EXHIBIT 10.1
$85,000,000
CREDIT AGREEMENT
among
DLI HOLDING II CORP.,
DEL LABORATORIES, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
Dated as of December 29, 2005
X.X. XXXXXX SECURITIES INC.
SOLE LEAD ARRANGER AND BOOKRUNNER
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS.........................................................2
1.1. Defined Terms................................................2
1.2. Other Definitional Provisions................................2
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS...........................2
2.1. Revolving Commitments........................................2
2.2. Procedure for Revolving Loan Borrowing.......................2
2.3. Swingline Commitment.........................................2
2.4. Refunding of Swingline Loans.................................2
2.5. Fees, etc....................................................2
2.6. Termination or Reduction of Revolving Commitments............2
2.7. Letter of Credit Subcommitment...............................2
2.8. Procedure for Issuance of Letter of Credit...................2
2.9. Fees and Other Charges.......................................2
2.10. L/C Participations...........................................2
2.11. Reimbursement Obligation of the Borrower.....................2
2.12. Obligations Absolute.........................................2
2.13. Letter of Credit Payments....................................2
2.14. Applications.................................................2
2.15. Protective Advances..........................................2
SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT.......2
3.1. Optional Prepayments.........................................2
3.2. Mandatory Prepayments........................................2
3.3. Conversion and Continuation Options..........................2
3.4. Limitations on Eurodollar Tranches...........................2
3.5. Interest Rates and Payment Dates.............................2
3.6. Computation of Interest and Fees.............................2
3.7. Inability to Determine Interest Rate.........................2
3.8. Pro Rata Treatment and Payments..............................2
3.9. Requirements of Law..........................................2
3.10. Taxes........................................................2
3.11. Indemnity....................................................2
3.12. Change of Lending Office.....................................2
3.13. Replacement of Lenders.......................................2
3.14. Evidence of Debt.............................................2
3.15. Illegality...................................................2
SECTION 4. REPRESENTATIONS AND WARRANTIES......................................2
4.1. Financial Condition..........................................2
4.2. No Change....................................................2
4.3. Corporate Existence; Compliance with Law.....................2
4.4. Power; Authorization; Enforceable Obligations................2
4.5. No Legal Bar.................................................2
4.6. Litigation...................................................2
4.7. No Default...................................................2
4.8. Ownership of Property; Liens.................................2
4.9. Intellectual Property........................................2
4.10. Taxes........................................................2
4.11. Federal Regulations..........................................2
4.12. Labor Matters................................................2
4.13. ERISA........................................................2
4.14. Investment Company Act; Other Regulations....................2
4.15. Subsidiaries.................................................2
4.16. Use of Proceeds..............................................2
4.17. Environmental Matters........................................2
4.18. Accuracy of Information, etc.................................2
4.19. Security Documents...........................................2
4.20. Solvency.....................................................2
4.21. Senior Indebtedness..........................................2
4.22. Regulation H.................................................2
4.23. Certain Documents............................................2
4.24. Foreign Assets Control Regulations and
Anti-Money Laundering..................................2
SECTION 5. CONDITIONS PRECEDENT................................................2
5.1. Conditions to Initial Extension of Credit....................2
5.2. Conditions to Each Extension of Credit.......................2
SECTION 6. AFFIRMATIVE COVENANTS...............................................2
6.1. Financial Statements.........................................2
6.2. Certificates; Other Information..............................2
6.3. Payment of Obligations.......................................2
6.4. Maintenance of Existence; Compliance.........................2
6.5. Maintenance of Property; Insurance...........................2
6.6. Inspection of Property; Books and Records; Discussions.......2
6.7. Notices......................................................2
6.8. Environmental Laws...........................................2
6.9. Interest Rate Protection.....................................2
6.10. Additional Collateral, etc...................................2
6.11. Use of Proceeds..............................................2
6.12. Further Assurances...........................................2
6.13. Cash Management Obligations; Control Agreements..............2
SECTION 7. NEGATIVE COVENANTS..................................................2
7.1. Financial Condition Covenant.................................2
7.2. Indebtedness.................................................2
7.3. Liens........................................................2
7.4. Fundamental Changes..........................................2
7.5. Disposition of Property......................................2
7.6. Restricted Payments..........................................2
7.7. Capital Expenditures.........................................2
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7.8. Investments..................................................2
7.9. Optional Payments and Modifications of Certain
Debt Instruments.......................................2
7.10. Transactions with Affiliates.................................2
7.11. Sales and Leasebacks.........................................2
7.12. Hedge Agreements.............................................2
7.13. Changes in Fiscal Periods....................................2
7.14. Negative Pledge Clauses......................................2
7.15. Clauses Restricting Subsidiary Distributions.................2
7.16. Lines of Business............................................2
SECTION 8. EVENTS OF DEFAULT...................................................2
SECTION 9. THE AGENTS..........................................................2
9.1. Appointment..................................................2
9.2. Delegation of Duties.........................................2
9.3. Exculpatory Provisions.......................................2
9.4. Reliance by Agents...........................................2
9.5. Notice of Default............................................2
9.6. Non-Reliance on Agents and Other Lenders.....................2
9.7. Indemnification..............................................2
9.8. Agent in Its Individual Capacity.............................2
9.9. Successor Administrative Agent...............................2
9.10. Agents Generally.............................................2
9.11. Agents other than the Administrative Agent...................2
9.12. Withholding Tax..............................................2
9.13. Secured Note Intercreditor Agreement.........................2
SECTION 10. MISCELLANEOUS......................................................2
10.1. Amendments and Waivers.......................................2
10.2. Notices......................................................2
10.3. No Waiver; Cumulative Remedies...............................2
10.4. Survival of Representations and Warranties...................2
10.5. Payment of Expenses and Taxes; Indemnity.....................2
10.6. Successors and Assigns; Participations and Assignments.......2
10.7. Adjustments; Set-off.........................................2
10.8. Counterparts.................................................2
10.9. Severability.................................................2
10.10. Integration..................................................2
10.11. GOVERNING LAW................................................2
10.12. Submission To Jurisdiction; Waivers..........................2
10.13. Acknowledgments..............................................2
10.14. Releases of Guarantees and Liens.............................2
10.15. Confidentiality..............................................2
10.16. WAIVERS OF JURY TRIAL........................................2
10.17. Delivery of Addenda..........................................2
10.18. USA PATRIOT Act..............................................2
10.19. Commercially Reasonable Discretion...........................2
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ANNEX:
A Lenders & Revolving Commitments
SCHEDULES:
1.1m Mortgaged Property
1.1s Existing Hedge Agreements
2.7(b) Existing Letters of Credit
4.4 Consents, Authorizations, Filings and Notices
4.9 Intellectual Property Litigation
4.15 Subsidiaries
7.2(d) Existing Indebtedness
7.3(i) Existing Liens
7.5(g) Scheduled Dispositions
7.8(e) Existing Investments
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate of the Guarantors
D Form of Mortgage
E Form of Assignment and Assumption
F-1 Form of Legal Opinion of Debevoise & Xxxxxxxx LLP
F-2 Form of Legal Opinion of Xxxxx X. Xxxxx, Esq.,
Vice President, General Counsel and Secretary of the
Borrower and its Subsidiaries
F-3 Form of Legal Opinion of Xxxxxxxx, Xxxxxx and Finger, PA
F-4 Form of Legal Opinion of Biberstein & Xxxxxxx, LLP
G Form of Exemption Certificate
H-1 Form of Revolving Note
H-2 Form Swingline Note
I Form of Addendum
J Form of Solvency Certificate
K Form of Closing Certificate of the Borrower
L Form of Borrowing Base Certificate
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CREDIT AGREEMENT, dated as of December 29, 2005, among DLI HOLDING II
CORP., a Delaware corporation ("HOLDINGS"), DEL LABORATORIES, INC., a Delaware
corporation (the "BORROWER"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "LENDERS"), X.X.
XXXXXX SECURITIES INC. as sole lead arranger and sole bookrunner (in such
capacities, the "ARRANGER"), and JPMORGAN CHASE BANK, N.A., as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ACCOUNT DEBTOR": as defined in Article 9 of the UCC.
"ACCOUNTS": as defined in Article 9 of the UCC.
"ADDENDUM": an instrument, substantially in the form of Exhibit I, by
which a Lender becomes a party to this Agreement as of the Closing Date.
"ADJUSTED ELIGIBLE ACCOUNTS": on any date, Eligible Accounts minus the
Dilution Reserve and any other Reserve applicable to Accounts.
"ADJUSTED ELIGIBLE FINISHED GOODS": on any date, Eligible Finished
Goods minus Inventory Reserves allocable to Eligible Finished Goods.
"ADJUSTED ELIGIBLE RAW MATERIALS": on any date, Eligible Raw Materials
minus Inventory Reserves allocable to Eligible Raw Materials.
"ADJUSTED ELIGIBLE WORK-IN-PROCESS": on any date, Eligible
Work-in-Process minus Inventory Reserves allocable to Eligible Work-in-Process.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"ADMINISTRATIVE AGENT": as defined in the preamble to this Agreement.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"AGENTS": the collective reference to the Arranger and the
Administrative Agent, which term shall include, for purposes of Section 9 only,
the Issuing Lender.
"AGGREGATE EXPOSURE": with respect to any Lender at any time, the
amount of such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"AGREEMENT": this Credit Agreement.
"APPLICABLE MARGIN": for each Type of Loan for any day, the rate per
annum set forth below for such day opposite the description of such Loan:
Eurodollar Revolving Loans 1.50%
Base Rate Revolving Loans and Swingline Loans 0.50%
PROVIDED, that on and after the first Adjustment Date occurring after the
delivery of the second monthly Borrowing Base Certificate following the Closing
Date, the Applicable Margin will be determined pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing Lender may
reasonably specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"APPROVED FUND": (a) a CLO and (b) with respect to any Lender that is a
fund which invests in commercial loans, any other fund that invests in
commercial loans and is managed or advised by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
"ARRANGER": as defined in the preamble to this Agreement.
"ASSIGNEE": as defined in Section 10.6(b).
"ASSIGNMENT AND ASSUMPTION": an Assignment and Assumption,
substantially in the form of Exhibit E.
"AVAILABLE REVOLVING COMMITMENT": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the lesser of (i) such Lender's
Revolving Percentage of the amount certified by the Borrower, in the Borrowing
Base Certificate then most recently delivered to the Administrative Agent, as
constituting the amount of the Borrowing Base (adjusted to give effect to any
changes in Reserves that thereafter became effective) and (ii) such Lender's
Revolving Commitment then in effect OVER (b) such Lender's Revolving Extensions
of Credit then outstanding.
"BASE RATE": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 0.50%. For purposes hereof: "PRIME RATE" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit to debtors). Any
change in the Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
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"BASE RATE LOANS": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BENEFITED LENDER": as defined in Section 10.7(a).
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BORROWER": as defined in the preamble hereto.
"BORROWING BASE": at any time, an amount equal to:
(a) the product of (i) 85% multiplied by (ii) Adjusted Eligible
Accounts at such time, PLUS
(b) the lesser of (i) (y) the sum of (A) 65% of Adjusted Eligible
Finished Goods (B) 35% of Adjusted Eligible Raw Materials and (C) 60% of
Adjusted Eligible Work-In-Process, each valued at the lower of cost or market
value, determined on a first-in-first-out basis, at such time, MINUS the Rent
Reserve and (ii) 85% of the product of (x) the Net Recovery Liquidation Rate in
effect at such time MULTIPLIED by (y) the aggregate amount of Inventory of the
Borrower and the Subsidiary Guarantors at such time (as reported in accordance
with the Borrower's perpetual inventory system) as set forth in the most recent
Borrowing Base Certificate, MINUS
(c) Reserves that are not Inventory Reserves or applicable to Accounts.
The Borrowing Base at any time shall be determined by
reference to the most recent Borrowing Base Certificate delivered to the
Administrative Agent pursuant to Section 6.2(h) of the Agreement. Standards of
eligibility, Reserves and advance rates in respect of the Borrowing Base may be
revised and adjusted from time to time by the Administrative Agent in its
Commercially Reasonable Discretion (provided, that the Administrative Agent may
not revise Borrowing Base standards if the effect thereof would be to increase
the advance rates above the rates in effect on the effective date of the Credit
Agreement or to add new asset categories to the Borrowing Base without the
consent of the requisite Lenders as set forth in Section 10.1), with any such
changes to be effective five Business Days after delivery of notice thereof to
the Borrower.
"BORROWING BASE CERTIFICATE": a certificate substantially in the form
of Exhibit L (with such changes therein as may be required by the Administrative
Agent to reflect the components of and reserves against the Borrowing Base as
provided for hereunder from time to time), executed and certified as accurate
and complete by a Responsible Officer and including appropriate exhibits,
schedules, supporting documentation and additional reports as are outlined in
Schedule 1 to Exhibit L or reasonably requested by the Administrative Agent.
"BORROWING DATE": any Business Day specified by the Borrower as a date
on which the Borrower requests the Lenders to make Loans hereunder.
"BUSINESS": as defined in Section 4.17(b).
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"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, PROVIDED, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"CAPITAL EXPENDITURES": for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) which would, in accordance with GAAP, be set
forth as capital expenditures in the consolidated statement of cash flow of such
Person, including, in any event, expenditures in connection with sales displays.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP. For the purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized
amount thereof at such time determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
"CASH COLLATERAL ACCOUNT": a non-interest-bearing Deposit Account
designated as such by the Administrative Agent, subject to the security interest
granted by the Guarantee and Collateral Agreement and maintained in the name of
or under the sole dominion and control of the Administrative Agent.
"CASH DOMINION PERIOD": as defined in Section 6.13(f).
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Xxxxx'x
Investors Service, Inc. ("MOODY'S"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition or money market funds that (i) comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody's
and (iii) have portfolio assets of at least $5,000,000,000.
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"CLAIM RESERVES": reserves for Obligations in respect of Specified
Hedge Agreements or Specified Cash Management Arrangements or for claims that
are or may become secured by any Lien on any Eligible Accounts or Eligible
Inventory, if such Lien is or may become entitled to priority over the
Administrative Agent's Liens thereon.
"CLO": any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an affiliate of such
Lender.
"CLOSING CERTIFICATE OF THE BORROWER": a certificate duly executed by a
Responsible Officer on behalf of the Borrower substantially in the form of
Exhibit K.
"CLOSING DATE": the date on which the conditions precedent set forth in
Section 5.1 shall have been satisfied or waived, which date is December 29,
2005.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all property of the Loan Parties, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"COLLATERAL ACCESS AGREEMENT": as defined in Section 6.13(b).
"COLLATERAL DEPOSIT ACCOUNT": as defined in Section 6.13(d)(i).
"COLLECTION ACCOUNT": as defined in Section 6.13(d)(ii).
"COMMITMENT FEE RATE": 0.375% per annum.
"COMMONLY CONTROLLED ENTITY": any trade or business, whether or not
incorporated, that is under common control with the Borrower within the meaning
of Section 4001 of ERISA or (solely for purposes of Section 302 of ERISA and
Section 412 of the Code) is part of a group that includes the Borrower and that
is treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Responsible
Officer on behalf of the Borrower substantially in the form of Exhibit B.
"COMMERCIALLY REASONABLE DISCRETION": the Administrative Agent's sole
good faith and commercially reasonable discretion as to any factor which the
Administrative Agent reasonably determines (a) will or reasonably could be
expected to adversely affect the value of any Eligible Accounts or Eligible
Inventory, the enforceability or priority of the Administrative Agent's Liens
thereon or the amount which the Administrative Agent or holders of Obligations
would be likely to receive (after giving consideration to delays in payment and
costs of enforcement) in the foreclosure, enforcement or liquidation of any
Eligible Accounts or Eligible Inventory or (b) establishes or creates a
reasonable doubt as to whether any collateral report or financial information
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delivered to the Administrative Agent by any Person on behalf of any Loan Party
is incomplete, inaccurate or misleading in any respect or (c) constitutes or
could be expected to create or result in a Default or Event of Default or (d)
increases the likelihood of a bankruptcy, reorganization, receivership or
insolvency proceeding involving Holdings or the Borrower or any of their
respective Subsidiaries or any of the Collateral. In exercising such discretion,
the Administrative Agent may consider such factors already included in or tested
by the definition of Eligible Accounts and Eligible Inventory, as well as any of
the following (i) changes after the Closing Date in any material respect in
demand for, pricing of, or product mix of Inventory, (ii) changes after the
Closing Date in any material respect in any concentration of risk with respect
to the Accounts or the Inventory, and (iii) any other factors arising after the
Closing Date that change the credit risk of lending to the Borrower on the
security of the Accounts or the Inventory.
"CONDUIT LENDER": any special purpose entity organized and administered
by any Lender for the purpose of making Loans otherwise required to be made by
such Lender and designated by such Lender in a written instrument (a copy of
which shall be provided by the Administrative Agent to the Borrower upon
request), subject to the consent of the Administrative Agent and the Borrower
(which consent shall not be unreasonably withheld); PROVIDED, that the
designation by any Lender of a Conduit Lender shall not relieve the designating
Lender of any of its obligations under this Agreement (including its obligation
to fund a Loan) if, for any reason, its Conduit Lender fails to fund any such
Loan, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and PROVIDED,
FURTHER, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to Section 3.9, 3.10, 3.11 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender, (b) be deemed to have any Revolving Commitment or (c) be
designated if such designation would otherwise increase the costs of the
Revolving Facility to the Borrower.
"CONFIDENTIAL INFORMATION MEMORANDUM": the Offering Memorandum dated
December 2005.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for such
period PLUS, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) the
aggregate amount of all provisions for all taxes (whether or not paid, estimated
or accrued) based upon the income and profits of the Borrower or alternative
taxes imposed as reflected in the provision for income taxes in the Borrower's
consolidated financial statements, (b) interest expense, amortization or
write-off of debt discount and debt issuance costs, and commissions, discounts
and other fees and charges associated with Indebtedness (including the Loans),
(c) depreciation and amortization expense, (d) amortization of intangibles
(including goodwill) and organization costs, (e) any extraordinary, unusual or
non-recurring charges or losses (including stock option payments and severance
expenses, change of control and employee payments and other fees and expenses
incurred in connection with the Merger in an aggregate amount not to exceed
$60,000,000), whether or not included as a separate item in the statement of
Consolidated Net Income, (f) any cash compensation expense relating to the
cancellation or retirement of stock options in connection with the Merger in an
aggregate amount not to exceed $36,000,000, (g) non-cash compensation expenses
arising from the issuance of stock, options to purchase stock and stock
appreciation rights to the management of the Borrower, (h) any other non-cash
charges, non-cash expenses or non-cash losses of the Borrower or any of its
Subsidiaries for such period (including deferred rent but excluding any such
charge, expense or loss incurred in the ordinary course of business that
constitutes an accrual of or a reserve for cash charges for any future period);
PROVIDED, HOWEVER, that cash payments made in such period or in any future
period in respect of such non-cash charges, expenses or losses (excluding any
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such charge, expense or loss incurred in the ordinary course of business that
constitutes an accrual of or a reserve for cash charges for any future period)
shall be subtracted from Consolidated Net Income in calculating Consolidated
EBITDA in the period when such payments are made, (i) (x) cash restructuring
charges itemized in a certificate delivered to the Administrative Agent by a
Responsible Officer and (y) losses relating to the disposition of excess,
surplus or obsolete inventory not exceeding, for both (x) and (y), $5,000,000
per fiscal year and $15,000,000 in the aggregate from the Closing Date, (j) no
more than $1,200,000 per fiscal year accrued with respect to the Sponsor in
respect of management, monitoring, consulting, expenses and advisory fees, (k)
any write-off, depreciation or amortization of intangibles arising pursuant to
Statement of Financial Accounting Standards No. 141 or to Statement of Financial
Accounting Standards No. 142 and any other non-cash charges resulting from
purchase accounting, (l) any loss realized upon the sale or other disposition of
any asset (including pursuant to any sale/leaseback transaction) that is not
Disposed of in the ordinary course of business and any loss realized upon the
sale or other disposition of any Capital Stock of any Person, (m) any unrealized
losses in respect of Hedge Agreements, (n) any unrealized foreign currency
translation losses in respect of Indebtedness of any Person denominated in a
currency other than the functional currency of such Person, (o) the amount of
any minority expense net of dividends and distributions paid to the holders of
such minority interest, (p) fees and expense reimbursements incurred to
Synergetics Installations Worldwide, Inc. in fiscal years 2005 and 2006 and (q)
in fiscal years 2005 and 2006, costs associated with implementing the
Synergetics Plan not to exceed $5,000,000 in the aggregate; and minus, to the
extent included in the statement of such Consolidated Net Income for such
period, the sum of (a) interest income, (b) any extraordinary, unusual or
non-recurring income or gains whether or not included as a separate item in the
statement of Consolidated Net Income, (c) all non-cash gains on the sale or
disposition of any property other than inventory sold in the ordinary course of
business, (d) any other non-cash income (excluding any items that represent the
reversal of any accrual of, or cash reserve for, anticipated cash charges in any
prior period that are described in the parenthetical to clause (h) above), (e)
any gain realized upon the sale or other disposition of any asset (including
pursuant to any sale/leaseback transaction) that is not Disposed of in the
ordinary course of business and any gain realized upon the sale or other
disposition of any Capital Stock of any Person, (f) any unrealized gains in
respect of Hedge Agreements and (g) any unrealized foreign currency translation
gains in respect of Indebtedness of any Person denominated in a currency other
than the functional currency of such Person, all as determined on a consolidated
basis. Notwithstanding the foregoing, (x) Consolidated EBITDA shall be deemed to
be $9,049,000, $12,155,000 and $18,444,000 for the fiscal quarters ending March
31, 2005, June 30, 2005 and September 30, 2005, respectively.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Fixed Charges for
such period.
"CONSOLIDATED FIXED CHARGES": for any period, the sum of (a)
Consolidated Interest Expense for such period, (b) all taxes and alternative
taxes paid in cash in such period based upon the income and profits of the
Borrower and (c) the aggregate amount actually paid by the Borrower and its
Subsidiaries in cash during such period on account of Capital Expenditures
(excluding the principal amount of Indebtedness incurred and equity
contributions received to finance such payments and any such payments financed
with the proceeds of any asset sales, Recovery Events or common equity
contributions received by the Borrower from equity issuances by Holdings).
"CONSOLIDATED INTEREST EXPENSE": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations), net of cash
interest income, of the Borrower and its Subsidiaries (determined on a
consolidated basis in each case in accordance with GAAP) for such period with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including, to the extent treated as interest expense under GAAP, all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Hedge Agreements
in respect of interest rates to the extent such net costs are allocable to such
period but excluding any amortization or write-off of financing costs otherwise
included therein).
-7-
"CONSOLIDATED NET INCOME": for any period, the consolidated net income
(or loss) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded the income
(or loss) of any Person (other than a Subsidiary of the Borrower) in which the
Borrower or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions.
"CONTINUING DIRECTORS": the directors of Holdings or a Parent on the
Closing Date and each other director of Holdings or such Parent whose nomination
for election to the board of directors of Holdings or such Parent is recommended
by at least a majority of the then Continuing Directors or such other director
receives the vote of the Permitted Investors in his or her election by the
shareholders of Holdings or such Parent.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL INVESTMENT AFFILIATE": as to any Person, any other Person that
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person or a common
controlling Person primarily for the purpose of making equity or debt
investments in one or more companies. For purposes of this definition, "control"
of a Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"DEFAULT": any of the events specified in Section 8, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"DEPOSIT ACCOUNT": as defined in Article 9 of the UCC.
"DEPOSIT ACCOUNT CONTROL AGREEMENT": with respect to any Deposit
Account, a control agreement in a form provided by or otherwise reasonably
acceptable to the Administrative Agent.
"DILUTION FACTORS": with respect to any period, the aggregate amount
(without duplication) of all deductions, credit memos, returns, adjustments,
allowances, bad debt write-offs, chargebacks and other non-cash credits which
are recorded to reduce accounts receivable in a manner consistent with current
and historical accounting practices of the Borrower.
"DILUTION RATIO": at any date, the amount (expressed as a percentage,
and only if a positive number) equal to (a) (i) the aggregate amount of the
applicable Dilution Factors for the 12 most recently ended fiscal months divided
by (ii) total gross sales for the 12 most recently ended fiscal months less (b)
5%.
"DILUTION RESERVE": at any date, the Dilution Ratio multiplied by
Eligible Accounts on such date.
-8-
"DISPOSITION": with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms "DISPOSE" and "DISPOSED OF" shall have correlative meanings.
"DLI HOLDING": DLI Holding II Corp., a Delaware corporation.
"DOLLARS" and "$": dollars in lawful currency of the United States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.
"ELIGIBLE ACCOUNTS": at the time of any determination thereof, each
Account owned by the Borrower or any Subsidiary Guarantor that satisfies the
following criteria at the time of creation and continues to meet the same at the
time of such determination: such Account (i) has been invoiced to, and
represents the bona fide amounts due to the Borrower or such Subsidiary
Guarantor from, the purchaser of goods or services, in each case originated in
the ordinary course of business of the Borrower or such Subsidiary Guarantor and
(ii) is not ineligible for inclusion in the calculation of the Borrowing Base
pursuant to any of clauses (a) through (y) below. Without limiting the
foregoing, to qualify as an Eligible Account, an Account shall indicate no
person other than the Borrower or such Subsidiary Guarantor as payee or
remittance party. Unless otherwise approved from time to time by the
Administrative Agent, no Account shall be an Eligible Account if, without
duplication:
(a) it is not subject to a first priority perfected security interest
in favor of the Administrative Agent;
(b) it is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Lien permitted by Section 7.3 which arises by
operation of law and not by grant and which does not have priority over the Lien
in favor of the Administrative Agent;
(c) its scheduled due date is more than 90 days (except for no more
than $5,000,000 in aggregate Accounts having a due date in excess of 90 days
after the original invoice date as a result of seasonal adjustments in payment
terms if, as of the date of determination, there are 90 days or less between the
date of determination and the scheduled due date for such Accounts) after the
original invoice date, is unpaid more than 60 days after the original due date
(or, in the case of Accounts described in the immediately preceding
parenthetical, 30 days after the original due date) or which has been written
off the books of the Borrower or such Subsidiary Guarantor or otherwise
designated as uncollectible (in determining the aggregate amount from the same
Account Debtor that is unpaid hereunder there shall be excluded the amount of
any net credit balances relating to Accounts due from an Account Debtor which
are unpaid more than 90 days from the date of invoice or more than 60 days from
the due date);
(d) it is owing by an Account Debtor for which more than 50% of the
Accounts owing from such Account Debtor and its Affiliates are ineligible
pursuant to clause (c) above;
(e) it is owing by an Account Debtor to the extent the aggregate amount
of Accounts owing from such Account Debtor and its Affiliates to the Borrower or
such Subsidiary Guarantor exceeds (i) 20% of the aggregate Eligible Accounts in
respect of an Account Debtor whose senior debt securities are rated "investment
grade" by Standard & Poor's Ratings Services and Xxxxx'x Investors Service,
Inc., (ii) 12.5% of the aggregate Eligible Accounts in the case of Rite Aid
Corp. so long as its senior debt securities are rated at least B by Standard &
Poor's Ratings Services and B2 by Xxxxx'x Investors Service, Inc and (ii) 10% of
the aggregate Eligible Accounts in respect of all other Account Debtors, except
that Account Debtors whose senior debt securities are rated at least A+ by
Standard & Poor's Ratings Services and A1 by Xxxxx'x Investors Service, Inc.
will not be subject to this clause (e);
-9-
(f) any covenant, representation, or warranty contained in this
Agreement or in the Guarantee and Collateral Agreement with respect to such
Account has been breached in any material respect;
(g) it (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an invoice
or other documentation satisfactory to the Administrative Agent which has been
sent to the Account Debtor, (iii) represents a progress billing, (iv) is
contingent upon the Borrower's completion of any further performance, (v)
represents a sale on a xxxx-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment, cash-on-delivery or any other repurchase or return basis
or (vi) relates to payments of interest;
(h) the goods giving rise to such Account have not been shipped to the
Account Debtor or for which the services giving rise to such Account have not
been performed by the Borrower;
(i) any check or other instrument of payment in respect of such Account
has been returned uncollected for any reason;
(j) it is owed by an Account Debtor which has (i) applied for,
suffered, or consented to the appointment of any receiver, custodian, trustee,
or liquidator of its assets, (ii) has had possession of all or a material part
of its property taken by any receiver, custodian, trustee or liquidator, (iii)
filed, or had filed against it, any request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as bankrupt,
winding-up, or voluntary or involuntary case under any state or federal
bankruptcy laws (other than post-petition accounts payable of an Account Debtor
that is a debtor-in-possession under the Bankruptcy Code and reasonably
acceptable to the Administrative Agent), (iv) has admitted in writing its
inability, or is generally unable to, pay its debts as they become due, (v)
become insolvent, or (vi) ceased operation of its business;
(k) it is owed by any Account Debtor which has sold all or a
substantially all of its assets;
(l) it is owed by an Account Debtor which (i) does not maintain its
chief executive office in the U.S. or (ii) is not organized under applicable law
of the U.S., any state of the U.S., unless, in either case, such Account is
backed by a letter of credit or credit insurance reasonably acceptable to the
Administrative Agent;
(m) it is owed in any currency other than U.S. dollars;
(n) it is owed by (i) the government (or any department, agency, public
corporation, or instrumentality thereof) of any country other than the U.S.
unless such Account is backed by a letter of credit or credit insurance
reasonably acceptable to the Administrative Agent, or (ii) the government of the
U.S., or any department, agency, public corporation, or instrumentality thereof,
unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. ss.
3727 ET SEQ. and 41 U.S.C. ss. 15 ET SEQ.), and any other steps necessary to
perfect the Lien of the Administrative Agent in such Account have been complied
with to the Administrative Agent's satisfaction;
(o) it is owed by any Affiliate, employee, officer, director, agent or
stockholder of any Loan Party;
-10-
(p) it exceeds, for any Account Debtor, a credit limit determined by
the Administrative Agent in its Commercially Reasonable Discretion, to the
extent of such excess;
(q) it is owed by an Account Debtor or any Affiliate of such Account
Debtor to which any Loan Party is indebted, but only to the extent of such
indebtedness or is subject to any security, deposit, progress payment, retainage
or other similar advance made by or for the benefit of an Account Debtor, in
each case to the extent thereof;
(r) it is subject to any counterclaim, deduction, defense, setoff or
dispute, but only to the extent of any such counterclaim, deduction, defense,
setoff or dispute;
(s) it is evidenced by any promissory note, chattel paper, or
instrument;
(t) it is owed by an Account Debtor located in any jurisdiction which
requires filing of a "Notice of Business Activities Report" or other similar
report in order to permit the Borrower to seek judicial enforcement in such
jurisdiction of payment of such Account, unless the Borrower has filed such
report or qualified to do business in such jurisdiction; provided that this
clause (t) shall not apply during the 90 day period following the Closing Date;
(u) the Borrower has made any agreement with the Account Debtor for any
reduction of such Account, other than discounts and adjustments given in the
ordinary course of business, or any Account which was partially paid and the
Borrower created a new receivable for the unpaid portion of such Account or any
portion of such Account classified by the Borrower or such Subsidiary Guarantor
as chargeback;
(v) it does not comply in all material respects with the requirements
of all applicable laws and regulations, whether Federal, state or local,
including without limitation the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board;
(w) it is for goods that have been sold under a purchase order or
pursuant to the terms of a contract or other agreement or understanding (written
or oral) that indicates or purports that any Person other than the Borrower or a
Subsidiary Guarantor has or has had an ownership interest in such goods, or
which indicates any party other than the Borrower as payee or remittance party;
(x) it was created on cash on delivery terms; or
(y) is not otherwise acceptable to the Administrative Agent in its
Commercially Reasonable Discretion.
In the event that an Account which was previously an Eligible Account ceases to
be an Eligible Account hereunder, the Borrower shall notify the Administrative
Agent thereof on and at the time of submission to the Administrative Agent of
the next Borrowing Base Certificate. In determining the amount of an Eligible
Account, the face amount of an Account shall be reduced by, without duplication,
to the extent not reflected in such face amount, (i) the amount of all accrued
and actual discounts, claims, credits or credits pending, promotional program
allowances, price adjustments, finance charges or other allowances (including
any amount that the Borrower may be obligated to rebate to an Account Debtor
pursuant to the terms of any agreement or understanding (written or oral)) and
(ii) the aggregate amount of all cash received in respect of such Account but
not yet applied by the Borrower to reduce the amount of such Account.
-11-
"ELIGIBLE FINISHED GOODS": completed goods which require no additional
processing or manufacturing, to be sold to third party customers by the Borrower
or any Subsidiary Guarantor in the ordinary course of business, which meet all
criteria under the definition of "Eligible Inventory".
"ELIGIBLE INVENTORY": all Inventory of the Borrower or any Subsidiary
Guarantor that, at the time of determination thereof is not ineligible for
inclusion in the calculation of the Borrowing Base pursuant to any of clauses
(a) through (q) below. Without limiting the Administrative Agent's discretion
provided herein, Eligible Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in favor of
the Administrative Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Lien permitted by Section 7.3 which arises by
operation of law and not by grant and which does not have priority over the Lien
in favor of the Administrative Agent;
(c) which is, in the Administrative Agent's opinion, slow moving, aged,
obsolete, unmerchantable, defective, used, unfit for sale, not salable at prices
approximating at least the cost of such Inventory in the ordinary course of
business or unacceptable due to age, type, category and/or quantity;
(d) which is classified as rejected;
(e) with respect to which any covenant, representation, or warranty
contained in this Agreement or the Guarantee and Collateral Agreement with
respect to such Inventory has been breached in any material respect and which
does not conform to all applicable standards imposed by any Governmental
Authority;
(f) in which any Person other than the Borrower or such Subsidiary
Guarantor shall (i) have any direct or indirect ownership, interest or title to
such Inventory or (ii) be indicated on any purchase order or invoice with
respect to such Inventory as having or purporting to have an interest therein;
(g) which is spare or replacement parts, subassemblies, packaging and
shipping material, manufacturing supplies, samples, prototypes, displays or
display items, xxxx-and-hold goods, goods that are returned to vendor or marked
for return to vendor, repossessed goods, defective or damaged goods, goods held
on consignment, or goods which are not of a type held for sale in the ordinary
course of business;
(h) which is not located in the U.S. or is in transit with a common
carrier from vendors and suppliers; except for up to $2,500,000 of Inventory
located within the United States and in-transit from one Borrower or Subsidiary
Guarantor location to another Borrower or Subsidiary Guarantor location;
(i) which is located in any location leased by any Loan Party unless
(i) the lessor has delivered to the Administrative Agent a Collateral Access
Agreement or (ii) a Rent Reserve with respect to such facility has been
established by the Administrative Agent;
(j) which is located in any third party warehouse or is in the
possession of a bailee (other than a third party processor) and is not evidenced
by a Document, unless (i) such warehouseman or bailee has delivered to the
Administrative Agent a Collateral Access Agreement or (ii) an appropriate
Reserve has been established by the Administrative Agent;
-12-
(k) which is being processed offsite at a third party location,
sub-contractor or outside processor, or is in-transit to or from said third
party location, sub-contractor or outside processor;
(l) which is a discontinued product or component thereof;
(m) which is the subject of a consignment by the Borrower or such
Subsidiary Guarantor as consignor;
(n) which contains or bears any intellectual property rights licensed
to any Loan Party unless the Administrative Agent is reasonably satisfied that
it may sell or otherwise dispose of such Inventory without (i) infringing the
rights of such licensor, (ii) violating any contract with such licensor, or
(iii) incurring any liability with respect to payment of royalties other than
royalties incurred pursuant to sale of such Inventory under the current
licensing agreement;
(o) which is not reflected in a current perpetual inventory report of
the Borrower; or
(p) which is not otherwise acceptable to the Administrative Agent in
its Commercially Reasonable Discretion.
In the event that Inventory which was previously Eligible Inventory
ceases to be Eligible Inventory hereunder, the Borrower shall notify the
Administrative Agent thereof on and at the time of submission to the
Administrative Agent of the next Borrowing Base Certificate
"ELIGIBLE RAW MATERIALS": items/materials used or consumed in the
manufacturing of goods to be sold by the Borrower or any Subsidiary Guarantor in
the ordinary course of business, which meet all criteria under the definition of
"Eligible Inventory".
"ELIGIBLE WORK-IN-PROCESS": Inventory which consists of
work-in-process, including materials other than Raw Materials, Finished Goods or
saleable products, title to which and sole ownership of which is vested in the
Borrower or any Subsidiary Guarantor, which meet all criteria under the
definition of "Eligible Inventory".
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health as it relates to
releases of Materials of Environmental Concern or the environment, as now or may
at any time hereafter be in effect.
"ENVIRONMENTAL PERMITS": any and all permits, licenses, approvals,
registrations, notifications, exemptions and other authorizations required under
any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
-13-
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having jurisdiction
with respect thereto) dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board) maintained by a member bank of the Federal Reserve
System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 a.m., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen),
the "EURODOLLAR BASE RATE" shall be determined by reference to such other
comparable publicly available service for displaying eurodollar rates as may be
reasonably selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 a.m., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar Loans for
which the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"EXCESS AVAILABILITY": for any day, the excess (expressed as a positive
or negative number) of (a) the lesser of (i) the then amount of the Revolving
Commitments and (ii) the amount certified by the Borrower, in the Borrowing Base
Certificate then most recently delivered to the Administrative Agent, as
constituting the amount of the Borrowing Base (adjusted to give effect to any
changes in Reserves that thereafter became effective) over (b) the aggregate
Revolving Extensions of Credit of all Lenders outstanding on such day, net of
all Dollars held in a Cash Collateral Account.
"EXCLUDED REDEMPTION OBLIGATION": an obligation (i) to purchase,
redeem, retire or otherwise acquire for value any Capital Stock that is not, and
cannot in any contingency become required to be purchased, redeemed, retired or
otherwise acquired prior to January 27, 2012 or (ii) an obligation of Holdings
to purchase, redeem, retire or otherwise acquire for value any Capital Stock of
Holdings or any Parent from present or former officers, directors or employees
of any Group Member upon the death, disability, retirement or termination of
employment or service of such officer, director or employee, or otherwise under
any stock option or employee stock ownership plan approved by the board of
directors of Holdings or any Parent.
-14-
"FEDERAL FUNDS EFFECTIVE RATE": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary or that is a Foreign Subsidiary Holdco.
"FOREIGN SUBSIDIARY HOLDCO": any Domestic Subsidiary that (a) has no
material assets other than securities of one or more Foreign Subsidiaries and
other assets relating to the ownership interest in any such securities and (b)
has no Guarantee Obligations in respect of any Indebtedness of the Borrower or
any Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation and, in the case of the Borrower, Indebtedness in respect of the
Loans.
"FUNDING ACCOUNT": a Deposit Account maintained by the Borrower with
the Administrative Agent and designated by the Borrower as the account to which
any funds released from the Collection Account as provided in Section 6.13(f)
shall be deposited.
"FUNDING OFFICE": the office of the Administrative Agent specified in
Section 10.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 4.1(b). In the event that any
Accounting Change (as defined below) shall occur and such change would otherwise
result in a change in the method of calculation of the Borrowing Base or the
financial covenants, standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for computing the Borrowing Base and
evaluating the Borrower's financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made. Until such
time as such an amendment shall have been executed and delivered by the
Borrower, the Administrative Agent and the Required Lenders, the Borrowing Base
and all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not
occurred. "ACCOUNTING CHANGES" refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or opinion
by the Financial Accounting Standards Board of the American Institute of
Certified Public Accountants or, if applicable, the SEC.
-15-
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GROUP MEMBERS": the collective reference to Holdings, the Borrower and
their respective Subsidiaries.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Borrower and each
Subsidiary Guarantor, substantially in the form of Exhibit A.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation which (in the case of either clause (a) or clause (b)), guarantees or
has the effect of guaranteeing any Indebtedness, leases, dividends or other
obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, including any such
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"GUARANTORS": the collective reference to Holdings and the Subsidiary
Guarantors.
"HEDGE AGREEMENTS": any interest rate protection agreement, commodity
price protection agreement or other interest or currency exchange rate or
commodity price hedging arrangement.
"HOLDINGS": as defined in the preamble to this Agreement.
"IMMATERIAL SUBSIDIARY": Xxxxx Xxxxxx, Inc., a New York corporation,
and Del International, Inc., a New York corporation, in each case only if and
for as long as (a) it has no more than $100,000 in total assets and (b) it had,
during the most recently completed period of four fiscal quarters of the
Borrower, aggregate gross revenues of less than $100,000.
"INCREASE ALLOWANCE": at any time, the amount (expressed as a
percentage) equal to (a) $85,000,000 plus all increases of Revolving Commitments
that have then become effective pursuant to Section 2.1(b) divided by (b)
$85,000,000.
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"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of credit
or similar arrangements, (g) all obligations of such Person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any
Capital Stock of such Person, except an Excluded Redemption Obligation, (h) all
Guarantee Obligations of such Person in respect of obligations of others of the
kind referred to in clauses (a) through (g) above, (i) all obligations of the
kind referred to in clauses (a) through (h) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become liable for the
payment of such obligation; PROVIDED that the amount of such Indebtedness shall
be limited to the value of the property subject to such Lien if such Person has
not assumed or become liable for the payment of such obligation, (j) all
preferred Capital Stock of any Subsidiary of such Person, and (k) for the
purposes of Sections 7.2 and 8(e) only, all obligations of such Person in
respect of Hedge Agreements. The Indebtedness of any Person shall include the
Indebtedness of any other entity (including any partnership in which such Person
is a general partner) to the extent such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness expressly provide that such
Person is not liable therefor.
"INDEMNIFIED LIABILITIES": as defined in Section 10.5.
"INDEMNITEE": as defined in Section 10.5.
"INDENTURES": the Senior Secured Note Indenture and the Senior
Subordinated Note Indenture.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights, and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses and
technology, know-how, trade secrets and proprietary information of any type, and
all rights to xxx at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT": the Intellectual Property
Security Agreement to be executed and delivered by each applicable Loan Party in
accordance with Section 5.10 of the Guarantee and Collateral Agreement.
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"INTERCREDITOR CONFIRMATION LETTER": a letter executed and delivered by
the trustee under the Senior Secured Note Indenture, the Note Collateral Agent,
the Administrative Agent and the Borrower and Subsidiary Guarantors
substantially in the form of Exhibit J-1.
"INTEREST PAYMENT DATE": (a) as to any Base Rate Loan (other than any
Swingline Loan), the last day of each March, June, September and December to
occur while such Loan is outstanding and the final maturity date of such Loan,
(b) as to any Eurodollar Loan having an Interest Period of three months or less,
the last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day that is three months, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (d) as to any Loan (other than any Revolving Loan
that is a Base Rate Loan and any Swingline Loan), the date of any repayment or
prepayment made in respect thereof and (e) as to any Swingline Loan, the last
day of each month.
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six or (if available to
all Lenders) nine or twelve months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be, given with
respect thereto; and (b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar Loan and ending
one, two, three or six or (if available to all Lenders) nine or twelve months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent no later than 12:00 noon, New York City time, on the date
that is three Business Days prior to the last day of the then current Interest
Period with respect thereto; PROVIDED that, all of the foregoing provisions
relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) the Borrower may not select an Interest Period that would extend
beyond the Revolving Termination Date;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to require a
payment or prepayment of any Eurodollar Loan during an Interest Period for
such Loan.
"INVENTORY RESERVES": Reserves against Inventory equal to the sum of
the following:
(a) a reserve determined by the Administrative Agent for Inventory that
is discontinued or slow-moving;
(b) a reserve for Inventory which is designated to be returned to
vendor or which is recognized as damaged or off quality by the Borrower;
(c) a revaluation reserve whereby capitalized favorable variances shall
be deducted from Eligible Inventory and unfavorable variances shall not be
added to Eligible Inventory; and
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(d) any other Reserve applicable to Inventory.
"INVESTMENTS": as defined in Section 7.8.
"ISSUING LENDER": JPMorgan Chase Bank, N.A. or any of its Affiliates or
any Lender appointed as Issuing Lender by the Borrower with the consent of the
Administrative Agent and such Lender, in its capacity as the issuer of Letters
of Credit.
"L/C FEE PAYMENT DATE": the last day of each March, June, September and
December and the last day of the Revolving Commitment Period.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters of
Credit and (b) the aggregate amount of drawings under Letters of Credit that
have not then been reimbursed pursuant to Section 2.11.
"L/C PARTICIPANTS": the collective reference to all the Lenders other
than the Issuing Lender.
"L/C SUBCOMMITMENT AMOUNT": $15,000,000.
"LENDERS": as defined in the preamble hereto; PROVIDED, that unless the
context otherwise requires, each reference herein to the Lenders shall be deemed
to include any Conduit Lender.
"LETTERS OF CREDIT": as defined in Section 2.7(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Security Documents, the Notes and
each other agreement, certificate or document executed by any Group Member and
delivered to any Agent or any Lender pursuant to this Agreement or any Security
Document.
"LOAN PARTIES": each Group Member that is a party to a Loan Document.
"LOCK BOX AGREEMENT": as defined in Section 6.13(d)(i).
"LOCK BOXES": as defined in Section 6.13(d)(i).
"MANAGEMENT ADVANCES": promissory notes issued by the Borrower to a
holder of the Capital Stock of Holdings or any Parent in accordance with the
Management Agreements to fund all or a portion of the purchase price paid in
connection with the repurchase by Holdings or such Parent of its Capital Stock
from such holder, if (a) such promissory note is subordinated at all times in
right of payment to the prior payment in full of all Obligations, pursuant to
subordination provisions no less favorable to the Lenders than the subordination
provisions set forth in the Senior Subordinated Note Indenture or, at the
request of the Borrower, such other subordination provisions as may be
reasonably acceptable to the Administrative Agent and (b) such repurchase is
occasioned by the death, disability, or retirement of such holder.
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"MANAGEMENT AGREEMENTS": the collective reference to (a) the
Financial Advisory Agreement, dated as of January 27, 2005 among DLI Holding
Corp., the Sponsor and any other parties thereto, (b) the Registration Rights
Agreement, dated as of January 27, 2005 among DLI Holding Corp., DLI Holding,
LLC and any other parties thereto and (c) the Management Subscription
Agreements, each as in effect on January 27, 2005.
"MANAGEMENT INVESTORS": officers and employees party to the Management
Subscription Agreements on the Closing Date.
"MANAGEMENT SUBSCRIPTION AGREEMENTS": the collective reference to any
subscription agreement or stockholders agreement between Holdings or any Parent
and any present or former officer, employee or director of any Group Member.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, assets, property, financial condition or results of operations of the
Borrower and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agents or the Lenders hereunder or thereunder or the
validity, perfection or priority of the Administrative Agent's Liens on the
Collateral.
"MATERIAL ENVIRONMENTAL AMOUNT": an amount payable by the Borrower
and/or its Subsidiaries in excess of $3,500,000 for remedial costs, compliance
costs, compensatory damages, punitive damages, fines, penalties or any
combination thereof pursuant to any Environmental Law.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity,
and any other substances or forces of any kind, whether or not any such
substance or force is defined as hazardous or toxic under any Environmental Law,
that is regulated pursuant to or could give rise to liability under any
Environmental Law.
"MERGER": the merger of DLI Acquisition Corp. with and into Del
Laboratories, Inc., in which Del Laboratories, Inc. was the surviving
corporation, which became effective on January 27, 2005.
"MORTGAGED PROPERTIES": the owned real properties listed on
Schedule 1.1m.
"MORTGAGES": each of the mortgages, deeds to secure debts and deeds of
trust made by any Loan Party in favor of, or for the benefit of, the
Administrative Agent for the benefit of the Lenders, substantially in the form
of Exhibit D (with such changes thereto as (a) shall be advisable under the law
of the jurisdiction in which such mortgage or deed of trust is to be recorded
and (b) do not have a material adverse economic effect on any Loan Party).
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
-20-
"NET RECOVERY LIQUIDATION RATE": with respect to Inventory of any
Person, the orderly liquidation value of such Inventory, expressed as a
percentage of the aggregate book value of such Inventory (valued at the lower of
cost or market value, on a first-in, first-out basis), as determined in a manner
accepted by the Administrative Agent (which shall not unreasonably withhold such
acceptance) in the most recent appraisal delivered to the Borrower and
Administrative Agent by an independent third party appraiser selected by the
Administrative Agent, net of all estimates and allowances for costs of
liquidation thereof.
"NON-EXCLUDED TAXES": as defined in Section 3.10(a).
"NON-U.S. LENDER": as defined in Section 3.10(d).
"NOTE COLLATERAL AGENT": Xxxxx Fargo Bank, N.A., in its capacity as
Collateral Agent under the Collateral Agency Agreement dated as of October 28,
2005 among it, as such Collateral Agent, the trustee under the Senior Secured
Note Indenture and the Borrower and Subsidiary Guarantors, and its successors in
such capacity.
"NOTES": the collective reference to any promissory note evidencing
Loans.
"OBLIGATIONS": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) the Loans and all other obligations and
liabilities of the Borrower to any Agent or to any Lender (or, in the case of
Specified Hedge Agreements or Specified Cash Management Arrangements, any
Qualified Counterparty), whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, the
Letters of Credit, any Specified Hedge Agreement, any Specified Cash Management
Arrangements or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses, overdraft charges (including
all fees, charges and disbursements of counsel to any Agent or to any Lender
that are required to be paid by the Borrower pursuant hereto) or otherwise;
provided, that (i) obligations of the Borrower or any Subsidiary under any
Specified Hedge Agreement or Specified Cash Management Arrangement shall be
secured and guaranteed pursuant to the Security Documents only to the extent
that, and for so long as, the other Obligations are so secured and guaranteed
and (ii) any release of Collateral or Guarantors effected in the manner
permitted by this Agreement shall not require the consent of holders of
obligations under Specified Hedge Agreements or Specified Cash Management
Arrangements.
"ORGANIZATIONAL DOCUMENTS": as to any Person, its certificate or
articles of incorporation and by-laws if a corporation, its partnership
agreement if a partnership, its limited liability company agreement if a limited
liability company, or other organizational or governing documents of such
Person.
"OTHER TAXES": any and all present or future stamp or documentary taxes
or any other excise taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Loan Document.
"PARENT": DLI Holding and any other Person of which Holdings at any
time is or becomes a Subsidiary after the Closing Date.
"PARTICIPANT": as defined in Section 10.6(c).
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"PATRIOT ACT": as defined in Section 10.18.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED ACQUISITION": any acquisition by purchase or otherwise of
all or substantially all the business, assets or Capital Stock of any Person or
a business unit of a Person, or a brand or trademark and related assets, to the
extent the aggregate consideration paid by the Borrower and its Subsidiaries for
such acquisition (including cash and indebtedness incurred or assumed in
connection with such acquisition) consists solely of any combination of:
(a) Capital Stock of Holdings or any Parent;
(b) cash in an amount equal to the net cash proceeds of issuance and
sale of Capital Stock of Holdings or any Parent that is transferred to the
Borrower as a contribution to its common equity within 90 days prior to the
date of the relevant acquisition; and
(c) other cash or property and other Indebtedness (whether incurred or
assumed) in an aggregate amount which, when aggregated with all other amounts
of such other cash and property paid for acquisitions at any time after the
Closing Date and all such other Indebtedness incurred or assumed in
acquisitions at any time after the Closing Date, does not exceed $50,000,000;
in each case if (i) no Default exists at the time of or results from such
acquisition, and (ii) the Borrower delivers to the Administrative Agent a
certificate of a Responsible Officer demonstrating in reasonable detail that,
after giving effect to such acquisition and the payment of the cash purchase
consideration for such acquisition and all fees, costs and other amounts payable
as a current liability in connection therewith, Excess Availability (computed
after giving effect to (x) all Borrowing Base assets to be acquired in such
acquisition in respect of which the Administrative Agent has had an opportunity
to conduct a collateral evaluation (including field examinations and appraisals)
and (y) all advance rate adjustments and Reserves which the Administrative
Agent, acting in its Commercially Reasonable Discretion, determines to establish
in respect of such assets) would be greater than 25% of the aggregate Revolving
Commitments.
"PERMITTED INVESTORS": the collective reference to: (x) the Sponsor,
its Control Investment Affiliates, any Management Investors and their respective
Permitted Transferees and (y) Magnetite Asset Investors III, LLC and its control
investment affiliates (but only with respect to their beneficial ownership of up
to 3% in the aggregate of the voting Capital Stock of Holdings or any Parent, as
the case may be).
"PERMITTED TRANSFEREES": (a) in the case of the Sponsor, (i) any
Control Investment Affiliate of the Sponsor (collectively, "SPONSOR
AFFILIATES"), (ii) any managing director, general partner, limited partner,
director, officer or employee of the Sponsor or any Sponsor Affiliate
(collectively, the "SPONSOR ASSOCIATES"), (iii) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any Sponsor
Associate and (iv) any trust, the beneficiaries of which, or a corporation or
partnership, the stockholders or partners of which, include only a Sponsor
Associate, his or her spouse, parents, siblings, members of his or her immediate
family (including adopted children) and/or direct lineal descendants; and (b) in
the case of any Management Investors, (i) his or her heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries, (ii) his or
her spouse, parents, siblings, members of his or her immediate family (including
adopted children) or direct lineal descendants or (iii) a trust, the
beneficiaries of which, or a corporation or partnership, the stockholders or
partners of which, include only the Management Investor, as the case may be, and
his or her spouse, parents, siblings, members of his or her immediate family
(including adopted children) and/or direct lineal descendants.
-22-
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee pension benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PLEDGED NOTES": as defined in the Guarantee and Collateral Agreement.
"PLEDGED STOCK": as defined in the Guarantee and Collateral Agreement.
"PRICING GRID": the Pricing Grid and related provisions attached hereto
as Annex B.
"PRO FORMA BALANCE SHEET": as defined in Section 4.1(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17(a).
"PROPERTY": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible,
including Capital Stock.
"PROTECTIVE ADVANCES": as defined in Section 2.15(a)
"QUALIFIED COUNTERPARTY": with respect to any Specified Hedge Agreement
or Specified Cash Management Arrangement, any counterparty thereto that, at the
time such Specified Hedge Agreement or Specified Cash Management Arrangement was
entered into, was a Lender or an affiliate of a Lender.
"RECEIVABLES": Accounts, chattel paper, notes, checks and drafts
receivable, debt securities (whether or not held in any investment account),
letter of credit rights, commercial tort claims, payment intangibles and other
rights to the payment of money of every type and description.
"RECOVERY EVENT": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating to
any asset of any Group Member, other than (x) any such settlement or payment
arising by reason of any loss of revenues or interruption of business or
operations caused thereby and (y) any such settlement or payment constituting
reimbursement or compensation for amounts previously paid by any Group Member in
respect of the theft, loss, destruction, damage or other similar event relating
to any such claim or proceeding.
"REGISTER": as defined in Section 10.6(b).
"REGULATION U": Regulation U of the Board as in effect from time to
time.
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"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to reimburse
the Issuing Lender pursuant to Section 2.11 for amounts drawn under Letters of
Credit.
"RELATED AGREEMENTS": the Senior Secured Note Indenture, Senior Secured
Notes, Secured Note Intercreditor Agreement and each other document executed in
connection with the Senior Secured Notes.
"RELATED PERSONS": with respect to any specified Person, such Person's
Affiliates and the respective officers, directors, employees, attorneys, agents
and advisors of such Person and such Person's Affiliates.
"RENT RESERVE": with respect to any store, warehouse distribution
center, regional distribution center or depot where any Inventory subject to
Liens arising by operation of law is located, a reserve equal to all rent,
charges, and other amounts due or to become due with respect to such facility
for a three month period.
"REORGANIZATION": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg.
ss. 4043.
"REQUIRED LENDERS": at any time, the holders of more than 50% of the
Revolving Commitments then in effect or, if the Revolving Commitments have been
terminated, the Revolving Extensions of Credit then outstanding.
"REQUIRED PRIORITY": as to any Lien created by any Security Document,
the condition that (subject to the provisions of such Security Document) such
Lien is entitled and subject to the relative lien priorities and rights provided
by the Secured Note Intercreditor Agreement and otherwise is prior and superior
in right to any claim, interest or Lien of any other Person (except, in the case
of Collateral other than Pledged Stock, Liens permitted by Section 7.3).
"REQUIREMENT OF LAW": as to any Person, 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.
"RESERVES": at any time, the aggregate amount then established by the
Administrative Agent, acting in its Commercially Reasonable Discretion by
advance notice to the Borrower, as deductions to be made in calculating the
Borrowing Base, including all Dilution Reserves, Inventory Reserves, Rent
Reserves and Claim Reserves and all other amounts established as reserves from
time to time by the Administrative Agent in its Commercially Reasonable
Discretion. Changes in Reserves shall be effective five Business Days after
delivery of advance written notice thereof to the Borrower.
"RESPONSIBLE OFFICER": the chief executive officer, president or chief
financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.
"RESTRICTED PAYMENTS": as defined in Section 7.6.
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"REVOLVING COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Swingline Loans and
Letters of Credit in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Commitment" opposite such Lender's
name on Annex A hereto or in the Assignment and Assumption pursuant to which
such Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original amount of the aggregate Revolving
Commitments of all Lenders is $85,000,000.
"REVOLVING COMMITMENT PERIOD": the period from and including the
Closing Date to the Revolving Termination Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Loans held by such Lender then outstanding, (b) such Lender's Revolving
Percentage of the L/C Obligations then outstanding and (c) such Lender's
Revolving Percentage of the aggregate principal amount of Swingline Loans then
outstanding.
"REVOLVING FACILITY": the Revolving Commitments and the extensions of
credit made thereunder.
"REVOLVING LOANS": as defined in Section 2.1(a).
"REVOLVING PERCENTAGE": as to any Lender at any time, the percentage
which such Lender's Revolving Commitment then constitutes of the aggregate
Revolving Commitments of all Lenders (or, at any time after the Revolving
Commitments shall have expired or terminated, the percentage which the aggregate
principal amount of such Lender's Revolving Extensions of Credit then
outstanding constitutes of the aggregate outstanding Revolving Extensions of
Credit of all Lenders).
"REVOLVING TERMINATION DATE": the earlier of (a) December 29, 2010 and
(b) the date on which the Revolving Commitments are terminated pursuant to any
provision of this Agreement.
"SEC": the Securities and Exchange Commission, any successor thereto
and otherwise any analogous Governmental Authority.
"SECURED NOTE INTERCREDITOR AGREEMENT": The Intercreditor Agreement
dated as of October 28, 2005 among JPMorgan Chase Bank, N.A., as Administrative
Agent under this Agreement and Credit Facility Collateral Agent (as defined
therein), the Note Collateral Agent and trustee under the Senior Secured Note
Indenture and the Borrower and Subsidiary Guarantors.
"SECURED PARTIES": as defined in the Guarantee and Collateral
Agreement.
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, the Intellectual Property Security Agreements, the
Mortgages, the Secured Note Intercreditor Agreement and all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any
property of any Person to secure the obligations and liabilities of any Loan
Party under any Loan Document.
"SENIOR SECURED NOTE INDENTURE": the Indenture dated as of October 28,
2005 among the Borrower and certain of its Subsidiaries and Xxxxx Fargo Bank,
N.A., as trustee.
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"SENIOR SECURED NOTES": the collective reference (a) the senior secured
notes of the Borrower issued on October 28, 2005 pursuant to the Senior Secured
Note Indenture and any Exchange Notes (as defined in the Senior Secured Note
Indenture) issued in exchange therefor and (b) any "Additional Notes" (defined
in the Senior Secured Note Indenture) issued from time to time after the Closing
Date and any Exchange Notes issued in exchange for such Additional Notes
(defined in the Senior Secured Note Indenture).
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture dated as of January
27, 2005 among the Borrower and certain of its Subsidiaries and Xxxxx Fargo
Bank, N.A., as trustee.
"SENIOR SUBORDINATED NOTES": the collective reference to (a) the
subordinated notes of the Borrower issued on January 27, 2005 pursuant to the
Senior Subordinated Note Indenture and any Exchange Notes (as defined in the
Senior Subordinated Note Indenture) issued in exchange therefor and (b) up to
$50,000,000 aggregate principal amount of "Additional Notes" (defined in the
Senior Subordinated Note Indenture) issued from time to time after January 27,
2005 and any Exchange Notes issued in exchange for such Additional Notes
(defined in the Senior Subordinated Note Indenture).
"SETTLEMENT": as defined in Section 2.4(b).
"SETTLEMENT DATE": as defined in Section 2.4(b).
"SINGLE EMPLOYER PLAN": any Plan that is covered by Title IV of ERISA,
but that is not a Multiemployer Plan.
"SOLVENT": with respect to any Person, as of any date of determination,
(a) the amount of the "present fair saleable value" of the assets of such Person
will, as of such date, exceed the amount of all "liabilities of such Person,
contingent or otherwise", as of such date, as such quoted terms are determined
in accordance with applicable federal and state laws governing determinations of
the insolvency of debtors, (b) the present fair saleable value of the assets of
such Person will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such debts become
absolute and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business, and (d)
such Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured
or unsecured.
"SPECIFIED CASH MANAGEMENT ARRANGEMENT": any arrangement for cash
management, clearing house, wire transfer, depository, treasury or investment
services in connection with any transfer or disbursement of funds through an
automated clearinghouse or on a same day or immediate or accelerated
availability basis (including all monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise of the Borrower or any of its Subsidiaries arising out of any cash
management, clearing house, wire transfer, depository, treasury or investment
services) provided to the Borrower or any of its Subsidiaries by a Qualified
Counterparty that has been designated by the Borrower (with the consent of the
Administrative Agent, which shall not unreasonably be withheld) as a Specified
Cash Management Arrangement. The designation of any such arrangement as a
Specified Cash Management Arrangement shall not create in favor of the Qualified
Counterparty that is a party thereto any rights in connection with the
management, enforcement or release of any Collateral.
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"SPECIFIED CHANGE OF CONTROL": a "Change of Control" (or any other
defined term having a similar purpose) as defined in either Indenture.
"SPECIFIED HEDGE AGREEMENT": the Hedge Agreements listed on Schedule
1.1s and any Hedge Agreement between the Borrower or any of its Subsidiaries and
any Qualified Counterparty that has been designated by the Borrower (with the
consent of the Administrative Agent, which shall not unreasonably be withheld)
as a Specified Hedge Agreement. The designation of any Hedge Agreement as a
Specified Hedge Agreement shall not create in favor of the Qualified
Counterparty that is a party thereto any rights in connection with the
management, enforcement or release of any Collateral.
"SPONSOR": Xxxxx & Company, L.P.
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other than (a)
any Foreign Subsidiary and (b) any Immaterial Subsidiary.
"SWINGLINE LENDER": JPMorgan Chase Bank, N.A., in its capacity as the
lender of Swingline Loans.
"SWINGLINE LOANS": as defined in Section 2.3.
"SYNERGETICS PLAN": the restructuring plan adopted by the Borrower in
consultation with Synergetics Installations Worldwide, Inc. (including any
reasonable modifications or replacements thereof approved by the board of
directors of Holdings or the Borrower). "THIRD PARTY ASSIGNEE" as defined in
Section 10.6(b)(ii)(D).
"TRANSFEREE": any Assignee or Participant.
"TYPE": as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Loan.
"UCC": the Uniform Commercial Code as in effect from time to time in
the State of New York.
"UNITED STATES": the United States of America.
"UNUSED COMMITMENT": as to any Lender at any time, an amount equal to
the excess, if any, of (a) such Lender's Revolving Commitment then in effect
OVER (b) the sum of (i) the aggregate principal amount of all Revolving Loans
held by such Lender then outstanding and (ii) such Lender's Revolving Percentage
of the L/C Obligations then outstanding.
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"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law or DE MINIMIS shares held by nominees or others as required by law) is owned
by such Person directly and/or through other Wholly Owned Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.
1.2. OTHER DEFINITIONAL PROVISIONS(a) . (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate
or other document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to any Group Member not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), and (iv) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties of
every type and nature and (v) references to agreements or other Contractual
Obligations shall, unless otherwise specified, be deemed to refer to such
agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time (subject to any applicable restrictions
hereunder).
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) The expressions "payment in full," "paid in full" and any other
similar terms or phrases when used herein with respect to any Obligation shall
mean the payment in full of such Obligation in cash in immediately available
funds.
SECTION 2. AMOUNT AND TERMS OF REVOLVING COMMITMENTS
2.1. REVOLVING COMMITMENTS(a) . (a) Subject to the terms and conditions
hereof, each Lender severally agrees to make revolving credit loans ("REVOLVING
LOANS") to the Borrower from time to time during the Revolving Commitment Period
in an aggregate principal amount at any one time outstanding which, when added
to such Lender's Revolving Extensions of Credit then outstanding, does not
exceed the lesser of (i) such Lender's Revolving Percentage of the amount
certified by the Borrower, in the Borrowing Base Certificate then most recently
delivered to the Administrative Agent, as constituting the amount of the
Borrowing Base (adjusted to give effect to any changes in Reserves that
thereafter became effective) and (ii) the amount of such Lender's Revolving
Commitment. Revolving Loans that are repaid may be reborrowed during the
Revolving Commitment Period, subject to the terms and conditions hereof. The
Revolving Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 3.3.
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(b) The Borrower from time to time may request the Administrative Agent
to consent to an increase in the aggregate Revolving Commitments on the
following terms:
(i) The aggregate amount of all such increases shall not exceed
$50,000,000.
(ii) No Lender will be obligated to provide or commit for any such
increase.
(iii) If the Administrative Agent consents to any such increase and
determines that one or more of the Lenders or other Persons reasonably
satisfactory to the Administrative Agent and Borrower are willing to commit
to provide such increase, such increase will be effective on the date the
Administrative Agent receives an amendment to this Agreement executed by the
Borrower, the Administrative Agent and such Lender or other Person, adding
such Person and commitment to Annex A and, in the case of a Person not then
already a Lender, confirming that such Person has become a Lender for all
purposes of this Agreement. Such amendment will not require the consent of
any other Lender.
(iv) On the effective date of such amendment, each Lender or other
Person committing to provide such increase shall fund Revolving Loans in an
amount equal to its Revolving Percentage (after giving effect to such
amendment) of the aggregate Revolving Loans outstanding immediately before
giving effect to such amendment, and the proceeds of such funding shall be
applied to repay ratably the Revolving Loans outstanding before giving effect
to such amendment. Each Lender receiving any such repayment will be entitled
to all amounts payable under Section 3.11 in connection therewith.
(c) The Borrower shall repay all outstanding Revolving Loans on the
Revolving Termination Date.
2.2. PROCEDURE FOR REVOLVING LOAN BORROWING. The Borrower may borrow
under the Revolving Commitments during the Revolving Commitment Period on any
Business Day, provided that the Borrower shall give the Administrative Agent
irrevocable notice, which must be received by the Administrative Agent prior to
12:00 Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior
to the requested Borrowing Date, in the case of Base Rate Loans and which shall
specify (i) the amount and Type of Revolving Loans to be borrowed, (ii) the
requested Borrowing Date, (iii) the amount certified by the Borrower, in the
Borrowing Base Certificate then most recently delivered to the Administrative
Agent, as constituting the amount of the Borrowing Base (adjusted to give effect
to any changes in Reserves that thereafter became effective), and (iv) in the
case of Eurodollar Loans, the respective amounts of each such Type of Loan and
the respective lengths of the initial Interest Period therefor. Each borrowing
under the Revolving Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $250,000 or a whole multiple thereof and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $250,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Lender thereof. Each Lender will make the amount of
its pro rata share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Funding Office prior to 12:00 Noon, New York
City time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such amounts will then be made available
to the Borrower by the Administrative Agent crediting an account of the Borrower
maintained by the Administrative Agent, in like amounts and funds as received by
the Administrative Agent.
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2.3. SWINGLINE COMMITMENT(a) . (a) The Administrative Agent, Swingline
Lender and Lenders agree that in order to facilitate the administration of this
Agreement and the other Loan Documents, the Borrower may request the Swingline
Lender to fund on behalf of the Lenders any Base Rate Loan requested by the
Borrower, by advancing the amount requested in same day funds on the applicable
Borrowing Date for account of the Borrower to the Administrative Agent (each
such Loan made solely by the Swingline Lender pursuant to this Section 2.3, a
"SWINGLINE LOAN"), with settlement among the Lenders as to the Swingline Loans
to take place on a periodic basis as set forth in Section 2.4(b). Each Swingline
Loan shall be subject to all the terms and conditions applicable to other Base
Rate Loans funded by the Lenders, except that all payments thereon shall be
payable to the Swingline Lender solely for its own account. Subject to the terms
and conditions hereof, the Swingline Lender agrees to make Swingline Loans up to
an aggregate outstanding amount that shall not at any time exceed $10,000,000.
The Swingline Lender shall not make any Swingline Loan to the extent the
requested Swingline Loan, when added to the aggregate Revolving Extensions of
Credit then outstanding, would exceed the lesser of (i) the amount certified by
the Borrower, in the Borrowing Base Certificate then most recently delivered to
the Administrative Agent, as constituting the amount of the Borrowing Base
(adjusted to give effect to any changes in Reserves that thereafter became
effective) and (ii) the aggregate Revolving Commitments. All Swingline Loans
shall be Base Rate Loans.
(b) Each borrowing of Swingline Loans shall be in an amount equal to
$200,000 or a whole multiple of $100,000 in excess thereof. Not later than 3:00
P.M., New York City time, on the Borrowing Date specified in a notice in respect
of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swingline Loan to be made by the Swingline
Lender. The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the account of the Borrower with the Administrative Agent on such Borrowing Date
in immediately available funds.
2.4. REFUNDING OF SWINGLINE LOANS(a) . (a) Whenever the Borrower
desires that the Swingline Lender make Swingline Loans it shall give the
Swingline Lender irrevocable telephonic notice confirmed promptly in writing
(which telephonic notice must be received by the Swingline Lender not later than
1:00 P.M., New York City time, on the proposed Borrowing Date), specifying (i)
the amount to be borrowed and (ii) the requested Borrowing Date (which shall be
a Business Day during the Revolving Commitment Period). Upon the making of a
Swingline Loan (whether before or after the occurrence of a Default and
regardless of whether a Settlement has been requested with respect to such
Swingline Loan), each Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from the
Swingline Lender without recourse or warranty, an undivided interest and
participation in such Swingline Loan in proportion to its Revolving Percentage
of the Revolving Commitment. The Swingline Lender may, at any time, require the
Lenders to fund their participations. From and after the date, if any, on which
any Lender is required to fund its participation in any Swingline Loan purchased
hereunder, the Administrative Agent shall promptly distribute to such Lender,
such Lender's Revolving Percentage of all payments of principal and interest and
all proceeds of Collateral received by the Administrative Agent in respect of
such Loan.
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(b) The Administrative Agent, on behalf of the Swingline Lender, shall
request settlement (a "SETTLEMENT") with the Lenders on at least a weekly basis
or on any date that the Administrative Agent elects, by notifying the Lenders of
such requested Settlement by facsimile, telephone, or e-mail no later than 12:00
noon New York City time on the date of such requested Settlement (the
"SETTLEMENT DATE"). Each Lender (other than the Swingline Lender, in the case of
the Swingline Loans) shall transfer the amount of such Lender's Revolving
Percentage of the outstanding principal amount of the applicable Loan with
respect to which Settlement is requested to the Administrative Agent, to such
account of the Administrative Agent as the Administrative Agent may designate,
not later than 2:00 p.m., New York City time, on such Settlement Date.
Settlements may occur during the existence of a Default and whether or not the
applicable conditions precedent set forth in Section 5.2 have then been
satisfied. Such amounts transferred to the Administrative Agent shall be applied
against the amounts of the Swingline Lender's Swingline Loans and, together with
Swingline Lender's Revolving Percentage of such Swingline Loan, shall constitute
Revolving Loans of such Lenders, respectively. If any such amount is not
transferred to the Administrative Agent by any Lender on such Settlement Date,
the Swingline Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon as specified in Section 3.8(d).
2.5. FEES, ETC.(a) (a) The Borrower agrees to pay to the Administrative
Agent for the account of each Lender a commitment fee for the period from and
including the Closing Date to the last day of the Revolving Commitment Period,
computed at the Commitment Fee Rate on the average daily amount of the Unused
Commitment of such Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Revolving Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrower agrees to pay to the Agents the fees in the amounts
and on the dates agreed to in writing by the Borrower and the Administrative
Agent.
2.6. TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. The Borrower
shall have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Revolving Commitments or, from time to
time, to reduce the amount of the Revolving Commitments; provided that no such
termination or reduction of Revolving Commitments shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Loans and
Swingline Loans made on the effective date thereof, the aggregate outstanding
amount of Revolving Extensions of Credit would exceed the aggregate amount of
Revolving Commitments. Any such reduction shall be in an amount equal to
$1,000,000, or a whole multiple thereof, and shall reduce permanently the
Revolving Commitments then in effect.
2.7. LETTER OF CREDIT SUBCOMMITMENT(a) . (a) Subject to the terms and
conditions hereof, the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in Section 2.10(a), agrees to issue letters of credit
("LETTERS OF CREDIT") for the account of the Borrower on any Business Day during
the Revolving Commitment Period in such form as may be customarily used from
time to time by the Issuing Lender or in such other form as may be reasonably
satisfactory to the Issuing Lender; PROVIDED, that the Issuing Lender shall have
no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Subcommitment Amount or
(ii) the aggregate amount of the Available Revolving Commitments would be less
than zero. Each Letter of Credit shall be denominated in Dollars and expire no
later than the earlier of (i) the first anniversary of its date of issuance and
(ii) the date that is five Business Days prior to the Revolving Termination
Date, provided that any Letter of Credit with a one-year term may provide for
the renewal thereof for additional periods of up to one year (which shall in no
event extend beyond the date referred to in clause (ii) above).
(b) Each of the outstanding letters of credit listed on SCHEDULE 2.7(B)
shall be deemed to be Letters of Credit issued by the Issuing Lender on the
Closing Date for all purposes of this Agreement.
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(c) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
2.8. PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT (a) (a) The Borrower
may from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified herein
an Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and information
as the Issuing Lender may reasonably request. Upon receipt of any Application,
the Issuing Lender will notify the Administrative Agent of the amount, the
beneficiary and the requested expiration of the requested Letter of Credit, and
upon receipt of confirmation from the Administrative Agent that after giving
effect to the requested issuance, the Available Revolving Commitments would not
be less than zero, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower (with a
copy to the Administrative Agent) promptly following the issuance thereof. The
Issuing Lender shall promptly furnish to the Administrative Agent, which shall
in turn promptly furnish to the Lenders, notice of the issuance of each Letter
of Credit (including the amount thereof).
(b) The making of each request for a Letter of Credit by the Borrower
shall be deemed to be a representation and warranty by the Borrower that such
Letter of Credit may be issued in accordance with, and will not violate the
requirements of, Section 2.7(a) or any Requirement of Law applicable to the
Group Members. Unless the Issuing Lender has received notice from the
Administrative Agent before it issues a Letter of Credit that one or more of the
applicable conditions specified in Section 5.2 are not satisfied, or that the
issuance of such Letter of Credit would violate Section 2.7, then the Issuing
Lender may issue the requested Letter of Credit for the account of the Borrower
in accordance with the Issuing Lender's usual and customary practices.
2.9. FEES AND OTHER CHARGES(a) . (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans, shared ratably among the
Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date. In addition, the Borrower shall pay to the Issuing Lender for its
own account a fronting fee on the undrawn and unexpired amount of each Letter of
Credit computed at the rate of 0.25% per annum and payable quarterly in arrears
on each L/C Fee Payment Date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
2.10. L/C PARTICIPATIONS(a) . (a) The Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions set forth below, for such L/C Participant's
own account and risk an undivided interest equal to such L/C Participant's
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Revolving Percentage in the Issuing Lender's obligations and rights under and in
respect of each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Administrative Agent upon demand of the Issuing Lender an
amount equal to such L/C Participant's Revolving Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed. The Administrative
Agent shall promptly forward such amounts to the Issuing Lender.
(b) If any amount required to be paid by any L/C Participant to the
Administrative Agent for the account of the Issuing Lender pursuant to Section
2.10(a) in respect of any unreimbursed portion of any payment made by the
Issuing Lender under any Letter of Credit is paid to the Administrative Agent
for the account of the Issuing Lender within three Business Days after the date
such payment is due, such L/C Participant shall pay to the Administrative Agent
for the account of the Issuing Lender on demand an amount equal to the product
of (i) such amount, times (ii) the daily average Federal Funds Effective Rate
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any L/C Participant pursuant to Section 2.10(a) is not made available
to the Administrative Agent for the account of the Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, the
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans. A certificate of the Issuing
Lender submitted to any L/C Participant with respect to any amounts owing under
this Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its PRO
RATA share of such payment in accordance with Section 2.10(a), the
Administrative Agent or the Issuing Lender receives any payment related to such
Letter of Credit (whether directly from the Borrower or otherwise, including
proceeds of collateral applied thereto by the Issuing Lender), or any payment of
interest on account thereof, the Administrative Agent or the Issuing Lender, as
the case may be, will distribute to such L/C Participant its PRO RATA share
thereof; PROVIDED, that if any such payment received by Administrative Agent or
the Issuing Lender, as the case may be, shall be required to be returned by the
Administrative Agent or the Issuing Lender, such L/C Participant shall return to
the Administrative Agent for the account of the Issuing Lender the portion
thereof previously distributed to such L/C Participant.
2.11. REIMBURSEMENT OBLIGATION OF THE BORROWER. The Borrower agrees to
reimburse the Issuing Lender on the same Business Day on which the Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by the Issuing Lender or on the next Business Day,
if such notice is received any time after 12:00 noon, New York time on such
Business Day for the amount of such draft so paid. Each such payment shall be
made to the Issuing Lender at its address for notices referred to herein in
Dollars and in immediately available funds. Interest shall be payable on any
such amounts from the date on which the relevant draft is paid until payment in
full at the rate set forth in (i) until the Business Day next succeeding the
date of the relevant notice, Section 3.5(b) and (ii) thereafter, Section 3.5(c).
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2.12. OBLIGATIONS ABSOLUTE. The Borrower's obligations under Section
2.11 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment that the Borrower
may have or have had against the Issuing Lender, any beneficiary of a Letter of
Credit or any other Person. The Borrower also agrees with the Issuing Lender
that the Issuing Lender shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 2.11 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender or any Related Person. The Borrower agrees that any action
taken or omitted by the Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York, shall be
binding on the Borrower and shall not result in any liability of the Issuing
Lender to the Borrower.
2.13. LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
2.14. APPLICATIONS. To the extent that any provision of any Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 2, the provisions of this Section 2 shall apply.
2.15. PROTECTIVE ADVANCES.
(a) The Administrative Agent is authorized by the Borrower and the
Lenders, from time to time in the Administrative Agent's sole discretion (but
shall have absolutely no obligation to), to make Loans to the Borrower, on
behalf of all Lenders, which the Administrative Agent, in its commercially
reasonable discretion, deems necessary or desirable (i) to preserve or protect
the Collateral or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (iii)
to pay any other amount chargeable to or required to be paid by the Borrower
pursuant to the terms of this Agreement, including payments of reimbursable
expenses (including costs, fees, and expenses as described in Section 10.5) and
other sums payable under the Loan Documents (any of such Loans are herein
referred to as "PROTECTIVE Advances"); PROVIDED, that (x) the aggregate amount
of Protective Advances made at any time shall not, when added to Protective
Advances then outstanding, exceed 5% of the lesser of the then amount of the
Revolving Commitments and the then amount of the Borrowing Base and (y) the
aggregate amount of Protective Advances and Revolving Extensions of Credit
outstanding at any time shall not exceed the then amount of the Revolving
Commitments. Protective Advances may be made even if the conditions precedent
set forth in Section 5.2 have not been satisfied and without regard to whether
there is Excess Availability. All Protective Advances shall be Base Rate Loans
and Obligations secured by the Collateral. The Administrative Agent's
authorization to make Protective Advances may be revoked at any time by the
Required Lenders. Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent's receipt thereof and
expiration of a reasonable time to act thereon. The Administrative Agent may at
any time request the Lenders to make Revolving Loans to repay a Protective
Advance, whether or not the conditions set forth in Section 5.2 are then
satisfied, or require the Lenders to fund their risk participations described in
Section 2.15(b).
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(b) Upon the making of a Protective Advance by the Administrative Agent
(whether before or after the occurrence of a Default), each Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably purchased from the Administrative Agent, without recourse or
warranty, an undivided interest and participation in such Protective Advance in
proportion to such Lender's Revolving Percentage. From and after the date, if
any, on which any Lender is required to fund its participation in any Protective
Advance purchased hereunder, the Administrative Agent shall promptly distribute
to such Lender, such Lender's Revolving Percentage of all payments of principal
and interest and all proceeds of Collateral received by the Administrative Agent
in respect of such Protective Advance.
SECTION 3. GENERAL PROVISIONS APPLICABLE
TO LOANS AND LETTERS OF CREDIT
3.1. OPTIONAL PREPAYMENTS. The Borrower may at any time and from time
to time prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Administrative Agent no later than 11:00
a.m., New York City time, three Business Days prior thereto in the case of
Eurodollar Loans and no later than 11:00 a.m., New York City time, one Business
Day prior thereto in the case of Base Rate Loans, which notice shall specify the
date and amount of prepayment and whether the prepayment is of Eurodollar Loans
or Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day
other than the last day of the Interest Period applicable thereto, the Borrower
shall also pay any amounts owing pursuant to Section 3.11. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof. If any such notice is given, the amount specified in such notice shall
be due and payable on the date specified therein, together with (except in the
case of Revolving Loans that are Base Rate Loans and Swingline Loans) accrued
interest to such date on the amount prepaid. Partial prepayments of Revolving
Loans shall be in an aggregate principal amount of $1,000,000 or a whole
multiple thereof. Partial prepayments of Swingline Loans shall be in an
aggregate principal amount of $100,000 or a whole multiple thereof.
3.2. MANDATORY PREPAYMENTS(a) . (a) If at any time the aggregate
outstanding Revolving Extensions of Credit of all Lenders exceed the lesser of
(i) the amount certified by the Borrower, in the Borrowing Base Certificate then
most recently delivered to the Administrative Agent, as constituting the amount
of the Borrowing Base (adjusted to give effect to any changes in Reserves that
thereafter became effective) and (ii) the aggregate Revolving Commitments then
in effect, the Borrower shall immediately, without notice or demand, prepay
outstanding Loans (or, after the Loans have been repaid, deposit Dollars to a
Cash Collateral Account) in an amount equal to such excess.
(b) As, when, to the extent and for as long as set forth in Section
6.13(f), the Administrative Agent will have the unconditional right (but not the
duty) to cause deposits received in the Collection Account to be applied to the
payment of the principal of or interest on outstanding Loans or Reimbursement
Obligations or other Obligations then payable or to fund deposits to a Cash
Collateral Account not exceeding the aggregate outstanding L/C Obligations. When
so applied to outstanding Loans, such payment shall constitute a mandatory
prepayment thereof.
(c) Mandatory prepayments of Loans shall be applied first to Base Rate
Loans and then to Eurodollar Loans.
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3.3. CONVERSION AND CONTINUATION OPTIONS(a) . (a) The Borrower may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent prior irrevocable notice of such election no later than
12:00 noon, New York City time, on the Business Day preceding the proposed
conversion date, provided, that any such conversion of Eurodollar Loans may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent prior irrevocable notice of such election no
later than 12:00 noon, New York City time, on the third Business Day preceding
the proposed conversion date (which notice shall specify the length of the
initial Interest Period therefor), PROVIDED that no Base Rate Loan may be
converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have determined
in its or their sole discretion not to permit such conversions. If the Borrower
requests a conversion to Eurodollar Loans in any such notice, but fails to
specify an Interest Period, it will be deemed to have specified an Interest
Period of one month. Upon receipt of any such notice the Administrative Agent
shall promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, PROVIDED,
that no Eurodollar Loan may be continued as such when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined in its or their sole discretion not to permit such
continuations, and PROVIDED, FURTHER, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period. So long as no Event of Default has occurred and is continuing,
if the Borrower requests a continuation of Eurodollar Loans in any such notice,
but fails to specify an Interest Period, it will be deemed to have specified an
Interest Period of one month. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
3.4. LIMITATIONS ON EURODOLLAR TRANCHES. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions and continuations of
Eurodollar Loans hereunder and all selections of Interest Periods hereunder
shall be in such amounts and be made pursuant to such elections so that, (a)
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $250,000 in excess thereof and (b) no more than six Eurodollar
Tranches shall be outstanding at any one time.
3.5. INTEREST RATES AND PAYMENT DATES(a). (a) Each Eurodollar Loan
shall bear interest on the outstanding principal amount thereof 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 Base Rate Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate plus the
Applicable Margin.
(c) (i) If any portion of the principal of any Loan or Reimbursement
Obligation is not paid when due (whether at the stated maturity, by acceleration
or otherwise), such portion of such principal shall bear interest at a rate per
annum equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to Section 3.5(a) or 3.5(b) PLUS 2% per annum or (y)
in the case of Reimbursement Obligations, the rate applicable to Base Rate Loans
PLUS 2% per annum and (ii) if all or a portion of any interest payable on any
Loan or Reimbursement Obligation or any commitment fee or other amount payable
hereunder is not paid when due (whether at the stated maturity, by acceleration
or otherwise), such overdue amount shall bear interest at a rate per annum equal
to the rate then applicable to Base Rate Loans PLUS 2% per annum, in each case,
with respect to both clause (i) and clause (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).
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(d) Interest shall be payable in arrears on each Interest Payment Date,
PROVIDED that interest accruing pursuant to Section 3.5(c) shall be payable from
time to time on demand.
3.6. COMPUTATION OF INTEREST AND FEES(a). (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the
actual days elapsed, except that, with respect to Base Rate Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate. Interest shall accrue on each Loan for each day on
which it is made or outstanding, except the day on which it is repaid unless it
is repaid on the same day that it was made.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 3.5(a).
3.7. INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period:
(a) the Administrative Agent shall have determined
(which determination shall be conclusive and binding upon the Borrower
absent manifest error) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received
notice from the Required 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,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the last day of the then-current
Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the
Administrative Agent, no further Eurodollar Loans shall be made or continued as
such, nor shall the Borrower have the right to convert Loans to Eurodollar
Loans.
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3.8. PRO RATA TREATMENT AND PAYMENTS(a) . (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Revolving Commitments shall be made
pro rata according to the respective Revolving Percentages of the Lenders.
(b) Each payment (including each prepayment) by the Borrower on account
of principal of and interest on the Revolving Loans shall be made PRO RATA
according to the respective outstanding principal amounts of the Revolving Loans
then held by the Lenders.
(c) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
benefit and account of the Lenders, at the Funding Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(d) Unless the Administrative Agent shall have been notified in writing
by any Lender prior to a borrowing that such Lender will not make the amount
that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans, on
demand, from the Borrower.
(e) Unless the Administrative Agent shall have been notified in writing
by the Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
PRO RATA shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days after such due
date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate. Nothing herein shall be
deemed to limit the rights of the Administrative Agent or any Lender against the
Borrower.
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3.9. REQUIREMENTS OF LAW(a) . (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof, or
compliance by any Lender with any request or directive whether or not having the
force of law from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for (A) changes in the rate of net
income taxes, capital taxes, branch taxes, franchise taxes (imposed in lieu
of income taxes) and net worth taxes (imposed in lieu of income taxes) and
(B) Non-Excluded Taxes, provided that this provision shall not affect any
obligation of the Borrower under Section 3.10);
(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 that 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 that such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its written demand (accompanied by a
certificate of the type described in clause (c) below), any additional
amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy whether or not having the force of law from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy
and such Lender's desired return on capital) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
(accompanied by a certificate of the type described in clause (c) below)
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction.
(c) A certificate as to any additional amounts payable pursuant to this
Section 3.9 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error.
Notwithstanding anything to the contrary in this Section 3.9, the Borrower shall
not be required to compensate a Lender pursuant to this Section 3.9 for any
amounts incurred more than six months prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor;
PROVIDED that, if the circumstances giving rise to such claim have a retroactive
effect, then such six-month period shall be extended to include the period of
such retroactive effect. The obligations of the Borrower pursuant to this
Section 3.9 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
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3.10. TAXES(a) . (a) Except to the extent required under applicable
law, all payments made under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes, capital
taxes, branch taxes, franchise taxes (imposed in lieu of net income taxes) and
net worth taxes (imposed in lieu of net income taxes) imposed on any Agent or
any Lender or its applicable lending office or any branch, as a result of a
present or former connection between such Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("NON-EXCLUDED TAXES") or Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement, PROVIDED, however, that the Borrower
shall not be required to increase any such amounts payable to any Lender or
Agent with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender's or Agent's failure to comply with the requirements of paragraph (d) or
(e) of this Section 3.10 or (ii) that are United States withholding taxes
imposed on amounts payable to such Lender or Agent at the time such Lender or
Agent becomes a party to this Agreement.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for its own account or for the account of the relevant
Agent or Lender, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower fails
to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Agents and
the Lenders for any incremental taxes, interest or penalties that may become
payable by any Agent or any Lender as a result of any such failure.
(d) Each Lender or Agent (or Transferee) that is not a "United States
person" as defined in Section 7701(a)(30) of the Code (a "NON-U.S. LENDER")
shall deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8IMY and/or
Form W-8BEN (claiming benefits of an applicable tax treaty) or Form W-8ECI, as
applicable (or successor form) or, in the case of a Non-U.S. Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest", a statement
substantially in the form of Exhibit G and a Form W-8BEN, or any subsequent
versions thereof or successors thereto, properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender shall deliver such
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forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver. Each Lender or Agent that is not
a Non-U.S. Lender shall furnish an accurate and complete U.S. Internal Revenue
Service Form W-9 (or successor form) establishing that such Lender or Agent is
not subject to U.S. backup withholding, and to the extent it may lawfully do so
at such times, provide a new Form W-9 (or successor form) upon the expiration or
obsolescence of any previously delivered form.
(e) A Lender or Agent that is entitled to an exemption from or
reduction of non-U.S. withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to the Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law and as reasonably requested in writing by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
to the extent that such Lender or Agent is legally entitled to complete, execute
and deliver such documentation and in such Lender's or Agent's reasonable
judgment such completion, execution or submission would not materially prejudice
the legal position of such Lender.
(f) If any Lender or Agent determines, in its reasonable discretion,
that it has received a refund of any Non-Excluded Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 3.10, it shall
promptly pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 3.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of such Agent or such Lender
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); PROVIDED, that the Borrower, upon the
request of such Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to such Agent or such Lender in the event such
Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require any Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.
(g) The agreements in this Section 3.10 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(h) For purposes of this Section 3.10, in the case of any Lender that
is treated as a partnership for U.S. federal income tax purposes, any
Non-Excluded Taxes or Other Taxes required to be deducted and withheld by such
Lender with respect to payments made by the Borrower under any Loan Document,
shall be treated as Non-Excluded Taxes or Other Taxes required to be deducted by
the Borrower, but only to the extent such Non-Excluded Taxes or Other Taxes
would have been required to be deducted and withheld by the Lender if the Lender
were treated as a corporation for U.S. federal income tax purposes making such
payments under the Loan Documents on behalf of the Borrower.
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(i) If a Lender or Agent changes its applicable lending office or
assigns its rights or sells participations therein and the effect of the change,
assignment or participation, as of the date of the change, would be to cause the
Borrower to become obligated to pay any additional amount under Section
3.9(a)(i) or 3.10, the Borrower shall not be obligated to pay such additional
amount in excess of amounts the Borrower was obligated to pay prior to such
change, assignment or participation.
3.11. INDEMNITY. The Borrower agrees to indemnify each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation and the calculation of the amount of such
compensation), for all losses, expenses and liabilities (including any loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Lender to fund its Eurodollar Loans but
excluding loss of anticipated profits) that such Lender may sustain or incur as
a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that 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 that 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) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section 3.11 submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.12. CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.9, 3.10(a) or
3.15 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans or Letters of Credit affected by
such event with the object of avoiding the consequences of such event; provided,
that such designation is made on terms that, in the sole judgment of such
Lender, cause such Lender and its lending office(s) to suffer no economic, legal
or regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of the Borrower or the rights of
any Lender pursuant to Section 3.9, 3.10(a) or 3.15.
3.13. REPLACEMENT OF LENDERS. The Borrower may replace, with a
replacement financial lender reasonably satisfactory to the Administrative
Agent, any Lender that (a) requests payment of any amounts payable under Section
3.9 or 3.10(a), (b) defaults in its obligation to make Loans hereunder, or (c)
declines to deliver any required consent to a waiver or modification of any
provision of the Loan Documents that has been consented by the Borrower,
Administrative Agent and Required Lenders, but only if (i) such replacement does
not conflict with any Requirement of Law, (ii) no Event of Default has occurred
and is continuing at the time of such replacement, (iii) prior to any such
replacement, such Lender has taken no action under Section 3.12 so as to
eliminate the demand or condition giving rise to the Borrower's replacement
right, (iv) the replacement lender purchases, at par, all Loans and other
amounts owing to the replaced Lender on or prior to the date of replacement and
assumes all obligations of the replaced Lender under the Loan Documents in
accordance with Section 10.6 (except that the Borrower shall pay the
registration and processing fee referred to therein), (v) the Borrower
compensates the replaced Lender under Section 3.11 if any Eurodollar Loan
outstanding to the replaced Lender is purchased other than on the last day of
the Interest Period relating thereto, (vi) the Borrower shall pay the replaced
Lender all amounts payable under Section 3.9 or 3.10(a), and (vii) all rights
and claims of the Borrower, Administrative Agent and Lenders against any
replaced Lender that has defaulted in its obligation to make Loans hereunder are
in all respects reserved and unaffected by the replacement of such Lender.
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3.14. EVIDENCE OF DEBT(a) . (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing
Indebtedness of the Borrower to such Lender resulting from each Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(b) The Administrative Agent, on behalf of the Borrower, shall maintain
the Register pursuant to Section 10.6(b), and a subaccount therein for each
Lender, in which shall be recorded (i) the amount of each Loan made hereunder
and any Note evidencing such Loan, the Type of such Loan and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.14(a) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
obligations of the Borrower therein recorded, but the failure of any Lender or
the Administrative Agent to maintain the Register or any such account, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.
(d) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Revolving Credit Loans or
Swingline Loans, as the case may be, of such Lender, substantially in the forms
of Exhibit H-1 or H-2, respectively, with appropriate insertions as to date and
principal amount.
3.15. ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be canceled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 3.11.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, Holdings
and the Borrower hereby jointly and severally represent and warrant to each
Agent and each Lender that:
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4.1. FINANCIAL CONDITION(a) . (a) The unaudited pro forma consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at September
30, 2005 (including the notes thereto) (the "PRO FORMA BALANCE Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the Loans to be made
and the Senior Secured Notes issued on October 28, 2005 and the use of proceeds
thereof and (ii) the payment of fees and expenses in connection with the
foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to the Borrower as of the date of delivery thereof, and
presents fairly in all material respects on a pro forma basis the estimated
financial position of Borrower and its consolidated Subsidiaries as at September
30, 2005, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 2004, December 31, 2003 and December 31, 2002
and the related consolidated statements of income and of cash flows for the
fiscal years ended on such dates, reported on by and accompanied by an
unqualified report from KPMG LLP, present fairly in all material respects the
consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and their consolidated results of operations and consolidated cash flows
for the fiscal years then ended. The unaudited consolidated balance sheets of
the Borrower and its Subsidiaries as at June 30, 2005 and September 30, 2005,
and the related unaudited consolidated statements of income and cash flows for
the six-month and nine-month periods, respectively, ended on such dates, present
fairly in all material respects the consolidated financial condition of the
Borrower and its Subsidiaries as at such dates and their consolidated results of
operations and consolidated cash flows for the period then ended (subject to
normal year-end audit adjustments and the absence of footnotes). All such
financial statements, including the related schedules and notes (if any)
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). As of the Closing Date, no Group Member
has any material Guarantee Obligations, contingent liabilities or any long-term
leases or unusual forward or long-term commitments, including any interest rate
or foreign currency swap or exchange transaction or other obligation in respect
of derivatives, that are not reflected in the most recent financial statements
referred to in this paragraph other than as contemplated by the Loan Documents
and the Related Agreements. During the period from June 30, 2005 to and
including the date hereof there has been no Disposition by the Borrower or any
of its Subsidiaries of any material part of its business or property.
4.2. NO CHANGE. Since June 30, 2005, except for developments or events
that occurred prior to the date of this Agreement and are disclosed in the
Confidential Information Memorandum, there has been no development or event that
has had or would reasonably be expected to have a Material Adverse Effect.
4.3. CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Group Member (other
than any Immaterial Subsidiary) (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the organizational power and authority, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation or other
organization and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent the failure to be so qualified
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law and Organizational
Documents, except to the extent that the failure to comply therewith would not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.
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4.4. POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each Group Member
(other than any Immaterial Subsidiary) has the organizational power and
authority, and the legal right, to make, deliver and perform the Loan Documents
and the Related Agreements to which it is a party and, in the case of the
Borrower, to obtain extensions of credit under this Agreement and issue and sell
the Senior Secured Notes. Each Group Member (other than any Immaterial
Subsidiary) has taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan Documents and Related Agreements
to which it is a party and, in the case of the Borrower, to authorize the
extensions of credit under this Agreement and issue and sell the Senior Secured
Notes. No consent or authorization of, filing with, notice to or other act by or
in respect of, any Governmental Authority or any other Person is required in
connection with the extensions of credit hereunder, the issuance and sale of the
Senior Secured Notes or the execution, delivery, performance, validity or
enforceability of the Loan Documents or Related Agreements except (i) consents,
authorizations, filings and notices described in Schedule 4.4, which consents,
authorizations, filings and notices have been obtained or made and are in full
force and effect and (ii) the filings referred to in Section 4.19. Each Loan
Document and Related Agreement has been duly executed and delivered on behalf of
each Group Member party thereto. This Agreement constitutes, each other Loan
Document upon execution will constitute, and each Related Agreement constitutes,
the legal, valid and binding obligation of each Group Member party thereto,
enforceable against such Group Member in accordance with its 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 equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5. NO LEGAL BAR. The execution, delivery and performance of the Loan
Documents and, the issuance of Letters of Credit and the borrowings hereunder do
not and will not violate in any material respect any Requirement of Law,
Organizational Documents or any Contractual Obligation of any Group Member or
result in or require the creation or imposition of any Lien on any property or
revenues of any Group Member in any material respect pursuant to any Requirement
of Law, Organizational Documents or Contractual Obligation (other than the Liens
created by the Security Documents). The execution, delivery and performance of
the Related Agreements, the issuance and sale of the Senior Secured Notes and
the use of the proceeds thereof do not and will not violate any Requirement of
Law, Organizational Documents or any Contractual Obligation of any Group Member
or result in or require the creation or imposition of any Lien on any property
or revenues of any Group Member pursuant to any Requirement of Law
Organizational Documents or Contractual Obligation (other than the Liens created
by the Security Documents) except, as in each case, has not had and would not
reasonably be expected to have a Material Adverse Effect. No Group Member is
subject to any Requirement of Law, Organizational Documents or Contractual
Obligation that has had or would reasonably be expected to have a Material
Adverse Effect.
4.6. LITIGATION. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the knowledge
of Holdings or the Borrower, threatened by or against any Group Member or
against any of their respective properties or revenues (a) with respect to any
of the Loan Documents or any of the transactions contemplated hereby or thereby
or (b) that would reasonably be expected to have a Material Adverse Effect.
4.7. NO DEFAULT. No Group Member is in default under or with respect to
any of its Contractual Obligations in any respect that would reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
4.8. OWNERSHIP OF PROPERTY; LIENS. Each Group Member has good and
marketable title to the Mortgaged Properties it owns, and to the knowledge of
Holdings or the Borrower, has good and marketable title, in the case of real
property, or good and valid title, in the case of other property, to, or a valid
leasehold interest in, all its other property and none of such property is
subject to any Lien except as permitted by Section 7.3.
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4.9. INTELLECTUAL PROPERTY. Except as set forth in Schedule 4.9, each
Group Member owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. Except as, in the
aggregate, has not had and would not reasonably be expected to have a Material
Adverse Effect, (a) no material claim has been asserted and is pending by any
Person challenging or questioning the use of any Intellectual Property or the
validity or effectiveness of any Intellectual Property, nor does Holdings or the
Borrower know of any valid basis for any such claim and (b) the use of
Intellectual Property by each Group Member does not infringe on the rights of
any Person in any material respect.
4.10. TAXES. Each Group Member has filed or caused to be filed all
Federal, state and other material tax returns that are required to be filed and
has paid all material taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other material
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings (if any) and
with respect to which reserves in conformity with GAAP have been provided on the
books of Holdings, the Borrower or its Subsidiaries, as the case may be); no tax
Lien has been filed, and, to the knowledge of Holdings and the Borrower, no
claim is being asserted, with respect to any such material tax, fee or other
charge. No Loan Party and no Subsidiary thereof intends to treat the Loan, the
Merger, or any other transaction contemplated hereby as being as "reportable
transaction" (within the meaning of Treasury Regulation section 1.6011-4).
4.11. FEDERAL REGULATIONS. No part of the proceeds of any Loans, and no
other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Administrative Agent and each Lender a statement to the foregoing effect
in conformity with the requirements of FR Form G-3 or FR Form U-1, as
applicable, referred to in Regulation U.
4.12. LABOR MATTERS. Except as, in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Group Member pending or, to the
knowledge of Holdings or the Borrower, threatened; (b) hours worked by and
payment made to employees of each Group Member have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters; and (c) all payments due from any Group Member on account of
employee health and welfare insurance have been paid or accrued as a liability
on the books of the relevant Group Member.
4.13. ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. Except
to the extent that the underfunding associated therewith does not, in the
aggregate, exceed $7,500,000, the present value of all accrued benefits under
each Single Employer Plan (based on those assumptions used to fund such Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by a material amount. Neither the
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan that has resulted or would reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any material
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liability under ERISA if the Borrower or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made. No such Multiemployer Plan is in Reorganization or Insolvent.
Neither the Borrower nor any of its Subsidiaries has any liability with respect
to any employee benefit plan that is not subject to the laws of the United
States or a political subdivision thereof that would reasonably be expected to
result in a Material Adverse Effect.
4.14. INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law or restriction under
its Organizational Documents (other than Regulation X of the Board) that limits
its ability to incur Indebtedness under this Agreement or either Indenture.
4.15. SUBSIDIARIES. Except as disclosed to the Administrative Agent by
the Borrower in writing from time to time after the Closing Date, (a) Schedule
4.15 sets forth the name and jurisdiction of organization of each Subsidiary
and, as to each such Subsidiary, the percentage of each class of Capital Stock
owned by any Loan Party and (b) there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than stock
options granted to employees, former employees or directors and directors'
qualifying shares) of any nature relating to any Capital Stock of the Borrower
or any Subsidiary, except as created by the Loan Documents.
4.16. USE OF PROCEEDS. The proceeds of all Revolving Loans funded on
the Closing Date shall be used to refinance existing Indebtedness of the
Borrower and its Subsidiaries and pay related fees and expenses. Letters of
Credit and the proceeds of Revolving Loans and Swingline Loans made after the
Closing Date shall be used only for general corporate purposes permitted by this
Agreement.
4.17. ENVIRONMENTAL MATTERS. Except as, in the aggregate, has not had
and would not reasonably be expected to have a Material Adverse Effect:
(a) the facilities and properties owned, leased or operated by any
Group Member (the "PROPERTIES") do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or concentrations
or under circumstances that constitute or constituted a violation of, or would
give rise to liability under, any Environmental Law;
(b) no Group Member has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the business operated by any Group Member
(the "BUSINESS"), nor does Holdings or the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened;
(c) Holdings, the Borrower and its Subsidiaries: (i) hold all
Environmental Permits (each of which is in full force and effect) required for
any of their current or intended operations or for any property owned, leased,
or otherwise operated by any of them; (ii) are, and within the period of all
applicable statutes of limitation have been, in compliance with all of their
Environmental Permits; and (iii) reasonably believe that: each of their
Environmental Permits will be timely renewed and complied with, without material
expense; any additional Environmental Permits that may be required of any of
them will be timely obtained and complied with, without material expense; and
compliance with any Environmental Law that is or is expected to become
applicable to any of them will be timely attained and maintained, without
material expense;
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(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
that would give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
would give rise to liability under, any applicable Environmental Law;
(e) no judicial proceeding or governmental or administrative action is
pending or, to the knowledge of Holdings and the Borrower, threatened, under any
Environmental Law to which any Group Member is or will be named as a party with
respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law
with respect to the Properties or the Business;
(f) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of any Group Member in connection with the Properties, any
facilities or properties formerly owned, leased or operated by any Group Member
or otherwise in connection with the Business, in violation of or in amounts or
in a manner that would give rise to liability under Environmental Laws;
(g) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or about
the Properties or violation of any Environmental Law with respect to the
Properties or the Business; and
(h) no Group Member has assumed any liability of any other Person under
Environmental Laws.
4.18. ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or
any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, taken as a whole, contained as of the
date such statement, information, document or certificate was so furnished (or,
in the case of the Confidential Information Memorandum, as of the date of this
Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements contained herein or therein not
materially misleading. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. As of the
date hereof, there is no fact known to any Loan Party that would reasonably be
expected to have a Material Adverse Effect that has not been expressly disclosed
herein, in the other Loan Documents, in the Confidential Information Memorandum
or in any other documents, certificates and statements furnished to the
Administrative Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents, taken as a whole.
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4.19. SECURITY DOCUMENTS(a) . (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Secured Parties, a legal, valid and enforceable security interest
in the Collateral described therein and proceeds and products thereof, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally. In the case of the Pledged Stock described in the
Guarantee and Collateral Agreement, when stock certificates representing such
Pledged Stock are delivered to the Administrative Agent, and in the case of the
other Collateral described in the Guarantee and Collateral Agreement, to the
extent provided therein, when financing statements, other filings specified on
Schedule 4 to the Guarantee and Collateral Agreement in appropriate form are
filed in the offices specified on Schedule 4 to the Guarantee and Collateral
Agreement and the other actions described in Section 4.3 of the Guarantee and
Collateral Agreement are completed, the Guarantee and Collateral Agreement shall
be effective to create a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Obligations (as defined in the Guarantee
and Collateral Agreement), in each case with the Required Priority.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds and
products thereof, and when the Mortgages are filed in the offices specified
therein, each such Mortgage shall constitute, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, (to the
extent provided therein) a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties
and the proceeds thereof, as security for the Obligations (as defined in the
relevant Mortgage), in each case with the Required Priority. Schedule 1.1 lists,
as of the Closing Date, each parcel of owned real property located in the United
States and held by the Borrower or any of its Subsidiaries that has a value, in
the opinion of the Borrower, in excess of $3,000,000.
(c) Each Intellectual Property Security Agreement is effective to
create in favor of the Administrative Agent, for the benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Intellectual
Property Collateral described therein and the proceeds and products thereof,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally. Upon the filing of (i) each Intellectual Property
Security Agreement in the appropriate indexes of the United States Patent and
Trademark Office relative to United States patents and United States trademarks,
and the United States Copyright Office relative to United States copyrights, if
any, together with provision for payment of all requisite fees, and (ii)
financing statements in appropriate form for filing in the offices specified on
Schedule 4 of the Guarantee and Collateral Agreement, each Intellectual Property
Security Agreement shall constitute (to the extent provided in the Guarantee and
Collateral Agreement) a fully perfected Lien on, and security interests in, all
right, title and interest of the Loan Parties in such Intellectual Property
Collateral and the proceeds and products thereof, as security for the
Obligations (as defined in the Guarantee and Collateral Agreement), in each case
with the Required Priority.
4.20. SOLVENCY. Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be and will continue to be, Solvent.
4.21. SENIOR INDEBTEDNESS. The Obligations (to the extent they
constitute "Indebtedness" as defined in the Senior Subordinated Note Indenture)
constitute "Senior Indebtedness" and "Designated Senior Indebtedness" of the
Borrower under and as defined in the Senior Subordinated Note Indenture. The
obligations of each Subsidiary Guarantor under the Guarantee and Collateral
Agreement constitute (to the extent they constitute "Indebtedness" as defined in
the Senior Subordinated Note Indenture) "Guarantor Senior Indebtedness" of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
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4.22. REGULATION H. No Mortgage encumbers improved real property that
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in respect of
which the procurement of flood insurance is required by any Requirement of Law,
unless such flood insurance has been obtained and is in full force and effect.
4.23. CERTAIN DOCUMENTS. The Borrower has delivered to the
Administrative Agent a complete and correct copy of the Related Agreements,
including any amendments, supplements or modifications with respect to any such
Related Agreements.
4.24. FOREIGN ASSETS CONTROL REGULATIONS AND ANTI-MONEY LAUNDERING(a) .
(a) Neither the making of Loans under this Agreement nor the use of the proceeds
thereof shall cause the Borrower or any Subsidiary of the Borrower to violate
any material provision of the U.S. Bank Secrecy Act, as amended, and any
applicable regulations thereunder or any of the sanctions programs administered
by the U.S. Department of the Treasury's Office of Foreign Assets Control
("OFAC") of the United States Department of Treasury, any regulations
promulgated thereunder by OFAC or under any affiliated or successor governmental
or quasi-governmental office, bureau or agency and any enabling legislation or
executive order relating thereto. Without limiting the foregoing, neither the
Borrower nor any Subsidiary of the Borrower (i) is a person whose property or
interests in property are blocked or subject to blocking pursuant to Section 1
of Executive Order 13224 of September 23, 200l Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) knowingly engages in any dealings or
transactions prohibited by Section 2 of such executive order, or is otherwise
knowingly associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other OFAC
regulation or executive order.
(b) The Borrower and its Subsidiaries are in compliance, in all
material respects, with the Uniting and Strengthening of America by Providing
the Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.
No part of the proceeds of the Loans hereunder will knowingly be used, directly
or indirectly, for any payments to any governmental official or employee,
political party, official of a political party, candidate for political office,
or anyone else acting in an official capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of the United
States Foreign Corrupt Practices Act of 1977, as amended.
SECTION 5. CONDITIONS PRECEDENT
5.1. CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or substantially concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) CREDIT AGREEMENT; GUARANTEE AND COLLATERAL AGREEMENT. The
Administrative Agent shall have received (i) this Agreement, executed and
delivered by Holdings and the Borrower, (ii) original or facsimile copies of a
signed signature page to this Agreement or Addendum from each Agent and Lender,
(iii) the Guarantee and Collateral Agreement, executed and delivered by
Holdings, the Borrower and each Subsidiary Guarantor, (iv) an Acknowledgment and
Consent in the form attached to the Guarantee and Collateral Agreement, executed
and delivered by each Issuer (as defined therein), if any, that is not a Loan
Party, (v) the Intellectual Property Security Agreement provided for in Section
5.10(c) of the Guarantee and Collateral Agreement, executed, delivered and
acknowledged by the Loan Parties referred to therein and (vi) the Intercreditor
Confirmation Letter, executed and delivered by the trustee under the Senior
Secured Note Indenture, the Note Collateral Agent, the Administrative Agent and
the Borrower and Subsidiary Guarantors.
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(b) CLOSING CERTIFICATE OF THE BORROWER. The Administrative Agent shall
have received (i) a certificate executed on behalf of the Borrower by a
Responsible Officer of the Borrower dated the Closing Date, substantially in the
form of Exhibit K with appropriate insertions and attachments including the
certificate of incorporation of the Borrower certified by the relevant authority
of the jurisdiction of organization of the Borrower, and (ii) a long form good
standing certificate for the Borrower from its jurisdiction of organization.
(c) PRO FORMA BALANCE SHEET; FINANCIAL STATEMENTS. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of the Borrower and its Subsidiaries as at December 31,
2004 and December 31, 2003 and for the fiscal years then ended, (iii) unaudited
interim consolidated financial statements of the Borrower and its Subsidiaries
as at the last day of the most recent fiscal quarter of the Borrower and each
month thereafter for which financial statements are available, and (iv) the
Borrower's Projections on a quarterly basis through December 31, 2006.
(d) FEES. The Administrative Agent shall have received confirmation
reasonably satisfactory to it that all fees required to be paid and all invoiced
expense reimbursements payable by any Group Member for account of any of the
Agents or Lenders on or before the Closing Date will be paid concurrently with
the funding of Revolving Loans on the Closing Date.
(e) CLOSING CERTIFICATE OF THE GUARANTORS, CERTIFICATE OF
INCORPORATION; GOOD STANDING. The Administrative Agent shall have received (i) a
certificate of each Guarantor, dated the Closing Date, substantially in the form
of Exhibit C, with appropriate insertions and attachments including the
certificate of incorporation of each Guarantor that is a corporation certified
by the relevant authority of the jurisdiction of organization of such Loan
Party, and (ii) a long form good standing certificate for each Guarantor from
its jurisdiction of organization.
(f) LEGAL OPINIONS. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Debevoise & Xxxxxxxx LLP, special New
York counsel to the Borrower and its Subsidiaries, substantially in the
form of Exhibit F-1;
(ii) the legal opinion of Xxxxx X. Xxxxx, Esq., Vice President,
General Counsel and Secretary of the Borrower and its Subsidiaries,
substantially in the form of Exhibit F-2;
(iii) the legal opinion of Xxxxxxxx, Xxxxxx and Finger PA,
special Delaware counsel to the Borrower and its Subsidiaries,
substantially in the form of Exhibit F-3; and
(iv) the legal opinion of Xxxxxxxxxx & Xxxxxxx, LLP, special
North Carolina counsel to the Borrower and its Subsidiaries,
substantially in the form of Exhibit F-4.
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(g) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. The Administrative
Agent shall have received (i) all certificates (if any) representing shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power or equivalent for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof, and (ii)
each promissory note (if any) pledged pursuant to the Guarantee and Collateral
Agreement endorsed (without recourse) in blank (or accompanied by an executed
transfer form in blank) by the pledgor thereof.
(h) MORTGAGES, ETC.
(i) The Administrative Agent shall have received a Mortgage with
respect to each Mortgaged Property, executed and delivered by a duly
authorized officer of each party thereto.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received evidence reasonably satisfactory to it that
the Borrower has obtained (A) a policy of flood insurance that (1)
covers any parcel of improved real property that is encumbered by any
Mortgage (2) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage that is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and
(3) has a term ending not later than the maturity of the Indebtedness
secured by such Mortgage and (B) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.
(i) SOLVENCY CERTIFICATE. The Administrative Agent shall have received
and shall be reasonably satisfied with a solvency certificate of the chief
financial officer of the Loan Parties substantially in the form of Exhibit J.
(j) INSURANCE. The Administrative Agent shall have received insurance
certificates satisfying the requirements of Section 5.3(b) of the Guarantee and
Collateral Agreement.
(k) BORROWING BASE CERTIFICATE. A Borrowing Base Certificate setting
forth the Borrowing Base as of a date no earlier than 30 days prior to the
Closing Date and certifying that Excess Availability will be at least
$15,000,000 after giving effect to the aggregate Revolving Extensions of Credit
requested by the Borrower to be provided on the Closing Date.
(l) REFINANCING. The Administrative Agent shall have received a
reasonably satisfactory letter from the administrative agent under the
Borrower's existing Credit Agreement dated as of October 28, 2005 relating to
the termination of the credit facilities thereunder, the amount required to
repay in full all outstanding obligations thereunder (the "PAYOFF AMOUNT") and
the release of all Liens securing such obligations.
(m) FIELD EXAMINATION; INVENTORY APPRAISAL. The Administrative Agent or
its designee shall have conducted a field examination of the accounts
receivable, inventory and related working capital matters and financial
information of the Borrower and its subsidiaries and of the related data
processing and other systems and shall have received a satisfactory full
appraisal of the inventory of the Borrower and its Subsidiary Guarantors
completed to commercially reasonable standards consistent with the usual
practice of asset-based lenders for collateral appraisals supporting
liquidation-value loans on such inventory by an independent appraiser selected
by the Administrative Agent and reasonably satisfactory to the Borrower, setting
forth in a form and in detail reasonably satisfactory to the Administrative
Agent such appraiser's determination of the Net Recovery Liquidation Rate.
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(n) The Administrative Agent shall have received all documentation and
other information requested by it on behalf of itself or any Lender to satisfy
the requirements of bank regulatory authorities under applicable "know your
customer" and anti-money laundering rules and regulations, including the USA
Patriot Act.
(o) MISCELLANEOUS. The Administrative Agent shall have received such
other documents, agreements, certificates and information as it, the Arranger or
the Required Lenders may reasonably request.
5.2. CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit (including any issuance of a Letter of
Credit or any extension thereof) requested to be made by it on any date
(including its initial extension of credit) is subject to the satisfaction of
the following conditions precedent:
(a) 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.
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of such date as if made on
and as of such date, except to the extent that such representations and
warranties refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date.
(c) AVAILABILITY. After giving effect to such extension of credit and
any substantially concurrent application of the proceeds thereof to pay Loans or
Reimbursement Obligations, the aggregate outstanding Revolving Extensions of
Credit shall not exceed the lesser of (i) the then amount of the Revolving
Commitments and (ii) the amount certified by the Borrower, in the Borrowing Base
Certificate then most recently delivered to the Administrative Agent, as
constituting the amount of the Borrowing Base (adjusted to give effect to any
changes in Reserves that thereafter became effective).
Each borrowing by and issuance (or extension) of a Letter of Credit on behalf of
the Borrower hereunder shall constitute a representation and warranty by the
Borrower as of the date of such extension of credit that the conditions
contained in this Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, the Borrower shall and shall cause each of its Subsidiaries to:
6.1. FINANCIAL STATEMENTS. Furnish to the Administrative Agent and each
Lender:
(a) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Borrower, a copy of the audited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end of such
year and the related audited consolidated statements of income and of cash flows
for such year, setting forth in each case in comparative form the figures for
the previous year and the current year budget, reported on without a "going
concern" or like qualification or exception, or qualification arising out of the
scope of the audit, by KPMG LLP or other independent certified public
accountants of nationally recognized standing;
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(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year and the
current year budget, certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit adjustments and the
absence of footnotes); and
(c) as soon as available, but in any event not later than 30 days after
the end of each month (other than a month that ends a fiscal quarter), monthly
financial statements in form substantially similar to those delivered to the
Lenders prior to the date of this Agreement and otherwise reasonably
satisfactory to the Administrative Agent in form.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
Notwithstanding the foregoing such financial statements may be delivered in the
form and with the accompanying certifications required by applicable
Requirements of Law for filing Forms 10-K and Forms 10-Q with the SEC.
6.2. CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (i), to the relevant Lender):
(a) concurrently with the delivery of the financial statements referred
to in Section 6.1(a), a letter (if permitted by GAAP and in the form permitted
by GAAP at the time) from the independent certified public accountants reporting
on such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default, except as
specified in such letter;
(b) concurrently with the delivery of any financial statements pursuant
to Section 6.1, (i) a certificate of a Responsible Officer stating that, to the
best of each such Responsible Officer's knowledge, each Loan Party during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it,
and that such Responsible Officer has obtained no knowledge of any Default or
Event of Default, in each case except as specified in such certificate and (ii)
in the case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information and calculations reasonably necessary for
determining compliance by each Group Member with the provisions of this
Agreement referred to therein as of the last day of the fiscal quarter or fiscal
year of the Borrower, as the case may be, and, if applicable, for determining
the Applicable Margins and Commitment Fee Rate, and (y) to the extent not
previously disclosed to the Administrative Agent, a description of any change in
the jurisdiction of organization of any Loan Party and, concurrently with the
delivery of any financial statements pursuant to Section 6.1(a) only, a listing
of any Intellectual Property acquired by any Loan Party since the date of the
most recent list delivered pursuant to this clause (y) (or, in the case of the
first such list so delivered, since the Closing Date);
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(c) as soon as available, and in any event no later than 45 days after
the end of each fiscal year of the Borrower, a detailed consolidated budget for
the following fiscal year (including a projected consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of the following fiscal year,
the related consolidated statements of projected cash flow, projected changes in
financial position and projected income and a description of the underlying
assumptions applicable thereto) (collectively, the "PROJECTIONS"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect;
(d) if the Borrower is not then a reporting company under the
Securities Exchange Act of 1934, as amended, within 45 days after the end of
each fiscal quarter of the Borrower (90 days, in the case of the fourth fiscal
quarter of any Fiscal Year), a narrative discussion and analysis of the
financial condition and results of operations of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the beginning of
the then current fiscal year to the end of such fiscal quarter, as compared to
the portion of the Projections covering such periods and to the comparable
periods of the previous year;
(e) no later than five Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to either Indenture;
(f) within five Business Days after the same are sent, copies of all
financial statements and reports that Holdings, any Parent or the Borrower sends
to the holders of any class of its debt securities or public equity securities
and, within five Business Days after the same are filed, copies of all financial
statements and reports that Holdings or the Borrower may make to, or file with,
the SEC;
(g) as soon as possible and in any event within 10 days of obtaining
knowledge thereof: (i) notice of any development, event, or condition that,
individually or in the aggregate with other developments, events or conditions
that, individually or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect or liability in excess of the Material
Environmental Amount; and (ii) any notice that any Governmental Authority may
deny any application for an Environmental Permit sought by, or revoke or refuse
to renew any Environmental Permit or any other material Permit held by the
Borrower or condition approval of any such material Permit on terms and
conditions that are materially burdensome to Holdings, the Borrower or any of
its Subsidiaries, or to the operation of any of its businesses or any property
owned, leased or otherwise operated by such Person; in each case, that would
reasonably be expected to result in a Material Adverse Effect or liability in
excess of the Material Environmental Amount;
(h) within 15 days after the last day of each month, a Borrowing Base
Certificate certifying the amount of the Borrowing Base as of such day of the
immediately preceding month; and in addition, at any other time when the
Administrative Agent reasonably believes that the then existing Borrowing Base
Certificate is or has become materially inaccurate or that any Default is
continuing, or at any other such times as the Administrative Agent may
reasonably request, within five days after any request therefor by the
Administrative Agent (without any restriction as to the number or frequency of
such requests), or at any time at the election of the Borrower, a Borrowing Base
Certificate certifying the amount of the Borrowing Base as of the date of such
request, together with (as promptly as practicable) such supporting schedules,
information and additional reports as the Administrative Agent may reasonably
request; and
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(i) promptly, such additional financial and other information as the
Administrative Agent or any Lender may from time to time reasonably request.
6.3. PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the relevant Group Member or where failure to pay, discharge or
otherwise satisfy such material obligations, in the aggregate, has not had and
would not reasonably be expected to result in a Material Adverse Effect.
6.4. MAINTENANCE OF EXISTENCE; COMPLIANCE.
(a) Preserve, renew and keep in full force and effect its
organizational existence (except in case of an Immaterial Subsidiary) and take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of
maintenance of rights, privileges and franchises, to the extent that failure to
do so would not reasonably be expected to have a Material Adverse Effect.
(b) Comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.5. MAINTENANCE OF PROPERTY; INSURANCE.
(a) Keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted.
(b) Maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against such risks
(but including in any event public liability, product liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business.
6.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Keep proper books of records and account in which full, true and
correct entries in conformity with GAAP and all Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities.
(b) Permit, upon reasonable prior notice, representatives of any Agent
or Lender (i) to visit, appraise and inspect any of its properties and audit,
verify, examine and make abstracts from any of its books and records (including
periodic field examinations and inventory appraisals) at such reasonable times
and upon reasonable intervals; PROVIDED that no more than two field examinations
and two appraisals per year will be conducted at the expense of Borrower;
PROVIDED FURTHER; that there shall be no limitation on the number or frequency
of field examinations and appraisals if an Event of Default shall have occurred
and be continuing and (ii) to discuss the business, operations, properties and
financial and other condition of the Group Members with officers and employees
of the Group Members and with their independent certified public accountants at
such reasonable times and upon reasonable intervals, in each case as any Agent
or Lender may reasonably request.
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6.7. NOTICES. Promptly give notice to the Administrative Agent and each
Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case, if not cured or if adversely determined, as the
case may be, would reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) which,
if determined adversely to such Group Member (after taking into account any
available insurance coverage), would have or would reasonably be expected to
have a Material Adverse Effect, (ii) in which injunctive or other temporary or
specific relief is sought which, if granted, would reasonably be expected to
have a Material Adverse Effect or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, the incurrence of
an "accumulated funding deficiency" (as defined in Section 302 of ERISA)
(whether or not waived) with respect to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the taking of any other action by the PBGC or the Borrower or
any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Plan;
and
(e) any development or event that has had or would reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action, if any, Holdings, the Borrower or
the relevant Subsidiary proposes to take with respect thereto.
6.8. ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws and Environmental Permits, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, in each case except for any such non-compliance
or failure to obtain, individually or in the aggregate, would not be expected to
result in a Material Adverse Effect.
(b) Unless being contested in good faith, conduct and complete in all
material respects all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.
6.9. INTEREST RATE PROTECTION. In the case of the Borrower, within 120
days after the Closing Date, enter into, and thereafter maintain, Hedge
Agreements to the extent necessary to provide that at least 45% of the aggregate
principal amount of the outstanding Funded Debt of the Group Members is subject
to either a fixed interest rate or interest rate protection for a period of not
less than two years, which Hedge Agreements shall have terms and conditions
reasonably satisfactory to the Administrative Agent.
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6.10. ADDITIONAL COLLATERAL, ETC.(a) (a) With respect to any property
acquired after the Closing Date by the Borrower or any Subsidiary Guarantor as
to which the Administrative Agent, for the benefit of the Lenders, does not have
a perfected Lien (except as expressly set forth in the applicable Security
Document), promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent reasonably deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions reasonably necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a (except as
expressly set forth in the applicable Security Document) a perfected security
interest with the Required Priority in such property, including the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
reasonably requested by the Administrative Agent.
(b) With respect to any fee interest in any real property having a
value of at least $3,000,000 acquired after the Closing Date by the Borrower or
any Subsidiary Guarantor promptly (i) execute, acknowledge and deliver a
Mortgage in favor of the Administrative Agent, for the benefit of the Lenders
with the Required Priority, in an amount no greater than 125% of the purchase
price if the property is located in a state with mortgage recording tax covering
such real property, (ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of such real property
as well as a current ALTA survey thereof, together with a surveyor's certificate
and (y) any consents or estoppels reasonably deemed necessary or advisable by
the Administrative Agent in connection with such Mortgage, each of the foregoing
in form and substance reasonably satisfactory to the Administrative Agent and
(iii) if reasonably requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than a Foreign
Subsidiary) created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be a Foreign Subsidiary or an Immaterial Subsidiary),
promptly (i) execute and deliver to the Administrative Agent such amendments to
the Guarantee and Collateral Agreement as the Administrative Agent reasonably
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected security interest with the Required Priority
in all Capital Stock of such new Subsidiary owned by any Group Member, (ii)
deliver to the Administrative Agent the certificates, if any, representing such
Capital Stock, together with undated stock powers or equivalents, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee
and Collateral Agreement, (B) to take such actions reasonably necessary or
reasonably advisable to grant to the Administrative Agent for the benefit of the
Lenders a (to the extent provided in the Guarantee and Collateral Agreement)
perfected security interest with the Required Priority in the Collateral
described in the Guarantee and Collateral Agreement with respect to such new
Subsidiary, including the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be reasonably requested by the Administrative
Agent and (C) to deliver to the Administrative Agent a certificate of such
Subsidiary, substantially in the form of Exhibit C, with appropriate insertions
and attachments, and (iv) if requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
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(d) The Borrower will not issue or sell any of its Capital Stock (i) to
any Person other than Holdings, (ii) unless such Capital Stock is issued subject
to the security interest granted by the Guarantee and Collateral Agreement or
(iii) in any form except as a certificated security delivered at or
substantially concurrent with issuance to the Administrative Agent and pledged
pursuant to the Guarantee and Collateral Agreement.
(e) With respect to any new Foreign Subsidiary created or acquired
after the Closing Date by any Group Member (other than by any Group Member that
is a Foreign Subsidiary), promptly (i) execute and deliver to the Administrative
Agent such amendments or supplements to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a (except as expressly set
forth in the Guarantee and Collateral Agreement) perfected security interest
with the Required Priority in the Capital Stock of such new Subsidiary owned by
any such Group Member (provided that in no event shall more than 65% of the
total outstanding voting Capital Stock of any such new Subsidiary be required to
be so pledged), (ii) deliver to the Administrative Agent the certificates, if
any, representing such Capital Stock, together with undated stock powers or
equivalents, in blank, executed and delivered by a duly authorized officer of
the relevant Group Member, as the case may be, and take such other action as may
be reasonably necessary or, in the reasonable opinion of the Administrative
Agent, desirable to perfect the Administrative Agent's security interest
therein, and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
6.11. USE OF PROCEEDS. Use the proceeds of the Loans only for the
purposes specified in Section 4.16.
6.12. FURTHER ASSURANCES. From time to time execute and deliver, or
cause to be executed and delivered, such additional instruments, certificates or
documents, and take all such actions, as the Administrative Agent may reasonably
request for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of perfecting or renewing with the
Required Priority the rights of the Administrative Agent and the Lenders with
respect to the Collateral (or with respect to any additions thereto or
replacements or proceeds thereof or with respect to any other property or assets
hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto. Upon the exercise by the
Administrative Agent or any Lender of any power, right, privilege or remedy
pursuant to this Agreement or the other Loan Documents which requires any
consent, approval, recording qualification or authorization of any Governmental
Authority, the Borrower will, if reasonably requested by the Administrative
Agent, use commercially reasonable efforts to execute and deliver, or to cause
the execution and delivery of, all applications, certifications, instruments and
other documents and papers that the Administrative Agent or such Lenders may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
6.13. CASH MANAGEMENT OBLIGATIONS; CONTROL AGREEMENTS.
(a) The Borrower and each Subsidiary Guarantor will maintain the
Administrative Agent as its principal depository bank, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business.
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(b) To the extent requested by the Administrative Agent, the Borrower
will use and cause its Subsidiaries to use commercially reasonable efforts to
obtain an agreement (a "COLLATERAL ACCESS AGREEMENT") from the lessor of leased
property, mortgagee of owned property or bailee or consignee with respect to any
existing or future warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall provide
access rights, contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee, bailee or consignee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in form and
substance to the Administrative Agent. If the Administrative Agent has not
received a Collateral Access Agreement within 30 days after the Closing Date (as
to existing locations) or as of the date such location is acquired or leased (as
to future locations), the Loan Parties' inventory at that location may be
subject to such Reserves as may be established by the Administrative Agent.
(c) The Borrower and each Subsidiary Guarantor will provide to the
Administrative Agent, upon the Administrative Agent's request, a Deposit Account
Control Agreement duly executed on behalf of each financial institution holding
a deposit account of such party as set forth in the Guarantee and Collateral
Agreement; PROVIDED, that the Administrative Agent may, in its discretion, defer
delivery of any such Deposit Account Control Agreement, establish a Reserve with
respect to any deposit account for which the Administrative Agent has not
received such Deposit Account Control Agreement, and require such party to open
and maintain a new deposit account with a financial institution subject to a
Deposit Account Control Agreement.
(d) Prior to the Closing Date or such later date as the Administrative
Agent may reasonably agree:
(i) the Borrower and each Subsidiary Guarantor shall (A) execute
and deliver to the Administrative Agent a Deposit Account Control
Agreements for each deposit account or securities account maintained by
any of them into which cash, checks or other similar payments relating
to or constituting payments made in respect of Receivables are
deposited (a "COLLATERAL DEPOSIT ACCOUNT") and (B) to the extent
requested by the Administrative Agent, establish lock box service (the
"LOCK BOXES") with the banks maintaining Collateral Deposit Accounts,
which lock boxes shall be subject to irrevocable lockbox agreements in
the form provided by or otherwise acceptable to the Administrative
Agent and shall be accompanied by an acknowledgment by the bank where
the Lock Box is located of the Lien of the Administrative Agent granted
hereunder and of irrevocable instructions to wire all amounts collected
therein to the Collection Account (a "LOCK BOX AGREEMENT"). After the
Closing Date, the Borrower and each Subsidiary Guarantor will comply
with the terms of Section 6.13(e).
(ii) Each of the Borrower and Subsidiary Guarantors shall direct
all of its Account Debtors to forward payments directly to Lock Boxes
subject to Lock Box Agreements. The Administrative Agent shall have
sole access to the Lock Boxes at all times and each of the Borrower and
the Subsidiary Guarantors shall take all actions necessary to grant the
Administrative Agent such sole access. At no time shall the Borrower or
any Subsidiary Guarantor remove any item from the Lock Box or from a
Collateral Deposit Account without the Administrative Agent's prior
written consent. If the Borrower or any Subsidiary Guarantor should
refuse or neglect to notify any Account Debtor to forward payments
directly to a Lock Box subject to a Lock Box Agreement after notice
from the Administrative Agent, the Administrative Agent shall be
entitled to make such notification directly to Account Debtor. If
notwithstanding the foregoing instructions, the Borrower or any
Subsidiary Guarantor receives any proceeds of any Receivables, such
party shall receive such payments as the Administrative Agent's
trustee, and shall immediately deposit all cash, checks or other
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similar payments related to or constituting payments made in respect of
Receivables received by it to a Collateral Deposit Account. All funds
deposited into any Lock Box subject to a Lock Box Agreement or a
Collateral Deposit Account will be swept on a daily basis into a
collection account maintained by the Borrower with the Administrative
Agent (the "COLLECTION ACCOUNT"). The Administrative Agent shall hold
and apply funds received into the Collection Account as provided by the
terms of Section 6.13(f).
(e) Before opening or replacing any Collateral Deposit Account or
establishing a new Lock Box, the Borrower and Subsidiary Guarantors shall (i)
obtain the Administrative Agent's consent in writing to the opening of such
Deposit Account or Lock Box, and (ii) cause each bank or financial institution
in which it seeks to open (x) a Collateral Deposit Account, to enter into a
Deposit Account Control Agreement with the Administrative Agent in order to give
the Administrative Agent control of such Deposit Account or (y) a Lock Box, to
enter into a Lock Box Agreement with the Administrative Agent in order to give
the Administrative Agent control of the Lock Box.
(f) The Borrower will have the right to require that collections which
are received into the Collection Account be released from the Collection Account
and deposited into the Borrower's Funding Account (rather than being used to
reduce amounts owing under this Agreement) on any Business Day that (i) is not a
day on which any Event of Default has occurred and is continuing and (ii) is not
a day in any period (a "CASH DOMINION PERIOD") that begins whenever Excess
Availability is less than the greater of (x) $8,500,000 and (y) 10% of the
aggregate Revolving Commitments and continues at all times thereafter until the
day on which Excess Availability has been at least equal to $11,500,000,
multiplied by the Increase Allowance, on each day for a period of 60 consecutive
days. At any time when any Event of Default has occurred and is continuing and
(even if no Event of Default is continuing) during any Cash Dominion Period, the
Administrative Agent will have the unconditional right (but not the duty) to
treat amounts deposited in the Collection Account and received by the
Administrative Agent as a payment made for application to the payment of the
principal of or interest on outstanding Loans or Reimbursement Obligations or
other Obligations then payable or to fund deposits to a Cash Collateral Account
not exceeding the aggregate outstanding L/C Obligations and to apply such
amounts to such payments when credited in immediately available funds to the
Collection Account. Neither the Borrower nor any Subsidiary Guarantor shall have
any control whatsoever over any deposit in a Cash Collateral Account. The
balance, if any, after all of the Obligations have been satisfied, shall be
deposited by the Administrative Agent into the Funding Account.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Revolving Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or Agent
hereunder, the Borrower shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly:
7.1. FINANCIAL CONDITION COVENANT. Permit the Consolidated Fixed Charge
Coverage Ratio determined as of the last day of any fiscal quarter of the
Borrower for the period of four consecutive fiscal quarters then ended,
commencing on December 31, 2005, to be less than 1:1; PROVIDED, that compliance
with the covenant set forth in this Section 7.1 will be required only if, and on
each occasion when, Excess Availability is less than $10,000,000, multiplied by
the Increase Allowance, on any day after the Closing Date and thereafter will be
required until Excess Availability has been at least $10,000,000, multiplied by
the Increase Allowance, on each day for a period of 30 consecutive days.
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7.2. INDEBTEDNESS. Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness (i) of the Borrower to any Subsidiary, (ii) of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other Subsidiary, (iii)
of any Foreign Subsidiary to any Foreign Subsidiary and (iv) subject to Section
7.8(j), of any Foreign Subsidiary to the Borrower or any Wholly Owned Subsidiary
Guarantor;
(c) Guarantee Obligations incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of the Borrower, any
Wholly Owned Subsidiary Guarantor and, subject to Section 7.8(j), of any Foreign
Subsidiary; and Guarantee Obligations incurred by any Foreign Subsidiary of
obligations of any other Foreign Subsidiary;
(d) Indebtedness outstanding on the date hereof and listed on Schedule
7.2(d) and any refinancings, refundings, renewals or extensions thereof (without
increasing, or shortening the maturity of, the principal amount thereof);
(e) Indebtedness (including Capital Lease Obligations) secured by Liens
permitted by Section 7.3(g) in an aggregate principal amount not to exceed
$10,000,000 at any one time outstanding;
(f) Indebtedness of the Borrower in respect of (i) the Senior Secured
Notes in an aggregate principal amount not to exceed $185,000,000, and Guarantee
Obligations of any Subsidiary Guarantor in respect of such Indebtedness, and
(ii) the Senior Subordinated Notes in an aggregate principal amount not to
exceed $225,000,000, and Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness subordinated to the same extent as the obligations
of the Borrower in respect of the Senior Subordinated Notes;
(g) Hedge Agreements required under Section 6.9 or permitted under
Section 7.12;
(h) Indebtedness of Foreign Subsidiaries, and guarantees thereof by
Foreign Subsidiaries, incurred solely for working capital purposes in an
aggregate principal amount not to exceed $20,000,000 outstanding at any time;
(i) unsecured Indebtedness of the Borrower in respect of Management
Advances in an aggregate principal amount not to exceed $2,000,000 incurred in
any fiscal year;
(j) guarantees of Indebtedness of directors, officers and employees of
Holdings or any of its Subsidiaries in respect of expenses of such Persons in
connection with relocations and other ordinary course of business purposes, if
the aggregate amount of Indebtedness so guaranteed, when added to the aggregate
amount of unreimbursed payments theretofore made in respect of such guarantees
and the amount of Investments then outstanding under Section 7.8(f), shall not
at any time exceed $2,500,000;
(k) Indebtedness of a Subsidiary of the Borrower acquired in a
Permitted Acquisition and outstanding at the time of such Permitted Acquisition,
Indebtedness assumed at the time of a Permitted Acquisition of an asset securing
such Indebtedness, and refinancings, renewals or extensions of any such
Indebtedness that do not increase the outstanding principal amount or change the
obligor in respect thereof, if (i) such Indebtedness was not incurred in
connection with, or anticipation or contemplation of such Permitted Acquisition
and (ii) the aggregate principal amount of such Indebtedness, refinancings,
renewals and extensions does not at any time exceed $15,000,000;
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(l) unsecured Indebtedness of the Borrower (which may be guaranteed on
a
subordinated basis by any or all Subsidiary Guarantors), in an aggregate
outstanding principal amount not to exceed $10,000,000 at any time, incurred to
pay the purchase consideration of a Permitted Acquisition and subordinated to
the Obligations upon terms and conditions at least as favorable to the Lenders
as the Senior Subordinated Notes (and guarantees thereof) or, at the request of
the Borrower, such other subordination terms and conditions as may be reasonably
acceptable to the Administrative Agent;
(m) guarantees of Indebtedness of a Person which is not a Subsidiary of
the Borrower and in which the Borrower or a Subsidiary made an investment
permitted by Section 7.8(m) or preferred Capital Stock of a Foreign Subsidiary
which such Foreign Subsidiary is obligated to purchase, redeem, retire or
otherwise acquire, if the aggregate outstanding principal amount so guaranteed
and the aggregate outstanding redemption value of such Capital Stock, when added
to (i) unreimbursed payments theretofore made in respect of such guarantees and
(ii) Investments then outstanding under Section 7.8(m), does not at any time
exceed $10,000,000; and
(n) additional unsecured Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) not to exceed $20,000,000 at any one time outstanding.
7.3. LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for:
(a) Liens for taxes, assessments or government charges not yet due or
that are being contested in good faith by appropriate proceedings, PROVIDED that
reserves with respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in good
faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and social security legislation;
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
do not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens created pursuant to the Loan Documents;
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(g) Liens securing Indebtedness of the Borrower or any other Subsidiary
incurred pursuant to Section 7.2(e) to finance the acquisition of fixed or
capital assets, PROVIDED that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets or within 90
days thereafter and (ii) such Liens do not at any time encumber any property
other than the property financed by such Indebtedness;
(h) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased and other statutory and common law landlords'
liens under leases;
(i) Liens in existence on the date hereof listed on Schedule 7.3(i),
PROVIDED that no such Lien is spread to cover any additional property after the
Closing Date and that the amount of the aggregate obligations, if any, secured
by any such Lien are not increased;
(j) attachment and judgment Liens, to the extent and for so long as the
underlying judgments and decrees do not constitute an Event of Default pursuant
to Section 8;
(k) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition, if (i) any Indebtedness that is secured by such Liens is permitted
by Section 7.2(k), and (ii) such Liens are not incurred in connection with, or
in contemplation or anticipation of, such Permitted Acquisition and do not
attach to any other asset of the Borrower or any of its Subsidiaries; and Liens
on such property or assets securing refinancings, renewals and extensions of
such Indebtedness permitted under Section 7.2(k);
(l) Liens on assets of Foreign Subsidiaries securing Indebtedness
permitted pursuant to Section 7.2(h);
(m) Liens on property subject to sale-leaseback transactions to the
extent such Sale-Leaseback Transactions are permitted by Section 7.11;
(n) Licenses, sublicenses, leases or subleases granted to other Persons
not materially interfering with the conduct of the business of the Borrower or
any of its Subsidiaries;
(o) any encumbrances or restrictions (including put and call
agreements) with respect to the Capital Stock of any joint venture agreed to by
the holders of such Capital Stock;
(p) Liens securing the Senior Secured Notes, if such Liens (i) are
subject to the Secured Note Intercreditor Agreement and (ii) attach only to
property that also is subject to enforceable perfected Liens securing the
Obligations with the Required Priority; and
(q) Liens not otherwise permitted by this Section so long as neither
(i) the aggregate outstanding principal amount of the obligations secured
thereby nor (ii) the aggregate fair market value (determined as of the date such
Lien is incurred) of the assets subject thereto exceeds (as to the Borrower and
all Subsidiaries) $500,000 at any one time.
7.4. FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except that:
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(a) any Subsidiary of the Borrower may be merged or consolidated (i)
with or into the Borrower if the Borrower is the continuing or surviving
corporation, (ii) with or into any Wholly Owned Subsidiary Guarantor if the
Wholly Owned Subsidiary Guarantor is the continuing or surviving corporation or
(iii) subject to Section 7.8(j), with or into any Foreign Subsidiary; and any
Foreign Subsidiary may be merged or consolidated with or into any other Foreign
Subsidiary; and
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation, winding up, dissolution or otherwise) as
permitted by Section 7.5, or to the Borrower or any Wholly Owned Subsidiary
Guarantor or, subject to Section 7.8(j), any Foreign Subsidiary; and any Foreign
Subsidiary may Dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to any other Foreign Subsidiary.
7.5. DISPOSITION OF PROPERTY. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition in the ordinary course of business of property that
is obsolete, damaged, worn-out or no longer used or useful in the conduct of
business;
(b) the sale of inventory or the licensing of intellectual property in
the ordinary course of business and other sales of excess or surplus inventory;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and the sale or issuance of
any Foreign Subsidiary's Capital Stock to any other Foreign Subsidiary;
(e) sale-leaseback transactions permitted by Section 7.11;
(f) sales, transfers or dispositions by the Borrower or any of its
Subsidiaries of non-strategic assets purchased as part of a Permitted
Acquisition, so long as (i) no Default then exists or would result therefrom,
(ii) the Borrower or the respective Subsidiary receives at least fair market
value (as determined in good faith by the Borrower), (iii) the aggregate
proceeds received by the Borrower or such Subsidiary from all such sales,
transfers or dispositions relating to a given Permitted Acquisition shall not
exceed 40% of the aggregate consideration paid for such Permitted Acquisition,
and (iv) such non-strategic assets are sold, transferred or disposed of on or
prior to the first anniversary of the respective Permitted Acquisition;
(g) the Disposition of the assets identified on Schedule 7.5(g); and
(h) the Disposition of other property having a fair market value not to
exceed $10,000,000 in the aggregate for any fiscal year of the Borrower if the
consideration received from such Disposition is no less than fair market value
of such assets (as determined in good faith by the Borrower).
7.6. RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Holdings, the
Borrower or any Subsidiary (collectively, "RESTRICTED PAYMENTS"), except that:
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(a) any Subsidiary may make Restricted Payments to the Borrower or any
Wholly Owned Subsidiary Guarantor; and any Foreign Subsidiary may make
Restricted Payments to another Foreign Subsidiary;
(b) so long as no Event of Default has occurred and be continuing or
would result therefrom, the Borrower may pay dividends or make loans or advances
to Holdings or any Parent to permit Holdings or such Parent to (i) purchase
Holdings' or such Parent's Capital Stock from present or former officers,
directors or employees of any Group Member upon the death, disability,
retirement or termination of employment or service of such officer, director or
employee or otherwise under any stock option or employee stock ownership plan
approved by the board of directors of Holdings or any Parent, in an aggregate
amount (net of any proceeds received by Holdings or any Parent and contributed
to the Borrower in connection with resales of any Capital Stock so purchased)
not exceeding $2,500,000 in any fiscal year and (ii) pay management fees and
expense reimbursements expressly permitted by Section 7.10; and
(c) the Borrower may pay dividends or make loans and advances to
Holdings or any Parent to permit Holdings or any Parent to (i) pay corporate
overhead expenses incurred in the ordinary course of business in an aggregate
amount not exceeding $1,000,000 in any fiscal year; (ii) pay (A) any taxes,
charges or assessments, including but not limited to sales, use, transfer,
rental, ad valorem, value-added, stamp, property, consumption, franchise,
license, capital, net worth, gross receipts, excise, occupancy, intangibles or
similar taxes, charges or assessments (other than federal, state or local taxes
measured by income and federal, state or local withholding imposed on payments
made by Holdings or any Parent), required to be paid by Holdings or any Parent
by virtue of its being incorporated or otherwise organized or having Capital
Stock outstanding (but not by virtue of owning stock or other equity interests
of any corporation or other entity other than the Borrower, any of its
Subsidiaries or any Parent or Holdings), or being a holding company parent of
the Borrower or receiving dividends from or other distributions in respect of
the Capital Stock of the Borrower, or having guaranteed any obligations of the
Borrower or any Subsidiary thereof, or having made any payment in respect of any
of the items for which the Borrower is permitted to make payments to Holdings or
any Parent pursuant to the other clauses of this Section 7.6, or (B) for so long
as the Borrower is a member of a group filing a consolidated, combined or
unitary tax return with Holdings or any Parent, amounts not to exceed the amount
of the relevant tax (including any penalties and interest) that the Borrower
would owe if the Borrower were filing a separate tax return (or a separate
consolidated or combined return with its Subsidiaries that are members of the
consolidated or combined group), taking into account any carryovers and
carrybacks of tax attributes (such as net operating losses) that would be
available to the Borrower (and any such Subsidiaries) from other taxable years
if the Borrower were filing a separate tax return (or a separate consolidated or
combined return with any such Subsidiaries); (iii) to pay expenses incurred by
Holdings or any Parent in connection with offerings, registrations, or exchange
listings of equity securities and maintenance of same (A) where the net proceeds
of such offering are to be received by or contributed to the Borrower, or (B) in
a prorated amount of such expenses in proportion to the amount of such net
proceeds intended to be so received or contributed or loaned, or (C) otherwise
on an interim basis prior to completion of such offering so long as Holdings or
any Parent shall cause the amount of such expenses to be repaid to the Borrower
or the relevant Subsidiary of the Borrower out of the proceeds of such offering
promptly if such offering is completed; (iv) to pay audit costs and any costs
(including all professional fees and expenses) incurred by Holdings or any
Parent in connection with reporting obligations under or otherwise incurred in
connection with compliance with applicable laws, applicable rules or regulations
of any governmental, regulatory or self-regulatory body or stock exchange,
including in respect of any reports filed with respect to the Securities Act,
the Securities Exchange Act or the respective rules and regulations promulgated
thereunder; and (v) to pay (A) obligations of Holdings or any Parent under or in
respect of director and officer insurance policies or indemnification
obligations to directors or officers, or (B) to pay fees and perform its other
obligations pursuant to the terms of the Management Agreements so long as no
Default under Section 8(a) or 8(g) has occurred and is continuing.
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7.7. CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its Subsidiaries
(other than any Immaterial Subsidiary) in the ordinary course of business not
exceeding (a) $23,000,000 in each fiscal year ending December 31, 2005 and
December 31, 2006 and (b) 30,000,000 in any fiscal year thereafter; PROVIDED,
that (i) up to 100% of any amount permitted but not expended in any fiscal year
may be carried over for expenditure in the next succeeding fiscal year (it being
understood that no portion of such carried over amount for any fiscal year may
be used until the entire amount of permitted Capital Expenditures for such
fiscal year has been used for Capital Expenditures), and (ii) Capital
Expenditures that are made with the proceeds of any asset sales, Recovery Events
or common equity contributions received by the Borrower from equity issuances by
Holdings will not be subject to the foregoing restriction.
7.8. INVESTMENTS. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) Guarantee Obligations to insurers required in connection with
worker's compensation and other insurance coverage arranged in the ordinary
course of business;
(e) Investments held by the Borrower or any Subsidiary on the Closing
Date and described on Schedule 7.8(e);
(f) loans and advances to employees of any Group Member of the Borrower
in the ordinary course of business (including for travel, entertainment and
relocation expenses) in an aggregate amount for all Group Members not to exceed
$2,500,000 at any one time outstanding;
(g) non-cash consideration received in any Disposition permitted by
Section 7.5;
(h) a Permitted Acquisition of Capital Stock of a Person that becomes a
Domestic Subsidiary and a Subsidiary Guarantor;
(i) Investments by any Group Member in the Borrower or any Person that,
prior to such Investment, is a Wholly Owned Subsidiary Guarantor;
(j) Investments in Foreign Subsidiaries (including Permitted
Acquisitions of Persons which become Foreign Subsidiaries, incurrence of
Guarantee Obligations with respect to obligations of Foreign Subsidiaries, loans
made to Foreign Subsidiaries and Investments resulting from mergers with or
sales of assets to any such Foreign Subsidiaries) so long as the aggregate
amount of all such Investments by the Borrower or any of its Subsidiaries
(except Investments by a Foreign Subsidiary in a Person that prior to such
Investment is a Foreign Subsidiary) net of cash repayments and sale proceeds in
the case of Investments in the form of Indebtedness and cash equity returns
received as a distribution or dividend or by redemption or sale, when added to
all Investments permitted by Section 7.8(p) that would have been permitted to be
classified as investments permitted this by Section 7.8(j), does not exceed
$25,000,000 at any time outstanding;
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(k) Investments (including debt obligations) received in connection
with the bankruptcy or reorganization of suppliers and customers and in good
faith settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(l) Hedge Agreements to the extent permitted under Section 7.12;
(m) Investments in any Person which is not a Subsidiary and in which
the Borrower or its Subsidiaries own or acquire Capital Stock in connection with
any joint venture or similar arrangement in an aggregate amount not to exceed,
net of cash repayments and sale proceeds in the case of Investments in the form
of Indebtedness and cash equity returns received as a distribution or dividend
or by redemption or sale, that, when added to all other amounts counted as set
forth in Section 7.2(m), does not exceed $10,000,000 at any time outstanding;
(n) Investments by any Foreign Subsidiary in any other Foreign
Subsidiary;
(o) transactions permitted by Section 7.4; and
(p) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an aggregate
amount, net of cash repayments and sale proceeds in the case of Investments in
the form of Indebtedness and cash equity returns received as a distribution or
dividend or by redemption or sale, not exceeding $10,000,000 at any time
outstanding;
PROVIDED, that any investment described in clauses (j), (m) and (p) above will
be permitted only if, after giving effect to such investment and the payment of
all fees, costs and other amounts payable as a current liability in connection
therewith, Excess Availability would be greater than 25% of the aggregate
Revolving Commitments.
7.9. OPTIONAL PAYMENTS AND MODIFICATIONS OF CERTAIN DEBT INSTRUMENTS.
(a) Make or offer to make any optional or voluntary payment,
prepayment, repurchase or redemption of or otherwise optionally or voluntarily
defease or segregate funds with respect to the Senior Secured Notes or Senior
Subordinated Notes at any time when (i) any Default exists or would result after
giving effect thereto, (ii) Excess Availability is less than $40,000,000 or
(iii) Excess Availability would be less than $40,000,000 after giving effect
thereto.
(b) Amend, modify, waive or otherwise change, or consent or agree to
any amendment, modification, waiver or other change to, any of the terms of the
Indentures, Senior Secured Notes or Senior Subordinated Notes (i) which amends,
supplements, waives, or otherwise modifies the lien or debt subordination
provisions applicable thereto, (ii) except as permitted by Section 7.2(f) (in
the case of an increase in principal amount), which shortens the fixed maturity
or increases the principal amount of, or increases the rate or shortens the time
of payment of interest on, or increases the amount or shortens the time of
payment of any principal or premium payable whether at maturity, at a date fixed
for prepayment or by acceleration or otherwise of the Indebtedness under any
Indenture or increases the amount of, or accelerates the time of payment of, any
fees or other amounts payable in connection therewith; (iii) which adds or
relates to any material affirmative or negative covenants or any events of
default or remedies thereunder and the effect of which is to subject the
Borrower or any of its Subsidiaries to any more onerous or more restrictive
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provisions; or (iv) which otherwise adversely affects the interests of the
Lenders with respect to the Senior Secured Notes or Senior Subordinated Notes or
the interests of the Lenders under this Agreement or any other Loan Document in
any material respect; PROVIDED that the foregoing does not restrict the
execution, delivery and performance of (A) a supplemental indenture to the
extent the amendment, modification or change effected pursuant thereto relates
solely to the addition of a "Subsidiary Guarantor" (as defined in any Indenture)
and related matters, pursuant to the terms of such Indenture and the
consummation of exchange offers in which "Exchange Notes" (as defined in the
applicable Indenture) are issued or (B) any amendment, modification or change
effected to the security documents securing the Senior Secured Notes (x) for the
purpose of adding additional beneficiaries to the collateral described therein,
adding to or releasing such collateral or adding or releasing grantors
thereunder or (y) which does not have an adverse impact on any Lender.
(c) Designate any Indebtedness (other than the Obligations and the
obligations under the Senior Secured Note Indenture) as "Designated Senior
Indebtedness" (or any other defined term having a similar purpose) for the
purposes of the Senior Subordinated Note Indenture.
7.10. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than Holdings, the Borrower or any Wholly Owned Subsidiary)
unless such transaction is (i) otherwise permitted under this Agreement, (ii) in
the ordinary course of business of the relevant Group Member and (iii) upon fair
and reasonable terms not materially less favorable to the relevant Group Member,
than it would obtain in an arm's length transaction with a Person that is not an
Affiliate. Notwithstanding the foregoing, the Borrower and its Subsidiaries may
do the following:
(a) Restricted Payments may be made to the extent permitted by Section
7.6;
(b) loans may be made and other transactions may be entered into by the
Borrower and its Subsidiaries to the extent permitted by Sections 7.2, 7.4, 7.5
and 7.8;
(c) customary fees and indemnifications may be paid to directors of any
Parent, Holdings, the Borrower and its Subsidiaries;
(d) the Borrower and its Subsidiaries may enter into, and may make
payments under, employment agreements, employee benefits plans, stock option
plans, indemnification provisions and other similar compensatory arrangements
with officers, employees and directors of any Parent, Holdings, the Borrower and
its Subsidiaries in the ordinary course of business;
(e) the Borrower and its Subsidiaries may pay fees to the Sponsor
pursuant to the terms of the Managements Agreements so long as no Default under
Section 8(a) or (g) has occurred and is continuing and may perform their other
obligations under the Management Agreements; and
(f) the execution, delivery and performance of a tax sharing agreement
with respect to any of the charges, taxes or assessments described in clause (B)
of Section 7.6(c)(ii), to the extent that payments in connection with such tax
sharing agreement are permitted by Section 7.6(c)(ii).
7.11. SALES AND LEASEBACKS. Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member,
except for a sale of real or personal property made for cash consideration in an
amount not less than the cost of such real or personal property and consummated
within 90 days after the Borrower or any Subsidiary acquires or completes the
construction of such property.
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7.12. HEDGE AGREEMENTS. Enter into any Hedge Agreement, except (a)
Hedge Agreements entered into to hedge or mitigate risks to which the Borrower
or any Subsidiary has actual exposure (other than those in respect of Capital
Stock or the Senior Subordinated Notes) and (b) Hedge Agreements entered into in
order to effectively cap, collar or exchange interest rates (from fixed to
floating rates, from one floating rate to another floating rate or otherwise)
with respect to any interest-bearing liability or investment of the Borrower or
any Subsidiary.
7.13. CHANGES IN FISCAL PERIODS. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower's method of
determining fiscal quarters.
7.14. NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Loan Party
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure its obligations
under the Loan Documents to which it is a party other than (a) this Agreement
and the other Loan Documents, (b) the Indentures and the Note Lien Documents
referred to therein, (c) any agreements governing any purchase money Liens or
Capital Lease Obligations otherwise permitted hereby, if the prohibition or
limitation therein is only effective against the assets financed thereby, and
(d) agreements for the benefit of the holders of Liens described in Section 7.3
(k), (l), or (m) and applicable solely to the property subject to such Lien.
7.15. CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any encumbrance or restriction pursuant to applicable law or an
agreement in effect at or entered into on the Closing Date (including the
Indentures and the Note Lien Documents referred to therein), (iii) any
encumbrance or restriction with respect to a Subsidiary or any of its
Subsidiaries pursuant to an agreement relating to any Indebtedness incurred by
such Subsidiary prior to the date on which such Subsidiary was acquired by the
Borrower (other than Indebtedness incurred as consideration in, in contemplation
of, or to provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to which
such Subsidiary was acquired by the Borrower) and outstanding on such date,
which encumbrance or restriction is not applicable to the Borrower or its
Subsidiaries, or the properties or assets of the Borrower or its Subsidiaries,
other than the Subsidiary, or the property or assets of the Subsidiary, so
acquired, or any Subsidiary thereof or the property or assets of any such
Subsidiary, (iv) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Indebtedness incurred pursuant to an agreement
referred to in clause (i), (ii) or (iii) of this covenant or this clause (iv) or
contained in any amendment to an agreement referred to in clause (i), (ii) or
(iii) of this covenant or this clause (iv); PROVIDED, HOWEVER, that the
encumbrances and restrictions contained in any such refinancing agreement or
amendment are not materially less favorable taken as a whole, as determined by
the Borrower in good faith, to the Lenders than the encumbrances and
restrictions contained in such predecessor agreement, (v) with respect to clause
(c), any encumbrance or restriction (A) that restricts the subletting,
assignment or transfer of any property or asset or right and is contained in any
lease, license or other contract entered into in the ordinary course of business
or (B) contained in security agreements securing Indebtedness of a Subsidiary to
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the extent such encumbrance or restriction restricts the transfer of the
property subject to such security AGREEMENTS, (vi) any restrictions with respect
to a Subsidiary imposed pursuant to an agreement that has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary, (vii) any encumbrances or restrictions applicable
solely to a Foreign Subsidiary and contained in any credit facility extended to
any Foreign Subsidiary; (viii) restrictions in the transfers of assets pursuant
to a Lien permitted by Section 7.3, (ix) any encumbrance or restriction arising
under or in connection with any agreement or instrument relating to any
Indebtedness permitted by Section 7.2(m) if (A) either (x) the encumbrance or
restriction applies only in the event of a payment default or a default with
respect to a financial covenant contained in the terms of such agreement or
instrument or (y) the Borrower in good faith determines that such encumbrance or
restriction will not cause the Borrower not to have the funds necessary to pay
the Obligations when due and (B) the encumbrance or restriction is not
materially more disadvantageous to the Lenders than is customary in comparable
financings (as determined in good faith by the Borrower) and (x) any encumbrance
or restriction arising under or in connection with any agreement or instrument
governing Capital Stock of any Person other than a Wholly Owned Subsidiary that
is acquired after the Closing Date.
7.16. LINES OF BUSINESS. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related thereto or are reasonable extensions thereof.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation,
or any other amount payable hereunder or under any other Loan Document, within
three Business Days after any such interest or other amount becomes due in
accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at any
time under or in connection with this Agreement or any such other Loan Document
shall prove to have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance or performance
of any agreement contained in clause (i) or (ii) of Section 6.4(a) (with respect
to Holdings and the Borrower only), Section 6.7(a) or Section 7 of this
Agreement or Sections 5.5 and 5.7(b) of the Guarantee and Collateral Agreement
or (ii) an "Event of Default" under and as defined in any Mortgage shall have
occurred and be continuing; or
(d) the Borrower shall fail to deliver a Borrowing Base Certificate
when and as required by Section 6.2(h), and such failure shall continue for five
Business Days; or
(e) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (d) of this Section 8) and
such default shall continue unremedied for a period of 30 days after written
notice thereof is given to the Borrower by the Administrative Agent or any
Lender; or
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(f) any Group Member shall (i) default in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding
the Loans) on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness beyond
the period of grace, if any, provided in the instrument or agreement under which
such Indebtedness was created; or (iii) default in the observance or performance
of any other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder
or beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or to become subject to
a mandatory offer to purchase by the obligor thereunder or (in the case of any
such Indebtedness constituting a Guarantee Obligation) to become payable;
PROVIDED, that a default, event or condition described in clause (i), (ii) or
(iii) of this paragraph (e) shall not at any time constitute an Event of Default
unless, at such time, one or more defaults, events or conditions of the type
described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding
principal amount of which exceeds in the aggregate $7,500,000; or
(g) (i) any Group Member shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Group Member shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Group Member any case, proceeding or other action of a
nature referred to in clause (i) above that (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 Group Member any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets 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 Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii), or (iii) above; or (v) any Group Member shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(h) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of any Group Member or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate in a distress termination under Section
4041(c) of ERISA or in an involuntary termination by the PBGC under Section 4042
of ERISA, (v) any Group Member or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur any liability
in connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i), (iii), (iv), (v) and
(vi) above, such event or condition, together with all other such events or
conditions, if any, would, in the aggregate, reasonably be expected to have a
Material Adverse Effect; or
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(i) one or more judgments or decrees shall be entered against any Group
Member involving in the aggregate a liability (not paid or fully covered by
insurance) of $5,000,000 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
(j) any of the Security Documents shall cease, for any reason other
than as set forth in Section 10.14, to be in full force and effect, or any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable or (except as expressly set forth therein)
perfected with the Required Priority as to any property of the Credit Parties
having an aggregate value exceeding $1,000,000; or
(k) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and effect
or any Loan Party shall so assert; or
(l) (i) at any time prior to the initial registered public offering of
voting Capital Stock of Holdings or any Parent, the Permitted Investors shall in
the aggregate be the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act) of (x) so long as Holdings is a Subsidiary of any Parent
(other than a Parent that is a Subsidiary of another Parent), shares of voting
Capital Stock having less than a majority of the total voting power of all
outstanding shares of such Parent or (y) if Holdings is not a Subsidiary of any
Parent, shares of voting Capital Stock having less than a majority of the total
voting power of all outstanding shares of voting Capital Stock of Holdings, (ii)
at any time on and after the date of the initial registered public offering of
voting Capital Stock of Holdings or any Parent, (x) the Permitted Investors
shall in the aggregate be the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act) of (A) so long as Holdings is a Subsidiary of any
Parent (other than a Parent that is a Subsidiary of another Parent), shares of
voting Capital Stock having less than 35% of the total voting power of all
outstanding shares of such Parent or (B) if Holdings is not a Subsidiary of any
Parent, shares of voting Capital Stock having less than 35% of the total voting
power of all outstanding shares of voting Capital Stock of Holdings, and (y) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Investors, shall be the
"beneficial owner" of (A) so long as Holdings is a Subsidiary of any Parent
(other than a Parent that is a Subsidiary of another Parent), shares of voting
Capital Stock having a greater amount of the voting power of all outstanding
shares of voting Capital Stock of such Parent than such shares of which the
Permitted Investors in the aggregate are the "beneficial owner" or (B) if
Holdings is not a Subsidiary of any Parent, shares of voting Capital Stock
having a greater amount of the voting power of all outstanding shares of the
voting Capital Stock of Holdings than such shares of which the Permitted
Investors in the aggregate are the "beneficial owner"; (iii) the board of
directors of Holdings or any Parent shall cease to consist of a majority of
Continuing Directors; (iv) Holdings shall cease to hold and own beneficially, of
record and directly, and control 100% of each class of outstanding Capital Stock
of the Borrower free and clear of all Liens (except Liens created by the
Guarantee and Collateral Agreement); or (v) a Specified Change of Control shall
occur; or
(m) Holdings shall (i) conduct, transact or otherwise engage in, or
commit to conduct, transact or otherwise engage in, any business or operations
other than those incidental to its direct or indirect ownership of the Capital
Stock of the Borrower and its Subsidiaries, PROVIDED that Holdings may engage in
those activities that are incidental to (A) the maintenance of its corporate
existence in compliance with applicable law, (B) legal, tax and accounting
matters in connection with any of the foregoing or following activities, (C) the
entering into, and performing its obligations under, this Agreement, the other
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Loan Documents and the Management Agreements, in each case to which it is a
party, (D) the issuance, sale or repurchase of its Capital Stock to the extent
permitted under this Agreement, (E) dividends or distributions on its Capital
Stock, (F) the filing of registration statements, and compliance with applicable
reporting and other obligations, under federal, state or other securities laws,
(G) the listing of its equity securities and compliance with applicable
reporting and other obligations in connection therewith, (H) the retention of
(and the entry into, and exercise of rights and performance of obligations in
respect of, contracts and agreements with) transfer agents, private placement
agents, underwriters, counsel, accountants and other advisors and consultants,
(I) the performance of obligations under and compliance with its certificate of
incorporation and by-laws, or any applicable law, ordinance, regulation, rule,
order, judgment, decree or permit, including as a result of or in connection
with the activities of its Subsidiaries, (J) the incurrence and payment of its
operating and business expenses and any taxes for which it may be liable, (K)
making loans to or other Investments in the Borrower or any Wholly-Owned
Subsidiary Guarantor as and to the extent not prohibited by this Agreement, or
(ii) incur, create, assume or suffer to exist any Indebtedness or other
liabilities or financial obligations, except (A) nonconsensual obligations
imposed by operation of law, (B) pursuant to the Loan Documents to which it is a
party and (C) obligations with respect to its Capital Stock, or (D) Indebtedness
owed to the Borrower or any Wholly-Owned Subsidiary Guarantor as and to the
extent not prohibited by this Agreement and (E) other liabilities and
obligations not constituting Indebtedness permitted in clause (i) above; or
(n) the Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party shall so assert in writing;
(o) the provisions of the Secured Note Intercreditor Agreement shall
not, for any reason, be valid, lawful and enforceable obligations of the trustee
under the Senior Secured Note Indenture and holders of Senior Secured Notes, and
such condition shall remain unremedied for a period of 30 days after written
notice thereof is given to the Borrower by the Administrative Agent or any
Lender; or any Loan Party shall so assert in writing;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
Dollars to a Cash Collateral Account an amount equal to the aggregate then
undrawn and unexpired amount of such Letters of Credit. Amounts held in such
Cash Collateral Account shall be applied by the Administrative Agent to the
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payment of drafts drawn under such Letters of Credit, and the unused portion
thereof after all such Letters of Credit shall have expired or been fully drawn
upon, if any, shall be applied to repay other obligations of the Borrower
hereunder and under the other Loan Documents. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations shall
have been satisfied and all other obligations of the Borrower hereunder and
under the other Loan Documents shall have been paid in full, the balance, if
any, in such Cash Collateral Account shall be returned to the Borrower (or such
other Person as may be lawfully entitled thereto). Except as expressly provided
above in this Section 8, presentment, demand, protest and all other notices of
any kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1. APPOINTMENT. Each Lender hereby irrevocably designates and
appoints each Agent as the agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes such Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall 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 this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2. DELEGATION OF DUTIES. Each 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. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3. EXCULPATORY PROVISIONS. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4. RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
Holdings or the Borrower), independent accountants and other experts selected by
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such Agent. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. Each Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or, if so specified
by this Agreement, all Lenders) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any
such action. The Agents shall in all cases be fully protected against any action
or claim by any Lender or affiliate thereof, in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
9.5. NOTICE OF DEFAULT. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, Holdings or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders or any other
instructing group of Lenders specified by this Agreement); provided, that unless
and until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6. NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party that may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
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9.7. INDEMNIFICATION. The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by Holdings or the Borrower and
without limiting the obligation of Holdings or the Borrower to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Revolving Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Revolving Commitments, this Agreement, any of
the other Loan Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or any action
taken or omitted by such 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 that are found by a final and non-appealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section 9.7 shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8. AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent were not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9. SUCCESSOR ADMINISTRATIVE AGENT. Subject to the appointment and
acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign as Administrative Agent. If the Administrative
Agent shall have given notice of its resignation as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(g) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 30 days
following a retiring Administrative Agent's notice of resignation, then the
resigning Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. After any
retiring Administrative Agent's resignation as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent under this
Agreement and the other Loan Documents.
9.10. AGENTS GENERALLY. Except as expressly set forth herein, no Agent
shall have any duties or responsibilities hereunder in its capacity as such.
9.11. AGENTS OTHER THAN THE ADMINISTRATIVE AGENT. No Agent other than
the Administrative Agent shall, in its capacity as such, have any duties or
responsibilities, or incur any liability, under this Agreement or any other Loan
Document.
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9.12. WITHHOLDING TAX. To the extent required by any applicable law,
the Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any applicable withholding tax. If any Governmental
Authority asserts a claim that the Administrative Agent did not properly
withhold tax from amounts paid to or for the account of any Lender because the
appropriate form was not delivered or was not properly executed or because such
Lender failed to notify the Administrative Agent of a change in circumstance
which rendered the exemption from, or reduction of, withholding tax ineffective
or for any other reason, such Lender shall indemnify the Administrative Agent
fully for all amounts paid, directly or indirectly, by the Administrative Agent
as tax or otherwise, including any penalties or interest and together with all
expenses (including legal expenses, allocated internal costs and out-of-pocket
expenses) incurred.
9.13. SECURED NOTE INTERCREDITOR AGREEMENT. Each Agent and Lender
hereby (a) irrevocably authorizes and directs the Administrative Agent to enter
into the Secured Note Intercreditor Agreement and to assume and perform its
obligations thereunder and (b) agrees for the enforceable benefit of all holders
of each existing and future Series of Note Lien Debt (as defined therein) and
each existing and future Note Lien Representative (as defined therein) that (i)
that the holders of Obligations hereunder are bound by the provisions of the
Secured Note Intercreditor Agreement, including the provisions relating to the
ranking of Credit Facility Liens (as defined therein), and (ii) such Agent or
Lender consents to and directs the Administrative Agent, as Credit Facility
Collateral Agent (as defined in the Secured Note Intercreditor Agreement), to
perform its obligations under the Secured Note Intercreditor Agreement and the
other security documents.
SECTION 10. MISCELLANEOUS
10.1. AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except as provided in Section 2.1(b) or in accordance with the
provisions of this Section 10.1. The Required Lenders and each Loan Party to the
relevant Loan Document may, or, with the written consent of the Required
Lenders, the Administrative Agent and each Loan Party to the relevant Loan
Document may, from time to time, (a) enter into written amendments, supplements
or modifications hereto and to the other Loan Documents for the purpose of
adding any provisions to this Agreement or the other Loan Documents or changing
in any manner the rights of the Lenders or of the Loan Parties hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders or
the Administrative Agent, as the case may be, may specify in such instrument,
any of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any Loan,
reduce the stated rate of any interest or fee payable hereunder (except (x) in
connection with the waiver of applicability of any post-default increase in
interest rates, which waiver shall be effective with the consent of the Required
Lenders, and (y) that any amendment or modification of defined terms used in the
financial covenants in this Agreement shall not constitute a reduction in the
rate of interest or fees for purposes of this clause (i)) or extend the
scheduled date of any payment thereof, or increase the amount or extend the
expiration date of any Lender's Revolving Commitment, in each case without the
written consent of each Lender directly affected thereby; (ii) eliminate or
reduce the voting rights of any Lender under this Section 10.1 without the
written consent of such Lender; (iii) reduce any percentage specified in the
definition of Required Lenders, consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement and the other
Loan Documents or, except as set forth in Section 10.14, release all or
substantially all of the Collateral or release all or substantially all of the
Subsidiary Guarantors from their obligations under the Guarantee and Collateral
Agreement, in each case without the written consent of all Lenders; (iv) extend
the scheduled date or reduce the amount of any scheduled payment in respect of
any Loan or provide for availability of Revolving Extensions of Credit in
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amounts greater than 110% of the Borrowing Base (determined as defined herein on
the Closing Date without giving effect to any Reserves), in each case without
the written consent of more than 80% of the Lenders; (v) amend, modify or waive
any provision of Sections 3.8(a) or 3.8(b) without the written consent of each
Lender directly and adversely affected thereby; (vi) amend, modify or waive any
provision of Section 9 without the written consent of each Agent adversely
affected thereby; (vii) amend, modify or waive any provision of Section 2.3 or
2.4 without the written consent of the Swingline Lender; or (viii) amend, modify
or waive any provision of Sections 2.7 to 2.14 without the written consent of
the Issuing Lender. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Agents and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders and the Agents
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
Notwithstanding the foregoing, this Agreement may be amended (or
amended and restated) with the written consent of the Required Lenders, the
Administrative Agent and the Borrower (a) to add one or more additional credit
facilities to this Agreement and to permit the extensions of credit from time to
time outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the "ADDITIONAL EXTENSIONS OF CREDIT") to share ratably in the
benefits of this Agreement and the other Loan Documents with the Revolving
Extensions of Credit and the accrued interest and fees in respect thereof and
(b) to include appropriately the Lenders holding such credit facilities in any
determination of the Required Lenders.
10.2. NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Holdings, the Borrower and the
Agents, and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:
Holdings: c/o Del Laboratories, Inc.
000 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Borrower: Del Laboratories, Inc.
000 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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with a copy to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
The Administrative Agent: JPMorgan Chase Bank, N.A.
000 Xxxx Xxx.
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
No notice, request or demand to or upon any Agent, the Issuing Lender, the
Lenders, Holdings or the Borrower shall be effective until received. Holdings
and the Borrower shall be conclusively deemed to have received any notice,
request or demand if such notice, request or demand is sent by courier service
and delivery thereof is confirmed by the courier, if it is sent by fax and
receipt thereof is confirmed orally, if it is sent by certified mail or if it is
served by any manner of service of process permitted by law. Notices and other
communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent. Approval of such procedures may be limited to particular notices or
communications.
10.3. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5. PAYMENT OF EXPENSES AND TAXES; INDEMNITY.
(a) The Borrower agrees:
(i) to pay or reimburse each Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to such Agent, the Administrative Agent's
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out-of-pocket costs and customary charges for field examinations and
internal appraisals and the reasonable fees and charges of independent
third party appraisers selected by the Administrative Agent, and filing
and recording fees and expenses, with statements with respect to the
foregoing to be submitted to the Borrower prior to the Closing Date (in
the case of amounts to be paid on the Closing Date) and from time to
time thereafter on a quarterly basis or such other periodic basis as
such Agent shall deem appropriate,
(ii) to pay or reimburse the Lenders and Agents for all
reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, the
other Loan Documents and any such other documents, including the
reasonable fees and disbursements of counsel to the Lenders and of
counsel to the Agents,
(iii) to pay, indemnify, and hold each Lender and Agent harmless
from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying Other Taxes, if
any, that may be payable or determined to be payable in connection with
the execution and delivery of, or consummation or administration of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the other Loan Documents and any such other documents, and
(iv) to pay, indemnify, and hold each Lender and Agent and each
of their respective officers, directors, employees, attorneys,
affiliates, agents and advisors (each, including each Lender and Agent,
an "INDEMNITEE") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing
relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable
to the operations of any Group Member or any of the Properties or the
unauthorized use by Persons of information or other materials sent
through electronic, telecommunications or other information
transmission systems that are intercepted by such Persons and the
reasonable fees and expenses of legal counsel in connection with
claims, actions or proceedings by any Indemnitee against any Loan Party
under any Loan Document (all the foregoing in this clause (iv),
collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED, that the
Borrower shall have no obligation hereunder to any Indemnitee with
respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court
of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee or any of its Related Persons.
(b) Without limiting the foregoing, and to the extent permitted by
applicable law, the Borrower agrees not to assert and to cause its Subsidiaries
not to assert, and hereby waives and agrees to cause its Subsidiaries to waive,
all rights for contribution or any other rights of recovery with respect to all
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee.
(c) All amounts due under this Section 10.5 shall be payable not later
than 10 days after written demand therefor. Statements payable by the Borrower
pursuant to this Section 10.5 shall be submitted to the address of the Borrower
set forth in Section 10.2 or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Administrative Agent.
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(d) Notwithstanding the foregoing, (i) so long as no Event of Default
has occurred and is continuing, the Borrower will not be obligated to reimburse
the Administrative Agent for more than two field examinations or for more than
two appraisals in any one-year period and (ii) so long as no Default has
occurred and is continuing, the Borrower will not be obligated to reimburse the
Administrative Agent for more than one field examination conducted during the
first 60 days following the Closing Date.
(e) The agreements in this Section 10.5 shall survive repayment of the
Loans and all other amounts payable hereunder.
10.6. SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS(a) . (a)
The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted
hereby (including any affiliate of the Issuing Lender that issues any Letter of
Credit), except that (i) the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section.
(b) (i) Subject to the conditions set forth in paragraph (c) below, any
Lender may assign to one or more assignees (each, an "ASSIGNEE") all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Revolving Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, PROVIDED that no consent of the Borrower shall
be required for an assignment to a Lender, an affiliate of a Lender, an
Approved Fund or, if an Event of Default has occurred and is
continuing, any other Person provided, further, that no consent of the
Borrower shall be required for an assignment by a Conduit Lender to its
designated Lender, a conduit administered or managed by such Conduit
Lender's designated Lender or to such Conduit Lender's liquidity
providers;
(B) the Administrative Agent, PROVIDED that no consent of the
Administrative Agent shall be required for an assignment (x) to an
Assignee that is a Lender immediately prior to giving effect to such
assignment or (y) by a Conduit Lender to its designated Lender, a
conduit administered or managed by such Conduit Lender's designated
Lender or to such Conduit Lender's liquidity providers; and
(C) the Issuing Lender.
(ii) Assignments shall be subject to the following additional
conditions:
(A) except in the case of an assignment to a Lender, an affiliate
of a Lender or an Approved Fund or an assignment of the entire
remaining amount of the assigning Lender's Revolving Commitment and
Loans, the amount of the Revolving Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $2,500,000 unless
each of the Borrower and the Administrative Agent otherwise consent,
PROVIDED that (1) no such consent of the Borrower shall be required if
an Event of Default has occurred and is continuing and (2) such amounts
shall be aggregated in respect of each Lender and its affiliates or
Approved Funds, if any;
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(B) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500;
(C) the Assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an administrative questionnaire; and
(D) in the case of an assignment by a Conduit Lender to an
Assignee that is not its designated Lender, another Conduit Lender
administered or managed by such Conduit Lender's designated Lender or
such Conduit Lender's liquidity providers (each such Assignee, a "THIRD
PARTY ASSIGNEE"), such Conduit Lender's designated Lender shall
concurrently assign to the such Third Party Assignee or, if such Third
Party Assignee is a conduit not administered by such designated Lender,
to an Assignee designated by such Third Party Assignee an amount of its
Revolving Commitment at least equal to the amount of the Loans assigned
to such Third Party Assignee by such Conduit Lender; provided that if
in connection with such assignment such Conduit Lender notifies the
Borrower or the Administrative Agent that such Conduit Lender shall not
make any additional Loans under this Agreement, such Conduit Lender's
designated Lender shall assign its entire Revolving Commitment to such
Third Party Assignee or, if such Third Party Assignee is a conduit not
administered by such designated Lender, to an Assignee designated by
such Third Party Assignee.
(iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in
each Assignment and Assumption the Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 3.9, 3.10, 3.11 and 10.5). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not
comply with this Section 10.6 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with, and subject to the limitations of
Section 10.6 (c).
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Revolving Commitments of, and principal amount of the Loans and L/C
Obligations owing to, each Lender pursuant to the terms hereof from
time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing
Lender and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing
Lender and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an Assignee, the
Assignee's completed administrative questionnaire (unless the Assignee
shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) of this Section and any written
consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it
has been recorded in the Register as provided in this paragraph.
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(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "PARTICIPANT") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Revolving Commitment and
the Loans owing to it); PROVIDED that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; PROVIDED that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 10.1 and (2) directly
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.9, 3.10 or 3.11 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section
10.6. To the extent permitted by law, each Participant also shall be entitled to
the benefits of Section 10.7(b) as though it were a Lender, provided such
Participant shall be subject to Section 10.7(a) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater
payment under Section 3.9 or 3.10 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant
is made with the Borrower's prior written consent. Any Participant that
is a Non-U.S. Lender shall not be entitled to the benefits of Section
3.10 unless such Participant complies with Section 3.10(d).
(d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; PROVIDED that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.
(e) The Borrower, upon receipt of written notice from the relevant
Lender, agrees to issue Notes to any Lender requiring Notes to facilitate
transactions of the type described in paragraph (d) above.
(f) Notwithstanding the foregoing, any Conduit Lender may assign any or
all of the Loans it may have funded hereunder to its designating Lender without
the consent of the Borrower or the Administrative Agent and without regard to
the limitations set forth in Section 10.6(b). Each of Holdings, the Borrower,
each Lender and the Administrative Agent hereby confirms that it will not
institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding under any state bankruptcy or similar law, for one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Conduit Lender; PROVIDED, HOWEVER, that each Lender
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.
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10.7. ADJUSTMENTS; SET-OFF.
(a) Except to the extent that this Agreement expressly provides for
payments to be allocated to a particular Lender, if any Lender (a "BENEFITED
LENDER") shall, at any time after the Loans and other amounts payable hereunder
shall immediately become due and payable pursuant to Section 8, receive any
payment of all or part of the Obligations owing 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 Section 8(g), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of the Obligations owing to
such other Lender, such Benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of the Obligations owing to
each such other Lender, or shall provide such other Lenders with the benefits of
any such collateral, as shall be necessary to cause such Benefited Lender to
share the excess payment or benefits of such collateral ratably with each of the
Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment or
benefits is thereafter recovered from such Benefited Lender, such purchase shall
be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Holdings or the
Borrower, any such notice being expressly waived by Holdings and the Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable
by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of Holdings or the Borrower,
as the case may be. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender,
PROVIDED that the failure to give such notice shall not affect the validity of
such setoff and application.
10.8. COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9. SEVERABILITY. Any provision of this Agreement 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.
10.10. INTEGRATION. This Agreement and the other Loan Documents
represent the entire agreement of Holdings, the Borrower, the Agents and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any Agent or any Lender
relative to subject matter hereof not expressly set forth or referred to herein
or in the other Loan Documents.
-85-
10.11. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.12. SUBMISSION TO JURISDICTION; WAIVERS. Each of Holdings, the
Borrower, the Agents and the Lenders hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to Holdings or the
Borrower, as the case may be at its address set forth in Section 10.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.
10.13. ACKNOWLEDGMENTS. Each of Holdings and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) no Agent or Lender has any fiduciary relationship with or duty to
Holdings or the Borrower arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Agents and
Lenders, on one hand, and Holdings and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among Holdings, the Borrower and the Lenders.
10.14. RELEASES OF GUARANTEES AND LIENS.
-86-
(a) Notwithstanding anything to the contrary contained herein or in any
other Loan Document, the Administrative Agent is hereby irrevocably authorized
by each Lender (without requirement of notice to or consent of any Lender except
as expressly required by Section 10.1) to take any action requested by the
Borrower having the effect of releasing any Collateral or guarantee obligations
(i) to the extent necessary to permit consummation of any transaction not
prohibited by any Loan Document or that has been consented to in accordance with
Section 10.1 or (ii) under the circumstances described in Section 10.14(b).
(b) At such time as the Loans, the Reimbursement Obligations and the
other obligations under the Loan Documents (other than contingent surviving
indemnity obligations in respect of which no claim or demand has been made and
obligations under or in respect of Hedge Agreements or Specified Cash Management
Arrangements) shall have been paid in full, the Revolving Commitments shall have
terminated and no Letters of Credit shall be outstanding, the Collateral shall
be released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or performance
of any act by any Person.
10.15. CONFIDENTIALITY. Each Agent and each Lender agrees to keep
confidential all non-public information provided to it by any Loan Party
pursuant to or in connection with this Agreement that is designated by such Loan
Party as confidential; provided that nothing herein shall prevent any Agent or
any Lender from disclosing any such information (a) to any Agent, any other
Lender or any Lender Affiliate, (b) to any actual or prospective Transferee or
any direct or indirect counterparty to any Hedge Agreement (or any professional
advisor to such counterparty), if such person is required to maintain
confidentiality, (c) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates if such person
is required to maintain confidentiality, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court or other
Governmental Authority, or as may otherwise be required pursuant to any
Requirement of Law, or if requested or required to do so in connection with any
litigation or similar proceeding; PROVIDED, that such Agent or Lender, unless
prohibited by any Requirement of Law, shall use reasonable efforts to notify the
Borrower in advance of any disclosure pursuant to this clause (e) above but only
to the extent reasonably practicable under the circumstances and on the
understanding that no Agent or Lender shall incur any liability for failure to
give such notice, (f) that has been publicly disclosed, (g) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender's investment portfolio in connection with ratings issued with respect to
such Lender or (h) in connection with the exercise of any remedy hereunder or
under any other Loan Document.
10.16. WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE AGENTS AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
10.17. DELIVERY OF ADDENDA. Each initial Lender not a signatory party
hereto may become a party to this Agreement by delivering to the Administrative
Agent an Addendum duly executed by such Lender. The Administrative Agent is
authorized to modify Annex A as necessary to reflect the Revolving Commitments
assumed by such Lenders by Addendum.
-87-
10.18. USA PATRIOT ACT. Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Publ. L.
107-56 (signed into law October 26, 2001)), (the "PATRIOT ACT"), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the
Patriot Act.
10.19. COMMERCIALLY REASONABLE DISCRETION.
(a) The restrictions upon the rights and powers of the Administrative
Agent set forth in this Agreement in provisions permitting or requiring
specified actions to be taken by the Administrative Agent "in its Commercially
Reasonable Discretion" are intended solely for the benefit of the Loan Parties
and are not enforceable by any Lender or any other Person. Such restrictions
will apply only to the extent, and in the manner, expressly set forth in this
Agreement.
(b) In respect of all actions as to which this Agreement provides that
the Administrative Agent will or may act in its Commercially Reasonable
Discretion, the Administrative Agent will have the right and power to take such
action, if, as a condition of the exercise of such right and power, it acts in
its Commercially Reasonable Discretion. The Administrative Agent will not be in
any respect obligated to take or omit to take any such action. Any failure of
the Administrative Agent to act in its Commercially Reasonable Discretion if it
determines to take any such action will constitute a failure of such condition
to the exercise of such right or power, excusing any obligation that otherwise
would be imposed on the Loan Parties if such condition had been satisfied and
such right or power properly exercised.
(c) Under no circumstances will any failure of the Administrative Agent
to act in its Commercially Reasonable Discretion give rise to any claim or cause
of action against the Administrative Agent or any Lender for any monetary
liability or any defense to or set-off against the obligations of the Loan
Parties for the payment of the Obligations.
(d) If the Administrative Agent takes any action as to which this
Agreement provides that the Administrative Agent will or may act in its
Commercially Reasonable Discretion, the Administrative Agent will be entitled to
a conclusive and irrebutable presumption that such action did qualify as and
constitute an exercise of its Commercially Reasonable Discretion and that such
action was properly taken if (i) the Administrative Agent delivers written
notice of such action to the Borrower setting forth in reasonable detail the
nature of such action and specifying that such notice is being delivered for
purposes of this Section 10.19(d) and (ii) the Borrower fails to notify the
Administrative Agent in writing within 90 days thereafter that the Borrower does
not consider such action to qualify as and constitute an exercise of
Commercially Reasonable Discretion.
(e) Subject to Section 10.19(d), in any litigation, proceeding or
dispute relating to whether any action taken or omitted by the Administrative
Agent qualified as or constituted an exercise of its Commercially Reasonable
Discretion, the Administrative Agent will be entitled to a rebuttable
presumption that such action did qualify as and constitute an exercise of its
Commercially Reasonable Discretion, and the burden of raising and proving lack
of Commercially Reasonable Discretion shall be on the Loan Parties.
-88-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
DLI HOLDING II CORP.
By:
--------------------------------------
Name:
Title:
DEL LABORATORIES, INC.
By:
--------------------------------------
Name:
Title:
-00-
XXXXXXXX XXXXX XXXX, X.X.,
as Administrative Agent and Lender
By:
--------------------------------------
Name:
Title:
-00-
XXXXXX XXXXXXXX XXXX XX XXX XXXX,
as Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
-91-
UBS LOAN FINANCE LLC,
as Lender
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
-92-
ANNEX A
Lenders and Revolving Commitments
NAME OF LENDER REVOLVING COMMITMENT
JPMorgan Chase Bank, N.A. $45,000,000
UBS Loan Finance LLC $30,000,000
Israel Discount Bank of New York $10,000,000
-93-
ANNEX B
PRICING GRID
The Applicable Margins shall be adjusted on a monthly basis after the delivery
of the second monthly Borrowing Base Certificate following the Closing Date,
based on average daily Excess Availability determined for the most recent month
for which a Borrowing Base Certificate has been delivered, with each such
adjustment to become effective on the date (the "ADJUSTMENT DATE") that is three
Business Days after the date on which the relevant Borrowing Base Certificate is
delivered to the Lenders pursuant to Section 6.2(h) and to remain in effect
until the next adjustment is effected.
The Applicable Margins effective on each Adjustment Date shall be determined in
accordance with the pricing grid set forth below:
PRICING EXCESS APPLICABLE MARGIN APPLICABLE MARGIN
LEVEL AVAILABILITY FOR EURODOLLAR LOANS FOR BASE RATE LOANS
----- ------------------- -------------------- -------------------
I < $25,000,000 1.75% 0.75%
II = $25,000,000 but < $50,000,000 1.50% 0.50%
III = $50,000,000 1.25% 0.25%
All rates are per annum rates.
For this purpose, "Excess Availability" means the difference, on the date of
determination, between (a) the lesser of (i) the aggregate Revolving Commitments
on such date and (ii) the average daily Borrowing Base determined for the most
recent month and (b) the average daily Revolving Extensions of Credit
outstanding for the most recent month but Excess Availability shall be -0- if
such difference is a negative number or if the conditions set forth in Section
5.2 are not satisfied on such date.
If any Borrowing Base Certificate referred to above is not delivered within the
time periods specified in Section 6.2(h), then until the date that is five
Business Days after the date on which such Borrowing Base Certificate is
delivered the highest rate set forth in each column of the pricing grid shall
apply. At all times after maturity or acceleration of the maturity of the Loans
or the delivery of notice to the Borrower by any Agent or Lender that an Event
of Default has occurred and is continuing or occurrence of any Event of Default
specified in Section 8(f) (until such time, if any, as such Event of Default may
be cured or waived), the highest rate set forth in each column of the pricing
grid shall apply.
-94-
SCHEDULE 1.1(M)
MORTGAGED PROPERTY
Del Laboratories, Inc.
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxx Xxxxxxxx 00000
SCHEDULE 1.1(S)
EXISTING HEDGE AGREEMENTS
NONE
SCHEDULE 2.7(B)
EXISTING LETTERS OF CREDIT
NONE
SCHEDULE 4.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
NONE
SCHEDULE 4.9
EXCEPTIONS TO INTELLECTUAL PROPERTY RIGHTS
NONE
SCHEDULE 4.15
SUBSIDIARIES
----------------------------------------------------------------------------------------------------------
SUBSIDIARIES JURISDICTION OF OWNERSHIP PERCENTAGE
ORGANIZATION
----------------------------------------------------------------------------------------------------------
Del Pharmaceuticals, Inc. Delaware 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
DLI International Holding I Corp. Delaware 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
DLI International Holding II Corp. Delaware 100% by Del Pharmaceuticals, Inc.
----------------------------------------------------------------------------------------------------------
Del Professional Products, Inc. Delaware 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
Royce & Xxxxx, Inc. Delaware 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
000 Xxxxx Xxxxxx Xxxxxx Xxxx. Xxx Xxxx 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
Parfums Schiaparelli, Inc. New York 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx, Inc. New York 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
Del International, Inc. New York 100% by Del Laboratories, Inc.
----------------------------------------------------------------------------------------------------------
Del Laboratories (Canada), Inc. Canada 100% by DLI International Holding I
Corp.
----------------------------------------------------------------------------------------------------------
Del Pharmaceutics (Canada), Inc. Canada 100% by DLI International Holding II
Corp.
----------------------------------------------------------------------------------------------------------
Laboratorios Del de Mexico, S.A., de C.V. Mexico 99% by Del Laboratories, Inc. and 1%
by Del Pharmaceuticals, Inc.
----------------------------------------------------------------------------------------------------------
Del Pharmaceuticals Limited United Kingdom 100% by DLI International Holding II
Corp.
----------------------------------------------------------------------------------------------------------
Del Laboratories U.K. Limited United Kingdom 100% by DLI International Holding I
Corp.
----------------------------------------------------------------------------------------------------------
SCHEDULE 6.14
POST CLOSING OBLIGATIONS
NONE
SCHEDULE 7.2(D)
EXISTING INDEBTEDNESS
1. Canadian mortgage loan owed to CIBC Mortgages, Inc. maturing April 1,
2009, as extended and amended on April 2, 2004, in the unpaid principal
amount of Cdn$1,462,871.00.
2. Capital lease for Pitney Xxxxx Mailing Machine in the amount of
$168,802.04.
3. Capital lease for CNC Milling Machine in the amount of $37,558.20.
4. Promissory Note in the principal amount of US$6,429,800.48 dated December
31, 2003 from Del Laboratories (Canada) Inc. to Del Laboratories, Inc.,
bearing interest at 3.55% per annum, payable quarterly.
SCHEDULE 7.3(I)
EXISTING LIENS
1. Mortgage filed against real property owned by Del Laboratories (Canada)
Inc. located at 000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxx, Xxxxxx, which secures
the Mortgage Loan in favor of CIBC Mortgages Inc. described in Item 1 of
Schedule 8.2(d) hereto.
2. UCC-1's filed in favor of the two companies leasing the capital equipment
described in Items 2 and 3 of Schedule 8.2(d) hereto.
3. All Liens set forth in that certain Title Commitment No. 05W10235 issued
by Old Republic National Title Insurance Company on December 15, 2005.
4. Liens under the Existing Credit Agreement, which Existing Credit Agreement
are to be repaid on the Closing Date.
5. Liens identified below:
-----------------------------------------------------------------------------------------------------------------------------
DEBTOR NAME SEARCH JURISDICTION SECURED PARTY FILE NO./DATE COLLATERAL
-----------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Bank Financial, F.S.B. 5086362 - Assignment Leased Equipment
of State (03/18/05)
40713356 - Initial
(3/15/2004)
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Bank Financial, F.S.B. 50183773 Specified Leased
of State (01/17/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Citicorp Vendor Finance, Inc. 50383084 Specified Leased
of State (02/03/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary JTA Leasing Co. LLC 50860016 Specified Leased
of State (03/18/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Bank Financial, F.S. B. 50865395 Specified Leased
of State (03/18/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Bank Financial, F.S. B. 50865627 Specified Leased
of State (03/18/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Xxxxxxx Leasing Corporation 52431139 Specified Leased
of State (08/03/2005) Electronic Equipment
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. North Carolina BB&T Leasing Corporation 20050001368 Specified Equipment
Secretary of State (01/05/2005)
------------------------------------------------------------------------------------------------------------------------------
Del Laboratories, Inc. Delaware Secretary Toyota Motor Credit 5366491- Amendment Specified Leased
of State Corporation (11/29/05) Equipment
5362095 - Initial
(11/22/05))
------------------------------------------------------------------------------------------------------------------------------
SCHEDULE 7.5(G)
SCHEDULED DISPOSITIONS
1. Xxxxxxxxx Xxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxx
2. Xxxxxx Xxxxx Xxxxxxxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxx
0. 000 Xx. 00xx Xxxxxx, Xxxxxx, Xxx Xxxxxx
4. 000 Xx. 00xx Xxxxxx, Xxxxxx, Xxx Xxxxxx
5. 000 Xx. 00xx Xxxxxx, Xxxxxx, Xxx Xxxxxx
SCHEDULE 7.8(E)
EXISTING INVESTMENTS
Promissory Note in the principal amount of US$6,429,800.48 dated December 31,
2003 from Del Laboratories (Canada) Inc. to Del Laboratories, Inc., bearing
interest at 3.55% per annum, payable quarterly.
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered to you pursuant to
Section 6.2(b) of the Credit Agreement, dated as of December 29, 2005 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among DLI Holding II Corp., a Delaware corporation ("HOLDINGS"),
Del Laboratories, Inc., a Delaware corporation (the "BORROWER"), the several
banks and other financial institutions or entities from time to time parties to
the Credit Agreement (the "LENDERS"), X.X. Xxxxxx Securities, Inc. as sole lead
arranger and sole bookrunner (in such capacities, the "ARRANGER"), and JPMorgan
Chase Bank, N.A., as Administrative Agent. Terms defined in the Credit Agreement
and not otherwise defined herein are used herein with the meanings so defined.
The undersigned, in his capacity as an officer of the Borrower, and not in his
individual capacity, certifies as follows:
1. I am the duly elected, qualified and acting Chief Financial
Officer of the Borrower.
2. I have reviewed and am familiar with the contents of this
Certificate.
3. I have reviewed the terms of the Credit Agreement and the
other Loan Documents and have made or caused to be made under my supervision, a
review in reasonable detail of the transactions and condition of the Borrower
during the accounting period covered by the financial statements attached hereto
as ATTACHMENT 1 (the "FINANCIAL STATEMENTS"). Such review did not disclose the
existence during or at the end of the accounting period covered by the Financial
Statements, and I have no knowledge of the existence, as of the date of this
Certificate, of any condition or event which constitutes a Default or Event of
Default.
4. Attached hereto as ATTACHMENT 2 are the computations
showing compliance with the covenants set forth in Sections 7.1 and 7.7 of the
Credit Agreement.
IN WITNESS WHEREOF, I execute this Certificate on behalf of
the Borrower this [__] day of
[_____], 20[ ].
DEL LABORATORIES, INC.
By:
-----------------------------------
Name:
Title:
B-1
ATTACHMENT 1
TO
EXHIBIT B
[Financial statements]
B-2
ATTACHMENT 2
TO
EXHIBIT B
The information described herein is as of ______, 20__,
and pertains to the period from _________, 20__ to ________________, 20__.
1. CONSOLIDATED FIXED CHARGE COVERAGE RATIO(1)* (SECTION 7.1)
The ratio of
(i) Consolidated EBITDA for such period $______________
To
(ii) Consolidated Fixed Charges for such period $______________
Ratio: _______________
(must not be less than 1:1) _______________
3. CAPITAL EXPENDITURES (SECTION 7.7)
Total Capital Expenditures of the Borrower and its Subsidiaries
from ___ to ___: $______________
(must not be greater than (a) $23,000,000 in each fiscal year
ending December 31, 2005 and December 31, 2006 and (b) $30,000,000
in any fiscal year thereafter; PROVIDED, that (i) up to 100% of
any amount permitted but not expended in any fiscal year may be
carried over for expenditure in the next succeeding fiscal year
(it being understood that no portion of such carried over amount
for any fiscal year may be used until the entire amount of
permitted Capital Expenditures for such fiscal year has been used
for Capital Expenditures), and (ii) Capital Expenditures made with
the proceeds of any asset sales will not be subject to the
foregoing restriction. $______________
----------------
(1) Compliance with this covenant will be required only if, and on each
occasion when, Excess Availability is less than $10,000,000 on any day
after the Closing Date and thereafter will be required until Excess
Availability has been at least $10,000,000 on each day for a period of 30
consecutive days.
B-3
CALCULATIONS
1. CONSOLIDATED EBITDA $______________
CONSOLIDATED FIXED CHARGES $______________
B-4
EXHIBIT C
FORM OF CLOSING CERTIFICATE
Pursuant to subsection 5.1(e) of the Credit Agreement dated as
of December 29, 2005 (the "CREDIT AGREEMENT"; terms defined therein being used
herein as therein defined), among DLI Holding II Corp., a Delaware corporation
("HOLDINGS"), Del Laboratories, Inc., a Delaware corporation (the "BORROWER"),
the several banks and other financial institutions or entities from time to time
parties to this Agreement (the "LENDERS"), X.X. Xxxxxx Securities Inc. as sole
lead arranger and sole bookrunner (in such capacities, the "ARRANGER") and
JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT"), the undersigned [INSERT TITLE OF OFFICER] of [INSERT
NAME OF COMPANY] (the "COMPANY") in his capacity as such and not in his
individual capacity, hereby certifies on behalf of the Company as follows:
1. The representations and warranties of the Company set forth
in each of the Loan Documents to which it is a party or which are contained in
any certificate furnished by or on behalf of the Company pursuant to any of the
Loan Documents to which it is a party are true and correct in all material
respects on and as of the date hereof with the same effect as if made on the
date hereof, except for representations and warranties expressly stated to
relate to a specific earlier date, in which case such representations and
warranties were true and correct in all material respects as of such earlier
date.
2. [ ] is the duly elected and qualified Corporate Secretary
of the Company and the signature set forth for such officer below is such
officer's true and genuine signature.
IN WITNESS WHEREOF, the undersigned has hereunto set his name
as of the date set forth below.
-------------------------------------
Name:
Title:
Date: December 29, 2005
C-1
The undersigned Corporate Secretary of the Company certifies
as follows:
1. There are no liquidation or dissolution proceedings pending
or to my knowledge threatened against the Company, nor has any other event
occurred adversely affecting or threatening the continued corporate existence of
the Company.
2. Attached hereto as ANNEX 1 is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Company on [ ]; such
resolutions have not in any way been amended, modified, revoked or rescinded,
have been in full force and effect since their adoption to and including the
date hereof and are now in full force and effect and are the only corporate
proceedings of the Company now in force relating to or affecting the matters
referred to therein.
3. Attached hereto as ANNEX 2 is a true and complete copy of
the By-Laws of the Company as in effect on the date hereof.
4. Attached hereto as ANNEX 3 is a true and complete copy of
the Certificate of Incorporation of the Company as in effect on the date hereof,
and such certificate has not been amended, repealed, modified or restated since
[ ].
5. The following persons are now duly elected and qualified
officers of the Company holding the offices indicated next to their respective
names below, and such officers have held such offices with the Company at all
times since the date indicated next to their respective titles to and including
the date hereof, and the signatures appearing opposite their respective names
below are the true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the Company each
of the Loan Documents to which it is a party and any certificate or other
document to be delivered by the Company pursuant to the Loan Documents to which
it is a party:
NAME OFFICE DATE SIGNATURE
IN WITNESS WHEREOF, the undersigned has hereunto set his name
as of the date set forth below.
--------------------------------------
Name:
Title: Secretary
Date: December [ ], 2005
C-2
ANNEX 1
[Board Resolutions]
C-3
ANNEX 2
[By-laws]
C-4
ANNEX 3
[Certificate of Incorporation]
C-5
EXHIBIT E
FORM OF
ASSIGNMENT AND ASSUMPTION
Reference is made to the Credit Agreement, dated as of
December 29, 2005 (the "CREDIT Agreement"), among DLI Holding II Corp., a
Delaware corporation ("HOLDINGS"), Del Laboratories, Inc., a Delaware
corporation (the "BORROWER"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "LENDERS"), X.X.
Xxxxxx Securities Inc., as sole lead arranger and sole bookrunner (in such
capacities, the "ARRANGER"), and JPMorgan Chase Bank, N.A., as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT"). Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
1. The Assignor identified on Schedule l hereto (the
"ASSIGNOR") and the Assignee identified on Schedule l hereto (the "ASSIGNEE")
agree as follows:
2. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest described in Schedule 1
hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and obligations
under the Credit Agreement and the other Loan Documents with respect to those
credit facilities contained in the Credit Agreement as are set forth on Schedule
1 hereto (individually, an "ASSIGNED FACILITY"; collectively, the "ASSIGNED
FACILITIES"), in a principal amount for each Assigned Facility as set forth on
Schedule 1 hereto.
3. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Subsidiaries or
any other obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes,
if any, for a new Note or Notes payable to the Assignee and (ii) if the Assignor
has retained any interest in the Assigned Facility, requests that the
Administrative Agent exchange the attached Notes, if any, for a new Note or
Notes payable to the Assignor, in each case in amounts which reflect the
assignment being made hereby (and after giving effect to any other assignments
which have become effective on the Effective Date).
4. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Assumption; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 6.1 thereof and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption; (c) agrees that it will,
independently and without reliance upon the Assignor, the Agents or any other
Lender and based on such documents and information as it shall deem appropriate
E-1
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (d) appoints and
authorizes the Agents to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Agents by the terms thereof, together with such powers as are
incidental thereto; and (e) agrees that it will be bound by the provisions of
the Credit Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to subsection
3.10(d) of the Credit Agreement.
5. The effective date of this Assignment and Assumption shall
be the Effective Date of Assignment described in Schedule 1 hereto (the
"EFFECTIVE DATE"). Following the execution of this Assignment and Assumption, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 10.6 of the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date.
7. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Assumption, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Assumption, relinquish its rights and be released from its
obligations under the Credit Agreement.
This Assignment and Assumption shall be governed by and construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Assumption to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
E-2
Schedule 1
to Assignment and Assumption
Name of Assignor: _______________________
Name of Assignee: _______________________
Effective Date of Assignment: _________________
Credit Principal Commitment Percentage
Facility Assigned Amount Assigned Assigned(1)
$------- ---.-------%
--------------------------------------------------------------------------------
[Name of Assignee] [Name of Assignor]
By: By:
---------------------------- -----------------------
Title: Title:
------------------------- -----------------------
--------------------
(1) Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
E-3
Accepted: [Consented To:
JPMORGAN CHASE BANK, N.A., [DEL LABORATORIES, INC.
as Administrative Agent
By: _________________________________ By: ______________________________
Title: Title: ]
[JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
By: _______________________________
Title: ]
E-4
December __, 2005
JPMorgan Chase Bank, N.A., as
Administrative Agent under the
Credit Agreement referred to below
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Each of the Lenders named in Schedule I
attached hereto that are parties to the
Credit Agreement referred to below
DEL LABORATORIES, INC.
Ladies and Gentlemen:
We have acted as special New York counsel to (I) DLI Holding II Corp., a
Delaware corporation ("Holdings"), (II) Del Laboratories, Inc., a Delaware
corporation (the "Company") and (III) each of the Subsidiary Parties referred to
below, in connection with the preparation, and execution and delivery today, (A)
the Credit Agreement, dated as of December __, 2005 (the "Credit Agreement"),
among Holdings, the Company, the several banks and other financial institutions
parties thereto (collectively, the "Lenders"), X.X. Xxxxxx Securities, Inc., as
sole lead arranger and sole bookrunner, and JPMorgan Chase Bank, N.A., as
administrative agent (in such capacity, the "Administrative Agent"), (B) the
Notes issued on and dated December __, 2005 (collectively, the "Notes") and (C)
the agreements to which Holdings, the Company or any Subsidiary Party is today a
party that are listed in Schedule II hereto (together with the Credit Agreement
and the Notes, the "Loan Documents").
The opinions expressed below are furnished to you pursuant to Section
5.1(f)(i) of the Credit Agreement. Unless otherwise defined herein, terms
defined in or defined by reference in the Credit Agreement and used herein shall
have the meanings assigned thereto in the Credit Agreement. The term "Investment
Company Act" means the Investment Company Act of 1940, as amended. The term
"Loan Parties" means Holdings, the Borrower and the Subsidiary Parties. The term
"Material Adverse Effect" means a material adverse effect on the business,
operations, property or condition (financial or otherwise) of Holdings and its
Subsidiaries taken as a whole. The term "Obligations" has the meaning specified
therefor in the Guarantee and Collateral Agreement. The term "Pledged Stock"
means those shares of Pledged Stock of the domestic Subsidiaries constituting
"certificated securities" (as defined in Section 8-102 of the UCC) that are
delivered to the Administrative Agent in certificated form on the date hereof.
The term "New York Subsidiary Parties" means the collective reference to the
following Subsidiaries of the Company: 000 Xxxxx Xxxxxx Xxxxxx Xxxx., x Xxx Xxxx
corporation; and Parfums Schiaparelli, Inc., a New York corporation. The term
"Secured Parties" has the meaning specified therefor in the Guarantee and
Collateral Agreement. The term "Subsidiary Parties" means the collective
reference to the New York Subsidiary Parties and the following Subsidiaries of
the Borrower: Del Pharmaceuticals, Inc., a Delaware corporation; Del
Professional Products, Inc., a Delaware corporation; and Royce & Xxxxx, Inc., a
Delaware corporation. The term "UCC" means the Uniform Commercial Code as in
effect in the State of New York on the date hereof.
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 2 December __, 2005
In arriving at the opinions expressed below,
(a) we have examined and relied on the originals, or copies certified or
otherwise identified to our satisfaction, of the Loan Documents,
(b) we have examined and relied on unfiled copies of the financing
statements on Form UCC-1 attached hereto as Exhibit A (collectively, the
"Financing Statements") naming each of the New York Subsidiary Parties as the
respective debtor and the Administrative Agent as secured party, setting forth
the respective correct addresses of such debtor and the Administrative Agent,
indicating whether such debtor is an organization or an individual and the
jurisdiction of organization of such debtor, and describing certain collateral
as to which security interests are intended to be perfected by filing under the
UCC, which we understand will be filed in the office of the Secretary of State
of the State of New York (the "Filing Office"),
(c) we have examined and relied on such corporate documents and records of
Holdings and its Subsidiaries and such other instruments and certificates of
public officials, officers and representatives of Holdings and its Subsidiaries
and other Persons as we have deemed necessary or appropriate for the purposes of
this opinion,
(d) we have examined and relied as to factual matters upon, and have
assumed the accuracy of, the representations and warranties contained in or made
pursuant to the Loan Documents, and
(e) we have made such investigations of law as we have deemed appropriate
as a basis for this opinion.
In rendering the opinions expressed below, we have assumed, with your
permission, without independent investigation or inquiry, (A) the authenticity
of all documents submitted to us as originals, (B) the genuineness of all
signatures on all documents that we examined, (C) the conformity to authentic
originals of documents submitted to us as certified, conformed or photostatic
copies, (D) the due authorization, execution and delivery of each of the Loan
Documents by each party thereto (other than Holdings), (E) the enforceability of
each Loan Document against each party thereto (other than the Loan Parties), (F)
the valid existence and good standing of each Loan Party (other than Holdings),
(G) the corporate or other power and authority of each Loan Party to enter into
and perform its obligations under the Loan Documents (other than Holdings) and
(H) the accuracy of the separate opinion, addressed to you, dated today, of
Xxxxx X. Xxxxx, Esq., Vice President, General Counsel and Secretary to certain
of the Loan Parties.
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 3 December __, 2005
Based upon and subject to the foregoing and the assumptions,
qualifications and limitations hereinafter set forth, we are of the opinion
that:
1. Holdings is validly existing and in good standing under the laws of the
State of Delaware.
2. Holdings has the corporate power and authority to execute, deliver and
perform its obligations under each of the Loan Documents to which it is a party.
3. Holdings has taken all necessary corporate action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party.
4. (a) Each of the Credit Agreement, the Notes and the other Loan
Documents to which the Company is a party constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
(b) Each of the Loan Documents to which Holdings is a party has been duly
executed and delivered on behalf of Holdings, and constitutes a valid and
binding obligation of Holdings enforceable against Holdings in accordance with
its terms.
(c) Each of the Loan Documents to which any Subsidiary Party is a party
constitutes a valid and binding obligation of such Subsidiary Party, enforceable
against such Subsidiary Party in accordance with its terms.
5. Except for (1) any consents, authorizations, approvals, notices and
filings that have been obtained or made and are in full force and effect, (2)
filings in the United States Patent and Trademark Office, the United States
Copyright Office, and in appropriate offices under any applicable state
trademark laws, (3) filings to perfect the security interests created by the
Guarantee and Collateral Agreement, (4) mortgage filings in connection with any
of the Loan Documents, (5) filings or consents required to create or perfect any
Lien on Collateral constituting mobile goods covered by a certificate of title
and (6) those consents, authorizations, filings and other acts that,
individually or in the aggregate, if not made, obtained or done, would not
reasonably be expected to have a Material Adverse Effect, no consent or
authorization of, approval by, notice to, or filing with, any federal or New
York State governmental authority is required under federal or New York State
law to be obtained or made on or prior to the date hereof by Holdings in
connection with the execution and delivery of, or performance of its obligations
under, the Loan Documents to which it is a party or in connection with the
validity or enforceability against it of the Loan Documents to which it is a
party.
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 4 December __, 2005
6. The execution and delivery by Holdings of the Loan Documents to which
it is a party and the grant by Holdings on the Closing Date of security
interests in the Article 9 Collateral and the Pledged Stock owned by Holdings
pursuant to the Guarantee and Collateral Agreement will not violate (I) the
certificate of incorporation and by-laws of Holdings, (II) any existing federal
or New York State law, rule or regulation applicable to Holdings or (iii) any
contract listed in Schedule III hereto to which Holdings is a party, except, in
the case of clauses (ii) and (iii), for such violations that, to our knowledge,
would not have a Material Adverse Effect.
7. (a) The Guarantee and Collateral Agreement is effective to create a
valid security interest in favor of the Administrative Agent, for the benefit of
the Secured Parties (as defined therein), as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), in all of the collateral
described therein that is of the type in which a security interest can be
created under Article 9 of the UCC (the "Article 9 Collateral"), to the extent
the UCC is applicable to the creation of such security interest.
(b) Upon the delivery of the Article 9 Collateral in which a security
interest may be perfected by possession pursuant to the UCC to (and provided
that the same remains in the possession of) the Administrative Agent in the
State of New York, the Administrative Agent, for the benefit of the Secured
Parties, will have a perfected security interest in such Article 9 Collateral.
(c) Upon the proper filing of the Financing Statements in the Filing
Office, the Administrative Agent will have a perfected security interest, for
the benefit of the Secured Parties, in all of the right, title and interest of
each New York Subsidiary Party in and to such Article 9 Collateral (excluding
fixtures as defined in the UCC), to the extent perfection may be accomplished by
the filing of financing statements in the Filing Office under the UCC.
(d) Upon delivery of the Pledged Stock (in certificated form) either in
bearer form or registered form (issued or endorsed in each case in the name of
the Administrative Agent or in blank) to (and retention of control (within the
meaning of Section 8-106 of the UCC) thereof by) the Administrative Agent in the
State of New York, the Administrative Agent will have a perfected security
interest therein, to the extent the UCC is applicable to the perfection of such
security interest.
8. The Company is not (A) an "investment company" within the meaning of
and subject to regulation under the Investment Company Act, or (B) a "holding
company" as defined in, or otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
* * *
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 5 December __, 2005
Our opinions set forth above are subject to the effects of (I) bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization and
moratorium laws and other similar laws relating to or affecting creditors'
rights or remedies generally, (II) general equitable principles (whether
considered in a proceeding in equity or at law), (III) an implied covenant of
good faith, reasonableness and fair dealing, and concepts of materiality and
(IV) limitations on the enforceability of indemnification, contribution or
exculpation under applicable law (including court decisions) or public policy.
In addition, applicable laws and interpretations may affect the validity or
enforceability of certain provisions of the Loan Documents, but such limitations
do not, in our opinion, make the remedies provided for therein inadequate for
the practical realization of the principal benefits intended to be provided
thereby (subject to the other qualifications expressed herein).
Without limiting the foregoing, we express no opinion as to the validity,
binding effect or enforceability of any provision of any Loan Document that
purports to (I) prohibit any Loan Party from transferring its respective rights
in the collateral described in the Loan Documents or any proceeds thereof, as
contemplated by Section 9-401 of the UCC, (II) permit the Administrative Agent
to vote or otherwise exercise any rights with respect to any of the collateral
under the Loan Documents absent compliance with the requirements of applicable
laws and regulations as to the voting of or other exercise of rights with
respect to such collateral, (III) waive, release or vary any defense, right or
privilege of, or any duties owing to, any Loan Party to the extent that such
waiver, release or variation may be limited by Section 1-102(3), 9-602 or 9-603
of the UCC or other provisions of applicable law, (IV) grant a right to collect
any amount that a court determines to constitute unearned interest, (V) grant
any right of set-off with respect to any contingent or unmatured obligation,
(VI) maintain or impose any obligation to pay any amount in U.S. dollars where a
final judgment concerning such obligation is rendered in another currency, (VII)
constitute a waiver of inconvenient forum or improper venue or (VIII) relate to
the subject matter jurisdiction of a court to adjudicate any controversy.
We express no opinion as to the creation, validity or perfection of any
security interest, or the validity, binding effect or enforceability of any Loan
Document, to the extent that such Loan Document grants or purports to grant (A)
a security interest (I) that is not governed by the UCC (including but not
limited to any such security interest with respect to (A) copyrights, copyright
licenses, patents, patent licenses, trademarks and trademark licenses or (B)
insurance policies), (II) in commercial tort claims, letter-of-credit rights,
fixtures, cooperative interests, farm products, as-extracted collateral or
timber to be cut, (III) in any property the terms of or governing which void or
prohibit, or are violated by, the granting of such security interest or (IV) in
any claim against the United States, (B) a mortgage or other interest in real
property or (c) an agricultural lien. Our opinions set forth in paragraph 7
above are limited to Articles 8 and 9 of the UCC and therefore do not address
(I) laws of jurisdictions other than the State of New York, (II) laws of the
State of New York other than Articles 8 and 9 of the UCC or (III) collateral of
a type not subject to Article 9 of the UCC. We express no opinion as to what law
governs perfection of any security interest granted by the Loan Documents. We
have assumed with your permission that (I) none of the Secured Parties has
waived, subordinated or agreed with any third party to any modification of the
perfection or priority of any security interest granted by the Loan Documents,
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 6 December __, 2005
(II) the Pledged Stock and all collateral under the Loan Documents in which a
security interest may be perfected only by possession will be held at all times
by the Administrative Agent in the State of New York and (III) each Loan Party
has sufficient rights in the collateral described in the Loan Documents for the
security interests granted thereby to attach. We express no opinion as to the
title or any other interest of any Loan Party in or to any of the collateral
described in the Loan Documents. No security interest will exist with respect to
after-acquired property of any Loan Party until such Loan Party has rights
therein within the meaning of Section 9-203 of the UCC. We call to your
attention that Section 9-108 of the UCC provides that a description of
collateral as "all the debtor's personal property" or words of similar import is
not a sufficient description of collateral, and we express no opinion as to the
enforceability of the Guarantee and Collateral Agreement or the enforceability
or validity of the security interest purported to be created thereby insofar as
they purport to create a security interest in all personal property of any Loan
Party.
Except as set forth in paragraph 7 above, we express no opinion as to the
validity or perfection of the security interests purported to be created by the
Loan Documents. We express no opinion as to the validity, perfection or priority
of such security interests:
(i) with respect to collateral sold, exchanged or otherwise disposed
of by any Loan Party;
(ii) to the extent such security interests may be affected by (X)
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, under which a bankruptcy
court has discretion as to the extent to which post-petition proceeds may
be subject to a lien arising from a security agreement entered into by the
debtor before the commencement of the case, or (Y) Section 547(b) of the
United States Bankruptcy Code, relating to the power to avoid a
preference;
(iii) with respect to proceeds, to the extent of limitations under
Section 9-315 of the UCC on the perfection of a security interest in
proceeds;
(iv) as to any collateral acquired by the party granting such
security interest more than four months after such party changes its name
so as to make the relevant financing statements seriously misleading,
unless amendments to such financing statements indicating the new name of
such party are properly filed before the expiration of such four months;
(v) as to any collateral acquired by any Loan Party following any
change in the jurisdiction of organization (within the meaning of Section
9-102(a)(50) of the UCC) of such Loan Party unless a new financing
statement is properly filed in the applicable new jurisdiction within the
time specified in Section 9-316 of the UCC;
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 7 December __, 2005
(vi) as to any property subject to a statute, regulation or treaty
of the United States, whose requirements for a security interest's
obtaining priority over the rights of a lien creditor with respect to such
property preempt Section 9-310(a) of the UCC;
(vii) as to any goods that are an accession to, or commingled or
processed with, other goods, to the extent limited by Section 9-335 or
9-336 of the UCC; or
(viii) as to goods of any kind, such as motor vehicles, subject to
certificate of title statutes.
We call to your attention that (A) the UCC requires periodic filing of
continuation statements in order to maintain the effectiveness of financing
statements filed pursuant thereto, (B) Section 8-107 of the UCC may in certain
circumstances limit the rights of a secured party in respect of any unauthorized
endorsement with respect to certificated securities constituting collateral
under the Loan Documents not registered in the name of or issued to the
Administrative Agent and not originally issued in bearer form, (C) under certain
circumstances Section 9-408 of the UCC limits the enforcement of security
interests in promissory notes, health-care-insurance receivables and general
intangibles and (D) the perfection of the security interests granted by the Loan
Documents may be limited by (I) rights under Article 2 of the UCC of a seller of
goods as to which the debtor does not yet have possession, (II) the right of
reservation of a seller of goods under Section 2-505 of the UCC, (III) the right
of reclamation of a seller of goods on credit under Section 2-702 of the UCC,
(IV) rights of buyers and lessees in the ordinary course to take goods free of
such security interests to the extent provided in Sections 9-320 and 9-321 of
the UCC, (V) rights of licensees in the ordinary course of business to license
general intangibles free of such security interest to the extent provided in
Section 9-321 of the UCC and (vi) rights of a purchaser of chattel paper and
instruments to claim priority over such security interests to the extent
provided in Section 9-330 of the UCC.
We express no opinion as to the priority of the security interests
purported to be created by the Loan Documents. Without limiting the foregoing,
we express no opinion as to the priority of any security interest (i) as against
any claims or liens in favor of the United States or any state thereof, or any
federal or state agency, instrumentality or political subdivision, including but
not limited to liens for payment of federal, state or local taxes that are given
priority by operation of law, liens under Title IV of the Employee Retirement
Security Act of 1974, as amended, or claims arising under 31 U.S.C. ss. 3713,
(II) as against any rights of a person in possession of proceeds consisting of
money or "instruments" (as defined in Section 9-102(a)(47) of the UCC), (III) as
against liens under Section 4-208 of the UCC, relating to security interests of
a collecting bank, (IV) as against liens granted under Section 364(d) of the
United States Bankruptcy Code, relating to liens granted by a court after the
commencement of a case or (V) that has been perfected by "control" under Section
8-106, 9-104, 9-105, 9-106 or 9-107 of the UCC, as against any other security
interest in the same property that has also been perfected by "control."
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 8 December __, 2005
We express no opinion as to the effect of, or compliance with, any federal
or state laws regarding fraudulent transfers or fraudulent conveyances or laws
governing preferential transfers, or provisions of state law restricting
dividends, loans or other distributions by a corporation to or for the benefit
of its stockholders, or any federal or state securities laws, rules or
regulations, including without limitation as to the effect thereof on the
validity, binding effect or enforceability of any of the Loan Documents.
We express no opinion as to the laws of any jurisdiction other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the Federal laws of the United States of America, in each case that
in our experience are generally applicable to transactions of this type. In
particular (and without limiting the generality of the foregoing) we express no
opinion as to (A) the laws of any country (other than the Federal laws of the
United States of America) or (B) the effect of such laws (whether limiting,
prohibitive or otherwise) on any of the rights or obligations of any Loan Party
or of any other party to or beneficiary of any of the Loan Documents. We have
assumed, with your permission, that the execution and delivery of each of the
Loan Documents by each of the parties thereto and the performance of their
respective obligations thereunder will not be illegal or unenforceable or
violate any fundamental public policy under, and that no such party has entered
therein with the intent of avoiding or a view to violating, applicable law
(other than the laws of the State of New York and Federal laws of the United
States of America). In giving the foregoing opinion, we express no opinion as to
the effect (if any) of any law of any jurisdiction (except the State of New
York) in which any Lender is located that limits the rate of interest that such
Lender may charge or collect.
* * *
The opinions expressed herein are solely for your benefit and, without our
prior consent, neither our opinions nor this opinion letter may be disclosed to
or relied upon by any other person (other than the persons that become Lenders
within 14 days of the date of this opinion letter).
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 9 December __, 2005
This opinion letter is limited to the matters stated and no opinion is
implied or may be inferred beyond the matters expressly stated herein. The
opinions expressed herein are rendered only as of the date hereof, and we assume
no responsibility to advise you of facts, circumstances, events or developments
which hereafter may be brought to our attention and which may alter, affect or
modify the opinions expressed herein.
Very truly yours,
Schedule I
LENDERS
JPMorgan Chase Bank, N.A
Israel Discount Bank of New York
UBS Loan Finance LLC
Schedule II
OTHER LOAN DOCUMENTS
1. Guarantee and Collateral Agreement, dated as of December __, 2005, among
Holdings, the Company, each of the Subsidiary Parties and the Administrative
Agent.
Schedule III
CONTRACTS
1. Indenture, dated as of October 28, 2005, among the Company, each of the
Subsidiaries Parties and Xxxxx Fargo Bank, National Association, with respect to
the Senior Secured Floating Rate Notes due 2011 of the Company.
Exhibit A
FINANCING STATEMENTS
December __, 2005
JPMorgan Chase Bank, N.A., as
Administrative Agent under the
Credit Agreement referred to below
000 Xxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Each of the Lenders named in Schedule I
attached hereto that are parties
to the Credit Agreement referred
to below
DEL LABORATORIES, INC.
I am Vice President, General Counsel and Secretary of Del Laboratories,
Inc., a Delaware corporation (the "Company"). This opinion is being delivered to
you pursuant to Section 5.1(f)(ii) of the Credit Agreement, dated as of December
__, 2005 (the "Credit Agreement"), among DLI Holding II Corp., a Delaware
corporation ("Holdings"), the Company, the several banks and other financial
institutions parties thereto named on the signature pages thereof (collectively,
the "Lenders"), X.X. Xxxxxx Securities Inc., as sole lead arranger and sole
bookrunner, and JPMorgan Chase Bank, N.A., as administrative agent (in such
capacity, the "Administrative Agent"). Unless otherwise defined herein, terms
defined in or defined by reference in the Credit Agreement and used herein shall
have the meanings assigned thereto in the Credit Agreement. The term "DGCL"
means the General Corporation Law of the State of Delaware. The term "Material
Adverse Effect" means a material adverse effect on the business, operations,
property or condition (financial or otherwise) of Holdings and its Subsidiaries
taken as a whole. The term "Loan Parties" means the collective reference to the
Company and the Subsidiary Parties. The term "Subsidiary Parties" means the
following Subsidiaries of the Company: Del Pharmaceuticals, Inc., a Delaware
corporation; Royce & Xxxxx, Inc., a Delaware corporation; 000 Xxxxx Xxxxxx
Xxxxxx Xxxx., x Xxx Xxxx corporation; Parfums Schiaparelli, Inc., a New York
corporation; and Del Professional Products, Inc., a Delaware corporation.
In arriving at the opinion expressed below,
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 2 December __, 2005
(1) I have examined and relied as to factual matters on the following
(including, but not limited to, the representations and warranties contained
therein):
(a) originals, or copies certified or otherwise identified to my
satisfaction, of the Credit Agreement, any Notes issued pursuant thereto, the
Guarantee and Collateral Agreement and each of the agreements to which any Loan
Party is today a party that are listed in Schedule II hereto (collectively, the
"Loan Documents"),
(b) such corporate documents and records of the Loan Parties and such
other instruments and certificates of public officials, officers and
representatives of the Loan Parties and other Persons as I have deemed necessary
or appropriate for the purposes of this opinion, and
(2) I have made such investigations of law as I have deemed appropriate as
a basis for this opinion.
In rendering the opinion expressed below, I have assumed, with your
permission, without independent investigation or inquiry, (A) the authenticity
of all documents submitted to me as originals, (B) the genuineness of all
signatures (other than those of any Loan Party) and the legal capacity of all
natural persons executing documents, (C) the conformity to authentic originals
of documents submitted to me as certified, conformed or photostatic copies, (D)
the due authorization, execution and delivery of each of the Loan Documents by
each party thereto (other than any Loan Party) and that each Loan Document is
valid, legally binding and enforceable upon each party thereto (other than those
of any Loan Party) and (E) the performance of and compliance with the covenants
and agreements contained in the Credit Agreement by all parties thereto.
Based upon and subject to the foregoing and the qualifications hereinafter
set forth, I am of the opinion that:
1. Each of the Loan Parties (I) is validly existing and in good standing
under the laws of the state of its organization and (II) has the corporate power
and authority, as applicable, to own and operate its respective property, to
lease the property each operates as lessee and to conduct the business in which
each is currently engaged.
2. Each of the Loan Parties has the corporate power and authority to make,
deliver and perform its obligations under each of the Loan Documents to which it
is a party, and in the case of the Company, to borrow on the terms and
conditions of the Credit Agreement. Each of the Loan Parties has taken all
necessary corporate action to authorize the execution, delivery and performance
of each of the Loan Documents to which it is a party, and in the case of the
Company, to authorize its borrowings on the terms and conditions of the Credit
Agreement.
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 3 December __, 2005
3. Each of the Loan Parties has duly executed and delivered each of the
Loan Documents to which it is a party.
4. Except for (A) any consents, authorizations, approvals, notices and
filings that have been obtained or made, (B) filings in the United States Patent
and Trademark Office, the United States Copyright Office, and appropriate
offices under any applicable state trademark laws, (C) filings to perfect the
security interests created by the Guarantee and Collateral Agreement, (D)
mortgage filings related to any of the Loan Documents, (e) filings or consents
required to create or perfect any Lien on Collateral constituting mobile goods
covered by a certificate of title and (F) those consents, authorizations,
approvals, notices and filings that if not made, obtained or done, would not,
have a Material Adverse Effect, no consent or authorization of, approval by,
notice to, or filing with, any United States Federal or New York State court or
governmental authority or body having jurisdiction over any Loan Party or any
Loan Party's respective properties or assets is required under United States
Federal or New York State law to be obtained or made on or prior to the date
hereof by the Company in connection with the borrowings under the Credit
Agreement, or any of the Loan Parties in connection with its execution, delivery
or performance of the Loan Documents to which each is a party, or in connection
with the validity or enforceability against it of the Loan Documents to which it
is a party.
5. The execution and delivery by each of the Loan Parties of each of the
Loan Documents to which it is a party, the borrowing and repayment of the loans
funded on the Closing Date, and the grant on the Closing Date of the collateral
security therefore pursuant to the Guarantee and Collateral Agreement, will not
violate (I) the certificate of incorporation and by-laws of such Loan Party,
(II) to my knowledge, any existing United States Federal or New York State
statute applicable to any Loan Party or any judgment, order, decree, rule or
regulation known to me of any United States Federal or New York court or
governmental agency or body having jurisdiction over any Loan Party or any Loan
Party's properties or assets, or (III) any Contractual Obligation to which such
Loan Party is a party, except, in the case of clauses (ii) and (iii), for such
violations that to my knowledge would not have a Material Adverse Effect.
I am a member of the bar of New York and I express no opinion as to the
laws of any jurisdiction other than the laws of the State of New York, the DGCL
and those federal laws of the United States of America, in each case as
currently in effect and that, in my experience, are generally applicable to
transactions of this type (other than any applicable securities laws, statutes,
rules or regulations, or laws regarding fraudulent transfers or conveyances, as
to which I express no opinion).
The opinions set forth above are subject to the following additional
qualifications and assumptions:
JPMorgan Chase Bank, N.A.
Each of the Lenders
named in Schedule I 4 December __, 2005
In rendering the opinion set forth in paragraph 1 above concerning the
valid existence and good standing of the Loan Parties, I have relied solely on
certificates or oral advice of the Secretary of State of the State of Delaware
or of the State of New York, Corporation Service Company and/or CT Corporation
System.
The opinion expressed herein is solely for your benefit and, without my
prior consent, neither my opinion nor this opinion letter may be disclosed
publicly to or relied upon by any other person (other than the persons that
become Lenders within 14 days of the date of this opinion letter).
This opinion letter is limited to the matters stated and no opinion is
implied or may be inferred beyond the matters expressly stated herein. The
opinions expressed herein are rendered only as of the date hereof, and I assume
no responsibility to advise you of facts, circumstances, events or developments
which hereafter may be brought to my attention and which may alter, affect or
modify the opinions expressed herein.
Very truly yours,
Xxxxx X. Xxxxx, Esq.
LENDERS
JPMorgan Chase Bank, N.A
SCHEDULE II
OTHER LOAN DOCUMENTS
1. Deed of Trust, Assignment of Leases and Rents, Security Agreement, Financing
Statement and Fixture Filing, dated as of December __, 2005, by the Company, as
Grantor, to the Administrative Agent.
2. Intellectual Property Security Agreement, dated as of December __, 2005, by
the Company, Del Pharmaceuticals, Inc., Del Professional Products, Inc. and
Parfums Schiarparelli, Inc. in favor of the Administrative Agent.
December __, 2005
To Each of the Persons Listed
on Schedule A Attached Hereto
Re: DEL LABORATORIES, INC. - UCC OPINION
Ladies and Gentlemen:
We have acted as special Delaware counsel for Del Laboratories,
Inc., a Delaware corporation (the "Parent"), and each of the entities listed on
Schedule B attached hereto (with the Parent, each, a "Grantor" and,
collectively, the "Grantors"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) Each of the documents described on Schedule C hereto
(collectively, the "Certificates");
(b) The Guarantee and Collateral Agreement, dated as of December __,
2005 (the "Agreement"), made by, INTER ALIA, the Grantors, in favor of JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the "Agent") for
the banks, financial institutions and other entities from time to time party as
Lenders to the Credit Agreement (as defined therein);
(c) A separate financing statement on form UCC-1 for each Grantor,
naming such Grantor as debtor and the Agent as secured party, in the forms
attached hereto and marked as Exhibits "A" through "E" (each, a "Financing
Statement" and, collectively, the "Financing Statements"), to be filed with the
Secretary of State of the State of Delaware (the "Secretary of State") (Uniform
Commercial Code Section) (the "Division"); and
(d) A Good Standing Certificate for each Grantor, obtained from the
Secretary of State, dated December 28, 2005.
Initially capitalized terms used herein and not otherwise defined
are used as defined in the Agreement.
To Each of the Persons Listed
on Schedule A Attached Hereto
December 29, 2005
Page 2
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (d) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (d) above) that is referred to in or incorporated by
reference into any document reviewed by us. We have assumed that there exists no
provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed that
(i) all signatures on documents examined by us are genuine, (ii) all documents
submitted to us as originals are authentic, and (iii) all documents submitted to
us as copies conform with the original copies of those documents.
For purposes of this opinion, we have assumed (i) that, except as
set forth on Schedule C attached hereto, none of the Certificates has been
amended and that no such amendment is pending or has been proposed, (ii) that
each Grantor is organized solely under the laws of the State of Delaware, (iii)
that there are no proceedings pending or contemplated for (A) the merger,
consolidation, conversion, dissolution, liquidation or termination of any
Grantor, or (B) any Grantor's transfer to or domestication in any other
jurisdiction, (iv) the due organization, due formation or due creation, as the
case may be, and valid existence in good standing of each party to the documents
examined by us under the laws of the jurisdiction governing its organization,
formation or creation, (v) the legal capacity of natural persons who are
signatories to the documents examined by us, (vi) that each of the parties to
the documents examined by us has the power and authority to execute and deliver,
and to perform its obligations under, such documents, (vii) the due
authorization, execution and delivery by all parties thereto of all documents
examined by us, and (viii) that each of the documents examined by us constitutes
a valid and binding agreement of the parties thereto, and is enforceable against
the parties thereto, in accordance with its terms. We have not participated in
the preparation of any offering material relating to the Grantors and assume no
responsibility for the contents of any such material. In addition, we assume no
responsibility for the filing of the Financing Statements (or any amendments or
continuation statements with respect thereo) with the Division or any other
governmental office or agency.
This opinion is limited to the laws of the State of Delaware
(excluding the insurance, securities and blue sky laws of the State of
Delaware), and we have not considered and express no opinion on the laws of any
other jurisdiction, including federal laws (including federal bankruptcy law)
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder that are
currently in effect.
To Each of the Persons Listed
on Schedule A Attached Hereto
December 29, 2005
Page 3
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. Each of the Financing Statements is in an appropriate form for
filing in the State of Delaware.
2. Insofar as Article 9 of the Uniform Commercial Code as in effect
in the State of Delaware on the date hereof (the "Delaware UCC") is applicable
(without regard to conflict of laws principles), upon the filing of the
Financing Statements with the Division, the Agent will have a perfected security
interest in each Grantor's rights in that portion of the Collateral in which a
security interest may be perfected by the filing of a UCC financing statement
with the Division (the "Filing Collateral") and the proceeds (as defined in
Section 9-102(a)(64) of the Delaware UCC) thereof.
The opinions expressed above are subject to the following additional
assumptions, qualifications, limitations and exceptions:
A. We have assumed that (i) each Grantor has sufficient rights in
the Filing Collateral and has received sufficient value and consideration in
connection with the security interest granted under the Agreement for the
security interest of the Agent to attach, and we express no opinion as to the
nature or extent of any Grantor's rights in, or title to, any portion of the
Filing Collateral, and (ii) the Agreement reasonably identifies the Filing
Collateral. Accordingly, we have assumed that the security interests in the
Filing Collateral and the proceeds (as defined in Section 9-102(a)(64) of the
Delaware UCC) thereof have been duly created and have attached. In addition, we
have assumed (i) that no Grantor has interests in real property located in the
State of Delaware, and (ii) that none of the Filing Collateral consists of
as-extracted collateral located in the State of Delaware or timber to be cut
located in the State of Delaware or fixtures located in the State of Delaware or
goods that are or are to become fixtures located in the State of Delaware.
B. The opinions set forth above are limited to Article 9 of the
Delaware UCC, and therefore such opinions do not address (i) laws of
jurisdictions other than the State of Delaware, and of the State of Delaware
except for Article 9 of the Delaware UCC, (ii) collateral of a type not subject
to Article 9 of the Delaware UCC, and (iii) what law governs perfection of the
security interests granted in the collateral covered by this opinion.
C. We note that further filings under the Delaware UCC may be
necessary to preserve and maintain (to the extent established and perfected by
the filing of the Financing Statements as described herein) the perfection of
the security interests of the Agent in the Filing Collateral, including, without
limitation, the following:
To Each of the Persons Listed
on Schedule A Attached Hereto
December 29, 2005
Page 4
(i) appropriate continuation filings to be made within the
period of six months prior to the expiration of five year anniversary dates from
the date of the original filing of the Financing Statements;
(ii) filings required with respect to proceeds of collateral
under Section 9-315(d) of the Delaware UCC;
(iii) filings required within four months of the change of
name, identity or structure made by or with respect to a Grantor, to the extent
set forth in Sections 9-507 and 9-508 of the Delaware UCC;
(iv) filings required within four months of a change by a
Grantor of its location to another jurisdiction, to the extent set forth in
Sections 9-301 and 9-316 of the Delaware UCC; and
(v) filings required within one year after the transfer of
collateral to a person or entity that becomes a debtor and is located in another
jurisdiction, to the extent set forth in Section 9-316 of the Delaware UCC.
D. We do not express any opinion as to the perfection of any
security interest in any portion of the Collateral in which a security interest
cannot be perfected by filing of a financing statement with the Division. In
addition, no opinion is expressed herein concerning (i) any collateral other
than the Filing Collateral and the proceeds (as defined in Section 9-102(a)(64)
of the Delaware UCC) thereof, (ii) any portion of the Filing Collateral that
constitutes a "commercial tort claim" (as defined in Section 9-102(a)(13) of the
Delaware UCC), (iii) any consumer transaction, or (iv) any security interest in
goods covered by a certificate of title statute. Further, we do not express any
opinion as to the perfection of any security interest in proceeds (as defined in
Section 9-102(a)(64) of the Delaware UCC) of the Filing Collateral, except to
the extent that such proceeds consist of cash proceeds (as defined in Section
9-102(a)(9) of the Delaware UCC) that are identifiable cash proceeds (as
contemplated by Sections 9-315(b) and (d) of the Delaware UCC), subject,
however, to the limitations of Section 9-315 of the Delaware UCC.
E. We do not express any opinion as to the priority of any security
interest.
F. We call to your attention that under the Delaware UCC, actions
taken by a secured party (e.g., releasing or assigning the security interest,
delivering possession of the collateral to the debtor or another person and
voluntarily subordinating a security interest) may affect the validity,
perfection or priority of a security interest.
We understand that you will rely as to matters of Delaware law upon
this opinion in connection with the transactions contemplated by the Agreement.
We further understand that your successors and assigns, any participant of
interests in the loan, any purchaser of the loan or any portion thereof in a
securitization, any issuer of securities in a securitization of the loan
(including, without limitation, any trustee or servicer in connection with a
securitization) and any rating agency may rely as to matters of Delaware law
upon this opinion in connection with the matters set forth herein. In connection
To Each of the Persons Listed
on Schedule A Attached Hereto
December 29, 2005
Page 5
with the foregoing, we hereby consent to your, your successors' and assigns',
any such participant's, any such purchaser's, any such issuer's (including,
without limitation, any trustee or servicer in connection with a securitization)
and any such rating agency's relying as to matters of Delaware law upon this
opinion, subject to the understanding that the opinions rendered herein are
given on the date hereof and such opinions are rendered only with respect to
facts existing on the date hereof and laws, rules and regulations currently in
effect. Except as stated above, without our prior written consent, this opinion
may not be furnished or quoted to, or relied upon by, any other person or entity
for any purpose.
Very truly yours,
CDK/SLM
SCHEDULE A
JPMorgan Chase Bank, N.A., as administrative agent
Each of the Lenders party to the Credit Agreement
Del Laboratories, Inc.
Del Pharmaceuticals, Inc.
DEL PROFESSIONAL PRODUCTS, INC.
ROYCE & XXXXX, INC.
DLI HOLDING II CORP
SCHEDULE B
1. Del Pharmaceuticals, Inc.
2. DEL PROFESSIONAL PRODUCTS, INC.
3. ROYCE & XXXXX, INC.
4. DLI HOLDING II CORP
SCHEDULE C
1. The Certificate of Incorporation of MARADEL PRODUCTS, INC., dated October
20, 1961, as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on October 25, 1961, as amended by the
Certificate of Reduction of Capital of MARADEL PRODUCTS, INC., dated April
24, 1963, as filed in the office of the Secretary of State on May 9, 1963,
as further amended by the Certificate of Amendment of Certificate of
Incorporation of MARADEL PRODUCTS, INC., changing the name of the
corporation to DEL LABORATORIES, INC. dated April 15, 1966, as filed in
the office of the Secretary of State on April 18, 1966, as further amended
by the Certificate of Amendment of Certificate of Incorporation of DEL
LABORATORIES, INC., dated May 15, 1972, as filed in the office of the
Secretary of State on May 23, 1972, as further amended by the Certificate
of Amendment of DEL LABORATORIES, INC., dated June 30, 1977, as filed in
the office of the Secretary of State on July 22, 1977, as further amended
by the Certificate of Amendment of the Certificate of Incorporation of DEL
LABORATORIES, INC., dated June 20, 1984, as filed in the office of the
Secretary of State on July 3, 1984, as further amended by the Certificate
of Amendment of the Certificate of Incorporation of DEL LABORATORIES,
INC., dated July 16, 1985, as filed in the office of the Secretary of
State on July 18, 1985, as further amended by the Certificate of Amendment
of the Certificate of Incorporation of DEL LABORATORIES, INC., dated June
12, 1987, as filed in the office of the Secretary of State on June 22,
1987, as further amended by the Certificate of Amendment of the
Certificate of Incorporation of DEL LABORATORIES, INC., dated May 26,
1994, as filed in the office of the Secretary of State on May 27, 1994, as
further amended by the Certificate of Amendment of the Certificate of
Incorporation of DEL LABORATORIES, INC., dated May 25, 1995, as filed in
the office of the Secretary of State on June 1, 1995, as restated by the
Restated Certificate of Incorporation of DEL LABORATORIES, INC., dated
March 28, 1996, as filed in the office of the Secretary of State on March
29, 1996, as amended by the Certificate of Amendment of the Restated
Certificate of Incorporation of DEL LABORATORIES, INC., dated June 3,
1996, as filed in the office of the Secretary of State on June 4, 1996, as
further amended by the Certificate of Amendment of the Restated
Certificate of Incorporation of DEL LABORATORIES, INC., dated June 1,
1998, as filed in the office of the Secretary of State on June 3, 1998, as
further amended by the Certificate of Ownership and Merger, merging DLI
Acquisition Corp. with and into DEL LABORATORIES, INC., dated January 27,
2005, as filed in the office of the Secretary of State on January 27,
2005, and as further amended and restated by the Amended and Restated
Certificate of Incorporation of Del Laboratories, Inc., dated January 28,
2005, as filed in the office of the Secretary of State on January 28,
2005.
2. The Certificate of Incorporation of MARADEL DRUG CO., INC., dated December
20, 1962, as filed in the office of the Secretary of State on December 21,
1962, as amended by the Certificate of Amendment of MARADEL DRUG CO.,
INC., changing the name of the corporation to COMMERCE DRUG CO., INC.,
dated January 15, 1963, as filed in the office of the Secretary of State
on January 17, 1963, as further amended by the Certificate of Restoration
and Revival COMMERCE DRUG CO., INC., dated July 16, 1990, as filed in the
office of the Secretary of State on August 1, 1990, and as further amended
by the Certificate of Amendment of Certificate of Incorporation of
COMMERCE DRUG CO., INC., changing the name of the corporation to Del
Pharmaceuticals, Inc., dated May 29, 1991, as filed in the office of the
Secretary of State on May 29, 1991.
3. The Certificate of Incorporation of DEL PROFESSIONAL PRODUCTS, INC., dated
March 19, 2004, as filed in the office of the Secretary of State on March
22, 2004.
4. The Certificate of Incorporation of ROYCE & XXXXX, INC., dated December
27, 1965, as filed in the office of the Secretary of State on December 30,
1965, as amended by the Certificate for Renewal and Revival of Certificate
of Incorporation, dated May 11, 1999, as filed in the office of the
Secretary of State on May 12, 1999, and as further amended by the
Certificate of Change of Location of Registered Office and of Registered
Agent, dated July 6, 2000, as filed in the office of the Secretary of
State on July 11, 2000.
5. The Certificate of Incorporation of DLI HOLDING II CORP, dated January 11,
2005, as filed in the office of the Secretary of State on January 11,
2005.
XXXXXXXXXX & XXXXXXX, L.L.P.
ATTORNEYS AT LAW
000 XXXXX XXXXXX XXXXXX
X.X. XXX 000
XXXXXX, XXXXX XXXXXXXX 00000-0000
TELEPHONE: 000-000-0000; FACSIMILE: 000-000-0000
E-MAIL: XXXXX@XXXXXXXXX.XXX
XXXXXXX XXX XXXXXXXXXX, XX. HAMPSTEAD OFFICE
(xxxxxxxx@xxxxxxxxx.xxx) __ December 2005 16191 U. S. HIGHWAY 17N
XXXX X. XXXXXXX XXXXXXXXX, XX 00000
CERTIFIED PUBLIC ACCOUNTANT TELEPHONE NO: 000-000-0000
(xxxxxxxx@xxxxxxxxx.xxx) *******MAILING ADDRESS:
X.X. XXX 000
XXXXXX, XX 00000
JPMorgan Chase Bank, N.A.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Loan (the "LOAN"), in the original principal amount of up to
$85,000,000, made by JPMorgan Chase Bank, N.A. and certain
other financial institutions (collectively, the "Lenders"),
pursuant to that certain Credit Agreement, dated as of
December __, 2005 (the "CREDIT AGREEMENT"), by and among DLI
Holding II Corporation ("Holdings"), Del Laboratories, Inc., a
Delaware corporation ("the Borrower"), the Lenders, X.X.
Xxxxxx Securities Inc., as sole lead arranger and sole
bookrunner (in such capacities, the "Arranger"), and X.X.
Xxxxxx Chase Bank N.A., as administrative agent
Dear Sir/Madam:
We have acted as counsel for Borrower in connection with the Loan. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Credit Agreement.
In rendering the opinions expressed below, we have examined the original,
or copies certified or otherwise authenticated to our satisfaction, of the
documents set forth below and such other certificates, documents and materials
as we have deemed necessary as a basis for such opinions. Except as otherwise
noted, the following document is dated as of the date hereof.
1. The Second Lien Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Financing Statement and Fixture Filing, made by
Borrower to the Agent (the "MORTGAGE");
2. The Uniform Commercial Code Financing Statement attached hereto as
Exhibit A (the "Personal Property Filing").
3. The Uniform Commercial Code Financing Statement attached hereto as
Exhibit B (the "Fixture Filing" and together with the Personal
Property Filing, the "Financing Statements").
For purposes of this opinion, we have, with your permission, assumed
without independent investigation that the documents submitted to us as
originals are authentic and the documents submitted to us as copies conform to
the original documents.
Based upon the foregoing, we are of the opinion that:
1. Except for filings which are necessary to perfect the security
interests granted under the Mortgage and such other filings,
authorizations or approvals as are specifically contemplated by the
Mortgage, no authorizations or approvals of, and no filings with,
any governmental or regulatory authority or agency of the United
States, the state of Borrower's formation, or the state of North
Carolina (the "STATE") are necessary for the execution, delivery or
performance of the Mortgage by the Borrower.
2. The Mortgage constitutes the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.
3. The execution and delivery by the Borrower of the Mortgage and the
consummation of the transactions contemplated thereby do not
conflict with or violate any federal or State law, rule, regulation
or ordinance applicable to Borrower.
4. The choice of law provisions contained in the Mortgage will be
upheld and enforced by the courts of the State and Federal courts
sitting in and applying the laws of the State. In this regard, the
amounts to be received by Lenders as interest in respect of the
Notes, made by the Borrower, as maker, in favor of Lenders and under
the Credit Agreement constitute lawful interest under the laws of
the State and are neither usurious nor illegal.
5. The Mortgage to be recorded in the State is in form satisfactory for
recording. The recording of the Mortgage in the office of the
Register of Deeds for the County of Xxxxxx, State of North Carolina
and the filing and recording of the Fixture Filing in the office of
the Register of Deeds for the County of Xxxxxx and the office of the
Secretary of State of North Carolina, are the only recording or
filing necessary to publish notice of and to establish of record the
rights of the parties thereto and to perfect the liens and security
interests granted by Borrower pursuant to the Mortgage in the real
property (including fixtures) covered thereby. Such Mortgage
complies in all respects with applicable provisions of the Uniform
Commercial Code as in effect in the State (the "UCC") and is in
appropriate form for filing or recording --- and the description
therein of the fixtures covered thereby is adequate to permit the
perfection of such security interests in the fixtures. Upon the
execution and delivery of the Mortgage and Fixture Filing as
aforesaid, such liens and security interest shall be created and
upon the recording and filing of the Mortgage and the Fixture Filing
as aforesaid, such liens and security interests shall be perfected.
No documents or instruments other than those ref erred to in this
paragraph need be recorded, registered or filed in any public office
in the State in order to publish notice of the Mortgage or to
perfect such liens and security interest or the for validity or
enforceability of any of the documents or to permit Agent to enforce
its rights thereunder in the court of the State.
6. Except for recording fees to the Register of Deeds and the Secretary
of State, no recording, filing, privilege or other tax must be paid
by either the Borrower or Lender in connection with the execution,
delivery, recordation or enforcement of the Mortgage.
7. The Loan, as made, will not violate any applicable usury laws of the
State, or other applicable laws regulating the interest rate, fees
and other charges that may be collected with respect to the Loan.
8. It is not necessary for Lender to qualify to do business in the
State solely to make the Loan and enforce the provisions of the
Mortgage. The making of the Loan and enforcement of the provisions
of the Mortgage will not result in the imposition upon Lender of any
taxes of the State, or any subdivision thereof in which the
applicable Mortgaged Property (as defined in the Mortgage) is
located (including, without limitation, franchise, license, tax on
interest received or income taxes), other than taxes which Lender,
if and when it becomes the actual and record owner of such Mortgaged
Property, by reason of power of sale or foreclosure under the
applicable Mortgage or by deed in lieu of foreclosure, would be
required to pay. Lender is not in violation of any banking law of
the State by carrying out the transactions contemplated by the
Mortgage.
9. The foreclosure of the Mortgage to be recorded in the State,
exercise of Lender's power of sale, or exercise of any other remedy
provided in the Mortgage will not in any manner restrict, affect or
impair the liability of Borrower with respect to the indebtedness
secured thereby or the rights and remedies of Lender with respect to
the foreclosure or enforcement of any other security interests or
liens securing such indebtedness, to the extent any deficiency
remains unpaid after application of the proceeds of the foreclosure
of such Mortgage, exercise of such power of sale or as a result of
the exercise of any other remedy.
10. The Priority of the lien of the Mortgage to be recorded in the State
in respect of all advances or extensions of credit made by Lenders
under the Credit Agreement on, before or after the date of which
such Mortgage is recorded in the appropriate office referred to in
Paragraph 5 above will be determined by the date of such recording.
11. The Priority of the lien of the Mortgage will not be affected by (a)
any prepayment of a portion or the Loan, or (b) any increase in or
reduction of the outstanding amount of the Loan from time to time.
12. Subject to the qualifications listed below, the Mortgage to be
recorded in the State creates valid security interests in favor of
Lender in the Personalty (as defined in the Mortgage) to the extent
the UCC is applicable thereto, as security for the payment or
performance of the Obligations (as defined in the Mortgage). The
Personal Property Filing to be filed with the Secretary of State of
the State of North Carolina complies in all respects with applicable
provisions of the UCC as in effect in the State and is in
appropriate form for filing or recording and the description therein
of the personal property covered thereby is adequate to permit the
perfection of such security interests in the personal property. Upon
the execution and delivery of such Personal Property Filing as
aforesaid, such security interest shall be created and upon the
recording and filing of the Personal Property Filing such security
interests shall be perfected in favor of the Agent.
The security interests described in this PARAGRAPH are referred to
as the "SECURITY INTERESTS."
13. The Mortgage contains the terms and provisions necessary to enable
Lender, following a default under the Mortgage, to exercise the
remedies that are customarily available to a lienholder under the
laws of the State.
Our opinions expressed above are subject to the following
qualifications:
(a) We express no opinion as to any Borrower's right in or title
to any of the Personalty.
(b) Such opinion as to perfection of the Security Interests are
subject to the assumption that Lender has not waived,
subordinated or agreed with any third party to any
modification of the perfection of any of the Security
Interests.
(c) We assume that none of the Personalty consists or will
consists or will consist of consumer goods, farm products,
crops, timber, minerals and the like or accounts resulting
from the sale thereof.
(d) We assume the Lender is a legal entity properly registered and
approved to enter into a transaction of the type here opined
on.
All of our foregoing opinions are subject to the qualifications that the
enforceability of the Mortgage may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application affecting the enforcement of creditor's rights.
This opinion is limited to the laws of the State of North Carolina and the
applicable federal laws.
This opinion is rendered as of the effective date set forth above, and we
express no opinion as to circumstances or events which may occur subsequent to
such date. This opinion may only be relied upon by Lender and its respective
successors and/or assigns and by no other person or entity.
Very truly yours,
Xxxxxxxxxx & Xxxxxxx, LLP
By:
---------------------------
X. x. Xxxxxxxxxx, Xx.
EXHIBIT G
FORM OF EXEMPTION CERTIFICATE
Reference is made to the Credit Agreement, dated as of
December 29, 2005 (the "CREDIT Agreement"), among DLI Holding II Corp., a
Delaware corporation ("HOLDINGS"), Del Laboratories, Inc., a Delaware
corporation (the "BORROWER"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "LENDERS"), X.X.
Xxxxxx Securities Inc., as sole lead arranger and sole bookrunner (in such
capacities, the "ARRANGER") ,and JPMorgan Chase Bank, N.A., as administrative
agent (in such capacity, the "ADMINISTRATIVE AGENT"). Capitalized terms used
herein that are not defined herein shall have the meanings ascribed to them in
the Credit Agreement. ______________________ (the "NON-U.S. LENDER") is
providing this certificate pursuant to subsection 3.10(d) of the Credit
Agreement. The Non-U.S. Lender hereby represents and warrants that:
I. The Non-U.S. Lender is the sole record and beneficial owner of the
Loans or the obligations evidenced by Note(s) in respect of which it is
providing this certificate.
II. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"). In this regard, the Non-U.S. Lender further represents and
warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or
other legal requirements as a bank in any
jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank
for purposes of any tax, securities law or other
filing or submission made to any Governmental
Authority, any application made to a rating agency or
qualification for any exemption from tax, securities
law or other legal requirements.
III. The Non-U.S. Lender is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code.
IV. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.
G-1
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.
[NAME OF NON-U.S. LENDER]
By:_______________________________
Name:
Title:
Date: _____ __, 20[ ]
G-2
EXHIBIT H-1
FORM OF REVOLVING NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT
AGREEMENT REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS
REPRESENTED HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE
ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF SUCH CREDIT AGREEMENT.
$____________ New York, New York
___________ ___, 200__
FOR VALUE RECEIVED, the undersigned, Del Laboratories, Inc., a
Delaware corporation (the "BORROWER"), hereby unconditionally promises to pay to
________ (the "LENDER") or its registered successors and assigns at the Funding
Office specified in the Credit Agreement (as hereinafter defined) in lawful
money of the United States and in immediately available funds, on the Revolving
Termination Date the principal amount of (a) ________DOLLARS ($_____), or, if
less, (b) the aggregate unpaid principal amount of all Revolving Loans of the
Lender outstanding under the Credit Agreement. The Borrower further agrees to
pay interest in like money at such Funding Office on the unpaid principal amount
hereof from time to time outstanding at the applicable rates and on the dates
specified in Section 2.5 of the Credit Agreement.
The holder of this Note is authorized to endorse on the
schedules annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof the date, Type and amount
of each Revolving Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, 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. Each such endorsement shall constitute PRIMA FACIE evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
or any error in any such endorsement shall not affect the obligations of the
Borrower in respect of any Revolving Credit Loan.
This Note (a) is one of the Notes evidencing the Revolving
Loans under the Credit Agreement, dated as of December 29, 2005 (the "CREDIT
AGREEMENT"), among DLI Holding II Corp., a Delaware corporation ("HOLDINGS"),
Del Laboratories, Inc., a Delaware corporation (the "BORROWER"), the several
banks and other financial institutions or entities from time to time parties to
the Credit Agreement (the "LENDERS"), X.X. Xxxxxx Securities Inc., as sole lead
arranger and sole bookrunner (in such capacities, the "ARRANGER"), and JPMorgan
Chase Bank, N.A., as administrative agent (in such capacity, the "ADMINISTRATIVE
AGENT"), (b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as provided in
the Credit Agreement. This Note is secured and guaranteed as provided in the
Loan Documents. Reference is hereby made to the Loan Documents for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of
Default, all principal and all accrued interest then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided in the Credit Agreement.
H-1-1
All parties now and hereafter liable with respect to this
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR
IN THE CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND
IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
DEL LABORATORIES, INC.
BY: _______________________________
NAME:
TITLE:
H-1-2
SCHEDULE A
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
Date Amount of Base Amount Converted to Amount of Principal of Amount of Base Rate Unpaid Principal Notation
Rate Loans Base Rate Loans Base Rate Loans Repaid Loans Converted to Balance of Base Made By
Eurodollar Loans Rate Loans
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
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---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
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---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
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---------- -------------------- ---------------------- ------------------------- --------------------- ------------------ ----------
H-1-3
SCHEDULE B
TO REVOLVING CREDIT NOTE
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
Date Amount of Amount Converted Interest Period and Amount of Principal Amount of Eurodollar Unpaid Principal Notation
Eurodollar to Eurodollar Eurodollar Rate of Eurodollar Loans Loans Converted to Balance of Made By
Loans Loans with Respect Thereto Repaid Base Rate Loans Eurodollar Loans
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
------- ------------ ------------------ -------------------- ------------------- -------------------- ----------------- ----------
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X-0-0
XXXXXXX X-0
FORM OF SWINGLINE NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT
REFERRED TO BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY
MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT
TO THE TERMS OF SUCH CREDIT AGREEMENT.
$10,000,000 New York, New York
__________ __, 200___
FOR VALUE RECEIVED, the undersigned, Del Laboratories, Inc., a Delaware
corporation (the "BORROWER"), hereby unconditionally promises to pay to JPMorgan
Chase Bank, N.A., (the "SWINGLINE LENDER") or its registered successors and
assigns at the Funding Office specified in the Credit Agreement (as hereinafter
defined) in lawful money of the United States and in immediately available
funds, on the Revolving Termination Date the principal amount of (a) TEN MILLION
DOLLARS ($10,000,000), or, if less, (b) the aggregate unpaid principal amount of
all Swingline Loans made by the Swingline Lender to the Borrower pursuant to
Section 2.3 of the Credit Agreement. The Borrower further agrees to pay interest
in like money at such office on the unpaid principal amount hereof from time to
time outstanding at the applicable rates and on the dates specified in Section
3.5 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Swingline
Loan made pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof. Each such endorsement shall
constitute PRIMA FACIE evidence of the accuracy of the information endorsed. The
failure to make any such endorsement or any error in any such endorsement shall
not affect the obligations of the Borrower in respect of any Swingline Loan.
This Note (a) is the Note evidencing the Swingline Loan under the
Credit Agreement, dated as of December 29, 2005 (the "CREDIT AGREEMENT"), among
DLI Holding II Corp., a Delaware corporation ("HOLDINGS"), Del Laboratories,
Inc., a Delaware corporation (the "BORROWER"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "LENDERS"), X.X. Xxxxxx Securities Inc., as sole lead arranger and sole
bookrunner (in such capacities, the "ARRANGER"), and JPMorgan Chase Bank, N.A.,
as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT"), (b) is
subject to the provisions of the Credit Agreement and (c) is subject to optional
and mandatory prepayment in whole or in part as provided in the Credit
Agreement. This Note is secured and guaranteed as provided in the Loan
Documents. Reference is hereby made to the Loan Documents for a description of
the properties and assets in which a security interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and each guarantee were granted and the rights
of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind under this Note
to the fullest extent permitted under applicable law.
H-2-1
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
DEL LABORATORIES, INC.
By:________________________
Name:
Title:
H-2-2
SCHEDULE A
TO SWINGLINE NOTE
LOANS AND REPAYMENTS OF SWINGLINE LOANS
--------------- -------------------------- --------------------------- -------------------------- ---------------------
Date Amount of Swingline Loans Amount of Principal of Unpaid Principal Balance Notation Made By
Swingline Loans Repaid of
Swingline Loans
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
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--------------- -------------------------- --------------------------- -------------------------- ---------------------
--------------- -------------------------- --------------------------- -------------------------- ---------------------
H-2-3
EXHIBIT I
FORM OF LENDER ADDENDUM
Reference is made to the Credit Agreement, dated as of December 29,
2005 (the "CREDIT Agreement") among DLI Holding II Corp., a Delaware corporation
("HOLDINGS"), Del Laboratories, Inc., a Delaware corporation (the "BORROWER"),
the several banks and other financial institutions or entities from time to time
parties to this Agreement (the "LENDERS"), X.X. Xxxxxx Securities Inc., as sole
lead arranger and sole bookrunner (in such capacities, the "ARRANGER"), and
JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT"). Capitalized terms used herein that are not defined
herein shall have the meanings ascribed to them in the Credit Agreement
Upon execution and delivery of this Lender Addendum by the
parties hereto as provided in Section 10.17 of the Credit Agreement, the
undersigned (i) hereby becomes a Lender thereunder having the Revolving
Commitments set forth in Schedule 1 hereto and (ii) agrees to all of the
provisions of the Credit Agreement, effective as of the Closing Date.
THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
This Lender Addendum may be executed by one or more of the
parties hereto on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page hereof by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Lender
Addendum to be duly executed and delivered by their proper and duly authorized
officers as of this ___ day of ________, 20[ ].
[NAME OF LENDER]
By:
---------------------------------------
Name:
Title:
I-1
SCHEDULE 1
COMMITMENTS AND NOTICE ADDRESS
1. Name of Lender: _____________________________
Notice Address: _____________________________
-----------------------------
-----------------------------
Attention: _____________________________
Telephone: _____________________________
Facsimile: _____________________________
2. Revolving Commitment:
I-2
EXHIBIT J
FORM OF
SOLVENCY CERTIFICATE
I, [ ], the Chief Financial Officer of each Loan Party hereby certify
that I am the Chief Financial Officer of each Loan Party and that I am familiar
with their properties, businesses, assets, finances and operations and I am duly
authorized to execute this certificate on behalf of the Loan Parties pursuant to
Section 5.1(i) of the Credit Agreement dated as of December 29, 2005 (the
"CREDIT AGREEMENT"; the terms defined therein, unless otherwise defined herein,
being used herein as therein defined) among DLI Holding II Corp., a Delaware
corporation, Del Laboratories, Inc., a Delaware corporation, as borrower, the
Lenders, X.X. Xxxxxx Securities Inc., as sole lead arranger and sole bookrunner,
and JPMorgan Chase Bank, N.A., as administrative agent.
I further certify that I am generally familiar with the
properties, business and assets of the Loan Parties and have carefully reviewed
the Loan Documents and the contents of this certificate and, in connection
herewith, have reviewed such other documentation and information and have made
such investigation and inquiries as I have deemed necessary and prudent
therefor.
I understand that the Agents and the Lenders are relying on the truth
and accuracy of this certificate in connection with the transactions
contemplated by the Loan Documents.
(a) The Loan Parties are able to realize upon their assets and pay
their debts and other liabilities, contingent obligations and other commitments
as they mature in the normal course of business;
(b) On the date hereof, before and after giving effect to the
transactions contemplated by the Credit Agreement and the other Loan Documents,
the fair value of the property of each Loan Party is greater than the total
amount of liabilities, including, without limitation, contingent liabilities, of
such Loan Party;
(c) On the date hereof, before and after giving effect to the
transactions contemplated by the Credit Agreement and the other Loan Documents,
the present fair saleable value of the assets of each Loan Party is not less
than the amount that will be required to pay the probable liability of such Loan
Party on its debts as they become absolute and matured;
(d) The Loan Parties do not intend to and do not believe that they will
incur debts or liabilities that will be beyond their ability to pay such debts
and liabilities as they mature; and
(e) On the date hereof, before and after giving effect to the
transactions contemplated by the Credit Agreement and the other Loan Documents,
the Loan Parties are not engaged in business or a transaction, and are not about
to engage in business or a transaction, for which its property would constitute
unreasonably small capital;
2. In making the certifications set forth above, the
undersigned has considered or taken the following actions, among other things:
(a) the financial statements (the "FINANCIAL STATEMENTS") delivered to
the Administrative Agent pursuant to Section 5.1(c) of the Credit Agreement;
J-1
(b) the values of the Loan Parties' real property, equipment,
inventory, accounts receivable, customer lists, supply contracts, joint venture
interests, licenses, leases and all other property of such party, real and
personal, tangible and intangible;
(c) consulted with officers of the Loan Parties concerning, among other
matters, pending and threatened litigation, uninsured risks, guaranties of
obligations of any other Person and other contingent obligations and have, using
my best judgment, also taken into account the maximum realistic exposure of each
Loan Party to liabilities which would not be included in reserves otherwise
reflected on the Financial Statements; and
(d) made such other investigations and inquiries as I have, to the best
of my experience, deemed appropriate and have taken into account the nature of
the particular business anticipated to be conducted by the Loan Parties after
consummation of the transactions referred to above.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
J-2
IN WITNESS WHEREOF, the undersigned has duly executed this
Solvency Certificate as of the date first written above.
DEL LABORATORIES, INC.
AS BORROWER
By:
-----
Name:
Title: Chief Financial Officer
J-3
EXHIBIT K
FORM OF CLOSING CERTIFICATE OF THE BORROWER
Pursuant to subsection 5.1(b) of the Credit Agreement, dated
as of December 29, 2005 (the "CREDIT AGREEMENT"; terms defined therein being
used herein as therein defined), among DLI Holding II Corp., a Delaware
corporation ("HOLDINGS"), Del Laboratories, Inc., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "LENDERS"), X.X. Xxxxxx Securities
Inc., as sole lead arranger and sole bookrunner (in such capacities, the
"ARRANGER"), and JPMorgan Chase Bank, N.A., as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT"), the undersigned Executive Vice President
and Chief Financial Officer of Del Laboratories Inc., (the "COMPANY") hereby
certifies, in his capacity as such and not in his individual capacity, that the
following shall have occurred prior to or substantially concurrently with the
delivery hereof (it being understood that no certification is being made as to
any fact or matter involving discretion, satisfaction, or any other
determination on the part of the Administrative Agent, any Arranger, or any
Lender):
1. The representations and warranties of the Borrower set
forth in each of the Loan Documents to which it is a party or which are
contained in any certificate furnished by or on behalf of the Borrower pursuant
to any of the Loan Documents to which it is a party are true and correct in all
material respects on and as of the date hereof with the same effect as if made
on the date hereof, except for representations and warranties expressly stated
to relate to a specific earlier date, in which case such representations and
warranties were true and correct in all material respects as of such earlier
date.
2. [ ] is the duly elected and qualified Corporate Secretary
of the Company and the signature set forth for such officer below is such
officer's true and genuine signature.
3. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to the Loans to be made
on the date hereof.
4. The representations and warranties of the Loan Parties in
the Loan Documents are accurate in all material respects on and as of the date
hereof with the same effect as if made on the date hereof, except for
representations and warranties expressly stated to relate to a specified earlier
date, in which case such representations and warranties were true and correct in
all material respects as of such earlier date.
DEL LABORATORIES, INC.
By:
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
K-1
The undersigned Corporate Secretary of the Company certifies
as follows:
1. There are no liquidation or dissolution "proceedings
pending or to my knowledge threatened against the Company, nor has any other
event occurred adversely affecting or threatening the continued corporate
existence of the Company.
2. Attached hereto as ANNEX 1 is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Company on
_________________; such resolutions have not in any way been amended, modified,
revoked or rescinded, have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect.
3. Attached hereto as ANNEX 2 is a true and complete copy of
the By-Laws of the Company as in effect on the date hereof.
4. Attached hereto as ANNEX 3 is a true and complete copy of
the Certificate of Incorporation of the Company as in effect on the date hereof,
and such certificate has not been amended, repealed, modified or restated at any
time after ___________________.
5. The following persons are now duly elected and qualified
officers of the Company holding the offices indicated next to their respective
names below, and such officers have held such offices with the Company at all
times since the date indicated next to their respective titles to and including
the date hereof, and the signatures appearing opposite their respective names
below are the true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the Company each
of the Loan Documents to which it is a party and any certificate or other
document to be delivered by the Company pursuant to the Loan Documents to which
it is a party:
NAME OFFICE DATE SIGNATURE
IN WITNESS WHEREOF, the undersigned has hereunto set his name
as of the date set forth below.
--------------------------------------
Name:
Title: Vice President, General
Counsel and Secretary
Date: December 29, 2005
K-2
EXHIBIT L
PAGE 1 OF 3
DEL LABORATORIES, INC.
Monthly Borrowing Base Certificate
For the Month Ended _____________
(000's US$)
A. Net available accounts receivable (from page 3 of 3) $ --
-------
B. Net available inventory (from page 2 of 3) $ --
-------
C. Less Reserves:
Secured xxxxxx / cash management $ --
Other $ --
----
Total Reserves $ --
-------
D. Borrowing Base (lines A + B - C) $ --
----
E. Lower of:
Borrowing Base (line D) $ --
-------
$ --
----
Revolving Credit Commitment $85,000
-------
F. Revolving Credit Outstandings
Revolving Loans $ --
Letter of Credit --
----
Total Revolving Credit Outstandings $ --
----
G. Available credit (overadvance) (line E - F) $ --
----
OFFICER'S CERTIFICATION:
Pursuant to the Credit Agreement dated as of December ___, 2005, as amended, the
undersigned Responsible Officer of Del Laboratories, Inc. certifies that the
information provided in this certificate to XX Xxxxxx Xxxxx Bank, as
Administrative Agent, is true and correct based on the accounting records of Del
Laboratories, Inc.
Del Laboratories, Inc.
----------------------------------------------- --------------
Signature & Title Date
* Borrowing Base Certificate to be accompanied by the documentation outlined in
Schedule 1 to Exhibit L*
EXHIBIT L
PAGE 2 OF 3
DEL LABORATORIES, INC.
Monthly Borrowing Base Certificate
For the Month Ended _____________
(in 000's US$)
CALCULATION OF AVAILABLE ACCOUNTS RECEIVABLE
Total
-----
Accounts receivable aging: $ --
Less:
Amounts greater than 60 days past due date $ --
Credit balances greater than 60 days past due date --
Chargebacks less than 60 days past due date --
Cross-age @ 50% over 60 days past due date --
Foreign A/R --
Concentration Cap --
Other per terms of the Credit Agreement --
--
Total ineligible accounts receivable $ --
Eligible accounts receivable --
Less: Dilution Reserve (actual LTM% in excess of 5%)
Adjusted eligible accounts receivable $ --
Advance rate 85%
-----
Total available accounts receivable $ --
=====
EXHIBIT L
PAGE 3 OF 3
DEL LABORATORIES, INC.
MONTHLY BORROWING BASE CERTIFICATE
FOR THE MONTH ENDED _____________
(in 000's US$)
CALCULATION OF AVAILABLE INVENTORY
Raw / Finished
Total Components Wip Goods
----- ---------- --- -----
Total inventory per perpetual: $ -- $ -- $ -- $ --
Freight-in -- -- -- --
------ ------ ------ ------
Total inventory: -- -- -- --
Less ineligibles:
Forecasted products reserve* -- -- -- --
Displays -- -- -- --
Packaging -- -- -- --
Inventory at sub-contractor locations -- -- -- --
Rejected inventory in company warehouses -- -- -- --
Reconciliation adjustments* -- -- -- --
Inventory in transit -- -- -- --
Located at third party warehouse (no access agreement) -- -- -- --
Licensed Inventory not saleable in liquidation -- -- -- --
Other per terms of the Credit Agreement -- -- -- --
------ ------ ------ ------
Subtotal ineligible inventory $ -- $ -- $ -- $ --
Inventory Reserves:
Inventory age (less than) 2003: 80% reserve -- -- -- --
Inventory age 2003: 50% reserve -- -- -- --
Closeout Inventory 50% reserve -- -- -- --
------ ------ ------ ------
Total inventory reserves $ -- $ -- $ -- $ --
Eligible inventory $ -- $ -- $ -- $ --
Advance rate 35% 60% 65%
------ ------ ------
Total available inventory prior to rent reserve $ -- -- -- --
Three months outside/public warehouse expense -- -- -- --
------ ------ ------ ------
(I) TOTAL AVAILABLE INVENTORY BEFORE NOLV CAP -- -- -- --
------ ------ ------ ------
(II) NET RECOVERY RATE CAP
Total inventory per perpetual: $ --
Freight-In --
--
Total Inventory $ --
Less Ineligibles per Appraisal:
Components/ Packaging** --
Inventory at Subcontractor locations --
Displays --
Rejected Inventory at Company Warehouses --
Eligible Inventory (subject to Net Recovery Rate) --
85% of Net Recovery Rate --
Available Inventory cap per appraisal $ --
------
AVAILABLE INVENTORY (LOWER OF I OR II) $ --
======
* To be updated quarterly
** To be updated with next appraisal
