, no
dividends or other distributions have been declared, paid or made upon any
shares of capital stock of the Company or any of its Subsidiaries, nor have any
shares of capital stock of the Company or any of its Subsidiaries been redeemed,
retired, purchased or otherwise acquired for value by the Company or any of its
Subsidiaries since February 28, 1997.
7.2 Corporate Existence; Compliance with Law. Each of the Company
----------------------------------------
and each of its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority and the legal right to own its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged. The Company and each of its Subsidiaries is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of business requires such qualification and is in compliance with all
Requirements of Law, except to the extent that the failure to be so qualified or
to so comply could not (individually or in the aggregate) reasonably be expected
to have a Material Adverse Effect.
7.3 Corporate Power; Authorization. Each of the Company and each of
------------------------------
its Subsidiaries has the corporate power and authority, and the legal right, to
make, deliver and perform this Agreement, the Notes and each Loan Document to
which it is a party. Each of the Company and each of its Subsidiaries has taken
all necessary corporate action on its part to be taken to authorize the
execution, delivery and performance of this Agreement, the Notes and each Loan
Document to which it is a party, the borrowings contemplated by this Agreement,
and the creation of the Liens contemplated by each Collateral Document to which
it is a party. No consent or authorization of, or filing with, any Person
(including, without limitation, any Governmental Authority) is required in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement, the Notes, any Loan Document, the borrowings contemplated by
this Agreement, or the creation of the Liens contemplated by the Collateral
40
Documents, except for (a) routine filings to be made with Governmental
Authorities and (b) filings necessary to create or perfect the security
interests created by the Collateral Documents, all of which consents and filings
will be obtained or made prior to or on the Effective Date and will be in full
force and effect on the Effective Date.
7.4 Enforceable Obligations. This Agreement has been, and each of
-----------------------
the Notes and the Loan Documents to which it is a party will be, duly executed
and delivered on behalf of the Company and each of its Subsidiaries, and this
Agreement constitutes, and each of the Notes and the Loan Documents to which it
is a party when duly executed and delivered by the Company or such Subsidiary,
as the case may be, will constitute, legal, valid and binding obligations of the
Company and such Subsidiaries, enforceable against it in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(whether enforcement is sought in a proceeding in equity or at law).
7.5 No Legal Bar. (a) The execution and delivery of this Agreement,
------------
the Notes and the Loan Documents do not and will not violate any Requirement of
Law or any Contractual Obligation applicable to the Company or any of its
Subsidiaries and (b) the performance of this Agreement, the Notes and the Loan
Documents, the borrowings contemplated by this Agreement and the creation of the
Liens contemplated by the Collateral Documents do not and will not violate any
Requirement of Law or any Contractual Obligation (other than Contractual
Obligations which individually or in the aggregate would not have a Material
Adverse Effect, including, without limitation Contractual Obligations with
wholesale vendors to the Company) applicable to the Company or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien (other than Liens created pursuant to the Collateral Documents) on any
of their respective properties or revenues pursuant to any Requirement of Law
applicable thereto or Contractual Obligation thereof.
7.6 No Material Litigation. Except as set forth on Schedule 7.6, no
----------------------
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company
threatened, by or against the Company or any of its Subsidiaries or against any
of their respective properties or revenues (a) with respect to this Agreement,
the Notes, any Loan Document or any of the transactions contemplated hereby or
thereby, or (b) with respect to any other matter that could reasonably be
expected (individually or in the aggregate) to have a Material Adverse Effect.
7.7 Federal Regulation. No part of the proceeds of any Extension of
------------------
Credit, Letter of Credit or GE Guarantee will be used for any purpose that
violates the provisions of Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System as in effect on the date of making of such Loans or
issuance of such Letter of Credit or GE Guarantee.
7.8 Investment Company Act. Neither the Company nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" (as each of the quoted terms is defined or used in the
Investment Company Act of 1940, as amended).
7.9 Disclosure. Except as set forth on Schedule 7.9, no
----------
representation or warranty of the Company or any of its Subsidiaries contained
in this Agreement, any other Loan Document or any other document, certificate or
written statement furnished to the Agent or the Lenders or any of them by or on
41
behalf of the Company or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents contains
any untrue statement of a material fact or omits to state a material fact (known
to the Company or such Subsidiary in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained in
--- -----
the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Company to be reasonable at the time
made. There is no fact known to the Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein or in such other documents, certificates and
statements furnished to the Agent and the Lenders for use in connection with the
transactions contemplated hereby by the other Loan Documents.
7.10 No Default. Neither the Company nor any of its Subsidiaries is
----------
in default under or with respect to any Contractual Obligation in any respect
that (individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect.
7.11 Ownership of Property; Liens. The Company and each of its
----------------------------
Subsidiaries has good record and marketable title in fee simple to, or a valid
leasehold interest in, all its real property. The Company and each of its
Subsidiaries has good title to all its other property. None of such real or
other property is subject to any Lien, except as permitted by subsection 10.2.
No amount owing by the Company or any of its Subsidiaries on account of any
leasehold interest held by it is past due (after giving effect to any applicable
grace period), except to the extent that the failure to pay such amount,
including interest and penalties, could not reasonably be expected to have a
Material Adverse Effect and with respect to which reserves in conformity with
GAAP have been provided on the books of the Company.
7.12 Taxes. The Company and each of its Subsidiaries has filed or
-----
caused to be filed all tax returns that to the knowledge of the Company are
required to be filed (whether by the Company, any of its Subsidiaries or by any
consolidated corporate group of which the Company or any of its Subsidiaries is
a member), and has paid all taxes shown to be due and payable on said returns,
except where the failure to so file (taking into account all the consequences of
such failure and the taxes to be paid in connection with such filing) could not
reasonably be expected to have a Material Adverse Effect. The Company and each
of its Subsidiaries has paid all assessments made against the Company or any of
its Subsidiaries or any of its or their property, except as set forth on
Schedule 7.12 hereto. The Company and each of its Subsidiaries has paid all
other taxes, fees or other charges imposed on the Company or any of its
Subsidiaries or any of its or their property by any Governmental Authority, and
no tax liens have been filed and, to the knowledge of the Company, no claims are
being asserted with respect to any such taxes, fees or other charges, except for
(a) taxes not yet due, (b) those the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Company and (c) those set forth on Schedule 7.12 hereto. Proper and accurate
amounts have been withheld by the Company and each of its Subsidiaries from its
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective governmental agencies. Neither the Company nor any of its
Subsidiaries has executed or filed with the Internal Revenue Service or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. Neither the Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
42
the Code apply to any dispositions of "subsection (f) assets" (as defined in
Section 341(f)(4) of the Code). None of the property owned by the Company or any
of its Subsidiaries is property that the Company or such Subsidiary is required
to treat as being owned by any other Person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954 or is "tax-exempt use
property" within the meaning of Section 168(h) of the Code. Neither the Company
nor any of its Subsidiaries has agreed or has been requested to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise. Except as set forth on Schedule 7.12, neither the Company
nor any of its Subsidiaries has any obligation under any written tax sharing
agreement.
7.13 No Burdensome Restrictions. No Contractual Obligation or
--------------------------
Requirement of Law applicable to the Company or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
7.14 ERISA. No Reportable Event has occurred during the five-year
-----
period prior to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. The present value of all
accrued benefits under each Single Employer Plan maintained by the Company or
any Commonly Controlled Entity (based on those assumptions used to fund the
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits. Neither the Company nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither the Company nor any Commonly Controlled Entity
would become subject to any material liability under ERISA if the Company or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. No such Multiemployer Plan is
in Reorganization or Insolvent. The present value (determined using actuarial
and other assumptions which are reasonable in respect of the benefits provided
and the employees participating) of the liability of the Company and each
Commonly Controlled Entity for post-retirement benefits to be provided to their
current and former employees under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the assets
under all such Plans allocable to which such benefits by an amount which could
reasonably be expected to have a Material Adverse Effect.
7.15 Capital Stock. All of the shares of the capital stock of the
-------------
Company and each of its Subsidiaries have been duly and validly issued, are
fully paid and are non-assessable.
7.16 Subsidiaries; Executive Offices. (a) The Company does not have
-------------------------------
any direct or indirect Subsidiary as of the date hereof, other than those set
forth on Schedule 7.16(a). No Subsidiary of the Company other than PSC and PIC
has any meaningful assets, capital or liabilities or conducts any meaningful
business.
(b) The current location of each Loan Party's chief executive office
and principal places of business are set forth on Schedule 7.16(b), except to
the extent that such Loan Party has complied with subsection 5(p) of the
Security Agreement to which it is a party in respect of any change in such
location.
43
7.17 Security Documents. (a) The provisions of the Subsidiary
------------------
Guarantee are effective to create a legal, valid, binding and enforceable
guarantee of the obligations described therein, except as such enforceability
may be limited by bankruptcy, moratorium, reorganization or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding at law or in equity) (the "Enforceability
--------------
Exceptions").
----------
(b) Each of the Pledge Agreements is effective to create in favor of
the Agent, for the ratable benefit of the Agent and the Lenders, a legal, valid
and enforceable security interest in the pledged securities described therein
and the proceeds thereof, subject to the Enforceability Exceptions, and, the
stock certificates representing or constituting the Collateral described in such
Pledge Agreement having been delivered to the Agent, such Pledge Agreement
constitutes a perfected first Lien on, and security interest in, all right,
title and interest of the pledgor party thereto in the pledged securities
described therein and the proceeds thereof.
(c) Each of the Security Agreements is effective to create in favor
of the Agent, for the ratable benefit of the Agent and the Lenders, a legal,
valid and enforceable security interest in the Collateral described therein and
the proceeds thereof, subject to the Enforceability Exceptions, and, upon the
filing of Uniform Commercial Code financing statements in each of the
jurisdictions listed on Schedule 7.17(c) hereto and each Patent and Trademark
Assignment having been filed in the United States Patent and Trademark Office,
each such Security Agreement constitutes a perfected first lien on, and security
interest in, all right, title and interest of the debtor party thereto in the
Collateral described therein which is located in the jurisdiction listed on
Schedule 7.17(c) and the proceeds thereof, other than any Collateral thereunder
which is subject to perfection only by possession (in which event the Agent has
possession of such Collateral and therefore possesses a perfected first lien on,
and security interest in, all right, title and interest of the debtor party
thereto in such Collateral).
7.18 Projections. The projections of the Company's annual operating
-----------
budgets on a consolidated basis, balance sheets and cash flow statements for its
fiscal years ending on February 28, 1998 and February 28, 1999, copies of which
have been delivered to each Lender, disclose all material assumptions used in
formulating such projections. The Company is not aware of any facts that
(individually or in the aggregate) would result in any material change in any of
such projections. The projections are based upon good faith estimates and
assumptions, all of which are believed to be reasonable, have been prepared on
the basis of the assumptions stated therein, and reflect the reasonable
estimates of the Company of the results of operations and other information
projected therein.
7.19 Labor Matters. There are no strikes or other labor disputes
-------------
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened that (individually or in the aggregate) would have a
Material Adverse Effect. Hours worked by and payment made to employees of the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) would have a Material Adverse
Effect. Payments due from the Company or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
would have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of the Company or such Subsidiary.
7.20 Other Ventures. Neither the Company nor any of its Subsidiaries
--------------
is engaged in any joint venture or partnership with any other Person.
44
7.21 Employment and Labor Agreements. (a) Except as set forth on
-------------------------------
Schedule 7.21(a), there are no employment agreements covering the executive
officers of the Company or any of its Subsidiaries. Each employment agreement
set forth on Schedule 7.21(a) is in full force and effect in accordance with its
terms and a true and correct copy of each such employment agreement has been
delivered to the Agent prior to the date hereof.
(b) Except as set forth on Schedule 7.21(b), there are no collective
bargaining agreements or other labor agreements covering an aggregate of more
than 20 employees of the Company and its Subsidiaries.
7.22 Intellectual Property. The Company and each of its Subsidiaries
---------------------
owns, or is licensed to use, all trademarks, tradenames, copyrights, patents,
technology, know-how and processes necessary for the conduct of its business as
currently conducted (the "Intellectual Property"), except for those the failure
---------------------
to own or license which could reasonably be expected to have a Material Adverse
Effect. No claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, and except as set forth on
Schedule 7.22 the Company does not know of any valid basis for any such claim.
To the best knowledge of the Company, the use of such Intellectual Property by
the Company and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, do not have a
Material Adverse Effect.
7.23 No Material Adverse Effect. No event has occurred since
--------------------------
February 28, 1997 and is continuing that (individually or in the aggregate) has
had or could reasonably be expected to have a Material Adverse Effect.
7.24 Environmental Matters. To the best knowledge of the Company,
---------------------
each of the representations and warranties set forth in (a) through (e) of this
subsection is true and correct with respect to each parcel of real property
owned or operated by the Company (the "Properties"), except (i) as set forth on
----------
Schedule 7.24 and (ii) to the extent that the facts and circumstances giving
rise to any such failure to be so true and correct would not have any reasonable
likelihood of having a Material Adverse Effect:
(a) The Properties do not contain, and have not previously contained,
any Hazardous Materials in concentrations which violate Environmental Laws.
(b) The Properties are in compliance with all Environmental Laws,
including, without limitation, all applicable Federal, state and local
standards and requirements regarding the generation, treatment, storage,
handling, use or disposal of Hazardous Materials at the Properties, and
there is no Hazardous Materials contamination which could materially
interfere with the continued operation of the Properties or materially
impair the fair saleable value thereof.
(c) Neither the Company nor any of its Subsidiaries has received any
notice of violation or advisory action by any Governmental Authority
regarding environmental control matters or permit compliance with regard to
45
the Properties, nor is the Company aware that any Governmental Authority is
contemplating delivering to the Company or any of its Subsidiaries any such
notice.
(d) Hazardous Materials have not been transferred from the Properties
to any other location.
(e) There are no governmental administrative actions or judicial
proceedings pending or, to the knowledge of the Company, contemplated under
any Environmental Laws to which the Company or any of its Subsidiaries is
or is expected to be named as a party with respect to the Properties.
7.25 Public Warehouses. No Inventory of the Company or any of its
-----------------
Subsidiaries is located at any Public Warehouse on the date hereof. No
Inventory of the Company or any of its Subsidiaries is located at any Public
Warehouse other than a Public Warehouse in respect of which the Agent has
received a duly executed and delivered Warehousemen Notice which is in full
force and effect. No amount owing to any Public Warehouse by the Company or any
of its Subsidiaries is past due (after giving effect to any applicable grace
period) and neither the Company nor any of its Subsidiaries is in default under
any Contractual Obligation owing in respect of any Public Warehouse which holds
Inventory of the Company or any of its Subsidiaries.
SECTION 8. CONDITIONS PRECEDENT
8.1 Conditions to the Initial Extension of Credit. The agreement of
---------------------------------------------
each Lender to make the initial Extension of Credit requested to be made on the
Effective Date is subject to the satisfaction or waiver by each Lender,
immediately prior to or concurrently with the making of such Loans or incurrence
of such Letter of Credit Obligations, of the following conditions precedent (the
date on which each of such conditions precedent is satisfied or waived being
herein called the "Effective Date"):
--------------
(a) Notes. The Agent shall have received, for the account of each
-----
relevant Lender, the Notes, executed and delivered by a duly authorized
officer of the Company.
(b) Global Amendment. The Agent shall have received, with a
----------------
counterpart for each Lender, the Global Amendment, executed and delivered
by a duly authorized officer of each Loan Party thereto.
(c) Filings, Registrations and Recordings. Each document (including,
-------------------------------------
without limitation, any Uniform Commercial Code financing statement and the
filing of the Patent and Trademark Assignments in the United States Patent
and Trademark Office) required by the Collateral Documents or under law or
reasonably requested by the Lenders to be filed, registered or recorded in
order to create in favor of the Agent, for the benefit of the Agent and the
Lenders, a perfected first Lien on the Collateral described therein shall
have been delivered to the Lender for filing, registry or recordation in
each jurisdiction in which the filing, registration or recordation thereof
is so required or requested.
(d) Closing Certificates. The Agent shall have received, with a
--------------------
counterpart for each Lender, a certificate of each Loan Party substantially
in the form of Exhibit D hereto, dated the Effective Date, executed and
46
delivered by duly authorized officers of such Loan Party and attaching and
certifying the relevant documents referred to in subsections 8.1(e), (f)
and (k).
(e) Corporate Proceedings. The Agent shall have received, with a
---------------------
copy for each Lender, a copy of the resolutions in form and substance
reasonably satisfactory to each Lender, of the board of directors of each
Loan Party authorizing, as applicable, (i) the execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents to
which it is a party and (ii) the granting by it of the pledges and security
interests granted by it pursuant to the Collateral Documents to which it is
a party, in both cases certified by the Secretary or an Assistant Secretary
of such Loan Party as of the Effective Date. Such certificate shall state
that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate.
(f) Corporate Documents. The Agent shall have received, with a copy
-------------------
for each Lender, true and complete copies of the certificate of
incorporation and by-laws of each Loan Party, certified as of the Effective
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of such Credit Party.
(g) Legal Opinions. The Agent shall have received, with a
--------------
counterpart for each Lender, the following executed legal opinions:
(i) the executed legal opinion of Xxxxxxxxxx Xxxxxxxx LLP,
counsel to the Credit Parties, substantially in the form of Exhibit
E-1 hereto; and
(ii) the executed legal opinion of Xxxxxx, Xxxxxxxxx and
Xxxxxxxxx, special intellectual property counsel to the Agent,
substantially in the form of Exhibit E-2 hereto.
Each such legal opinion shall cover such matters incident to the transactions
contemplated by the Loan Documents as the Agent may reasonably require.
(h) No Litigation. (i) Except as disclosed on Schedule 7.6, no
-------------
litigation, investigation or proceeding before or by any arbitrator or
Governmental Authority shall be continuing or, to the knowledge of the Company
or any of its Subsidiaries, threatened against any Loan Party or against the
officers or directors of any thereof (A) in connection with this Agreement, the
Notes or the other Loan Documents or (B) that could reasonably be expected to
have a Material Adverse Effect; (ii) no injunction, writ, restraining order or
other order of any nature materially adverse to any Loan Party or the conduct of
its business or inconsistent with the due consummation of transactions
contemplated hereby shall have been issued by any Governmental Authority; and
(iii) the Agent shall have received a certificate of an officer of the Company
to the effect of clauses (i) and (ii) above.
(i) Closing Fee. GE Capital shall have received the closing fee
-----------
payable to GE Capital on the earlier of the Effective Date and March 31, 1998
pursuant to the Fee Letter.
(j) No Violation. The consummation of the transactions contemplated
------------
hereby, by the other Loan Documents shall not contravene, violate or conflict
with, or involve the Agent or any Lender in a violation of, any Requirement of
Law.
47
(k) Consents, Authorizations and Filings, etc. The Agent shall have
------------------------------------------
received, with copies for each Lender, copies of all consents, authorizations
and filings, if any, required in connection with the execution, delivery and
performance by each Loan Party, and the validity and enforceability against each
Loan Party, of the Loan Documents to which it is a party.
(l) Projections. Each Lender shall have received (i) the projections
-----------
referred to in subsection 7.18, certified by the chief financial officer of the
Company in accordance with said subsection 7.18.
(m) Insurance. The Agent shall have received evidence satisfactory
---------
to it that the insurance policies provided for in subsection 9.6 and subsection
5(m) of the Security Agreements are in full force and effect, certified by the
insurer thereof, together with appropriate evidence showing the Agent, for the
benefit of the Agent and the Lenders, as an additional named insured or loss
payee to the extent required pursuant to subsection 9.6.
(n) Employment and Labor Agreements. The Agent shall have received a
-------------------------------
copy of (i) each agreement or plan or, if not available, a summary thereof,
providing for employment, compensation, severance, deferred payments, bonus
payments or accruals, profit sharing arrangements, stock option or stock
appreciation rights, incentive payments, pension or employment benefit
contributions or similar payments or arrangements (either individually or in the
aggregate material to the Company and its Subsidiaries taken as a whole) for the
benefit of any Loan Party's executive officers and (ii) each collective
bargaining agreement or other labor agreement covering more than 20 employees of
the Company and its Subsidiaries, in each case in form and substance as has been
approved by each Lender.
(o) Labor Matters. There shall be (i) no strikes or other labor
-------------
disputes pending or threatened against any Company or any of its Subsidiaries,
(ii) no violation by the Company or any of its Subsidiaries of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with labor or
employment matters that (individually or in the aggregate) would have a Material
Adverse Effect and (iii) no amounts owing by the Company or any of its
Subsidiaries on account of employee health and welfare insurance that
(individually or in the aggregate) would have a Material Adverse Effect if not
paid have been paid or accrued as a liability on the books of the Company or
such Subsidiary.
(p) Legal and Other Fees. The Agent shall have received evidence
--------------------
satisfactory to it that the Company has paid all reasonable fees and expenses
then billed of (i) the Agent's outside counsel, Xxxxxxx Xxxxxxx & Xxxxxxxx, and
(ii) all special counsel retained by the Agent in connection with any of the
Loan Documents and the transactions contemplated thereby.
(q) Lien Searches. The Agent shall have received the results of a
-------------
recent search by a Person satisfactory to the Lenders of the Uniform Commercial
Code filings which may have been filed in such jurisdictions as the Agent may
reasonably request.
(r) Material Agreements. The Agent shall have received, with a copy
-------------------
for each Lender, true and correct copies of such documents or instruments
(including, without limitation, a copy of any debt instrument, security
48
agreement or other material contract to which the Company or any of its
Subsidiaries may be a party) as may be requested by the Agent or the Lenders,
which shall each be in form and substance satisfactory to the Lenders.
(s) Borrowing Base Certificate. The Agent shall have received a
--------------------------
Borrowing Base Certificate, dated the Effective Date, showing that the aggregate
principal amount of the Revolving Credit Extensions of Credit and Swingline
Loans, if any, to be made on the Effective Date shall not exceed the Borrowing
Base as set forth in such Certificate.
(t) Subsection 8.2 Conditions. The conditions set forth in
-------------------------
subsection 8.2 shall have been satisfied.
8.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any Extension of Credit requested to be made by such Lender on
any date (including, without limitation, the initial Extension of Credit) is
subject to the satisfaction of the following conditions precedent as of the date
a Loan is made or a Letter of Credit Obligation is incurred, as the case may be:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Company in or pursuant to this Agreement and the
other Loan Documents to which it is a party, and each of the
representations and warranties made by each other Loan Party in or pursuant
to each Loan Document to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection
with this Agreement or any other Loan Document, shall be true and correct
in all material respects on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the Extensions of
Credit requested to be made on such date.
(c) Borrowing Base. The aggregate principal amount of the Total
--------------
Revolving Extensions of Credit then outstanding, after giving effect to the
Extensions of Credit to be made on the date of the proposed Extension of
Credit, shall not exceed the Borrowing Base set forth in the most recent
Borrowing Base Certificate furnished by the Company pursuant to subsection
9.2(b) or 9.2(e).
Each Extension of Credit hereunder shall constitute a representation and
warranty by the Company as of the date of such Extension of Credit that the
conditions contained in this subsection 8.2 have been satisfied.
SECTION 9. AFFIRMATIVE COVENANTS
From the date hereof and so long as any amount remains owing
hereunder, under any Note or any Collateral Document, or the Commitments remain
in effect, the Company covenants and agrees that:
9.1 Financial Statements. The Company shall furnish to each Lender:
--------------------
49
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Company, copies of the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries as at the
end of such fiscal year, and the related consolidated statements of
earnings and cash flows for the fiscal year then ended, certified with an
Unqualified Opinion by Ernst & Young (or other accountants of nationally
recognized standing selected by the Company which are reasonably acceptable
to the Agent), with such financial statements being prepared in accordance
with GAAP applied consistently throughout the period involved (except as
approved by such accountants and disclosed therein);
(b) as soon as available, but in any event within 45 days after the
end of each fiscal quarter of the Company (other than the fourth quarter of
the Company's fiscal year), (i) copies of the unaudited consolidated
balance sheet of the Company and its Consolidated Subsidiaries, in each
case as at the end of such quarter and the related unaudited consolidated
statements of earnings and cash flows for such quarter, and the portion of
the fiscal year through such quarter, certified by the chief financial
officer of the Company as presenting fairly the financial condition and
results of operations of the Company and its Consolidated Subsidiaries
(subject to normal year-end audit adjustments), and (ii) copies of the
unaudited consolidating financial statements of the Company and its
Consolidated Subsidiaries including therein (A) the consolidating balance
sheets of each of the Company and its Consolidated Subsidiaries, as at the
end of such fiscal quarter, and (B) the related consolidating statements of
earnings for such fiscal quarter and the portion of the fiscal year of the
Company through such fiscal quarter, in each case showing inter-company
eliminations;
(c) as soon as available, but in any event within 30 days after the
end of each month (other than May, August, November and February) (i)
copies of the unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries, in each case as at the end of such month, and
the related unaudited consolidated statement of earnings and cash flows for
such month and the portion of the calendar year through such month,
certified by the chief financial officer of the Company as presenting
fairly the financial condition and results of operations of the Company and
its Consolidated Subsidiaries (subject to normal year-end and quarterly
audit adjustments) and (ii) copies of the unaudited consolidating financial
statements of the Company and its Consolidated Subsidiaries including
therein (A) the consolidating balance sheets of each of the Company and its
Consolidated Subsidiaries, as at the end of such month and (B) the related
consolidating statements of earnings for such month and the portion of the
calendar year through such month, and in each case showing inter-company
eliminations;
(d) not later than 30 days prior to the last day of each fiscal year
of the Company, a copy of the projections (on a monthly basis) by the
Company of the operating budget and cash flow budget of the Company and its
Subsidiaries for the succeeding calendar year (together with disclosure of
all material assumptions used in the formulation thereof), such projections
to be accompanied by a certificate of the chief financial officer of the
Company to the effect that such projections are based upon good faith
estimates and assumptions, all of which are believed to be reasonable, have
been prepared on the basis of the assumptions stated therein, and reflect
the reasonable estimates of the Company of the results of operations and
other information projected therein;
50
all such financial statements to be complete and correct in all material
respects and prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as approved by
such accountants or officer, as the case may be, and disclosed therein).
9.2 Certificates; Other Information. The Company shall furnish to
-------------------------------
each Lender:
(a) concurrently with the delivery of each set of the financial
statements referred to in subsections 9.1(a) and 9.1(b), a certificate of
the chief financial officer of the Company (i) stating that, to the best of
such officer's knowledge, during the period covered by such set of
financial statements, each Loan Party has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained in
the Loan Documents to be observed, performed or satisfied by it, and that
such officer has obtained no knowledge of any Default or Event of Default
(except as specified in such certificate, in which case such certificate
shall set forth in reasonable detail the steps that the Company plans to
take in respect thereof), (ii) showing in reasonable detail the
calculations supporting such statement in respect of subsection 10.8 and
(iii) certifying that such consolidating financial statements are fairly
stated in all material respects when considered in relation to the
consolidated financial statements of the Company and its Consolidated
Subsidiaries (subject to normal year-end audit adjustments and quarterly
adjustments);
(b) by no later than 4:00 p.m., New York City time, 15 Business Days
after the end of each month, (i) a Monthly Borrowing Base Certificate,
which certificate shall be true and accurate as of the date thereof and
(ii) a certificate disclosing the amount of accounts payable due, as of the
last day of such month, to vendors of inventory sold by the Company and its
Subsidiaries on a consignment basis;
(c) within five days after the same are sent, copies of all financial
statements and reports which the Company sends to its stockholders, and
within five days after the same are filed, copies of all financial
statements and reports which any Loan Party may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(d) concurrently with the delivery of the financial statements
referred to in each of subsections 9.1(a) and 9.1(b), a brief narrative by
the chief financial officer of the Company (i) describing significant
developments regarding the Company's and its Subsidiaries' results of
operation and marketing activities and (ii) certifying that, to the best of
such officer's knowledge after due inquiry, (A) no Material Adverse Effect
has occurred since the date of such officer's previous report or (B) a
Material Adverse Effect has occurred since such date and setting forth in
reasonable detail the steps that the Company plans to take in respect
thereof;
(e) on the third Business Day of each calendar week, by no later than
4:00 p.m., New York City time, a Weekly Borrowing Base Certificate for the
previous calendar week's activity, which certificate shall be true and
accurate as of the date thereof;
51
(f) promptly, such additional financial and other information as any
Lender may from time to time reasonably request (including, without
limitation, such supporting detail regarding the Collateral as the Agent
reasonably may request); and
(g) concurrently with the delivery of the financial statements
referred to in subsection 9.1(a), a copy of any auditor's letters to
management, including any inquiry letters and management's responses
thereto, delivered in connection with, or as a result of, the preparation
of such financial statements.
9.3 Payment of Obligations. The Company shall, and shall cause each
----------------------
of its Subsidiaries to, pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all of its
Indebtedness and other material obligations of whatever nature (including any
obligations for taxes), except, without prejudice to the effectiveness of
subsection 11(h), where the amount or validity thereof is being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves in conformity with GAAP shall have been provided on the books of the
Company and its Subsidiaries.
9.4 Conduct of Business and Maintenance of Existence. The Company
------------------------------------------------
shall, and shall cause each of its Subsidiaries to, (a) preserve, renew and keep
in full force and effect its corporate existence and take all reasonable action
to maintain all its material rights, licenses, privileges and franchises
necessary or desirable in the normal conduct of its business, except as
permitted by subsection 10.3, (b) continue to engage in the same general type of
business in which it is engaged on the Effective Date and (c) comply with all
Contractual Obligations and Requirements of Law applicable to it, except to the
extent that the failure to comply therewith would not, individually or in the
aggregate, have a Material Adverse Effect.
9.5 Maintenance of Property and Accounts; Cash Management. (a) The
-----------------------------------------------------
Company shall, and shall cause each of its Subsidiaries to, keep all of its
property necessary for the continued operation of its business in good working
order and condition, ordinary wear and tear excepted.
(b) The Company shall, and shall cause each of its Subsidiaries to,
maintain (i) all data and records necessary for the conduct of its business,
(ii) duplicate data and records, in a different location, sufficient to protect
its business against material interruption or loss in the event of damage, loss
or destruction of its basic data and records and (iii) adequate disaster
recovery systems and back-up computer and other information management systems,
in a different location, sufficient to protect its business against material
interruption or loss in the event of damage, loss or destruction of its primary
computer and other information management systems.
(c) The Company shall, and shall cause each of its Subsidiaries to,
(i) maintain a cash management system and controls substantially similar to that
in effect on the Effective Date, and (ii) obtain the approval of each Lender in
advance with regard to any material change to be made or proposed to be made
with respect to such cash management system and controls.
9.6 Maintenance of Insurance. (a) The Company shall, and shall
------------------------
cause each of its Subsidiaries to, at its sole cost and expense, maintain "All
Risk" physical damage insurance on all real and personal property including,
without limitation, fire and extended coverage, boiler and machinery coverage,
flood, earthquake, liquids, theft, explosion, collapse, and all other hazards
52
and risks ordinarily insured against by owners or users of such properties in
similar businesses. All policies of insurance on such real and personal
property shall contain an endorsement, in form and substance satisfactory to the
Agent, showing loss payable to the Agent as its interests appear.
(b) The Company shall, at its sole cost and expense, maintain
commercial general liability insurance on an "occurrence basis" (unless such
insurance cannot be reasonably obtained at commercially reasonable rates, in
which case such insurance shall be on a "claims made" basis) against claims for
personal injury, bodily injury and property damage with a minimum limit of
$10,000,000 per occurrence and $10,000,000 in the aggregate. Such coverage
shall include, but not be limited to, premises/operations, broad form
contractual liability, underground, explosion and collapse hazard, independent
contractors, broad form property coverage, products and completed operations
liability. The Company shall, at its sole cost and expense, maintain workers'
compensation insurance including employer's liability in the amount of $500,000
for each accident, $500,000 disease-policy limit, and $500,000 disease-each
employee.
(c) The Company shall, at its sole cost and expense, maintain
automobile liability insurance for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury and property damage with a
minimum combined single limit of $10,000,000 per occurrence.
(d) All policies of insurance required to be maintained under this
Agreement shall (i) include the Agent as an additional insured, (ii) contain a
30-day advance notice of alteration or cancellation, (iii) provide that no act
or default by the Company or any other Person shall affect the right of the
Agent to recover under such policy or policies of insurance in case of loss or
damage, (iv) be in form substantially similar to those in effect on the date
hereof and be with insurers rated at least A by A.M. Best and (v) be in not less
than the amounts set forth herein. The Company shall deliver to the Agent
certificates of insurance evidencing coverage, the naming of the Agent as
additional insured and the 30-day advance notice of cancellation provision. The
original (or certified copies) of each policy of insurance shall be maintained
by the Company and made available to the Agent from time to time at the Agent's
request. In addition, the Company shall notify the Agent promptly of any
occurrence causing a material loss or decline in value of any real or personal
property and the estimated (or actual, if available) amount of such loss or
decline. The Company hereby directs all insurers under such policies of
insurance to pay all proceeds payable thereunder directly to the Agent, as its
interest may appear. For the purpose of making, settling and adjusting claims
under such policies of insurance, the Company shall not, without the Agent's
prior written consent, agree to the making, settling or adjusting of claims in
excess of $50,000 made under such policies of insurance or endorsing any check,
draft, instrument or other item of payment in excess of $50,000 for the proceeds
of such policies of insurance. In the event that the Company at any time or
times hereafter shall fail to obtain or maintain any of the policies of
insurance required above or to pay any premium in whole or in part relating
thereto, the Agent, without waiving or releasing any obligations or Default or
Event of Default by the Company hereunder, may at any time or times thereafter
(but shall not be obligated to) obtain and maintain such policies of insurance
and pay such premium and take any other action with respect thereto which the
Agent deems advisable. All sums to disbursed by the Agent (including, without
limitation, reasonable attorneys' fees, court costs, expenses and other charges
relating thereto) shall be payable, on demand, by the Company to the Agent and
shall be additional Obligations (as defined in the Collateral Documents)
hereunder secured by the Collateral.
53
9.7 Inspection of Property; Books and Records; Discussions. The
------------------------------------------------------
Company shall, and shall cause each of its Subsidiaries to, (a) keep proper
books of record and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of the Agent or any Lender to visit and inspect any of
its properties and to examine and make abstracts from any of its books and
records at their customary location during normal business hours or at such
other times as the Agent or any Lender may reasonably request, and as often as
may reasonably be desired for use by the Lenders, in making continuing credit
decisions hereunder, and (c) permit representatives of the Agent to discuss the
affairs, accounts, business, operations, properties and financial and other
condition of the Company and its Subsidiaries with officers, directors,
employees, customers, suppliers (following the Agent's reasonable best efforts
to give the Company advance oral notice) of the Company and its Subsidiaries and
with its independent certified public accountants. The Agent and the Lenders
hereby agree that, unless a Default or Event of Default has occurred and is
continuing, they will provide the Company with oral notice which is reasonable
under the circumstances prior to exercising their rights under clause (b) of
this subsection 9.7.
9.8 Notices. The Company shall promptly give notice to the Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any default or event of default under any Contractual Obligation
of the Company or any of its Subsidiaries that, in the reasonable judgment
of the Company, could reasonably be expected to have a Material Adverse
Effect;
(c) any litigation, investigation or proceeding affecting the Company
or any of its Subsidiaries and that, in the reasonable judgment of the
Company, if adversely determined, could reasonably be expected to have a
Material Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after the Company knows or has reason to know thereof: (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, or any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Company or any
Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the terminating, Reorganization or Insolvency of, any
Plan; and
(e) any material change or event that, in the reasonable judgment of
the Company, could reasonably be expected to have a Material Adverse
Effect.
Each notice pursuant to this subsection 9.8 shall be accompanied by a statement
of a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take with
respect thereto.
9.9 Communication with Accountants. The Company authorizes the Agent
------------------------------
and, if accompanied by the Agent, each Lender and each Transferee, to
communicate directly with its independent certified public accountants and
hereby authorizes such accountants to disclose to the Agent, each Lender and
54
each Transferee any and all financial statements and other supporting financial
documents and schedules including copies of any management letter with respect
to the business, financial condition and other affairs of the Company or any of
its Subsidiaries. At or before the Effective Date, the Company shall deliver a
letter addressed to such accountants instructing them to comply with the
provisions of this subsection 9.9.
9.10 Lenders' Fees. The Company shall pay to each Lender, on demand,
-------------
any and all fees, costs or expenses that such Lender shall pay to a bank or
other similar institution arising out of or in connection with the forwarding by
such Lender to the Company or any other Person designated by the Company of
proceeds of the Loans.
9.11 Payment of Taxes. The Company shall pay all transfer, excise,
----------------
mortgage recording or similar taxes (but excluding income or franchise taxes) in
connection with the issuance, sale, delivery or transfer by the Company to the
Lenders of the Notes, and the execution and delivery of the Loan Documents and
any other agreements and instruments contemplated thereby, and shall save the
Lenders harmless, without limitation as to time, against any and all liabilities
with respect to such taxes, provided, that the Company shall not be responsible
--------
for any taxes in connection with the transfer of any Note by the holder thereof.
The obligations of the Company under this subsection 9.11 shall survive the
payment of the Notes and all other amounts owing hereunder and the termination
of this Agreement.
9.12 Environmental Laws; Environmental Indemnity. The Company shall,
-------------------------------------------
and shall cause each of its Subsidiaries to:
(a) Comply with, and insure compliance by all tenants and subtenants,
if any, with, all Environmental Laws and obtain and comply in all material
respects with and maintain, and insure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals,
registrations or permits required by Environmental Laws, except to the
extent that failure to do so would not have any reasonable likelihood of
having a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except to the extent that the same are being contested
in good faith by appropriate proceedings and the pendency of such
proceedings would not have any reasonable likelihood of having a Material
Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the Banks, and
their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to, the
violation of or noncompliance with any Environmental Laws applicable to the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, court costs and
litigation expenses, except to the extent that any of the foregoing arise
out of the gross negligence or willful misconduct of the party seeking
indemnification therefor.
55
9.13 Leases. The Company shall, and shall cause each of its
------
Subsidiaries to, comply in all material respects with all of its and their
obligations under all Leases now existing or hereafter entered into by it or
them with respect to real property. The Company shall, or shall cause the
appropriate Subsidiary to (a) provide the Agent and each Lender with a copy of
each notice of default or termination received by the Company or such Subsidiary
under any Lease immediately upon receipt of any such notice, and deliver to the
Agent and each Lender a copy of each notice of default or termination sent by
the Company or such Subsidiary under any Lease simultaneously with its delivery
of such notice under such Lease, (b) use its commercially reasonable efforts to
not permit any new Lease to contain any provision that would cause such Lease to
terminate (or would give the lessor thereunder the right to terminate such
Lease) upon a sale or other change in control of any Loan Party and (c) provide
to the Agent, at the request of the Agent, a schedule of all properties then
being leased by the Company and its Subsidiaries as lessee, (i) describing the
material terms of each such lease, (ii) indicating the expiration date of each
such lease and (iii) setting forth, in comparative form, any changes from the
schedule delivered to the Agent for the immediately preceding quarter.
9.14 Additional Collateral. (a) If, after the Effective Date, the
---------------------
Company or any of its Subsidiaries shall acquire any assets on which the Agent,
for the benefit of the Agent and the Lenders, does not have a perfected Lien,
other than any stock of any corporation, the Company (i) shall execute and
deliver, or shall cause the appropriate Subsidiary to execute and deliver, to
the Agent such amendments to this Agreement, the Collateral Documents or such
other documents as the Agent or the Required Lenders deem necessary or advisable
in order to grant to the Agent, for the benefit of the Agent and the Lenders, a
security interest in such assets, (ii) shall take, or shall cause the
appropriate Subsidiary to take, all actions necessary or advisable to grant to
the Agent, for the benefit of the Agent and the Lenders, a perfected first
priority security interest in such assets, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the appropriate Security Agreement or by law or as may be
requested by the Agent and (iii) shall, upon the request of the Agent, deliver
to the Agent legal opinions relating to the matters described in the preceding
clauses (i) and (ii), which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Agent and the Required Lenders; provided
--------
that the Company and its Subsidiaries shall not be required to grant Liens on
any such assets consisting of real property unless requested to do so by the
Agent.
(b) The Company shall, and shall cause each of its Subsidiaries to,
at any time and from time to time upon the request of the Agent (in its sole
discretion), (i) execute a first priority mortgage or deed of trust, as the case
may be (subordinate only to such mortgages or deeds of trust as are necessary to
permit the Company or such Subsidiary, as the case may be, to purchase such real
estate), in favor of the Agent, for the benefit of the Agent and the Lenders,
covering such real estate, in form and substance reasonably satisfactory to the
Required Lenders, (ii) provide the Lenders with title and extended coverage
insurance covering such real estate in an amount equal to the purchase price of
such real estate as well as a current ALTA survey thereof, together with a
surveyor's certificate in form and substance reasonably satisfactory to the
Required Lenders and (iii) provide the Lenders with environmental audits from
environmental consultants reasonably acceptable to the Agent with respect to
each such parcel of real estate.
56
(c) If, after the Effective Date, the Company or any of its
Subsidiaries shall acquire any stock of any corporation, the Company (i) shall
(or, if such stock is acquired by a Subsidiary of the Company, the Company shall
cause such Subsidiary to) execute and deliver to the Agent such pledge
agreements and other documents and instruments as the Agent or the Required
Lenders deem necessary or advisable in order to grant to the Agent, for the
benefit of the Agent and the Lenders, a perfected first priority security
interest in such stock and shall deliver to the Agent the certificates
representing such stock, together with undated stock powers, in blank, executed
and delivered by a duly authorized officer of the Company (or such Subsidiary,
as the case may be), (ii) shall, if such stock is all or substantially all of
the stock of such corporation, cause such corporation (A) to guarantee the
Extensions of Credit and other obligations hereunder, (B) to execute and deliver
to the Agent such security agreements and other documents and instruments as the
Agent or the Required Lenders reasonably deem necessary or advisable in order to
grant to the Agent, for the benefit of the Agent and the Lenders, a perfected
first priority security interest in all assets of such corporation, (C) to take
such additional actions as are necessary or advisable to grant to the Agent for
the benefit of the Agent and the Lenders a perfected first priority security
interest in the Collateral described in such security agreement and other
documents and instruments with respect to such corporation, including, without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by such security agreement or other documents
and instruments or by law or as may be requested by the Agent and (D) in the
event that such corporation has Subsidiaries of its own, to cause such
Subsidiaries to execute and deliver such documents, instruments and agreements
as may be necessary to cause such Subsidiaries to guarantee the Extensions of
Credit and other obligations of the Company hereunder and to grant to the Agent,
for the benefit of the Agent and the Lenders, a perfected first priority
security instruments in all assets of such Subsidiaries and take the other
relevant actions described above and (iii) shall, upon the request of the Agent,
deliver to the Agent legal opinions relating to the matters described in the
preceding clauses (i) and (ii), which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Agent and the Required Lenders.
(d) Notwithstanding the foregoing provisions of this subsection 9.14,
the Agent and the Lenders hereby agree that the Company and its Subsidiaries
shall not be required to grant to the Agent, for the benefit of the Agent and
the Lenders, a security interest in the assets or in more than 66% of the
capital stock of any Subsidiary of the Company which is incorporated under the
laws of a jurisdiction which is not within the United States of America, and no
such non-United States Subsidiary shall be required to guarantee the obligations
of the Company hereunder.
9.15 Inventory. The Company shall, and shall cause each of its
---------
Subsidiaries to:
(a) provide that at all time all inventory of the Company and its
Subsidiaries which is located in Public Warehouses shall be covered by non-
negotiable warehouse receipts and shall instruct all such warehouses not to
issue any negotiable warehouse receipts or other negotiable documents of
title in respect thereof;
(b) use its best efforts to cause each Public Warehouse in which
Inventory of the Company or any of its Subsidiaries is located to deliver
to the Agent an acknowledgement copy of a Warehousemen Notice; and
(c) permit the Agent at any time and from time to time at the sole
expense of the Company (including, without limitation, any out-of-pocket
expenses of such auditors and a per diem fee equal to $200 per auditor per
57
day) to conduct a field analysis of the Inventory of the Company to the
extent necessary to permit the Agent to determine that (i) the inventory
reports of the Company (including, without limitation, each Borrowing Base
Certificate) are true and correct in all material respects, (ii) the
Inventory listed thereon is in saleable condition and (iii) the Inventory
control systems of the Company are adequate to properly monitor such
inventory.
9.16 Bank Accounts. The Company shall, and shall cause each of its
-------------
Subsidiaries to, notify the Agent and each Lender promptly of each bank account
or other deposit account (including, without limitation, securities accounts)
opened by the Company or such Subsidiary, as the case many be, and provide to
the Agent and each Lender the account number, financial institution and location
of each such bank or other deposit account. The Company shall, and shall cause
each of its Subsidiaries to, notify each financial institution at which the
Company and each of its Subsidiaries has a bank or other deposit account that
such financial institution is irrevocably authorized to provide the Agent with
all information which the Agent may from time to time request concerning each
such account (including, without limitation, the amount on deposit therein).
SECTION 10. NEGATIVE COVENANTS
From the date hereof and so long as any amount remains owing
hereunder, under any Note or any Collateral Document, or the Commitments remain
in effect, the Company covenants and agrees that:
10.1 Limitation on Indebtedness . The Company shall not, and shall
--------------------------
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Indebtedness, except:
(a) Indebtedness in respect of the Loans, the Notes, and other
obligations of the Company under this Agreement and under the Transfer
Agreement or the Receivables Purchase Agreement;
(b) Indebtedness of the Company and its Subsidiaries in respect of
the deferred purchase price of fixed or capital assets or in the nature of
Capital Leases in an aggregate principal amount (including the imputed
principal amount of Capital Leases) not to exceed $5,000,000 at any one
time outstanding;
(c) Indebtedness of the Company and its Subsidiaries to each other to
the extent permitted by subsection 10.5(e); and
(d) Indebtedness not otherwise described in clauses (a) through (c)
above not to exceed $250,000 in principal amount in the aggregate at any
time outstanding.
10.2 Limitation on Liens. The Company shall not, and shall not
-------------------
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
58
(a) Liens in favor of the Agent, for the benefit of the Agent and the
Lenders, created pursuant to the Collateral Documents;
(b) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings; provided that adequate reserves with
--------
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP;
(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 60 days or which are being contested
in good faith by appropriate proceedings in a manner which will not
jeopardize or diminish the interest of the Agent, for the benefit of the
Agent and the Lenders, in any of the Collateral;
(d) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(e) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Company or any
of its Subsidiaries;
(g) Liens securing Indebtedness of the Company and its Subsidiaries
permitted by subsection 10.1(b) in respect of the deferred purchase price
of fixed or capital assets or in the nature of Capital Leases; provided
--------
that such Liens do not at any time encumber any property other than the
property financed by such Indebtedness and the amount of Indebtedness
secured thereby is not increased;
(h) Liens created pursuant to the Transfer Agreement or the
Receivables Purchase Agreement; and
(i) Liens in favor of Xxxxxxx Manufacturing Co. to secure purchase
money Indebtedness owed to such vender, as consented to by the Agent in the
consent letter dated September 4, 1996.
10.3 Prohibition of Fundamental Changes. Except as permitted in
----------------------------------
subsections 10.5 and 10.7, except for the transactions described in the Transfer
Agreement and the License Agreement, the Company shall not, and shall not permit
any of its Subsidiaries to, 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, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or substantially
all of its business, property or tangible or intangible assets, whether now
59
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all of the business property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person.
10.4 Limitation on Dividends and Restricted Payments. The Company
-----------------------------------------------
shall not, and shall not permit any of its Subsidiaries to, declare or pay any
dividend (other than dividends payable solely in common stock of the Company)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of capital stock of the Company or
any of its Subsidiaries, or any warrants or options to purchase such stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or any of its Subsidiaries (collectively, "Restricted
----------
Payments"), except that (a) any Subsidiary of the Company may make Restricted
--------
Payments to the Company; and (b) subject to first complying with the provisions
of subsection 6.1(b), the Company may make Restricted Payments in any one fiscal
year of the Company, beginning with the fiscal year ending February 28, 1999, so
long as the aggregate amount of such payments for any such fiscal year shall not
exceed 75% of the Consolidated Net Income of the Company for the immediately
preceding fiscal year (as reflected in the audited financial statements required
by subsection 9.1(a) for such prior fiscal year of the Company, which financial
statements must have been prepared in accordance with GAAP applied consistently
throughout such fiscal year and certified with an Unqualified Opinion by an
accountant of nationally recognized standings selected by the Company and
acceptable to the Agent) and provided, further, that no such payment shall be
-------- -------
made pursuant to this clause (b) when any Default or Event of Default has
occurred and is continuing.
10.5 Limitation on Investments, Acquisitions, Loans and Advances.
-----------------------------------------------------------
The Company shall not, and shall not permit any of its Subsidiaries to, make any
advance, loan, extension of credit or capital contribution to, or purchase or
otherwise acquire any stock, bonds, notes, debentures or other securities of, or
acquire by purchase or otherwise all or substantially all of the business,
properties or assets of, or make any other investment in, any Person, except:
(a) investments existing as of the Effective Date and described on
Schedule 10.5 hereto;
(b) extensions of trade credit in the ordinary course of business;
(c) temporary investments in Cash Equivalents;
(d) loans and advances to employees of the Company or its Subsidiaries
for travel, entertainment, relocation and other expenses in the ordinary
course of business (provided that such loans and advances shall not exceed
--------
$750,000 in the aggregate at any time outstanding);
(e) loans, advances, extensions of credit, capital contributions and
investments by the Company to or in its Wholly Owned Subsidiaries in an
aggregate amount not to exceed $50,000 made in the ordinary course of
business and loans, advances, extensions of credit, capital contributions
and investments by Subsidiaries of the Company in the Company; and
60
(f) the acquisition by purchase or otherwise of the capital stock of
or all or substantially all of the business, properties or assets of any
one or more Persons for aggregate consideration not to exceed $3,500,000 in
any one such acquisition transaction or in any series of related
acquisition transactions; provided that the aggregate consideration for all
--------
acquisitions made pursuant to this paragraph (f) in any fiscal year of the
Company shall not exceed $15,000,000.
10.6 Limitation on Contingent Obligations. The Company shall not,
------------------------------------
and shall not permit any of its Subsidiaries to agree to or assume, guarantee,
indorse or otherwise in any way be or become responsible or liable, directly or
indirectly, for any Contingent Obligation, except (a) Contingent Obligations in
respect of which the Company and its Subsidiaries are liable on the Effective
Date and which are listed on Schedule 10.6 hereto and the primary obligations in
respect of which are reflected on the financial statements of the Company
described in subsection 7.1, (b) any guarantee made by a Subsidiary of the
Company in favor of the Agent, for the benefit of the Agent and the Lenders, on
account of obligations owing by the Company to the Agent and the Lenders
hereunder and (c) pursuant to the terms of the Transfer Agreement or the
Receivables Purchase Agreement.
10.7 Limitation on Sale of Assets. The Company shall not, nor shall
----------------------------
it permit any of its Subsidiaries to, sell, lease, assign, transfer or otherwise
dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, except for:
(a) sales of obsolete or worn out property, or other property in the
ordinary course of business in connection with the acquisition of a
replacement therefor;
(b) sales of assets by the Company to any of its Subsidiaries or by
any of the Company's Subsidiaries to the Company or another of its
Subsidiaries made in the ordinary course of business and on an arm's-length
basis;
(c) the sale of inventory in the ordinary course of business; and
(d) the sale of Receivables pursuant to the Transfer Agreement and
the Receivables Purchase Agreement.
10.8 Financial Condition Covenants. The Company shall not violate
-----------------------------
any of the financial covenants set forth on Schedule 10.8 hereto.
10.9 Fiscal Year. The Company shall not, and shall not permit any of
-----------
its Subsidiaries to, have a fiscal year which ends on a date other than February
28 or 29, as the case may be.
10.10 Limitation on Affiliate Transactions. The Company shall not,
------------------------------------
nor shall it permit any of its Subsidiaries to, enter into any transaction,
including, without limitation, any purchase, sale or exchange of property or the
rendering of any services, with any Subsidiary (other than a Wholly Owned
Subsidiary of the Company) or Affiliate of the Company, unless such a
transaction is otherwise permitted under this Agreement, is in the ordinary
course of the Company's or such Subsidiary's business and is upon fair and
61
reasonable terms no less favorable to the Company or such Subsidiary than it
would obtain in a comparable arm's-length transaction with a Person not a
Subsidiary or an Affiliate; provided, however, that nothing in this subsection
-------- -------
10.10 shall be deemed to prohibit the transactions described in the Transfer
Agreement, in the License Agreement or in the Subordinated Demand Promissory
Note.
10.11 No Subsidiaries. The Company shall not at any time acquire,
---------------
establish or otherwise suffer to exist any Subsidiaries, other than the
Subsidiaries listed on Schedule 7.16(a), which Subsidiaries shall not, in any
event, have any meaningful assets, capital or liabilities or conduct any
meaningful business.
10.12 Accounting Treatment. The Company shall not fail to take
--------------------
necessary actions including, without limitation, making appropriate entries in
its accounting records, so that all amounts outstanding under this Agreement,
whether principal, interest, fees, costs, expenses, reimbursement obligations or
otherwise, constitute "Senior Indebtedness" (or the equivalent term) within the
meaning of the indentures or other instruments under which any subordinated
indebtedness (including, without limitation, the Subordinated Demand Promissory
Note) shall be outstanding.
10.13 Maintenance of Business. The Company shall not, and shall not
-----------------------
permit any of its Subsidiaries to, engage in any business other than those
engaged on the date of this Agreement and those reasonably related thereto.
10.14 Cancellation of Claims or Indebtedness. The Company shall not,
--------------------------------------
and shall not permit any of its Subsidiaries to, cancel any claim or
Indebtedness owing to it, except for reasonable consideration (which, under the
circumstances, may be no consideration) and in the ordinary course of business.
10.15 Environmental Matters. (a) The Company shall not, nor shall
---------------------
it permit any of its Subsidiaries to, use or permit or suffer use of any
property owned, operated or leased by the Company or any of its Subsidiaries, or
conduct any activity or operations thereon in any manner which:
(i) would involve or result in generation, manufacture, discharge,
release, disposal, transportation, treatment, transmission, storage, usage
or handling of Hazardous Materials or other toxic material at, upon, under,
across or within any such property or any other property owned, operated or
leased by the Company or any of its Subsidiaries or any part thereof, if
such action is reasonably likely to result in a Material Adverse Effect; or
(ii) would result in the discharge of pollutants or effluents into
any water source or system or the discharge into the air of any emissions
for which a permit would be required under any Requirement of Law or would
result in groundwater contamination or soil contamination, but only if in
each such case such discharge or contamination could reasonably be expected
to have a Material Adverse Effect.
(b) From and after the Effective Date, the Company shall not install
or permit to be installed any Asbestos in any other property owned, operated or
leased by the Company or any of its Subsidiaries or any part thereof.
62
(c) The Company shall not, nor shall it permit any of its
Subsidiaries to, install or suffer or permit installation or existence on, in or
under any property owned, operated or leased by the Company or any of its
Subsidiaries, of any underground or above-ground tanks for the storage of fuel
oil, gasoline or other petroleum products or by-products or Hazardous Materials.
10.16 Cash Management System. The Company shall, and shall cause
----------------------
each of its Subsidiaries to maintain a cash management system in accordance with
Annex B hereto.
10.17 Bank Accounts. The Company shall not, nor shall it permit any
-------------
of its subsidiaries to establish or maintain, any bank accounts in the name of,
or for the benefit of, the Company or any of its Subsidiaries, except for those
accounts listed in Schedule 10.17 hereto, which is a complete list of all such
accounts maintained by the Company and its Subsidiaries on the Effective Date,
as such Schedule may be amended in accordance with Annex B hereto.
SECTION 11. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
events:
(a) Payments. Failure by the Company to pay any principal of or
--------
interest on any Note or to pay any fee or other amount payable hereunder
(including, without limitation, any Reimbursement Obligation) when due, in
accordance with the terms thereof or hereof; or
(b) Representations and Warranties. Any representation or warranty
------------------------------
made or deemed made by the Company in this Agreement or any other Loan
Document to which it is a party or by any other Loan Party in any Loan
Document to which it is a party, or made or deemed made or in any
certificate, document or financial or other statement furnished at any time
in connection herewith or therewith, shall prove to have been incorrect or
misleading in any material respect on or as of the date made or deemed
made; or
(c) Certain Covenants. Default by the Company in the observance or
-----------------
performance of any agreement contained in Section 10; or
(d) Collateral Document Covenants. Default by any Loan Party in the
-----------------------------
observance or performance of any agreement in the Collateral Documents to
which it is a party if the effect of such default would be to impair in any
material respect the value of, or impair the Lien of the Agent, for the
ratable benefit of the Agent and the Lenders, on, the Collateral covered
thereby, other than immaterial Collateral; or
(e) Other Covenants. Default by any Loan Party in the observance or
---------------
performance of any other agreement contained in this Agreement or any other
Loan Document to which it is a party (other than as provided in paragraphs
(a) through (e) of this Section 11) and the continuance of such default
unremedied for a period of 30 days; or
63
(f) Effectiveness of Loan Documents. If for any reason (other than
-------------------------------
any act on the part of the Agent or the Lenders) any Loan Document ceases
to be in full force and effect or any Loan Party shall so assert or any of
the Liens intended to be created by any Collateral Document (except in
respect of immaterial Collateral) ceases to be or is not a valid and
perfected Lien having the priority contemplated thereby; or
(g) Removal of Collateral. Any of the assets of any Loan Party
---------------------
having an aggregate fair market value of more than $250,000 shall be
attached, seized, levied upon or subjected to a writ or distress warrant;
or any Loan Party shall have concealed, removed or permitted to be
concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may
be fraudulent under any bankruptcy, fraudulent conveyance or other similar
law; or
(h) Cross-Default. Any Loan Party shall (i) default in any payment
-------------
of principal of or interest on any Indebtedness (other than the Notes and
the Letter of Credit Obligations) or in the payment of any Contingent
Obligation, beyond the period of grace (not to exceed 30 days), if any,
provided in the instrument or agreement under which such Indebtedness or
Contingent Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Contingent Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Contingent Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice or the lapse of time
(or both) such Indebtedness to become due prior to its stated maturity or
such Contingent Obligation to become payable; provided, however, that a
-------- -------
default, event or condition described in clause (i) or (ii) of this
paragraph (i) shall not constitute an Event of Default under this Agreement
unless, at the time of such default, defaults, events or conditions of the
type described in clauses (i) and (ii) of this paragraph (i) shall have
occurred and be continuing with respect to Indebtedness and/or Contingent
Obligations the outstanding principal amount of which exceeds in the
aggregate $250,000; or
(i) Commencement of Bankruptcy or Reorganization Proceeding. (i) Any
-------------------------------------------------------
Loan Party shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or any Loan Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Loan Party any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against any Loan Party any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
64
distraint or similar process against all or any substantial part of its
assets that results in the entry of an order for any such relief that shall
not have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) any Loan Party shall take
any action authorizing, or in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clauses (i),
(ii) or (iii) above; or (v) any Loan Party shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as
they become due; or
(j) ERISA. (i) Any Person shall engage in any "prohibited
-----
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, (iii) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Required Lenders, likely
to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, all Multiemployer Plans or (vi) any other similar event
or condition shall occur or exist, with respect to a Plan; and in each case
with respect to clauses (i) through (vi) above, such event or condition,
together with all other such events or conditions, if any, could reasonably
be expected to subject the Company or any of its Subsidiaries to any tax,
penalty or other liabilities in the aggregate in excess of $250,000; or
(k) Judgments. One or more judgments or decrees shall be entered
---------
against the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $250,000 or more and
all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry thereof; or
(l) Environmental Liabilities. If at any time the Company and its
-------------------------
Subsidiaries shall become liable for remediation and/or environmental
compliance expenses and/or fines, penalties or other charges which, in the
aggregate, are in excess of $250,000; or
(m) Board of Directors. (i) During any 12-month period, individuals
------------------
who at the beginning of such period constituted the Company's board of
directors, plus any new directors whose election by the Company's board of
directors or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election had been so approved, cease for any
reason (other than death, disability or retirement in accordance with the
Company's existing policies) to constitute at least a majority of the
Company's board of directors; or
(n) Material Adverse Effect. Any other event, condition or change
-----------------------
shall have occurred with respect to the business, operations, properties,
assets, management or condition (financial or otherwise) of the Company or
65
any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect and such event, condition or change shall have
continued unremedied for a period of 10 days after notice to the Company by
the Agent;
then, and in any such event, (1) if such event is an Event of Default specified
in clause (i), (ii), (iii) or (iv) of paragraph (j) above with respect to the
Company, automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of Letter of Credit
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (2) if such event is any other
Event of Default, either or both of the following actions may be taken: (x)
with the consent of the Majority Facility Lenders under the Revolving Credit
Facility, the Agent may, or upon request of the Majority Facility Lenders under
the Revolving Credit Facility, the Agent shall, by notice to the Company,
declare the Revolving Credit Commitments to be terminated forthwith, whereupon
the Commitments hereunder shall immediately terminate; and (y) with the consent
of the Required Lenders, the Agent may, or upon request of the Required Lenders,
the Agent shall, by notice to the Company, declare all or a portion of the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement (including, without limitation, all amounts of Letter of Credit
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes to
be due and payable forthwith, whereupon the same shall immediately become due
and payable. With respect to all Letters of Credit and GE Guarantees that shall
not have matured or with respect to which presentment for honor or demand for
payment shall not have occurred, upon the termination of the Commitments and/or
acceleration of the Loans, the Company shall cash collateralize such Letters of
Credit and GE Guarantees in the manner set forth in subsection 5.1(c). Except
as expressly provided above in this Section 11, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.
SECTION 12. THE AGENT
12.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints General Electric Capital Corporation as the Agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes General Electric Capital Corporation, as the Agent for such Lender,
to take such action on its behalf under the provisions of the Loan Documents and
to exercise such power and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in any Loan Document, the Agent shall not
have any duties or responsibilities, except those expressly set forth herein, or
any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into the Loan
Documents or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its duties
--------------------
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
66
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
12.3 Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable to any of the Lenders for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with the Loan Documents
(except for its or such Person's own gross negligence or willful misconduct) or
(b) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in the Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent under
or in connection with, any Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the Loan Documents
or for any failure of any Loan Party to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, the Loan Documents, or to inspect the
properties, books or records of any Loan Party.
12.4 Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under the Loan Documents unless it shall first receive such advice or
concurrence of those Lenders required by subsection 13.1 or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, under the Loan Documents in accordance with a request of
the Required Lenders or the Majority Facility Lenders, as applicable, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders.
12.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders or the Majority Facility
Lenders, as applicable; provided that unless and 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 in the best interests of the
Lenders.
12.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
---------------------------------------
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of any Loan Party, shall be deemed to constitute any
67
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and made its own decision to hold the Notes held by it and make its
Loans hereunder and participate in the Reimbursement Obligations and the Letters
of Credit Obligations. Each Lender also represents that it will, independently
and without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under the Loan Documents, and make such investigations as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Loan Parties. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder and under the other Loan Documents, the Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, financial
and other condition or creditworthiness of the Loan Parties that may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
12.7 Indemnification. The Lenders agree to indemnify the Agent in
---------------
its capacity as such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to their pro
---
rata share of the outstanding principal amount of Loans and the Reimbursement
----
Obligations, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind whatsoever that may at any time (including without limitation at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents, or any documents contemplated by or referred to therein or the
transactions contemplated thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender shall
--------
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Agent's gross negligence or willful
misconduct. The agreements in this subsection 12.7 shall survive the payment of
the Obligations.
12.8 Agent in Its Individual Capacity. The Agent and its Affiliates
--------------------------------
may make loans to, and generally engage in any kind of business with, any Loan
Party as though the Agent were not the Agent hereunder and under the other Loan
Documents. With respect to its Loans and other Extensions of Credit made or
renewed by it and any Note held by it, the Agent shall have the same rights and
powers under this Agreement and under the other Loan Documents as any Lender and
may exercise the same as though it were not the Agent, and the terms "Lender"
and "Lenders" shall include the Agent in its individual capacity.
12.9 Successor Agent. The Agent may resign as Agent upon 30 days'
---------------
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall (with the approval
of the Company, which shall not be unreasonably withheld) appoint from among the
Lenders a successor agent for the Lenders, whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent, and the term "Agent"
shall mean such successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without any
other or further act or deed on the part of such former Agent or any of the
68
parties to this Agreement or any holders of the Notes. After any retiring
Agent's resignation hereunder as Agent, the provisions of this subsection 12.9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement and the other Loan Documents.
12.10 No Effect on any Loan Party. The Lenders and the Agent agree
---------------------------
that this Section 12 outlines the rights and responsibilities of the Agent and
the Lenders as among themselves and is not intended to affect the rights or
obligations of any Loan Party under the Loan Documents.
SECTION 13. MISCELLANEOUS
13.1 Complete Agreement; Amendments and Waivers. (a) The Loan
------------------------------------------
Documents constitute the complete agreement among the Loan Parties, the Agent
and the Lenders with respect to the subject matter hereof.
(b) Except as provided in subsection 13.2(c) hereof, no amendment or
supplement to or waiver of any provision of this Agreement, the Notes or any
other Loan Document, nor consent to any departure by any Loan Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders and such Loan Party, and then such amendment,
supplement, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided that no amendment,
--------
supplement, waiver or consent shall, unless in writing and signed by all of the
Lenders and all Purchasing Institutions affected thereby, do any of the
following: (i) increase any of the Commitments or subject any Lender or any
Purchasing Institution to any additional financial obligations pursuant thereto,
except that any Commitment of GE Capital may be changed by GE Capital and the
Company; (ii) except pursuant to amendments, waivers or consents relating to
subsections 6.1(a), (c) and (b) or any definition used therein, reduce the
principal of, or interest on, the Notes or other amounts payable hereunder
(including, without limitation, the Reimbursement Obligations), except that
amounts payable only to GE Capital may be reduced by GE Capital unilaterally;
(iii) except pursuant to amendments, waivers or consents relating to subsections
6.1(a), (c) and (b) or any definition used therein, postpone any date fixed for
any payment of principal of, or interest on, the Notes or other amounts payable
hereunder (including, without limitation, the Reimbursement Obligations), except
that amounts payable only to GE Capital may be postponed by GE Capital
unilaterally; (iv) change the number of Lenders and Purchasing Institutions or
the aggregate unpaid principal amount of the Notes or the Letter of Credit
Obligations that, in either case, shall be required for the Lenders and the
Purchasing Institutions or any of them to take any action hereunder; (v) release
or discharge any Loan Party from the performance of its obligations under any of
the Loan Documents to which it is a party; (vi) release all or substantially all
of the Collateral from the Liens created by the Collateral Documents; or (vii)
amend subsection 6.13 or this subsection 13.1; and provided, further, that any
-------- -------
amendment or supplement to, or modification of, this Agreement or waiver of a
Default or an Event of Default hereunder that would have the effect of (w)
reinstating the obligations of the Lenders to make Loans or incur Letter of
Credit Obligations from and after the date such obligations have been terminated
or (x) changing the terms of or obligation to make Loans or incur Letter of
Credit Obligations, shall require the affirmative consent thereto of holders of
Notes evidencing at least 66-2/3% of the aggregate unpaid principal amount of
the Loans then outstanding and Reimbursement Obligations then outstanding or, in
the event that at such date there are no Loans then outstanding or Reimbursement
69
Obligations then outstanding, then Lenders having at least 66-2/3% of the
Commitments; and provided, further, that (y) no amendment, supplement, waiver or
-------- -------
consent shall, unless in writing and signed by the Agent in addition to the
Lenders and Purchasing Institutions required above to take such action, affect
the rights or duties of the Agent under this Agreement, any Note or any Loan
Document and (z) no amendment, waiver or consent shall, unless in writing and
signed by GE Capital in addition to the Lenders and Purchasing Institutions
required above to take such action, affect the rights or duties of GE Capital as
the Person incurring the Letter of Credit Obligations or making the Swingline
Loans or amend, supplement or otherwise modify the provisions of Section 4 or 5.
13.2 Successors and Assigns; Participations; Purchasers. (a) This
--------------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Company, the
Agent, the Lenders, all future holders of the Notes and their respective
successors and assigns. No Loan Party may sell, assign or transfer any of the
Loan Documents or any portion thereof including, without limitation, such Loan
Party's rights, title, interests, remedies, powers and duties hereunder or
thereunder, except in connection with transactions permitted by subsection 10.3.
(b) Any Lender may, in accordance with applicable law, at any time
sell to one or more banks or other entities (each, a "Participant")
-----------
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender, any Reimbursement Obligation owing to
such Lender, any Letter of Credit Obligation or any other interest of such
Lender hereunder. In the event of any such sale by a Lender to a Participant,
such Lender's obligations hereunder to the other parties hereto shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of any such Note for all purposes
hereunder and each Loan Party shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations hereunder.
(c) Any Lender may, in accordance with applicable law, at any time
and from time to time sell, assign and transfer to one or more banks or
financial institutions (each, a "Purchasing Institution") all or any part of its
----------------------
rights and obligations under this Agreement or any of the Notes or Reimbursement
Obligation owed to it or its Letter of Credit Obligations pursuant to a
Commitment Transfer Supplement, substantially in the form of Exhibit F hereto
(each, a "Commitment Transfer Supplement"), executed by such Purchasing
------------------------------
Institution and the Agent and delivered to the Agent for its acceptance and
recording in the Register; provided, however, that each such Commitment Transfer
-------- -------
Supplement between a Lender and a Purchasing Institution that is not then a
Lender or an Affiliate thereof also shall be subject to the consent (which
consent shall not be unreasonably withheld) of, and shall be executed by, the
Company and the Agent (but such consent of the Company shall not be required if
an Event of Default is then continuing). Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date (as defined
in the Commitment Transfer Supplement) specified in such Commitment Transfer
Supplement, (i) the Purchasing Institution thereunder shall be a party hereto
and, to the extent provided in such Commitment Transfer Supplement, have the
rights and obligations of a Lender hereunder with respect to the Loans and other
Extensions of Credit as set forth therein and (ii) such transferor Lender shall,
to the extent provided in such Commitment Transfer Supplement, be released from
its obligations hereunder. Such Commitment Transfer Supplement shall be deemed
70
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Institution and any resulting
adjustment of the Commitment Percentages arising from the purchase by such
Purchasing Institution of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Notes. On or prior to the
Transfer Effective Date specified in such Commitment Transfer Supplement, the
Company shall execute and deliver to the Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Purchasing Institution
in an amount equal to the Commitment or Commitments assumed by it pursuant to
such Commitment Transfer Supplement and a new Note or Notes to the order of such
transferor Lender in an amount equal to the Commitment or Commitments retained
by it hereunder. Such new Notes shall be in an aggregate principal amount equal
to the principal amount of such surrendered Note or Notes, shall be dated the
Effective Date and shall otherwise be in the form of the Note or Notes replaced
thereby. The Note or Notes surrendered by such transferor Lender shall be
delivered by such transferor Lender to the Agent and returned by the Agent to
the Company marked "cancelled".
(d) The Agent shall maintain at its address referred to in subsection
13.3 a copy of each Commitment Transfer Supplement delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
--------
Lenders and the Commitment of and principal amount of the Loans and
Reimbursement Obligations owing to each Lender from time to time. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Company, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as the owner of the Loan recorded therein for all purposes of
this Agreement. The Register shall be available for inspection by the Company
or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a Commitment Transfer Supplement executed by
a transferor Lender and a Purchasing Institution (and, to the extent required
pursuant to subsection 13.2(c), by the Company) together with payment to the
Agent of a registration and processing fee of $5,000, and the Notes subject to
such Commitment Transfer Supplement, the Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in the
Register and (iii) give prompt notice of such acceptance and recordation to the
Lenders and the Company.
(f) The Company authorizes each Lender to disclose to any Participant
or Purchasing Institution (each, a "Transferee") and any prospective Transferee
----------
any and all financial information in such Lender's possession concerning the
Loan Parties and their Affiliates that has been delivered to the Agent or such
Lender by or on behalf of the Company pursuant hereto or that has been delivered
to the Agent or such Lender by or on behalf of the Company in connection with
the Agent's or such Lender's credit evaluation of the Company and its Affiliates
prior to becoming a party hereto.
(g) If, pursuant to this subsection 13.2, any interest in this
Agreement or any Note is transferred to any Transferee that is organized under
the laws of any jurisdiction other than the United States or any State or other
political subdivision thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Agent and the Company) that under applicable law and treaties, no taxes will
be required to be withheld by the Agent, the Company or the transferor Lender
with respect to any payments to be made to such Transferee in respect of the
Loans and other Extensions of Credit, (ii) to furnish to the transferor Lender,
the Agent and the Company either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee claims entitlement
71
to complete exemption from U.S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Lender, the
Agent and the Company) to provide the transferor Lender, the Agent and the
Company a new Form 4224 or Form 1001 upon the expiration or obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such Transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
(h) The Company shall use its best efforts to assist and cooperate
with each Lender in any manner reasonably requested by such Lender to effect the
sale of permitted participations in or permitted assignments of any of the Loan
Documents or of any portion thereof or interest therein, including, without
limitation, assistance in the preparation of appropriate disclosure documents or
placement memoranda.
13.3 Notices. All notices, consents, requests and demands to or
-------
upon the respective parties hereto to be effective shall be in writing or by
telegraph, telecopy or telex and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when received, addressed as
follows to the Company, the Agent and the Lenders or to such other address as
may be hereafter notified by any of the respective parties hereto or any future
holders of the Notes:
The Company: Pameco Corporation
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Chief Financial Officer
with a copy to: Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx, Esq.
The Agent General Electric Capital Corporation
and GE Capital: 000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attn: Vice President - Portfolio
Commercial Finance
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attn: Xxxxxxx Xxxxx, Esq.
The other Lenders: To the address set forth with its signature below.
13.4 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay
72
in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
13.5 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes.
13.6 Payment of Expenses and Taxes; Indemnities. (a)
------------------------------------------
The Company hereby agrees (a) to pay or reimburse the Agent for all reasonable
out-of-pocket costs and expenses incurred by the Agent in connection with the
preparation, execution and delivery of, and any amendment, supplement or
modification to, the Loan Documents and any other documents prepared in
connection herewith, and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the fees and disbursements of
counsel to the Agent, (b) to pay or reimburse the Agent, each Lender and each
Transferee for all reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under the Loan Documents and any such
other documents, including, without limitation, fees and disbursements of
counsel and consultants to the Agent, each Lender and each Transferee, (c) to
pay, indemnify, and hold each Lender and each Transferee harmless from, any and
all recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, that
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, the Loan Documents and any such other documents (other than any such
taxes relating to the transfer of any Note by the holder thereof), and (d) to
pay, indemnify, and hold the Agent, each Lender and each Transferee harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement
and performance of the Loan Documents and any such other documents (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
----------------------- --------
Company shall have no obligation hereunder to the Agent, any Lender or any
Transferee with respect to indemnified liabilities arising from the gross
negligence or willful misconduct of such Person. The agreements in this
subsection 13.6 shall survive repayment of the Obligations.
(b) To the extent that the Company fails to pay any amount required
to be paid by it to the Agent or the Swingline Lender under paragraph (a) of
this Section, each Lender severally agrees to pay to the Agent or the Swingline
Lender, as the case may be, such Lender's Applicable Percentage (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or
--------
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Agent, or the Swingline Lender in
its capacity as such.
13.7 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
---------------------------
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE
73
MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND
THE PARTIES HERETO DESIRE APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER
THAN ARBITRATION RULES), THE AGENT, THE LENDERS, THE TRANSFEREES AND THE COMPANY
INTEND THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE AGENT, THE LENDERS, THE TRANSFEREES AND THE
COMPANY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS.
13.8 SUBMISSION TO JURISDICTION; WAIVERS. THE COMPANY HEREBY
-----------------------------------
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM
ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL
(OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE
COMPANY AT ITS ADDRESS SET FORTH IN SUBSECTION 13.3 OR AT SUCH OTHER
ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT TO XXX IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO
IN THIS SUBSECTION 13.8 ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
74
13.9 Further Assurances. The Company agrees that at any time and
------------------
from time to time upon the written request of the Agent, the Company shall, and
shall cause its Subsidiaries to, execute and deliver such further documents and
do such further acts and things as the Agent or the Lenders may reasonably
request in order to effect the purposes of this Agreement and the other Loan
Documents.
13.10 Acknowledgements. The Company hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the Notes and the other Loan Documents;
(b) neither the Agent nor any Lender has any fiduciary relationship
to any Loan Party, and the relationship between Agent and Lenders, on one
hand, and the Company and the other Loan Parties, on the other hand, is
solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Company or
any other Loan Party and the Lenders.
13.11 Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13.12 Counterparts. This Agreement may be executed on any number of
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separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
13.13 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
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THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK EXCEPT, IN THE CASE OF THE COLLATERAL
DOCUMENTS, TO THE EXTENT OTHERWISE PROVIDED THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and duly
authorized officers as of the day and year first above written.
PAMECO CORPORATION
By:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
and as a Lender
By:
Title:
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