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EXHIBIT (a)(4)
EXECUTION COUNTERPART
THIS SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT IS SUBJECT TO THAT CERTAIN
SUBORDINATION AGREEMENT, DATED AS OF THE DATE HEREOF, AMONG CIC ACQUISITION SUB,
INC., SUNTRUST BANKS, INC., THE LINCOLN NATIONAL LIFE INSURANCE COMPANY AND
LINCOLN NATIONAL INCOME FUND, INC. AS SUBORDINATED CREDITORS, AND SUNTRUST BANK,
AS AGENT FOR THE SENIOR CREDITORS AS AMENDED FROM TIME TO TIME.
SUBORDINATED NOTE
AND WARRANT PURCHASE AGREEMENT
Dated as of March 6, 2000
by and among
CIC ACQUISITION SUB, INC., as assumed by
CONSO INTERNATIONAL CORPORATION,
as the Company,
THE SUBSIDIARY GUARANTORS SET FORTH
ON THE SIGNATURE PAGES HERETO,
and
SUNTRUST BANKS, INC.,
THE LINCOLN NATIONAL LIFE INSURANCE COMPANY
and
LINCOLN NATIONAL INCOME FUND, INC.
as the Purchasers
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TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS.................................................................................2
Section 1.1 Definitions.......................................................................2
Section 1.2 Accounting Terms and Determination...............................................15
Section 1.3 Other Definitional Terms.........................................................15
Section 1.4 Exhibits and Schedules...........................................................15
Section 1.5 Plural Terms.....................................................................15
ARTICLE 2. ISSUANCE AND PURCHASE OF NOTES AND WARRANTS................................................16
Section 2.1 Authorization of Issuance of Notes and Warrants..................................16
Section 2.2 Purchase and Sale of Notes and Warrants..........................................16
Section 2.3 Allocation of Purchase Price.....................................................16
Section 2.4 Interest on the Notes............................................................16
Section 2.5 Amortization and Maturity of Notes; Prepayments; Funding Losses..................17
Section 2.6 Prepayment Fee...................................................................17
ARTICLE 3. OTHER PROVISIONS RELATING TO THE NOTES.....................................................18
Section 3.1 Making of Payments...............................................................18
Section 3.2 Increased Costs..................................................................18
Section 3.3 Capital Adequacy.................................................................18
Section 3.4 Default Rate of Interest.........................................................19
Section 3.5 Calculation of Interest..........................................................19
Section 3.6 Usury............................................................................19
Section 3.7 Payments, etc....................................................................20
ARTICLE 4. GUARANTY...................................................................................22
Section 4.1 The Guaranty.....................................................................22
Section 4.2 Obligations Unconditional........................................................22
Section 4.3 Reinstatement....................................................................23
Section 4.4 Certain Additional Waivers.......................................................23
Section 4.5 Remedies.........................................................................24
Section 4.6 Guarantee of Payment; Continuing Guarantee.......................................24
ARTICLE 5. CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS.............................24
Section 5.1 Closing Date Conditions..........................................................24
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.............................................................27
Section 6.1 Representations and Warranties Generally.........................................27
6.1.1 Organizational Existence; Compliance with Law....................................27
6.1.2 Organizational Power; Authorization..............................................27
6.1.3 Enforceable Obligations..........................................................27
6.1.4 No Legal Bar.....................................................................28
6.1.5 No Material Litigation...........................................................28
6.1.6 Investment Company Act, Etc......................................................28
6.1.7 Margin Regulations...............................................................28
6.1.8 Compliance With Environmental Laws...............................................28
6.1.9 Insurance........................................................................29
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6.1.10 No Default.......................................................................29
6.1.11 No Burdensome Restrictions.......................................................29
6.1.12 Taxes............................................................................29
6.1.13 Subsidiaries; Dormant Subsidiaries...............................................29
6.1.14 Financial Statements.............................................................29
6.1.15 Employee Benefits................................................................30
6.1.16 Patents, Trademarks, Licenses, Etc...............................................32
6.1.17 Ownership of Property............................................................32
6.1.18 Indebtedness.....................................................................33
6.1.19 Financial Condition..............................................................33
6.1.20 Labor Matters....................................................................33
6.1.21 Payment or Dividend Restrictions.................................................33
6.1.22 Year 2000 Issues.................................................................34
6.1.23 Disclosure.......................................................................34
ARTICLE 7. AFFIRMATIVE COVENANTS......................................................................34
Section 7.1 Affirmative Covenants............................................................34
7.1.1 Organizational Existence, Etc....................................................34
7.1.2 Compliance with Laws, Etc........................................................34
7.1.3 Payment of Taxes and Claims, Etc.................................................35
7.1.4 Keeping of Books.................................................................35
7.1.5 Visitation, Inspection and Audits, Etc...........................................35
7.1.6 Insurance; Maintenance of Properties; Net Casualty/Insurance Proceeds............35
7.1.7 Reporting Covenants..............................................................36
7.1.8 ERISA............................................................................37
7.1.9 Liens............................................................................38
7.1.10 Public Filings, Etc..............................................................38
7.1.11 Accountants' Reports.............................................................39
7.1.12 Senior Debt and Equity Notices...................................................39
7.1.13 Other Information................................................................39
7.1.14 Year 2000 Issues.................................................................39
7.1.15 Maximum Total Funded Debt to Adjusted EBITDA Ratio...............................39
7.1.16 Minimum Fixed Charge Coverage Ratio..............................................40
7.1.17 Interest Coverage Ratio..........................................................40
7.1.18 Additional Credit Parties........................................................41
7.1.19 Issuance of Relacement Warrants..................................................41
ARTICLE 8. NEGATIVE COVENANTS.........................................................................41
Section 8.1 Negative Covenants...............................................................41
8.1.1 Indebtedness.....................................................................41
8.1.2 Liens............................................................................42
8.1.3 Mergers, Consolidations, Acquisitions, Sales, Etc................................43
8.1.4 Investments, Loans, Etc..........................................................44
8.1.5 Lease Obligations................................................................45
8.1.6 Restricted Payments..............................................................46
8.1.7 Sale and Leaseback Transactions..................................................46
8.1.8 Transactions with Affiliates.....................................................46
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8.1.9 ERISA............................................................................46
8.1.10 Additional Negative Pledges......................................................46
8.1.11 Limitation on Payment Restrictions Affecting Consolidated Companies..............47
8.1.12 Capital Expenditures.............................................................47
8.1.13 Change in Business...............................................................47
8.1.14 Modification of Corporate Name, Charter, Etc.....................................47
ARTICLE 9. EVENTS OF DEFAULT..........................................................................48
Section 9.1 Events of Default...................................................................48
Section 9.2 Remedies on Default.................................................................49
ARTICLE 10. MISCELLANEOUS..............................................................................50
Section 10.1 Notices.............................................................................50
Section 10.2 No Waiver...........................................................................52
Section 10.3 Expenses............................................................................53
Section 10.4 Amendments, Etc.....................................................................53
Section 10.5 Successors and Assigns..............................................................54
Section 10.6 GOVERNING LAW.......................................................................54
Section 10.7 Survival of Representations and Warranties..........................................54
Section 10.8 Severability........................................................................54
Section 10.9 Counterparts........................................................................54
Section 10.10 Set-Off.............................................................................54
Section 10.11 Termination of Agreement............................................................54
Section 10.12 JURISDICTION AND VENUE..............................................................55
Section 10.13 WAIVER OF JURY TRIAL................................................................55
Section 10.14 Entire Agreement....................................................................55
Exhibits and Schedules
Exhibit A - Form of Note
Exhibit B - Form of Warrant Agreement
Exhibit C - Form of Warrant
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Compliance Certificate As To Financial Covenants
Exhibit F - Form of Subordination Agreement
Exhibit G - Form of Assignment and Assumption Agreement
Exhibit H - Form of Stockholders Agreement
Schedule 5.16 - Material Contracts
Schedule 5.21 - Ownership of Stock of Company
Schedule 7.6 - Existing Debt
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SUBORDINATED NOTE AND WARRANT
PURCHASE AGREEMENT
THIS SUBORDINATED NOTE AND WARRANT PURCHASE AGREEMENT dated as of March
6, 2000 by and between CIC ACQUISITION SUB, INC., a corporation organized under
the laws of the State of South Carolina, as issuer of the Subordinated Notes and
the Warrants (the "Company"), the Subsidiaries of the Company listed on the
signature pages hereto, as guarantors (the "Subsidiary Guarantors"), SUNTRUST
BANKS, INC., a corporation organized under the laws of the State of Georgia
("SunTrust"), THE LINCOLN NATIONAL LIFE INSURANCE COMPANY, a corporation
organized under the laws of the State of Indiana ("Lincoln National") and
LINCOLN NATIONAL INCOME FUND, INC., a corporation organized under the laws of
the State of Maryland ("Lincoln National Income Fund"; Lincoln National and
Lincoln National Income Fund, collectively, "Lincoln"; SunTrust and Lincoln
individually, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, pursuant to a Merger Agreement, dated as of October 5, 1999,
between CIC Acquisition Co., a Delaware corporation, the Company, and Conso
International Corporation, a South Carolina corporation ("Conso International"),
Conso International will merge with and into the Company with Conso
International as the surviving corporation (the "Merger") and upon effectiveness
of the Merger, Conso International will assume all obligations of the Company
hereunder and shall be deemed to be the Company hereunder;
WHEREAS, on the date hereof, the Company entered into that certain
Revolving Credit and Term Loan Agreement with, amongst others, SunTrust Bank, as
agent (the "Agent") for the senior lenders party thereto (the "Senior Lenders"),
providing a $70,000,000 credit facility to the Company;
WHEREAS, the Company has requested that the Purchasers make a certain
subordinated debt investment in the Company, the proceeds of which will be used
by the Company to effect the Merger, to pay related fees and expenses, and for
general corporate purposes;
WHEREAS, each Purchaser has severally agreed to make its Pro Rata Share
of a $20,000,000 subordinated debt investment in the Company on the terms and
subject to the conditions set forth herein, such investment to be evidenced by
subordinated notes in such amount from the Company and certain warrants issued
by the Company as more fully described below;
NOW, THEREFORE, for and in consideration of the mutual premises,
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
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ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Active Subsidiary" shall mean each Subsidiary of the Company that has
any assets, liabilities or conducts any business whatsoever.
"Adjusted EBITDA" shall mean (a) for any period ending after the last
day of the second Fiscal Quarter of Fiscal Year 2001, EBITDA, and (b) for any
period ending on or prior to the last day of the second Fiscal Quarter of Fiscal
Year 2001, EBITDA, plus:
(i) for the period ending on the last day of the third Fiscal Quarter
of Fiscal Year 2000, $366,000;
(ii) for the period ending on the last day of fourth Fiscal Quarter of
Fiscal Year 2000, $117,500;
(iii) for the period ending on the last day of the first Fiscal Quarter
of Fiscal Year 2001, $40,000; or
(iv) for the period ending on the last day of the second Fiscal Quarter
of Fiscal Year 2001, $15,000.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person.
"Agent" shall have the meaning given to such term in the recitals
hereof.
"Agreement" shall mean this Subordinated Note and Warrant Purchase
Agreement, as the same may be amended, restated, supplemented or modified from
time to time in accordance with the terms hereof.
"Amortization" shall mean, for any period, amortization expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
"Applicable Law" shall mean all applicable provisions of constitutions,
statutes, rules, regulations and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
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"Assumption Agreement" shall mean the Assumption Agreement dated as of
the Closing Date, executed and delivered by Conso International in favor of the
Purchasers in the form of Exhibit G.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss. 101 et seq.).
"BT" shall mean British Trimmings Limited, a corporation organized
under the laws of England (Registered in England No. 2150914).
"BT Credit Party" shall mean "Credit Party" as such term is defined in
the BT Intercompany Loan Agreement.
"BT Intercompany Debt Documents" shall mean, collectively, the BT
Intercompany Loan Agreement, the BT Intercompany Note and all other "Loan
Documents" as defined in the BT Intercompany Loan Agreement.
"BT Intercompany Loan Agreement" shall mean the Loan Agreement, dated
as of the date hereof, between BT and the Company, as amended, restated,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.
"BT Intercompany Note" shall mean the intercompany note, in the
principal amount of [$11,500,000], in form and substance reasonably satisfactory
to the Purchasers and Lenders, issued by BT to the Company, together with all
replacements and substitutions therefor, in each case as amended, restated,
supplemented, or otherwise modified from time to time in accordance with this
Agreement.
"Business Day" shall mean any day on which commercial banks located in
Atlanta, Georgia are required or permitted by law to be open for the purpose of
conducting a commercial banking business.
"Capital Expenditures" shall mean, for any period, the aggregate of
expenditures of the Consolidated Companies for the acquisition or leasing
pursuant to capital leases of fixed or capital assets or additions to property,
plants and equipment (including, but not limited to, replacements, capitalized
repairs and improvements) which should be capitalized under GAAP.
"Capital Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which would,
in accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of such Person, other than, in the case of the
Company or a Subsidiary, any such lease under which the Company or a wholly
owned Subsidiary is the lessor.
"Capital Lease Obligations" of any Person shall mean all obligations of
such Person under leases that are required to be classified and accounted for as
capital leases under GAAP.
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"Cash Taxes" shall mean for any period, Taxes relating to income paid
by the Consolidated Companies during such period.
"Casualty" means any act or occurrence of any kind or nature that
results in damage, loss or destruction to any Collateral (as such term is
defined in the Senior Credit Agreement).
"Change in Control" shall mean and be deemed to occur on the earliest
of, and upon any subsequent occurrence of:
(a) (i) prior to the occurrence of a fully distributed public offering
of Stock or other securities of the Company, (A) CVC and its officers and
directors ceasing to own and control beneficially and of record, one hundred
percent of the capital stock of CIC, (B) CIC ceasing to own at least fifty-one
percent (51%) in the aggregate on a fully diluted, as if converted basis, of the
issued and outstanding voting Stock of the Company, or (C) for the period
commencing on the Closing Date and ending on the first anniversary of the
Closing Date, X. Xxxx Xxxxxxx or, in the event of his death, his estate or
members of his immediate family, ceasing to own and control beneficially and of
record, at least seventy-five percent (75%) of the voting Stock of the Borrower
held by X. Xxxx Findlay on the Closing Date, or (ii) approval by the
stockholders or the Board of Directors of the Company or CIC of a merger,
reorganization, consolidation, exchange of shares, recapitalization,
restructuring or other business combination which could result in the occurrence
of any event described in clause (i) of this subparagraph (a); or
(b) following the occurrence of a fully distributed public offering of
Stock or other securities of the Company (i) CVC and its officers and directors
ceasing to own and control beneficially and of record, one hundred percent of
the capital stock of CIC, (ii) CVC, its officers and directors and X. Xxxx
Xxxxxxx ceasing to own and control beneficially and of record thirty-three
percent (33%) in the aggregate on a fully diluted, as if converted basis, of the
issued and outstanding voting Stock of the Company, (iii) any Person or group
(within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934 as in
effect on the date hereof) shall own and control beneficially and of record, a
percentage of the issued and outstanding Voting Stock of the Company on a fully
diluted, as if converted, basis having ordinary voting power in excess of the
percentage then owned beneficially and of record, on a fully diluted, as if
converted basis, by CVC, its officers and directors and X. Xxxx Findlay, or (iv)
a majority of the seats (except in the case of any vacancy for 30 days or less
resulting from the death or resignation of any director of Company) on the board
of directors of Company shall at any time be occupied by persons who were
neither (A) nominated by the board of directors of the Company nor (B) appointed
by the board of directors so nominated.
"CIC" means CIC Acquisition Co., a Delaware corporation.
"Closing Date" shall mean the date on or before March 6, 2000 or such
later date that the conditions set forth in Section 5.1 are satisfied or waived
in accordance with Section 10.4.
"Common Stock" shall mean, except for purposes of the shares obtainable
upon exercise of the Warrants, any capital stock of any class of the Company
hereafter authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders
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thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Company" shall mean initially CIC Acquisition Sub, Inc., a South
Carolina corporation, and, upon the effectiveness of the Merger, shall mean
Conso International as successor by merger with CIC Acquisition Sub, Inc., and
its successors and assigns.
"Condemnation Awards" mean any and all judgements, awards of damages
(including, but not limited to, severance and consequential damages), payments,
proceeds, settlements, amounts paid for a taking in lieu of Condemnation, or
other compensation heretofore or hereafter made, including interest thereon, and
the right to receive the same, as a result of, or in connection, with, any
Condemnation or threatened Condemnation.
"Condemnation" means any taking of title, of use, or of any other
property interest under the exercise of the power of eminent domain, whether
temporarily or permanently, by any Governmental Authority or by any Person
acting under Governmental Authority.
"Conso International" shall mean Conso International Corporation, a
South Carolina corporation.
"Consolidated Companies" shall mean, collectively, the Company and all
of its Subsidiaries, and "Consolidated Company" shall mean, individually, the
Company or any of its Subsidiaries.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property in
which it has an interest is bound.
"Credit Party" shall mean the Company and any Guarantor (including any
Person that currently is a Guarantor and any Person who may at any time in the
future become a Guarantor).
"Currency Contracts" shall mean any forward contracts, futures
contracts, foreign exchange contracts, currently swap agreements, and others
similar agreements and arrangements designed to protect against fluctuations in
foreign exchange rates.
"CVC" shall mean Citicorp Venture Capital, Ltd., a New York
corporation, and its Affiliates.
"Default" shall mean any condition or event which, with notice or lapse
of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning assigned to such term in Section
3.4.
"Depreciation" shall mean, for any period, depreciation expense of the
Consolidated Companies determined on a consolidated basis in accordance with
GAAP.
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"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of
the United States of America.
"Domestic Subsidiary" shall mean any Subsidiary of the Company that is
organized under the laws of one of the fifty states of the United States or the
District of Columbia of the United States.
"Dormant Subsidiary" shall mean each Subsidiary of the Company that has
no assets, no liabilities and does not conduct business in any way.
"EBITDA" shall mean, for any period, determined on a consolidated basis
in accordance with GAAP an amount equal to the sum of (i) Net Income (Loss) for
such period plus (ii) without duplication and to the extent deducted in
computing Net Income (Loss) for such period, (A) Interest Expense for such
period, (B) Cash Taxes for such period, (C) Depreciation for such period, (D)
Amortization for such period, and (E) all other non-cash charges, non-cash
losses and extraordinary one-time losses for such period (including transaction
expenses and the amortization of debt discount) minus (iii) without duplication
and to the extent included in computing Net Income (Loss) for such period,
non-cash gains and extraordinary gains for such period; provided, however, that
with respect to any Person, or substantially all of the assets of a Person, that
became a Subsidiary, of or was merged with or consolidated into, or acquired by
a Consolidated Company in accordance with the terms of this Agreement, during
such period, "EBITDA" shall also include the EBITDA of such Person or the EBITDA
attributable to such assets during such period as if such Person or assets were
acquired as of the first day of such period.
"Environmental Laws" shall mean all federal, state, provincial, local
and other foreign statutes and codes or regulations, rules or ordinances issued,
promulgated, or approved thereunder, now or hereafter in effect (including,
without limitation, those with respect to asbestos or asbestos containing
material or exposure to asbestos or asbestos containing material), relating to
pollution or to protection of the environment or public health and safety,
including without limitation those relating to (a) emissions, discharges,
releases or threatened releases of Hazardous Substances, (b) the manufacture,
processing, distribution, use, generation, treatment, storage, disposal,
transport or handling of Hazardous Substances, and (c) underground storage tanks
and related piping, and emissions, discharges and releases or threatened
releases therefrom, such Environmental Laws to include, without limitation (i)
the Clean Air Act (42 U. S. C. ss. 7401 et seq.), (ii) the Clean Water Act (33
U. S. C. ss. 1251 et seq.), (iii) the Resource Conservation and Recovery Act (42
U.S. C. ss. 6901 et seq.), (iv) the Toxic Substances Control Act (15 U.S.C. ss.
2601 et seq.), and (v) the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S. C. ss. 9601 et seq.).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
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"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) that is considered to be a single
employer with such Person within the meaning of the Tax Code and the regulations
promulgated thereunder.
"Event of Default" means any of the events specified in Section 9.1
hereof.
"Excess Cash Flow" shall have the meaning set forth in the Senior
Credit Agreement.
"Fee Letter" shall mean that certain Fee Letter, dated as of the
Closing Date, executed by SunTrust Equitable Securities Corporation and accepted
and agreed to by Conso International.
"Fiscal Month" shall mean a fiscal month of the Company.
"Fiscal Quarter" shall mean a fiscal quarter of the Company.
"Fiscal Year" shall mean a fiscal year of the Company; references to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "Fiscal
Year 2000") refers to the Fiscal Year ending during such calendar year.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
(a) the greater of (i) the difference of (x) Adjusted EBITDA minus (y) the sum
of (A) Capital Expenditures for such period, (B) Cash Taxes paid during such
period, and (C) to the extent deducted in determining Adjusted EBITDA,
management fees paid during such period, or (ii) zero, to (b) the sum of (i)
principal repayments of Total Funded Debt made during such period, and (ii)
Interest Expense during such period, in each case, measured for the four Fiscal
Quarter period ending on such date of determination; provided, however, for
purposes of calculating the Fixed Charge Coverage Ratio for any period ending
during Fiscal Year 2000 or Fiscal Year 2001, Capital Expenditures shall
specifically exclude Capital Expenditures made during Fiscal Year 2000 in the
operations of the Consolidated Companies in Juarez, Mexico and Coimbatore, India
in an aggregate amount not to exceed $3,700,000.
"Foreign Subsidiary" shall mean any Subsidiary of the Company that is
organized under the laws of a jurisdiction other than one of the fifty states of
the United States or the District of Columbia of the United States.
"Fully Diluted Basis" includes, without duplication, (i) all shares of
Stock of the Company outstanding at the time of determination, (ii) the Stock
issuable upon exercise of all outstanding warrants, options and other rights to
acquire Stock of the Company directly or indirectly and (iii) the Stock of the
Company issuable upon conversion of all securities convertible directly or
indirectly into Stock of the Company.
"GAAP" shall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant
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segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, without limitation, the
FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central
bank or any comparable authority or the Securities and Exchange Commission) or
any court or any arbitrator with authority to bind a party at law.
"Guarantor" shall mean each Subsidiary Guarantor and their respective
successors and permitted assigns.
"Guaranty" shall mean any contractual obligation, contingent or
otherwise, of a Person with respect to any Indebtedness or other obligation or
liability of another Person, including without limitation, any such
Indebtedness, obligation or liability directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable,
including contractual obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such Indebtedness,
obligation or liability or any security therefor, or any agreement to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
solvency, assets, level of income, or other financial condition, or to make any
payment other than for value received. The amount of any Guaranty shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which guaranty is made or, if not so stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Guaranty Agreement" shall mean the this Agreement.
"Hazardous Substance" shall mean any pollutant, contaminant, chemical
or industrial toxic or hazardous constituent, substance or waste (a) that is
defined as a "hazardous waste", "hazardous material", "hazardous substance",
"pollutant" or "contaminant" under (i) the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), (ii) the clean Water Act (33 U.S.C. ss. 1251 et seq.), (iii) the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), (iv) the Toxic
Substances Control Act (15 U.S.C. ss. 2601 et seq.), or (v) the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, (42 U.S.C. ss. 9601 et
seq.), (b) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any Governmental Authority (c) that contains petroleum (including, without
limitation, crude oil or any fraction thereof), petroleum hydrocarbons or other
volatile organic compounds, polychlorinated biphenyls (PCBs) or asbestos or urea
formaldehyde foam insulation, or (d) that contains or remits radioactive
particles, waves or material, including, without limitation, radon gas.
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"Indebtedness" of any Person shall mean, without duplication (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes, drafts, bankers' acceptances or
other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts
payable that are not past due by more than ninety (90) days and other
obligations accrued in the ordinary course of business and earn-outs or similar
arrangements), (d) all obligations of such Person under leases required to be
capitalized under GAAP, (e) all obligations or liabilities of others secured by
any Lien upon property of such Person whether or not such obligation or
liability is assumed, (f) all obligations of such Person under Interest Rate
Contracts or Currency Contracts, (g) all obligations of such Person in respect
of letters of credit (including all contingent reimbursement obligations,
whether or not any draws under such letters of credit have been presented for
payment) and all drafts, bankers acceptances or similar instruments issued in
connection therewith, (h) all Guaranties of Indebtedness of the type described
in clauses (a) through (g) of this definition of Indebtedness, (i) the aggregate
development, construction and acquisition cost of property leased to such Person
pursuant to a Synthetic Lease and all obligations of such Person with respect to
asset securitization programs, and (j) without duplication, all obligations and
liabilities of such Person that are required by GAAP to be shown as liabilities
on a balance sheet of such Person (other than reserves required under GAAP).
"Intangible Assets" shall mean those assets of any Person which are (i)
deferred assets, other than prepaid insurance and prepaid taxes; (ii) patents
and applications therefor, copyrights, trademarks, service marks, trade names,
trademark and trade name registrations and applications, goodwill, franchises,
permits, experimental expenses and other similar assets which would be
classified as "intangible assets" under GAAP; and (iii) treasury stock and any
write-up of the value of any assets after the date of such Person's most recent
year end financial statements provided to the Purchaser prior to the Closing
Date, unless in accordance with GAAP.
"Interest Coverage Ratio" shall mean, as of any date of determination,
the ratio of (a) Adjusted EBITDA to (b) Interest Expense, in each case measured
for the four Fiscal Quarter period ending on such date of determination, or if
such date of determination is not the last day of any Fiscal Quarter, then
ending immediately prior to such date of determination.
"Interest Expense" shall mean, for any period, all interest expense of
the Consolidated Companies (including without limitation, interest expense
attributable to capitalized leases in accordance with GAAP, all capitalized
interest, all commissions, discounts and other fees and charges with respect to
bankers acceptance financing, and all interest expense (whether shown as
interest expense or as loss and expenses on sale of receivables) under a
receivables purchase facility) determined on a consolidated basis in accordance
with GAAP, provided that, for any period ending prior to the first four full
Fiscal Quarters after the Closing Date, Interest Expense shall mean interest
expense for the period commencing on the Closing Date and ending on the last day
of such period, multiplied by a fraction, the numerator of which is 365 and the
denominator of which is the number of days in such period.
"Interest Rate Contracts" shall mean any forward contracts, futures
contracts, interest rate exchange agreements, interest rate cap agreements,
interest rate collar agreements, and other
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similar agreements and arrangements designed to protect against fluctuations in
interest rates, which agreements and arrangements shall be valued on a xxxx to
market basis.
"Investment" shall mean, any direct or indirect advance, loan or other
extension of credit (other than the creation of receivables in the ordinary
course of business) or capital contribution (by means of transfers of property
to others or payments for property or services for the account or use of others,
or otherwise), or any direct or indirect purchase or other acquisition of, or of
a beneficial interest in, capital stock, partnership interests, bonds, notes,
debentures or other securities.
"Lien" shall mean, any mortgage, pledge, security interest, lien,
charge, hypothecation, assignment, deposit arrangement, title retention,
preferential right, trust or other arrangement having the practical effect of
the foregoing and shall include the interest of a vendor or lessor under any
conditional sale agreement, capitalized lease or other title retention
agreement, and the filing of a financing statement under the Uniform Commercial
Code (excluding precautionary filings or financing statements under the Uniform
Commercial Code which cover property that is made available to or used by a
Consolidated Company pursuant to the terms of a lease that is not a Capital
Lease or a Synthetic Lease).
"Loan Documents" shall mean, collectively, each of the Transaction
Documents other than the Warrant Documents, in each case either as originally
executed or as the same may from time to time be supplemented, modified,
amended, restated, extended or supplanted.
"Margin Regulations" shall mean Regulation T, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.
"Materially Adverse Effect" shall mean any materially adverse change
in, or material adverse effect upon, (i) the business, results of operations,
condition (financial or otherwise), assets, liabilities or prospects of the
Consolidated Companies, taken as a whole, (ii) the ability of any Credit Party
to perform its obligations under the Loan Documents, (iii) the rights and
remedies of the Purchasers under any Transaction Document or (iv) the legality,
validity or enforceability of any Transaction Document.
"Material Contract" shall mean any contract or other arrangement (other
than Transaction Documents), whether written or oral, to which the Company or
any of its Subsidiaries is a party as to which the breach, nonperformance,
cancellation or failure to renew by any party thereto could have a Material
Adverse Effect, as the same are listed on Schedule 5.16 as of the Closing Date.
"Maturity Date" shall mean March 5, 2008.
"Merger" shall have the meaning set forth in the recitals to this
Agreement.
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"Merger Documents" shall mean any and all agreements and other
documents relating to the Merger, including without limitation, the articles of
merger, including the Plan of Merger, which are filed in connection with the
Merger with the Secretary of State of South Carolina.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean, (a) with respect to any sale or
disposition by any Consolidated Company of any of its assets, the gross amount
of cash proceeds received by such Consolidated Company including any cash
proceeds received from time to time as payments for the deferred purchase price
of such assets or as principal payments on any promissory notes or other
instruments made or issued to a Consolidated Company in payment of such assets)
less (i) the amount of all commissions and other reasonable and customary
transaction costs, transfer taxes, broker's fees, legal fees and other fees and
expenses properly attributable to such transaction and paid by the Consolidated
Company in cash in connection therewith to any Person that is not an Affiliate
of any of the Consolidated Companies (other than such costs and fees payable to
an Affiliate of CVC and on conditions at least as favorable to such Consolidated
Company as would be obtained by such Consolidated Company at the time in a
comparable arms-length transaction with a Person other than an Affiliate), (ii)
the amount of any reserves taken in accordance with GAAP against liabilities
incurred in connection with such asset sale, and (iii) the principal amount of
any Indebtedness plus premium, penalty and interest (other than the
Obligations), if any, which is secured by such asset and which is required to be
repaid in connection with the disposition thereof, and (b) with respect to the
issuance by Parent of any Stock or debt securities, the gross proceeds received
by Parent from such issuance less the amount of all underwriting discounts and
commissions and other reasonable costs, fees and expenses paid by Parent in
connection therewith to any Person that is not an Affiliate.
"Net Casualty/Insurance Proceeds" when used with respect to any
Condemnation Awards or insurance proceeds allocable to the Collateral, means the
gross proceeds from any Casualty or Condemnation remaining after payment of all
expenses (including attorney's fees incurred in collection of such gross
proceeds).
"Net Income (Loss)" shall mean, for any period, the net income (or
loss) of the Consolidated Companies for such period (taken as a single
accounting period) determined on a consolidated basis in conformity with GAAP.
"Net Worth" shall mean, as of any date, total stockholders' equity of
the Consolidated Companies, determined on a consolidated basis in accordance
with GAAP.
"Note" shall mean, collectively, each subordinated promissory note
issued by the Company pursuant to Section 2.1 or any other provision hereof, in
substantially the form of Exhibit A hereto, maturing on the Maturity Date, or
such earlier date as provided herein, at which time all principal, interest and
other amounts owing hereunder shall be due and payable in full, and bearing
interest as set forth in this Agreement, and each Note delivered in
substitution, amendment, modification, extension or exchange for any such Note
pursuant to the provisions of this Agreement.
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"Obligations" shall mean all amounts owing to any Purchaser by the
Company or its Domestic Subsidiaries pursuant to the terms of this Agreement and
all other Loan Documents including, without limitation, all amounts outstanding
under any Note (including all principal and interest payments due thereunder),
all fees, expenses, indemnification and reimbursement payments, indebtedness,
liabilities and obligations, direct or indirect, absolute or contingent,
liquidated or unliquidated, now existing or hereafter arising, together with all
renewals, extension, modifications or refinancings thereof.
"Permitted Liens" shall mean those Liens expressly permitted by Section
8.1.2.
"Person" shall mean any individual, partnership, firm, corporation, S
corporation, association, joint venture, limited liability company, trust or
other entity, or any government or political subdivision or agency, department
or instrumentality thereof.
"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) of ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits, but shall exclude any Foreign Plan.
"Preferred Stock" shall mean the Preferred Stock of the Company, no par
value.
"Principal Office" for each Purchaser shall mean the office set forth
as such on the signature pages hereto.
"Pro Rata Share" for each Purchaser shall mean the percentage
designated on such Purchaser's Pro Rata Share of the Note as set forth under the
name of such Purchaser on the respective signature page for such Purchaser to
this Agreement.
"Purchasers" and "Purchaser" has the meaning set forth in the
introductory paragraph hereof and shall include each Purchaser's successors and
assigns.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, between, amongst others, the Company and
the Purchasers in their capacity as holder of the Warrants, in substantially the
form of Exhibit D, together with all amendments and modifications thereto.
"Required Purchasers" shall mean Purchasers who individually or
collectively hold more than fifty-one percent (51%) of the outstanding principal
amount of the Note or Notes.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Requirement of Law" for any Person shall mean the articles or
certificate of incorporation and bylaws or other organizational or governing
documents of such Person, and
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any law, treaty, rule or regulation, or determination of a 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.
"Restricted Payment" shall have the meaning set forth in Section 8.1.6.
"Senior Credit Agreement" shall mean that certain Revolving Credit and
Term Loan Agreement, dated as of the date hereof, by and between the Senior
Lenders, SunTrust Bank, as Agent, as Security Agent, as Issuing Bank, and as
Swingline Lender, GMAC Commercial Credit LLC, as Syndication Agent, and Xxxxxx
Financial, Inc., as Documentation Agent, and the Company, providing as of the
Closing Date for an aggregate credit facility to the Company of $70,000,000, as
the same may be hereafter amended, modified, restated, supplemented, refinanced
or replaced.
"Senior Debt" shall have the meaning set forth in the Subordination
Agreement.
"Senior Debt Documents" shall mean the Senior Credit Agreement and all
other Credit Documents (as defined in the Senior Credit Agreement).
"Senior Lenders" shall have the meaning given to such term in the
recitals hereof.
"Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights, or
options to purchase any of the foregoing.
"Stock Holding Agreement" shall mean that certain Stock Holding
Agreement, dated as of March 6, 2000 by and between CIC and the Purchasers.
"Stockholders Agreement" means that certain Stockholders Agreement,
dated as of the date hereof, between, amongst others, the Company and the
Purchasers in their capacity as holder of the Warrants, in substantially the
form of Exhibit H, together with all amendments and modifications thereto.
"Subordination Agreement" shall mean that certain Subordination
Agreement, dated as of the date hereof, by and among the Agent and the Senior
Lenders and the Purchasers, and acknowledged by each Credit Party, either as
originally executed or as hereafter amended, modified or supplemented with the
consent of the Purchaser.
"Subordinated Debt" shall mean (i) the Indebtedness evidenced by the
Notes, and (ii) additional Indebtedness incurred by the Company after the
Closing Date which is expressly subordinated to the Obligations in form and
substance satisfactory to the Purchasers in their sole discretion.
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"Subsidiary" shall mean, with respect to any Person, any other Person a
majority of the total combined voting power of all classes of voting Stock of
which shall, at the time as of which any determination is being made, be owned
by such first Person, either directly or indirectly through one or more other
Subsidiaries.
"Subsidiary Guarantor" shall mean Simplicity Pattern Co., Inc.,
Simplicity Capital Corp., Simplicity Holdings and all other Domestic
Subsidiaries now or hereafter existing, and their respective successors and
permitted assigns.
"Synthetic Lease" shall mean lease that is not treated as a capital
lease under GAAP, but that is treated as a financing under the Tax Code.
"Synthetic Lease Obligations" shall mean the obligations of any
Consolidated Company pursuant to a Synthetic Lease.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor statute, together with the regulations thereunder, as in
effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States of America, or any state,
local or foreign government or by any department, agency or other political
subdivision or taxing authority thereof or therein and all interest, penalties,
additions to tax and similar liabilities with respect thereto.
"Total Funded Debt" shall mean, as of any date of determination,
without duplication, the sum of all Indebtedness of the Consolidated Companies
described in clauses (a) through (e) and in clause (i) of the definition of
"Indebtedness", including without limitation, the Loans (as such term is defined
in the Senior Credit Agreement) and the Letter of Credit Obligations (as such
term is defined in the Senior Credit Agreement).
"Total Funded Debt to Adjusted EBITDA Ratio" shall mean, as of any date
of determination, the ratio of (a) Total Funded Debt, as of such date of
determination, to (b) Adjusted EBITDA measured for the four Fiscal Quarter
period ending on such date of determination, or if such date of determination is
not the last day of any Fiscal Quarter, then ending immediately prior to such
date of determination.
"Transaction Documents" shall mean, collectively, this Agreement, each
Note, each Warrant, the Warrant Agreement, the Registration Rights Agreement,
the Stockholders Agreement, the Assumption Agreement, the Subordination
Agreement, the Stock Holding Agreement, the Fee Letter and any other agreements
of any type or nature in any way relating to or in furtherance of this Agreement
and the Merger Documents, in each case either as originally executed or as the
same may from time to time be supplemented, modified, amended, restated,
extended or supplanted.
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"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code as
in effect from time to time in the State of Georgia.
"United States" shall mean the United States of America, any of the
fifty states thereof, and the District of Columbia thereof.
"Val Mex" shall mean Val-Mex, S.A. de C.V. a corporation organized
under the laws of Mexico, and a wholly owned subsidiary of the Company.
"Warrant Agreement" shall mean that certain Warrant Agreement, dated as
of the date hereof, between the Company and the Purchasers in their capacity as
holder of the Warrants, in substantially the form of Exhibit B hereto, together
with all amendments and modifications thereto.
"Warrant Documents" shall mean, collectively, the Warrant Agreement,
the Warrants, the Registration Rights Agreement and the Stockholders Agreement.
"Warrants" shall mean, collectively, the common stock and preferred
stock purchase warrants issued and delivered by the Company on the Closing Date,
in substantially the form of Exhibit C hereto, and each common stock or
preferred stock purchase warrant issued and delivered in substitution or
exchange for any Warrant.
"Year 2000 Issues" shall mean the actual and anticipated costs, claims,
losses, and liabilities associated with the inability of certain computer
applications to handle effectively data that includes dates on and after January
1, 2000, as such inability in respect of the Consolidated Companies and their
respective material customers, suppliers and vendors materially affects the
business, operations, and financial condition of the Consolidated Companies.
Section 1.2 Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms shall be construed herein, all accounting
determinations hereunder shall be made, all financial statements required to be
delivered hereunder shall be prepared, and all financial records shall be
maintained in accordance with, GAAP, provided, however, if there is a change in
GAAP, the financial statements required to be delivered by the Company under
Section 7.1.7(1) or 7.1.7(2), as applicable, shall be delivered within ninety
(90) days of the effective date of such change in GAAP, and otherwise in
accordance with the requirements of Section 7.1.7(1) or Section 7.1.7(2), as
applicable.
Section 1.3 Other Definitional Terms. 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 Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.4 Exhibits and Schedules. All Exhibits and Schedules attached hereto
are by reference made a part hereof.
Section 1.5 Plural Terms. Capitalized terms used in the singular shall import
the plural and vice versa.
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ARTICLE 2.
ISSUANCE AND PURCHASE OF NOTES AND WARRANTS
Section 2.1 Authorization of Issuance of Notes and Warrants. The Company has
duly authorized the issuance and sale, on the terms and subject to the
conditions set forth herein, of Notes in the aggregate principal amount of up to
$20,000,000, to be dated as of the date of Issuance. The Company has duly
authorized the issuance and sale, on the terms and subject to the conditions set
forth herein and in the Warrant Agreement, of the Warrants for the purchase of
the number of Shares of the Company which correspond to an aggregate twelve
percent (12%) of the Common Stock and the Preferred Stock of Conso
International, calculated on a Fully Diluted Basis, after giving effect to the
Merger.
Section 2.2 Purchase and Sale of Notes and Warrants. The Company hereby agrees
to sell to the Purchasers and, subject to the terms and conditions set forth
herein and in reliance upon the representations and warranties of the Company
contained herein, Purchasers severally agree to purchase from the Company, its
Pro Rata Share of the Notes with the Warrants for an aggregate purchase price of
$20,000,000 (the "Purchase Commitment"). The purchase price paid by the
Purchasers for each Note shall be equal to the principal amount thereof and no
additional consideration (other than payable upon issuance of the Notes and the
Purchase Commitment).
Section 2.3 Allocation of Purchase Price. Under both generally accepted
accounting standards consistently applied and the regulations of the Internal
Revenue Service, the issuance to the Purchasers of the Notes and the Warrants
for an aggregate purchase price equal to the aggregate principal amount of such
Notes being so purchased results in the creation of "original issue discount" on
such Notes (which original issue discount may also be deemed to constitute the
value of any Warrant issued in connection with the issuance of such Notes), and
such regulations require the determination of the value of any Warrant so
delivered. Pursuant to generally accepted accounting principles consistently
applied and applicable Treasury Regulations, the Company and the Purchasers
agree that the aggregate amount of such original issue discount and the
aggregate value of the Warrants for the number of Shares of the Company which
correspond to an aggregate twelve percent (12%) of the Common Stock and the
Preferred Stock of Conso International, calculated on a Fully Diluted Basis,
after giving effect to the Merger is $__________, which original issue discount
and value of such Warrants shall be allocated to the Notes. The Company and the
Purchasers agree to recognize and adhere to the determinations and allocations
of original issue discount and valuation of each Warrant set forth herein for
all federal and state income tax purposes. In the event of any proposed transfer
of any Note by any Purchaser, such Purchaser shall, prior to such transfer, xxxx
such Note with a legend pertaining to the original issue discount in the form
required by Treasury Regulation Section 1.1275-3(b)(1).
Section 2.4 Interest on the Notes.
(a) Interest on each Note shall accrue at a rate per annum
equal to twelve percent (12.00%), subject to Section 3.5 below.
Interest shall be payable (i) on the last Business Day of each calendar
quarter, commencing on March 31, 2000 and continuing
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thereafter until such Note has been paid in full, (ii) upon any
prepayment of any Note to the date of prepayment on the amount prepaid
and (iii) at maturity of the Notes, whether by acceleration or
otherwise.
(b) After maturity, whether by acceleration or otherwise,
interest shall accrue on the Notes at the Default Rate.
Section 2.5 Amortization and Maturity of Notes; Prepayments; Funding Losses.
(a) The principal amount of the Notes shall be payable on the
Maturity Date, unless sooner accelerated in accordance with the terms
hereof.
(b) The Company may prepay the Notes in whole or in part from
time to time, provided that (i) the Company provides at least fifteen
(15) days' prior written notice to the Purchaser of such prepayment,
(ii) any partial prepayment hereunder shall be in a principal amount of
not less than $500,000 or, if greater than $500,000, then in integral
multiples of $500,000, and (iii) such prepayment is accompanied by all
accrued and unpaid interest on the amount prepaid through the date of
prepayment and all other amounts then owing by the Company hereunder in
connection with the Notes.
(c) Prepayment of the Notes shall not preclude any Purchaser
from continuing to own the Warrants or from exercising any of its
rights pursuant to the Warrants, the Warrant Agreement or the
Registration Rights Agreement at a later date; provided, however, that
if the Notes are prepaid in full on or before May 28, 2001, one of each
class of Warrants issued to each Purchaser on the Closing Date (and any
substitution or replacement thereof) shall be deemed to expire pursuant
to the terms thereof.
(d) The Notes shall be prepaid upon a Change of Control, or
upon the closing of a public offering of the Company's Common Stock
pursuant to a registration statement filed under the Securities Act.
Section 2.6 Prepayment Fee.
(a) Upon any prepayment of the Notes on or prior to the second
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to three percent (3%) of the amount of such prepayment.
(b) Upon any prepayment of the Notes after the second
anniversary of the Closing Date and on or prior to the third
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to two percent (2%) of the amount of such prepayment.
(c) Upon any prepayment of the Notes after the third
anniversary of the Closing Date and on or prior to the fourth
anniversary of the Closing Date, the Company shall pay to the Purchaser
prior to or concurrently with such prepayment a prepayment fee in an
amount equal to one percent (1%) of the amount of such prepayment.
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ARTICLE 3.
OTHER PROVISIONS RELATING TO THE NOTES
Section 3.1 Making of Payments. The Company shall make each payment hereunder
and under the Notes not later than 1:00 p.m. (Atlanta, Georgia time) on the day
when due in Dollars in same day funds to each Purchaser at its Principal Office.
All payments received after that hour shall be deemed to have been received by
such Purchaser on the next following Business Day.
Section 3.2 Increased Costs. In the event that any change in any applicable law,
treaty or governmental regulation, or in the interpretation or application
thereof, or compliance by any Purchaser with any guideline, request or directive
(whether or not having the force of law) from any central bank or other U.S. or
foreign financial, monetary or other governmental authority in either case
arising after the date hereof, shall: (a) subject such Purchaser to any tax
(subject to the applicable provisions of Section 3.7) of any kind whatsoever
with respect to this Agreement, the Notes or the Warrants or change the basis of
taxation of payments to such Purchaser of principal, interest, fees or any other
amount payable hereunder (except for changes in the rate of tax on the overall
net income of such Purchaser); (b) impose, modify, or hold applicable any
reserve, special deposit, assessment or similar requirement against assets held
by, or deposits in or for the account of, advances or loans by, or other credit
extended by or committed to be extended by any office of such Purchaser,
including, without limitation, pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or (c) impose on such Purchaser any
other condition with respect to this Agreement, the Notes or the Warrants
hereunder; and the result of any of the foregoing is to increase the cost to
such Purchaser of making or maintaining the Notes or the Warrants or to reduce
the amount of any payment (whether of principal, interest or otherwise) in
respect of the Notes or the Warrants, then, in any case, the Company shall
promptly pay from time to time, upon demand of such Purchaser, such additional
amounts as will compensate such Purchaser for such additional cost or such
reduction, as the case may be. Such Purchaser shall certify the amount of such
additional cost or reduced amount to the Company, and such certification shall
be conclusive absent manifest error. Each Purchaser agrees that, if requested by
the Company, it will use reasonable efforts (subject to overall policy
considerations of such Purchaser) to designate an alternate lending office with
respect to any of its Notes affected by the matters or circumstances described
herein, to reduce the liability of the Company or avoid the results provided
hereunder, so long as such designation is not disadvantageous to such Purchaser
as determined by such Purchaser, which determination if made in good faith,
shall be conclusive and binding on all parties hereto. Nothing in this Section
3.2 shall affect or postpone any of the obligations of the Company or any right
of any Purchaser provided hereunder.
Section 3.3 Capital Adequacy. If, after the date of this Agreement, any
Purchaser shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Purchaser with any request or
directive
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regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Purchaser's capital (whether on this credit
facility or otherwise) as a consequence of its obligations hereunder to a level
below that which such Purchaser could have achieved but for such adoption,
change or compliance (taking into consideration such Purchaser's policies with
respect to capital adequacy) by an amount deemed by such Purchaser, acting
reasonably, to be material, then from time to time, promptly upon demand by such
Purchaser, the Company shall pay such Purchaser such additional amount or
amounts as will compensate such Purchaser for such reduction. A certificate of
such Purchaser claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be prima facie
evidence of the matters contained therein. In determining any such amount, such
Purchaser may use any reasonable averaging and attribution methods. Each
Purchaser agrees that, if requested by the Company, it will use reasonable
efforts (subject to overall policy considerations of such Purchaser) to
designate an alternate lending office with respect to any of its Notes affected
by the matters or circumstances described herein, to reduce the liability of the
Company or avoid the results provided hereunder, so long as such designation is
not disadvantageous to such Purchaser as determined by such Purchaser, which
determination if made in good faith, shall be conclusive and binding on all
parties hereto. Nothing in this Section 3.3 shall affect or postpone any of the
obligations of the Company or any right of any Purchaser provided hereunder.
Section 3.4 Default Rate of Interest. If the Company shall fail to pay on the
due date therefor, whether by acceleration or otherwise, any principal owing
under the Notes or any other Obligations, then interest shall accrue on such
unpaid principal or other Obligation from the due date until and including the
date on which such principal is paid in full at a rate per annum that is two
percent (2%) in excess of the rate of interest otherwise payable hereunder (the
"Default Rate"). Interest calculated at the Default Rate shall be due and
payable upon demand by any Purchaser.
Section 3.5 Calculation of Interest. Interest payable on the Notes shall be
calculated on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed. If the date for any payment of principal is
extended (whether by operation of this Agreement, any provision of law or
otherwise), interest shall be payable for such extended time at the rates
provided herein. Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be due on the next succeeding
Business Day.
Section 3.6 Usury. In no event shall the amount of interest due or payable on
any Obligation, when aggregated with all amounts payable by the Company under
any of the Transaction Documents that are deemed or construed to be interest,
exceed the maximum rate of interest allowed by Applicable Law and, in the event
any such payment is paid by the Company or received by any Purchaser, then such
excess sum shall be credited as a payment of principal, unless the Company, as
applicable, shall notify such Purchaser in writing that it elects to have such
excess sum returned to it forthwith. It is the express intent of the parties
hereto that the Company not pay, and the Purchasers not receive, directly or
indirectly, in any manner whatsoever, interest in excess of that which may be
lawfully paid by the Company under Applicable Law.
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Section 3.7 Payments, etc.
(i) Any and all payments by the Company hereunder or
under the Notes shall be made free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Purchaser, taxes imposed on or measured
by its net income, net profits, and franchise taxes (all such excluded
net income taxes, taxes on net profits and franchise taxes,
collectively referred to as the "Excluded Taxes"; all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being collectively referred to in this Section 3.7 as
"Taxes"). If the Company shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to
any Purchaser, (x) the sum so payable shall be increased by such amount
(the "Gross-up Amount") as may be necessary so that after making all
required deductions (including deductions with respect to Taxes owed by
such Purchaser on the Gross-up Amount payable under this Section 3.7
such Purchaser receives an amount equal to the sum it would have
received had no such deductions been made, (y) the Company shall make
such deductions, and (z) the Company shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance
with applicable law.
(ii) The Company will indemnify each Purchaser for
the full amount of Taxes (together with any Taxes or Excluded Taxes
owed by such Purchaser applicable to the Gross-up Amount payable under
clause (x) of Section 3.7(i) or on the indemnification payments made by
the Company under this Section 3.7(ii), but without duplication
thereof), and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not
such Taxes or such Excluded Taxes were correctly or legally asserted,
so as to compensate such Purchaser for any loss, cost, expense or
liability incurred as a consequence of any such Taxes. Payment pursuant
to such indemnification shall be made within ten (10) days from the
date such Purchaser makes written demand therefor. Within thirty (30)
days after the date of the Company's payment of Taxes, the Company will
furnish to the relevant Purchaser, at its appropriate lending office,
the original or a certified copy of a receipt evidencing payment
thereof. In the event a Purchaser receives a refund of, or credit with
respect to, any Taxes or Excluded Taxes paid by the Company pursuant to
this Section 3.7, such Purchaser shall pay the amount of such refund or
credit to the Company within thirty (30) days of receipt of such refund
or application of such credit.
(iii) Each Purchaser that is not a "United States
Person" (as defined in the Internal Revenue Code of 1986, as amended)
hereby agrees that:
(A) it shall, prior to the time it becomes a
Purchaser hereunder, deliver to the Company:
(1) for each lending office located
in the United States, three (3) accurate and complete
signed originals of Internal Revenue Service Form
W-8ECI or any successor thereto ("Form W-8ECI"),
and/or
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(2) for each lending office located
outside the United States, three (3) accurate and
complete signed originals of Internal Revenue Service
Form W-8BEN or any successor thereto ("Form W-8BEN");
in each case indicating and establishing that such Purchaser,
on the date of delivery thereof, is entitled to receive
payments of principal, interest and fees for the account of
such lending office under this Agreement and the Notes are
free from withholding of any United States Federal income tax;
provided, that if the Form W-8ECI or Form W-8BEN, as the case
may be, supplied by a Purchaser fails to establish a complete
exemption from United States withholding tax as of the date
such Purchaser becomes a Purchaser, such Purchaser shall,
within 15 days after a written request from the Company,
deliver to the Company the forms or other documents necessary
to establish a complete exemption from United States
withholding tax as of such date;
(B) if at any time such Purchaser changes
its lending office or selects an additional lending office, it
shall, at the same time or reasonably promptly thereafter (but
only to the extent the forms previously delivered by it
hereunder are no longer effective or do not meet the
requirements of Section 3.7(iii)(A) deliver to the Company in
replacement for the forms previously delivered by it
hereunder:
(1) for such changed or additional
applicable lending office located in the United
States of America, three (3) accurate and complete
signed originals of Form W-8ECI; or
(2) otherwise, three (3) accurate
and complete signed originals of Form W-8BEN;
in each case indicating and establishing that such Purchaser
is on the date of delivery thereof entitled to receive
payments of principal, interest and fees for the account of
such changed or additional lending office under this Agreement
and the Notes are free from withholding of any United States
Federal income tax.
(iv) In addition to the documents to be furnished
pursuant to Section 3.7, each Purchaser shall, promptly upon the
reasonable written request of the Company, deliver to the Company and
such other accurate and complete forms or similar documentation as such
Purchaser is legally able to provide and as may be required from time
to time by any applicable law, treaty, rule or regulation of any
jurisdiction in order to establish such Purchaser's tax status for
withholding purposes or as may otherwise be appropriate to eliminate or
minimize any Taxes on payments under this Agreement and the Notes.
(v) Each Purchaser shall use reasonable efforts to
avoid or minimize any amounts which might otherwise be payable by the
Company pursuant to this Section
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3.7, except to the extent that a Purchaser determines that such efforts
would be disadvantageous to such Purchaser, as reasonably determined by
such Purchaser and which determination, if made in good faith, shall be
binding and conclusive on all parties hereto.
(vi) Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of
the Company and the Purchasers contained in this Section 3.7 shall
survive the termination of this Agreement and the payment in full of
the principal of, premium, if any, interest, and fees hereunder and
under the Notes.
ARTICLE 4.
GUARANTY
Section 4.1 The Guaranty.
Each Guarantor hereby jointly and severally guarantees to the
Purchasers, as primary obligor and not as surety, the prompt payment of the
Obligations in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors hereby further
agree that if any of the Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, or otherwise), the
Guarantors will promptly pay the same, without any demand or notice whatsoever,
and that in the case of any extension of time of payment or renewal of any of
the Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in
any other of the Loan Documents, the obligations of each Guarantor under this
Agreement and the other Loan Documents shall be limited to an aggregate amount
equal to the largest amount that would not render such obligations subject to
avoidance under Section 548 of the Bankruptcy Code or any comparable provisions
of any applicable state law.
Section 4.2 Obligations Unconditional.
The obligations of each Guarantor under Section 4.1 are joint and
several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Loan Documents, or any
other agreement or instrument referred to therein, or any substitution, release,
impairment or exchange of any other guarantee of or security for any of the
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 4.2 that the obligations of each Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.
Each Guarantor agrees that it shall have no right of subrogation, indemnity,
reimbursement or contribution against the Company or any other Guarantor for
amounts paid under this Article 4 until such time as the Purchasers have been
indefeasibly paid in full in respect of all Obligations. Without limiting the
generality of the
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foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice any
Guarantor, the time for any performance of or compliance with any of
the Obligations shall be extended, or such performance or compliance
shall be waived;
(b) any of the acts mentioned in any of the provisions of any
of the Loan Documents, or any other agreement or instrument referred to
in the Loan Documents shall be done or omitted;
(c) the maturity of any of the Obligations shall be
accelerated, or any of the Obligations shall be modified, supplemented
or amended in any respect, or any right under any of the Loan
Documents, or any other agreement or instrument referred to in the Loan
Documents shall be waived or any other guarantee of any of the
Obligations or any security therefor shall be released, impaired or
exchanged in whole or in part or otherwise dealt with; or
(d) any of the Obligations shall be determined to be void or
voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of
any Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that each Purchaser exhaust any right, power or
remedy or proceed against any Person under any of the Loan Documents, or any
other agreement or instrument referred to in the Loan Documents, or against any
other Person under any other guarantee of, or security for, any of the
Obligations.
Section 4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Obligations is rescinded or must be
otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify each Purchaser on demand for all
reasonable costs and expenses (including, without limitation, reasonable
out-of-pocket fees and expenses of counsel) incurred by such Purchaser in
connection with such rescission or restoration, including any such reasonable
costs and expenses incurred in defending against any claim alleging that such
payment constituted a preference, fraudulent transfer or similar payment under
any bankruptcy, insolvency or similar law.
Section 4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4,
each Guarantor hereby specifically waives the benefits of [O.C.G.A. ss. 10-7-24
(or New York equivalent)] to the extent applicable. Each Guarantor further
agrees that it shall have no right of recourse to security for the
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Obligations, except through the exercise of rights of subrogation and
contribution pursuant to Section 4.2.
Section 4.5 Remedies.
Each Guarantor agrees that, to the fullest extent permitted by law, as
between such Guarantor, on the one hand, and each Purchaser, on the other hand,
the Obligations may be declared to be forthwith due and payable as provided in
Section 9.2 (and shall be deemed to have become automatically due and payable in
the circumstances provided in said Section 9.2) for purposes of Section 4.1
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing the Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of such declaration
(or the Obligations being deemed to have become automatically due and payable),
the Obligations (whether or not due and payable by any other Person) shall
forthwith become due and payable by such Guarantor for purposes of Section 4.1.
Section 4.6 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Section 4 is a guaranty of payment and not of
collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.
ARTICLE 5.
CONDITIONS PRECEDENT TO PURCHASE OF THE NOTES AND THE WARRANTS
Section 5.1 Closing Date Conditions. The obligations of the Credit Parties under
this Agreement are subject to the satisfaction of each of the following
conditions on the Closing Date:
(A) No Injunction, etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain,
or prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of, this Agreement or the Merger Agreement or the consummation
of the transactions contemplated hereby or thereby, or which, in each
Purchaser's reasonable discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement.
(B) Documentation. Each Purchaser shall have received, on or prior to
the Closing Date, the following, each in the form and substance satisfactory to
such Purchaser and its counsel:
(1) duly executed counterparts of this Agreement;
(2) a Note or Notes executed in favor of each Purchaser in the
aggregate principal amount of such Purchaser's Pro Rata Share of the
$20,000,000 of Notes sold pursuant to the terms of this Agreement;
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(3) the duly executed Warrant Agreement;
(4) duly executed Warrants executed in favor of each Purchaser
for the purchase of such Purchaser's Pro Rata Share of the number of
Shares of the Company which correspond to an aggregate twelve percent
(12%) of the Common Stock and the Preferred Stock of Conso
International, calculated on a Fully Diluted Basis, after giving effect
to the Merger;
(5) the duly executed Registration Rights Agreement;
(6) the duly executed Stockholders' Agreement;
(7) UCC, tax, judgment and fixture Lien search results on (a)
the names of each Credit Party and (b) all trade names or former names
used by each Credit Party from all appropriate jurisdictions and filing
offices requested by Purchasers, together with copies of executed
originals of such termination statements, releases and cancellations of
mortgages required by the Purchasers in connection with the removal of
any Liens (other than Permitted Liens) against the assets of the
Purchasers;
(8) a certificate signed by a senior officer of each Credit
Party stating that the representations and warranties set forth in
Section 5.1 hereof are true and correct in all material respects on and
as of such date with the same effect as though made on and as of such
date, stating that each Credit Party is on such date in compliance with
all the terms and provisions of the Transaction Documents on its part
to be observed or performed, and stating that on such date, no Default
or Event of Default, has occurred or is continuing;
(9) copies of the articles of incorporation of each Credit
Party and CIC, and all amendments thereto, certified by the relevant
Secretary of State of such Credit Party's or CIC's incorporation as of
a recent date; and (b) good standing certificates for each Credit
Party, issued by the relevant Secretary of State and any other States
in which each Credit Party's qualification is required, in each case as
of a recent date;
(10) a certificate of the Secretary or an Assistant Secretary
of each Credit Party and CIC, certifying (a) that attached thereto is a
true and complete copy of the Bylaws of such Credit Party or CIC, as
the case may be, as in effect on the date of such certification, (b)
that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors of such Credit Party or CIC, as the
case may be, authorizing the execution, delivery and performance of
this Agreement and the other Transaction Documents to which such Credit
Party is a party; (c) as to the incumbency and genuineness of the
signatures of the officers of such Credit Party executing this
Agreement or any of the other Transaction Documents;
(11) a favorable legal opinion of counsel to each Credit
Party, addressed to the Purchasers, covering such matters relating to
the transactions contemplated hereby as the Purchasers may request;
(12) certified copies of the executed Senior Debt Documents
and evidence that all conditions precedent thereto have been satisfied
or waived;
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(13) copies of all material consents, approvals,
authorizations, registrations and filings and orders required or
advisable to be made or obtained under any Requirement of Law or by any
material Contractual Obligation of each Credit Party, in connection
with the execution, delivery, performance, validity and enforceability
of the Transaction Documents or any of the transactions contemplated
thereby, and such consents, approvals, authorizations, registrations,
filings and orders shall be in full force and effect and all applicable
waiting periods shall have expired
(14) copies of the internally prepared quarterly consolidated
financial statements of Conso International for the Fiscal Quarter
ending January 1, 2000 and copies of the audited consolidated financial
statements for Conso International for the Fiscal Year ending July 3,
1999;
(15) a solvency certificate of each Credit Party executed by
the Chief Financial Officer of such Credit Party;
(16) written instructions from the Company to the Purchasers
as to the disbursements of the proceeds of each Note;
(17) the duly executed Subordination Agreement;
(18) certified copies of the Merger Agreement, together with
evidence that all conditions precedent to the Merger Agreement have
been satisfied or waived and that all transactions contemplated by the
Merger Agreement have been consummated.
(19) evidence satisfactory to the Purchasers that CVC has made
an aggregate minimum equity investment in the Company of $19,999,600
and Findlay has made an aggregate minimum equity investment in the
Company of $4,800,400, in each case under terms reasonably satisfactory
to Purchasers.
(20) evidence satisfactory to Purchasers that the Consolidated
Companies have Adjusted EBITDA for the most recent twelve-month period
ending December 31, 1999 of at least $19,000,000.
(21) such other documents, instruments and agreements as
Purchasers shall request.
(C) Corporate Actions. All corporate and other action required
hereunder shall be satisfactory.
(D) No Material Adverse Effect. No Material Adverse Effect has occurred
since July 3, 1999.
(F) No Default, Etc. No Default or Event of Default shall exist.
(G) Representations Accurate. All representations and warranties made
by the Credit Parties contained herein or in any other Transaction Document
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been
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made on and as of the Closing Date except where such representations or
warranties specifically refer to an earlier date.
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties Generally. The Company (as to itself
and all other Consolidated Companies) represents and warrants that the following
statements are, and after giving effect to the Merger will be, true and correct.
6.1.1 Organizational Existence; Compliance with Law. Each of the
Consolidated Companies (i) is duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its organization,
(ii) has the corporate or other organizational power and authority and
the legal right to own and operate its property and to conduct its
business, (iii) is duly qualified as a foreign corporation or other
organization and in good standing under the laws of each jurisdiction
where its ownership of property or the conduct of its business requires
such qualification, except where a failure to be so qualified could not
reasonably be expected to have a Materially Adverse Effect, and (iv) is
in compliance with all Requirements of Law except where the failure to
be in compliance could not reasonably be expected to have a Materially
Adverse Effect and has not received any notice of any violation of any
Requirement of Laws that would reasonably be expected to have a
Materially Adverse Effect.
6.1.2 Organizational Power; Authorization. Each Credit Party has the
corporate or other organizational power and authority to make, deliver
and perform the Transaction Documents to which it is a party and has
taken all necessary corporate or other organizational action to
authorize the execution, delivery and performance of the Transaction
Documents to which it is a party. No consent, approval, authorization
of, or registration or filing with, any Person under any material
Contractual Obligation, with any Person under the articles of
incorporation or bylaws of any Credit Party, or with any Governmental
Authority is required in connection with the execution, delivery or
performance by any Credit Party, or the validity or enforceability
against any Credit Party of the Transaction Documents to which it is a
party or any of the transactions contemplated thereby, other than such
consents, approvals, authorizations, registrations or filings which
have been made or obtained and are in full force and effect.
6.1.3 Enforceable Obligations. This Agreement has been duly executed
and delivered, and each other Loan Document will be duly executed and
delivered, by the Credit Parties, and this Agreement constitutes, and
each other Loan Document when executed and delivered will constitute,
legal, valid and binding obligations of the Credit Parties, enforceable
against them in accordance with their respective terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
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6.1.4 No Legal Bar. The execution, delivery and performance by the
Credit Parties of the Transaction Documents to which it is a party will
not violate any Requirement of Law or cause a breach or default under
any of their respective Contractual Obligations, articles of
incorporation or bylaws, except as could not reasonably be expected to
have a Materially Adverse Effect.
6.1.5 No Material Litigation. Except as set forth on Schedule 6.1.5, no
litigation, investigations or proceedings of or before any Governmental
Authority are pending or, to the knowledge of any Credit Party,
threatened by or against any of the Consolidated Companies, or against
any of their respective properties or revenues, existing or future (a)
with respect to any Transaction Document or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Materially Adverse Effect.
6.1.6 Investment Company Act, Etc. No Credit Party is an "investment
company" or a company "controlled" by an "investment company" (as each
of the quoted terms is defined or used in the Investment Company Act of
1940, as amended). No Credit Party is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, or
any foreign, federal or local statute or regulation limiting its
ability to incur indebtedness for money borrowed, guarantee such
indebtedness, or pledge its assets to secure such indebtedness, as
contemplated hereby or by any other Loan Document.
6.1.7 Margin Regulations. No part of the proceeds of any of the Notes
will be used for any purpose which violates, or which would be
inconsistent or not in compliance with, the provisions of the
applicable Margin Regulations.
6.1.8 Compliance With Environmental Laws. Except as set forth on
Schedule 6.1.8 or as would not reasonably be expected to result in
penalties, fines, claims or other liabilities (including, without
limitation, remediation costs and expenses) to the Consolidated
Companies in amounts in excess of $50,000 either individually or in the
aggregate:
(1) The Consolidated Companies have received no notices of
claims or potential liability under, and are in compliance with, all
applicable Environmental Laws.
(2) None of the Consolidated Companies has received during the
period from January 1, 1990 through the date of this Agreement, any
notice of violation, or notice of any action, either judicial or
administrative, from any Governmental Authority (whether United States
or foreign) relating to the actual or alleged violation of any
Environmental Law, including, without limitation, any notice of any
actual or alleged spill, leak, or other release of any Hazardous
Substance, waste or hazardous waste by any Consolidated Company or its
employees or agents, or as to the existence of any contamination on any
properties owned by any Consolidated Company.
(3) The Consolidated Companies have obtained, and are in
compliance with, all necessary governmental permits, licenses and
approvals which are material to the operations conducted on their
respective properties, including without limitation, all
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required permits, licenses and approvals for (i) the emission of air
pollutants or contaminates, (ii) the treatment or pretreatment and
discharge of waste water or storm water, (iii) the treatment, storage,
disposal or generation of hazardous wastes, (iv) the withdrawal and
usage of ground water or surface water, and (v) the disposal of solid
wastes.
6.1.9 Insurance. The Consolidated Companies currently maintain
insurance with respect to their respective properties and businesses,
with financially sound and reputable insurers, having coverages against
losses or damages of the kinds customarily insured against by reputable
companies in the same or similar businesses, such insurance being in
amounts no less than those amounts which are customary for such
companies under similar circumstances. The Consolidated Companies have
paid all of insurance premiums now due and owing with respect to such
insurance policies and coverages, and such policies and coverages are
in full force and effect.
6.1.10 No Default. None of the Consolidated Companies is in default
under any Contractual Obligation which has had or is reasonably
expected to have a Materially Adverse Effect.
6.1.11 No Burdensome Restrictions. None of the Consolidated Companies
is a party to or bound by any Contractual Obligation or Requirement of
Law which has had or could reasonably be expected to have a Materially
Adverse Effect.
6.1.12 Taxes. Each of the Consolidated Companies has filed or caused to
be filed all declarations, reports and tax returns which are required
to have been filed, and has paid all taxes, custom duties, levies,
charges and similar contributions ("taxes" in this Section 6.1.12)
shown to be due and payable on said returns or on any assessments made
against it or its properties, and all other taxes, fees or other
charges imposed on it or any of its properties by any Governmental
Authority (other than those (i) the amount or validity of which is
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been
provided in its books and (ii) for which an extension has been filed);
and no tax liens have been filed and, to the knowledge of any
Consolidated Company, no claims are being asserted with respect to any
such taxes, fees or other charges.
6.1.13 Subsidiaries; Dormant Subsidiaries. Except as set forth on
Schedule 6.1.13 (as amended from time to time), the Company has no
Subsidiaries, and no Consolidated Company is a joint venture partner or
general partner in any partnership. Each Subsidiary listed in Part A of
Schedule 6.1.13 is an Active Subsidiary and each Subsidiary listed in
Part B of Schedule 6.1.13 is a Dormant Subsidiary.
6.1.14 Financial Statements. The Company has furnished to the
Purchasers:
(1) (i) the audited consolidated and consolidating balance
sheet of Conso International and its Subsidiaries as at July 3, 1999
and the related consolidated and consolidating statements of income,
shareholders' equity and cash flows for the Fiscal Year then ended,
including in each case the related schedules and notes, and (ii) the
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unaudited consolidated and consolidating balance sheet of Conso
International and its Subsidiaries as at the end of the October 2, 1999
Fiscal Quarter, and the related unaudited consolidated and
consolidating statements of income, shareholders' equity, and cash
flows for the period then ended, setting forth in each case in
comparative form the figures for the previous Fiscal Year and Fiscal
Quarter, as the case may be. The foregoing financial statements fairly
present in all material respects the financial condition of Conso
International and its Subsidiaries as at the dates thereof and results
of operations for such periods in conformity with GAAP. Conso
International and its Subsidiaries taken as a whole do not have any
material contingent obligations, contingent liabilities, or material
liabilities for known taxes, long-term leases or unusual forward or
long-term commitments not reflected in the foregoing financial
statements or the notes thereto. Since July 3, 1999 there have been no
changes with respect to Conso International and its Subsidiaries which
have had or could reasonably be expected to have, as to any Credit
Party, BT Credit Party, or in the aggregate, a Materially Adverse
Effect.
(2) the unaudited pro forma balance sheet of the Consolidated
Companies on a consolidated basis setting forth as of the Closing Date
(after giving effect to the Merger) the pro forma financial position of
the Company and its Subsidiaries on a consolidated basis, copies of
which have been delivered to the Purchasers, fairly present, on a pro
forma basis, in conformity with GAAP applied on a basis consistent with
the financial statements referred to in clause (a) above, the financial
position of the Consolidated Companies on a consolidated basis, as of
such date and time, as if the Merger occurred as of October 2, 1999.
Neither the Company nor any Subsidiary of the Company has any material
contingent obligations, contingent liabilities or other obligations
which are not reflected in the balance sheet referenced above (the "Pro
Forma Financial Statements").
(3) the projections attached to the solvency certificates
delivered by the Company pursuant to Section 5.1(B)(15), prepared for
the Consolidated Companies on a consolidated basis with respect to the
1999 fiscal year (on a month by month basis) and with respect to the
2000 and 2001 fiscal years (on an annual basis), copies of which have
been furnished to the Purchasers, have been prepared based upon the
reasonable assumptions set forth therein which are believed by the
Company to be reasonable and fair in light of the current condition and
past performance of Conso International and to reflect a reasonable
estimate of the projected balance sheets, results of operations, cash
flows and other information presented therein.
6.1.15 Employee Benefits. Except as disclosed on Schedule 6.1.15:
(1) Identification of Plans. (1) None of the Consolidated
Companies maintains or contributes to or has an obligation to
contribute to, a Plan that is an "employee pension benefit plan" as
defined in Section 3(2) of ERISA or any plan, program or arrangement
that provides for deferred compensation, (2) none of the Consolidated
Companies nor any of their respective ERISA Affiliates in the last five
years has maintained or contributed to or has had an obligation to
contribute to, a Plan that is subject to Title IV of ERISA, and (3)
none of the Consolidated Companies maintains or contributes to any
Foreign Plan;
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(2) Compliance. Except as could not reasonably be expected to
result in a Materially Adverse Effect, each Plan maintained by a
Consolidated Company is by its terms and in operation, in substantial
compliance with all applicable laws, and no Consolidated Company has
been assessed, and to the knowledge of the Company, is subject to, any
tax or penalty with respect to any Plan of such Consolidated Company or
any ERISA Affiliate thereof, including without limitation, any tax or
penalty under Title I or Title IV of ERISA or under Chapter 43 of the
Tax Code, or any tax or penalty resulting from a loss of deduction
under Sections 162, 404, or 419 of the Tax Code;
(3) Liabilities. The Consolidated Companies have not been
assessed and to the knowledge of the Company are not subject to, any
material monetary liabilities (including withdrawal liabilities) with
respect to any Plans or Foreign Plans of such Consolidated Companies or
any of their ERISA Affiliates, including without limitation, any
liabilities arising from Titles I or IV of ERISA, other than
obligations to fund benefits under an ongoing Plan and to pay current
contributions, expenses and premiums with respect to such Plans or
Foreign Plans;
(4) Funding. The Consolidated Companies and, with respect to
any Plan which is subject to Title IV of ERISA, each of their
respective ERISA Affiliates, have made full and timely payment of all
amounts (A) required to be contributed under the terms of each Plan and
applicable law, and (B) required to be paid as expenses (including PBGC
or other premiums) of each Plan, and no Plan subject to Title IV of
ERISA has an "amount of unfunded benefit liabilities" (as defined in
Section 4001 (a)(18) of ERISA), determined as if such Plan terminated
on any date on which this representation and warranty is deemed made.
The Consolidated Companies are subject to no liabilities with respect
to post-retirement medical benefits;
(5) Prohibited Transactions. No Consolidated Company has
engaged in, or has any knowledge of, any non-exempt prohibited
transaction (within the meaning of Section 406 of ERISA or Section 4975
of the Tax Code) with respect to any Plan.
(6) Qualification of Plans. A favorable determination as to
the qualification under Section 401(a) of the Tax Code has been made by
the Internal Revenue Service with respect to each Plan intended to be
qualified under Section 401(a) of the Tax Code and, to the best
knowledge of each of the Consolidated Companies, nothing has occurred
since the date of such determination that would adversely affect such
qualification.
(7) Withdrawal. Except as could not reasonably be expected to
result in a Materially Adverse Effect, none of the Consolidated
Companies nor any of their respective ERISA Affiliates has:
(A) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e)
of ERISA,
(B) withdrawn as a substantial employer so
as to become subject to the provisions of Section
4063 of ERISA,
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(C) ceased making contributions to any
"employee pension benefit plan" subject to the
provisions of Section 4064(a) of ERISA to which any
of the Consolidated Companies or any of their
respective ERISA Affiliates made contributions,
(D) incurred or caused to occur a "complete
withdrawal" (within the meaning of Section 4203 of
ERISA) or a "partial withdrawal" (within the meaning
of Section 4205 of ERISA) from a Multiemployer Plan
so as to incur withdrawal liability under Section
4201 of ERISA (without regard to subsequent reduction
or waiver of such liability under Sections 4207 or
4208 of ERISA), or
(E) been a party to any transaction or
agreement under which the provisions of Section 4204
of ERISA were applicable and which could reasonably
be expected to result in liability for any of the
Consolidated Companies.
(F) Proceedings. Except as could not
reasonably be expected to result in a Materially
Adverse Effect, there are no actions, suits or claims
pending (other than routine claims for benefits) or,
to the knowledge of any of the Consolidated
Companies, which could reasonably be expected to be
asserted, against any Plan maintained for employees
or the assets of any such Plan. No civil or criminal
action brought pursuant to the provisions of Title I,
Subtitle B, Part 5 of ERISA, is pending or, to the
best knowledge of any of the Consolidated Companies,
threatened against any fiduciary or any Plan.
6.1.16 Patents, Trademarks, Licenses, Etc (x) The Consolidated
Companies have obtained and hold in full force and effect or have the
right to use all material patents, trademarks, service marks, trade
names, copyrights, licenses and other such rights, free from burdensome
restrictions, which are necessary for the operation of their respective
businesses as presently conducted, and (y) no product, process, method,
service or other item presently sold by or employed by any Consolidated
Company in connection with such business infringes any patents,
trademark, service xxxx, trade name, copyright, license or other right
owned by any other Person except to the extent any such infringement
could not reasonably be expected to have a Materially Adverse Effect,
and (z) there is not presently pending, or to the knowledge of any
Consolidated Company, threatened, any claim or litigation against or
affecting any Consolidated Company contesting such Person's right to
sell or use any such product, process, method, substance or other item.
6.1.17 Ownership of Property. On the Closing Date, the real estate (the
"Real Estate") listed on Schedule 6.1.17 constitutes all of the real
property owned, leased, subleased, or used by the Consolidated
Companies. Each Consolidated Company has good and marketable fee simple
title to all of its owned real property or a valid leasehold interest
in all of its leased real property and good title to, or a valid
leasehold interest in, all of its other property, including the
properties and assets reflected in the balance sheet of Conso
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International at July 3, 1999 and the Pro Forma Financial Statements
hereinabove described, other than properties disposed of in the
ordinary course of business since such date, subject to no Lien or
title defect of any kind, except Permitted Liens. The Consolidated
Companies enjoy peaceful and undisturbed possession under all of their
respective real estate leases under which they are tenants or lessees,
as the case may be. Schedule 6.1.17 also describes any purchase
options, rights of first refusal or other similar contractual rights
pertaining to any Real Estate. As of the Closing Date, no portion of
any Credit Party's owned Real Estate has suffered any material damage
by fire or other casualty loss which has not heretofore been repaired
and restored in all material respects to its original condition or
otherwise remedied.
6.1.18 Indebtedness. Except as set forth on Schedule 8.1.1, as of the
Closing Date none of the Consolidated Companies is an obligor in
respect of any Indebtedness for borrowed money in a principal amount of
$250,000 or more, or any commitment to create or incur any Indebtedness
for borrowed money in a principal amount of $250,000 or more.
6.1.19 Financial Condition. On the Closing Date and after giving effect
to the Merger and the other transactions contemplated by this
Agreement, the other Loan Documents, the Senior Debt Documents and the
other Transaction Documents, (i) the assets of each Credit Party, at
fair valuation and based on their present fair saleable value, will
exceed such Credit Party's debts, including contingent liabilities, as
such liabilities may be limited under the express terms of any Guaranty
Agreement, (ii) the remaining capital of each Credit Party will not be
unreasonably small to conduct such Credit Party's business, and (iii)
no Credit Party will have incurred debts, or have intended to incur
debts, beyond its ability to pay such debts as they mature. For
purposes of this Section 6.1.19, "debt" means any liability on a claim,
and "claim" means (a) the right to payment, whether or not such right
is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured, or (b) the 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, unmatured, disputed, undisputed, secured or
unsecured.
6.1.20 Labor Matters. Since January 1, 1997, the Consolidated Companies
have experienced no strikes, labor disputes, slow downs or work
stoppages due to labor disagreements and, to the best knowledge of any
Credit Party, there are no such strikes, disputes, slow downs or work
stoppages threatened against any Consolidated Company. The hours worked
and payment made to employees of the Consolidated Companies have not
been in violation in any material respect of the Fair Labor Standards
Act or any other applicable law dealing with such matters. All material
payments due from the Consolidated Companies, or for which any claim
may be made against the Consolidated Companies, on account of wages and
employee health and welfare insurance and other benefits have been paid
or accrued as liabilities on the books of the Consolidated Companies.
6.1.21 Payment or Dividend Restrictions. Except as described on
Schedule 6.1.21, none of the Consolidated Companies is party to or
subject to any agreement or understanding
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restricting or limiting the payment of any dividends or other
distributions by such Consolidated Company.
6.1.22 Year 2000 Issues. The Company and the other Consolidated
Companies (i) have done a comprehensive review of their computer
programs to identify the systems that would be affected by Year 2000
Issues as such Year 2000 Issues pertain to the computer programs and
systems of the Consolidated Companies, (ii) have reviewed their Year
2000 exposure to their material third party customers, suppliers, or
vendors and have evaluated the costs of modifications to program logic
control systems, (iii) developed a program for remediating in all
material respects all currently known Year 2000 Issues and successfully
implemented such program, and (iv) based on their review, consultants'
reports, and all other information currently available to them, the
Year 2000 Issues could not reasonably be expected to have a Materially
Adverse Effect.
6.1.23 Disclosure. No representation or warranty contained in the Loan
Documents or in any other document furnished from time to time to the
Purchasers by the Company, Conso International, their advisors, counsel
or representatives pursuant to the terms of this Agreement, contains or
will contain any untrue statement of a material fact or omits or will
omit to state any material fact necessary to make the statements herein
or therein not misleading as of the date made or deemed to be made.
Except as may be set forth herein, there is no fact known to any Credit
Party which has had, or is reasonably expected to have, a Materially
Adverse Effect.
ARTICLE 7.
AFFIRMATIVE COVENANTS
Section 7.1 Affirmative Covenants. Until all Obligations then due and payable
have been paid in full, unless the Required Purchasers shall otherwise consent
in the manner set forth in Section 10.4, the Company agrees to, and to cause
each of its Subsidiaries to:
7.1.1 Organizational Existence, Etc. Except as permitted by Section
8.3, preserve and maintain its corporate or other organizational
existence, its rights, franchises, and licenses, and its patents and
copyrights (for the scheduled duration thereof), trademarks, trade
names, and service marks, necessary or desirable in the normal conduct
of its business, and its qualification to do business as a foreign
corporation or other organization in all jurisdictions where it
conducts business or other activities making such qualification
necessary except where a failure to be so qualified could not
reasonably be expected to have a Materially Adverse Effect.
7.1.2 Compliance with Laws, Etc. Comply with all Requirements of Law
(including, without limitation, the Environmental Laws and ERISA) and
Contractual Obligations applicable to or binding on any of them, except
where a failure to comply could not reasonably be expected to have a
Materially Adverse Effect.
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7.1.3 Payment of Taxes and Claims, Etc. Pay (i) all taxes, assessments
and governmental charges imposed upon it or upon its property, and (ii)
all claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its
property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate proceedings and adequate
reserves are maintained with respect thereto in accordance with GAAP
and subject to maintenance of reasonable reserves and extensions
permitted by the relevant taxing authorities.
7.1.4 Keeping of Books. Keep proper books of record and account,
containing complete and accurate entries of all their respective
financial and business transactions which are required to be maintained
in order to prepare the consolidated financial statements of the
Company and its Subsidiaries in conformity with GAAP in all material
respects.
7.1.5 Visitation, Inspection and Audits, Etc. Permit any representative
of any Purchaser which owns at least $2,500,000 of Subordinated Notes
to visit and inspect any of its property, to examine its books and
records and to make copies and take extracts therefrom, and to discuss
its affairs, finances and accounts with its officers, all at such
reasonable times and as often as any such Purchaser may reasonably
request after reasonable prior notice to the Company; provided,
however, if a Default or an Event of Default has occurred and is
continuing, no prior notice shall be required. All reasonable expenses
incurred by such Purchaser in connection with any such visit,
inspection, audit, examination and discussions shall be borne by the
Company; provided, however, that prior to the occurrence and
continuation of a Default or Event of Default the Company shall not be
required to pay the reasonable expenses of each visit of such Purchaser
under this Section 7.1.5 in excess of one visit per Fiscal Quarter.
7.1.6 Insurance; Maintenance of Properties; Net Casualty/Insurance
Proceeds.
(1) Maintain or cause to be maintained with financially sound
and reputable insurers, insurance with respect to its properties and
business, and the properties and business of its Subsidiaries, against
loss or damage of the kind customarily insured against by reputable
companies in the same or similar businesses, such insurance to be of
such types and in such amounts as is customary for such companies under
similar circumstances; provided, however, that in any event the Company
shall use its best efforts to maintain, or cause to be maintained,
insurance in amounts and with coverages not materially less favorable
to any Consolidated Company as in effect on the date of this Agreement.
(2) Cause all properties used or useful in the conduct of its
business to be maintained and kept in good condition, repair and
working order (normal wear and tear and any damage being repaired or
restored excepted) and supplied with all necessary equipment and will
cause to be made all necessary repairs, renewals, replacements,
settlements and improvements thereof, all as in the judgment of the
Company as may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at
all times and except where a failure to do so would not have a
Materially Adverse Effect;
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(3) To the extent permitted by the terms of the Senior Credit
Agreement, Net Casualty/Insurance Proceeds must be applied to the
payment of the Obligations.
7.1.7 Reporting Covenants. Furnish to each Purchaser:
(1) Annual Financial Statements. As soon as available and in
any event within 120 days after the end of each Fiscal Year, balance
sheets of the Consolidated Companies as at the end of such year,
presented on a consolidated and consolidating basis, and the related
statements of income, retained earnings and cash flows of the
Consolidated Companies for such Fiscal Year, presented on a
consolidated basis, setting forth in each case in comparative form the
figures for the previous Fiscal Year, all in reasonable detail and
accompanied by a report thereon of Deloitte & Touche L.L.P. or other
independent public accountants of comparable recognized national
standing, which such report shall be unqualified as to going concern
and scope of audit and shall state that such financial statements
present fairly in all material respects the financial condition as at
the end of such Fiscal Year, and the results of operations and
statements of cash flows of the Consolidated Companies for such Fiscal
Year in accordance with GAAP and that the examination by such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards;
(2) Monthly Financial Statements. As soon as available and in
any event within 45 days after the end of each Fiscal Month that is not
the end of a Fiscal Year, balance sheets of the Consolidated Companies
as at the end of such Fiscal Month presented on a consolidated and
consolidating basis and the related statements of income, retained
earnings and cash flows of the Consolidated Companies for such Fiscal
Month and for the portion of the Fiscal Year ended at the end of such
Fiscal Month, presented on a consolidated and consolidating basis
setting forth in each case in comparative form the figures for the
corresponding month and the corresponding portion of the Company's
previous Fiscal Year, all in reasonable detail, and certified by the
chief financial officer or principal accounting officer of the Company
that such financial statements fairly present in all material respects
the financial condition of the Consolidated Companies as at the end of
such Fiscal Month on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies
for such Fiscal Month and such portion of the Fiscal Year, in
accordance with GAAP (subject to normal year-end audit adjustments and
the absence of certain footnotes);
(3) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsection (a) and with the
financial statements required pursuant to subsection (b) above for the
third Fiscal Month of each Fiscal Quarter, a certificate of the chief
financial officer or treasurer of the Company substantially in the form
of Exhibit G, to the effect that, based upon a review of the activities
of the Consolidated Companies and such financial statements during the
period covered thereby, to his knowledge, (i) there exists no Event of
Default and no Default under this Agreement, or if there exists an
Event of Default or a Default hereunder, specifying the nature thereof
and the proposed response thereto, and (ii) demonstrating in reasonable
detail compliance as at the end of such Fiscal Year or such Fiscal
Month with Sections 7.1.15, 7.1.16, 7.1.17 and 8.1.12;
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(4) Auditor's No Default Certificate. Together with the
financial statements required pursuant to subsection (1) above, a
certificate of the accountants who prepared the report referred to
therein, (i) to the effect that during the course of their audit, they
have found no Default or Event of Default under this Agreement, or if
there exists a Default or Event of Default hereunder, specifying the
nature thereof and (ii) demonstrating in reasonable detail compliance
as at the end of such Fiscal Year with Sections 7.1.15, 7.1.16, 7.1.17
and 8.1.12;
(5) Notice of Default under Loan Documents. Promptly after any
Credit Party has notice or knowledge of the occurrence of an Event of
Default or a Default hereunder a certificate of the chief financial
officer or principal accounting officer of the Company specifying the
nature thereof and the proposed response thereto;
(6) Notice of Default under Other Indebtedness. Promptly upon
its receipt thereof, furnish to the Purchasers a copy of any notice
received by it or any other Consolidated Company from the holder(s) of
any Indebtedness referred to in Section 8.1.1 (or from any trustee,
agent, attorney, or other party acting on behalf of such holder(s)),
where such notice states or claims the existence or occurrence of any
default or event of default with respect to such Indebtedness under the
terms of any indenture, loan or credit agreement, debenture, note, or
other document evidencing or governing such Indebtedness;
(7) Litigation. Promptly after (i) the occurrence thereof,
notice of the institution of or any material adverse development in any
action, suit or proceeding or any governmental investigation or any
arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against any Consolidated
Company, or any property of any thereof, or (ii) actual knowledge
thereof, notice of the threat of any such action, suit, proceeding,
investigation or arbitration;
(8) Environmental Notices. Promptly after receipt thereof,
notice of any actual or alleged violation, or notice of any action,
claim or request for information, either judicial or administrative,
from any Governmental Authority relating to any actual or alleged
claim, notice of potential responsibility under or violation of any
Environmental Law, or any actual or alleged spill, leak, disposal or
other release of any waste, petroleum product, or hazardous waste or
Hazardous Substance by any Consolidated Company which could result in
penalties, fines, claims or other liabilities to any Consolidated
Company in amounts in excess of $500,000;
7.1.8 ERISA. Promptly after the occurrence thereof with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof, or any
trust established thereunder, notice of (A) a "reportable event"
described in Section 4043 of ERISA and the regulations issued from time
to time thereunder (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under such regulations), or
(B) any other event which could subject any Consolidated Company to any
tax, penalty or liability under Title I or Title IV of ERISA or Chapter
43 of the Tax Code, or any tax or penalty resulting from a loss of
deduction under Sections 162, 404 or 419 of the Tax Code, or any tax,
penalty or liability (other than amounts that become payable in the
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normal operation of any Plan) under any Requirement of Law applicable
to any Foreign Plan, where any such taxes, penalties or liabilities
exceed or could exceed $500,000 in the aggregate;
(1) Promptly after such notice must be provided to the PBGC,
or to a Plan participant, beneficiary or alternative payee, any notice
required under Section 101(d), 302(f)(4), 303, 304, 307, 4041(a)(2) of
ERISA or under Section 401(a)(29) or 412 of the Tax Code with respect
to any Plan of any Consolidated Company or any ERISA Affiliate thereof,
(2) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof concerning the
intent of the PBGC or any other Governmental Authority to terminate a
Plan of such Company or ERISA Affiliate thereof which is subject to
Title IV of ERISA, to impose any liability on such Company or ERISA
Affiliate under Title IV of ERISA or Chapter 43 of the Tax Code;
(3) Upon the request of the Purchasers, promptly upon the
filing thereof with the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report
for each Plan of any Consolidated Company or ERISA Affiliate thereof
which is subject to Title IV of ERISA;
(4) Upon the request of the Purchasers, (A) true and complete
copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any
Consolidated Company from the IRS, PBGC or DOL, (B) any reports filed
with the IRS, PBGC or DOL with respect to a Plan of the Consolidated
Companies or any ERISA Affiliate thereof, or (C) a current statement of
withdrawal liability for each Multiemployer Plan of any Consolidated
Company or any ERISA Affiliate thereof,
(5) Promptly upon any Consolidated Company becoming aware
thereof, notice that (i) any material contributions to any Foreign Plan
have not been made by the required due date for such contribution and
such default cannot immediately be remedied, (ii) any Foreign Plan is
not funded to the extent required by the law of the jurisdiction whose
law governs such Foreign Plan based on the actuarial assumptions
reasonably used at any time, or (iii) a material change is anticipated
to any Foreign Plan that could reasonably be expected to have a
Materially Adverse Effect.
7.1.9 Liens. Promptly upon any Consolidated Company becoming aware
thereof, notice of the filing of any federal statutory Lien, tax or
other state or local government Lien or any other Lien affecting their
respective properties, other than Permitted Liens;
7.1.10 Public Filings, Etc. Promptly upon the filing thereof or
otherwise becoming available, copies of all financial statements,
annual, quarterly, monthly and special reports, proxy statements and
notices sent or made available generally by the Company to its public
security holders, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by it with any
securities exchange, and of all press releases and other statements
made available generally to the public containing
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material developments in the business or financial condition of the
Company and the other Consolidated Companies;
7.1.11 Accountants' Reports. Promptly upon receipt thereof, copies of
all financial statements of, and all reports submitted by, independent
public accountants to the Company in connection with each annual,
interim, or special audit of the Company's financial statements,
including without limitation, the comment letter submitted by such
accountants to management in connection with their annual audit;
7.1.12 Senior Debt and Equity Notices. As soon as practicable, copies
of all material written notices given or received by any Credit Party
with respect to any Senior Debt or Stock of such Person, and, promptly
after any Credit Party obtains knowledge of any matured or unmatured
event of default with respect to any Senior Debt, notice of such event
of default;
7.1.13 Other Information. With reasonable promptness, such other
information about the Consolidated Companies as the Purchasers may
reasonably request from time to time.
7.1.14 Year 2000 Issues. Take all actions reasonably necessary to
assure that the Year 2000 Issues could not reasonably be expected to
have a Materially Adverse Effect. The Company and the other
Consolidated Companies will use their best efforts to assure that its
material third-party customers, suppliers and vendors develop and
implement programs to remediate in all material respects all Year 2000
Issues that could not reasonably be expected to have a Materially
Adverse Effect. Upon reasonable request by the Purchasers or Lender,
the Company will provide the Purchasers and Lenders a written
description of its Year 2000 program, including updates and progress
reports. The Company will advise the Purchasers and the Lenders
promptly of any reasonably anticipated Materially Adverse Effect as a
result of Year 2000 Issues.
7.1.15 Maximum Total Funded Debt to Adjusted EBITDA Ratio. As of the
last day of each Fiscal Quarter, commencing with the Fiscal Quarter
ending on the third Fiscal Quarter of Fiscal Year 2000, the Total
Funded Debt to Adjusted EBITDA Ratio for the following periods shall be
not greater than the following ratios:
Fiscal Quarter Ratio
-------------- -----
Third and Fourth
Fiscal Quarter in
Fiscal Year 2000 4.90:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2001 4.85:1.00
Third Fiscal Quarter
in Fiscal Year 2001 4.75:1.00
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Fourth Fiscal Quarter
in Fiscal Year 2001 4.50:1.00
First Fiscal Quarter in
Fiscal Year 2002 4.35:1.00
Second Fiscal Quarter in
Fiscal Year 2002 4.25:1.00
Third Fiscal Quarter in
Fiscal Year 2002 4.00:1.00
Fourth Fiscal Quarter in
Fiscal Year 2002 3.85:1.00
First Fiscal Quarter in
Fiscal Year 2003 3.75:1.00
Second Fiscal Quarter in
Fiscal Year 2003 3.65:1.00
Third Fiscal Quarter in
Fiscal Year 2003 and
thereafter 3.50:1.00
7.1.16 Minimum Fixed Charge Coverage Ratio. As of the last day of each
Fiscal Quarter, commencing with the third Fiscal Quarter of Fiscal Year
2000, the Fixed Charge Coverage Ratio shall be not less than 1.05:1.00.
7.1.17 Interest Coverage Ratio. As of the last day of each Fiscal
Quarter, commencing with the third Fiscal Quarter of Fiscal Year 2000,
the Interest Coverage Ratio for the following periods shall be not less
than the following ratios:
Fiscal Quarter Ratio
-------------- -----
Third Fiscal Quarter in
Fiscal Year 2000 through
the Third Fiscal Quarter
in Fiscal Year 2001 1.90:1.00
Fourth Fiscal Quarter in
Fiscal Year 2001 2.00:1.00
First and Second
Fiscal Quarter in
Fiscal Year 2002 2.10:1.00
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Third Fiscal Quarter in
Fiscal Year 2002 and thereafter 2.30:1.00
7.1.18 Additional Credit Parties. In the event that, subsequent to the
Closing Date, any Person becomes a Domestic Subsidiary of the Company,
whether pursuant to an acquisition or otherwise, (x) the Company shall
promptly notify the Purchasers of the creation or acquisition of such
Domestic Subsidiary and (y) the Company shall cause such Person (i) to
become a party to this Agreement as a new Subsidiary Guarantor, and
(ii) to provide all relevant documentation with respect thereto and to
take such other actions as such Domestic Subsidiary would have provided
and taken pursuant to Section 5.1 if such Subsidiary had been a Credit
Party on the Closing Date.
7.1.19 Issuance of Relacement Warrants. If the Notes are not prepaid in
full on or before June 5, 2001, upon the request of any Registered
Holder of any Warrant Certificate the Company shall issue replacement
Warrant Certificates, which replacement Warrant Certificates shall be
in the form of Exhibit I hereto, upon the surrender thereof by the
Registered Holders at the principal office of the Company, for new
certificates of like tenor representing in the aggregate the purchase
rights thereunder, and each new certificate will represent such portion
of such rights as is designated by the Registered Holder at the time of
such surrender.
ARTICLE 8.
NEGATIVE COVENANTS
Section 8.1 Negative Covenants. For so long as any Note or any of the other
Obligations remains unpaid or unperformed (other than indemnification and other
similar obligations that survive beyond the termination of this Agreement),
unless the Required Purchasers (or, if required pursuant to Section 10.4, all
Purchasers) shall otherwise consent in the manner set forth in Section 10.4, the
Company will not, and will not permit any of its Subsidiaries to:
8.1.1 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, other than:
(1) Indebtedness under this Agreement and any other Loan
Document;
(2) Senior Debt;
(3) Indebtedness evidenced by the BT Intercompany Note;
(4) Indebtedness existing on the Closing Date and described on
Schedule 8.1.1;
(5) purchase money Indebtedness and Capital Lease Obligations
to the extent secured by a Lien permitted by Section 8.1.2(8);
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(6) (A) unsecured current liabilities and other ordinary
course operating liabilities incurred in the ordinary course of
business as conducted on the Closing Date (other than liabilities for
borrowed money or liabilities evidenced by promissory notes, bonds or
similar instruments) and (B) Indebtedness to trade creditors incurred
in the ordinary course of business and either (i) not more than 90 days
past due, or (ii) being disputed in good faith by appropriate
proceedings with reserves for such disputed liability maintained in
conformity with GAAP;
(7) Indebtedness consisting of contingent obligations under
indemnities, guarantees, and reimbursement agreements in favor of
Persons issuing surety bonds, guarantees and similar undertakings
issued to support performance obligations of any of the Consolidated
Companies incurred in the ordinary course of business;
(8) the Interest Rate Contract required under Section 8.13 of
the Senior Credit Agreement;
(9) Indebtedness consisting of intercompany loans and advances
made by the Company to any Subsidiary Guarantor, or made by BT to
Val-Mex or India Trimmings; provided that (i) each Subsidiary Grantor,
BT and Val-Mex shall execute a demand note on the Closing Date (the
"Intercompany Notes") to evidence any such intercompany Indebtedness,
(ii) the Company and BT shall record all intercompany transactions on
its books and records in a manner reasonably satisfactory to
Purchasers, (iii) the obligations of each borrower under any such
Intercompany Notes shall be subordinated to its obligations under its
respective guarantee, if any, (iv) at the time any such intercompany
loan or advance is made by the Company to any Subsidiary Guarantor, or
by BT to Val-Mex or India Trimmings, as the case may be, and after
giving effect thereto, the representation and warranty set forth in
Section 6.1.19 is true and correct, and (v) no Default or Event of
Default shall have occurred and be continuing or would occur and be
continuing after giving effect to any such proposed intercompany loan;
provided, further, that the Intercompany Notes by Val-Mex and India
Trimmings in favor of BT shall be in a principal amount not to exceed
$4,000,000, of which up to $2,000,000 may be used for Capital
Expenditures permitted pursuant to Section 8.1.12 and up to $2,000,000
may be used for purposes other than Capital Expenditures;
(10) Indebtedness secured by Permitted Liens;
(11) Indebtedness for borrowed money not otherwise permitted
pursuant to this Section 8.1.1 in an aggregate amount at any one time
outstanding not to exceed $500,000; and
(12) Indebtedness arising out of judgments and awards, not to
exceed $500,000 in the aggregate at any one time outstanding, which do
not otherwise constitute an Event of Default under the terms of this
Agreement, including, without limitation, Section 9.1(i) hereof.
8.1.2 Liens. Create, incur, assume or suffer to exist any Lien on any
of its property now owned or hereafter acquired other than:
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(1) Liens in favor of the Agent for the benefit of the Senior
Lenders;
(2) Liens existing on the Closing Date and disclosed on
Schedule 8.1.2;
(3) Liens in favor of the Company to secure the BT
Intercompany Note;
(4) Liens for taxes not yet due and payable, and Liens for
taxes or Liens imposed by ERISA which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
are being maintained in accordance with GAAP;
(5) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(6) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, trade contracts, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(7) zoning, building and other land use laws imposed by any
Governmental Authority having jurisdiction over such parcel which are
not violated by the current use and occupancy of such parcel or the
operation of the business thereon, and easements, covenants,
conditions, restrictions and other similar matters of record affecting
title to such parcel, which would not materially impair the use or
occupancy of such parcel in the operation of the business;
(8) Liens incurred in connection with purchase money
Indebtedness with respect to assets acquired by any Credit Party in the
ordinary course of business (provided that such Liens attach only to
the assets subject to such purchase money debt and such Indebtedness
does not exceed 100% of the purchase price of the subject assets);
(9) Liens incurred in connection with capital leases permitted
under Section 8.1.7; and
(10) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien
referred to in the foregoing clauses; provided that such extension,
renewal or replacement Lien shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced (plus
improvements on such property).
8.1.3 Mergers, Consolidations, Acquisitions, Sales, Etc.
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(1) Enter into any transaction of merger, consolidation,
pooling of interest or other combination with any other Person other
than (i) the Merger, (ii) a consolidation or merger between the Company
and a Subsidiary, provided the Company is the surviving entity, or
(iii) any Subsidiary may merge with and into any Credit Party, provided
such Credit Party is the surviving entity, and any Subsidiary of any BT
Credit Party may merge with and into such BT Credit Party provided such
BT Credit Party is the surviving entity;
(2) Sell, lease, or otherwise dispose of its accounts,
property or other assets (including capital stock of Subsidiaries),
other than (i) sales, leases or other dispositions of assets by the
Company to another Credit Party, (ii) sales, leases or other
dispositions of assets by a Subsidiary to a Credit Party, (iii) sales,
leases or other disposition of assets by a Foreign Subsidiary to a BT
Credit Party, (iv) sales of inventory in the ordinary course of
business, (v) grants of licenses of intellectual property in the
ordinary course of business as conducted on the Closing Date, (vi)
sales of obsolete, worn out, excessively damaged or unusable equipment,
fixtures or inventory, and (vii) the sale of property in Niles,
Michigan referred to in paragraph B3(b)of Schedule 7.17;
(3) Purchase, lease or otherwise acquire all or any
substantial portion of the property or assets (including capital stock)
of another Person (each an "Acquisition") provided, however, that the
foregoing restriction on Acquisitions shall not apply to any
Acquisitions (A) that are otherwise permitted under Section 8.1.3(1),
and (B) by any Consolidated Company so long as: (i) after giving effect
to such Acquisition, no Default or Event of Default will have occurred
and be continuing, (ii) the Consolidated Companies would have been in
compliance with Sections 7.1.15, 7.1.16, 7.1.17 and 8.10 as of the last
day of the then most recently ended Fiscal Quarter after giving effect
to such Acquisition on a pro forma basis as if such Acquisition had
occurred on the first day of any period tested in the covenants set
forth in such Sections, (iii) the Board of Directors of the Person
being acquired has approved the Acquisition, (iv) after giving effect
to such Acquisition, the representation and warranty set forth in
Section 6.1.20 is true and correct with respect to the Consolidated
Company making such Acquisition, (v) the assets or property being
acquired belong to the same, or a substantially related, line of
business as the Consolidated Companies taken as a whole or logical
extensions thereof, and (vi) the Company has notified the Purchasers of
such Acquisition and delivered to the Purchasers a certificate
certifying that each of the conditions set forth above has been
satisfied, demonstrating compliance with the covenants set forth in
Sections 7.1.15, 7.1.16, 7.1.17 and 8.10 after giving effect to such
Acquisition on a pro forma basis; and
(4) Sale or other dispositions of assets not otherwise
permitted by this Section 8.1.3 in an aggregate amount per Fiscal Year
not to exceed $350,000.
8.1.4 Investments, Loans, Etc. Make, permit or hold, any Investments in
any Person, or otherwise create, acquire or hold any Subsidiaries,
other than:
(1) Investments from time to time in any Credit Party;
(2) Investments existing on the date hereof and described on
Schedule 8.1.4;
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(3) Investments consisting of intercompany Indebtedness
permitted by Section 8.1.3;
(4) direct obligations of the United States of America or any
agency thereof, or obligations guaranteed by the United States of
America or any agency thereof, in each case supported by the full faith
and credit of the United States of America and maturing within one year
from the date of creation thereof;
(5) commercial paper maturing within one year from the date of
creation thereof rated in the highest grade by a nationally recognized
credit rating agency;
(6) time deposits maturing within one year from the date of
creation thereof, including certificates of deposit issued by, any
office located in England of any bank or trust company which is
organized under the laws of the United States of America or any state
thereof and has capital, surplus and undivided profits aggregating at
least $500,000,000, including without limitation, any such deposits in
Eurodollars issued by a foreign branch of any such bank or trust
company;
(7) Investments made by Plans;
(8) time deposits maturing within one year from the date of
creation thereof, including certificates of deposits, or the
equivalent, issued by any office located in the United Kingdom of any
bank which is organized under the laws of the United Kingdom and has
capital, surplus and undivided profits aggregating at least
$500,000,000;
(9) loans and advances in an aggregate principal amount
outstanding at any one time not to exceed $300,000 to management and
other employees of the Company, the proceeds of which are used in their
entirety to purchase Stock in Company and make other investments
pursuant to retirement savings programs;
(10) Investments made in connection with Acquisitions
otherwise permitted under Section 8.1.3(7);
(11) investments consisting of promissory notes or other
non-cash consideration received as proceeds of asset sales and
dispositions by any Credit Party or BT Credit Party or permitted under
Section 8.1.3; and
(12) investments not otherwise permitted under this Section
8.1.4 made after the Closing Date; provided that the aggregate amount
of all such Investments does not exceed $500,000.
8.1.5 Lease Obligations. Create or suffer to exist any obligations for
the payment under operating leases or agreements to lease (including
all Synthetic Lease Obligations but excluding any obligations under
leases required to be classified as capital leases under GAAP) having a
term of one year or more which would cause the direct or contingent
liabilities of the Consolidated Companies under such leases or
agreements to lease, on a consolidated basis, to exceed $5,000,000 in
the aggregate in any Fiscal Year.
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8.1.6 Restricted Payments. (a) Declare or pay any dividend or
distribution on any class of its stock, or (b) make any payment to
purchase, redeem, retire or acquire any capital stock or Subordinated
Debt or any option, warrant, or other right to acquire such capital
stock or such Indebtedness (each payment under clause (a) or (b), a
"Restricted Payment"), other than (i) dividends payable solely in
shares of any class of its stock, and (ii) Restricted Payments made by
any Subsidiary to any Credit Party or BT.
8.1.7 Sale and Leaseback Transactions. Sell or transfer any property,
real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property for substantially the same
purpose or purposes as the property being sold or transferred other
than in connection with assets acquired in contemplation of the
creation of a capital lease which are, within six months from the date
of purchase of such assets, sold to another Person and leased back to a
Consolidated Company pursuant to a Capital Lease arrangement permitted
hereunder ("Permitted Sale Leaseback"), provided that the aggregate
amount of such Permitted Sale Leasebacks does not exceed $1,000,000 in
the aggregate.
8.1.8 Transactions with Affiliates. Other than transactions described
on Schedule 8.1.8:
(1) Enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with
any Affiliate of any Consolidated Company, other than on terms and
conditions at least as favorable to such Consolidated Company as would
be obtained by such Consolidated Company at the time in a comparable
arm's-length transaction with a Person other than an Affiliate.
(2) Make any payment or any loan owing to any officer,
shareholder, subsidiary or Affiliate, or convey or transfer to any
other Person any real property, buildings, or Fixtures used in the
manufacturing or production operations of any Consolidated Company, or
convey or transfer to any other Consolidated Company any other assets
(excluding conveyances or transfers in the ordinary course of business)
if at the time of such payment, conveyance or transfer any Default or
Event of Default exists or would exist as a result of such payment,
conveyance or transfer.
8.1.9 ERISA. Take or fail to take any action with respect to any Plan
of any Consolidated Company or, with respect to its ERISA Affiliates,
any Plans which are subject to Title IV of ERISA or to continuation
health care requirements for group health plans under the Tax Code
which could reasonably be expected to result in a Materially Adverse
Effect, including without limitation (i) establishing any such Plan,
(ii) amending any such Plan (except where required to comply with
applicable law), (iii) terminating or withdrawing from any such Plan,
or (iv) incurring an amount of unfunded benefit liabilities, as defined
in Section 4001(a)(18) of ERISA, or any withdrawal liability under
Title IV of ERISA with respect to any such Plan, without first
obtaining the written approval of the Required Lenders.
8.1.10 Additional Negative Pledges. Create or otherwise cause or suffer
to exist or become effective, directly or indirectly, any prohibition
or restriction on the creation or existence of any Lien upon any asset
of any Consolidated Company, other than pursuant
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to (i) this Agreement, (ii) the Subordinated Note Documents, (iii) the
terms of any agreement, instrument or other document pursuant to which
any Indebtedness permitted by Section 8.1.1(e) is incurred by any
Consolidated Company, so long as such prohibition or restriction
applies only to the property or asset being financed by such
Indebtedness, and (iv) any requirement of applicable law or any
regulatory authority having jurisdiction over any of the Consolidated
Companies.
8.1.11 Limitation on Payment Restrictions Affecting Consolidated
Companies. Create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction on the ability of
any Consolidated Company to (i) pay dividends or make any other
distributions on such Consolidated Company's stock, or (ii) pay any
Indebtedness owed to any Credit Party or any other Consolidated
Company, or (iii) transfer any of its property or assets to any Credit
Party or any other Consolidated Company, except any consensual
encumbrance or restriction existing under the Loan Documents or the
Subordinated Note Documents.
8.1.12 Capital Expenditures. Make Capital Expenditures during any
Fiscal Year in excess of (i) $5,700,000 during Fiscal Year 2000, (ii)
$2,000,000 during Fiscal Year 2001, and (iii) for each Fiscal Year
thereafter, the sum of (y) $2,000,000 plus (z) an amount equal to fifty
percent (50%) of Excess Cash Flow for the immediately preceding Fiscal
Year measured at the end of such immediately preceding Fiscal Year;
provided, however, commencing with Fiscal Year 2001, if the actual
aggregate amount of Capital Expenditures made by the Company and its
Subsidiaries during any Fiscal Year (the "Current CapEx"), is less than
the respective limit specified above for such Fiscal Year (the
"Specified CapEx"), then the applicable limit for the immediately
succeeding Fiscal Year shall be increased by an amount equal to the
difference between the Current CapEx and the Specified CapEx (the
"Carryover Amount"). For purposes of this Section 8.1.12, Capital
Expenditures made by the Company in any Fiscal Year shall be deemed to
be made first with Specified CapEx for such Fiscal Year, then, from the
Carryover Amount, if any. In addition, for purposes of this Section
8.1.12, Capital Expenditures shall not include: (A) Capital
Expenditures made with Net Casualty/Insurance Proceeds and (B) up to a
maximum amount of $3,000,000 in the aggregate during the term of this
Agreement, of Capital Expenditures incurred in connection with
Acquisitions that are permitted under Section 8.1.3, and which are not
solely for the purchase of assets but are made in connection with
Acquisitions of an additional line of business or business entity.
8.1.13 Change in Business. Enter into, or permit any of their
respective Subsidiaries to enter into, any business other than the
business presently conducted by the Consolidated Companies taken as a
whole or any business reasonably related or complementary thereto.
8.1.14 Modification of Corporate Name, Charter, Etc. Make any change in
any of their (i) corporate names, articles of incorporation, or similar
documents or capital structure that would materially adversely affect
the Company's ability to perform under any Transaction Document, or
(ii) accounting practices, business objectives, purposes of operations,
Fiscal Month, Fiscal Quarter or Fiscal Year.
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ARTICLE 9.
EVENTS OF DEFAULT
Section 9.1 Events of Default. Each of the following shall constitute an Event
of Default, whatever the reason for such event and whether or not it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule, or regulation of any
governmental or nongovernmental body:
(a) failure of the Company to pay (i) any principal on any of
the Notes when due or (ii) any other amount payable hereunder or under
any other Loan Document when due and such failure to pay continues for
five (5) days after such due date; or
(b) failure on the part of the Company to perform or observe
any covenant contained in Article 8 or Sections 7.1.1, 7.1.5, 7.1.7,
7.1.15, 7.1.16, and 7.1.17 hereof; or
(c) failure on the part of the Company to perform or observe
(after giving effect to any applicable grace period) any other term,
covenant or agreement contained in this Agreement not specifically
referred to in this Article 9, and any such failure remains unremedied
for 30 days after the earlier of (i) the discovery thereof by the
Company or (ii) written notice thereof to the Company by any Purchaser;
or
(d) any warranty, representation or other written statement
made by or on behalf of the Company contained herein or in any
instrument furnished in compliance with or in reference to this
Agreement is false or misleading in any material respect on the date as
of which made or deemed to be made; or
(e) any Credit Party shall fail to pay its debts generally as
they come due, or shall file any petition or action for relief under
any bankruptcy, reorganization, insolvency or moratorium law, or any
other law or laws for the relief of, or relating to, debtors; or
(f) an involuntary petition shall be filed under any
bankruptcy statute against Credit Party, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar
official) shall be appointed to take possession, custody, or control of
the Credit Party, unless such petition or appointment is set aside or
withdrawn or ceases to be in effect within sixty (60) days from the
date of said filing or appointment or an order for relief shall be
entered in any such involuntary action; or
(g) the Company or any of its Subsidiaries (i) shall fail to
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration or otherwise) with respect to (x) the Senior
Credit Agreement or (y) any other Indebtedness in excess of $1,000,000
in the aggregate, or (ii) shall fail to perform or observe any other
agreement, term or condition contained in any agreement under which any
Indebtedness described in clause (i) is created (or if any other event
shall occur and be continuing
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thereunder) and, in the case of clause (ii) above, the holders thereof
shall have caused such Indebtedness to become due prior to any stated
maturity; or
(h) a Change of Control shall occur; or
(i) any final order or judgment for the payment of money in
excess of $1,000,000 shall be rendered against the Company or any of
its Subsidiaries as to which the Company or such Subsidiary is not
indemnified, and such order or judgment shall continued unsatisfied and
unstayed for more than sixty (60) days. A final judgement or order for
the payment of damages for which the Company is indemnified shall not
constitute an Event of Default hereunder, so long as (i) the Purchasers
have received written confirmation of such indemnification, (ii) the
terms of such indemnification have been approved by the Required
Purchasers in their reasonable credit judgement, and (iii) the Person
indemnifying the Company or other Consolidated Company is acceptable to
the Required Purchasers in their reasonable credit judgement; or
(j) the Company shall disavow, revoke or terminate prior to
its scheduled or stated maturity date any Transaction Document to which
it is a party or shall otherwise challenge or contest in any action,
suit or proceeding in any court or before any arbitrator or
governmental body the validity or enforceability of this Agreement, the
Notes or any other Transaction Document; or
(k) an attachment or similar action shall be made on or taken
against any of the assets of the Consolidated Companies with an
aggregate value of $500,000 or more and such attachment or similar
action is not controverted within 10 days, or is not removed within 60
days.
Section 9.2 Remedies on Default. (a) Upon the occurrence and continuation of an
Event of Default (other than an Event of Default described in Section 9.1 (e)
and (f)), the Required Purchasers may, in their sole discretion, but shall not
be obligated to, declare all amounts payable by the Company under the Notes to
be forthwith due and payable, including, without limitation, costs of collection
(including reasonable attorneys' fees if collected by or through an attorney at
law or in bankruptcy, receivership or other judicial proceedings) and the same
shall thereupon become immediately due and payable without demand, presentment,
protest or further notice of any kind, all of which are hereby expressly waived,
and may exercise all of its rights and remedies under the Loan Documents or
under applicable law.
(b) Upon the occurrence of any Event of Default set forth in
clause (e) or (f) above, without any notice to the Company or any other
act by the Required Purchasers, all amounts payable by the Company
under the Notes, including, without limitation, all costs of collection
(including reasonable attorneys' fees if collected by or through an
attorney at law or in bankruptcy, receivership or other judicial
proceedings) shall be immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived by the Company.
(c) No remedy herein conferred or reserved is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative
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and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing
upon any default, omission or failure of performance hereunder shall
impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to exercise any
remedy reserved to the Purchaser in this Agreement, it shall not be
necessary to give any notice, other than such notice as may be herein
expressly required.
ARTICLE 10.
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, telecopy,
electronic mail message or similar teletransmission or writing), shall be in the
English language, and shall be given to such party at its address or applicable
teletransmission number set forth below, or such other address or applicable
teletransmission number as such party may hereafter specify by notice to the
Purchasers and the Company. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section and the appropriate answer back is
received, (ii) if given by mail, five Business Days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid,
(iii) if given by telecopy, when such telecopy is transmitted to the telecopy
number specified in this Section and the appropriate confirmation is received,
(iv) if given by a reputable overnight courier service, the Business Day after
such communication is delivered to such courier device for overnight delivery,
or (v) if given by any other means (including, without limitation, by air
courier), when delivered or received at the address specified in this Section;
provided that notices to the Purchasers shall not be effective until received.
Notices herein shall be mailed or telecopied as follows:
If to the Company, the Parent or any other Consolidated Company:
CIC Acquisition Sub, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
Attn: X. Xxxx Findlay
Telecopy No.: (000) 000-0000
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with a copy, which shall not constitute notice to the Company, the
Parent or any other Consolidated Company, to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
If to SunTrust:
SunTrust Banks, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
with a copy to:
King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopy Number: (000) 000-0000
Telephone Number: (000) 000-0000
If to Lincoln:
The Lincoln National Life Insurance Company
Principal & Interest Payments (via Fed Wire) for
$3,000,000 Note
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 00-000-000
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance
Company
Custody Account Number 98127
Principal & Interest Payments (via Fed Wire) for
$6,500,000 Note
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 00-000-000
Private Placement Processing
For Further Credit: The Lincoln National Life Insurance
Company
Custody Account Number 98449
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Address for all Communication and Notice of Payment
Lincoln Investment Management, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
ATTN: Investments/Private Placements
FAX: (000) 000-0000 - Private Placements
Address for Notice of Payment
Bankers Trust Company
ATTN: Private Placement Xxxx
X.X. Xxx 000, Xxxxxxx Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000
FAX: (000) 000-0000 - ATTN: Xxx Xxxxx - Private Placements
Lincoln National Income Fund, Inc.
Principal & Interest Payments (via Fed Wire)
Bankers Trust Company
New York, NY
ABA #: 021 00 1033
A/C #: 00-000-000
Private Placement Processing
For Further Credit: Lincoln National Income Fund, Inc.
Address for all Communication and Notice of Payment
Lincoln Investment Management, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
ATTN: Investments/Private Placements
FAX: (000) 000-0000 - Private Placements
Address for Notice of Payment
Bankers Trust Company
ATTN: Private Placement Xxxx
X.X. Xxx 000, Xxxxxxx Xxxxx Xxxxxxx
Xxx Xxxx, XX 00000
FAX: (000) 000-0000 - ATTN: Xxx Xxxxx - Private Placements
Section 10.2 No Waiver. No delay or failure on the part of any Purchaser or any
holder of the Notes and the exercise of any right, power or privilege granted
under this Agreement or any other Transaction Document or available at law or in
equity, shall impair any such right, power or privilege or be construed as a
waiver of any Event of Default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the further
exercise
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of such right, power or privilege. No waiver shall be valid against any
Purchaser unless made in writing and signed by such Purchaser, and then only to
the extent expressly specified therein.
Section 10.3 Expenses.
(1) The Company agrees to pay on demand all reasonable
out-of-pocket costs, expenses, taxes and fees (i) incurred by the
Purchasers in connection with the preparation, execution and delivery
of this Agreement and all other Transaction Documents, including the
reasonable fees and disbursements of counsel for each Purchaser; (ii)
incurred by each Purchaser in connection with the preparation,
execution and delivery of any waiver, amendment or consent by each
Purchaser relating to the Transaction Documents, including the
reasonable costs and fees of counsel for each Purchaser; and (iii)
incurred by each Purchaser, including the reasonable costs and fees of
its counsel, in connection with the enforcement of the Transaction
Documents.
(2) The Company agrees to indemnify, pay and hold each
Purchaser and any holder of any of the Notes and the Warrants and the
officers, directors, employees and agents of such Purchaser and such
holders (the "Indemnified Persons") harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements
of counsel for any Indemnified Person in connection with any
investigative, administrative or judicial proceeding, whether or not
such Indemnified Person shall be designated a party thereto) which may
be incurred by any Indemnified Person, relating to or arising out of
the enforcement of this Agreement, the Notes, the Warrants or any other
Transaction Document or any actual or proposed use of proceeds of the
Notes; provided, that no Indemnified Person shall have the right to be
indemnified hereunder for its own gross negligence or willful
misconduct.
Section 10.4 Amendments, Etc. Any provision of this Agreement, the Notes, or any
other Loan Document to which the Company is a party may be amended or waived, if
such amendment or waiver is in writing and is signed by the Company and the
Required Purchasers; provided that, without the approval in writing of each
Purchaser with respect to its Note, no amendment, modification, supplement,
termination, waiver, or consent may be effective:
(a) to amend or modify the principal of such Note, or the
amount of principal payments or prepayments required hereunder, or the
rate of interest payable on any Note;
(b) to postpone any date fixed for any payment of principal
of, prepayment of principal of, or any installment of interest on, any
Note or to extend the term of any Note;
(c) to amend or modify the definitions of "Required
Purchasers," or the provisions of this Section 10.4;
Any amendment, modification, supplement, termination, waiver or consent effected
in accordance with this Section 10.4 shall apply equally to, and shall be
binding upon, all Purchasers.
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Section 10.5 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, that the Company may not assign or otherwise
transfer any of its rights or obligations under this Agreement, the Notes or any
other Transaction Document to any Person without the prior written consent of
the Purchasers. Each Purchaser hereby agrees to promptly provide written notice
to the Company of any assignment, along with providing such other information
about the assignee as the Company may reasonably request. After such
notification, an assignee that becomes a Purchaser hereunder shall have, to the
extent of such assignment, the same rights, obligations and benefits as the
assigning Purchaser had hereunder and under the other Loan Documents.
Notwithstanding the foregoing, any Purchaser may sell or otherwise grant
participations in all or any part of the Notes. The holder of any such
participation, shall not have any rights and benefits of a Purchaser hereunder,
and the Purchaser that sells or grants such participation shall have the same
rights, obligations and benefits with respect to the Loan Documents.
Section 10.6 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS).
Section 10.7 Survival of Representations and Warranties. All representations and
warranties contained herein or made by or furnished on behalf of the Company in
connection herewith shall survive the execution and delivery of this Agreement
and shall continue until the termination hereof.
Section 10.8 Severability. If any part of any provision contained in this
Agreement shall be invalid or unenforceable under applicable law, said part
shall be ineffective to the extent of such invalidity only, without in any way
affecting the remaining parts of said provision or the remaining provisions.
Section 10.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
Section 10.10 Set-Off. Upon the occurrence and during the continuation of an
Event of Default, each Consolidated Company authorizes each Purchaser, without
notice or demand, to apply any indebtedness due or to become due to such
Consolidated Company from such Purchaser in satisfaction of any of the
indebtedness, liabilities or obligations of such Consolidated Company under this
Agreement or under any other Loan Document, including, without limitation, the
right to set-off against any deposits or other cash collateral of the Company
held by such Purchaser or an Affiliate thereof.
Section 10.11 Termination of Agreement. This Agreement shall terminate upon the
payment in full of the Notes and all Obligations relating thereto; provided
that, Sections 3.2, 3.3 and 10.3 shall survive the termination of this
Agreement.
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Section 10.12 JURISDICTION AND VENUE. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT
SITTING IN NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR RELATED DOCUMENT, AND EACH HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. THE CREDIT
PARTIES AGREE THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING BROUGHT BY IT AGAINST ANY PURCHASER. EACH PARTY TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO
SO, THE DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING. EACH CREDIT PARTY AGREES THAT FINAL JUDGMENT IN ANY SUCH CIVIL SUIT
OR ACTION SHALL BE CONCLUSIVE AND BINDING UPON IT AND SHALL BE ENFORCEABLE
AGAINST IT BY SUIT UPON SUCH JUDGMENT IN ANY COURT OF COMPETENT JURISDICTION.
Section 10.13 WAIVER OF JURY TRIAL. EACH OF THE COMPANY, SUBSIDIARY GUARANTOR
AND each PURCHASER KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVE
THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY
LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR EQUITY, BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY OTHER
DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
PURCHASER ENTERING INTO THIS AGREEMENT. FURTHER, EACH CREDIT PARTY HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF PURCHASER, NOR THE PURCHASER'S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT PURCHASER WOULD NOT, IN
THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION, NO REPRESENTATIVE OR AGENT OF THE PURCHASER, NOR PURCHASER'S COUNSEL
HAS THE AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
Section 10.14 Entire Agreement. This Agreement, the Notes, the Warrants and the
other Transaction Documents to which any Credit Party is a party, together with
any exhibits and schedules attached hereto and thereto, constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof, and any other prior or contemporaneous agreements, whether written or
oral, with respect hereto or thereto are expressly superseded hereby. The
execution of this Agreement, the Notes, the Warrants and the other Transaction
Documents to which any Credit Party is a party by such Credit Party was not
based upon any facts or materials provided by any Purchaser, nor was such Credit
Party induced to execute this Agreement, the Note, the Warrants or the other
Transaction Documents to which any Credit Party is a party by any
representation, statement or analysis made by any Purchaser.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their authorized officers all as of the day and year first above
written.
COMPANY:
CIC ACQUISITION SUB, INC.
By: /s/ M. Xxxxxx Xxxxxxxx
------------------------------
Name: M. Xxxxxx Xxxxxxxx
Title: President and Secretary
SUBSIDIARY GUARANTORS:
SIMPLICITY PATTERN CO., INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
SIMPLICITY CAPITAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
SIMPLICITY HOLDINGS
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
[SIGNATURE PAGE TO SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT
61
PURCHASERS:
Pro Rata Share: 50% SUNTRUST BANKS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
Group Vice President
Pro Rata Share: 47.5% THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: Lincoln Investment Management, Inc.,
Its Attorney-In-Fact
By: /s/ R. Xxxxx Xxxxxx
-----------------------------
Name: R. Xxxxx Xxxxxx
Title: Vice President
Pro Rata Share: 2.5% LINCOLN NATIONAL INCOME FUND, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
[SIGNATURE PAGE TO SUBORDINATED
NOTE AND WARRANT PURCHASE AGREEMENT
