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EXHIBIT 10.2
CREDIT AGREEMENT
among
XXXXXX-XXXX INC.
and
XXXXXX-XXXX INTERNATIONAL L.L.C.,
as Borrowers;
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Agent;
SUNTRUST BANK, ATLANTA,
as Co-Agent;
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
CLOSING DATE: JULY 16, 1996
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$90,000,000 REVOLVING CREDIT FACILITY
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ARRANGED BY
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
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TABLE OF CONTENTS
Page
ARTICLE I Definitions................................................................................. 1
SECTION 1.1. Definitions....................................................................... 1
ARTICLE II Amount and Terms of the Revolving Loans; Letters of Credit.................................10
SECTION 2.1. Revolving Credit Facility.........................................................10
SECTION 2.2. Procedure for Borrowings..........................................................10
SECTION 2.3. Additional Provisions Regarding Eurodollar Rate Fundings and
SECTION 2.4. Alternative Currency Fundings.....................................................11
SECTION 2.5. Alternative Currency Participation's..............................................12
SECTION 2.6. Interest..........................................................................13
SECTION 2.7. Conversion of Principal to Eurodollar Rate Fundings...............................14
SECTION 2.8. Pricing Adjustments...............................................................15
SECTION 2.9. Letters of Credit.................................................................15
SECTION 2.10. Limitation on LJ International Outstandings.......................................17
SECTION 2.11. Fees..............................................................................17
SECTION 2.12. Termination or Reduction of the Commitments.......................................18
SECTION 2.13. Voluntary Prepayments.............................................................18
SECTION 2.14. Computation of Interest and Fees..................................................18
SECTION 2.15. Payment...........................................................................18
SECTION 2.16. Application of Payments...........................................................19
SECTION 2.17. Payment on Nonbusiness Days.......................................................20
SECTION 2.18. Use of Proceeds...................................................................20
SECTION 2.19. Changes in Law....................................................................20
SECTION 2.20. Funding Losses....................................................................21
SECTION 2.21. Capital Adequacy..................................................................21
SECTION 2.22. Mandatory Assignment of Bank's Interest...........................................22
ARTICLE III Conditions Precedent.....................................................................22
SECTION 3.1. Initial Conditions Precedent......................................................22
SECTION 3.2. Conditions Precedent to All Advances and Letters of Credit........................24
ARTICLE IV Representations and Warranties...........................................................24
SECTION 4.1. Corporate Existence and Power.....................................................24
SECTION 4.2. Authorization of Borrowing, No Conflict as to Law or
SECTION 4.3. Agreements .......................................................................24
SECTION 4.4. Legal Agreements..................................................................25
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SECTION 4.5. Subsidiaries......................................................................25
SECTION 4.6. Financial Condition...............................................................25
SECTION 4.7. Adverse Change....................................................................25
SECTION 4.8. Litigation........................................................................25
SECTION 4.9. Hazardous Substances .............................................................25
SECTION 4.10. Regulation U......................................................................26
SECTION 4.11. Taxes.............................................................................26
SECTION 4.12. Titles and Liens Licenses and Patents.............................................26
SECTION 4.13. ERISA.............................................................................26
ARTICLE V Affirmative Covenants......................................................................26
SECTION 5.1 Financial Statements..............................................................27
SECTION 5.2. Books and Records, Inspection and Examination.....................................29
SECTION 5.3. Compliance with Laws..............................................................29
SECTION 5.4. Payment of Taxes and Other Claims.................................................29
SECTION 5.5. Maintenance of Properties.........................................................29
SECTION 5.6. Insurance .......................................................................29
SECTION 5.7. Preservation of Corporate Existence...............................................30
SECTION 5.8. Subchapter S Status...............................................................30
SECTION 5.9. Total-Funded-Debt-To-EBITDAR Ratio................................................30
SECTION 5.10. Ratio of Total Funded Debt to Adjusted Tangible Net Worth.........................30
SECTION 5.11. Adjusted Tangible Net Worth.......................................................30
SECTION 5.12. EBITDAR...........................................................................30
SECTION 5.13. Net Income .......................................................................30
ARTICLE VI Negative Covenants........................................................................31
SECTION 6.1 Liens..............................................................................31
SECTION 6.2. Indebtedness.......................................................................32
SECTION 6.3. Guaranties.........................................................................33
SECTION 6.4. Investments........................................................................33
SECTION 6.5. Dividends..........................................................................34
SECTION 6.6. Sale of Assets.....................................................................34
SECTION 6.7. Transactions with Affiliates.......................................................34
SECTION 6.8. Consolidation and Merger...........................................................35
SECTION 6.9. Sale and Leaseback.................................................................35
SECTION 6.10. Subordinated Debt..................................................................35
SECTION 6.11. Capital Expenditures...............................................................36
SECTION 6.12. Hazardous Substances...............................................................36
SECTION 6.13. Restrictions on Nature of Business.................................................36
ARTICLE VII Events of Default, Rights and Remedies...................................................36
SECTION 7.1 Events of Default..................................................................36
SECTION 7.2. Rights and Remedies................................................................38
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SECTION 7.3. Pledge of Cash Collateral Account..................................................39
ARTICLE VIII The Agent...............................................................................40
SECTION 8.1. Authorization......................................................................40
SECTION 8.2. Distribution of Payments and Proceeds..............................................40
SECTION 8.3. Expenses...........................................................................41
SECTION 8.4. Payments Received Directly by Banks................................................41
SECTION 8.5. Indemnification....................................................................41
SECTION 8.6. Limitations on Agent's Power.......................................................41
SECTION 8.7. Exculpation; "Agent."..............................................................42
SECTION 8.8. Agent and Affiliates...............................................................42
SECTION 8.9. Credit Investigation...............................................................42
SECTION 8.10. Resignation........................................................................42
SECTION 8.11. Assignments........................................................................43
SECTION 8.12. Participations.....................................................................45
SECTION 8.13. Co-Agent...........................................................................45
ARTICLE IX Miscellaneous..............................................................................46
SECTION 9.1 No Waiver. Cumulative Remedies....................................................46
SECTION 9.2. Amendments, Etc....................................................................46
SECTION 9.3. Notice.............................................................................46
SECTION 9.4. Accommodation Party Defenses Waived................................................47
SECTION 9.5. Disclosure of Information..........................................................47
SECTION 9.6. Costs and Expenses.................................................................48
SECTION 9.7. Indemnification by Borrowers.......................................................48
SECTION 9.8. Execution in Counterparts..........................................................48
SECTION 9.9. Binding Effect, Assignment.........................................................49
SECTION 9.10. Governing Law......................................................................49
SECTION 9.11. Jurisdiction.......................................................................49
SECTION 9.12. Waiver of Jury Trial...............................................................49
SECTION 9.13. Severability of Provisions.........................................................49
SECTION 9.14. Prior Agreements...................................................................49
SECTION 9.15. Headings...........................................................................50
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CREDIT AGREEMENT
Dated as of July 16, 1996
Xxxxxx-Xxxx Inc., a Georgia corporation; Xxxxxx-Xxxx International
L.L.C., a Georgia limited liability company; the Banks, as defined below;
Norwest Bank Minnesota, National Association, a national banking association, as
Agent for the Banks; and SunTrust Bank, Atlanta, a Georgia banking corporation,
as Co-Agent for the Banks; agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For all purposes of this Agreement except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular; and
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles consistently applied.
"Additional Bank" means a financial institution that becomes a
Bank pursuant to the procedures set forth in Section 8.11.
"Adjusted Special Reserves and Accruals" means the aggregate
Special Reserves and Accruals of the Company, multiplied in each case
by a percentage. The applicable percentage (i) may be determined
separately for each item included in the Company's Special Reserves and
Accruals, (ii) except as set forth in the following c1ause, shall be
set, as to each item, by the Company with the consent of the Required
Banks, which consent shall not be unreasonably withheld, and (iii) if
less than 70%, may be set by the Company in its sole discretion,
without the consent of the Required Banks.
"Advance" means an advance by the Banks to either Borrower
pursuant to Article II.
"Adjusted Tangible Net Worth" means (i) the sum (without
duplication) of (A) stockholders' equity of the Company, (B) 65% of the
Company's LIFO Reserve as of the date of determination, and (C) the
Company's Adjusted Special Reserves and Accruals as of the date of
determination, minus (ii) intangible assets of the Company included in
calculating such stockholders' equity, all determined in accordance
with generally accepted accounting principles consistently applied. For
purposes of the foregoing calculation, intangible assets of the Company
shall include but not be limited to the net book value of the Company's
patents, trademarks, trade names, copyrights, licenses, premiums paid
on indebtedness, and goodwill.
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"Affiliate" means (a) any director or officer of the Company,
(b) any Person who, individually or with his immediate family,
beneficially owns or holds 5% or more of the voting interest of the
Company, or (c) any corporation, partnership or other Person in which
any Person or group of Persons described above directly or indirectly
owns a 5% or greater equity interest.
"Agent" means Norwest acting in its capacity as agent for
itself and the other Banks hereunder.
"Agreement" means this Credit Agreement, together with all
amendments, modifications and restatements thereof.
"Alternative Currency" means Australian dollars, Austrian
Schillings, Belgian francs, Dutch guilders, English pounds, Finnish
Finnmarks, French francs, German Deutsche Marks, Italian lira,
Norwegian crowns, South African rands, Spanish pesetas, Swedish krona,
Swiss francs, or any other currency (other than Dollars) requested by a
Borrower and acceptable to all of the Banks.
"Alternative Currency Base Rate" means, with respect to any
Alternative Currency Funding, the rate per annum determined by the
Agent to be the rate at which deposits in the applicable Alternative
Currency are offered to first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two LIBO Business Days
prior to the beginning of the applicable Interest Period, for funds to
be made available on the first day of the applicable Interest Period in
an amount approximately equal to the amount of such Alternative
Currency Funding and maturing at the end of the applicable Interest
Period.
"Alternative Currency Funding" means a Borrowing or any
portion thereof that is made in an Alternative Currency.
"Alternative Currency Letter of Credit" means a Letter of
Credit denominated in an Alternative Currency.
"Alternative Currency Rate" means, with respect to any
Alternative Currency Funding, the annual rate equal to the sum of (i)
the Alternative Currency Base Rate, and (ii) the applicable LIBO Rate
Margin.
"Assignment Certificate" has the meaning set forth in Section
8.11.
"Bank Business Day" means a day other than a Saturday, Sunday,
United States national holiday or other day on which banks in
Minnesota, New York or Georgia are permitted or required by law to
close.
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"Banks" means Norwest, acting on its own behalf and not as
Agent, each of the undersigned banks and any financial institution that
becomes a Bank pursuant to the procedures set forth in Section 8.11,
collectively.
"Base Rate" means, at any time, the rate of interest publicly
announced from time to time by the Agent as its "prime" or "base" rate
or, if the Agent ceases to announce a rate so designated, any similar
successor rate designated by the Agent.
"Borrowers" means the Company and LJ International,
collectively.
"Borrowing" means a borrowing under Article II consisting of
Advances made to a Borrower at the same time by each of the Banks
severally.
"Capital Expenditure" means any expenditure of money for the
purchase or construction of fixed assets or for the purchase or
construction of any other assets, or for improvements or additions
thereto, which are capitalized on the Company's balance sheet in
accordance with generally accepted accounting principles.
"Cash Collateral Account" means an account maintained with the
Agent in which funds are deposited pursuant to Section 2.8(h) or
Section 7.2(c).
"Commitment" means, with respect to each Bank, that Bank's
commitment to make Advances and participate in Letters of Credit
pursuant to Article II.
"Commitment Amount" means, with respect to each Bank, the
amount set forth opposite that Bank's name on the signature page or on
any Assignment Certificate, unless said amount is reduced pursuant to
Section 2.11, in which event it means the amount to which said amount
is reduced.
"Commitment Termination Date" means September 1, 2001, or the
earlier date of termination in whole of the Commitments pursuant to
Section 2.11 or 7.2.
"Company" means Xxxxxx-Xxxx Inc., a Georgia corporation and a
party to this Agreement. Except as otherwise expressly provided herein,
"Company" means only Xxxxxx-Xxxx Inc., without regard to any
Subsidiaries of Xxxxxx-Xxxx Inc. or any consolidation of financial data
with such Subsidiaries.
"Compliance Certificate" means a certificate in substantially
the form of Exhibit C, or such other form as the Borrowers and the
Required Banks may from time to time agree upon in writing, executed by
the chief financial officer of the Company, stating (i) that the
financial statements delivered therewith have been prepared `in
accordance with generally accepted accounting principles applied on a
basis consistent with the accounting practices reflected in the annual
financial statements referred to in Section 4.5, subject, in the case
of interim financial statements, to year-end adjustments, (ii) whether
or not such officer has knowledge of the occurrence of any Default or
Event of Default hereunder not theretofore reported and remedied and,
if so, stating in reasonable detail
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the facts with respect thereto and (iii) if such financial statements
are as of the end of the Company's fiscal year or the second quarter of
the Company's fiscal year, all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Company is in
compliance with the requirements set forth in Sections 5.9, 5.10, 5.11,
5.12 and 5.13.
"Default" means an event that, but for the giving of notice,
the passage of time or both, would constitute an Event of Default.
"Dollar Equivalent" means (i) with respect to a Borrowing,
Advance or Letter of Credit made or denominated in Dollars, the amount
of such Borrowing, Advance or Letter of Credit, and (ii) with respect
to an Alternative Currency Funding or Alternative Currency Letter of
Credit, the amount in freely-transferable Dollars that the Agent may
purchase for the amount and in the currency of such Alternative
Currency Funding or Alternative Currency Letter of Credit on the spot
market on the day of determination, determined at the Agent's
discretion within the period of three LIBO Business Days preceding the
day of such Alternative Currency Funding, as of the first day of the
Interest Period applicable to such Alternative Currency Funding, on the
date of the issuance of or any draw under such Alternative Currency
Letter of Credit and at such other times as the Agent shall determine
in accordance with this Agreement.
"Dollars" means United States dollars.
"EBITDAR" means, with respect to any period, the Net Income of
the Company with respect to that period, increased or decreased (as the
case may be) by any change in the Company's Adjusted Special Reserves
and Accruals during that period, plus each of the following to the
extent deducted in determining Net Income: (i) any taxes accrued by the
Company with respect to such period, (ii) interest expenses recognized
by the Company with respect to that period, (iii) 65% of the Company's
LIFO Expense during that period, and (iv) depreciation and amortization
recognized by the Company with respect to that period, all determined
in accordance with generally accepted accounting principles
consistently applied.
"Eligible Bank" means a commercial bank having aggregate
capital and surplus greater than $500,000,000 as of the date of
determination.
"Environmental Law" means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the
Federal Water Pollution Control Act, 33 U.S.C. ss. 1252 et seq., the
Clean Water Act, 33 U.S.C. ss. 1321 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., and any other federal, state, county,
municipal, local or other statute, law, ordinance or regulation which
may relate to or deal with human health or the environment all as may
be from time to time amended.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that is, along with the Company, a member of a controlled
group of corporations or a controlled group of trades or businesses, as
described in sections 414(b) and 414(c), respectively, of the Internal
Revenue Code of 1986, as amended.
"Eurodollar Base Rate" means, with respect to any Interest
Period, the rate per annum at which U.S. dollar deposits in immediately
available funds are offered as of 11:00 A.M. (London Time) two LIBO
Business Days prior to the beginning of such Interest Period, as
determined by the Agent on the basis of the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service; provided, however,
that if such page is no longer available, the Eurodollar Base Rate
shall be determined by the Agent on the basis of a substantially
comparable source selected by the Agent and acceptable to the Required
Banks.
"Eurodollar Rate" means the annual rate equal to the sum of
(i) the rate obtained by dividing (a) the Eurodollar Base Rate, by (b)
a percentage equal to 100% minus the Federal Reserve System requirement
(expressed as a percentage) applicable to such deposits, and (ii) the
applicable LIBO Rate Margin.
"Eurodollar Rate Funding" means a Borrowing or any portion
thereof, or any other portion of the principal balance of the Notes,
that bears interest at a Eurodollar Rate.
"Event of Default" has the meaning specified in Section 7.1.
"Excess Guaranty Increment" means $0, except that the
Borrowers may increase the Excess Guaranty Increment at any time and
from time to time by payment to the Agent for the benefit of the Banks,
of an excess guaranty fee in an amount equal to 1.125% of the amount of
such increase; provided, however, that in no event shall the Excess
Guaranty Increment be greater than $5,000,000.
"Federal Funds Rate" means at any time an interest rate per
annum equal to the weighted average of the rates for overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any
day which is a Bank Business Day, the average of the quotations for
such day for such transactions received by the Agent from three federal
funds brokers of recognized standing selected by it, it being
understood that the Federal Funds Rate for any day which is not a Bank
Business Day shall be the Federal Funds Rate for the next preceding
Bank Business Day.
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"Floating Rate" means, at any time, an annual rate equal to
the greater of
(i) the Base Rate, minus 50 basis points (0.50%); or
(ii) the Federal Funds Rate, plus 50 basis points (0.50%);
The Floating Rate shall change when and as the Base Rate or Federal
Funds Rate changes.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical
waste, radioactive material, explosives, known carcinogens, petroleum
products and by-products and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law.
"Interest Period" means, with respect to any Eurodollar Rate
Funding or Alternative Currency Funding, a period of one, two, three or
six months beginning on a LIBO Business Day, as elected by the Borrower
requesting the Eurodollar Rate Funding or Alternative Currency Funding.
Each Interest Period shall end on the day in the final month of such
Interest Period that immediately precedes the date which numerically
corresponds to the first day of such Interest Period, except that (i)
if such final month has no numerically corresponding day, then the
Interest Period shall end on the last LIBO Business Day of such month,
and (ii) if an Interest Period would otherwise end on a day which is
not a LIBO Business Day, such Interest Period shall end on the next
following LIBO Business Day, unless such next following LIBO Business
Day is the first LIBO Business Day of a month, in which case such
Interest Period shall end on the next preceding LIBO Business Day.
"Issuing Bank" means Norwest acting as the Bank issuing
Letters of Credit.
"L/C Amount" means the Dollar Equivalent of the sum of (i) the
aggregate face amount of any issued and outstanding Letters of Credit,
plus (ii) amounts drawn under Letters of Credit for which the Banks
have neither been reimbursed nor made any Advance.
"Letter of Credit" has the meaning set forth in Section 2.8.
"Lien" means any mortgage, deed of trust, lien, pledge,
security interest or other charge or encumbrance, of any kind
whatsoever, including but not limited to the interest of the lessor or
titleholder under any capitalized lease, title retention contract or
similar agreement.
"LIBO Business Day" means a Bank Business Day on which
dealings in the London interbank market are carried on (i) if such
determination relates to a Eurodollar Rate, in U.S. dollar deposits, or
(ii) if such determination relates to an Alternative Currency Funding,
the applicable Alternative Currency.
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"LIBO Rate Margin" means a percentage, determined as set forth
in Section 2.7.
"LIFO Expense" means, during any period, the change in the
Company's LIFO Reserve during such period.
"LIFO Reserve" means, at any time, the difference between the
value of inventory calculated using a first-in-first-out (FIFO) method
and the value of such inventory calculated using the "link chain"
last-in-first-out (LIFO) method. In determining the Company's LIFO
Reserve as of any date, the LIFO Reserve shall be calculated with
respect to each pool of the Company's inventory (divided into separate
pools in accordance with applicable standards set forth in the Internal
Revenue Code and the regulations thereunder and interpretations
thereof), and the sum of the LIFO Reserves for each such pool shall be
aggregated to determine the Company's LIFO Reserve.
"LJ International" means Xxxxxx-Xxxx International L.L.C., a
Georgia limited liability company. Except as otherwise expressly
provided herein, "LJ International" means only LJ International,
without regard to any Subsidiaries of LJ International or any
consolidation of financial data with such Subsidiaries.
"LJ International Outstandings" means, at any time, the sum of
(i) the aggregate principal amount of Advances made to LJ International
hereunder, and (ii) the L/C Amount, to the extent that the Letters of
Credit giving rise to the L/C Amount have been issued for the account
or at the request of LJ International.
"LJ Party" means either Borrower or any Subsidiary of either
Borrower.
"Loan Documents" means this Agreement and the Notes.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001 (a)(3) of ERISA.
"Net Income" means the net earnings of the Company, determined
in accordance with generally accepted accounting principles
consistently applied.
"Norwest" means Norwest Bank Minnesota, National Association,
a national banking association and a party to this Agreement.
"Note" has the meaning set forth in Section 2.1.
"Organizational Documents" means, with respect to any limited
liability company, the articles of organization and all operating
agreements, member control relating to that limited liability
agreements and similar organizational documents relating company.
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"Percentage" means, with respect to each Bank, the ratio of
that Bank's Commitment Amount to the aggregate Commitment Amounts of
all of the Banks.
"Permitted Acquisition" means the acquisition by the Company
of stock or other equity interests in any other Person, the
consolidation or merger of any other Person into the Company, or the
transfer of any assets of any other Person to the Company outside the
ordinary course of business, in each case so long as:
(i) no Default or Event of Default is continuing at the
time of such acquisition, consolidation, merger or
transfer, or would be caused by such acquisition,
consolidation, merger or transfer;
(ii) in the case of the acquisition of stock or other
equity interests or in the case of any consolidation
or merger, the aggregate amount expended by the
Company on account of all such acquisitions,
consolidations and mergers during any single 12-month
period does not exceed $20,000,000, less the amount
expended by the Company on account of any transfer of
assets to the Company outside the ordinary course of
business during such period;
(iii) in the case of any consolidation or merger, the
Company shall be the continuing or surviving
corporation; and
(iv) in the case of a transfer of assets to the Company
outside the ordinary course of business, the
aggregate amount expended by the Company on account
of all such transfers during any single 12-month
period does not exceed the lesser of (A) 40% of the
Company's assets as of the beginning of that 12-month
period, or (B) $20,000,000, in each case reduced by
the aggregate amount expended by the Company on
account of all acquisitions of stock and other equity
interests and all consolidations and mergers with the
Company during such 12-month period.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock
company, trust unincorporated organization or government or any agency
or political subdivision thereof
"Plan" means an employee benefit plan or other plan maintained
for employees of the Company or any ERISA Affiliate and covered by
Title IV of ERISA.
"Xxxxxx" means Xxxxx X. Xxxxxx.
"Xxxxxx Entity" means (i) Xxxxxx, (ii) any member of Ponzio's
immediate family, (iii) any trust established for the benefit of Xxxxxx
or any member of his immediately family, so long as such trust is
controlled solely by Xxxxxx at all times prior to his death, (iv) the
estate of Xxxxxx arising after his death, or (v) any corporation,
partnership or limited liability company controlled by Xxxxxx. For
purposes of this definition, Xxxxxx
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shall be deemed to be in control of a corporation, partnership or
limited liability company so long as (x) he owns (both legally and
beneficially) not less than 67% of each class of the equity interests
of such entity, and (y) he maintains voting control of such
corporation, partnership or limited liability company.
"Reportable Event" means (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) a
withdrawal from any Plan, as described in Section 4063 of ERISA,, (iii)
an action to terminate a Plan for which a notice is required to be
filed under Section 4041 of ERISA, (iv) any other event or condition
that might constitute grounds for termination of, or the appointment of
a trustee to administer, any Plan, or (v) a complete or partial
withdrawal from a Multiemployer Plan as described in Sections 4203 and
4205 of ERISA.
"Required Banks" means one or more Banks (including, where
relevant Additional Banks) having an aggregate Percentage equal to or
greater than 66-2/3%.
"Special Reserves and Accruals" means, as of any date,
reserves and liabilities of the Company that do not meet the "all
events test" as defined in Section 461 of the Internal Revenue Code of
1986 and the regulations thereunder and interpretations thereof,
including but not limited to any reserves or liabilities the existence
or amount of which cannot be determined with reasonable accuracy.
"Subchapter S Corporation" means an "electing small business
corporation," as defined in Subchapter S of the Internal Revenue Code
of 1986 (26 U.S.C. xx.xx. 1371-1377).
"Subordinated Debt" means indebtedness of the Company which is
subordinated in right of payment to all indebtedness of the Company to
any Bank, on terms that have been approved in writing by the Required
Banks and that have been noted by appropriate legend on all instruments
evidencing the Subordinated Debt.
"Subsidiary" means, as to either Borrower, (i) any corporation
of which more than 50% of the outstanding shares of capital stock
having general voting power under ordinary circumstances to elect a
majority of the board of directors of such corporation, irrespective of
whether or not at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any
contingency, is at the time directly or indirectly owned by that
Borrower, by that Borrower and one or more other Subsidiaries, or by
one or more other Subsidiaries, (ii) any partnership of which 50% or
more of the partnership interests therein are directly or indirectly
owned by that Borrower, by that Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries, and (iii) any
limited liability company or other form of business organization the
effective control of which is held by that Borrower, by that Borrower
and one or more other Subsidiaries, or by one or more other
Subsidiaries.
"Total Funded Debt" means (without duplication) (i) all
indebtedness of the Company for borrowed money; (ii) indebtedness of
the Company evidenced by bonds,
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notes or similar written instruments, whether or not representing
obligations for borrowed money; (iii) all capitalized lease obligations
of the Company; (iv) all indebtedness secured by a Lien on any property
owned by the Company, whether or not such indebtedness has been assumed
by the Company or is nonrecourse to the Company; (v) all net
obligations of the Company under interest rate agreements or currency
agreements; (vi) guaranty obligations of the Company with respect to
indebtedness for borrowed money of another Person (including
Affiliates); and (vii) the face amount of all Letters of Credit issued
hereunder, all other letters of credit and bankers' acceptances issued
for the account of the Company, and, without duplication, all drafts
drawn thereunder.
"Total-Funded-Debt-To-EBITDAR Ratio" means, as of any date of
determination, the ratio of (i) the Total Funded Debt of the Company as
of that date, to (ii) (A) the EBITDAR of the Company during the
24-month period ending on that date, divided by (B) 2.
"Welfare Plan" means a "welfare plan" as defined in Section
3(1) of ERISA.
ARTICLE II
AMOUNT AND TERMS OF THE REVOLVING LOANS; LETTERS OF CREDIT
Section 2.1 Revolving Credit Facility. Each Bank agrees, severally but
not jointly, on the terms and subject to the conditions hereinafter set forth,
to make Advances to the Borrowers from time to time during the period from the
date hereof to and including the Commitment Termination Date. In no event shall
any Bank be obligated to make any requested Advance if the sum of the Dollar
Equivalent of the Advances by that Bank then outstanding, that Bank's Percentage
of the then-outstanding L/C Amount and the Dollar Equivalent of the requested
Advance would exceed that Bank's Commitment Amount. Within the limits of each
Bank's Commitment Amount, the Borrowers may borrow, prepay pursuant to Section
2.12 and reborrow under this Section 2.1. The Advances made by each Bank shall
be evidenced by and repayable with interest in accordance with a single
promissory note of the Borrowers (each, a "Note") payable to the order of that
Bank, substantially in the form of Exhibit A hereto, dated the date hereof.
Section 2.2 Procedure for Borrowings. Each Borrowing shall occur
following written notice from either Borrower to the Agent or telephonic request
from any person purporting to be authorized to request Advances on behalf of
either Borrower. Each such notice or request shall specify (i) the name of the
Borrower that will receive the proceeds of such Borrowing, (ii) the date of the
requested Borrowing, (iii) the amount thereof, (iv) if any portion of such
Borrowing will bear interest at a Eurodollar Rate or be made in an Alternative
Currency, the Interest Period selected by the requesting Borrower with respect
thereto, and (v) if such Borrowing will be made in an Alternative Currency, the
Alternative Currency in which such Borrowing will be made. Such notice or
request must be received by the Agent not later than 11:00 a.m. (Minneapolis
time) on the day on which such Borrowing is to occur or, if all or any portion
of the Borrowing will bear interest at a Eurodollar Rate or be made in an
Alternative Currency, not
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later than 11:00 a.m. (Minneapolis time) on the day three LIBO Business Days'
prior to the date on which such Borrowing is to occur. Upon receiving a request
for a Borrowing, and in any event not later than 1:30 p.m. (Minneapolis time) on
the date that the requested Borrowing is to occur, or, if the requested
Borrowing is to bear interest at a Eurodollar Rate or be made in an Alternative
Currency, the close of business on the day that the request is received, the
Agent will notify the Banks of the amount of the requested Borrowing, the amount
of each Bank's Advance with respect thereto, and, if applicable, the fact that
such Borrowing will bear interest at a Eurodollar Rate or Alternative Currency
Rate, and the Interest Period and Alternative Currency selected by the
requesting Borrower. Not later than 4:00 p.m. (Minneapolis time) on the second
LIBO Business Day prior to the date on which any Eurodollar Rate Funding or
Alternative Currency Funding is to occur, the Agent will notify the Banks and
the Borrowers of the interest rate to be applicable thereto. Upon fulfillment of
the applicable conditions set forth in Article III, each Bank shall remit its
Percentage of the requested Borrowing to the Agent in immediately available
funds. So long as a Bank receives notice of the requested Borrowing by the
applicable time specified above, that Bank will make its Advance with respect to
that Borrowing available to the Agent by wire transfer of immediately available
funds to the Agent not later than 4:00 p.m. (Minneapolis time) on the date
called for in such notice. Prior to the close of business on the day of the
requested Borrowing, the Agent shall disburse such funds by crediting the same
to the demand deposit account of the requesting Borrower maintained with the
Agent or in such other manner as the Agent and either Borrower may from time to
time agree. The Agent shall have no obligation to disburse the requested
Borrowing if any condition set forth in Article III has not been satisfied on
the day of the requested Borrowing. Each Borrowing shall be in the amount of
$500,000 or an integral multiple thereof, provided, however, that each
Eurodollar Rate Funding or Alternative Currency Funding must be in the amount of
$2,000,000 or an integral multiple of $500,000 greater than $2,000,000. The
Borrowers shall be obligated to repay all Advances made to them notwithstanding
the fact that the person requesting the same was not in fact authorized so to
do. Any request for an Advance shall be deemed to be a representation that the
statements set forth in Section 3.2 are correct.
Section 2.3 Additional Provisions Regarding Eurodollar Rate Fundings
and Alternative Currency Fundings.
(a) In no event shall more than 18 Eurodollar Rate Fundings
and Alternative Currency Fundings be outstanding at any one time.
(b) In no event may the Borrower request a Eurodollar Rate
Funding or Alternative Currency Funding if the Interest Period
applicable thereto would end after the Commitment Termination Date.
(c) In no event may the Borrowers rescind any request for a
Eurodollar Rate Funding or Alternative Currency Funding once made.
(d) Notwithstanding anything to the contrary in this
Agreement, the Agent and the Banks shall have no obligation to honor
any request for a Eurodollar Rate Funding or Alternative Currency
Funding (i) if a Default or Event of Default has occurred and is
continuing when such request is made or on the first day of the
Interest
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Period applicable thereto, (ii) if any Bank, in its sole discretion,
determines that funds in amounts equal to the requested amount,
maturing at the end of the proposed Interest Period and, if applicable,
in the applicable Alternative Currency are not readily available to
such Bank from major banks in the London interbank market, or (iii) if
any Bank, in its sole discretion, determines that it is unlawful for
such Bank to make, maintain or fund Eurodollar Rate Fundings or
Alternative Currency Fundings. Absent manifest error, the records of
the Agent shall be conclusive evidence as to the amount of each
Eurodollar Rate Funding and Alternative Currency Funding and the
interest rate and Interest Period applicable thereto.
(e) If any Bank, in its sole discretion, determines that it is
unlawful for it to continue to maintain its portion of any Eurodollar
Rate Funding or Alternative Currency Funding outstanding at the time of
such determination, such Bank may, by notice to the Agent and the
Borrowers, require the immediate repayment thereof or, if legally
permissible, convert its portion of such Eurodollar Funding or
Alternative Currency Funding to an Advance bearing interest at the
Floating Rate in an amount equal to the Dollar Equivalent of such
portion of the applicable Eurodollar Rate Funding or Alternative
Currency Funding. Any such Advance shall be applied to the prepayment
of that Bank's portion of such Eurodollar Rate Funding or Alternative
Currency Funding, but (i) no amount shall be required to be paid under
Section 2.19 on account of such prepayment and (ii) except as provided
in Section 7.2 upon acceleration of the Notes, no interest shall be
due and payable with respect to such Advance until the end of the
applicable Interest Period.
(f) Unless the Borrowers repay an Alternative Currency Funding
on the expiration of the Interest Period applicable thereto in the
applicable Alternative Currency, the outstanding principal balance of
such Alternative Currency Funding shall be converted from the
applicable Alternative Currency to Dollars on the expiration of such
Interest Period. Upon any such conversion to Dollars, the Dollar
Equivalent resulting from such conversion shall be deemed a Borrowing
by the Borrowers from the Banks hereunder consisting of Advances by
each Bank in proportion to their shares of the corresponding
Alternative Currency Funding.
(g) If, as a result of any conversion of an Alternative
Currency Funding to Dollars pursuant to paragraph (f) or any conversion
of the Borrowers' reimbursement obligation with respect to any
Alternative Currency Letter of Credit pursuant to Section 2.8(f), the
sum of the Dollar Equivalent of all outstanding Advances and the L/C
Amount exceeds the aggregate Commitment Amounts of the Banks, the
Borrowers shall on demand by the Agent repay the amount of such excess,
together with interest thereon from the date of such conversion until
payment at the Floating Rate.
Section 2.4 Alternative Currency Participation's
(a) Notwithstanding any other provision of this Agreement to
the contrary, if any Bank (the "Participating Bank"), in its sole
discretion, determines that it is unable to make its portion of
Alternative Currency Fundings in a particular Alternative
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Currency or if such Bank determines that it will not as a matter of
policy, make loans to any of its borrowers in such Alternative
Currency, such Bank may enter into one or more participation agreements
with another Bank (the "Funding Bank') providing that the Participating
Bank will purchase from the Funding Bank, and the Funding Bank will
grant to the Participating Bank, a participation in each Alternative
Currency Funding made in such Alternative Currency (each, a "Restricted
Currency Funding"). Such participation shall, as between the Funding
Bank and the Participating Bank, be denominated in Dollars, but the
underlying loan to the Borrowers shall be funded by the Funding Bank in
the applicable Alternative Currency (subject to the other terms and
conditions of this Agreement). Any Bank entering into a participation
agreement as contemplated by this paragraph shall deliver a copy of the
applicable agreement to the Agent and the Borrower promptly upon
entering into such agreement.
(b) The Percentages of the Funding Bank and the Participating
Bank with respect to each Restricted Currency Funding covered by any
such participation agreement shall (with respect to the obligation to
provide such Restricted Currency Funding hereunder and with respect to
the right to receive payments on account of such Restricted Currency
Funding) be equal to (i) in the case of the Funding Bank, the sum of
the Funding Bank's Percentage and the Participating Bank's Percentage,
and (ii) in the case of the Participating Bank, 0%.
(c) The participated portion of any Restricted Currency
Funding shall be evidenced by the Note payable to the order of the
Funding Bank. In no event shall the Funding Bank be required to fund
any Advance or participate in any Letter of Credit if the sum of the
Dollar Equivalent of the Advances by that Bank then outstanding
(including the participated portion of any Restricted Currency Fundings
as to which such Bank is the Funding Bank), that Bank's Percentage of
the then-outstanding L/C Amount and the Dollar Equivalent of the amount
of the applicable Advance or Letter of Credit (including, in the case
of any Restricted Currency Fundings, the participated portion thereof
as to which such Bank is the Funding Bank) would exceed that Bank's
Commitment Amount.
(d) In no event shall the Borrowers' liability (whether under
Section 2.18, 2.19 or 2.20 or otherwise) to the Funding Bank and the
Participating Bank, when considered in the aggregate, be greater
because of the arrangement contemplated by this Section 2.4 than it
would be if no such arrangement existed and the Funding Bank and the
Participating Bank each funded their respective Percentages of each
Alternative Currency Funding in the applicable Alternative Currency as
would be required but for this Section 2.4.
Section 2.5 Interest
(a) The Notes shall bear interest on the unpaid principal
amount thereof from the date thereof until paid as follows:
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a
(i) Except as provided elsewhere in this paragraph (a), the
principal balance of each Note shall bear interest at
the Floating Rate.
(ii) Each Eurodollar Rate Funding shall bear interest at the
applicable Eurodollar Rate for the Interest Period
specified in the notice or request for such Eurodollar
Rate Funding.
(iii) Each Alternative Currency Funding shall bear interest
at the applicable Alternative Currency Rate for the
Interest Period specified in the notice or request for
such Alternative Currency Funding.
(iv) At the termination of each Interest Period, the
interest rate applicable to the Eurodollar Rate Funding
or Alternative Currency Funding to which such Interest
Period was applicable shall revert to the Floating Rate
unless a new Eurodollar Rate request is made by a
Borrower in accordance with this Agreement.
(b) Interest accruing on the principal balance of the Notes
shall be payable as follows:
(i) Interest accruing on the principal balance of the Notes
at the Floating Rate each month shall be due and
payable on the last day of that month, commencing on
the last day of the month hereof, and on the Commitment
Termination Date.
(ii) Interest on each Eurodollar Rate Funding and
Alternative Currency Funding shall be due and payable
on the last day of the applicable Interest Period or,
if such Interest Period is in excess of three months,
on the last day of each three-month interval during
such Interest Period, and on the last day of such
Interest Period.
Section 2.6 Conversion of Principal to Eurodollar Rate Fundings. At the
election of either Borrower, which may be exercised from time to time, a
Borrower may request in writing or by telephone that a Eurodollar Rate be
applicable for the portion of the outstanding principal balance of the Notes
(including any Advance requested or to be requested) and for the Interest Period
indicated by the applicable Borrower in its request. The portion of the
outstanding balance of the Notes for which a Eurodollar Rate is requested (i)
must be in the amount (as to all Notes combined) of $2,000,000 or an integral
multiple of $500,000 greater than $2,000,000, and (ii) must on the first day of
the applicable Interest Period, either (A) bear interest at the Floating Rate,
or (B) bear interest at a Eurodollar Rate or Alternative Currency Rate with
respect to which the Interest Period expires on such first day. A request for a
Eurodollar Rate must be received by the Agent before 11:00 a.m. (Minneapolis
time) on the day three LIBO Business Days before the first day of the proposed
Interest Period. Upon receiving a request for a Eurodollar Rate, and in any
event not later than the close of business on the day that the request is
received, the Agent will notify the Banks of the principal amount to be subject
to such Eurodollar Rate and the Interest Period applicable thereto. Not later
than 4:00 p.m.
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(Minneapolis time) on the second LIBO Business Day prior to the date on which
such Eurodollar Rate is to become effective, the Agent will notify the Banks and
the Borrowers of the interest rate to be applicable thereto.
Section 2.7 Pricing Adjustments.
(a) Until adjusted as set forth below, the LIBO Rate Margin
shall be 1.125%.
(b) The LIBO Rate Margin shall be adjusted quarterly on the
basis of the Total-Funded-Debt-To-EBITDAR Ratio of the Company as at
the end of the previous fiscal quarter in accordance with the following
table:
Total-Funded-Debt-To-EBITDAR Ratio LIBO Rate Margin
---------------------------------- ----------------
Less than 1.50 to 1 0.75%
1.50 to 1 or greater, but less than 2.00 to 1 1.00%
2.00 to 1 or greater, but less than 3.00 to 1 1.25%
3. 00 to 1 or greater 1.50%
Notwithstanding the foregoing, (i) no reduction in the LIBO Rate Margin
will be made if a Default or an Event of Default has occurred and is
continuing at the time that such reduction would otherwise be made, and
(ii) if the Company fails to deliver any financial statements or
Compliance Certificates when required under Section 5.1, the Agent upon
the request of the Required Banks, shall, by notice to the Borrowers,
increase the LIBO Rate Margin to the highest rates set forth above from
the beginning of the fiscal quarter in which such items were required
to be delivered until such time as the Agent has received all such
financial statements and Compliance Certificates.
(c) Reductions and increases in the LIBO Rate Margin (and the
letter of credit fees based thereon) will be determined quarterly
following receipt of the Company's financial statements and quarterly
Compliance Certificates required under Section 5.1. Any such reduction
or increase shall be applicable (i) to Eurodollar Rate Fundings and
Alternative Currency Fundings having an Interest Period commencing
after the last day of the month in which such receipt occurs, and (ii)
to commitment fees and letter of credit fees accruing after the last
day of such month. The Agent shall notify each Bank of any change
pursuant to this Section 2.7 promptly following the determination
thereof.
Section 2.8 Letters of Credit.
(a) Either Borrower may from time to time request that the
Issuing Bank issue one or more irrevocable standby or documentary
letters of credit (each, a "Letter of Credit") for the account of that
Borrower, either solely or jointly with any other LJ
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Party. No Letter of Credit shall be issued if the Dollar Equivalent of
the face amount of that Letter of Credit, together with the sum of the
L/C Amount and the Dollar Equivalent of the aggregate principal balance
of the Notes then outstanding, would exceed the aggregate Commitment
Amounts. Each Letter of Credit shall be used for the general corporate
purposes of the Borrowers.
(b) At least five days prior to the issuance of each Letter of
Credit the Borrowers shall execute a letter of credit application and
reimbursement agreement either in the form attached as Exhibit B or in
the Issuing Bank's standard form as required by the Issuing Bank.
(c) Each Letter of Credit shall be denominated in Dollars or
an Alternative Currency specified by the applicable Borrower in its
request for such Letter of Credit.
(d) Each Letter of Credit shall be issued in a form acceptable
to the Issuing Bank. Not later than the day on which any Letter of
Credit is issued, the Issuing Bank shall deliver to the Agent, and the
Agent shall deliver to each of the Banks, a copy of such Letter of
Credit. Unless otherwise approved by the Required Banks, no Letter of
Credit shall have an initial or any renewal term of more than one year.
Unless otherwise approved by all of the Banks, no Letter of Credit
shall have a term (including renewals thereof) extending beyond the
Commitment Termination Date.
(e) A fee shall be due and payable to the Agent for the
benefit of the Banks upon issuance of each Letter of Credit, computed
at an annual rate equal to the LIBO Rate Margin applied to the face
amount of that Letter of Credit outstanding from time to time, from and
including the date of issuance of that Letter of Credit until the
expiration thereof, payable in advance on the date of issuance and on
the first day of each calendar quarter thereafter.
(f) The Borrowers shall pay the amount of each draft drawn
under any Letter of Credit to the Issuing Bank on demand (or, if demand
is not earlier made, on the Commitment Termination Date), together with
interest at the Float Rate from the date that such draft is paid by the
Issuing Bank until payment of such amount in full. Unless the Borrowers
make such payment with respect to an Alternative Currency Letter of
Credit in the applicable Alternative Currency immediately upon payment
of such draft by the Issuing Bank, the Borrowers' obligation to pay the
amount of such draft shall be converted from the applicable Alternative
Currency to Dollars following such payment by the Issuing Bank.
(g) Each Bank shall be deemed to hold a participation interest
in each Letter of Credit equal to that Bank's Percentage of the face
amount of that Letter of Credit. If the Issuing Bank makes any payment
pursuant to the terms of any Letter of Credit and is not promptly
reimbursed, the Issuing Bank may request that each other Bank pay such
Bank's Percentage of the unreimbursed amount (which amount shall, in
the case of an Alternative Currency Letter of Credit, have been
converted to Dollars as
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set forth in paragraph (f). Upon receipt of any such request prior to
1:30 p.m. (Minneapolis time) on a Bank Business Day, the recipient
shall be unconditionally and irrevocably obligated to pay its
Percentage of the unreimbursed amount to the Issuing Bank in
immediately available funds prior to 4:00 p.m. (Minneapolis time) on
such date. Notices received after 1:30 p.m. (Minneapolis time) shall be
deemed to have been received on the following Bank Business Day. If
payment is not made by a Bank when due hereunder, interest on the
unpaid amount shall accrue from and including the date of the Issuing
Bank's request to the date of payment at the Federal Funds Rate. After
making any payment to the Issuing Bank under this subsection in
connection with a particular Letter of Credit, a Bank shall be entitled
to participate to the extent of its Percentage in the related
reimbursements received by the Issuing Bank from the Borrowers or
otherwise. Upon receiving any such reimbursement, the Issuing Bank will
distribute to each Bank its Percentage of such reimbursement. At the
option of the Required Banks, any payment by a Bank hereunder may be
deemed an Advance in accordance with Section 2.1 and payable under the
Notes. Notwithstanding the foregoing, the Banks shall have no
obligation to make any payment under this paragraph (g) to the extent
that the payment of such draw constituted gross negligence or willful
misconduct by the Issuing Bank.
(h) Unless otherwise agreed by each Bank in writing, the
Borrowers shall deposit in the Cash Collateral Account, on the
Commitment Termination Date, an amount equal to the then-applicable L/C
Amount, less the balance (if any) then outstanding in the Cash
Collateral Account. Such deposit shall be made (i) with respect to each
Alternative Currency Letter of Credit in the applicable Alternative
Currency, and (ii) with respect to each Letter of Credit denominated in
Dollars, in Dollars.
Section 2.9 Limitation on LJ International Outstandings.
Notwithstanding any other provision of this Agreement to the contrary, the Banks
shall have no obligation to make any Advance to LJ International or issue any
Letter of Credit for the account of LJ International if, after making such
Advance or issuing such Letter of Credit, the aggregate LJ International
Outstandings would exceed at any time exceed 90% of the Adjusted Tangible Net
Worth of the Company.
Section 2.10 Fees.
(a) Upfront Fee. The Borrowers shall pay to the Agent, for the
benefit of each Bank, on the date hereof, an upfront fee equal to 35
basis points (0.35%) of each Bank's Commitment Amount. Each Bank's
upfront fee shall be deemed fully earned by that Bank's entering into
this Agreement, whether or not any Advance is at any time made
hereunder.
(b) Commitment Fees. The Borrowers shall pay to the Agent for
the benefit of each Bank, a commitment fee at an annual rate equal to
25 basis points (0.25%) on the average daily unused amount of each
Bank's Commitment Amount from the date hereof to and including the
Commitment Termination Date, payable quarterly in arrears on the last
day of each March, June, September and December through the
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Commitment Termination Date, commencing September 30,1996. Any
commitment fee remaining unpaid on the Commitment Termination Date
shall be due and payable on that date. As used herein, the "unused
amount" of any Bank's Commitment Amount shall, at any time, mean that
Bank's Commitment Amount less the sum of (i) the principal balance of
that Bank's Note then outstanding, and (ii) that Bank's Percentage of
the L/C Amount then outstanding.
(c) Agency Fee. The Borrowers shall pay to the Agent, for the
Agent's own account and not for the benefit of the Banks, an agency fee
in an amount set forth in a separate agreement between the Agent and
the Borrowers.
Section 2.11 Termination or Reduction of the Commitments. Either
Borrower may at any time and from time to time upon three Bank Business Days'
prior notice to the Agent permanently terminate the Commitments in whole or
permanently reduce the Commitment Amounts in part, without penalty or premium,
provided that (i) the Commitments may not be terminated while any Advance or L/C
Amount remains outstanding, (ii) each partial reduction shall be in the
aggregate amount of $5,000,000 or a multiple thereof, (iii) any partial
reduction of the Commitment Amounts shall be pro rata as to each Bank in
accordance with that Bank's Percentage, and (iv) no reduction shall reduce the
Commitment Amounts to an amount less than the Dollar Equivalent of the sum of
the aggregate Advances and the L/C Amount outstanding at the time.
Section 2.12 Voluntary Prepayments. The Borrowers may prepay the Notes
in whole or in part, without penalty or premium, at any time and from time to
time; provided that (i) prepayment of any Bank's Note must be accompanied by pro
rata prepayment of each other Bank's Note, (ii) any prepayment of any Eurodollar
Rate Funding or Alternative Currency Funding shall include prepayment of the
entire amount of such Eurodollar Rate Funding or Alternative Currency Funding,
together with accrued interest thereon, (iii) each partial prepayment of the
Notes shall be in the aggregate principal amount of $1,000,000 or a multiple
thereof, except that no prepayment of any portion of the Notes bearing interest
at a Eurodollar Rate or Alternative Currency Rate may be made in an aggregate
principal amount less than $5,000,000, and (iv) any prepayment of any portion of
the principal balance of the Notes which, at the time of such prepayment, bears
interest at a Eurodollar Rate or Alternative Currency Rate shall be accompanied
by compensation as specified in Section 2.19. Each partial prepayment of
principal on the Notes shall be applied, first, to that portion of the Notes
bearing interest at the Floating Rate; and, second, to Eurodollar Rate Fundings
and Alternative Currency Fundings, in inverse order of the maturity of the
Interest Periods applicable thereto.
Section 2.13 Computation of Interest and Fees. Interest under the Notes
and the fees hereunder shall be computed on the basis of actual number of days
elapsed in a year of 360 days.
Section 2.14 Payment.
(a) All payments of principal and interest under the Notes and
of the fees and other amounts hereunder shall be made to the Agent in
immediately available funds.
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All payments shall be made to the Agent's principal office in
Minneapolis, Minnesota, except that payments of Alternative Currency
Fundings and reimbursement obligations arising from Alternative
Currency Letters of Credit shall be made to such office as the Agent
may from time to time designate. All payments of principal and interest
on any Note shall be made in Dollars, except that Alternative Currency
Fundings and reimbursement obligations arising from Alternative
Currency Letters of Credit shall be repaid in that same Alternative
Currency or converted as set forth in Section 2.3(f). Payments received
after noon (Minneapolis time) on any day shall be deemed received on
the next succeeding Bank Business Day. The Borrowers agree that the
amount shown on the books and records of each Bank as being the
principal balance of that Bank's Note shall be prima facie evidence of
such principal balance. The Borrowers hereby authorize the Agent to
charge against any account of either or both Borrowers with the Agent
an amount equal to the accrued interest and fees from time to time due
and payable to the Agent and the Banks under the Notes or hereunder, or
(at the Banks' option) to effect a Borrowing in such amount, all
without receipt of any request for such charge or Borrowing.
(b) If, for the purpose of obtaining judgment in any court, it
is necessary to convert a sum due hereunder in Dollars or any
Alternative Currency (the "Specified Currency") into another currency
(the "Judgment Currency"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures the
Agent could purchase the Specified Currency with that amount of the
Judgment Currency on the LIBO Business Day next preceding the day on
which such judgment is rendered. The obligation of the Borrowers with
respect to any such sum due from it to the Agent or any Bank (each, an
"Entitled Person") shall, notwithstanding the rate of exchange actually
applied in rendering such judgment, be discharged only to the extent
that on the LIBO Business Day following receipt by such Entitled Person
of any sum adjudged to be due hereunder or under the Notes in the
Judgment Currency, such Entitled Person may in accordance with normal
banking procedures purchase and transfer to the required location of
payment the Alternative Currency with the amount of the Judgment
Currency so adjudged to be due; and the Borrowers hereby, as a separate
obligation and notwithstanding any such judgment, agree to indemnify
such Entitled Person against and to pay such Entitled Person on demand,
in the applicable Alternative Currency, any difference between the sum
originally due to such Entitled Person in the Alternative Currency and
the amount of the Alternative Currency so purchased and transferred on
that LIBO Business Day.
Section 2.15 Application of Payments. The parties intend that the
entire principal balance of and interest on the Notes, and all other amounts due
hereunder, shall be the joint and several obligations of each Borrower. However,
the parties recognize that, for certain purposes hereunder, it will be necessary
that payments be deemed to be applied to the Borrowings made by a particular
Borrower. For such purposes, the parties agree that all payments of the
principal balance of the Notes shall be applied against the then-outstanding
Borrowings of such Borrower as the payer (or, if such payor is not a Borrower,
the Borrowers) may designate, or, if no such designation is made, against the
Borrowings of the Borrower designated as the payor on the applicable check, wire
transfer or other payment device; provided, however, that any such
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payment may be applied by the Banks in such manner as the Required Banks may, in
their sole discretion, determine (i) if the foregoing rules of application may
not be clearly applied, e.g., because payment is received from a party other
than a Borrower and the Borrowers have not designated the order of application,
(ii) to the extent that application as set forth above would result in payment
of a principal amount greater than a Borrower's then-outstanding Borrowings, or
(iii) if a Default or Event of Default has occurred and is continuing at the
time of such application.
Section 2.16 Payment on Nonbusiness Days. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a day other than
a Bank Business Day, such payment may be made on the next succeeding Bank
Business Day, and such, extension of time shall in each case be included in the
computation of payment of interest on such Note or the fees hereunder, as the
case may be.
Section 2.17 Use of Proceeds. The proceeds of the first Borrowing shall
be used by the Borrowers (a) to the extent necessary, to repay in full the
obligations of the Borrowers described in Schedule 2.17; and (b) for general
corporate purposes of the Borrowers. The proceeds of each subsequent Borrowing
shall be used by the Borrowers for their general corporate purposes.
Section 2.18 Changes in Law.
(a) Definition. As used in this Section 2.18, "Law Change"
means the adoption after the date hereof of any law, rule, regulation,
treaty or directive, or any change therefor in the interpretation or
administration thereof by any court, central bank, governmental
authority, agency or instrumentality, or comparable agency charged with
the interpretation or administration thereof
(b) Increased Costs. If at any time any Law Change (i) shall
subject any Bank (including the Issuing Bank) to any tax, duty or other
charges (including but not limited to any tax designed to discourage
the purchase or acquisition of foreign securities or debt instruments
by United States nationals) with respect to this Agreement, or shall
materially change the basis of taxation of payments to any Bank of the
principal of or interest on that Bank's Note or reimbursement for any
Letter of Credit (except for the imposition of or changes in respect of
the rate of tax on the overall net income of that Bank), or (ii) shall
impose or deem applicable or increase any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by any Bank (including the Issuing Bank) because
of the Currency employed with respect to any portion of that Bank's
Note or in which any Alternative Currency Letter of Credit is issued,
the fact that all or a portion of that Bank's Note bears interest at a
Eurodollar Rate or Alternative Currency Rate, or the manner of funding
such Note, and the result of any of the foregoing would be to increase
the cost to that Bank of maintaining such Note or to reduce any sum
received or receivable by that Bank with respect to such Note, then,
within 30 days after demand by that Bank, the Borrowers shall pay that
Bank such additional amount or amounts as will compensate that Bank for
such increased cost or reduction. A certificate in reasonable detail of
the applicable Bank
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setting forth the basis for the determination of such additional amount
or amounts shall be conclusive evidence of such amount or amounts.
Section 2.19 Funding Losses. The Borrowers will compensate any Bank,
upon written request by that Bank (which request shall set forth the basis for
requesting such amounts), for all losses and expenses which that Bank may
sustain or incur (including, without limitation, any loss or expense sustained
or incurred in obtaining, liquidating or employing deposits or other funds
acquired to effect, fund, or maintain any portion of the principal balance of
that Bank's Note at a Eurodollar Rate or Alternative Currency Rate, or in a
particular Currency) as a consequence of (i) any failure of the Borrowers to
make any payment when due with respect to any Eurodollar Rate Funding or
Alternative Currency Funding, (ii) the failure by reason of the occurrence of an
Event of Default to effect any Eurodollar Rate Funding or Alternative Currency
Funding, requested by either or both Borrowers, or (iii) any payment or
prepayment of any Eurodollar Rate Funding or Alternative Currency Funding on a
day other than the maturity of the Interest Period applicable thereto.
Determinations by a Bank for purposes of this Section 2.19 shall be conclusive
in the absence of manifest error. A certificate as to any such loss or expense
(including calculations, in reasonable detail, showing how that Bank computed
such loss or expense) shall be promptly submitted by that Bank to the Borrowers
and shall, in the absence of manifest error, be conclusive and binding as to the
amount thereof. Such loss or expense may be computed as though that Bank
acquired deposits in the London interbank market in the applicable Currency to
fund that portion of the principal balance whether or not that Bank actually did
so.
Section 2.20 Capital Adequacy. If any Bank determines at any time that
its Return has been reduced as a result of any Capital Adequacy Rule Change,
that Bank may require the Borrowers to pay it the amount necessary to restore
its Return to what it would have been had there been no Capital Adequacy Rule
Change. For purposes of this Section:
(a) "Return", for any period, means the percentage determined
by dividing (i) the sum of interest and ongoing fees earned by a Bank
under this Agreement during such period, by (ii) the average capital
that Bank is required to maintain during such period as a result of its
being a party to this Agreement as determined by that Bank based upon
its total capital requirements and a reasonable attribution formula
that takes account of the Capital Adequacy Rules then in effect. Return
may be calculated for each calendar quarter and for the shorter period
between the end of a calendar quarter and the date of termination in
whole of this Agreement.
(b) "Capital Adequacy Rule" means any law, rule, regulation or
guideline regarding capital adequacy that applies to any Bank, or the
interpretation thereof by any governmental or regulatory authority.
Capital Adequacy Rules include rules requiring financial institutions
to maintain total capital in amounts based upon percentages of
outstanding loans, binding loan commitments and letters of credit.
(c) "Capital Adequacy Rule Change" means any change in any
Capital Adequacy Rule occurring after the date of this Agreement, but
the term does not include any changes in applicable requirements that
at the date hereof are scheduled to take place
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under the existing Capital Adequacy Rules or any increases in the
capital that any Bank is required to maintain to the extent that the
increases are required due to a regulatory authority's assessment of
the financial condition of that Bank.
(d) "Bank" includes (but is not limited to) the Agent, the
Banks, as defined elsewhere in this Agreement, and any assignee of any
interest of any Bank hereunder and any participant in the loans made
hereunder.
The initial notice sent by a Bank shall be sent as promptly as practicable after
that Bank learns that its Return has been reduced, shall include a demand for
payment of the amount necessary to restore that Bank's Return for the quarter in
which the notice is sent and, if applicable, the preceding quarter, and shall
state in reasonable detail the cause for the reduction in its Return and its
calculation of the amount of such reduction. Thereafter, that Bank may send a
new notice with respect to each calendar quarter setting forth the calculation
of the reduced Return for that quarter and including a demand for payment of the
amount necessary to restore its Return for that quarter. A Bank's calculation in
any such notice shall be conclusive and binding absent demonstrable error.
Section 2.21 Mandatory Assignment of Bank's Interest. If any Bank
delivers to the Borrowers a demand for compensation pursuant to Section 2.18 or
a demand for payment pursuant to Section 2.20, the Borrowers may (so long as no
Default or Event of Default has occurred and is continuing) at their expense
require such Bank to assign, in whole and in accordance with Section 8.11
(including the execution of an Assignment Certificate and all other applicable
documents, and the payment by the Borrowers of any fees required under Section
8.11), all of its rights and obligations hereunder and under such Bank's Note,
including but not limited to such Bank's Commitment, to an Eligible Bank
identified by the Borrowers and willing to become a Bank hereunder. Such Bank
may be an existing Bank hereunder. Notwithstanding the foregoing, the Borrowers
may not compel the resignation of any Bank as the Agent except as provided in
Section 8.10.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Initial Conditions Precedent. The obligation of the Banks
to make any Advance or to issue any Letter of Credit is subject to the condition
precedent that the Agent shall have received on or before the day of the first
Advance or Letter of Credit all of the following, each dated (unless otherwise
indicated) as of the date hereof, in form and substance satisfactory to each
Bank:
(a) This Agreement, duly executed by each of the parties
hereto.
(b) The Notes, properly executed on behalf of the Borrowers.
(c) Current searches of appropriate filing offices showing
that (i) no state or federal tax liens have been filed and remain in
effect against either Borrower in the
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states of California, Florida, Georgia, Illinois, Texas and Wisconsin
(the "Search States"), and (ii) no financing statements have been filed
and remain in effect against the Company in the Search States, except
financing statements perfecting only Liens permitted under Section 6.1.
(d) A certificate of the secretary or assistant secretary of
the Company (i) certifying that the execution, delivery and performance
of the Loan Documents and other documents contemplated hereunder to
which such corporation is a party have been duly approved by all
necessary action of the Board of Directors of the Company and attaching
true and correct copies of the applicable resolutions granting such
approval, (ii) certifying that attached to such certificate are true
and correct copies of the articles of incorporation and bylaws of the
Company, together with such copies, and (iii) certifying the names of
the officers of the Company that are authorized to sign the Loan
Documents and other documents contemplated hereunder, including
requests for Borrowings, together with the true signatures of such
officers. The Banks may conclusively rely on such certificate until
they shall receive a further certificate of the secretary or assistant
secretary of the Company canceling or amending the prior certificate
and submitting the signatures of the officers named in such further
certificate.
(e) A certificate of the managing member, secretary or
assistant secretary of LJ International (i) certifying that such person
is the keeper of or otherwise responsible for the maintenance of the
minute books of LJ International, (ii) certifying that the execution,
delivery and performance of the Loan Documents and other documents
contemplated hereunder to which such organization is a party have been
duly approved by all necessary action of the managing member of LJ
International and attaching true and correct copies of the applicable
resolutions granting such approval, (iii) certifying that attached to
such certificate are true and correct copies of all Organizational
Documents relating to LJ International, together with such copies, and
(iv) certifying the names of the managers of LJ International that are
authorized to sign the Loan Documents and other documents contemplated
hereunder, including requests for Borrowings, together with the true
signatures of such managers. The Banks may conclusively rely on such
certificate until they shall receive a further certificate of the
managing member, secretary or assistant secretary of LJ International
canceling or amending the prior certificate and submitting the
signatures of the managers named in such further certificate.
(f) Certificates of good standing of the Company and LJ
International issued by the State of Georgia, dated not more than ten
days before such date.
(g) A signed copy of an opinion of counsel for the Borrowers,
addressed to the Banks, as to matters referred to in Sections 4.1, 4.2,
4.3 and 4.7, and as to such other matters as the Banks may reasonably
request, with that opinion being acceptable to each Bank's counsel in
such counsel's reasonable discretion. In the case of Section 4.7, the
opinion may be to the best knowledge of such counsel, and, in the case
of Section 4.3, insofar as it relates to enforcement of remedies, it
may be subject to
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applicable bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally from time to time, and to
usual equity principles.
Section 3.2 Conditions Precedent to All Advances and Letters of Credit.
The obligation of the Banks to make any Advance (including the initial Advance)
or to issue any Letter of Credit shall be subject to the further conditions
precedent that on the date of such Advance or Letter of Credit:
(a) the representations and warranties contained in Article IV
are correct on and as of the date of such Advance or Letter of Credit
as though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier date; and
(b) no event has occurred and is continuing, or would result
from such Advance or Letter of Credit, which constitutes a Default or
an Event of Default.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Banks as follows:
Section 4.1 Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Georgia. LJ International is a limited liability company duly
incorporated, validly existing and in good standing under the laws of the State
of Georgia. Each Borrower and each Subsidiary of each Borrower is duly licensed
or qualified to transact business in all jurisdictions where the character of
the property owned or leased or the nature of the business transacted by it is
such that the failure to obtain such licensing or qualification would have a
material adverse effect on the Company. Each Borrower has all requisite power
and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents.
Section 4.2 Authorization of Borrowing, No Conflict as to Law or
Agreements. The execution, delivery and performance by the Borrowers of the Loan
Documents and any letter of credit applications and reimbursement agreements to
be executed pursuant to Section 2.8(b), and the borrowings and Letters of Credit
from time to time hereunder, have been duly authorized by all necessary
corporate or other action of the Borrowers and do not and will not (i) require
any consent or approval of the stockholders of the Company, or any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any
provision of (A) any law, rule or regulation (including, without limitation,
Regulation X of the Board of Governors of the Federal Reserve System), (B) any
order, writ, injunction or decree presently in effect having applicability to
either Borrower, (C) the Articles of Incorporation or Bylaws of the Company, or
(D) any Organizational Document with respect to LJ International, (iii) result
in a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or
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instrument to which either Borrower is a party or by which either Borrower or
the properties of either Borrower may be bound or affected, or (iv) result in,
or require, the creation or imposition of any Lien (other than the Lien created
under Section 7.3) upon or with respect to any of the properties now owned or
hereafter acquired by either Borrower. Neither Borrower is in default of any
material provision of any material agreement, instrument, decree or order to
which it is a party.
Section 4.3 Legal Agreements. This Agreement and the Notes constitute,
and any letter of credit applications and reimbursement agreements to be
executed pursuant to Section 2.8(b) will constitute, the legal, valid and
binding obligations of each Borrower, enforceable against the Borrowers in
accordance with their respective terms.
Section 4.4 Subsidiaries. Schedule 4.4 is a complete and correct list
of all present Subsidiaries of either Borrower, including in each case the
percentage of the ownership of the applicable Borrower or other Subsidiary in
each as of the date of this Agreement.
Section 4.5 Financial Condition. The Company has heretofore furnished
to the Banks (i) the Company's audited financial statement as of August 27,
1995, (ii) the Company's unaudited interim financial statement as of May 26,
1996, (iii) LJ International's consolidated audited financial statement as of
August 27, 1995, and (iv) LJ International's consolidated unaudited interim
financial statement as of February 26, 1996. Those financial statements are
complete and correct in all material respects and fairly present the financial
condition of the LJ Parties on the dates thereof and the results of operations
and cash flows for the periods then ended, and were prepared in accordance with
generally accepted accounting principles consistently applied, subject in the
case of the interim financial statements, to year-end adjustments.
Section 4.6 Adverse Change. There has been no material adverse change
in the business, properties or condition (financial or otherwise) of either
Borrower since the date of the latest financial statement of that Borrower
referred to in Section 4.5.
Section 4.7 Litigation. There are no actions, suits or proceedings
pending or, to the actual knowledge of the Company, threatened against or
affecting any LJ Party or the properties of any LJ Party before any court or
governmental department commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to that LJ Party, would have
a material adverse effect on the financial condition, properties, or operations
of the Company.
Section 4.8 Hazardous Substances. To the best of the Borrowers' actual
knowledge after reasonable inquiry, neither any LJ Party nor any other Person
has ever caused or permitted any Hazardous Substance to be disposed of in any
manner which might result in any material liability to the Company on, under or
at any real property which is operated by any LJ Party or in which any LJ Party
has any interest; and no such real property has ever been used (either by an LJ
Party by any other Person) as a dump site or permanent or temporary storage site
for any Hazardous Substance.
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Section 4.9 Regulation U. No LJ Party is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Advance will be used to purchase or
carry, directly or indirectly, any margin stock, to extend credit to others for
the purpose of purchasing or carrying any margin stock, or for any other purpose
in violation of Regulation U.
Section 4.10 Taxes. Each LJ Party has paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by it, except to the extent that the failure to pay such taxes would
not have a material adverse effect on the financial condition, properties or
operations of the Company. Each LJ Party has filed all federal, state and local
tax returns which to the actual knowledge of the officers of that LJ Party are
required to be filed, and each LJ Party has paid or caused to be paid to the
respective taxing authorities all taxes as shown on said returns or on any
assessment received by it to the extent such taxes have become due, other than
taxes whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which the applicable LJ Party has provided
adequate reserves in accordance with generally accepted accounting principles.
Section 4.11 Titles and Liens Licenses and Patents. Each Borrower has
good title to each of the properties and assets reflected in the latest balance
sheet of that Borrower referred to in Section 4.5 (other than any sold, as
permitted by Section 6.6), free and clear of all Liens and encumbrances, except
for Liens permitted by Section 6.1 and covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the, business or operations of that Borrower as presently conducted. No
financing statement naming the Company as debtor is on file in any office except
to perfect only Liens permitted by Section 6.1. Each Borrower has such licenses,
permits and patents, or rights thereto, as are necessary to conduct its business
as presently conducted.
Section 4.12 ERISA. No Plan established or maintained by any LJ Party
or any ERISA Affiliate that is subject to Part 3 of Subtitle B of Title I of
ERISA had an accumulated funding deficiency (as such term is defined in Section
302 of ERISA) in excess of $1,000,000 as of the last day of the most recent
fiscal year of such Plan ended prior to the date hereof, and no liability to the
Pension Benefit Guaranty Corporation or the Internal Revenue Service in excess
of such amount has been, or is expected by any LJ Party or ERISA Affiliate to
be, incurred with respect to any Plan of any LJ Party or ERISA Affiliate. No LJ
Party has any contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Subtitle B of Title I of ERISA.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or any Commitment or L/C Amount
shall be outstanding, the Company will comply with the following requirements,
unless the Required Banks shall otherwise consent in writing:
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Section 5.1 Financial Statements. The Company will deliver to the
Agent, with sufficient copies for each Bank:
(a) As soon as available, and in any event within 120 days
after the end of each fiscal year of the Company, a copy of the annual
audit report of the Company with the unqualified opinion of Xxxxxx
Xxxxxxxx & Co. or other independent certified public accountants
selected by the Company and acceptable to the Required Banks, which
annual report shall include the balance sheet of the Company as at the
end of such fiscal year and the related statements of income,
stockholders' equity and cash flows of the Company for the fiscal year
then ended, all in reasonable detail and all prepared in accordance
with generally accepted accounting principles applied on a basis
consistent with the accounting practices applied in the annual
financial statements referred to in Section 4.5.
(b) As soon as available and in any event within 60 days after
the end of each fiscal quarter of the Company, a balance sheet of the
Company as at the end of such quarter and related statements of
earnings and cash flows of the Company for such quarter and for the
year to date, in reasonable detail and stating in comparative form the
figures for the corresponding date and period in the previous year, all
prepared in accordance with generally accepted accounting principles
applied on a basis consistent with the accounting practices reflected
in the annual financial statements referred to in Section 4.5, and
certified by the chief financial officer of the Company, subject to
year-end adjustments.
(c) As soon as available, and in any event within 150 days
after the end of each fiscal year of LJ International, a copy of the
annual audit report of LJ International with the unqualified opinion of
Xxxxxx Xxxxxxxx & Co. or other independent certified public accountants
selected by LJ International and acceptable to the Required Banks,
which annual report shall include the balance sheet of LJ International
as at the end of such fiscal year and the related statements of income,
stockholders' equity and cash flows of LJ International for the fiscal
year then ended, all in reasonable detail and all prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with the accounting practices applied in the annual
financial statements referred to in Section 4.5.
(d) Upon request of the Agent or the Required Banks not
earlier than 150 days after the end of any fiscal year of the Company,
a copy of the annual report of the LJ Parties on a combined basis,
which annual report shall include the combined balance sheet of the LJ
Parties as at the end of such fiscal year and the related combined
statements of income, stockholders' equity and cash flows of the LJ
Parties for the fiscal year then ended, all in reasonable detail and
all prepared on a combined basis in accordance with generally accepted
accounting principles consistently applied.
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(e) Within 180 days after the end of each fiscal year of the
Company, a copy of the management letter, if any, issued to the Company
by its auditors referred to in paragraph (a) above for such year.
(f) Concurrent with the delivery of any financial statements
under paragraph (a) or (b), a Compliance Certificate, duly executed by
the chief financial officer of the Company.
(g) Within 60 days after the end of the second and fourth
fiscal quarters of the Company in each fiscal year, a written
description of all dividends paid by the Company during the period of
two fiscal quarters ending with such quarter, including the amount
thereof and such other information as the Agent or the Required Banks
may reasonably request.
(h) Promptly after the sending or filing thereof, copies of
all regular and periodic financial reports which the Company shall file
with the Securities and Exchange Commission or any national securities
exchange.
(i) Immediately after the commencement thereof, notice in
writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Company or LJ
International of the type described in Section 4.7 or which seek a
monetary recovery against the Company or LJ International in excess of
$3,000,000.
(j) As promptly as practicable (but in any event not later
than five business days) after an officer of the Company obtains
knowledge of the occurrence of any Default or Event of Default, notice
of such occurrence, together with a detailed statement by a responsible
officer of the Company of the steps being taken by the Borrowers to
cure the effect of such event.
(k) Promptly upon becoming aware of any Reportable Event or
any prohibited transaction (as defined in Section 4975 of the Internal
Revenue Code or Section 406 of ERISA) in connection with any Plan or
any trust created thereunder, a written notice specifying the nature
thereof, what action the Company has taken, is taking or proposes to
take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the Department of Labor with respect thereto.
(l) Promptly upon their receipt, copies of (i) all notices
received by the Company or any ERISA Affiliate of the Pension Benefit
Guaranty Corporation's intent to terminate any Plan or to have a
trustee appointed to administer any Plan, and (ii) all notices received
by the Company or any ERISA Affiliate from a Multiemployer Plan
concerning the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA.
(m) Upon request of the Agent or the Required Banks, copies of
the most recent annual report (Form 5500 Series), including any
supporting schedules, filed by the
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Company or any ERISA Affiliate with the Internal Revenue Service with
respect to any Plan.
(n) Such other information respecting the financial condition
and results of operations of the Company and the other LJ Parties as
any Bank may from time to time reasonably request.
Section 5.2 Books and Records, Inspection and Examination. The Company
will, and will ensure that each other LJ Party will, (i) keep accurate books of
record and account for itself in which true and complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
and (ii) upon request of any Bank, give any representative of that Bank access
to, and permit such representative to examine, copy or make extracts from, any
and all books, records and documents in its possession, to inspect any of its
properties and to discuss its affairs, finances and accounts with any of its
principal officers, all at such times during normal business hours and as often
as any Bank may reasonably request.
Section 5.3 Compliance with Laws. The Company will, and will ensure
that each other LJ Party will, comply with the requirements of applicable laws
and regulations, the noncompliance with which would materially and adversely
affect its business or the financial condition of the Company.
Section 5.4 Payment of Taxes and Other Claims. The Company will, and
will ensure that each other LJ Party will, pay or discharge, when due, (a) all
taxes, assessments and governmental charges levied or imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, (b) all federal, state and local taxes
required to be withheld by it, and (c) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a Lien or charge upon any
properties of the Company or any other LJ Party; provided, that no LJ Party
shall be required to pay any such tax, assessment charge or claim (i) whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which such LJ Party has provided adequate
reserves in accordance with generally accepted accounting principles, or (ii) to
the extent that the failure to make such payment would not have a material
adverse effect on the financial condition, properties or operations of the
Company.
Section 5.5 Maintenance of Properties. The Company will, and will
ensure that each other LJ Party will, keep and maintain all of its properties
necessary or useful in its business in good condition, repair and working order,
subject to normal wear and tear; provided, however, that nothing in this Section
shall prevent the Company or any other LJ Party from discontinuing the operation
and maintenance of any of its properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business and not
disadvantageous in any material respect to any Bank as holder of a Note.
Section 5.6 Insurance. The Company will, and will ensure that each
other LJ Party will, obtain and maintain insurance with insurers believed by the
Company to be responsible and reputable, in such amounts and against such risks
as is usually carried by companies engaged in similar business and owning
similar properties in the same general areas in which the Company
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or such other LJ Party operates, except to the extent that the Company or such
LJ Party maintains a system or systems of self-insurance consistent with sound
risk management practices and the reliance on such system will not have a
material adverse effect on the financial condition, properties or operations of
the Company.
Section 5.7 Preservation of Corporate Existence. The Company will, and
will ensure that each other LJ Party will, preserve and maintain its existence
and all of its rights, privileges and franchises; provided, however, that no LJ
Party shall be required to preserve any of its rights, privileges and franchises
if its Board of Directors, managing members or equivalent governing body, as the
case may be, shall reasonably determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company or such other LJ
Party and that the loss thereof is not disadvantageous in any material respect
to any Bank as a holder of a Note.
Section 5.8 Subchapter S Status. The Company will at all times maintain
its status as a Subchapter S Corporation; provided, however, that the foregoing
shall not prohibit the Company from losing its status as a Subchapter S
Corporation so long as, prior to the loss of such status, the Borrowers and the
Banks have agreed in writing to any adjustments to Sections 5.9, 5.10, 5.11,
5.12 and 5.13, and to any definitions affecting those Sections, deemed necessary
by the Banks to reflect the loss of such status.
Section 5.9 Total-Funded-Debt-To-EBITDAR Ratio. The Company will at all
times maintain its Total-Funded-Debt-To-EBITDAR Ratio, determined as at the end
of the second and fourth quarters of each fiscal year of the Company, at not
more than 3.50 to 1.
Section 5.10 Ratio of Total Funded Debt to Adjusted Tangible Net Worth.
The Company will at all times maintain the ratio of its Total Funded Debt to
Adjusted Tangible Net Worth, determined as at the end of the second and fourth
quarters of each fiscal year of the Company, at not more than 3.00 to 1.
Section 5.11 Adjusted Tangible Net Worth. The Company will at all times
maintain its Adjusted Tangible Net Worth, determined as at the end of each
fiscal year of the Company, in an amount not less than $28,000,000, plus 30% of
the Company's book pre-tax income with respect to each fiscal year of the
Company ending after August 31, 1996 in which such Net Income is positive.
Section 5.12 EBITDAR. The Company will maintain its EBITDAR with
respect to each fiscal year of the Company in a positive amount; provided,
however, that the Company need not comply with the foregoing requirement with
respect to any particular fiscal year if (i) the Company's Adjusted Tangible Net
Worth, determined as of the end of that fiscal year, is greater than
$40,000,000, and (ii) the ratio of the Company's Total Funded Debt to Adjusted
Tangible Net Worth, determined as of the end of that fiscal year, is less than
1.75 to 1.
Section 5.13 Net Income. The Company will maintain its Net Income with
respect to each fiscal year of the Company in an amount not less than $1.00;
provided, however, that the Company need not comply with the foregoing
requirement with respect to any particular fiscal
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year if (i) the Company's Adjusted Tangible Net Worth, determined as of the end
of that fiscal year, is greater than $40,000,000, and (ii) the ratio of the
Company's Total Funded Debt to Adjusted Tangible Net Worth, determined as of the
end of that fiscal year, is less than 1.75 to 1.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or any Commitment or L/C Amount
shall be outstanding, the Company agrees that, without the prior written consent
of the Required Banks:
Section 6.1 Liens. The Company will not create, incur, assume or suffer
to exist any Lien on any of its assets, now owned or hereafter acquired, or
assign or otherwise convey Any right to receive income or give its consent to
the subordination of any right or claim of the Company to any right or claim of
any other Person; excluding, however, from the operation of the foregoing:
(a) Liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 5.4.
(b) Materialmen's, merchant's, carrier's, worker's,
repairer's, or other like liens arising in the ordinary course of
business to the extent that the claims related thereto are not required
to be paid by Section 5.4.
(c) Pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business.
(d) Zoning restrictions, easements, licenses, restrictions on
the use of real property or minor irregularities in title thereto,
which do not materially impair the use of such property in the
operation of the business of the Company or the value of such property
for the purpose of such business.
(e) Purchase money Liens (which term for purposes of this
subsection shall include conditional sale agreements or other title
retention agreements and leases in the nature of title retention
agreements) upon or in property acquired after the date hereof,
provided that:
(i) no such Lien extends or shall extend to or cover any
property of the Company other than the property then
being acquired and fixed improvements then or
thereafter erected thereon;
(ii) the original cost of the property so covered exceeds
$250,000 as to each such Lien;
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(iii) the aggregate principal amount of the indebtedness
secured by Liens described in this subsection (e) at
the time of acquisition of the property subject thereto
shall not exceed the cost of such property or of the
then fair market value of such property as determined
by the Board of Directors of the Company, whichever
shall be less;
(iv) the incurrence of such indebtedness will not result in
a violation of the restriction on the amount of
indebtedness set forth in Section 6.2(c); and
(v) the aggregate amount of payments made thereunder in any
period of 12 consecutive months will not result in a
violation of the restriction contained in Section 6.11.
(f) Liens on any property of the Company (other than
those described in subsection (e) securing any indebtedness for
borrowed money in existence on the date hereof and listed in Schedule
6.1 hereto.
(g) Liens not otherwise permitted under this Section, so
long as the aggregate principal amount of the indebtedness secured by
such Liens does not at any one time exceed $100,000.
(h) Liens arising out of a judgment against the Company
for the payment of money not exceeding $500,000 with respect to which
an appeal is being prosecuted and a stay of execution pending such
appeal has been secured.
Section 6.2 Indebtedness. The Company will not incur, create, assume or
permit to exist any indebtedness or liability of the Company on account of
deposits or advances, or any indebtedness of the Company for borrowed money, or
any other indebtedness or liability of the Company evidenced by notes, bonds,
debentures or similar obligations, except:
(a) Indebtedness to the Banks arising under this
Agreement.
(b) Indebtedness of the Company in existence on the date
hereof and listed in Schedule 6.2 hereto, but not including any
extensions or renewals thereof.
(c) The following indebtedness of the Company, but only
so long as the aggregate amount of all such indebtedness described in
this subsection (c) does not exceed $10,000,000:
(i) Subordinated Debt incurred with the approval of the
Required Banks, which approval shall not be
unreasonably withheld.
(ii) Purchase money indebtedness of the Company secured by
Liens permitted by subsection 6.1(e).
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(iii) Indebtedness to the Banks not arising under this
Agreement.
(iv) Indebtedness owed to the seller of any assets purchased
as permitted under Section 6.8(a).
Section 6.3 Guaranties. The Company will not assume, guarantee, endorse
or otherwise become directly or contingently liable in connection with any
obligations of any other Person, except:
(a) The endorsement of negotiable instruments by the Company
for deposit or collection or similar transactions in the ordinary
course of business.
(b) Guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in Schedule 6.3 hereto.
(c) Guaranties of the indebtedness of Affiliates other than LJ
International, so long as the aggregate amount of all indebtedness so
guarantied does not at any one time exceed $5,000,000, plus the Excess
Guaranty Increment, if any.
Section 6.4 Investments. The Company will not purchase or hold
beneficially any stock or other securities or evidence of indebtedness of, make
or permit to exist any loans or advances by the Company to, or make any
investment or acquire any interest whatsoever in, any other Person, except:
(a) Investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America having a maturity of one year or less, commercial paper issued
by U.S. corporations rated "A-1" or "A-2" by Standard & Poor's
Corporation or "P-1" or "P-2" by Xxxxx'x Investors Service or
certificates of deposit or bankers' acceptances having a maturity of
one year or less issued by members of the Federal Reserve System having
deposits in excess of $100,000,000.
(b) Loans to officers and employees of the Company not
exceeding at any one time an aggregate of $5,000,000.
(c) Loans and advances to Affiliates other than LJ
International, so long as (i) no such loan or advance is made while any
Default or Event of Default remains outstanding, and (ii) the aggregate
amount of all such loans and advances outstanding at any one time does
not exceed $5,000,000.
(d) Loans and advances to LJ International, so long as (i) no
such loan or advance is made while any Default or Event of Default
remains outstanding, and (ii) each such loan or advance is reported to
the Agent when made and payments thereon are reported to the Agent at
least monthly, and all such loans, advances and payments are accurately
reflected on the books and records of the Company and LJ International.
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(e) Travel advances to officers and employees of the Company
in the ordinary course of business.
(f) Advances in the form of progress payments, prepaid rent,
security deposits and similar advances in the ordinary course of the
Company's business.
(g) Permitted Acquisitions.
Section 6.5 Dividends. The Company will not declare or pay any dividend
(other than dividends payable solely in stock of the Company) on any class of
its stock or make any payment on account of the purchase, redemption or other
retirement of any shares of such stock or make any distribution in respect
thereof, either directly or indirectly, except the foregoing shall not prohibit:
(a) The payment of not more than $2,000,000 in dividends or
distributions to the Company's shareholders (in addition to those
permitted under paragraph (b)) on or before January 31, 1997.
(b) The payment of dividends in addition to any permitted
under paragraph (a), so long as (i) the aggregate amount of dividends
paid by the Company with respect to any single fiscal year does not
exceed the applicable percentage (as defined below) of the Company's
book after-tax income with respect to that fiscal year (or, if such
payment is made prior to delivery of the Company's audit report under
Section 5.1(a) with respect to such year, the applicable percentage of
the Company's book after-tax income during the period from the
beginning of that fiscal year through the most recent quarter-ending in
such fiscal year for which financial statements have been delivered to
the Agent before the date of such payment), all determined in
accordance with generally accepted accounting principles, and (ii) no
Default or Event of Default has occurred and is continuing at the time
that such dividend is paid. For purposes of this paragraph, a dividend
paid within the first 180 days of any fiscal year may, at the Company's
election, be deemed paid either with respect to that fiscal year or the
immediately preceding fiscal year, but such election must be made only
once by the Company with respect to any particular dividend. As used in
this paragraph, "applicable percentage" means (x) with respect to the
fiscal year of the Company ending on or about August 25, 1996, 65%, and
(y) with respect to each other fiscal year, 70%.
Section 6.6 Sale of Assets. The Company will not sell, lease, assign,
transfer or otherwise dispose of a material part of its assets (whether in one
transaction or in a series of transactions) to any other Person, except that the
foregoing shall not prohibit sales of inventory in the ordinary course of
business. For purposes of this Section, "material part" means 25% or more of the
assets of the Company, as determined in accordance with generally accepted
accounting principles consistently applied.
Section 6.7 Transactions with Affiliates. The Company will not make any
loan or capital contribution to, or any other investment in, any Affiliate, or
pay any dividend to any
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Affiliate, or make any other cash transfer to any Affiliate; provided, however,
that the foregoing shall not prohibit any of the following:
(a) Sales of goods and services to any Affiliate to the extent
that such sales are made in accordance with the Company's uniform
transfer pricing guidelines, as the same may be amended from time to
time with the consent of the Required Banks, which consent shall not be
unreasonably withheld. Such guidelines presently provide that sales by
the Company to its Affiliates will be made at a price equal to 110% of
the Company's cost for the applicable goods and services.
(b) Loans and advances to the extent permitted under
paragraphs (b), (c) and (d) of Section 6.4.
(c) Dividends to the extent permitted under Section 6.5.
Section 6.8 Consolidation and Merger. The Company will not consolidate
with or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all of the assets of any other Person, except that
the foregoing shall not prohibit:
(a) Permitted Acquisitions.
(b) The consolidation or merger of any Subsidiary of either
Borrower with, or a conveyance or transfer of its assets to, the
Company, so long as the Company is the continuing or surviving
corporation.
Section 6.9 Sale and Leaseback. The Company will not enter into any
arrangement, directly or indirectly, with any other Person whereby the Company
shall sell or transfer any real or personal property, whether now owned or
hereafter acquired, and then or thereafter rent or lease as lessee such property
or any part thereof or any other property which the Company intends to use for
substantially the same purpose or purposes as the property being sold or
transferred, except that the foregoing shall not prohibit any such arrangement
if the book value of all such property subject to all such arrangements at any
one time does not exceed $1,000,000.
Section 6.10 Subordinated Debt. The Company will not (i) make any
payment of, or acquire, any Subordinated Debt except as expressly permitted by
the subordination provision thereof, (ii) give security for all or any part of
such Subordinated Debt; (iii) amend or cancel the subordination provisions of
such Subordinated Debt; (iv) take or omit to take any action whereby the
subordination of such Subordinated Debt or any part thereof to the Notes might
be terminated, impaired or adversely affected; or (v) omit to give the Banks
prompt written notice of any default under any agreement or instrument relating
to such Subordinated Debt by reason whereof such Subordinated Debt might become
or be declared to be immediately due and payable.
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Section 6.11 Capital Expenditures. The Company will not make any
Capital Expenditure (including payments under capitalized leases) if, after
giving effect to such expenditure, the aggregate amount of Capital Expenditures
made by the Company in any single fiscal year will exceed (i) with respect to a
single fiscal year ending after the date hereof and to be selected by the
Company, $6,500,000, and (ii) with respect to each other fiscal year,
$4,500,000; provided, however, that the restriction contained in this Section is
subject to the further limitations imposed by Section 6.1(e) if any asset is
acquired under a purchase money Lien referred to in that Section.
Section 6.12 Hazardous Substances. The Company will not cause or permit
any Hazardous Substance to be disposed of, in any manner which might result in
any material liability to the Company, on, under or at any real property which
is operated by the Company or in which the Company has any interest.
Section 6.13 Restrictions on Nature of Business. Neither Borrower will
engage in any line of business materially different from that presently engaged
in by any of the LJ Parties.
ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever used
herein, means any one of the following events:
(a) A default in the payment of any principal of any Note when
it becomes due and payable.
(b) A default in the payment of any interest on any Note or
any amount payable under Section 2.8(f) when it becomes due and payable
and the continuance of such default for a period of 10 days.
(c) A default in the payment of any fees payable under Section
2.8(e) or 2.10, or any other amount payable to the Agent or the Banks
in connection with this Agreement and not otherwise specifically dealt
with in this Section 7.1, and the continuance of such default for a
period of 15 days.
(d) A default in the performance, or breach, of any covenant
or agreement on the part of the Company contained in Section 5.9, 5.10,
5.11, 5.12 or 5.13.
(e) A default in the performance, or breach, of any covenant
or agreement of either Borrower in this Agreement (other than a
covenant or agreement a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and the continuance
of such default or breach for a period of 30 days after the Agent has
given notice to the Borrowers specifying such default or breach and
requiring it to be remedied; provided, however, that no Event of
Default shall be deemed to have occurred under this paragraph if such
default or breach consists solely of a failure by the Company
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to fulfill its obligation to cause any LJ Party other than the Company
to meet any requirement of Section 5.2, 5.3, 5.4, 5.5, 5.6, 5.7 or 6.13
unless such failure (when considered in conjunction with all such
similar failures of the Subsidiaries of LJ International) will, in the
good faith judgment of the Required Banks, have a material adverse
effect on the financial condition, properties or operations of the
Company.
(f) Any representation or warranty made by either Borrower in
this Agreement or by either Borrower (or any of its officers or
managers) in any certificate, instrument, or statement contemplated by
or made or delivered pursuant to or in connection with this Agreement,
shall prove to have been incorrect or (in the reasonable judgment of
the Banks) misleading in any material respect when made.
(g) A default under any bond, debenture, note or other
evidence of indebtedness of either Borrower (other than hereunder) or
under any indenture or other instrument under which any such evidence
of indebtedness has been issued or by which it is governed and the
expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness, indenture or other instrument; provided,
however, that no Event of Default shall be deemed to have occurred
under this paragraph if the aggregate amount owing as to all such
indebtedness as to which such defaults have occurred and are continuing
is less than $5,000,000, provided, however, that if such default shall
be cured by the applicable Borrower, or waived by the holders of such
indebtedness, in each case prior to the commencement of any action
under Section 7.2 and as may be permitted by such evidence of
indebtedness, indenture or other instrument, then the Event of Default
hereunder by reason of such default shall be deemed likewise to have
been thereupon cured or waived.
(h) Either Borrower shall be adjudicated a bankrupt or
insolvent, or admit in writing its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors; or either
Borrower shall apply for or consent to the appointment of any receiver,
trustee, or similar officer for it or for all or any substantial part
of its property; or such receiver, trustee or similar officer shall be
appointed without the application or consent of the applicable Borrower
and such appointment shall continue undischarged for a period of 60
days; or either Borrower shall institute (by petition, application,
answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition,
application or otherwise) against either Borrower and shall continue
without dismissal for a period of 60 days; or any writ or warrant of
attachment or execution or similar process shall be issued or levied
against a property of either Borrower- having a fair market value in
excess of $5,000,000, and such writ, warrant or similar process shall
not be released, vacated or fully bonded within 30 days after its issue
or levy.
(i) Either Borrower shall liquidate, wind up, dissolve, merge
(except as permitted hereunder), terminate or suspend its business
operations, or sell all or substantially all of its assets.
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(j) A petition shall be filed by either Borrower under the
United States Bankruptcy Code naming that Borrower as debtor; or a
petition shall be filed against either Borrower under the United States
Bankruptcy Code naming that Borrower as debtor and shall continue
without dismissal for a period of 60 days; or an order for relief shall
be entered in any case under the United States Bankruptcy Code in which
either Borrower is a debtor.
(k) Xxxxxx Entities shall cease (for any reason, whether
voluntary or involuntary) to own (legally and beneficially) at least
67% of each class of the issued and outstanding equity interests of the
Company and LJ International, or for any other reason shall cease to
have voting control of the Company and LJ International.
(l) The rendering against either Borrower of a final judgment,
decree or order for the payment of money if (i) such judgment, decree
or order remains unsatisfied and in effect for any period of 30
consecutive days without a stay of execution, and (ii) (A) the amount
of such judgment, decree or order is greater than $5,000,000, or (B)
the amount of such judgment, decree or order, together with the amount
of all other such judgments, decrees and orders then outstanding, is
greater than $10,000,000.
(m) Any Plan shall have been terminated, or a trustee shall
have been appointed by an appropriate United States District Court to
administer any Plan, or the Pension Benefit Guaranty Corporation shall
have instituted proceedings to terminate any Plan or to appoint a
trustee to administer any Plan, or withdrawal liability shall have been
asserted against either Borrower or any ERISA Affiliate by a
Multiemployer Plan; or either Borrower or any ERISA Affiliate shall
have incurred liability to the Pension Benefit Guaranty Corporation,
the Internal Revenue Service, the Department of Labor or Plan
participants in excess of $5,000,000 with respect to any Plan; or any
Reportable Event that the Required Banks may determine in good faith
might constitute grounds for the termination of any Plan, for the
appointment by the appropriate United States District Court of a
trustee to administer any Plan or for the imposition of withdrawal
liability with respect to a Multiemployer Plan, shall have occurred and
be continuing 30 days after written notice to such effect shall have
been given to the Borrowers by the Banks.
Section 7.2 Rights and Remedies. Upon the occurrence of an Event of
Default or at any time thereafter until such Event of Default is cured to the
written satisfaction of the Required Banks, the Agent may, with the consent of
the Required Banks, and upon the request of the Required Banks shall, exercise
any or all of the following rights and remedies:
(a) The Agent may, by notice to the Borrowers, declare the
Commitments to be terminated, whereupon the same shall forthwith
terminate.
(b) The Agent may, by notice to the Borrowers, declare the
entire unpaid principal amount of the Notes then outstanding, all
interest accrued and unpaid thereon, and all other amounts payable
under this Agreement to be forthwith due and payable, whereupon the
Notes, all such accrued interest and all such amounts shall become and
be
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forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
the Borrowers.
(c) If any Letter of Credit remains outstanding, the Agent
may, by notice to the Borrowers, require the Borrowers to deposit in
the Cash Collateral Account immediately available funds equal to the
aggregate face amount of all such outstanding Letters of Credit. Such
funds shall be deposited (i) with respect to each Alternative Currency
Letter of Credit, in the applicable Alternative Currency, and (ii) with
respect to each Letter of Credit denominated in Dollars, in Dollars.
(d) The Banks may, without notice to the Borrowers and without
further action, apply any and all money owing by any Bank to either
Borrower to the payment of the Notes then outstanding, including
interest accrued thereon, and of all other sums then owing by either
Borrower hereunder.
(e) The Agent and the Banks may exercise any other rights and
remedies available to them by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.10) hereof, the Commitments shall terminate and the
entire unpaid principal amount of the Notes then outstanding, all interest
accrued and unpaid thereon, and all other amounts payable under this Agreement
shall be immediately due and payable without presentiment, demand, protest or
notice of any kind.
Section 7.3 Pledge of Cash Collateral Account. Sections 2.8(h) and
7.2(c) set forth certain circumstances under which the Borrowers may be required
to make deposits in the Cash Collateral Account on or after the Commitment
Termination Date. The Borrowers hereby pledge, and grant the Agent, as agent for
the Banks, including the Issuing Bank, a security interest in, all sums held in
the Cash Collateral Account from time to time and all proceeds thereof as
security for the payment of all amounts due and to become due from either or
both Borrowers to the Issuing Bank, the Agent and/or the Banks pursuant to this
Agreement, including but not limited to both principal of and interest on the
Notes and all renewals, extensions and modifications thereof and any notes
issued in substitution therefor, and specifically including the Borrowers'
obligation to reimburse the Agent or any Bank for any amount drawn under any
Letter of Credit, whether such reimbursement obligation arises directly under
this Agreement or under a separate reimbursement agreement. Upon request of
either Borrower, the Agent shall permit either Borrower to withdraw from the
Cash Collateral Account the lesser of (i) the Excess Balance (as defined below),
or (ii) the balance of the Cash Collateral Account. As used herein, "Excess
Balance" means (i) at any time during the continuance of a Default or Event of
Default (unless each such Default or Event of Default has been waived by the
Required Banks in writing), the amount by which the balance of the Cash
Collateral Account exceeds the aggregate amount secured by the sums held in the
Cash Collateral Account, and (ii) at all other times, the amount by which the
balance of the Cash Collateral Account exceeds the L/C Amount. The Agent shall
have full ownership and control of the Cash Collateral Account, and, except as
set forth above, the Borrowers shall have no right to withdraw the funds
maintained in the Cash Collateral Account.
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ARTICLE VIII
THE AGENT
Section 8.1 Authorization. Each Bank and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Bank or
holder to the extent provided herein or in any document or instrument delivered
hereunder or in connection herewith, and to take such other action as may be
reasonably incidental thereto.
Section 8.2 Distribution of Payments and Proceeds.
(a) After deduction of any costs of collection as hereinafter
provided and any servicing fee provided in any agreement between the
Agent and the applicable Bank, the Agent shall remit to each Bank that
Bank's Percentage of all payments of principal, interest, excess
guaranty fees paid pursuant to the definition of "Excess Guaranty
Increment" in Section 1.1, upfront and commitment fees payable under
paragraphs (a) and (b) of Section 2.10 and Letter of Credit fees
payable under Section 2.8(e), and any payments to which such Bank is
entitled under Section 2.8(g), that are received by the Agent under the
Loan Documents. Each Bank's interest in the Loan Documents shall be
payable solely from payments, collections and proceeds actually
received by the Agent under the Loan Documents; and the Agent's only
liability to the Banks with respect to payments, collections and
proceeds shall be to account for each Bank's Percentage thereof in
accordance with this Agreement. If the Agent is ever required for any
reason to refund any such payments, collections or proceeds, each Bank
will refund to the Agent, upon demand, its Percentage of such payments,
collections or proceeds, together with its Percentage of interest or
penalties, if any, payable by the Agent in connection with such refund.
The Agent may, in its sole discretion, make payment to the Banks in
anticipation of receipt of payment from the Borrowers. If the Agent
fails to receive any such anticipated payment from the Borrowers, each
Bank shall promptly refund to the Agent, upon demand, any such payment
made to it in anticipation of payment from the Borrowers, together with
interest for each day on such amount until so refunded at a rate equal
to the Federal Funds Rate for each such date.
(b) Notwithstanding the foregoing, if any Bank has wrongfully
refused to fund its Percentage of any Borrowing or other amount as
required hereunder, or if the principal balance of any Bank's Note is
for any other reason less than its Percentage of the aggregate
principal balances of the Notes then outstanding, the Agent may remit
all payments received by it to the other Banks until such payments have
reduced the aggregate amounts owed by the Borrowers to the extent that
the aggregate amount owing to such Bank hereunder is equal to its
Percentage of the aggregate amount owing to all of the Banks hereunder.
The provisions of this paragraph are intended only to set forth certain
rules for the application of payments, proceeds and collections in the
event that a Bank has breached its obligations hereunder and shall not
be deemed to excuse any Bank from such obligations.
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Section 8.3 Expenses. All payments, collections and proceeds received or
effected by the Agent may be applied, first to pay or reimburse the Agent for
all costs, expenses, damages and liabilities at any time incurred by or imposed
upon the Agent in connection with this Agreement or any other Loan Document
(including but not limited to all reasonable attorney's fees, foreclosure
expenses and advances made to protect the security of any collateral). If the
Agent does not receive payments, collections or proceeds sufficient to cover any
such costs, expenses, damages or liabilities within 30 days after their
incurrence or imposition, each Bank shall, upon demand, remit to the Agent its
Percentage of the difference between (i) such costs, expenses, damages and
liabilities, and (ii) such payments, collections and proceeds.
Section 8.4 Payments Received Directly by Banks. If any Bank or other
holder of a Note shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise) on account of principal of
or interest on any Note other than through distributions made in accordance with
Section 8.2, such Bank or holder shall promptly give notice of such fact to the
Agent and shall purchase from the other Banks or holders such participations in
the Notes held by them as shall be necessary to cause the purchasing Bank or
holder to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank or holder, the
purchase shall be rescinded and the purchasing Bank restored to the extent of
such recovery (but without interest thereon, except to the extent that the
purchasing Bank is required to pay interest on the amount recovered, in which
case each other Bank shall pay its Percentage of such interest as well).
Section 8.5 Indemnification. The Agent shall not be required to do any act
hereunder or under any other document or instrument delivered hereunder or in
connection herewith or take any action toward the execution or enforcement of
the agency hereby created, or to prosecute or defend any suit in respect of this
Agreement or the Notes or any documents or instrument delivered hereunder or in
connection herewith unless indemnified to its satisfaction by the holders of the
Notes against loss, cost, liability and expense (other than any such loss, cost,
liability or expense attributable to the Agent's own gross negligence or willful
misconduct). If any indemnity furnished to the Agent for any purpose shall, in
the opinion of the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and not commence or cease to do the acts indemnified
against until such additional indemnity is furnished.
Section 8.6 Limitations on Agent's Power. Notwithstanding any other
provision of this Agreement the Agent shall not have the power, without the
consent of all of the Banks, to (i) increase any Bank's Commitment Amount (ii)
forgive any indebtedness of the Borrowers arising under this Agreement or the
Notes, (iii) agree to reduce the rate of interest or the amount or rate of any
fees charged under this Agreement, (iv) agree to extend the maturity of any
amount due under this Agreement or the Notes, (v) extend the Commitment
Termination Date, (vi) amend this Section 8.6 or the definition of "Required
Banks" in Section 1.1, or (vii) permit the assignment by either Borrower of its
rights under the Loan Documents or any interest therein.
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Section 8.7 Exculpation; "Agent."
(a) The Agent shall be entitled to rely upon advice of counsel
concerning legal matters, and upon this Agreement, any Loan Document and
any schedule, certificate, statement, report, notice or other writing which
it believes to be genuine or to have been presented by a proper person.
Neither the Agent nor any of its directors, officers, employees or agents
shall (a) be responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of this Agreement, any Loan Document, or any other
instrument or document delivered hereunder or in connection herewith, (b)
be responsible for the validity, genuineness, perfection, effectiveness,
enforceability, existence, value or enforcement of any collateral security,
(c) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by either
Borrower or any other obligor of its obligations, or (d) in any event be
liable as such for any action taken or omitted by it or them, except for
its or their own gross negligence or willful misconduct. The appointment of
Norwest as Agent hereunder created shall in no way impair or affect any of
the rights and powers of, or impose any duties or obligations upon, Norwest
in its individual capacity.
(b) The term, "agent" is used herein in reference to the Agent merely
as a matter of custom. It is intended to reflect only an administrative
relationship between the Agent and the Banks, in each case as independent
contracting parties. However, the obligations of the Agent shall be limited
to those expressly set forth herein. In no event shall the use of such term
create or imply any fiduciary relationship or any other obligation arising
under the general law of agency.
Section 8.8 Agent and Affiliates. The Agent shall have the same rights and
powers hereunder in its individual capacity as any other Bank, and may exercise
or refrain from exercising the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from and generally engage in any
kind of business with the Borrowers as fully as if the Agent were not the Agent
hereunder.
Section 8.9 Credit Investigation. Each Bank acknowledges that it has made
such inquiries and taken such care on its own behalf as would have been the case
had its Commitment been granted and the Advances made directly by such Bank to
the Borrowers without the intervention of the Agent or any other Bank. Each Bank
agrees and acknowledges that the Agent makes no representations or warranties
about the creditworthiness of the Borrowers or any other party to this Agreement
or with respect to the legality, validity, sufficiency or enforceability of this
Agreement any Loan Document, or any other instrument or document delivered
hereunder or in connection herewith.
Section 8.10 Resignation. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Borrowers and the Banks. In the event of any
resignation of the Agent, the Required Banks shall as promptly as practicable
appoint a successor Agent. The Banks shall consult with the Borrower about the
choice of such successor Agent prior to making such appointment, but the consent
of the Borrower shall not be a condition to such appointment. If
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47
no such successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within 30 days after the resigning Agent's
giving of notice of resignation, then the resigning Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be an Eligible Bank organized
under the laws of the United States of America or of any state thereof Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon be entitled to receive from the prior Agent such
documents of transfer and assignment as such successor Agent may reasonably
request and the resigning Agent shall be discharged from its duties and
obligations under this Agreement. After any resignation pursuant to this
Section, the provisions of this Section shall inure to the benefit of the
retiring Agent as to any actions taken or omitted to be taken by it while it was
an Agent hereunder.
Section 8.11 Assignments.
(a) No Bank may assign any of its rights or obligations under any Loan
Document without the prior written consent of the Borrowers and the Agent,
which consent shall not be unreasonably withheld; provided, however, that
the consent of the Borrowers shall not be required in connection with any
such assignment made at any time when a Default or Event of Default has
occurred and is continuing. Upon receiving such consent, any Bank may
assign a portion of its Note and Commitment to an Eligible Bank (an
"Applicant") on any date (the "Adjustment Date") selected by such Bank. The
aggregate principal amount of the Note and Commitment so assigned in any
assignment shall be not less than $5,000,000, and the assigning Bank shall
retain at least $5,000,000 of such Note and Commitment for its own account;
provided, however, that the foregoing restriction shall not apply to a Bank
assigning its entire Note and Commitment to the Applicant. Such request
shall specify the identity of such Applicant and the Percentage which it
proposes that such Applicant acquire.
(b) To confirm the status of each Additional Bank as a party to this
Agreement and to evidence the assignment of the applicable portion of the
assigning Bank's Commitment and Note in accordance herewith:
(i) the Borrowers, such Bank, such Applicant, and the Agent shall, on
or before the Adjustment Date, execute and deliver to the Agent
an Assignment Certificate (provided that the assignment will be
effective whether the Borrowers sign it or not), in substantially
the form of Exhibit D (an "Assignment Certificate"); and
(ii) the Borrowers will execute and deliver to the assigning Bank a
new Note, payable to the order of the Applicant in an amount
corresponding to the applicable interest in the assigning Bank's
rights and obligations acquired by such Applicant pursuant to
such assignment, and, if the assigning Bank has retained
interests in such rights and obligations, a new Note, payable to
the order of that Bank in an amount corresponding to such
retained interests. Such new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of the
applicable Note to be replaced by
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48
such new Notes, shall be dated the effective date of such
assignment and shall otherwise be in the form of the Note to be
replaced thereby. Such new Notes shall be issued in substitution
for, but not in satisfaction or payment of, the Note being
replaced thereby.
Upon the execution and delivery of such Assignment Certificate and such Notes,
(a) this Agreement shall deemed to be amended to the extent, and only to the
extent, necessary to reflect the addition of such Additional Bank and the
resulting adjustment of Percentages arising therefrom, (b) the assigning Bank
shall be relieved of all obligations hereunder to the extent of the reduction of
all obligations hereunder and to the extent of the reduction of such Bank's
Percentage, and (c) the Additional Bank shall become a party hereto and shall be
entitled to all rights, benefits and privileges accorded to a Bank herein and in
each other document or instrument executed pursuant hereto and subject to all
obligations of a Bank hereunder, including the right to approve or disapprove
actions which, in accordance with the terms hereof, require the approval of the
Required Banks or all Banks, and the obligations to make Advances hereunder.
Promptly after the execution of any Assignment Certificate, a copy thereof shall
be delivered by the Agent to each Bank.
(c) In order to facilitate the addition of Additional Banks hereto,
the Borrowers shall cooperate fully with each Bank and the Agent in
connection therewith and shall provide all reasonable assistance requested
by each Bank and the Agent relating thereto, including, without limitation,
the furnishing of such written materials and financial information
regarding the Borrowers as any Bank or the Agent may reasonably request,
the execution of such documents as any Bank or the Agent may reasonably
request with respect thereto, and the participation by officers and
managers of the Borrowers in a meeting or teleconference call with any
Applicant upon the request of any Bank or the Agent.
(d) Without limiting any other provision hereof:
(i) each Bank may at any time, upon written notice to the Borrowers
and the Agent, sell, assign, transfer, or negotiate all or any
part of its Commitment, Advances, Note, and other rights and
obligations under this Agreement and the Loan Documents to one or
more affiliates of such Bank, provided that unless consented to
by the Borrowers and the Agent, no such sale, assignment,
transfer or negotiation of Commitment shall relieve the
transferring Bank from its obligations (to the extent such
affiliate does not fulfill its obligations) hereunder; and
(ii) each Bank may at any time sell, assign, transfer, or negotiate
all or any part of its Commitment Advances, Note, and other
rights and obligations under this Agreement and the Loan
Documents to one or more Banks, and any such sale, assignment,
transfer or negotiation shall relieve the transferring Bank from
its obligations hereunder to the extent of the obligations so
transferred (except, in any event, to the extent that the
Borrowers, any other Bank or the Agent has rights against such
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49
transferring Bank as a result of any default by such transferring
Bank under this Agreement);
provided, however, that any partial sale, assignment, transfer or
negotiation pursuant to this Section shall be pro rata as to all of the
Commitment, Note and Advances transferred.
(e) Any Bank making an assignment under this Section shall pay the
Agent a transfer fee in the amount of $2,500 simultaneous with such
assignment.
(f) Notwithstanding any other provision of this Agreement, any Bank
may at any time create a security interest in all or any portion of its
rights under this Agreement and that Bank's Note in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of
the Federal Reserve System.
(g) Except as set forth in this Section 8.11 and the following Section
8.12, no Bank may assign any of its rights or obligations under any Loan
Document.
Section 8.12 Participations. In addition to the rights granted in Section
8.11, each Bank may grant participations in a portion of its Note and Commitment
to any institutional investor, with the prior written consent of the Agent which
consent shall not be unreasonably withheld, but only so long as the principal
amount of the participation so granted is no less than $5,000,000. A Bank
requesting the Agent's consent to any such participation shall provide the Agent
the name, address and telecopier number of the participant and the amount of the
Note and Commitment covered by the participation, and such other information as
the Agent may reasonably request. No holder of any such participation, other
than an affiliate of such Bank, shall be entitled to require such Bank to take
or omit to take any action hereunder, except that such Bank may agree with such
participant that such Bank will not, without such participant's consent, (i)
forgive any indebtedness of the Borrowers under this Agreement or the Notes,
(ii) agree to reduce the rate of interest charged under this Agreement (iii)
agree to extend the final maturity of any indebtedness evidenced by the Notes,
(iv) extend the Commitment Termination Date, or (v) agree to release any
collateral securing payment of the Notes, except as expressly provided by the
terms of the Loan Documents. No Bank shall, as between the Borrowers and such
Bank, be relieved of any of its obligations hereunder as a result of any such
granting of a participation. The Borrowers hereby acknowledge and agree that any
participant described in this Section will, for purposes of Section 2.20, be
considered to be a Bank hereunder (provided that such participant shall not be
entitled to receive any more than the Bank selling such participation would have
received had such sale not taken place) and may rely on, and possess all rights
under, any opinions, certificates, or other instruments or documents delivered
under or in connection with any Loan Document. Except as set forth in this
Section 8.12, no Bank may grant any participation in any Loan Document or
Commitment.
Section 8.13 Co-Agent. The Bank identified on the title page and in the
preamble to this Agreement as "Co-Agent" shall have no right, power, obligation
or liability under this Agreement or any other Loan Document other than those
applicable to all Banks as such. Each
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Bank acknowledges that it has not relied, and will not rely, on any Bank so
identified in deciding to enter into this Agreement or in taking or omitting any
action hereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.1 No Waiver. Cumulative Remedies. No failure or delay on the part
of the Banks or the Borrower in exercising any right, power or remedy under the
Loan Documents shall operate as a waiver thereof, nor shall any Bank's
acceptance of payments while any Default or Event of Default is outstanding
operate as a waiver of such Default or Event of Default, or any right, power or
remedy under the Loan Documents; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy under the Loan Documents. The
remedies provided in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.
Section 9.2 Amendments, Etc. No amendment, modification, termination or
waiver of any provision of any Loan Document or consent to any departure by the
Borrowers therefrom shall be effective unless the same shall be in writing and
signed by the Required Banks (or, in the case of any action described in Section
8.6 or elsewhere requiring the consent of all of the Banks, each Bank) and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No notice to or demand on the Borrowers in
any case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances.
Section 9.3 Notice. Except as otherwise expressly provided herein, all
notices and other communications hereunder shall be in writing and shall be (i)
personally delivered, (ii) transmitted by certified or registered mail, postage
prepaid, return receipt requested (it being agreed that the returned receipt
shall constitute prima facie evidence of the receipt of such notice or other
communication), (iii) sent by Federal Express or similar expedited delivery
service, or (iv) transmitted by telecopy, in each case addressed to the party to
whom notice is being given at the address or addresses (including any addresses
specified for copies) as set forth for such party by its signature below, or if
telecopied, transmitted to that party at its telecopier number or numbers
(including any numbers specified for copies) set forth by its signature below;
or, as to each party, at such other addresses or telecopier numbers as may
hereafter be designated in a notice by that party to the other parties complying
with the terms of this Section. All such notices or other communications shall
be deemed to have been given on (i) the date received if delivered personally or
by mail, (ii) the date of receipt if delivered by Federal Express or similar
expedited delivery service, or (iii) the date of transmission if delivered by
telecopy, except that notices or requests to the Agent or any Bank pursuant to
any of the provisions of Article II shall not be effective until received.
Notice given by the Agent or any Bank to either Borrower at the addresses and/or
telecopier numbers determined as set forth in this Section shall be deemed
sufficient as to both Borrowers, regardless of whether each Borrower is sent
separate copies of such notice or even specifically identified in such notice.
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51
Section 9.4 Accommodation Party Defenses Waived. The parties intend that
each of the Borrowers shall be fully liable for the entire principal balance of
and interest on the Notes and all other indebtedness arising hereunder.
Nonetheless, in case a court finds that either Borrower is not such a primary
obligor with respect to all or any part of such obligations, the Borrowers
expressly waive the benefit of any and all defenses and discharges available to
a guarantor, surety, endorser or accommodation party dependent on an obligor's
character as such. Without limiting the generality of the foregoing, the
liability of the Borrowers hereunder shall not be affected or impaired in any
way by any of the following acts or things (which the Agent and the Banks are
hereby expressly authorized to do, omit or suffer from time to time without
notice to or consent of anyone): (i) any acceptance of collateral security,
guarantors, accommodation parties or sureties for any or all indebtedness
arising under this Agreement; (ii) any extension or renewal of any such
indebtedness (whether or not for longer than the original period) or any
modification of the interest rate, maturity or other terms of any such
indebtedness; (iii) any waiver or indulgence granted to either Borrower, and any
delay or lack of diligence in the enforcement of the indebtedness arising under
this Agreement; (iv ) any full or partial release of, compromise or settlement
with, or agreement not to xxx, either Borrower or any guarantor or other person
liable on any such indebtedness; (v) any release, surrender, cancellation or
other discharge of any indebtedness arising under this Agreement or the
acceptance of any instrument in renewal or substitution for any instrument
evidencing any such indebtedness; (vi) any failure to obtain collateral security
(including rights of setoff) for any indebtedness arising under this Agreement,
or to see to the proper or sufficient creation and perfection thereof, or to
establish the priority thereof, or to preserve, protect, insure, care for,
exercise or enforce any collateral security for any such indebtedness; (vii) any
modification, alteration, substitution, exchange, surrender, cancellation,
termination, release or other change, impairment, limitation, loss or discharge
of any collateral security for any such indebtedness; (viii) any assignment,
sale, pledge or other transfer of any of the indebtedness arising under this
Agreement; or (ix) any manner, order or method of application of any payments or
credits on any indebtedness arising under this Agreement.
Section 9.5 Disclosure of Information. The Agent and the Banks shall keep
confidential (and cause their respective officers, directors, employees, agents
and representatives to keep confidential) all information, materials and
documents furnished by the LJ Parties to the Agent or the Banks (the "Disclosed
Information"). Notwithstanding the foregoing, the Agent and each Bank may
disclose Disclosed Information (i) to the Agent, any other Bank or any affiliate
of any Bank; (ii) to legal counsel, accountants and other professional advisors
to the Agent or such Bank, so long as such counsel, accountants or other
advisors have been advised of the terms of this Section 9.5 and are bound
hereby; (iii) to any regulatory body having jurisdiction over any Bank or the
Agent; (iv) to the extent required by applicable laws and regulations or by any
subpoena or similar legal process, or requested by any governmental agency or
authority; (v) to the extent such Disclosed Information (A) becomes publicly
available other than as a result of a breach of this Agreement, (B) becomes
available to the Agent or such Bank on a non-confidential basis from a source
other than an LJ Party, or (C) was available to the Agent or such Bank on a
non-confidential basis prior to its disclosure to the Agent or such Bank by an
LJ Party; (vi) to the extent the Company shall have consented to such disclosure
in writing; (vii) to the extent reasonably deemed necessary by the Agent or any
Bank in the enforcement of the remedies of the Agent and the Banks provided
under the Loan Documents; or (viii) in
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52
connection with any potential assignment or participation in the interest
granted hereunder, provided that any such potential assignee or participant
shall have executed a confidentiality agreement imposing on such potential
assignee or participant substantially the same obligations as are imposed on the
Agent and the Banks under this Section.
Section 9.6 Costs and Expenses. The Borrowers agree to pay on demand all
costs and expenses incurred by the Agent in connection with the negotiation,
preparation, execution, administration, amendment or enforcement of the Loan
Documents and the other instruments and documents to be delivered hereunder and
thereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto, whether paid to outside counsel or allocated
to the Agent by in-house counsel. The Borrowers also agree to pay and reimburse
the Agent for all of its out-of-pocket and allocated costs incurred in
connection with each audit or examination conducted by the Agent, its employees
or agents, which audits and examinations shall be for the sole benefit of the
Agent and the Banks. In addition, the Borrowers agree to pay on demand all costs
and expenses incurred by any Bank (other than the Agent) in connection with the
enforcement of the Loan Documents following the occurrence of an Event of
Default including the reasonable fees and out-of-pocket expenses of counsel for
such Bank with respect thereto; provided, however, that no such costs and
expenses shall be paid prior to payment in full of all principal and interest on
the Notes and all costs and expenses incurred by the Agent and reimbursable
hereunder.
Section 9.7 Indemnification by Borrowers. The Borrowers hereby agree to
indemnify the Agent and the Banks and each officer, director, employee and agent
thereof (herein individually each called an "Indemnitee" and collectively called
the "Indemnitees") from and against any and all losses, claims, damages,
reasonable expenses (including, without limitation, reasonable attorneys' fees)
and liabilities (all of the foregoing being herein called the "Indemnified
Liabilities") incurred by an Indemnitee in connection with or arising out of the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the use of the proceeds of any Advance or Letter of
Credit hereunder (including but not limited to any such loss, claim, damage,
expense or liability arising out of any claim in which it is alleged that any
Environmental Law has been breached with respect to any activity or property of
the Borrowers), except for any portion of such losses, claims, damages, expenses
or liabilities incurred solely as a result of the gross negligence or willful
misconduct of the applicable Indemnitee. If and to the extent that the foregoing
indemnity may be unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. All
obligations provided for in this Section shall survive any termination of this
Agreement.
Section 9.8 Execution in Counterparts. This Agreement and the other Loan
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts of this Agreement or such other Loan Document, as the case may be,
taken together, shall constitute but one and the same instrument.
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Section 9.9 Binding Effect, Assignment. The Loan Documents shall be binding
upon and inure to the benefit of the Borrowers and the Banks and their
respective successors and assigns, except that neither Borrower shall have the
right to assign its rights thereunder or any interest therein without the prior
written consent of each of the Banks.
Section 9.10 Governing Law. The Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of Minnesota.
Section 9.11 Jurisdiction. The Borrowers hereby irrevocably submit to the
jurisdiction of any state or federal court sitting in Minneapolis or St. Xxxx,
Minnesota, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents, and the Borrowers hereby
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such Minnesota state or federal court. The Borrowers
hereby irrevocably waive, to the fullest extent they may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrowers irrevocably consent to the service of copies of the
summons and complaint and any other process which may be served in any such
action or proceeding by the mailing of copies of such process to the Borrowers
at their addresses as determined under Section 9.3. The Borrowers agree that a
final judgment in any such action or proceeding may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Section shall affect the right of the Agent or any Bank to serve
legal process in any other manner permitted by law or affect the right of the
Agent or any Bank to bring any action or proceeding against the Borrowers or
their property in the courts of other jurisdictions.
SECTION 9.12 WAIVER OF JURY TRIAL. THE BORROWERS, THE AGENT AND THE BANKS
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT AND THE NOTES
OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.
Section 9.13 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof
Section 9.14 Prior Agreements. This Agreement and the other Loan Documents
and related documents described herein restate and supersede in their entirety
any and all prior agreements and understandings, oral or written, between the
Banks and the Borrowers.
Section 9.15 Headings. Article and Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
above written.
Addresses for Xxxxxx-Xxxx Inc. and Xxxxxx-Xxxx XXXXXX-XXXX, INC.
International L.L.C.:
0000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
Telecopier: 000-000-0000 ---------------------------------
Its: President
with a copy of all notices to: XXXXXX-XXXX INTERNATIONAL L.L.C.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Xx. Xxxxxx X. Xxxxx Its: Managing Member
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
[If by mail:]
X.X. Xxx 00000
Xxxxxxx, Xxxxxxx 00000
[If by other delivery service:]
000 Xxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Telecopier: 000-000-0000
Address: NORWEST BANK MINNESOTA,
Sixth Street and Marquette Avenue NATIONAL ASSOCIATION, as Agent
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx
Telecopier: 000-000-0000 By: /s/ Xxxxx Xxxxxx
---------------------------------
Its: Vice President
Address: NORWEST BANK MINNESOTA,
Sixth Street and Marquette Avenue NATIONAL ASSOCIATION, as a Bank
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx
Telecopier: 000-000-0000 By: /s/ Xxxxx Xxxxxx
---------------------------------
Its: Vice President
Commitment Amount: $30,000,000
50
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Address: SUNTRUST BANK, ATLANTA
00 Xxxx Xxxxx, N.E./Mail Code 127
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxx
Telecopier: 000-000-0000 By: /s/ Xxxxx X. Xxxx
---------------------------------
Its: Banking Officer
Commitment Amount: $30,000,000
By: /s/ R. Xxxxxxx Xxxxxx
---------------------------------
Its: Vice President
Address: THE SUMITOMO BANK, LIMITED
One Peachtree Center
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx By: /s/ Xxxxx Xxxxxx
Telecopier: 000-000-0000 ---------------------------------
Its: Vice President
Commitment Amount: $20,000,000
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Its: Assistant Vice President
Address: THE SUMITOMO BANK, LIMITED
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier: 000-000-0000 By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Its: Vice President
Commitment Amount: $10,000,000
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EXHIBITS AND SCHEDULES
Exhibit A Note
Exhibit B Letter of Credit Application and Reimbursement Agreement
Exhibit C Form of Compliance Certificate
Exhibit D Assignment Certificate
---------------------------------------------------
Schedule 2.17 Use of First Borrowing
Schedule 4.4 Subsidiaries
Schedule 6.1 Permitted Liens
Schedule 6.2 Permitted Indebtedness
Schedule 6.3 Permitted Guaranties
57
Exhibit A
REVOLVING NOTE
$____________ Minneapolis, Minnesota
_________________, 19___
For value received, Xxxxxx-Xxxx Inc., a Georgia corporation, and
Xxxxxx-Xxxx International L.L.C., a Georgia limited liability company (each, a
"Borrower" and together, the "Borrowers"), jointly and severally promise to pay
to the order of ________________________ _________, a _________________________
(the "Bank"), at the main office of Norwest Bank Minnesota, National Association
("Norwest") in Minneapolis, Minnesota, on the Commitment Termination Date, as
defined in the Credit Agreement described below, the principal sum of
_______________________________ Dollars ($__________), or, if less, the
aggregate unpaid principal amount of all advances made by the Bank to either or
both Borrowers pursuant to Section 2.1 of the Revolving Credit Agreement dated
July 16, 1996 among the Borrowers, Norwest, as Agent (in such capacity, the
"Agent"), and various Banks, including the Bank (together with all amendments,
modifications and restatements thereof, the "Credit Agreement"), and to pay
interest on the principal balance of this Note outstanding from time to time at
the rate or rates determined pursuant to the Credit Agreement.
Interest accruing on the principal balance of this Note shall be due
and payable on the dates specified in the Credit Agreement.
This Note is issued pursuant to, and is subject to, the Credit
Agreement, which provides (among other things) for the acceleration of this Note
upon an Event of Default and for the voluntary and mandatory prepayment of this
Note.
The Borrowers jointly and severally agree to pay all costs of
collection, including reasonable attorneys' fees and legal expenses, if this
Note is not paid when due, whether or not legal proceedings are commenced.
Presentment or other demand for payment, notice of dishonor and protest
are expressly waived.
XXXXXX-XXXX INC. XXXXXX-XXXX INTERNATIONAL L.L.C.
By: __________________________ By: _____________________________
Its: _______________________ Its: ___________________________
2
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Exhibit C
COMPLIANCE CERTIFICATE
-----------------------, ------
Norwest Bank Minnesota, National Association,
for itself and as Agent under the Credit
Agreement described below
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
The Banks, as defined under the Credit
Agreement described below
COMPLIANCE CERTIFICATE
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated July 16, 1996 among
Xxxxxx-Xxxx Inc. (the "Company"), Xxxxxx-Xxxx International L.L.C., Norwest Bank
Minnesota, National Association, as Agent and the Banks, as defined therein (the
"Credit Agreement").
All terms defined in the Credit Agreement and not otherwise defined
herein shall have the meanings given them in the Credit Agreement.
This is a Compliance Certificate submitted in connection with the
Company's financial statements (the "Statements") as of ______________________,
______(the "Effective Date").
I hereby certify to you as follows:
1. I am the chief financial officer of the Company, and I am
familiar with the financial statements and financial affairs
of the Company.
2. The Statements have been prepared in accordance with generally
accepted accounting principles applied on a basis that is
consistent with the accounting practices practices reflected
in the annual financial statements referred to in Section
4.5[, subject to year-end audit adjustments].
3. The following computations set forth the Borrower's compliance
or noncompliance with the requirements set forth in Sections
5.9, 5.10, 5.11, 5.12 and 5.13 as of the Effective Date:
59
ACTUAL REQUIREMENT
5.9 TOTAL-FUNDED-DEBT-TO-EBITDAR RATIO
Funded Debt
On Balance Sheet $_________
Off Balance Sheet $_________
Total Funded Debt $_________
EBITDAR $_________
Ratio _________:1 =<3.50:1
5.10 TOTAL FUNDED DEBT TO ADJUSTED TANGIBLE NET WORTH
Total Funded Debt $_________
ATNW $_________
Ratio _________:1 =<3.00:1
5.11 ADJUSTED TANGIBLE NET WORTH
ATNW $_________ *
5.12 EBITDAR
EBITDAR $_________ >=$0
5.11 NET INCOME
Net Income $_________ >=$1
Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of, the financial covenants
referred to above.
4. I have no knowledge of the occurrence of any Default or Event
of Default, except as set forth in the attachments, if any,
hereto.
Very truly yours,
XXXXXX-XXXX INC. XXXXXX-XXXX INTERNATIONAL L.L.C.
By By
-------------------------- --------------------------------
Its Its
----------------------- -----------------------------
*REQUIRED ADJUSTED TANGIBLE NET WORTH: $28,000,000, plus 30% of in (but not
decreases) in Company's book pre-tax income for fiscal year ending after
8/31/96.
60
Exhibit D
ASSIGNMENT CERTIFICATE
Assigning Bank:
----------------------------
Applicant:
---------------------------------
This Certificate (the "Certificate") is delivered pursuant to Section 8.11
of the Credit Agreement dated as of July 16, 1996 (together with all amendments,
supplements, restatements and other modifications, if any, from time to time
made thereto, the "Credit Agreement"), among Xxxxxx-Xxxx Inc., a Georgia
corporation, and Xxxxxx-Xxxx International .L.L.C., a Georgia limited liability
company (the "Borrower"), Norwest Bank Minnesota, National Association, as agent
(the "Agent"), and the various banks now or hereafter parties thereto.
The Assigning Bank named above wishes to assign a portion of its interest
arising under the Credit Agreement to the Applicant named above pursuant to
Section 8.11 of the Credit Agreement, and the Applicant wishes to become an
Additional Bank pursuant thereto. This Certificate is an Assignment Certificate,
as defined in the Credit Agreement, and is executed for purposes of informing
the Agent and the Borrowers of the transactions contemplate hereby and obtaining
the consent of the Agent and the Borrowers to the extent required under the
Credit Agreement.
Accordingly, the undersigned hereby agree as follows:
1. Definitions. Unless otherwise defined herein, terms used herein have the
meanings provided in the Credit Agreement.
2. Allocation of Payments. Any interest fees and other payments accrued to
the Effective Date with respect to the Assigning Bank's interest under the Loan
Documents shall be for the account of the Assigning Bank. Any interest, fees and
other payments accruing on and after the Effective Date with respect to the
interests assigned hereunder shall be for the account of the Applicant. Each of
the Assigning Bank and the Applicant agrees that it will hold in trust for the
other party any interest fees and other amounts which it may receive to which
the other party is entitled pursuant to the preceding sentence and pay to the
other party any such amounts which it may receive promptly upon receipt.
3. Effective Date, Conditions. The date on which the Applicant shall become
an Additional Bank (the "Effective Date") is _____________________, 19___;
provided, however, that the assignment and assumption described in this
Certificate shall not be effective unless, on or before the Effective Date, (i)
the Agent has received counterparts of this Certificate duly executed and
delivered by the Borrowers (unless the Borrowers' consent to the assignment
hereunder is not required under Section 8.11 of the Credit Agreement), the
Assigning Bank, the Agent and the Applicant, (ii) the Agent has received the
transfer fee for the account of the Agent in the amount of $2,500, and (iii) all
other terms and conditions of this Certificate and the Credit Agreement relating
to the assignment hereunder have been satisfied.
61
4. Applicant's Interest. Effective as of the Effective Date, (i) the
Applicant's Commitment Amount shall be the amount designated as the "Assigned
Commitment Amount" opposite the Applicant's signature below (and the Applicant
shall be deemed to have assumed the Assigning Bank's Commitment in the amount of
such Assigned Commitment Amount), (ii) the principal amount of Advances owing to
the Applicant shall be the amount designated as the "Assigned Advances" opposite
the Applicant's signature below and (iii) the Applicant's Percentage shall be
the percentage designated as the "Assigned Percentage" opposite the Applicant's
signature below.
5. Retained Interest. Effective as of the Effective Date, (i) the
Assigning Bank's Commitment Amount shall be the amount designated as the
"Retained Commitment Amount" opposite the Assigning Bank's signature below
(which amount shall, when added t the Applicant's Commitment Amount as
determined under paragraph 4, equal the Assigning Bank's Commitment Amount as
determined immediately before giving effect to this Certificate) (and the
Assigning Bank shall be relieved of all of its obligations under-the Credit
Agreement to the extent of the reduction in its Commitment Amount 'm accordance
herewith), (ii) the principal amount of Advances under Section 2.1 owing to the
Assigning Bank shall be the amount designated as the "Retained Advances"
opposite the Assigning Bank's signature below, and (iii) the Assigning Bank's
Percentage shall be the percentage designated as the "Retained Percentage"
opposite the Assigning Bank's signature below.
6. New Notes. Concurrently with the execution and delivery hereof, the
Borrowers shall issue and deliver to the Agent in exchange for the Assigning
Bank's Note (i) a Note payable to the order of the Applicant in a face principal
amount equal to the Applicant's "Assigned Commitment Amount" (or, if the
Effective Date is after the Commitment Termination Date, the Applicant's
"Assigned Advances"), in substantially the form of Exhibit A to the Credit
Agreement, and (ii) a Note payable to the order of the Assigning Bank in the
amount of the "Retained Commitment Amount (or, if the Effective Date is after
the Commitment Termination Date, the Assigning Bank's "Retained Advances"), in
substantially the form of Exhibit A to the Credit Agreement. The Agent shall
deliver the foregoing Notes to the Applicant and the Assigning Bank promptly
after the Effective Date, or (if later) the receipt by the Agent thereof.
7. Notice Address. The address shown below the Applicant's signature
hereto shall be its notice address for purposes of Section 9.3 of the Credit
Agreement, unless and until it shall designate, in accordance with such Section
9.3, another address for such purposes.
8. Assumption. Upon the Effective Date, the Applicant shall become a
party to the Credit Agreement and a Bank thereunder and (i) shall be entitled to
all rights, benefits and privileges accorded to a Bank in the Credit Agreement,
(ii) shall be subject to all obligations of a Bank thereunder, and (iii) shall
be deemed to have specifically ratified, confirmed and agreed to be bound by
(and by executing this Certificate the Applicant hereby specifically ratifies,
confirms and agrees to be bound by) all of the provisions of the Credit
Agreement and the Loan Documents.
9. Independent Credit Decision. The Applicant (a) acknowledges that it
has received a copy of the Credit Agreement and the Schedules and Exhibits
thereto, together with copies of the
62
most recent financial statements referred to in Section 4.5 or 5.1 of the Credit
Agreement, and such other documents and information as it has deemed appropriate
to make its own credit and legal analysis and decision to enter into this
Assignment and Acceptance; (b) acknowledges and agrees that in becoming an
Additional Bank and in making any Advance under the Credit Agreement, such
actions have been and will be made without recourse to, or representation or
warranty by, the Assigning Bank or the Agent; and (c) agrees that it will,
independently and without reliance upon the Assigning Bank, the Agent or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit and legal decisions in
taking or not taking action under the Credit Agreement.
10. Withholding Tax. The Applicant (a) represents and warrants to the
Agent and the Borrowers that under applicable law and treaties no tax will be
required to be withheld by the Agent with respect to any payments to be made to
the Applicant hereunder, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof) to
the Agent and the Borrowers prior to the time that the Agent or Borrowers are
required to make any payment of principal, interest or fees hereunder, duplicate
executes originals of either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein the Applicant claims entitlement to
the benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Applicant, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
11. Further Assurances. The Borrowers, the Assigning Bank and the
Applicant shall, at any time and from time to time upon the written request of
the Agent, execute and deliver such further documents and do such further acts
and things as the Agent may reasonably request in order to effect the purpose of
this Certificate.
12. Miscellaneous. This Certificate may be executed in any number of
counterparts by the parties hereto, each of which counterparts shall be deemed
to be an original and all of which shall together constitute one and the same
certificate. Matters relating to this Certificate shall be governed by, and
construed in accordance with, the internal laws of the State of Minnesota.
IN WITNESS WHEREOF, the undersigned have executed this Certificate as
of the Effective Date set forth above.
Retained Advances:
$
----------------- --------------------------------
Retained Commitment Amount: [Assigning Bank]
$
-----------------
Retained Percentage: %
----------
By
------------------------
Its
---------------------
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Assigned Advances:
$
----------------- --------------------------------
Assigned Commitment Amount: [Applicant]
$
-----------------
Assigned Percentage: %
-------------
By
---------------------------
Its
------------------------
Notice Address:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Telecopier:
------------------
64
Consent of Agent
The Agent hereby consents to the foregoing Assignment.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By
---------------------------------
Its
------------------------------
Consent of Borrowers
The Borrowers hereby consent to the foregoing Assignment.
XXXXXX-XXXX INC. XXXXXX-XXXX INTERNATIONAL L.L.C.
By By
-------------------------- ---------------------------------
Its Its
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