EXHIBIT 10.1
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AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
DATED AS OF SEPTEMBER 17, 1998
AMONG
AMSCAN HOLDINGS, INC.,
AS BORROWER
THE LENDERS LISTED HEREIN,
AS LENDERS,
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
AS ARRANGER AND SYNDICATION AGENT,
AND
FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT
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AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
TABLE OF CONTENTS
PAGE
SECTION 1.
DEFINITIONS................................ 3
1.1 Certain Defined Terms...................................... 3
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement............................ 45
1.3 Other Definitional Provisions and Rules of Construction.... 45
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS............. 46
2.1 Commitments; Making of Loans; the Register; Notes.......... 46
2.2 Interest on the Revolving Loans............................ 50
2.3 Fees....................................................... 54
2.4 Prepayments and Reductions in Revolving Loan Commitments;
General Provisions Regarding Payments; Application of
Proceeds of Collateral and Payments Under Subsidiary
Guaranty................................................... 54
2.5 Use of Proceeds............................................ 59
2.6 Special Provisions Governing Eurodollar Rate Loans......... 60
2.7 Increased Costs; Taxes; Capital Adequacy................... 62
2.8 Obligation of Lenders and Issuing Lenders to Mitigate...... 67
2.9 Defaulting Lenders......................................... 67
2.10 Removal or Replacement of a Lender......................... 69
SECTION 3.
LETTERS OF CREDIT............................ 71
3.1 Issuance of Letters of Credit and Lenders' Purchase
of Participations Therein.................................. 71
3.2 Letter of Credit Fees...................................... 74
3.3 Drawings and Reimbursement of Amounts Paid Under Letters
of Credit.................................................. 75
3.4 Obligations Absolute....................................... 77
3.5 Indemnification; Nature of Issuing Lenders' Duties......... 78
3.6 Increased Costs and Taxes Relating to Letters of Credit.... 80
SECTION 4.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT... 81
(i)
Page
4.1 Conditions to Effectiveness................................ 81
4.2 Conditions to All Revolving Loans.......................... 90
4.3 Conditions to Letters of Credit............................ 91
SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES................ 92
5.1 Organization, Powers, Qualification, Good Standing,
Business and Subsidiaries.................................. 92
5.2 Authorization of Borrowing, etc............................ 93
5.3 Financial Condition........................................ 94
5.4 No Material Adverse Change................................. 95
5.5 Title to Properties; Liens; Real Property.................. 95
5.6 Litigation; Adverse Facts.................................. 96
5.7 Payment of Taxes........................................... 96
5.8 Performance of Agreements; Materially Adverse
Agreements; Material Contracts............................. 97
5.9 Governmental Regulation.................................... 97
5.10 Securities Activities...................................... 97
5.11 Employee Benefit Plans..................................... 97
5.12 Certain Fees............................................... 98
5.13 Environmental Protection................................... 98
5.14 Employee Matters........................................... 99
5.15 Solvency................................................... 99
5.16 Matters Relating to Collateral............................. 99
5.17 Related Agreements.........................................100
5.18 Disclosure.................................................101
5.19 AXEL Credit Agreement......................................102
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS....................102
6.1 Financial Statements and Other Reports.....................102
6.2 Corporate Existence, etc...................................108
6.3 Payment of Taxes and Claims; Tax Consolidation.............108
6.4 Maintenance of Properties; Insurance; Application
of Net Insurance/Condemnation Proceeds...................109
6.5 Inspection Rights; Audits of Inventory and Accounts
Receivable; Lender Meeting.................................111
6.6 Compliance with Laws, etc..................................111
6.7 Environmental Review and Investigation, Disclosure, Etc.;
Company's Actions Regarding Hazardous Materials Activities,
Environmental Claims and Violations of Environmental
Laws.......................................................111
(ii)
6.8 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries........................................114
6.9 Conforming Leasehold Interests; Matters Relating to
Real Property Collateral...................................116
6.10 Interest Rate Protection...................................118
6.11 Cash Management Systems....................................119
6.12 TRADEMARKS AND PATENTS.............................................120
SECTION 7.
COMPANY'S NEGATIVE COVENANTS......................120
7.1 Indebtedness...............................................120
7.2 Liens and Related Matters..................................122
7.3 Investments; Joint Ventures................................124
7.4 Contingent Obligations.....................................124
7.5 Restricted Junior Payments.................................126
7.6 Financial Covenants........................................126
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions...............................................132
7.8 Consolidated Capital Expenditures..........................133
7.9 Sales and Lease-Backs......................................134
7.10 Transactions with Shareholders and Affiliates..............134
7.11 Disposal of Subsidiary Stock...............................135
7.12 Conduct of Business........................................135
7.13 Amendments or Waivers of Certain Related Agreements
and the Anagram Acquisition Agreement; Amendments of
Documents Relating to Subordinated Indebtedness............135
7.14 Fiscal Year................................................136
SECTION 8.
EVENTS OF DEFAULT............................136
8.1 Failure to Make Payments When Due..........................136
8.2 Default in Other Agreements................................136
8.3 Breach of Certain Covenants................................137
8.4 Breach of Warranty.........................................137
8.5 Other Defaults Under Revolving Loan Documents..............137
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.......137
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.........138
8.8 Judgments and Attachments..................................138
8.9 Dissolution................................................138
8.10 Employee Benefit Plans.....................................138
8.11 Change in Control..........................................139
(iii)
Page
8.12 Invalidity of Subsidiary Guaranty; Failure of Security;
Repudiation of Obligations.................................139
8.13 Failure to Consummate Anagram Acquisition..................139
8.14 Amendment of Certain Documents of Company..................139
SECTION 9.
AGENTS..................................141
9.1 Appointment................................................141
9.2 Powers and Duties; General Immunity........................142
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness..............................144
9.4 Right to Indemnity.........................................144
9.5 Successor Agent............................................144
9.6 Collateral Documents and Guaranties........................145
SECTION 10.
MISCELLANEOUS..............................146
10.1 Assignments and Participations in Loans and Letters
of Credit..................................................146
10.2 Expenses...................................................149
10.3 Indemnity..................................................150
10.4 Set-Off; Security Interest in Deposit Accounts.............151
10.5 Ratable Sharing............................................152
10.6 Amendments and Waivers.....................................152
10.7 Independence of Covenants..................................153
10.8 Notices....................................................154
10.9 Survival of Representations, Warranties and Agreements.....154
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative......154
10.11 Marshalling; Payments Set Aside............................155
10.12 Severability...............................................155
10.13 Obligations Several; Independent Nature of Lenders'
Rights.....................................................155
10.14 Headings...................................................155
10.15 Applicable Law.............................................156
10.16 Successors and Assigns.....................................156
10.17 Consent to Jurisdiction and Service of Process.............156
10.18 Waiver of Jury Trial.......................................157
10.19 Confidentiality............................................157
10.20 Counterparts; Effectiveness................................158
Signature pages S-1
(iv)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV [INTENTIONALLY OMITTED]
V FORM OF REVOLVING NOTE
VI FORM OF COMPLIANCE CERTIFICATE
VII-A FORM OF OPINION OF WACHTELL, LIPTON, XXXXX & XXXX
VII-B FORM OF OPINION OF XXXXXXX & XXXXXXXXX
VIII FORM OF OPINION OF O'MELVENY & XXXXX
IX FORM OF ASSIGNMENT AGREEMENT
X FORM OF CERTIFICATE RE NON-BANK STATUS
XI FORM OF FINANCIAL CONDITION CERTIFICATE
XII FORM OF COMPANY PLEDGE AGREEMENT
XIII FORM OF COMPANY SECURITY AGREEMENT
XIV FORM OF SUBSIDIARY GUARANTY
XV FORM OF SUBSIDIARY PLEDGE AGREEMENT
XVI FORM OF SUBSIDIARY SECURITY AGREEMENT
XVII FORM OF MORTGAGE
XVIII FORM OF COLLATERAL ACCESS AGREEMENT
XIX FORM OF BORROWING BASE CERTIFICATE
XX FORM OF SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT
(v)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP;
MANAGEMENT
4.1E-I INDEBTEDNESS TO BE REPAID UNDER AMSCAN CREDIT AGREEMENTS
4.1E-II INDEBTEDNESS TO BE REPAID UNDER ANAGRAM CREDIT AGREEMENTS
5.1 SUBSIDIARIES OF COMPANY
5.5 REAL PROPERTY
5.6 LITIGATION
5.8 MATERIAL CONTRACTS
5.13 ENVIRONMENTAL MATTERS
6.11 CASH MANAGEMENT SYSTEM
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.10 CERTAIN TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
(vi)
AMSCAN HOLDINGS, INC.
AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING LOAN CREDIT AGREEMENT is dated as
of September 17, 1998 and entered into by and among AMSCAN HOLDINGS, INC., a
Delaware corporation ("COMPANY"), XXXXXXX XXXXX CREDIT PARTNERS L.P., ("GSCP")
as arranger (in such capacity, "ARRANGER"), and as syndication agent (in such
capacity, "SYNDICATION AGENT"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each, including GSCP and Fleet (as hereinafter defined),
individually referred to herein as a "LENDER" and collectively as "LENDERS"),
and FLEET NATIONAL BANK ("FLEET"), as administrative agent for Lenders (in such
capacity, "ADMINISTRATIVE AGENT").
R E C I T A L S
- - - - - - - -
WHEREAS, Company, Arranger, Syndication Agent, Administrative Agent and
certain financial institutions ("EXISTING LENDERS") are parties to that certain
Revolving Loan Credit Agreement dated as of December 19, 1997 (as heretofore
amended, supplemented or otherwise modified, the "EXISTING REVOLVING LOAN CREDIT
AGREEMENT") pursuant to which Existing Lenders have extended certain credit
facilities to Company, a portion of the proceeds of which were applied on the
Closing Date (this and other capitalized terms used in these recitals without
definition being used as defined in subsection 1.1) to fund a portion of the
Recapitalization Financing Requirements;
WHEREAS, Company is party to a separate AXEL Credit Agreement dated as
of December 19, 1997 (as heretofore amended, supplemented, refinanced, renewed,
extended, or otherwise modified from time to time, the "AXEL CREDIT AGREEMENT")
with Fleet National Bank, as administrative agent ("AXEL FACILITY AGENT"),
Xxxxxxx Sachs Credit Partners L.P., as arranger and syndication agent, and the
financial institutions party thereto as lenders ("AXEL LENDERS") pursuant to
which AXEL Lenders extended certain credit facilities to Company on the Closing
Date to fund a portion of the Recapitalization Financing Requirements.
WHEREAS, on the Closing Date, Administrative Agent and AXEL Facility
Agent entered into the Intercreditor Agreement pursuant to which Administrative
Agent and AXEL Facility Agent appointed Fleet to serve as collateral agent and
representative (in such capacity, "COLLATERAL AGENT") for Existing Lenders, AXEL
Lenders, Administrative Agent, AXEL Facility Agent and the other agents under
the Existing Revolving Loan Credit Agreement and the AXEL Credit Agreement
(collectively, the "SECURED PARTIES") and
agreed to the terms on which the Collateral, the benefits of guarantees and the
proceeds thereof are to be shared between the credit facilities;
WHEREAS, Company has secured all of the Obligations under the Existing
Revolving Loan Credit Agreement and under the other Loan Documents by granting
to Collateral Agent, on behalf of Secured Parties, a first priority Lien on
substantially all of its real, personal and mixed property, including a pledge
of all of the capital stock of each of its Domestic Subsidiaries and 66% of the
capital stock of each of its Foreign Subsidiaries;
WHEREAS, all of the Domestic Subsidiaries of Company have guarantied
the Obligations under the Existing Revolving Loan Credit Agreement and under the
other Loan Documents and secured their guaranties by granting to Collateral
Agent, on behalf of Secured Parties, a first priority Lien on substantially all
of their respective personal and mixed property, including a pledge of all of
the capital stock of each of their respective Domestic Subsidiaries and 66% of
the capital stock of each of their respective Foreign Subsidiaries;
WHEREAS, on the Restatement Effective Date, Company intends to acquire
(the "ANAGRAM ACQUISITION") all of the outstanding Capital Stock (the "ANAGRAM
SHARES") of Anagram International, Inc. and certain related companies
(collectively, "ANAGRAM") from Xxxxx Xxxxxx, certain members of his family and
certain trusts (collectively, the "ANAGRAM SELLERS") pursuant to the Anagram
Acquisition Agreement in exchange for aggregate consideration consisting of
$74,500,000 in cash plus 120 shares of newly-issued Company Common Stock (the
"NEW COMPANY SHARES") plus warrants to purchase 10 shares of Company Common
Stock.
WHEREAS, Company desires that Existing Lenders amend and restate the
Existing Revolving Loan Credit Agreement in its entirety to permit Company to
consummate the Anagram Acquisition and to borrow Additional AXELs under the AXEL
Credit Agreement in an aggregate principal amount of $40,000,000 to be added to
the Existing AXELs, the proceeds of which will be used, together with (i) cash
on hand at the Company and (ii) proceeds of incremental borrowings under this
Agreement in an amount up to $23,500,000 plus the excess, if any, of $15,000,000
over the amount of cash on hand at the Company on the Restatement Effective Date
(1) to fund the cash portion of the consideration for the Anagram Acquisition,
(2) to refinance certain existing indebtedness of Anagram and its Subsidiaries,
and (iii) to pay Anagram Transaction Costs;
WHEREAS, concurrently with the amendment and restatement of the
Existing Revolving Loan Credit Agreement, Company and AXEL Lenders will amend
and restate the AXEL Credit Agreement in its entirety in order to permit the
Additional AXELs and the Anagram Acquisition and to make certain other changes
in connection therewith.
WHEREAS, it is the intent of the parties hereto that this Agreement not
constitute a novation of the obligations and liabilities of the parties under
the Existing Revolving Loan
Credit Agreement or be deemed to evidence or constitute repayment of all or any
portion of such obligations and liabilities and that this Agreement amend and
restate in its entirety the Existing Revolving Loan Credit Agreement and
re-evidence the Obligations of Company outstanding thereunder; and
WHEREAS, it is the intent of Loan Parties to confirm that all
Obligations of Loan Parties under the other Loan Documents shall continue in
full force and effect and that from and after the Restatement Effective Date all
references to the "REVOLVING CREDIT AGREEMENT" contained therein shall be deemed
to refer to this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agents agree
that on the Restatement Effective Date the Existing Revolving Loan Credit
Agreement shall be amended and restated in its entirety as follows:
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings:
"ACCOUNT" means, with respect to any Person, all present and
future rights of such Person to payment for goods sold or leased or for
services rendered (except those evidenced by instruments or chattel
paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance.
"ADDITIONAL AXEL[Trademark]" or "ADDITIONAL AXELS[Trademark]"
means a loan made by an AXEL Lender to Company as an amortization
extended loan pursuant to subsection 2.1A(ii) of the AXEL Credit
Agreement. The term AXEL is a registered trademark of Xxxxxxx, Sachs &
Co.
"ADDITIONAL AXEL COMMITMENT" means a commitment of an AXEL
Lender to make an Additional AXEL under the AXEL Credit Agreement, and
"ADDITIONAL AXEL COMMITMENTS" means such commitments of all AXEL
Lenders in the aggregate.
"ADDITIONAL AXEL NOTES" means the promissory notes of Company
issued pursuant to subsection 2.1E of the AXEL Credit Agreement on the
Restatement Effective Date, substantially in the form of Exhibit III
annexed thereto, as they may be amended, supplemented or otherwise
modified from time to time.
3
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar
Rate Loan, the interest rate per annum (rounded upward, if necessary,
to the nearest 1/32 of one percent) as determined on the basis of the
offered rates for deposits in U.S. dollars, for a period of time
comparable to such Interest Period which appears on the Telerate Page
3750 as of 11:00 a.m. (New York time) two Business Days before the
first day of such Interest Period; provided, however, that if the rate
described above does not appear on the Telerate System on any
applicable interest determination date, the Adjusted Eurodollar Rates
shall be the rate (rounded upward as described above, if necessary) for
deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may
replace the LIBO page on that service for the purpose of displaying
such rates), as of 11:00 a.m. (London time) two Business Days before
the first day of such Interest Period.
If both the Telerate and Reuters system are unavailable, then
the rate for that date will be determined on the basis of the offered
rates for deposits in U.S. dollars for a period of time comparable to
such Interest Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. (New York time) two
Business Days before the first day of such Interest Period as selected
by the Administrative Agent. The principal London office of each of the
four major London banks will be requested to provide a quotation of its
U.S. dollar deposit offered rate. If at least two such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted
for loans in U.S. dollars to leading European banks for a period of
time comparable to such Interest Period offered by major banks in New
York City at approximately 11:00 a.m. (New York time) two Business Days
before the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided
above, it will be deemed that the Adjusted Eurodollar Rate for such
Interest Rate cannot be determined.
In the event that the Board of Governors of the Federal
Reserve System shall impose a Eurodollar Rate Reserve Percentage with
respect to Eurocurrency Liabilities, the Adjusted Eurodollar Rate for
an Interest Period shall be equal to the amount determined above for
such Interest Period divided by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest Period.
"ADMINISTRATIVE AGENT" has the meaning assigned to that term
in the introduction to this Agreement and also means and includes any
successor Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in
subsection 2.6C.
4
"AFFILIATE", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as
applied to any Person, means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"AGENT" means, individually, each of Arranger, Syndication
Agent, Collateral Agent and Administrative Agent and "AGENTS" means
Arranger, Syndication Agent, Collateral Agent and Administrative Agent,
collectively.
"AGREEMENT" means this Amended and Restated Revolving Loan
Credit Agreement dated as of September 17, 1998, as it may be amended,
supplemented or otherwise modified from time to time.
"ANAGRAM" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM ACQUISITION" has the meaning assigned to such term in
the recitals to this Agreement.
"ANAGRAM ACQUISITION AGREEMENT" means the Stock Purchase
Agreement dated as of August 6, 1998 by and among Company and the
Anagram Sellers and all exhibits and schedules thereto.
"ANAGRAM HEADQUARTERS FACILITY" means, as of the Restatement
Effective Date, the real property in Minnesota owned in fee simple by
Eden Prairie Holdings where Anagram's headquarters and manufacturing
site are located.
"ANAGRAM INTERNATIONAL" means Anagram International, Inc., a
Minnesota corporation.
"ANAGRAM SELLERS" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM SHARES" has the meaning assigned to such term in the
recitals to this Agreement.
"ANAGRAM TRANSACTION COSTS" means the fees, costs and expenses
payable by Company in connection with the transactions contemplated by
the Anagram Acquisition Agreement, including without limitation any
fees payable to Agents and Lenders on or before the Restatement
Effective Date in connection therewith.
5
"APPLICABLE LEVERAGE RATIO" means, with respect to any date of
determination, the Consolidated Leverage Ratio set forth in the most
recent Compliance Certificate delivered pursuant to subsection 6.1(iv)
hereof, provided that (i) the Applicable Leverage Ratio for the period
from the Closing Date to but excluding the fifth Business Day following
delivery of the first Compliance Certificate pursuant to subsection
6.1(iv) hereof, shall be deemed to be no less than 5.25:1, (ii) no
change in the Applicable Leverage Ratio shall be effective until five
Business Days after the date on which Administrative Agent receives a
Compliance Certificate pursuant to subsection 6.1(iv) calculating the
Consolidated Leverage Ratio and (iii) in the event the Company fails to
deliver to the Administrative Agent a Compliance Certificate
calculating the Consolidated Leverage Ratio in accordance with
subsection 6.1(iv) when required thereunder, then the Applicable
Leverage Ratio shall be deemed to be not less than 5.25:1 from the date
such Compliance Certificate was due until the date the Company shall
deliver such Compliance Certificate.
"APPLICABLE REVOLVING BASE RATE MARGIN" means, as at any date
of determination, a rate per annum equal to the percentage set forth
below opposite the Applicable Leverage Ratio in effect as of such date
of determination with any change in the Applicable Revolving Base Rate
Margin to be effective on the date of any corresponding change in the
Applicable Leverage Ratio.
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING BASE RATE MARGIN
-------------------------------------------------- --------------------------------------------------------------
5.25:1.00 or greater 1.25%
-------------------------------------------------- --------------------------------------------------------------
4.75:1.00 or greater, but less than 5.25:1.00 1.00%
-------------------------------------------------- --------------------------------------------------------------
4.25:1.00 or greater, but less than 4.75:1.00 0.75%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.25:1.00 0.50%
-------------------------------------------------- --------------------------------------------------------------
3.25:1.00 or greater, but less than 3.75:1.00 0.25%
-------------------------------------------------- --------------------------------------------------------------
less than 3.25:1.00 0.00%
================================================== ==============================================================
"APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE" means, as at
any date of determination, a rate per annum equal to the percentage set
forth below opposite the Applicable Leverage Ratio in effect as of such
date of determination, any change
6
in the Applicable Revolving Commitment Fee Percentage to be effective
on the date of any corresponding change in the Applicable Leverage
Ratio:
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING COMMITMENT FEE PERCENTAGE
-------------------------------------------------- --------------------------------------------------------------
4.75:1.00 or greater 0.50%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.75: 1.00 0.375%
-------------------------------------------------- --------------------------------------------------------------
less than 3.75:1.00 0.25%
================================================== ==============================================================
"APPLICABLE REVOLVING EURODOLLAR RATE MARGIN" means, as at any
date of determination, with respect to any Eurodollar Rate Loans a rate
per annum equal to the percentage set forth below opposite the
Applicable Leverage Ratio in effect as of the first day of the Interest
Period for such Eurodollar Rate Loans:
================================================== ==============================================================
APPLICABLE LEVERAGE RATIO APPLICABLE REVOLVING EURODOLLAR RATE MARGIN
-------------------------------------------------- --------------------------------------------------------------
5.25:1.00 or greater 2.25%
-------------------------------------------------- --------------------------------------------------------------
4.75:1.00 or greater, but less than 5.25: 1.00 2.00%
-------------------------------------------------- --------------------------------------------------------------
4.25:1.00 or greater, but less than 4.75:1.00 1.750%
-------------------------------------------------- --------------------------------------------------------------
3.75:1.00 or greater, but less than 4.25:1.00 1.50%
-------------------------------------------------- --------------------------------------------------------------
3.25:1.00 or greater, but less than 3.75:1.00 1.25%
-------------------------------------------------- --------------------------------------------------------------
2.75:1.00 or greater, but less than 3.25:1.00 0.875%
-------------------------------------------------- --------------------------------------------------------------
less than 2.75:1.00 0.625%
================================================== ==============================================================
"ARRANGER" has the meaning assigned to that term in the
introduction to this Agreement.
"ASSET SALE" means the sale by Company or any of its
Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (i) any of the stock of any of Company's
Subsidiaries, (ii) substantially all of the assets of any division or
line of business of Company or any of its Subsidiaries, or (iii) any
other
7
assets (whether tangible or intangible) of Company or any of its
Subsidiaries (other than (a) inventory sold in the ordinary course of
business (b) sales of Cash Equivalents for the fair market value
thereof, and (c) any such other assets to the extent that the aggregate
value of such assets sold in any single transaction or related series
of transactions is equal to $500,000 or less).
"ASSIGNMENT AGREEMENT" means (i) with respect to the period
ending on the Restatement Effective Date, an Assignment Agreement in
substantially the form of Exhibit VII annexed to the Existing Revolving
Loan Credit Agreement, and (ii) thereafter, an Assignment Agreement in
substantially the form of Exhibit IX annexed hereto.
"AUXILIARY PLEDGE AGREEMENT" means each pledge agreement or
similar instrument governed by the laws of a country other than the
United States, executed on the Closing Date pursuant to subsection
4.1I(v) of the Existing Revolving Loan Credit Agreement or on the
Restatement Effective Date pursuant to subsection 4.1H(v) or from time
to time thereafter in accordance with subsection 6.8 by Company or any
Domestic Subsidiary that owns capital stock of one or more Foreign
Subsidiaries organized in such country, in form and substance
satisfactory to Collateral Agent, as such Auxiliary Pledge Agreement
may hereafter be amended, supplemented or otherwise modified from time
to time, and "AUXILIARY PLEDGE AGREEMENTS" means all such pledge
agreements or instruments, collectively.
"AXEL" or "AXELS" means the Existing AXELs and the Additional
AXELs, collectively.
"AXEL CREDIT AGREEMENT" has the meaning assigned to that term
in the recitals to this Agreement.
"AXEL FACILITY AGENT" has the meaning assigned to that term in
the recitals to this Agreement.
"AXEL LENDER" means a lender under the AXEL Credit Agreement
holding an outstanding AXEL or having an Additional AXEL Commitment,
and "AXEL LENDERS" means any such lender or lenders under the AXEL
Credit Agreement, collectively.
"AXEL LOAN DOCUMENTS" means the AXEL Credit Agreement, the
AXEL Notes, the Subsidiary Guaranty, the Collateral Documents and the
Intercreditor Agreement.
"AXEL NOTES" means (i) the Existing AXEL Notes, (ii) the
Additional AXEL Notes, and (iii) any promissory notes of Company issued
pursuant to the last sentence of subsection 9.1B(i) of the AXEL Credit
Agreement in connection with
8
assignments of the AXELs of any AXEL Lender, in each case substantially
in the form of Exhibit III annexed to the AXEL Credit Agreement, as
they may be amended, supplemented or otherwise modified from time to
time.
"BANKRUPTCY CODE" means Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor
statute.
"BASE RATE" means, at any time, the higher of (x) the Prime
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds
Effective Rate.
"BASE RATE LOANS" means Revolving Loans bearing interest at
rates determined by reference to the Base Rate as provided in
subsection 2.2A.
"BORROWING BASE" means, as at any date of determination, an
aggregate amount (determined with reference to the most recent
Borrowing Base Certificate delivered pursuant to subsection 6.1(xviii))
equal to:
(i) eighty-five percent (85%) of Eligible Accounts Receivable
of Company and Subsidiary Guarantors plus
(ii) fifty-five percent (55%) of Eligible Inventory of Company
and Subsidiary Guarantors minus
(iii) the aggregate amount of any reserves established by
Administrative Agent, in the exercise of its commercially
reasonable judgment, against Eligible Accounts Receivable and
Eligible Inventory of Company and Subsidiary Guarantors;
provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may (a) increase or decrease reserves against
Eligible Accounts Receivable and Eligible Inventory of any Loan Party
and (b) reduce the advance rates provided in this definition, or (c)
restore such advance rates to any level equal to or below the advance
rates in effect as of the Closing Date and provided further that if any
Inventory is held on or in any leased property, leased trailer or
warehouse and the applicable lessor or warehouseman has not entered
into a Collateral Access Agreement in favor of Administrative Agent,
Administrative Agent may take a reserve against the value of such
Inventory equal to the lesser of (a) the value of such Inventory
included in the Borrowing Base and (b) two months lease payments or
warehouse storage payments payable to the applicable lessor or
warehouseman.
"BORROWING BASE CERTIFICATE" means a completed certificate
substantially in the form of Exhibit XIX annexed hereto.
9
"BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which is a legal holiday under the laws of the State of New
York or is a day on which banking institutions located in such state
are authorized or required by law or other governmental action to
close.
"CAPITAL LEASE", as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee
that, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of that Person.
"CASH" means money, currency or a credit balance in a Deposit
Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government
or (b) issued by any agency of the United States the obligations of
which are backed by the full faith and credit of the United States, in
each case maturing within one year after such date; (ii) marketable
direct obligations issued by any state of the United States of America
or any political subdivision of any such state or any public
instrumentality thereof, in each case maturing within one year after
such date and having, at the time of the acquisition thereof, the
highest rating obtainable from either Standard & Poor's Ratings Group
("S&P") or Xxxxx'x Investors Service, Inc. ("MOODY'S"); (iii)
commercial paper maturing no more than one year from the date of
creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one
year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia that (a) is at
least "adequately capitalized" (as defined in the regulations of its
primary Federal banking regulator) and (b) has Tier 1 capital (as
defined in such regulations) of not less than $100,000,000 (each Lender
and each commercial bank being referred to herein as a "CASH EQUIVALENT
BANK"); (v) shares of any money market mutual fund that (a) has at
least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's; and (vi) with respect to Foreign
Subsidiaries, investments of the types described in clause (iv) above
issued by a Cash Equivalent Bank or any commercial bank of recognized
international standing chartered in the country where such Foreign
Subsidiary is domiciled having unimpaired capital and surplus of at
least $500,000,000.
"CERTIFICATE OF MERGER" means the Certificate of Merger dated
as of December 19, 1997 for the Merger of Newco with and into Company,
as in effect on the Closing Date.
10
"CERTIFICATE RE NON-BANK STATUS" means a certificate
substantially in the form of Exhibit X annexed hereto delivered by a
Lender to Administrative Agent pursuant to subsection 2.7B(iii).
"CLOSING DATE" means December 19, 1997, the date on which the
initial Revolving Loans were made under the Existing Revolving Loan
Credit Agreement.
"COLLATERAL" means, collectively, all of the real, personal
and mixed property (including capital stock) in which Liens are
purported to be granted pursuant to the Collateral Documents as
security for the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord waiver,
mortgagee waiver, bailee letter or any similar acknowledgement or
agreement of any landlord in respect of any Leased Property or
mortgagee in respect of any real property in which Company or any of
its Subsidiaries owns or holds a fee interest and which is subject to a
mortgage, held by such mortgagee, in either case where any Collateral
is located or any warehouseman or processor in possession of any
Inventory of any Loan Party, substantially in the form of Exhibit XVIII
annexed hereto with such changes thereto as may be agreed to by
Collateral Agent in the reasonable exercise of its discretion.
"COLLATERAL ACCOUNTS" has the meaning assigned to that term in
the Intercreditor Agreement.
"COLLATERAL AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"COLLATERAL DOCUMENTS" means the Company Pledge Agreement, the
Company Security Agreement, the Subsidiary Pledge Agreements, the
Subsidiary Security Agreements, the Subsidiary Patent and Trademark
Security Agreements, the Mortgages, the Auxiliary Pledge Agreements and
all other instruments or documents delivered by any Loan Party pursuant
to this Agreement or any of the other Loan Documents in order to grant
to Collateral Agent, on behalf of Secured Parties, a Lien on any real,
personal or mixed property of that Loan Party as security for the
Obligations.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or
similar instrument issued for the purpose of providing the primary
payment mechanism in connection with the purchase of any materials,
goods or services by Company or any of its Subsidiaries in the ordinary
course of business of Company or such Subsidiary.
"COMPANY" means Company as the surviving corporation in the
Merger.
"COMPANY COMMON STOCK" means the shares of common stock of
Company par value $0.10 per share.
11
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement
executed and delivered by Company on the Closing Date, substantially in
the form of Exhibit XII annexed hereto, as such Company Pledge
Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COMPANY SECURITY AGREEMENT" means the Company Security
Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such
Company Security Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in
the form of Exhibit VI annexed hereto delivered to Administrative Agent
and Lenders by Company pursuant to subsection 6.1(iv).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain
Confidential Information Memorandum prepared by GSCP relating to the
AXELs and Existing Revolving Loans dated November 1997.
"CONFORMING LEASEHOLD INTEREST" means any Recorded Leasehold
Interest as to which the lessor has agreed in writing for the benefit
of Administrative Agent (which writing has been delivered to Collateral
Agent), whether under the terms of the applicable lease, under the
terms of a Landlord Consent and Estoppel, or otherwise, to the matters
described in the definition of "Landlord Consent and Estoppel," which
interest, if a subleasehold or sub-subleasehold interest, is not
subject to any contrary restrictions contained in a superior lease or
sublease.
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum
of the amounts for such period of (i) Consolidated Net Income, (ii)
Consolidated Interest Expense, (iii) provisions for taxes based on
income, (iv) total depreciation expense, (v) total amortization
expense, (vi) to the extent otherwise deducted in determining
Consolidated Net Income, (a) non-recurring expenses and fees relating
to Company's initial public offering in December 1996 in an amount not
to exceed $16,000,000 and (b) certain special bonuses paid by Company
in 1996, in an aggregate amount not to exceed $4,200,000 pursuant to
certain profit-sharing arrangements that were terminated by Company in
connection with such initial public offering, (vii) to the extent
otherwise deducted in determining Consolidated Net Income,
non-recurring expenses and charges relating to the transactions
contemplated by the Related Agreements, the Loan Documents and the
Anagram Acquisition Agreement including any special bonuses payable in
connection therewith and (viii) other non-cash items reducing
Consolidated Net Income including provisions for minority interests but
only to the extent such items have been deducted from operating income
for such period in determining Consolidated Net Income less other
non-cash items increasing Consolidated Net Income, all of the foregoing
as determined on a consolidated basis for Company and its Subsidiaries
in conformity with GAAP.
12
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
sum, without duplication, of (i) the aggregate of all expenditures
(whether paid in cash or other consideration or accrued as a liability)
by Company and its Subsidiaries during that period that, in conformity
with GAAP, are included in "additions to property, plant or equipment"
or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries, but excluding any such
expenditures relating to future acquisitions and (ii) the aggregate
amount of all additions to assets on the consolidated balance sheet of
Company and its Subsidiaries during that period in conformity with GAAP
in connection with Capital Leases consummated by Company and its
Subsidiaries. Notwithstanding the foregoing, Consolidated Capital
Expenditures shall not include any amounts reinvested from Net Asset
Sale Proceeds, Net Insurance/Condemnation Proceeds or any amounts spent
on Permitted Business Acquisitions or the Anagram Acquisition.
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
amounts included in Consolidated Interest Expense for such period paid
or payable in Cash (excluding amortization of original issue discount
and amortization of debt issuance costs).
"CONSOLIDATED CURRENT ASSETS" means, as at any date of
determination, the total assets of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current assets
in conformity with GAAP, excluding any Cash and Cash Equivalents.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on
a consolidated basis which may properly be classified as current
liabilities in conformity with GAAP excluding all Revolving Loans and
the current portion of any long-term Indebtedness.
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an
amount (if positive) equal to (i) the sum, without duplication, of the
amounts for such period of (a) Consolidated Adjusted EBITDA and (b) the
Consolidated Working Capital Adjustment minus (ii) the sum, without
duplication, of the amounts for such period of (a) voluntary and
scheduled repayments of Consolidated Total Debt (excluding repayments
of Revolving Loans except to the extent the Revolving Loan Commitments
are permanently reduced in connection with such repayments), (b) the
sum of Consolidated Capital Expenditures and any expenditures during
such period relating to acquisitions to the extent excluded from
Consolidated Capital Expenditures (in each case net of any proceeds of
any related financings with respect to such expenditures), (c)
Consolidated Cash Interest Expense, (d) the provision for current taxes
based on income of Company and its Subsidiaries and payable in cash
with respect to such period and (e) any non-recurring restructuring
charges and charges related to cost savings paid in cash during such
period.
13
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum
(without duplication) of the amounts for such period of (i)
Consolidated Cash Interest Expense, (ii) provisions for taxes based on
income, (iii) scheduled repayments of principal on the Loans and other
Indebtedness, and (iv) Consolidated Capital Expenditures to the extent
paid for in cash, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest expense (without reduction for interest income) (including
that portion attributable to Capital Leases in accordance with GAAP and
capitalized interest) of Company and its Subsidiaries on a consolidated
basis with respect to all outstanding Indebtedness of Company and its
Subsidiaries, including (i) all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, in
each case, attributable to such period and (ii) commitment fees on the
unused portion of the Revolving Loan Commitment as set forth in
subsection 2.3A, but excluding, however, (a) any amounts referred to in
subsection 2.3B of the Existing Revolving Loan Credit Agreement that
were payable to Agents and Existing Lenders on or before the Closing
Date and any amounts referred to in subsection 2.3 of the AXEL Credit
Agreement as in effect on the Closing Date that were payable to the
AXEL Facility Agent, any other agents under the AXEL Credit Agreement
and the AXEL Lenders on or before the Closing Date, and (b) any amounts
referred to in subsection 2.3B payable to Agents and Lenders on or
before the Restatement Effective Date and any amounts referred to in
subsection 2.3 of the AXEL Credit Agreement payable to the AXEL
Facility Agent, any other agents under the AXEL Credit Agreement and
the AXEL Lenders on or before the Restatement Effective Date.
"CONSOLIDATED LEVERAGE RATIO" means, as at any date of
determination, the ratio of (i) Consolidated Total Debt as of such date
of determination to (ii) Consolidated Adjusted EBITDA for the
four-Fiscal Quarter period ending (a) on such date of determination or
(b) if such date of determination is not the last day of a Fiscal
Quarter, on the last day of the Fiscal Quarter immediately preceding
such date of determination.
"CONSOLIDATED NET INCOME" means, for any period, the net
income (or loss) of Company and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period determined in
conformity with GAAP; provided that there shall be excluded (i) the
income (or loss) of any Person (other than a Subsidiary of Company) in
which any other Person (other than Company or any of its Subsidiaries)
has a joint interest, except to the extent of the amount of dividends
or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary
of Company or is merged into or consolidated with Company or any of its
Subsidiaries or that Person's assets are acquired by Company or any of
14
its Subsidiaries, (iii) the income of any Subsidiary of Company to the
extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or
losses attributable to Asset Sales or returned surplus assets of any
Pension Plan, and (v) (to the extent not included in clauses (i)
through (iv) above) any net extraordinary gains or net non-cash
extraordinary losses; and provided, further that, notwithstanding GAAP
and the provisions of clause (ii) above, Consolidated Net Income shall
include, for all purposes of this Agreement other than the calculation
of Consolidated Excess Cash Flow, the income (or loss) of Anagram and
its Subsidiaries or any Person that is acquired by Company or any of
its Subsidiaries in a Permitted Business Acquisition for any portion of
such period prior to the consummation of the Anagram Acquisition or the
applicable Permitted Business Acquisition, as the case may be.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means, as at any date of
determination, the ratio of (i) Consolidated Total Senior Debt as of
such date of determination to (ii) Consolidated Adjusted EBITDA for the
four-Fiscal Quarter period ending (a) on such date of determination or
(b) if such date of determination is not the last day of a Fiscal
Quarter, on the last day of the Fiscal Quarter immediately preceding
such date of determination.
"CONSOLIDATED TOTAL DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL SENIOR DEBT" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries (other than Subordinated
Debt), determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED WORKING CAPITAL" means, as at any date of
determination, Consolidated Current Assets minus Consolidated Current
Liabilities.
"CONSOLIDATED WORKING CAPITAL ADJUSTMENT" means, for any
period on a consolidated basis, the amount (which may be a negative
number) equal to Consolidated Working Capital as of the beginning of
such period minus Consolidated Working Capital as of the end of such
period.
"CONTINGENT OBLIGATION", as applied to any Person, means any
direct or indirect liability, contingent or otherwise, of that Person
(i) with respect to any Indebtedness, lease, dividend or other
obligation of another if the primary purpose or intent thereof by the
Person incurring the Contingent Obligation is to provide
15
assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders
of such obligation will be protected (in whole or in part) against loss
in respect thereof, (ii) with respect to any letter of credit issued
for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings, or (iii) under Hedge Agreements.
Contingent Obligations shall include (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (b) the
obligation to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an
agreement, and (c) any liability of such Person for the obligation of
another through any agreement (contingent or otherwise) (X) to
purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the
solvency or any balance sheet item, level of income or financial
condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any
of its properties is bound or to which it or any of its properties is
subject.
"CURRENCY AGREEMENT" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic
cap or other similar agreement or arrangement to which Company or any
of its Subsidiaries is a party.
"DEFAULT EXCESS" has the meaning assigned to that term in
subsection 2.9.
"DEFAULT PERIOD" has the meaning assigned to that term in
subsection 2.9.
"DEFAULTED REVOLVING LOAN" has the meaning assigned to that
term in subsection 2.9.
"DEFAULTING LENDER" has the meaning assigned to that term in
subsection 2.9.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or
like account with a bank, savings and loan association, credit union or
like organization, other than an account evidenced by a negotiable
certificate of deposit.
16
"DOLLARS" and the sign "$" mean the lawful money of the United
States of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary of Company that is
organized under the laws of a state of the United States or the
District of Columbia.
"EDEN PRAIRIE HOLDINGS" means Anagram Eden Prairie Property
Holdings LLC, a Delaware limited liability company.
"ELIGIBLE ACCOUNTS RECEIVABLE" means, with respect to Company
or any Subsidiary Guarantor, the aggregate amount of Accounts of such
Loan Party deemed by Administrative Agent, in the exercise of its
commercially reasonable judgment, to be eligible for inclusion in the
calculation of the Borrowing Base. In determining the amount to be so
included, the face amount of such Accounts shall be reduced by the
amount of all returns, discounts, deductions, claims, credits, charges,
or other allowances. Unless otherwise approved in writing by
Administrative Agent, an Account shall not be included in Eligible
Account Receivable if:
(i) it arises out of a sale made by such Loan Party to another
Loan Party; or
(ii) it is unpaid for (a) more than 60 days after its due date
or (b) either more than 120 days after the date of invoice if
such Account is not a Seasonal/Promotional Account or 180 days
after the date of the invoice if such Account is a
Seasonal/Promotional Account; or
(iii) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account
debtor (and its Affiliates) are ineligible under clause (ii)
above; or
(iv) when aggregated with all other Accounts of an account
debtor, such Account exceeds 15% in face value of all Accounts
of all Loan Parties then outstanding, but only to the extent
of such excess, unless such excess is supported by an
irrevocable letter of credit or other form of assurance
satisfactory to Administrative Agent (as to form, substance
and issuer) and assigned to and directly drawable by
Administrative Agent provided that this clause (iv) shall not
apply to Accounts of Party City Corporation; or
(v) the account debtor for such Account is a creditor of such
Loan Party, has or has asserted a right of setoff against such
Loan Party, or has disputed its liability or otherwise has
made any claim with respect to such Account or any other
Account which has not been resolved, in each case to the
extent of the amount owed by such Loan Party to such account
debtor, the amount of
17
such actual or asserted right of setoff, or the amount of such
dispute or claim, as the case may be; or
(vi) the account debtor is (or its assets are) the subject of
an Insolvency Event; or
(vii) such Account is not payable in Dollars or the account
debtor for such Account is located outside the continental
United States, unless such Account is supported by an
irrevocable letter of credit satisfactory to Administrative
Agent (as to form, substance and issuer) and assigned to and
directly drawable by Administrative Agent; or
(viii) the sale to the account debtor is on a xxxx-and-hold,
guaranteed sale, sale-and-return, sale on approval or
consignment basis or was made pursuant to any other written
agreement providing for repurchase or return; or
(ix) Administrative Agent determines by its own credit
analysis that collection of such Account is uncertain or that
such Account is not likely to be paid; or
(x) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless such
Loan Party duly assigns its rights to payment of such Account
to Administrative Agent pursuant to the Assignment of Claims
Act of 1940, as amended (31 U.S.C. [Section] 3727 et seq.); or
(xi) unless such Account relates to permitted dated
receivables, the goods giving rise to such Account have not
been shipped and delivered to and accepted by the account
debtor, the services giving rise to such Account have not been
performed and accepted, or such Account otherwise does not
represent a final sale; or
(xii) such Account does not comply with all Requirements of
Law, including the Federal Consumer Credit Protection Act, the
Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System; or
(xiii) such Account is subject to any adverse security
deposit, progress payment or other similar advance made by or
for the benefit of the applicable account debtor; or
(xiv) such Account is not subject to a valid and perfected
first priority Lien in favor of Administrative Agent for the
benefit of Lenders or does not otherwise conform to the
representations and warranties contained in the Revolving Loan
Documents.
18
provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may impose additional restrictions (or eliminate
the same) to the standards of eligibility set forth in this definition.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized
under the laws of the United States or any state thereof; (ii) a
savings and loan association or savings bank organized under the laws
of the United States or any state thereof; (iii) a commercial bank
organized under the laws of any other country or a political
subdivision thereof; provided that (x) such bank is acting through a
branch or agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities
Act) which extends credit or buys loans as one of its businesses
including insurance companies, mutual funds and lease financing
companies; and (B) any Lender, and any Related Fund or any Affiliate of
any Lender; provided that no Loan Party or any Subsidiary of any Loan
Party shall be an Eligible Assignee.
"ELIGIBLE INVENTORY" means, with respect to Company or any
Subsidiary Guarantor, the aggregate amount of Inventory of such Loan
Party deemed by Administrative Agent, in the exercise of its
commercially reasonable judgment, to be eligible for inclusion in the
calculation of the Borrowing Base. In determining the amount to be so
included, Inventory shall be valued at the lower of cost or market on a
basis consistent with such Loan Party's current and historical
accounting practices. Unless otherwise approved in writing by
Administrative Agent, an item of Inventory shall not be included in
Eligible Inventory if:
(i) it is not owned solely by such Loan Party or such Loan
Party does not have good, valid and marketable title thereto;
or
(ii) it is not located in the United States; or
(iii) it is not located on property (including trailers) owned
or leased by such Loan Party or in a contract warehouse, in
each case subject to a Collateral Access Agreement executed by
any applicable mortgagee, lessor or contract warehouseman, as
the case may be, (or, if not subject to a Collateral Access
Agreement, subject to such reserves against such Inventory as
the Administrative Agent may deem appropriate as set forth in
the second proviso of the definition of "Borrowing Base") and
segregated or otherwise separately identifiable from goods of
others, if any, stored on the premises; provided that any
goods in transit to property owned or leased by a Loan Party
or to a contract warehouse, in each case subject to a
Collateral Access Agreement executed by any applicable
mortgagee, lessor or contract warehouseman, shall not be
excluded under this clause (iii) so long as title to such
goods has
19
passed to a Loan Party, and delivery to the property or
warehouse of the Loan Party is reasonably expected within 15
days; or
(iv) it is not subject to a valid and perfected first priority
Lien in favor of Collateral Agent except, with respect to
Inventory stored at sites described in clause (iii) above, to
the extent such Lien is subject to Liens for unpaid rent or
normal and customary warehousing charges; provided that any
goods in transit to property owned or leased by a Loan Party
or to a contract warehouse, in each case subject to a
Collateral Access Agreement executed by any applicable
mortgagee, lessor or contract warehouseman, shall not be
excluded under this clause (iv) so long as title to such goods
has passed to a Loan Party, and delivery to the property or
warehouse of the Loan Party is reasonably expected within 15
days; or
(v) it is in excess of the amount required for 18 months
supply of such item of Inventory based on sales for the
12-month period ending as of the end of the most recently
ended Fiscal Quarter, provided that this clause (v) shall not
apply to Inventory in new stock keeping units first purchased
or produced by Company on or after the first day of the
12-month period ending as of the end of the most recently
ended Fiscal Quarter; or
(vi) it consists of goods returned or rejected by such Loan
Party's customers that are not first-quality goods or are
obsolete or goods in transit to third parties other than to
warehouse sites or trailers covered by a Collateral Access
Agreement or subject to such reserves as the Administrative
Agent may deem appropriate as set forth in the second proviso
of the definition of "Borrowing Base"; or
(vii) it is not first-quality goods, is obsolete (i.e. such
item is not included in the Company's current or
next-scheduled catalog) or does not otherwise conform to the
representations and warranties contained in the Revolving Loan
Documents;
provided that Administrative Agent, in the exercise of its commercially
reasonable judgment, may impose additional restrictions (or eliminate
the same) to the standards of eligibility set forth in this definition.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as
defined in Section 3(3) of ERISA which is or was maintained or
contributed to by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates.
"EMPLOYMENT AGREEMENTS" means, collectively, the employment
agreements and stock and option agreements between the Company and
certain employees of the Company as set forth on Schedule 4.1C annexed
hereto, in certain cases providing
20
for the exclusive employment of such Persons by Company, in the form
provided to Arranger and Administrative Agent pursuant to subsection
4.1C of the Existing Revolving Loan Credit Agreement on or prior to the
Closing Date or pursuant to subsection 4.1C of this Agreement on or
prior to the Restatement Effective Date.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order
or other order or directive (conditional or otherwise), by any
governmental authority or any other Person, arising (i) pursuant to or
in connection with any actual or alleged violation of any Environmental
Law, (ii) in connection with any Hazardous Materials or any actual or
alleged Hazardous Materials Activity, or (iii) in connection with any
actual or alleged damage, injury, threat or harm to natural resources
or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents,
judgments, Governmental Authorizations, or any other requirements of
governmental authorities relating to (i) environmental matters,
including those relating to any Hazardous Materials Activity, (ii) the
generation, use, storage, transportation or disposal of Hazardous
Materials, or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Company or any of its Subsidiaries or any
Facility, including the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. [Section] 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. [Section] 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. [Section]
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
[Section] 1251 et seq.), the Clean Air Act (42 U.S.C. [Section] 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. [Section] 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
[Section] 136 et seq.), the Occupational Safety and Health Act (29
U.S.C. [Section] 651 et seq.), the Oil Pollution Act (33 U.S.C.
[Section] 2701 et seq) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. [Section] 11001 et seq.), each as amended
or supplemented, any analogous present or future state or local
statutes or laws, and any regulations promulgated pursuant to any of
the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any
corporation which is a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of
which that Person is a member; (ii) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the
Internal Revenue Code of which that Person is a member; and (iii) any
member of an affiliated service group within the meaning of Section
414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i)
21
above or any trade or business described in clause (ii) above is a
member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of
Company or such Subsidiary within the meaning of this definition with
respect to the period such entity was an ERISA Affiliate of Company or
such Subsidiary and with respect to liabilities arising after such
period for which Company or such Subsidiary could be liable under the
Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued thereunder
with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by regulation);
(ii) the failure to meet the minimum funding standard of Section 412 of
the Internal Revenue Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Internal Revenue
Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any
Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any
Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its
Subsidiaries or any of their respective ERISA Affiliates from any
Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings
to terminate any Pension Plan, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds
under ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; (vi) the imposition of liability on
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal of
Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in a complete or partial withdrawal (within the meaning of
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there
is any potential liability therefor, or the receipt by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice
from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be
expected to give rise to the imposition on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or
the assets thereof, or against Company, any of its Subsidiaries or any
of their respective ERISA Affiliates in connection with any Employee
Benefit
22
Plan; (x) receipt from the Internal Revenue Service of notice of the
failure of any Pension Plan (or any other Employee Benefit Plan
intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA
with respect to any Pension Plan.
"EUROCURRENCY LIABILITIES" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EURODOLLAR RATE LOANS" means Revolving Loans bearing interest
at rates determined by reference to the Adjusted Eurodollar Rate as
provided in subsection 2.2A.
"EURODOLLAR RATE RESERVE PERCENTAGE" means, for any Interest
Period for all Eurodollar Rate Loans comprising part of the same
Borrowing, the reserve percentage applicable two Business Days before
the first day of such Interest Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with respect to
any other category of liabilities that includes deposits by reference
to which the interest rate on Eurodollar Rate Loans is determined)
having a term equal to such Interest Period.
"EVENT OF DEFAULT" means each of the events set forth in
Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"EXCHANGE RATE" means, on any date when an amount expressed in
a currency other than Dollars is to be determined with respect to any
Letter of Credit, the nominal rate of exchange of the applicable
Issuing Lender in the New York foreign exchange market for the purchase
by such Issuing Lender (by cable transfer) of such currency in exchange
for Dollars at 12:00 noon (New York time) one Business Day prior to
such date, expressed as a number of units of such currency per one
Dollar.
"EXISTING AMSCAN CREDIT AGREEMENTS" means any and all credit
agreements entered into by Company prior to the Closing Date, in each
case as amended prior to the Closing Date, as set forth on Schedule
4.1E-I.
23
"EXISTING ANAGRAM CREDIT AGREEMENTS" means any and all credit
agreements entered into by Anagram and its Subsidiaries, in each case
as amended prior to the Restatement Effective Date, as set forth on
Schedule 4.1E-II.
"EXISTING AXELS" means, with respect to any AXEL Lender, the
AXELs under the AXEL Credit Agreement held by such AXEL Lender, in the
principal amount of such AXELs outstanding immediately prior to the
Restatement Effective Date, and "EXISTING AXELS" means such AXELs of
all AXEL Lenders, collectively.
"EXISTING LENDER" has the meaning assigned to such term in the
recitals to this Agreement.
"EXISTING REVOLVING LOANS" means, with respect to any Existing
Lender, the Revolving Loans under the Existing Revolving Loan Credit
Agreement held by such Existing Lender, in the principal amount of such
Revolving Loans outstanding immediately prior to the Restatement
Effective Date, and "EXISTING REVOLVING LOANS" means such Revolving
Loans of all Existing Lenders, collectively.
"EXISTING REVOLVING LOAN CREDIT AGREEMENT" has the meaning
assigned to that term in the recitals to this Agreement.
"EXISTING REVOLVING LOAN NOTES" means (i) the promissory notes
of Company issued pursuant to subsection 2.1E of the Existing Revolving
Loan Credit Agreement on the Closing Date and (ii) any promissory notes
issued by Company pursuant to the last sentence of subsection 9.1B(i)
of the Existing Revolving Loan Credit Agreement in connection with
assignments of the Existing Revolving Loans of any Existing Lenders, in
each case substantially in the form of Exhibit III annexed to the
Existing Revolving Loan Credit Agreement.
"FACILITIES" means any and all real property (including all
buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or
any of its Subsidiaries or any of their respective predecessors or
Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds
brokers of recognized standing selected by Administrative Agent.
24
"FEE PROPERTY" means any real property owned in fee simple by
any Loan Party, other than any such real property designated from time
to time by Collateral Agent in its sole discretion as not being
required to be included in the Collateral.
"FINANCIAL PLAN" has the meaning assigned to that term in
subsection 6.1(xiii).
"FIRST PRIORITY" means, with respect to any Lien purported to
be created in any Collateral pursuant to any Collateral Document, that
(i) such Lien has priority over any other Lien on such Collateral
(other than Liens permitted pursuant to subsection 7.2A) and (ii) such
Lien is the only Lien (other than Permitted Encumbrances and Liens
permitted pursuant to subsection 7.2) to which such Collateral is
subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its
Subsidiaries ending on December 31 of each calendar year. For purposes
of this Agreement, any particular Fiscal Year shall be designated by
reference to the calendar year in which such Fiscal Year ends.
"FLEET" has the meaning assigned to that term in the
introduction to this Agreement.
"FLOOD HAZARD PROPERTY" means a Mortgaged Property located in
an area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards.
"FOREIGN SUBSIDIARY" means a Subsidiary of Company other than
a Domestic Subsidiary.
"FUNDING AND PAYMENT OFFICE" means (i) the office of
Administrative Agent located at Fleet National Bank, 0 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated
as such in a written notice delivered by Administrative Agent to
Company and each Lender.
"FUNDING DATE" means the date of the funding of a Revolving
Loan.
"FUNDING DEFAULT" has the meaning assigned to that term in
subsection 2.9.
"GAAP" means, subject to the limitations on the application
thereof set forth in subsection 1.2, generally accepted accounting
principles set forth in opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
25
Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license,
authorization, plan, directive, consent order or consent decree of or
from any federal, state or local governmental authority, agency or
court.
"GSCP" has the meaning assigned to that term in the
introduction to this Agreement.
"GSII" means, collectively, GS Capital Partners II, L.P., GS
Capital Partners II Offshore, L.P., Xxxxxxx, Xxxxx & Co. Xxxxxxxxxxx
XxxX, Xxxxx Xxxxxx Xxxx 0000, L.P. and Bridge Street Fund 1997, L.P.
"HAZARDOUS MATERIALS" means (i) any chemical, material or
substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials",
"extremely hazardous waste", "acutely hazardous waste", "radioactive
waste", "biohazardous waste", "pollutant", "toxic pollutant",
"contaminant", "restricted hazardous waste", "infectious waste", "toxic
substances", or any other term or expression intended to define, list
or classify substances by reason of properties harmful to health,
safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or
"EP toxicity" or words of similar import under any applicable
Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources; (iv) any
flammable substances or explosives; (v) any radioactive materials; (vi)
any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (ix) pesticides;
and (x) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or which
may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the
indoor or outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current or
future activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment,
abatement, removal, remediation, disposal, disposition or handling of
any Hazardous Materials, and any corrective action or response action
with respect to any of the foregoing.
26
"HEDGE AGREEMENT" means an Interest Rate Agreement or a
Currency Agreement designed to hedge against fluctuations in interest
rates or currency values, respectively.
"INCREASED COST LENDER" has the meaning assigned to that term
in subsection 2.10.
"INDEBTEDNESS", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on
a balance sheet in conformity with GAAP, (iii) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for all or any
part of the deferred purchase price of property or services (excluding
any such obligations incurred under ERISA), which purchase price is (a)
due more than six months from the date of incurrence of the obligation
in respect thereof or 12 months in the case of a bona fide trade
payable or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned
or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and
Currency Agreements constitute (X) in the case of Hedge Agreements,
Contingent Obligations, and (Y) in all other cases, Investments, and in
neither case constitute Indebtedness. Any contingent earnout
obligations incurred pursuant to any acquisition agreements shall
constitute Contingent Obligations and not Indebtedness until actually
earned and thereafter shall constitute Indebtedness until paid.
"INDEMNITEE" has the meaning assigned to that term in
subsection 10.3.
"INSOLVENCY EVENT" means, with respect to any Person, the
occurrence of any of the events described in subsection 8.6 or 8.7;
provided that, solely for purposes of this definition, any references
to Company or any of its Subsidiaries in subsection 8.6 or 8.7 shall be
deemed to be a reference to such Person.
"INSOLVENCY LAWS" means the Bankruptcy Code or any other
applicable bankruptcy, insolvency or similar law now or hereafter in
effect in the United States of America or any state thereof.
"INTELLECTUAL PROPERTY" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used in or
necessary for the conduct of the business of Company and its
Subsidiaries as currently conducted that are material to the condition
(financial or otherwise), business or operations of Company and its
Subsidiaries, taken as a whole.
27
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement
dated as of December 19, 1997 among the Administrative Agent, the AXEL
Facility Agent, the Collateral Agent the Company and the Subsidiary
Guarantors as such agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) with respect to any Base
Rate Loan, each March 15, June 15, September 15 and December 15 of each
year, commencing on the first such date to occur after the Closing
Date, and (ii) with respect to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Eurodollar Rate Loan;
provided that in the case of each Interest Period of longer than three
months "Interest Payment Date" shall also include each date that is
three months, or an integral multiple thereof, after the commencement
of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in
subsection 2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement to which Company or any of
its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any
Interest Period, the second Business Day prior to the first day of such
Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter,
and any successor statute.
"INVENTORY" means, with respect to any Person as of any date
of determination, all goods, merchandise and other personal property
which are then held by such Person for sale or lease, including raw
materials and work in process.
"INVESTMENT" means (i) any direct or indirect purchase or
other acquisition by Company or any of its Subsidiaries of, or of a
beneficial interest in, any Securities of any other Person (including
any Subsidiary of Company), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any Subsidiary
of Company from any Person other than Company or any of its
Subsidiaries, of any equity Securities of such Subsidiary, (iii) any
direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital
contribution by Company or any of its Subsidiaries to any other Person,
including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that
other Person in the ordinary course of business, or (iv) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements.
The amount of any Investment shall be the original cost of such
28
Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"IP COLLATERAL" means the Collateral under the Subsidiary
Patent and Trademark Security Agreements.
"ISSUING LENDER" means, with respect to any Letter of Credit,
the Lender which agrees or is otherwise obligated to issue such Letter
of Credit, determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal
form; provided that in no event shall any corporate Subsidiary of any
Person be considered to be a Joint Venture to which such Person is a
party.
"LANDLORD CONSENT AND ESTOPPEL" means, with respect to any
Leasehold Property, a letter, certificate or other instrument in
writing from the lessor under the related lease, satisfactory in form
and substance to Collateral Agent, pursuant to which such lessor
agrees, for the benefit of Collateral Agent, (i) to the matters
contained in the form of Collateral Access Agreement applicable to a
Leasehold Property, and (ii) to such other matters relating to such
Leasehold Property as Collateral Agent may reasonably request,
including, without limitation that without any further consent of such
lessor or any further action on the part of the Loan Party holding such
Leasehold Property, such Leasehold Property may be encumbered pursuant
to a Mortgage and may be assigned to the purchaser at a foreclosure
sale or in a transfer in lieu of such a sale (and to a subsequent third
party assignee if Collateral Agent, any Lender, or an Affiliate of
either so acquires such Leasehold Property).
"LEASEHOLD PROPERTY" means any leasehold interest of any Loan
Party as lessee under any lease of real property, other than any such
leasehold interest designated from time to time by Collateral Agent in
its sole discretion as not being required to be included in the
Collateral.
"LENDER" and "LENDERS" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement, together
with their successors and permitted assigns pursuant to subsection
10.1; provided that the term "Lenders", when used in the context of a
particular Commitment, shall mean Lenders having that Commitment. To
the extent the context so requires, the terms "LENDER" and "LENDERS"
shall include "Lenders" under, and as defined in, the Existing
Revolving Loan Credit Agreement.
29
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial
Letters of Credit and Standby Letters of Credit issued or to be issued
by Issuing Lenders for the account of Company pursuant to subsection
3.1.
"LETTER OF CREDIT USAGE" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which is or
at any time thereafter may become available for drawing under all
Letters of Credit then outstanding plus (ii) the aggregate amount of
all drawings under Letters of Credit honored by Issuing Lenders and not
theretofore reimbursed by Company (including any such reimbursement out
of the proceeds of Revolving Loans pursuant to subsection 3.3B). For
purposes of this definition, any amount described in clause (i) or (ii)
of the preceding sentence which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such
currency as of the applicable date of determination.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional
sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any
option, trust or other preferential arrangement having the practical
effect of any of the foregoing.
"LOAN DOCUMENTS" means the Revolving Loan Documents and the
AXEL Loan Documents.
"LOAN PARTY" means each of Company and any of Company's
Subsidiaries
from time to time executing a Loan Document, and "LOAN PARTIES" means
all such Persons, collectively.
"MANAGEMENT INVESTORS" means the management officers and
employees of Company and its Subsidiaries identified as Management
Investors on Schedule 4.1C annexed hereto.
"MARGIN STOCK" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve System as
in effect from time to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect
upon the business, operations, properties, assets, condition (financial
or otherwise) or prospects of Company or any of its Subsidiaries or
(ii) the impairment in any material respect of the ability of the Loan
Parties, taken as a whole, to perform, or of Administrative Agent or
Lenders to enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to
which Company or any of its Subsidiaries is a party (other than the
Loan Documents) for
30
which breach, nonperformance, cancellation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
"MATERIAL DOMESTIC SUBSIDIARY" means each Domestic Subsidiary
of Company now existing or hereafter acquired or formed by Company
which, on a consolidated basis for such Subsidiary and its
Subsidiaries, (i) for the most recent Fiscal Year account for more than
5% of the consolidated revenues of Company and its Subsidiaries or (ii)
as at the end of such Fiscal Year, was the owner of more than 5% of the
consolidated assets of Company and its Subsidiaries; provided that, for
purposes of the calculations contemplated by the foregoing clauses (i)
and (ii), any Subsidiary of Company that was acquired by Company or any
of its Subsidiaries after the first day of the most recent Fiscal Year
(whether such acquisition was consummated during such most recent
Fiscal Year or the current Fiscal Year) shall be deemed to have been
acquired on and as of the first day of such most recent Fiscal Year.
"MATERIAL LEASEHOLD PROPERTY" means a Leasehold Property
reasonably determined by Administrative Agent to be of material value
as Collateral or of material importance to the operations of Company or
any of its Subsidiaries; provided, however that no Leasehold Property
with respect to which the aggregate amount of all rents payable during
any one Fiscal Year is not expected to exceed $500,000 shall be a
"Material Leasehold Property".
"MERGER" means the merger of Newco with and into Company in
accordance with the terms of the Recapitalization Agreement, with
Company being the surviving corporation in such Merger.
"MORTGAGE" means a security instrument (whether designated as
a deed of trust or a mortgage or by any similar title) executed and
delivered by any Loan Party, substantially in the form of Exhibit XVII
annexed hereto or in such other form as may be approved by Collateral
Agent in its sole discretion, in each case with such changes thereto as
may be recommended by Collateral Agent's local counsel based on local
laws or customary local mortgage or deed of trust practices.
"MORTGAGES" means all such instruments collectively.
"MORTGAGED PROPERTY" has the meaning assigned to that term in
subsection 6.9.
"MORTGAGE POLICY" has the meaning assigned to that term in
subsection 6.9.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is
a "multiemployer plan" as defined in Section 3(37) of ERISA.
31
"NET ASSET SALE PROCEEDS" means, with respect to any Asset
Sale, Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or
otherwise, but only as and when so received) received from such Asset
Sale, net of any bona fide direct costs, including, without limitation,
all transaction costs, incurred in connection with such Asset Sale,
including (i) income taxes reasonably estimated to be actually payable
within two years of the date of such Asset Sale as a result of any gain
recognized in connection with such Asset Sale and (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness that is secured by a Lien on the stock or
assets in question and that is prior to the Lien securing the Revolving
Loans on such stock or assets and is required to be repaid under the
terms thereof as a result of such Asset Sale.
"NET INSURANCE/CONDEMNATION PROCEEDS" means any Cash payments
or proceeds received by Company or any of its Subsidiaries (i) under
any business interruption or casualty insurance policy in respect of a
covered loss thereunder or (ii) as a result of the taking of any assets
of Company or any of its Subsidiaries by any Person pursuant to the
power of eminent domain, condemnation or otherwise, or pursuant to a
sale of any such assets to a purchaser with such power under threat of
such a taking, in each case net of (x) any actual and reasonable
documented costs incurred by Company or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of Company
or such Subsidiary in respect thereof and (y) any amounts required to
be applied to the repayment of any Indebtedness secured by a Lien which
is prior to any Liens of the Lenders on the asset or assets that are
subject to the taking, condemnation or casualty but excluding, however,
in each case any payments or proceeds relating to assets having a value
of $500,000 or less in any single transaction or related series of
transactions.
"NEW COMPANY SHARES" has the meaning assigned to that term in
the recitals to this Agreement.
"NEW LENDER" means any Lender which is a party to this
Agreement on the Restatement Effective Date which is not an Existing
Lender.
"NEWCO" means Confetti Acquisition, Inc., a Delaware
corporation existing prior to the Merger.
"NEWCO COMMON STOCK" means the shares of common stock of Newco
par value $0.10 per share to be converted into shares of Company Common
Stock upon consummation of the Merger.
"NON-CONSENTING LENDER" has the meaning assigned to that term
in subsection 2.10.
32
"NOTICE OF BORROWING" means a notice substantially in the form
of Exhibit I annexed hereto delivered by Company to Administrative
Agent pursuant to subsection 2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice
substantially in the form of Exhibit II annexed hereto delivered by
Company to Administrative Agent pursuant to subsection 2.2D with
respect to a proposed conversion or continuation of the applicable
basis for determining the interest rate with respect to the Revolving
Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice
substantially in the form of Exhibit III annexed hereto delivered by
Company to Administrative Agent pursuant to subsection 3.1B(i) with
respect to the proposed issuance of a Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each
Loan Party from time to time owed to Agents, Lenders or their
respective Affiliates or any of them under the Revolving Loan
Documents, whether for principal, interest, reimbursement of amounts
drawn under Letters of Credit, fees, expenses, indemnification or
otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of
the board (if an officer) or its president or one of its vice
presidents and by its chief financial officer or its treasurer;
provided that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any Revolving
Loans hereunder shall include (i) a statement that the officer or
officers making or giving such Officers' Certificate have read such
condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of
the signers, they have made or have caused to be made such examination
or investigation as is necessary to enable them to express an informed
opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such
condition has been complied with.
"OPERATING LEASE" means, as applied to any Person, any lease
(including leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital
Lease other than any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
33
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal
Revenue Code or Section 302 of ERISA.
"PERMITTED BUSINESS ACQUISITION" has the meaning assigned to
that term in subsection 7.7(vi).
"PERMITTED ENCUMBRANCES" means the following types of Liens
(excluding any such Lien imposed pursuant to Section 401(a)(29) or
412(n) of the Internal Revenue Code or by ERISA, any such Lien relating
to or imposed in connection with any Environmental Claim, and any such
Lien expressly prohibited by any applicable terms of any of the
Collateral Documents):
(i) Liens for taxes, assessments or governmental charges or
claims the payment of which is not, at the time, required by
subsection 6.3;
(ii) statutory Liens of landlords, statutory Liens of banks
and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the
ordinary course of business (a) for amounts not yet overdue or
(b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 15 days) are
being contested in good faith by appropriate proceedings, so
long as (1) such reserves or other appropriate provisions, if
any, as shall be required by GAAP shall have been made for any
such contested amounts, and (2) in the case of a Lien with
respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any
portion of the Collateral on account of such Lien;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation,
unemployment insurance and other types of social security, or
to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the
payment of borrowed money), so long as no foreclosure, sale or
similar proceedings have been commenced with respect to any
portion of the Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event
of Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance
with any applicable terms of the Collateral Documents and not
interfering in any material respect with the ordinary conduct
of the business of Company or any
34
of its Subsidiaries or resulting in a material diminution in
the value of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, covenants, conditions,
restrictions, encroachments, and other defects or
irregularities in title, in each case which do not and will
not interfere in any material respect with the ordinary
conduct of the business of Company or any of its Subsidiaries
or result in a material diminution in the value of any
Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under
any lease permitted by subsection 7.9, (b) restriction or
encumbrance that the interest or title of such lessor or
sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any
restriction or encumbrance referred to in the preceding clause
(b), so long as the holder of such restriction or encumbrance
agrees to recognize the rights of such lessee or sublessee
under such lease;
(viii) Liens arising from filing UCC financing statements
relating solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in
connection with the importation of goods;
(x) any zoning or similar law or right reserved to or vested
in any governmental office or agency to control or regulate
the use of any real property;
(xi) Liens securing obligations (other than obligations
representing Indebtedness for borrowed money) under operating,
reciprocal easement or similar agreements entered into in the
ordinary course of business of Company and its Subsidiaries;
and
(xii) licenses of patents, trademarks and other intellectual
property rights granted by Company or any of its Subsidiaries
in the ordinary course of business and not interfering in any
material respect with the ordinary conduct of the business of
Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal
entities, and governments (whether federal, state or local, domestic or
35
foreign, and including political subdivisions thereof) and agencies or
other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged
Collateral" as defined in the Company Pledge Agreement and the
Subsidiary Pledge Agreements.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that,
after notice or lapse of time or both, would constitute an Event of
Default.
"PRIME RATE" means the rate that Fleet announces from time to
time as its prime lending rate, as in effect from time to time. The
Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Fleet or any
other Lender may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"PRO FORMA BASIS" means(i) with respect to compliance with the
Consolidated Leverage Ratio for purposes of subsection 7.1 (viii),
compliance with the Consolidated Leverage Ratio after giving effect to
acquisitions and incurrence or assumption of any Indebtedness in
connection therewith, and (ii) with respect to compliance with the
Consolidated Senior Leverage Ratio for purposes of subsection 7.7 (vi),
compliance with the Consolidated Senior Leverage Ratio after giving
effect to acquisitions and incurrence or assumption of any Indebtedness
in connection therewith. For purposes of such calculations any
Indebtedness incurred under subsection 7.1 (viii) or 7.7(vi) or
otherwise incurred or assumed in connection with an acquisition
subsequent to the beginning of the four quarter calculation period, but
on or prior to the date of calculation of the Consolidated Leverage
Ratio or the Consolidated Senior Leverage Ratio, as the case may be,
shall be deemed to have been incurred or assumed at the beginning of
such four quarter calculation period. In addition, for such purposes,
acquisitions will be given pro forma effect as follows:
(i) (A) acquisitions that have been made or are being
made by the Company or any of its Subsidiaries during
the four-quarter reference period or subsequent to
such reference period and on or prior to the
calculation date (including through mergers or
consolidations and including any related financing
transactions) shall be deemed to have occurred on the
first day of the four-quarter reference period, and
(B) for purposes of determining the pro forma effects
of any such acquisition, Consolidated Adjusted EBITDA
shall be increased to reflect the annualized amount
of any cost savings expected by the Company to be
realized in connection with such acquisition (from
steps to be taken not later than the first
anniversary of such acquisition, and without
reduction for any non-recurring charges expected in
connection with such acquisition), as set forth in an
Officers' Certificate signed by
36
the Company's chief executive and chief financial
officers (which shall be determinative of such
matters) which states (x) the amount of such
increase, (y) that such increase is based on the
reasonable beliefs of the officers executing such
Officers' Certificate at the time of such execution
(and that estimates of cost savings from prior
acquisitions have been reevaluated and updated) and
(z) that any related incurrence of Indebtedness is
permitted pursuant to this Agreement.
(ii) Consolidated Adjusted EBITDA shall be further increased
to reflect the annualized amount of any cost savings expected
by the Company but not yet realized in respect of any
acquisition made by the Company during the four fiscal
quarters immediately preceding the four-quarter calculation
period prior to the calculation date, to the extent such cost
savings are (x) expected to result from steps taken not later
than the first anniversary of the relevant acquisition and (y)
determined and certified as set forth in clause (i) above.
In addition, in calculating the Consolidated Leverage Ratio or the
Consolidated Senior Leverage Ratio, as the case may be, discontinued
operations will be given pro forma effect by excluding any Consolidated
Adjusted EBITDA attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of on or
prior to the calculation date.
"PRO RATA SHARE" means with respect to all payments,
computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Lender or any Letters of
Credit issued or participations therein purchased by any Lender, the
percentage obtained by dividing (x) the Revolving Loan Exposure of that
Lender by (y) the aggregate Revolving Loan Exposure of all Lenders, in
any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1.
"PTO" means the United States Patent and Trademark Office or
any successor or substitute office in which filings are necessary or,
in the opinion of the Administrative Agent, desirable in order to
create or perfect Liens on any IP Collateral.
"QUALIFIED PUBLIC OFFERING" means any sale of capital stock of
the Company to the public pursuant to an offering registered under the
Securities Act of 1933 pursuant to which the Company receives cash
proceeds (net of all fees and expenses (including underwriting
discounts and legal, investment banking and accounting and other
professional fees) and disbursements actually incurred in connection
therewith) in an amount not less than $50,000,000.
"REAL PROPERTY ASSET" means, at any time of determination, any
interest then owned by any Loan Party in any real property.
37
"RECAPITALIZATION AGREEMENT" means that certain Agreement and
Plan of Merger between Company and Newco dated as of August 10, 1997,
in the form delivered to Arranger, Administrative Agent and Lenders
prior to their execution of the Existing Revolving Loan Credit
Agreement and as such agreement may hereafter be amended from time to
time thereafter to the extent permitted under subsection 7.15A.
"RECAPITALIZATION CONSIDERATION" means payments required under
Article II of the Recapitalization Agreement.
"RECAPITALIZATION DOCUMENTS" means the Recapitalization
Agreement and all other instruments or documents relating to the
Recapitalization Agreement.
"RECAPITALIZATION FINANCING REQUIREMENTS" means the aggregate
of all amounts necessary (i) to pay the Recapitalization Consideration,
(ii) to refinance all Indebtedness outstanding under the Existing
Amscan Credit Agreements, and (iii) to pay Recapitalization Transaction
Costs.
"RECAPITALIZATION TRANSACTION COSTS" means the fees, costs and
expenses payable by Company in connection with the transactions
contemplated by the Loan Documents and the Related Agreements, in each
case as in effect on the Closing Date.
"RECORDED LEASEHOLD INTEREST" means a Leasehold Property with
respect to which a Record Document (as hereinafter defined) has been
recorded in all places necessary or desirable, in Collateral Agent's
reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected
real property. For purposes of this definition, the term "RECORD
DOCUMENT" means, with respect to any Leasehold Property, (a) the lease
evidencing such Leasehold Property or a memorandum thereof, executed
and acknowledged by the owner of the affected real property, as lessor,
or (b) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or
sublease document, executed and acknowledged by such holder, in each
case in form sufficient to give such constructive notice upon
recordation and otherwise in form reasonably satisfactory to
Administrative Agent.
"REGISTER" has the meaning assigned to that term in subsection
2.1D.
"REGULATION D" means Regulation D of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
38
"RELATED AGREEMENTS" means, collectively, the Certificate of
Merger, the Stockholders Agreement, the Employment Agreements, the Tax
Indemnification Agreement, the Recapitalization Agreement and the
Senior Subordinated Note Indenture.
"RELATED FUND" means, with respect to any Lender that is a
fund that invests in commercial loans, any other fund that invests in
commercial loans and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
"RELEASE" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including the abandonment or
disposal of any barrels, containers or other closed receptacles
containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or
groundwater.
"REPLACEMENT LENDER" has the meaning assigned to that term in
subsection 2.10.
"REQUIREMENT OF LAW" means, with respect to any Person, (i)
the certificate or articles of incorporation, by-laws and other
organizational or governing documents of such Person, (ii) any law,
treaty, rule, regulation or determination of an arbitrator, court or
other governmental authority binding on such Person or any of its
property, or (iii) any franchise, license, lease, permit, certificate,
authorization, qualification, easement, right of way, or right of
approval binding on such Person or any of its property.
"REQUIRED PREPAYMENT DATE" has the meaning assigned to that
term in subsection 2.4.
"REQUISITE LENDERS" means Lenders having or holding more than
50% of the aggregate Revolving Loan Exposure of all Lenders.
"RESTATEMENT EFFECTIVE DATE" means the date on or before
October 31, 1998 on which (i) the conditions precedent to the
effectiveness of this Agreement set forth in subsection 4.1 shall be
satisfied and (ii) the conditions precedent set forth in subsection 4.2
shall be satisfied or waived in accordance with the terms hereof.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of Company now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock to the holders of that
class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect,
of any shares of
39
any class of stock of Company now or hereafter outstanding, (iii) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of
stock of Company now or hereafter outstanding, and (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or
legal defeasance), sinking fund or similar payment with respect to, any
Subordinated Indebtedness.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender
to make Revolving Loans to Company pursuant to subsection 2.1A, and
"REVOLVING LOAN COMMITMENTS" means such commitments of all Lenders in
the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means December
31, 2002.
"REVOLVING LOAN DOCUMENTS" means this Agreement, the Revolving
Notes, the Letters of Credit (and any applications for, or
reimbursement agreements or other documents or certificates executed by
Company in favor of an Issuing Lender relating to, the Letters of
Credit), the Subsidiary Guaranty, the Collateral Documents, any Hedging
Agreements with Lenders and the Intercreditor Agreement.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as
of any date of determination (i) prior to the termination of the
Revolving Loan Commitments, that Lender's Revolving Loan Commitment and
(ii) after the termination of the Revolving Loan Commitments, the sum
of (a) the aggregate outstanding principal amount of the Revolving
Loans of that Lender plus (b) in the event that Lender is an Issuing
Lender, the aggregate Letter of Credit Usage in respect of all Letters
of Credit issued by that Lender (in each case net of any participations
purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
participations purchased by that Lender in any outstanding Letters of
Credit or any unreimbursed drawings under any Letters of Credit.
"REVOLVING LOANS" means the loans made by Lenders to Company
pursuant to subsection 2.1A.
"REVOLVING NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Revolving
Loan Commitments and Revolving Loans of any Lenders, in each case
substantially in the form of Exhibit V annexed hereto, as they may be
amended, supplemented or otherwise modified from time to time.
"SEASONAL/PROMOTIONAL ACCOUNTS" means (i) Accounts relating to
sales of merchandise which Accounts are categorized as seasonal by the
Company consistent
40
with past practices and (ii) Accounts which are categorized as
promotional consistent with past practices of the Company because such
Accounts are with new Account Debtors (including, without limitation,
new stores for existing Account Debtors) or relate to new products.
"SECURED PARTIES" has the meaning assigned to that term in the
introduction to this Agreement.
"SECURITIES" means any stock, shares, partnership interests,
voting trust certificates, certificates of interest or participation in
any profit-sharing agreement or arrangement, options, warrants, bonds,
debentures, notes, or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of
interest, shares or participations in temporary or interim certificates
for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing provided that "Securities"
shall not include any earnout agreement or obligation or any employee
bonus or other incentive compensation plan or agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and any successor statute.
"SENIOR SUBORDINATED NOTE INDENTURE" means the indenture
pursuant to which the Senior Subordinated Notes are issued, as such
indenture may hereafter be amended from time to time to the extent
permitted under subsection 7.15B.
"SENIOR SUBORDINATED NOTES" means the $110,000,000 in
aggregate principal amount of 9,875% Senior Subordinated Notes due 2007
of Company issued pursuant to the Senior Subordinated Note Indenture.
"SOLVENT" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the
property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z)
not less than the amount that will be required to pay the probable
liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business
or any contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they
become due; and (B) such Person is "solvent" within the meaning given
that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances. For purposes of this definition,
the amount of any contingent liability at any time shall be computed as
the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
41
"STANDBY LETTER OF CREDIT" means any standby letter of credit
or similar instrument issued for the purpose of supporting (i)
Indebtedness of Company or any of its Subsidiaries in respect of
industrial revenue or development bonds or financings, (ii) workers'
compensation liabilities of Company or any of its Subsidiaries, (iii)
the obligations of third party insurers of Company or any of its
Subsidiaries arising by virtue of the laws of any jurisdiction
requiring third party insurers, (iv) obligations with respect to
Capital Leases or Operating Leases of Company or any of its
Subsidiaries, and (v) performance, payment, deposit or surety
obligations of Company or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance
with custom and practice in the industry; provided that Standby Letters
of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) any Indebtedness constituting "antecedent debt" (as
that term is used in Section 547 of the Bankruptcy Code).
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
dated as of December 19, 1997 by and among Company, GSII, the Estate of
Xxxx X. Xxxxxxxxxxx and certain other individuals and as such agreement
may heretofore have been or hereafter may be amended from time to time
to the extent permitted under subsection 7.14A of the Existing
Revolving Loan Credit Agreement or subsection 7.13 of this Agreement.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of
Company evidenced by the Senior Subordinated Notes and (ii) any other
Indebtedness of Company subordinated in right of payment to the
Obligations pursuant to documentation containing maturities,
amortization schedules, covenants, defaults, remedies, subordination
provisions and other material terms in form and substance satisfactory
to Administrative Agent and Requisite Lenders.
"SUBSIDIARY" means, with respect to any Person, any
corporation, partnership, limited liability company, association, joint
venture or other business entity of which more than 50% of the total
voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or
a combination thereof.
"SUBSIDIARY GUARANTOR" means, collectively, (i) any Subsidiary
of Company that executed and delivered a counterpart of the Subsidiary
Guaranty on the Closing Date or from time to time thereafter pursuant
to subsection 6.8 of the Existing Revolving Loan Credit Agreement and
(ii) any Subsidiary of Company that executes and delivers a counterpart
of the Subsidiary Guaranty on the Restatement Effective Date or from
time to time thereafter pursuant to subsection 6.8.
42
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty (i)
heretofore executed and delivered by certain existing Domestic
Subsidiaries of Company on the Closing Date or from time to time
thereafter in accordance with subsection 6.8 of the Existing Revolving
Loan Credit Agreement and (ii) to be executed and delivered by
additional Domestic Subsidiaries of Company on the Restatement
Effective Date and from time to time thereafter in accordance with
subsection 6.8, substantially in the form of Exhibit XIV annexed
hereto, as such Subsidiary Guaranty may heretofore have been or
hereafter may be amended, supplemented or otherwise modified from time
to time.
"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENT" means (i)
each Subsidiary Patent and Trademark Security Agreement executed and
delivered by any Subsidiary Guarantor on the Restatement Effective Date
and (ii) each Subsidiary Patent and Trademark Security Agreement
executed and delivered by any additional Subsidiary Guarantor from time
to time thereafter in accordance with subsection 6.8, in each case
substantially in the form of Exhibit XX annexed hereto, as such
Subsidiary Patent and Trademark Security Agreement may hereafter be
amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PATENT AND TRADEMARK SECURITY AGREEMENTS" means all such
Subsidiary Patent and Trademark Security Agreements, collectively.
"SUBSIDIARY PLEDGE AGREEMENT" means (i) each Subsidiary Pledge
Agreement executed and delivered by an existing Subsidiary Guarantor on
the Closing Date or from time to time thereafter in accordance with
subsection 6.8 of the Existing Revolving Loan Credit Agreement, (ii)
each Subsidiary Pledge Agreement executed and delivered by a new
Subsidiary Guarantor on the Restatement Effective Date, and (iii) each
Subsidiary Pledge Agreement executed and delivered by any additional
Subsidiary Guarantor from time to time thereafter in accordance with
subsection 6.8, in each case substantially in the form of Exhibit XV
annexed hereto, as such Subsidiary Pledge Agreement may heretofore have
been or hereafter may be amended, supplemented or otherwise modified
from time to time, and "SUBSIDIARY PLEDGE AGREEMENTS" means all such
Subsidiary Pledge Agreements, collectively.
"SUBSIDIARY SECURITY AGREEMENT" means (i) each Subsidiary
Security Agreement executed and delivered by an existing Subsidiary
Guarantor on the Closing Date or from time to time thereafter in
accordance with subsection 6.8 of the Existing Revolving Loan Credit
Agreement, (ii) each Subsidiary Security Agreement executed and
delivered by a new Subsidiary Guarantor on the Restatement Effective
Date, and (iii) each Subsidiary Security Agreement executed and
delivered by any additional Subsidiary Guarantor from time to time
thereafter in accordance with subsection 5.8, in each case
substantially in the form of Exhibit XVI annexed hereto, as such
Subsidiary Security Agreement may heretofore have been or hereafter may
be amended, supplemented or otherwise modified from time to time, and
43
"SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to
that term in subsection 9.1D.
"SYNDICATION AGENT" has the meaning assigned to that term in
the introduction to this Agreement.
"TAX" or "TAXES" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature and
whatever called, by whomsoever, on whomsoever and wherever imposed,
levied, collected, withheld or assessed; provided that "TAX ON THE
OVERALL NET INCOME" of a Person shall be construed as a reference to a
tax imposed by the jurisdiction in which that Person is organized or in
which that Person's principal office (and/or, in the case of a Lender,
its lending office) is located or in which that Person (and/or, in the
case of a Lender, its lending office) is deemed to be doing business on
all or part of the net income, profits or gains (whether worldwide, or
only insofar as such income, profits or gains are considered to arise
in or to relate to a particular jurisdiction, or otherwise) of that
Person (and/or, in the case of a Lender, its lending office).
"TAX INDEMNIFICATION AGREEMENT" means the Tax Indemnification
Agreement dated as of August 10, 1997 by and between Company, Xxxxxxxxx
Xxxxxxxxxxx and the Estate of Xxxx X. Xxxxxxxxxxx and as such agreement
may heretofore have been or hereafter may be amended from time to time
to the extent permitted under subsection 7.14A of the Existing
Revolving Loan Credit Agreement or subsection 7.13 of this Agreement.
"TERMINATED LENDER" has the meaning assigned to that term in
subsection 2.10.
"TITLE COMPANY" means, collectively one or more title
insurance companies that are members of ALTA and are reasonably
satisfactory to Arranger and Administrative Agent.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at
any date of determination, the sum of (i) the aggregate principal
amount of all outstanding Revolving Loans (other than Revolving Loans
made for the purpose of reimbursing the applicable Issuing Lender for
any amount drawn under any Letter of Credit but not yet so applied)
plus (ii) the Letter of Credit Usage.
"UCC" means the Uniform Commercial Code (or any similar or
equivalent legislation) as in effect in any applicable jurisdiction.
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"UNREINVESTED ASSET SALE PROCEEDS" means that portion, if any,
of any Net Asset Sale Proceeds that shall not have been reinvested by
Company and its Subsidiaries in the business of Company and its
Subsidiaries within six months after the date of receipt by Company or
any of its Subsidiaries of such Net Asset Sale Proceeds or, in the case
of Net Asset Sale Proceeds from the sale of the Xxxxxxx, New York,
Montreal, Quebec or Melbourne, Australia properties, (i) that portion
of Net Asset Sale Proceeds that is not subject to a binding agreement
with a third party to reinvest such Net Asset Sale Proceeds entered
into within six months after the date of receipt of such Net Asset Sale
Proceeds or (ii) if subject to such a binding agreement, that portion
of such Net Asset Sale Proceeds that shall not have been reinvested
within nine months of such binding agreement, such reinvestment to be
evidenced by an Officers' Certificate, satisfactory in form and
substance to Administrative Agent, delivered by Company to
Administrative Agent prior to the expiration of such six-month period
and demonstrating in reasonable detail the reinvestment of such Net
Asset Sale Proceeds as aforesaid.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as
in effect at the time of such preparation (and delivered together with the
reconciliation statements provided for in subsection 6.1(v)). Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with
those used to prepare the financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when following
any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not nonlimiting
language (such as "without limitation" or "but not limited to" or words of
similar import) is used with reference thereto, but rather
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shall be deemed to refer to all other items or matters that fall within the
broadest possible scope of such general statement, term or matter.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Company herein set
forth, each Lender hereby severally agrees, subject to the limitations set forth
below with respect to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to maintain or to lend to Company, as the case
may be, from time to time during the period from the Restatement Effective Date
to but excluding the Revolving Loan Commitment Termination Date, an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the Revolving
Loan Commitments to be used for the purposes identified in subsection 2.5A.
Company acknowledges and confirms that each Existing Lender holds Existing
Revolving Loans in the respective principal amounts outstanding prior to the
Restatement Effective Date set forth opposite its name on Schedule 2.1 annexed
hereto. The aggregate amount of the Revolving Loan Commitments as of the
Restatement Effective Date is $50,000,000; provided that the Revolving Loan
Commitments of Lenders shall be adjusted to give effect to any assignments of
the Revolving Loan Commitments pursuant to subsection 10.1B; and provided,
further that the amount of the Revolving Loan Commitments shall be reduced from
time to time by the amount of any reductions thereto made pursuant to
subsections 2.4A(ii) and 2.4A(iii). Company hereby represents, warrants, agrees,
covenants and (1) reaffirms that it has no defense, set off, claim or
counterclaim against any Agent or Lender in regard to its Obligations in respect
of such Existing Revolving Loans and (2) reaffirms its obligation to pay such
Existing Revolving Loans in accordance with the terms and conditions of this
Agreement and the other Loan Documents. Based on the foregoing, (A) Company and
each Lender agree that the Existing Revolving Loans and any amounts owed
(whether or not presently due and payable, and including all interest accrued to
the Restatement Effective Date (which shall be payable on the next Interest
Payment Date with respect to the Revolving Loans to which such interest
relates)) by Company to Lenders thereunder or in respect thereof shall, as of
the Restatement Effective Date, be converted to, maintained as, and owed by
Company under and in respect of Revolving Loans hereunder. Each Lender's
Revolving Loan Commitment shall expire on the Revolving Loan Commitment
Termination Date and all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Loan Commitments shall be
paid in full no later than that date. Amounts borrowed under this subsection
2.1A may be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
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Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to the
following limitations in the amounts and during the periods indicated:
(i) in no event shall the Total Utilization of Revolving Loan
Commitments at any time exceed either (a) the Revolving Loan
Commitments then in effect or (b) the sum of the Borrowing Base then in
effect plus (1) all amounts up to $23,500,000 spent on the Anagram
Acquisition and (2) all amounts spent through such time on Permitted
Business Acquisitions (in each case other than amounts funded through
equity issuances or indebtedness other than Revolving Loans); and
(ii) for 30 consecutive days during each consecutive twelve-month
period, the aggregate outstanding principal amount of all Revolving
Loans shall not exceed $10,000,000 plus (1) all amounts up to
$23,500,000 spent on the Anagram Acquisition and (2) all amounts spent
through any given date of determination on Permitted Business
Acquisitions (in each case other than amounts funded through equity
issuances or indebtedness other than Revolving Loans).
B. BORROWING MECHANICS. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to subsection 3.3B for the purpose of
reimbursing any Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of (x) $1,000,000
and integral multiples of $100,000 in excess of that amount in the case of
Eurodollar Rate Loans and (y) $100,000 and integral multiples of $100,000 in
excess of that amount in the case of Base Rate Loans. Whenever Company desires
that Lenders make Revolving Loans it shall deliver to Administrative Agent a
Notice of Borrowing no later than 10:00 A.M. (New York City time) at least three
Business Days in advance of the proposed Funding Date (in the case of a
Eurodollar Rate Loan) or at least one Business Day in advance of the proposed
Funding Date (in the case of a Base Rate Loan). The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the
amount requested, (iii) whether such Revolving Loans shall be Base Rate Loans or
Eurodollar Rate Loans, (iv) in the case of any Revolving Loans requested to be
made as Eurodollar Rate Loans, the initial Interest Period requested therefor
and (v) that, after giving effect to the requested Revolving Loans, the Total
Utilization of Revolving Loan Commitments will not exceed the Revolving Loan
Commitment then in effect or the sum of the Borrowing Base then in effect plus
amounts (up to $23,500,000) spent on the Anagram Acquisition plus amounts spent
on Permitted Business Acquisitions (in each case other than amounts funded
through equity issuances or indebtedness other than Revolving Loans). Revolving
Loans may be continued as or converted into Base Rate Loans and Eurodollar Rate
Loans in the manner provided in subsection 2.2D. In lieu of delivering the
above-described Notice of Borrowing, Company may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Borrowing to Administrative Agent on or
before the applicable Funding Date.
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Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Revolving Loans by Lenders in accordance with this Agreement pursuant to any
such telephonic notice Company shall have effected Revolving Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Revolving Loans in the event that any of the matters to which Company is
required to certify in the applicable Notice of Borrowing is no longer true and
correct as of the applicable Funding Date, and the acceptance by Company of the
proceeds of any Revolving Loans shall constitute a re-certification by Company,
as of the applicable Funding Date, as to the matters to which Company is
required to certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this Agreement
shall be made by Lenders simultaneously and proportionately to their respective
Pro Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a
Revolving Loan requested hereunder nor shall the Revolving Loan Commitment of
any Lender be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Revolving Loan requested
hereunder. Promptly after receipt by Administrative Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Administrative Agent shall notify each Lender of the proposed borrowing. Each
Lender shall make the amount of its Revolving Loan available to Administrative
Agent not later than 12:00 Noon (New York City time) on the applicable Funding
Date, in same day funds in Dollars, at the Funding and Payment Office. Except as
provided in subsection 3.3B with respect to Revolving Loans used to reimburse
any Issuing Lender for the amount of a drawing under a Letter of Credit issued
by it, upon satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Revolving Loans made on the Closing Date) and
4.2 (in the case of all Revolving Loans), Administrative Agent shall make the
proceeds of such Revolving Loans available to Company on the applicable Funding
Date by causing an amount of same day funds in Dollars equal to the proceeds of
all such Revolving Loans received by Administrative Agent from Lenders to be
credited to the account of Company at the Funding and Payment Office.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Revolving Loans that such Lender does not
intend to make available to Administrative Agent the amount of such Lender's
Revolving Loan requested on such
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Funding Date, Administrative Agent may assume that such Lender has made such
amount available to Administrative Agent on such Funding Date and Administrative
Agent may, in its sole discretion, but shall not be obligated to, make available
to Company a corresponding amount on such Funding Date. If such corresponding
amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
customary rate set by Administrative Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefor, Administrative Agent shall promptly notify Company and Company
shall immediately pay such corresponding amount to Administrative Agent together
with interest thereon, for each day from such Funding Date until the date such
amount is paid to Administrative Agent, at the rate payable under this Agreement
for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Revolving Loan Commitments
hereunder or to prejudice any rights that Company may have against any Lender as
a result of any default by such Lender hereunder.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address
referred to in subsection 10.8, a register for the recordation of the
names and addresses of Lenders and the Revolving Loan Commitments and
Revolving Loans of each Lender from time to time (the "REGISTER"). The
Register shall be available for inspection by Company or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(ii) Administrative Agent shall record in the Register the
Revolving Loan Commitment and the Revolving Loans from time to time of
each Lender and each repayment or prepayment in respect of the
principal amount of the Revolving Loans of each Lender. Any such
recordation shall be conclusive and binding on Company and each Lender,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any
Lender's Revolving Loan Commitments or Company's Obligations in respect
of any applicable Revolving Loans.
(iii) Each Lender shall record on its internal records
(including the Notes held by such Lender) the amount of each Revolving
Loan made by it and each payment in respect thereof. Any such
recordation shall be conclusive and binding on Company, absent manifest
error; provided that failure to make any such recordation, or any error
in such recordation, shall not affect any Lender's Revolving Loan
Commitments or Company's Obligations in respect of any applicable
Revolving Loans; and provided, further that in the event of any
inconsistency between the Register and any Lender's records, the
recordations in the Register shall govern.
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(iv) Company, Administrative Agent and Lenders shall deem and
treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Revolving Loan Commitments and Revolving
Loans listed therein for all purposes hereof, and no assignment or
transfer of any such Revolving Loan Commitment or Revolving Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted
by Administrative Agent and recorded in the Register as provided in
subsection 10.1B(ii). Prior to such recordation, all amounts owed with
respect to the applicable Revolving Loan Commitment or Revolving Loan
shall be owed to the Lender listed in the Register as the owner
thereof, and any request, authority or consent of any Person who, at
the time of making such request or giving such authority or consent, is
listed in the Register as a Lender shall be conclusive and binding on
any subsequent holder, assignee or transferee of the corresponding
Revolving Loan Commitments or Revolving Loans.
(v) Company hereby designates Fleet to serve as Company's
agent solely for purposes of maintaining the Register as provided in
this subsection 2.1D, and Company hereby agrees that, to the extent
Fleet serves in such capacity, Fleet and its officers, directors,
employees, agents and affiliates shall constitute Indemnitees for all
purposes under subsection 10.3.
E. NOTES. Company has executed and delivered on the Closing Date to
each Lender (or to Administrative Agent for that Lender) a Revolving Note
substantially in the form of Exhibit V annexed hereto to evidence that Lender's
Revolving Loans, in the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions.
2.2 INTEREST ON THE REVOLVING LOANS.
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
Eurodollar Rate. The applicable basis for determining the rate of interest with
respect to any Revolving Loan shall be selected by Company initially at the time
a Notice of Borrowing is given with respect to such Revolving Loan pursuant to
subsection 2.1B. The basis for determining the interest rate with respect to any
Revolving Loan may be changed from time to time pursuant to subsection 2.2D. If
on any day a Revolving Loan is outstanding with respect to which notice has not
been delivered to Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Revolving Loan shall bear interest determined by
reference to the Base Rate. Subject to the provisions of subsections 2.2E and
2.7, the Revolving Loans shall bear interest through maturity as follows:
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(i) if a Base Rate Loan, then at the sum of the Base Rate plus
the Applicable Revolving Base Rate Margin then in effect; or
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Revolving Eurodollar Rate
Margin then in effect.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Revolving Loan, which Interest
Period shall be, at Company's option, either a one-, two-, three-or six-month
period; provided that:
(i) the initial Interest Period for any Eurodollar Rate Loan
shall commence on the Funding Date in respect of such Revolving Loan,
in the case of a Revolving Loan initially made as a Eurodollar Rate
Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Revolving Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period
shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (v) of this subsection 2.2B, end on
the last Business Day of a calendar month;
(v) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
(vi) there shall be no more than seven (7) Interest Periods
outstanding at any time under this Agreement and the AXEL Credit
Agreement; and
(vii) in the event Company fails to specify an Interest Period
for any Eurodollar Rate Loan in the applicable Notice of Borrowing or
Notice of Conversion/Continuation, Company shall be deemed to have
selected an Interest Period of one month.
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C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Revolving Loan shall be payable in arrears on and to each
Interest Payment Date applicable to that Revolving Loan, upon any prepayment of
that Revolving Loan (to the extent accrued on the amount being prepaid) and at
maturity (including final maturity); provided that in the event any Revolving
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4A(i),
interest accrued on such Revolving Loans through the date of such prepayment
shall be payable on the next succeeding Interest Payment Date applicable to Base
Rate Loans (or, if earlier, at final maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Revolving Loans equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to Eurodollar Rate Loans
or (ii) to convert at any time all or any part of its outstanding Revolving
Loans equal to $100,000 and integral multiples of $100,000 in excess of that
amount from Eurodollar Rate Loans to Base Rate Loans upon the expiration of any
Interest Period applicable to a Eurodollar Rate Loan, to continue all or any
portion of such Revolving Loan equal to $1,000,000 and integral multiples of
$100,000 in excess of that amount as a Eurodollar Rate Loan; provided, however,
that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the
expiration date of an Interest Period applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (New York City time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v)
in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan,
that no Potential Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic notice
by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
writing by delivery of a Notice of Conversion/Continuation to Administrative
Agent on or before the proposed conversion/continuation date. Upon receipt of
written or telephonic notice of any proposed conversion/continuation under this
subsection 2.2D, Administrative Agent shall promptly transmit such notice by
telefacsimile or telephone to each Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D,
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and upon conversion or continuation of the applicable basis for determining the
interest rate with respect to any Revolving Loans in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Revolving Loans and,
to the extent permitted by applicable law, any interest payments thereon not
paid when due and any fees and other amounts then due and payable hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable
Revolving Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans); provided that, in the case of Eurodollar
Rate Loans, upon the expiration of the Interest Period in effect at the time any
such increase in interest rate is effective such Eurodollar Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate which is 2% per annum in excess of the interest rate otherwise
payable under this Agreement for Base Rate Loans. Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is not a
permitted alternative to timely payment and shall not constitute a waiver of any
Event of Default or otherwise prejudice or limit any rights or remedies of
Administrative Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Revolving Loans shall be
computed on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during which it accrues. In computing interest on any
Revolving Loan, the date of the making of such Revolving Loan or the first day
of an Interest Period applicable to such Revolving Loan or, with respect to a
Base Rate Loan being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may
be, shall be included, and the date of payment of such Revolving Loan or the
expiration date of an Interest Period applicable to such Revolving Loan or, with
respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date
of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case
may be, shall be excluded; provided that if a Revolving Loan is repaid on the
same day on which it is made, one day's interest shall be paid on that Revolving
Loan.
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2.3 FEES.
A. COMMITMENT FEES. Company agrees to pay to Administrative Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Revolving Loan Commitment Termination Date equal to the average of
the daily excess of the Revolving Loan Commitments over the sum of (i) the
aggregate principal amount of outstanding Revolving Loans plus (ii) the Letter
of Credit Usage multiplied by the Applicable Commitment Fee Percentage such
commitment fees to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable quarterly in arrears on March 15, June
15, September 15 and December 15 of each year, commencing on the first such date
to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. OTHER FEES. Company agrees to pay to Arranger and Administrative
Agent (including fees payable to Administrative Agent for distribution to
Existing Lenders) such other fees in the amounts and at the times separately
agreed upon between Company, Arranger and Administrative Agent.
2.4 PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS; GENERAL
PROVISIONS REGARDING PAYMENTS; APPLICATION OF PROCEEDS OF COLLATERAL
AND PAYMENTS UNDER SUBSIDIARY GUARANTY.
A.PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon not less than one
Business Day's prior written or telephonic notice, in the case of Base
Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (New York City time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Revolving Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount. Notice of prepayment having been given as
aforesaid, the principal amount of the Revolving Loans specified in
such notice shall become due and payable on the prepayment date
specified therein. Any such voluntary prepayment shall be applied as
specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Revolving Loan Commitments.
Company may, upon not less than three Business Days' prior written or
telephonic notice confirmed in writing to Administrative Agent (which
original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently
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reduce in part, without premium or penalty, the Revolving Loan
Commitments in an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving Loan Commitments
at the time of such proposed termination or reduction; provided that
any such partial reduction of the Revolving Loan Commitments shall be
in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount. Company's notice to Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and
such termination or reduction of the Revolving Loan Commitments shall
be effective on the date specified in Company's notice and shall reduce
the Revolving Loan Commitment of each Lender proportionately to its Pro
Rata Share. Any such voluntary reduction of the Revolving Loan
Commitments shall be applied as specified in subsection 2.4A(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of
Revolving Loan Commitments. The AXELs under the AXEL Credit Agreement
and the Revolving Loans shall be prepaid and/or the Revolving Loan
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions
to be applied as set forth below or as more specifically provided in
subsection 2.4A(iv):
(a) Prepayments and Reductions From Unreinvested
Asset Sale Proceeds. No later than the first Business Day
following the date on which any Net Asset Sale Proceeds become
Unreinvested Asset Sale Proceeds, Company shall prepay the
AXELs under the AXEL Credit Agreement and the Revolving Loans
and/or the Revolving Loan Commitments shall be permanently
reduced in an aggregate amount equal to such Unreinvested
Asset Sale Proceeds; provided, further that, with respect to
an Asset Sale of any asset owned by a Foreign Subsidiary, the
Unreinvested Asset Sale Proceeds in respect thereof shall be
applied (i) first, to the extent such Unreinvested Net Asset
Sale Proceeds may be repatriated to the United States without
in the reasonable judgment of the Company resulting in a
material tax liability to Company in relation to the amount of
proceeds to be repatriated, to prepay the AXELs under the AXEL
Credit Agreement and the Revolving Loans and/or permanently
reduce the Revolving Loan Commitments as set forth above in
this subsection 2.4A(iii)(a), (ii) second, to the extent of
any remaining portion of such Unreinvested Asset Sale
Proceeds, to finance the general corporate purposes of such
Foreign Subsidiary so long as the aggregate of all such
amounts so applied by all Foreign Subsidiaries with respect to
Asset Sales consummated after the Closing Date does not exceed
$5,000,000, and (iii) third, to the extent of any remaining
portion of such Unreinvested Asset Sale Proceeds, to prepay
the AXELs under the AXEL Credit Agreement and the Revolving
Loans and/or reduce the Revolving Loan Commitments as set
forth above in this subsection 2.4A(iii)(a).
55
Concurrently with any determination by Company that any
portion of any Unreinvested Asset Sale Proceeds of any Foreign
Subsidiary will be applied as described in clause (ii) of the
immediately preceding proviso, Company shall deliver to Agent
an Officers' Certificate (w) certifying that such Unreinvested
Asset Sale Proceeds cannot be repatriated to the United States
without resulting in a material tax liability to Company and
the reasons therefor, (y) specifying the amount of
Unreinvested Asset Sale Proceeds to be retained by such
Foreign Subsidiary as described in said clause (ii) and the
cumulative aggregate amount of all such Unreinvested Asset
Sale Proceeds so retained by all Foreign Subsidiaries since
the date of this Agreement and (z) demonstrating the
derivation of the Unreinvested Asset Sale Proceeds of the
correlative Asset Sale from the gross sales price thereof.
(b) Prepayments and Reductions from Net
Insurance/Condemnation Proceeds. No later than the first
Business Day following the date of receipt by Administrative
Agent or by Company or any of its Subsidiaries of any Net
Insurance/Condemnation Proceeds that are required to be
applied to prepay the AXELs under the AXEL Credit Agreement
and the Revolving Loans and/or reduce the Revolving Loan
Commitments pursuant to the provisions of subsection 6.4C or
the Intercreditor Agreement, Company shall prepay the AXELs
under the AXEL Credit Agreement and the Revolving Loans and/or
the Revolving Loan Commitments shall be permanently reduced in
an aggregate amount equal to the amount of such Net
Insurance/Condemnation Proceeds.
(c) Prepayments and Reductions Due to Issuance of
Debt or Equity Securities. On the date of receipt by Company
or any of its Subsidiaries of the Cash proceeds (any such
proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith,
including reasonable legal fees and expenses, being "NET
SECURITIES PROCEEDS") from the issuance of any debt (other
than debt permitted by Section 7.1) or equity Securities of
Company or any of its Subsidiaries to any Person other than
Company or any of its Subsidiaries (and excluding any private
issuances of Company Common Stock after the Closing Date to
the extent such funds would not be required to prepay any
other Indebtedness of the Company and its Subsidiaries) after
the Closing Date, Company shall prepay the AXELs under the
AXEL Credit Agreement and the Revolving Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to such Net Securities Proceeds.
(d) Prepayments and Reductions from Consolidated
Excess Cash Flow. In the event that there shall be
Consolidated Excess Cash Flow for any Fiscal Year (commencing
with Fiscal Year 1998), Company shall, no later than 90 days
after the end of such Fiscal Year, prepay the AXELs under the
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AXEL Credit Agreement and the Revolving Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an
aggregate amount equal to 75% of such Consolidated Excess Cash
Flow; provided that for any Fiscal Year in which the
Consolidated Leverage Ratio as of the end of any such Fiscal
Year is less than 3.75:1, such percentage of Consolidated
Excess Cash Flow applied to prepay the AXELs under the AXEL
Credit Agreement or reduce Revolving Loan Commitments shall be
reduced to 50%.
(e) Calculations of Net Proceeds Amounts; Additional
Prepayments and Reductions Based on Subsequent Calculations.
Concurrently with any prepayment of the AXELs under the AXEL
Credit Agreement and the Revolving Loans and/or reduction of
the Revolving Loan Commitments pursuant to subsections
2.4A(iii)(a)-(d), Company shall deliver to Administrative
Agent an Officers' Certificate demonstrating the calculation
of the amount (the "NET PROCEEDS AMOUNT") of the applicable
Unreinvested Asset Sale Proceeds or Net Insurance/Condemnation
Proceeds, the applicable Net Securities Proceeds (as such term
is defined in subsection 2.4A(iii)(c)) or the applicable
Consolidated Excess Cash Flow, as the case may be, that gave
rise to such prepayment and/or reduction. In the event that
Company shall subsequently determine that the actual Net
Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an
additional prepayment of the AXELs under the AXEL Credit
Agreement and the Revolving Loans (and/or, if applicable, the
Revolving Loan Commitments shall be permanently reduced) in an
amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an
Officers' Certificate demonstrating the derivation of the
additional Net Proceeds Amount resulting in such excess.
(f) Prepayments Due to Reductions or Restrictions of
Revolving Loan Commitments or Due to Insufficient Borrowing
Base. Company shall from time to time prepay the Revolving
Loans to the extent necessary to give effect to the
limitations set forth in clauses (i) and (ii) of the second
paragraph of subsection 2.1A.
(iv) Application of Prepayments.
(a) Application of Voluntary Prepayments by Type of
Loans and Order of Maturity. Any voluntary prepayments
pursuant to subsection 2.4A(i) shall be applied as specified
by Company in the applicable notice of prepayment.
(b) Application of Mandatory Prepayments by Type of
Loans. Any amount (the "APPLIED AMOUNT") required to be
applied as a mandatory
57
prepayment of the AXELs under the AXEL Credit Agreement or the
Revolving Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4A(iii)(a)-(e) shall be
applied first to prepay the AXELs under the AXEL Credit
Agreement to the full extent thereof, second, to the extent of
any remaining portion of the Applied Amount, to prepay the
Revolving Loans to the full extent thereof and to further
permanently reduce the Revolving Loan Commitments by the
amount of such prepayment, and third, to the extent of any
remaining portion of the Applied Amount, to further
permanently reduce the Revolving Loan Commitments to the full
extent thereof and to cash collateralize any Letters of Credit
outstanding (with any such amounts held in the Collateral
Accounts pursuant to the Intercreditor Agreement). Any
prepayments of the Revolving Loans under subsection
2.4A(iii)(f) shall be applied to reduce the Revolving Loans.
(c) Application of Prepayments to Base Rate Loans and
Eurodollar Rate Loans. Considering Revolving Loans being
prepaid, any prepayment thereof shall be applied first to Base
Rate Loans, to the full extent thereof before application to
Eurodollar Rate Loans, in a manner which minimizes the amount
of any payments required to be made by Company pursuant to
subsection 2.6D.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
principal, interest, fees and other Obligations hereunder and under the
Revolving Notes shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition,
and delivered to Administrative Agent not later than 12:00 Noon (New
York City time) on the date due at the Funding and Payment Office for
the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Company
on the next succeeding Business Day. Company hereby authorizes
Administrative Agent to charge its accounts with Administrative Agent
in order to cause timely payment to be made to Administrative Agent of
all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. Except
as provided in subsection 2.2C, all payments in respect of the
principal amount of any Revolving Loan shall include payment of accrued
interest on the principal amount being repaid or prepaid, and all such
payments (and, in any event, any payments in respect of any Revolving
Loan on a date when interest is due and payable with respect to such
Loan) shall be applied to the payment of interest before application to
principal.
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(iii) Apportionment of Payments. Aggregate principal and
interest payments shall be apportioned among all outstanding Revolving
Loans to which such payments relate, in each case proportionately to
Lenders' respective Pro Rata Shares. Administrative Agent shall
promptly distribute to each Lender, at its primary address set forth
below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all
such payments received by Administrative Agent and the commitment fees
of such Lender when received by Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4C(iii), if, pursuant to the provisions of subsection
2.6B, any Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, Administrative
Agent shall give effect thereto in apportioning payments received
thereafter.
(iv) Payments on Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation
thereon of all Revolving Loans evidenced by that Revolving Note and all
principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or
any error in the making of) a notation of any Revolving Loan made under
such Revolving Note shall not limit or otherwise affect the obligations
of Company hereunder or under such Revolving Note with respect to any
Revolving Loan or any payments of principal or interest on such
Revolving Note.
2.5 USE OF PROCEEDS.
A. REVOLVING LOANS. The proceeds of Revolving Loans made on and after
the Restatement Effective Date are to be applied for working capital and general
corporate purposes, which may include the Anagram Acquisition and future
Permitted Business Acquisitions (provided that (i) no more than $23,500,000 plus
the excess, if any, of $15,000,000 over the amount of cash on hand at Company on
the Restatement Effective Date may be borrowed in connection with the Anagram
Acquisition and (ii) after giving effect to any borrowings to fund any portion
of a Permitted Business Acquisition, the sum of (1) unrestricted Cash and Cash
Equivalents on the balance sheet of Company plus (2) the difference between the
Revolving Loan Commitments and the aggregate outstanding principal amount of
Revolving Loans is equal to at least $10,000,000) and the making of intercompany
loans to any of Company's wholly-owned Subsidiaries, in accordance with
subsection 7.1(iv), for their own working capital and general corporate
purposes.
59
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York City time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Company and
each Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the Eurodollar market adequate and fair means do not
exist for ascertaining the interest rate applicable to such Eurodollar Rate
Loans on the basis provided for in the definition of Adjusted Eurodollar Rate,
Administrative Agent shall on such date give notice (by telefacsimile or by
telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Revolving Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist
and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Revolving Loans in respect of which such
determination was made shall be deemed to be rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not be
unlawful) or (ii) has become impracticable, or would cause such Lender material
hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely
60
affect the Eurodollar market or the position of such Lender in that market,
then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it
shall on that day give notice (by telefacsimile or by telephone confirmed in
writing) to Company and Administrative Agent of such determination (which notice
Administrative Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Revolving Loans as, or to
convert Revolving Loans to, Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Revolving Loan as
(or convert such Revolving Loan to, as the case may be) a Base Rate Loan, (c)
the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/Continuation, Company shall
have the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender
gives notice of its determination as described above (which notice of rescission
Administrative Agent shall promptly transmit to each other Lender). Except as
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Revolving Loans as, or to convert Revolving Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that Lender) a borrowing
of any Eurodollar Rate Loan does not occur on a date specified therefor in a
Notice of Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any prepayment
pursuant to subsection 2.4A(i)) or other principal payment or any conversion of
any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Eurodollar Rate Loan, (iii) if any prepayment
of any of its Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence of any other
default by
61
Company in the repayment of its Eurodollar Rate Loans when required by the terms
of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Revolving Loan be made or maintained as, or
converted to, a Eurodollar Rate Loan after the expiration of any Interest Period
then in effect for that Revolving Loan and (ii) subject to the provisions of
subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to a requested borrowing or
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby and to the extent a Lender is not entitled to payment
under the terms of Section 2.7B, it shall not be entitled to such payment
pursuant to this subsection 2.7A), in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
Closing Date, or compliance by such Lender with any guideline, request or
directive issued or made after the Closing Date by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
62
(i) subjects such Lender (or its applicable lending office) to
any additional Tax (other than any Tax on the overall net income of
such Lender) with respect to this Agreement or any of its obligations
hereunder or any payments to such Lender (or its applicable lending
office) of principal, interest, fees or any other amount payable
hereunder;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect
to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Lender (or its applicable lending
office) or its obligations hereunder or the Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Revolving Loans hereunder or to reduce
any amount received or receivable by such Lender (or its applicable lending
office) with respect thereto by an amount considered by the Lender to be
material; then, in any such case, Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver to Company (with a copy to Administrative Agent) a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which statement shall be
conclusive and binding upon all parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Revolving Loan Documents shall
(except to the extent required by law) be paid free and clear of, and
without any deduction or withholding on account of, any Tax (other than
a Tax on the overall net income of any Lender) imposed, levied,
collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by
or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at
the time of payment.
63
(ii) Grossing-up of Payments. If Company or any other Person
is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the Revolving Loan Documents:
(a) Company shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon
as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if
the liability to pay is imposed on Company) for its own
account or (if that liability is imposed on Administrative
Agent or such Lender, as the case may be) on behalf of and in
the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which
the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment,
Administrative Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which
it is required by clause (b) above to pay, Company shall
deliver to Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing
or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the Closing Date (in the case of each Existing Lender), after the
Restatement Effective Date (in the case of each New Lender) or after
the date of the Assignment Agreement pursuant to which such Lender
became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect on the Closing Date, at the
date of this Agreement or at the date of such Assignment Agreement, as
the case may be, in respect of payments to such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
(a) Each Lender that is organized under the laws of
any jurisdiction other than the United States or any state or
other political subdivision thereof
64
(for purposes of this subsection 2.7B(iii), a "NON-US LENDER")
shall deliver to Administrative Agent for transmission to
Company, on or prior to the Closing Date (in the case of each
Existing Lender), on or prior to the Restatement Effective
Date (in the case of each New Lender), or on or prior to the
date of the Assignment Agreement pursuant to which it becomes
a Lender (in the case of each other Lender), and at such other
times as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue
Service Form 1001 or 4224 (or any successor forms), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Revolving Loan
Documents or (2) if such Lender is not a "bank" or other
Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form
1001 or 4224 pursuant to clause (1) above, a Certificate re
Non-Bank Status together with two original copies of Internal
Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the
Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect
to any payments to such Lender of interest payable under any
of the Revolving Loan Documents.
(b) Each Lender required to deliver any forms,
certificates or other evidence with respect to United States
federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the
initial delivery by such Lender of such forms, certificates or
other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that
such Lender shall promptly (1) deliver to Administrative Agent
for transmission to Company two new original copies of
Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other
certificate or statement of exemption required in order to
confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax
with respect to payments to such Lender under the Revolving
Loan Documents or (2) notify Administrative Agent and Company
of its inability to deliver any such forms, certificates or
other evidence.
65
(c) Company shall not be required to pay any
additional amount to any Non-US Lender under clause (c) of
subsection 2.7B(ii) if such Lender shall have failed to
satisfy the requirements of clause (a) or (b)(1) of this
subsection 2.7B(iii); provided that if such Lender shall have
satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Existing Lender), on the
Restatement Effective Date (in the case of each New Lender) or
on the date of the Assignment Agreement pursuant to which it
became a Lender (in the case of each other Lender), nothing in
this subsection 2.7B(iii)(c) shall relieve Company of its
obligation to pay any additional amounts pursuant to clause
(c) of subsection 2.7B(ii) in the event that, as a result of
any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no
longer properly entitled to deliver forms, certificates or
other evidence at a subsequent date establishing the fact that
such Lender is not subject to withholding as described in
subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the Closing
Date (in the case of an Existing Lender) or the Restatement Effective Date (in
the case of each New Lender) of any law, rule or regulation (or any provision
thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lender's Revolving Loans or Revolving
Loan Commitments or Letters of Credit or participations therein or other
obligations hereunder with respect to the Revolving Loans or the Letters of
Credit to a level below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy) by
an amount considered by the Lender to be material, then from time to time,
within five Business Days after receipt by Company from such Lender of the
statement referred to in the next sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.
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2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Revolving Loans or Letters of Credit of such Lender or Issuing Lender, as
the case may be, becomes aware of the occurrence of an event or the existence of
a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender or Issuing Lender to receive payments under subsection
2.7 or subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Revolving Loan Commitments of such Lender or the affected Revolving Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take such
other measures as such Lender or Issuing Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would otherwise be
required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7
or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding or
maintaining of such Revolving Loan Commitments or Revolving Loans or Letters of
Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Revolving Loan Commitments or Revolving Loans or Letters
of Credit or the interests of such Lender or Issuing Lender; provided that such
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses payable
by Company pursuant to this subsection 2.8 (setting forth in reasonable detail
the basis for requesting such amount) submitted by such Lender or Issuing Lender
to Company (with a copy to Administrative Agent) shall be conclusive absent
manifest error.
2.9 DEFAULTING LENDERS.
Anything contained herein to the contrary notwithstanding, in the event
that any Lender (a "DEFAULTING LENDER") defaults (a "FUNDING DEFAULT") in its
obligation to fund any Revolving Loan (a "DEFAULTED REVOLVING Loan") in
accordance with subsection 2.1 as a result of the appointment of a receiver or
conservator with respect to such Lender at the direction or request of any
regulatory agency or authority, then (i) during any Default Period (as defined
below) with respect to such Defaulting Lender, such Defaulting Lender shall be
deemed not to be a "Lender" for purposes of voting on any matters (including the
granting of any consents or waivers) with respect to any of the Revolving Loan
Documents, (ii) to the extent permitted by applicable law, until such time as
the Default Excess (as defined below) with respect to such Defaulting Lender
shall have been reduced to zero, (a) any voluntary prepayment of the Revolving
Loans pursuant to subsection 2.4B(i) shall, if
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Company so directs at the time of making such voluntary prepayment, be applied
to the Revolving Loans of other Lenders as if such Defaulting Lender had no
Revolving Loans outstanding and the Revolving Loan Exposure of such Defaulting
Lender were zero, and (b) any mandatory prepayment of the Revolving Loans
pursuant to subsection 2.4B(iii) shall, if Company so directs at the time of
making such mandatory prepayment, be applied to the Revolving Loans of other
Lenders (but not to the Revolving Loans of such Defaulting Lender) as if such
Defaulting Lender had funded all Defaulted Revolving Loans of such Defaulting
Lender, it being understood and agreed that Company shall be entitled to retain
any portion of any mandatory prepayment of the Revolving Loans that is not paid
to such Defaulting Lender solely as a result of the operation of the provisions
of this clause (b), (iii) such Defaulting Lender's Revolving Loan Commitment and
outstanding Revolving Loans and such Defaulting Lender's Pro Rata Share of the
Letter of Credit Usage shall be excluded for purposes of calculating the
commitment fee payable to Lenders pursuant to subsection 2.3A in respect of any
day during any Default Period with respect to such Defaulting Lender, and such
Defaulting Lender shall not be entitled to receive any commitment fee pursuant
to subsection 2.3A with respect to such Defaulting Lender's Revolving Loan
Commitment in respect of any Default Period with respect to such Defaulting
Lender, and (iv) the Total Utilization of Revolving Loan Commitments as at any
date of determination shall be calculated as if such Defaulting Lender had
funded all Defaulted Revolving Loans of such Defaulting Lender.
For purposes of this Agreement, (I) "DEFAULT PERIOD" means, with
respect to any Defaulting Lender, the period commencing on the date of the
applicable Funding Default and ending on the earliest of the following dates:
(A) the date on which all Revolving Loan Commitments are cancelled or terminated
and/or the Obligations are declared or become immediately due and payable, (B)
the date on which (1) the Default Excess with respect to such Defaulting Lender
shall have been reduced to zero (whether by the funding by such Defaulting
Lender of any Defaulted Revolving Loans of such Defaulting Lender or by the
non-pro rata application of any voluntary or mandatory prepayments of the
Revolving Loans in accordance with the terms of this subsection 2.9 or by a
combination thereof) and (2) such Defaulting Lender shall have delivered to
Company and Administrative Agent a written reaffirmation of its intention to
honor its obligations under this Agreement with respect to its Revolving Loan
Commitment, and (C) the date on which Company, Administrative Agent and
Requisite Lenders waive all Funding Defaults of such Defaulting Lender in
writing, and (II) "DEFAULT EXCESS" means, with respect to any Defaulting Lender,
the excess, if any, of such Defaulting Lender's Pro Rata Share of the aggregate
outstanding principal amount of Revolving Loans of all Lenders (calculated as if
all Defaulting Lenders (other than such Defaulting Lender) had funded all of
their respective Defaulted Revolving Loans) over the aggregate outstanding
principal amount of Revolving Loans of such Defaulting Lender.
No Revolving Loan Commitment of any Lender shall be increased
or otherwise affected, and, except as otherwise expressly provided in this
subsection 2.9, performance by Company of its obligations under this Agreement
and the other Revolving
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Loan Documents shall not be excused or otherwise modified, as a result of any
Funding Default or the operation of this subsection 2.9. The rights and remedies
against a Defaulting Lender under this subsection 2.9 are in addition to other
rights and remedies which Company may have against such Defaulting Lender with
respect to any Funding Default and which Administrative Agent or any Lender may
have against such Defaulting Lender with respect to any Funding Default.
2.10 REMOVAL OR REPLACEMENT OF A LENDER.
A. Anything contained in this Agreement to the contrary
notwithstanding, in the event that:
(i) (a) any Lender (an "INCREASED-COST LENDER") shall give
notice to Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7 or
subsection 3.6, (b) the circumstances which have caused such Lender to
be an Affected Lender or which entitle such Lender to receive such
payments shall remain in effect, and (c) such Lender shall fail to
withdraw such notice within five Business Days after Company's request
for such withdrawal; or
(ii) (a) any Lender shall become a Defaulting Lender, (b) the
Default Period for such Defaulting Lender shall remain in effect, and
(c) such Defaulting Lender shall fail to cure the default as a result
of which it has become a Defaulting Lender within five Business Days
after Company's request that it cure such default; or
(iii) (a) in connection with any proposed amendment,
modification, termination, waiver or consent with respect to any of the
provisions of this Agreement as contemplated by clauses (i) through (v)
of the first proviso to subsection 10.6A, the consent of Requisite
Lenders shall have been obtained but the consent of one or more of such
other Lenders (each a "NON-CONSENTING LENDER") whose consent is
required shall not have been obtained, and (b) the failure to obtain
Non-Consenting Lenders' consents does not result solely from the
exercise of Non-Consenting Lenders' rights (and the withholding of any
required consents by Non-Consenting Lenders) pursuant to the second
proviso to subsection 10.6A;
then, and in each such case, Company shall have the right, at its option, to
remove or replace the applicable Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the "TERMINATED LENDER") to the extent permitted by
subsection 2.10B.
B. Company may, by giving written notice to Administrative Agent and
any Terminated Lender of its election to do so:
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(i) elect to (a) terminate the Revolving Loan Commitment, if
any, of such Terminated Lender upon receipt by such Terminated Lender
of such notice and (b) prepay on the date of such termination any
outstanding Revolving Loans made by such Terminated Lender, together
with accrued and unpaid interest thereon and any other amounts payable
to such Terminated Lender hereunder pursuant to subsection 2.6,
subsection 2.7 or subsection 3.6 or otherwise; provided that, in the
event such Terminated Lender has any Revolving Loans outstanding at the
time of such termination, the written consent of Administrative Agent
and Requisite Lenders (which consent shall not be unreasonably withheld
or delayed) shall be required in order for Company to make the election
set forth in this clause (i); or
(ii) elect to cause such Terminated Lender (and such
Terminated Lender hereby irrevocably agrees) to assign its outstanding
Revolving Loans and its Revolving Loan Commitment, if any, in full at
par to one or more Eligible Assignees (each a "REPLACEMENT LENDER") in
accordance with the provisions of subsection 10.1B; provided that (a)
on the date of such assignment, Company shall pay any amounts payable
to such Terminated Lender pursuant to subsection 2.6, subsection 2.7 or
subsection 3.6 or otherwise as if it were a prepayment and (b) in the
event such Terminated Lender is a Non-Consenting Lender, each
Replacement Lender shall consent, at the time of such assignment, to
each matter in respect of which such Terminated Lender was a
Non-Consenting Lender;
provided that (X) Company may not make either of the elections set forth in
clauses (i) or (ii) above with respect to any Non-Consenting Lender unless
Company also makes one of such elections with respect to each other Terminated
Lender which is a Non-Consenting Lender and (Y) Company may not make either of
such elections with respect to any Terminated Lender that is an Issuing Lender
unless, prior to the effectiveness of such election, Company shall have caused
each outstanding Letter of Credit issued by such Issuing Lender to be cancelled.
C. Upon the prepayment of all amounts owing to any Terminated Lender
and the termination of such Terminated Lender's Revolving Loan Commitment, if
any, pursuant to clause (i) of subsection 2.10B, (i) Schedule 2.1 shall be
deemed modified to reflect any corresponding changes in the Revolving Loan
Commitments and (ii) such Terminated Lender shall no longer constitute a
"Lender" for purposes of this Agreement; provided that any rights of such
Terminated Lender to indemnification under this Agreement (including under
subsections 2.6D, 2.7, 3.6, 10.2 and 10.3) shall survive as to such Terminated
Lender.
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SECTION 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
THEREIN.
A. LETTERS OF CREDIT. In addition to Company requesting that
Lenders make Revolving Loans pursuant to subsection 2.1A, Company may request,
in accordance with the provisions of this subsection 3.1, from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date, that one or more Lenders issue Letters of Credit
for the account of Company for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, any one or more Lenders may, but (except
as provided in subsection 3.1B(ii)) shall not be obligated to, issue such
Letters of Credit in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue (and no Lender
shall issue):
(i) any Letter of Credit if, after giving effect to such
issuance, the Total Utilization of Revolving Loan Commitments would
exceed the Revolving Loan Commitments then in effect or the sum of
Borrowing Base then in effect plus all amounts up to $23,500,000 spent
on the Anagram Acquisition plus all amounts spent through such date on
Permitted Business Acquisitions (in each case other than amounts funded
through equity issuances or indebtedness other than Revolving Loans);
(ii) any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage would exceed $15,000,000;
(iii) any Standby Letter of Credit having an expiration date
later than the earlier of (a) the date which is 30 days prior to the
Revolving Loan Commitment Termination Date and (b) the date which is
not more than 365 days from the date of issuance of such Standby Letter
of Credit; provided that the immediately preceding clause (b) shall not
prevent any Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more successive
periods not to exceed one year each unless such Issuing Lender elects
not to extend for any such additional period; and provided, further
that such Issuing Lender shall elect not to extend such Standby Letter
of Credit if it has knowledge that an Event of Default has occurred and
is continuing (and has not been waived in accordance with subsection
10.6) at the time such Issuing Lender must elect whether or not to
allow such extension; or
(iv) any Commercial Letter of Credit having an expiration date
(a) later than the earlier of (X) the date which is 30 days prior to
the Revolving Loan Commitment Termination Date and (Y) the date which
is 180 days from the date of
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issuance of such Commercial Letter of Credit or (b) that is otherwise
unacceptable to the applicable Issuing Lender in its reasonable
discretion.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance
of a Letter of Credit, it shall deliver to Administrative Agent a
Notice of Issuance of Letter of Credit substantially in the form of
Exhibit III annexed hereto no later than 12:00 Noon (New York City
time) at least three Business Days (in the case of Standby Letters of
Credit) or five Business Days (in the case of Commercial Letters of
Credit), or in each case such shorter period as may be agreed to by the
Issuing Lender in any particular instance, in advance of the proposed
date of issuance. The Notice of Issuance of Letter of Credit shall
specify (a) the proposed date of issuance (which shall be a Business
Day), (b) whether the Letter of Credit is to be a Standby Letter of
Credit or a Commercial Letter of Credit, (c) the face amount of the
Letter of Credit, (d) in the case of a Letter of Credit which Company
requests to be denominated in a currency other than Dollars, the
currency in which Company requests such Letter of Credit to be issued,
(e) the expiration date of the Letter of Credit, (f) the name and
address of the beneficiary, (g) either the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents to be presented by the
beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit, and (h) that, after
giving effect to the issuance of the Letter of Credit, the Total
Utilization of Revolving Loan Commitments will not exceed the Revolving
Loan Commitments then in effect or the Borrowing Base then in effect;
provided that the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of Credit or any
such documents; and provided, further that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the
same business day (under the laws of the jurisdiction in which the
office of the Issuing Lender to which such draft is required to be
presented is located) that such draft is presented if such presentation
is made after 10:00 A.M. (in the time zone of such office of the
Issuing Lender) on such business day.
Company shall notify the applicable Issuing Lender (and Administrative
Agent, if Administrative Agent is not such Issuing Lender) prior to the
issuance of any Letter of Credit in the event that any of the matters
to which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit is no `longer true and correct as of the
proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Company shall be deemed to have
re-certified, as of the date of such issuance, as to the matters to
which Company is required to certify in the applicable Notice of
Issuance of Letter of Credit.
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(ii) Determination of Issuing Lender. Upon receipt by
Administrative Agent of a Notice of Issuance of Letter of Credit
pursuant to subsection 3.1B(i) requesting the issuance of a Letter of
Credit, in the event Administrative Agent elects to issue such Letter
of Credit, Administrative Agent shall promptly so notify Company, and
Administrative Agent shall be the Issuing Lender with respect thereto.
In the event that Administrative Agent, in its sole discretion, elects
not to issue such Letter of Credit, Administrative Agent shall promptly
so notify Company, whereupon Company may request any other Lender to
issue such Letter of Credit by delivering to such Lender a copy of the
applicable Notice of Issuance of Letter of Credit. Any Lender so
requested to issue such Letter of Credit shall promptly notify Company
and Administrative Agent whether or not, in its sole discretion, it has
elected to issue such Letter of Credit, and any such Lender which so
elects to issue such Letter of Credit shall be the Issuing Lender with
respect thereto. In the event that all other Lenders shall have
declined to issue such Letter of Credit, notwithstanding the prior
election of Administrative Agent not to issue such Letter of Credit,
Administrative Agent shall be obligated to issue such Letter of Credit
and shall be the Issuing Lender with respect thereto, notwithstanding
the fact that the Letter of Credit Usage with respect to such Letter of
Credit and with respect to all other Letters of Credit issued by
Administrative Agent, when aggregated with Administrative Agent's
outstanding Revolving Loans, may exceed Administrative Agent's
Revolving Loan Commitment then in effect; provided that Administrative
Agent shall not be obligated to issue any Letter of Credit denominated
in a foreign currency which in the judgment of Administrative Agent is
not readily and freely available.
(iii) Issuance of Letter of Credit. Upon satisfaction or
waiver (in accordance with subsection 10.6) of the conditions set forth
in subsection 4.3, the Issuing Lender shall issue the requested Letter
of Credit in accordance with the Issuing Lender's standard operating
procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter
of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent and each other Lender of such issuance, which
notice shall be accompanied by a copy of such Letter of Credit.
Promptly after receipt of such notice (or, if Administrative Agent is
the Issuing Lender, together with such notice), Administrative Agent
shall notify each Lender of the amount of such Lender's respective
participation in such Letter of Credit, determined in accordance with
subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each
month ending after the Closing Date, so long as any Letter of Credit
shall have been outstanding during such month, each Issuing Lender
shall deliver to each other Lender a report setting forth for such
month the daily aggregate amount available to be drawn under the
Letters of Credit issued by such Issuing Lender that were outstanding
during such month.
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C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for its
own account, equal to 0.25% per annum of the daily amount available to
be drawn under such Standby Letter of Credit and (b) a letter of credit
fee, payable to Administrative Agent for the account of Lenders, equal
to the Applicable Revolving Eurodollar Rate Margin in effect with
respect to Eurodollar Rate Loans from time to time multiplied by the
daily amount available to be drawn under such Standby Letter of Credit,
each such fronting fee or letter of credit fee to be payable in arrears
on and to (but excluding) each March 15, June 15, September 15 and
December 15 of each year and computed on the basis of a 360-day year
for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of Credit, (a) a
fronting fee, payable directly to the applicable Issuing Lender for its
own account, equal to 0.25% per annum of the daily amount available to
be drawn under such Commercial Letter of Credit and (b) a letter of
credit fee, payable to Administrative Agent for the account of Lenders,
equal to the Applicable Revolving Eurodollar Rate Margin in effect with
respect to Eurodollar Rate Loans from time to time multiplied by the
daily amount available to be drawn under such Commercial Letter of
Credit, each such fronting fee or letter of credit fee to be payable in
arrears on and to (but excluding) each March 15, June 15, September 15
and December 15 of each year and computed on the basis of a 360-day
year for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or transfer of
each Letter of Credit and each payment of a drawing made thereunder
(without duplication of the fees payable under clauses (i) and (ii)
above), documentary and processing charges payable directly to the
applicable Issuing Lender for its own account in accordance with such
Issuing Lender's standard schedule for such charges in effect at the
time of such issuance, amendment, transfer or payment, as the case may
be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination. Promptly upon receipt by
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Administrative Agent of any amount described in clause (i)(b) or (ii)(b) of this
subsection 3.2, Administrative Agent shall distribute to each Lender its Pro
Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate) and in same day funds equal to the amount of such honored drawing;
provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless Company shall have notified Administrative Agent and
such Issuing Lender prior to 10:00 A.M. (New York City time) on the date such
drawing is honored that Company intends to reimburse such Issuing Lender for the
amount of such honored drawing with funds other than the proceeds of Revolving
Loans, Company shall be deemed to have given a timely Notice of Borrowing to
Administrative Agent requesting Lenders to make Revolving Loans that are Base
Rate Loans on the Reimbursement Date in an amount in Dollars (which amount, in
the case of a drawing under a Letter of Credit which is denominated in a
currency other than Dollars, shall be calculated by reference to the applicable
Exchange Rate) equal to the amount of such honored drawing and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.2B, Lenders
shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans
in the amount of such honored drawing, the proceeds of which shall be applied
directly by Administrative Agent to reimburse such Issuing Lender for the amount
of such honored drawing; and provided, further that if for any reason proceeds
of Revolving Loans are not received by such Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such honored drawing, Company shall
reimburse such Issuing Lender, on demand, in an amount in same day funds equal
to the excess of the amount of such honored drawing over the aggregate amount of
such Revolving Loans, if any, which are so received. Nothing in this subsection
3.3B shall be deemed to relieve any Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this subsection 3.3B.
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C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS
OF CREDIT.
(i) Payment by Lenders. In the event that Company shall fail
for any reason to reimburse any Issuing Lender as provided in
subsection 3.3B in an amount (calculated, in the case of a drawing
under a Letter of Credit denominated in a currency other than Dollars,
by reference to the applicable Exchange Rate) equal to the amount of
any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall promptly notify each other
Lender of the unreimbursed amount of such honored drawing and of such
other Lender's respective participation therein based on such Lender's
Pro Rata Share. Each Lender shall make available to such Issuing Lender
an amount equal to its respective participation, in Dollars and in same
day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (New York City time) on the first
business day (under the laws of the jurisdiction in which such office
of such Issuing Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to make available to
such Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection
3.3C, such Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the rate
customarily used by such Issuing Lender for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.
Nothing in this subsection 3.3C shall be deemed to prejudice the right
of any Lender to recover from any Issuing Lender any amounts made
available by such Lender to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of
which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From
Company. In the event any Issuing Lender shall have been reimbursed by
other Lenders pursuant to subsection 3.3C(i) for all or any portion of
any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such honored drawing such other Lender's Pro Rata Share of
all payments subsequently received by such Issuing Lender from Company
in reimbursement of such honored drawing when such payments are
received. Any such distribution shall be made to a Lender at its
primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to
each Issuing Lender, with respect to drawings honored under any Letters
of Credit issued
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by it, interest on the amount paid by such Issuing Lender in respect of
each such honored drawing from the date such drawing is honored to but
excluding the date such amount is reimbursed by Company (including any
such reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B) at a rate equal to (a) for the period from the date
such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving
Loans that are Base Rate Loans and (b) thereafter, a rate which is 2%
per annum in excess of the rate of interest otherwise payable under
this Agreement with respect to Revolving Loans that are Base Rate
Loans. Interest payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual number of days
elapsed in the period during which it accrues and shall be payable on
demand or, if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender.
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing honored under
a Letter of Credit issued by it, (a) such Issuing Lender shall
distribute to each other Lender, out of the interest received by such
Issuing Lender in respect of the period from the date such drawing is
honored to but excluding the date on which such Issuing Lender is
reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to
subsection 3.3B), the amount that such other Lender would have been
entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such
Letter of Credit, and (b) in the event such Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all
or any portion of such honored drawing, such Issuing Lender shall
distribute to each other Lender which has paid all amounts payable by
it under subsection 3.3C(i) with respect to such honored drawing such
other Lender's Pro Rata Share of any interest received by such Issuing
Lender in respect of that portion of such honored drawing so reimbursed
by other Lenders for the period from the date on which such Issuing
Lender was so reimbursed by other Lenders to but excluding the date on
which such portion of such honored drawing is reimbursed by Company.
Any such distribution shall be made to a Lender at its primary address
set forth below its name on the appropriate signature page hereof or at
such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Revolving
Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders
under subsection 3.3C(i) shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances including any of the following circumstances:
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(i) any lack of validity or enforceability of any Letter of
Credit;
(ii) the existence of any claim, set-off, defense or other
right which Company or any Lender may have at any time against a
beneficiary or any transferee of any Letter of Credit (or any Persons
for whom any such transferee may be acting), any Issuing Lender or
other Lender or any other Person or, in the case of a Lender, against
Company, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including any
underlying transaction between Company or one of its Subsidiaries and
the beneficiary for which any Letter of Credit was procured);
(iii) any draft or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) payment by the applicable Issuing Lender under any Letter
of Credit against presentation of a draft or other document which does
not substantially comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document
by any party thereto;
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event
of Default shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
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Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
"GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
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3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby and to the extent a
Lender is not entitled to payment under the terms of Section 2.7B, it shall not
be entitled to payment pursuant to this section), in the event that any Issuing
Lender or Lender shall determine (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) that any
law, treaty or governmental rule, regulation or order, or any change therein or
in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by any Issuing Lender or
Lender with any guideline, request or directive issued or made after the date
hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable
lending or letter of credit office) to any additional Tax (other than
any Tax on the overall net income of such Issuing Lender or Lender)
with respect to the issuing or maintaining of any Letters of Credit or
the purchasing or maintaining of any participations therein or any
other obligations under this Section 3, whether directly or by such
being imposed on or suffered by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve
(including any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing
Lender or participations therein purchased by any Lender; or
(iii) imposes any other condition (other than with respect to
a Tax matter) on or affecting such Issuing Lender or Lender (or its
applicable lending or letter of credit office) regarding this Section 3
or any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto by an amount considered by such Issuing Lender or Lender to be material;
then, in any case, Company shall promptly pay to such Issuing Lender or Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate such Issuing Lender or
Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to
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such Issuing Lender or Lender under this subsection 3.6, which statement shall
be conclusive and binding upon all parties hereto absent manifest error.
SECTION 4.
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT
The effectiveness of this Agreement and the obligations of Lenders to
make (or maintain, as the case may be) Revolving Loans and the issuance of
Letters of Credit hereunder are subject to the satisfaction of the following
conditions.
4.1 CONDITIONS TO EFFECTIVENESS.
The effectiveness of this Agreement is subject to prior or concurrent
satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Restatement Effective Date,
Company shall, and shall cause each other Loan Party to, deliver to Lenders (or
to Administrative Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) the following with respect
to Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Restatement Effective Date:
(i) Certified copies of the Certificate or Articles of
Incorporation of such Person (or, in lieu thereof, a certificate of the
corporate secretary of such Person certifying as of the Restatement
Effective Date that its Certificate of Incorporation delivered on the
Closing Date pursuant to subsection 4.1 of the Existing Revolving Loan
Credit Agreement is in full force and effect without modification or
amendment), together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other
state in which such Person is qualified as a foreign corporation to do
business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Restatement
Effective Date;
(ii) Copies of the Bylaws of such Person, certified as of the
Closing Date by such Person's corporate secretary or an assistant
secretary (or, in lieu thereof, a certificate of the corporate
secretary of such Person certifying as of the Restatement Effective
Date that its Bylaws delivered on the Closing Date pursuant to
subsection 4.1 of the Existing Revolving Loan Credit Agreement is in
full force and effect without modification or amendment);
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(iii) Resolutions of the Board of Directors of such Person
approving and authorizing the execution, delivery and performance of
the Revolving Loan Documents and the Anagram Acquisition Agreement to
which it is a party, certified as of the Restatement Effective Date by
the corporate secretary or an assistant secretary of such Person as
being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of
such Person executing the Revolving Loan Documents to which it is a
party;
(v) Executed originals of this Agreement and (to the extent
not previously executed and delivered to Lenders) the other Revolving
Loan Documents to which such Person is a party; and
(vi) Such other documents as Arranger or Administrative Agent
may reasonably request.
B. NO MATERIAL ADVERSE EFFECT. Since December 31, 1997, no
Material Adverse Effect (in the opinions of Arranger and Administrative Agent)
shall have occurred. Since December 31, 1997, there shall not have been an
adverse change, or any development involving a prospective adverse change, in or
affecting Anagram or any of its Subsidiaries or the general affairs, management,
financial position, shareholders' equity or results of operation of Anagram and
its Subsidiaries which is, in the reasonable judgment of Arranger,
Administrative Agent or Requisite Lenders, material.
C. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Corporate Structure. The corporate organizational
structure of Company and its Subsidiaries, both before and after giving
effect to the Anagram Acquisition, shall be as set forth on Schedule
4.1C annexed hereto.
(ii) Capital Structure and Ownership. The capital structure
and ownership of Company, both before and after giving effect to the
Anagram Acquisition, shall be as set forth on Schedule 4.1C annexed
hereto.
(iii) Management; Employment Agreements. The management
structure of Company after giving effect to the Anagram Acquisition
shall be as set forth on Schedule 4.1C annexed hereto. Arranger and
Administrative Agent shall have received duly executed copies of, and
shall be satisfied with the form and substance of, the Employment
Agreements as set forth on Schedule 4.1C annexed hereto.
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D. ANAGRAM ACQUISITION AGREEMENT.
(i) The Anagram Acquisition Agreement shall be satisfactory in
form and substance to Arranger and Administrative Agent;
(ii) On or prior to the Restatement Effective Date, Arranger
and Administrative Agent shall each have received a fully executed or
conformed copy of the Anagram Acquisition Agreement (including all
schedules and exhibits thereto) and any material documents executed in
connection therewith;
(iii) The Anagram Acquisition shall be in full force and
effect and no provision thereof shall have been modified or waived in
any respect determined by Arranger or Administrative Agent to be
material, in each case without the consent of Arranger and
Administrative Agent;
(iv) The parties thereto shall not have failed in any material
respect to perform any material obligation or covenant required by the
Anagram Acquisition Agreement to be performed or complied with by any
of them on or before the Restatement Effective Date; and
(v) Arranger and Administrative Agent shall have received an
Officer's Certificate from Company to the effect set forth in clauses
(ii)-(iv) above.
E. MATTERS RELATING TO EXISTING INDEBTEDNESS OF COMPANY AND ITS
SUBSIDIARIES.
(i) Termination of Existing Anagram Credit Agreements and
Related Liens; Existing Anagram Letters of Credit. On or prior to the
Restatement Effective Date, Anagram and its Subsidiaries shall have (a)
repaid in full all Indebtedness outstanding under the Existing Anagram
Credit Agreements as set forth on Schedule 4.1E-II (the aggregate
principal amount of which Indebtedness shall not exceed $19,000,000),
(b) terminated any commitments to lend or make other extensions of
credit thereunder, (c) delivered to Arranger and Administrative Agent
all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Anagram and its Subsidiaries
thereunder, and (d) made arrangements satisfactory to Arranger and
Administrative Agent with respect to the cancellation of any letters of
credit outstanding thereunder or the issuance of Letters of Credit to
support the obligations of Company and its Subsidiaries (after giving
effect to the Anagram Acquisition) with respect thereto.
(ii) Existing Indebtedness to Remain Outstanding. On the
Restatement Effective Date, Arranger and Administrative Agent shall
have received an Officers' Certificate of Company stating that, after
giving effect to the transactions described in this subsection 4.1E,
the Indebtedness of Loan Parties (other than Indebtedness under the
Loan Documents and the Senior Subordinated Notes) shall consist of
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(a) approximately $5,809,255 in aggregate principal amount of
outstanding Indebtedness described in Part I of Schedule 7.1 annexed
hereto and (b) Indebtedness in an aggregate amount not to exceed
$4,123,512 in respect of Capital Leases described in Part II of
Schedule 7.1 annexed hereto. The terms and conditions of all such
Indebtedness shall be in form and in substance satisfactory to
Arranger, Administrative Agent and Requisite Lenders.
F. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION
OF WAITING PERIODS, ETC. Company shall have obtained all Governmental
Authorizations and all consents of other Persons, in each case that are
necessary or advisable in connection with the Anagram Acquisition and the other
transactions contemplated by the Loan Documents and the Anagram Acquisition
Agreement and the continued operation of the business conducted by Company and
its Subsidiaries (including Anagram and its Subsidiaries) in substantially the
same manner as conducted prior to the consummation of the Anagram Acquisition,
and each of the foregoing shall be in full force and effect, in each case other
than those the failure to obtain or maintain which, either individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. All applicable waiting periods shall have expired without any action
being taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Anagram Acquisition or the
financing thereof. No action, request for stay, petition for review or
rehearing, reconsideration, or appeal with respect to any of the foregoing shall
be pending, and the time for any applicable agency to take action to set aside
its consent on its own motion shall have expired.
G. CONSUMMATION OF ANAGRAM ACQUISITION.
(i) All conditions to the Anagram Acquisition set forth in the
Anagram Acquisition Agreement shall have been satisfied or the
fulfillment of any such conditions shall have been waived; provided
that Arranger, Administrative Agent and Requisite Lenders shall have
consented to any such waiver of any such condition that Arranger or
Administrative Agent reasonably deems material;
(ii) The Anagram Acquisition shall have become effective in
accordance with the terms of the Anagram Acquisition Agreement at or
immediately prior to the time of funding of the Additional AXELs and
any Revolving Loans to be made hereunder on the Restatement Effective
Date;
(iii) Anagram Transaction Costs shall not exceed $4,000,000,
and Arranger shall have received evidence to its satisfaction to such
effect; and
(iv) Arranger and Administrative Agent shall have received an
Officers' Certificate of Company to the effect set forth in clauses
(i)-(iii) above.
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H. SECURITY INTERESTS IN PERSONAL AND MIXED PROPERTY. Collateral Agent
shall have received evidence satisfactory to it that Company and Subsidiary
Guarantors shall have taken or caused to be taken (to the extent not previously
taken pursuant to the terms of the Existing Revolving Loan Credit Agreement and
the other Loan Documents executed in connection therewith) all such actions,
executed and delivered or caused to be executed and delivered all such
agreements, documents and instruments, and made or caused to be made all such
filings and recordings (other than the filing or recording of items described in
clauses (iii), (iv) and (v) below) that may be necessary or, in the opinion of
Collateral Agent, desirable in order to create in favor of Collateral Agent, for
the benefit of Secured Parties, a valid and (upon such filing and recording)
perfected First Priority security interest in the entire personal and mixed
property Collateral. Such actions shall include the following:
(i) Schedules to Collateral Documents. Delivery to Collateral
Agent of accurate and complete schedules to all of the applicable
Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
Collateral Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank
and otherwise satisfactory in form and substance to Collateral Agent)
representing all capital stock pledged pursuant to the Company Pledge
Agreement and the Subsidiary Pledge Agreements and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to Collateral Agent) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery
to Arranger and Administrative Agent of (a) the results of a recent
search, by a Person satisfactory to Arranger and Administrative Agent,
of all effective UCC financing statements and fixture filings and all
judgment and tax lien filings which may have been made with respect to
any personal or mixed property of Anagram or any of its Subsidiaries,
together with copies of all such filings disclosed by such search, and
(b) UCC termination statements duly executed by all applicable Persons
for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement).
(iv) UCC Financing Statements and Fixture Filings; PTO
Filings. (a) Delivery to Collateral Agent of UCC financing statements
and, where appropriate, fixture filings, duly executed by each
applicable Loan Party with respect to all personal and mixed property
Collateral of such Loan Party, for filing in all jurisdictions as may
be necessary or, in the reasonable opinion of Collateral Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents and (b) delivery to Administrative
Agent of all cover sheets or other documents or instruments required to
be filed with the PTO or the United
85
States Copyright Office in order to create or perfect Liens in respect
of any IP Collateral;
(v) Auxiliary Pledge Agreements. Execution and delivery to
Collateral Agent of Auxiliary Pledge Agreements with respect to the
stock of all Foreign Subsidiaries organized under the laws of all
jurisdictions with respect to which Collateral Agent deems an Auxiliary
Pledge Agreement necessary or advisable to perfect or otherwise protect
the First Priority Liens granted to Collateral Agent on behalf of
Secured Parties in such stock, and the taking of all such other actions
under the laws of such jurisdictions as Collateral Agent may deem
necessary or advisable to perfect or otherwise protect such Liens; and
(vi) Opinions of Local Counsel. Delivery to Arranger and
Administrative Agent of an opinion of counsel (which counsel shall be
reasonably satisfactory to Arranger and Administrative Agent) under the
laws of each state in the United States in which any personal or mixed
property Collateral with an aggregate value in excess of $500,000 is
located with respect to the creation and perfection of the security
interests in favor of Collateral Agent in such Collateral and such
other matters governed by the laws of such jurisdiction regarding such
security interests as Arranger and Administrative Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Arranger and Administrative Agent.
I. EDEN PRAIRIE HOLDINGS. On or before the Restatement Effective
Date, Collateral Agent shall have received from Anagram:
(i) Certified copy of the Certificate of Formation of Eden
Prairie Holdings, together with a good standing certificate from the
Secretary of State of Delaware and each other state in which Eden
Prairie Holdings is qualified to do business, each dated a recent date
prior to the Restatement Effective Date;
(ii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Anagram International has transferred all
its right, title and interest in and to the Anagram Headquarters
Facility to Eden Prairie Holdings;
(iii) Evidence in form and substance satisfactory to Arranger
and Administrative Agent that Company has assigned all its membership
interest in Eden Prairie Holdings to Anagram International;
(iv) Copy of a lease relating to the Anagram Headquarters
Facility entered into by and between Eden Prairie Holdings and Anagram
International, in form and substance satisfactory to Arranger and
Administrative Agent; and
(v) Evidence satisfactory to Arranger and Administrative Agent
that Anagram International has appointed an independent manager for
Eden Prairie
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Holdings in accordance with paragraph Seventh of the Certificate of
Formation of Eden Prairie Holdings; provided that, to the extent such
independent manager is not so appointed on or before the Restatement
Effective Date, Company shall cause Anagram International to appoint an
independent manager for Eden Prairie Holdings in accordance with
paragraph Seventh of the Certificate of Formation of Eden Prairie
Holdings as promptly as practicable after being requested to do so by
Collateral Agent in accordance with said paragraph Seventh.
J. ENVIRONMENTAL REPORTS. Arranger and Administrative Agent shall have
received such reports and other information, in form, scope and substance
satisfactory to Arranger and Administrative Agent, as Arranger and
Administrative Agent may reasonably require regarding environmental matters
relating to Anagram and its Subsidiaries and any of their respective Facilities.
K. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Restatement Effective Date, Lenders shall have received from Company (i) audited
financial statements of Anagram International, Inc. and its Subsidiaries for its
fiscal years ended December 31, 1996 and 1997, consisting of balance sheets and
the consolidated statements of income, stockholders' equity and cash flows for
such fiscal years, (ii) unaudited combined and combining financial statements of
Anagram and its Subsidiaries as at June 30, 1998, consisting of an unaudited
combined and combining balance sheet and the combined and combining statements
of income for the six-month period ending on such date, all in reasonable detail
and certified by the chief financial officer of Anagram that they fairly present
the financial condition of Anagram and its Subsidiaries as at the dates
indicated and the results of their operations for the periods indicated, subject
to changes resulting from audit and normal year-end adjustments, (iii) unaudited
financial statements of Company and its Subsidiaries as at June 30, 1998,
consisting of a balance sheet and the related consolidated statements of income,
stockholders' equity and cash flows for the six-month period ending on such
date, all in reasonable detail and certified by the chief financial officer of
Company that they fairly present the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments,(iv) pro forma consolidated balance sheets
of Company and its Subsidiaries as of July 31, 1998, prepared in accordance with
GAAP and reflecting the consummation of the Anagram Acquisition, the related
financings and the other transactions contemplated by the Loan Documents and the
Anagram Acquisition Agreement, which pro forma financial statements shall be in
form and substance satisfactory to Lenders, and (v) pro forma financial
statements (including consolidated balance sheets, statements of operations,
stockholders' equity and cash flows) of Company and its Subsidiaries (after
giving effect to the Anagram Acquisition) for the 10-year period commencing on
the Restatement Effective Date, which pro forma financial statements shall be in
form and substance satisfactory to Lenders.
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L. EVIDENCE OF INSURANCE. Collateral Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to it
that all insurance required to be maintained pursuant to subsection 6.4 is in
full force and effect and that Collateral Agent on behalf of Secured Parties has
been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
M. OPINIONS OF COUNSEL TO LOAN PARTIES. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of (a) Wachtell, Lipton, Xxxxx & Xxxx, special
counsel for Loan Parties, in form and substance reasonably satisfactory to
Administrative Agent and Arranger and its counsel, dated as of the Restatement
Effective Date and setting forth substantially the matters in the opinions
designated in Exhibit VII-A annexed hereto and as to such other matters as
Administrative Agent or Arranger and acting on behalf of Lenders may reasonably
request and (b) Xxxxxxx & Xxxxxxxxx counsel for Loan Parties, in form and
substance reasonably satisfactory to Administrative Agent and Arranger and its
counsel, dated as of the Restatement Effective Date and setting forth
substantially the matters in the opinions designated in Exhibit VII-B annexed
hereto and as to such other matters as Administrative Agent or Arranger and
acting on behalf of Lenders may reasonably request, and (ii) evidence
satisfactory to Arranger and Administrative Agent that Company has requested
such counsel to deliver such opinions to Lenders.
N. OPINIONS OF ARRANGER AND ADMINISTRATIVE AGENT'S COUNSEL. Lenders
shall have received originally executed copies of one or more favorable written
opinions of O'Melveny & Xxxxx LLP, counsel to Arranger and Administrative Agent,
dated as of the Restatement Effective Date, substantially in the form of Exhibit
VIII annexed hereto and as to such other matters as Arranger and Administrative
Agent may reasonably request.
O. OPINIONS OF COUNSEL RELATING TO THE ANAGRAM ACQUISITION AGREEMENT.
On or prior to the Effective Date, Arranger and Administrative Agent shall each
have received executed copies of all opinions by counsel delivered in connection
with the Anagram Acquisition Agreement to Company or any of its Subsidiaries.
All such opinions shall be, to the extent agreed to by the person delivering
such opinion, addressed to Arranger, Administrative Agent and Lenders or
accompanied by written authorization from each person delivering such an opinion
stating that Arranger, Administrative Agent and Lenders may rely on such opinion
as though it were addressed to them.
P. FEES. Company shall have paid to Arranger and Administrative Agent,
for distribution (as appropriate) to Arranger, Administrative Agent and Lenders,
the fees payable on the Restatement Effective Date referred to in subsection
2.3B.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Arranger and Administrative Agent an Officers'
Certificate, in form and substance satisfactory to Arranger and Administrative
Agent, to the effect that the representations and warranties in Section 5 hereof
are true, correct and complete in all
88
material respects on and as of the Restatement Effective Date to the same extent
as though made on and as of that date (or, to the extent such representations
and warranties specifically relate to an earlier date, that such representations
and warranties were true, correct and complete in all material respects on and
as of such earlier date) and that Company shall have performed in all material
respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before the Restatement
Effective Date except as otherwise disclosed to and agreed to in writing by
Arranger, Administrative Agent and Requisite Lenders.
R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Administrative
Agent, acting on behalf of Lenders, or Arranger and its counsel shall be
satisfactory in form and substance to Administrative Agent and Arranger and such
counsel, and Administrative Agent, Arranger and such counsel shall have received
all such counterpart originals or certified copies of such documents as
Administrative Agent or Arranger may reasonably request.
S. BORROWING BASE CERTIFICATE. Administrative Agent shall have received
a Borrowing Base Certificate dated as of July 31, 1998, in form, scope and
substance satisfactory to Arranger and Administrative Agent.
T. CASH MANAGEMENT SYSTEM. Administrative Agent shall have received
evidence satisfactory to it that Company and its Subsidiaries have established
and maintain a cash management system in form and substance reasonably
satisfactory to the Administrative Agent and in accordance with subsection 6.11.
U. COLLATERAL ACCESS AGREEMENTS. On or prior to the Restatement
Effective Date, Anagram and each applicable Subsidiary Guarantor shall have used
its reasonable good faith efforts to obtain, in the case of any Leasehold
Property or any real property in which Anagram or any of its Subsidiaries owns
or holds a fee interest and which is subject to a mortgage held by a third-party
mortgagee holding inventory or equipment with an aggregate fair market value
exceeding $500,000, a Collateral Access Agreement with respect thereto, in each
case in form and substance reasonably satisfactory to Arranger and
Administrative Agent; provided that, to the extent any such Collateral Access
Agreement is not so obtained on or before the Restatement Effective Date, upon
the reasonable request of Collateral Agent, Company hereby covenants and agrees
to cause the applicable Subsidiary Guarantor to continue to use its reasonable
good faith efforts to obtain such Collateral Access Agreement as promptly as
practicable after the Restatement Effective Date.
V. AXEL CREDIT AGREEMENT. Arranger and Administrative Agent shall each
have received a fully executed or conformed copy of the AXEL Credit Agreement,
as amended and restated in connection with the Anagram Acquisition, satisfactory
in form and substance to Arranger and Administrative Agent. The AXEL Credit
Agreement shall be in full force
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and effect and the conditions to advances of the AXELs thereunder shall have
been satisfied or waived by the AXEL Lenders.
U. NO EVENT OF DEFAULT. Company shall have delivered to Administrative
Agent an Officer's Certificate, in form and substance satisfactory to
Administrative Agent, to the effect that, immediately prior to the Restatement
Effective Date, no event has occurred and is continuing that would constitute an
Event of Default or Potential Event of Default under the Existing Revolving Loan
Credit Agreement or the AXEL Credit Agreement.
4.2 CONDITIONS TO ALL REVOLVING LOANS.
The obligations of Lenders to make Revolving Loans on each Funding Date
are subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer or the treasurer or corporate controller of
Company or by any executive officer of Company designated by any of the
above-described officers on behalf of Company in a writing delivered to
Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in
the other Revolving Loan Documents shall be true, correct and complete
in all material respects on and as of that Funding Date to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier
date;
(ii) No event shall have occurred and be continuing or would
result from the consummation of the borrowing contemplated by such
Notice of Borrowing that would constitute an Event of Default or a
Potential Event of Default;
(iii) Each Loan Party shall have performed in all material
respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before
that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making the Revolving Loans to be made by it on that Funding Date;
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(v) The making of the Revolving Loans requested on such
Funding Date shall not violate any law including Regulation G,
Regulation T, Regulation U or Regulation X of the Board of Governors of
the Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of
Company, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries that
has not been disclosed by Company in writing pursuant to subsection 5.6
or 6.1(x) prior to the making of the last preceding Revolving Loans
(or, in the case of the initial Revolving Loans, prior to the execution
of this Agreement), and there shall have occurred no development not so
disclosed in any such action, suit, proceeding, governmental
investigation or arbitration so disclosed, that, in either event, in
the opinion of Administrative Agent or of Requisite Lenders, would be
expected to have a Material Adverse Effect; and no injunction or other
restraining order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be pending or
noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated
by this Agreement or the making of Revolving Loans hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, the initial Revolving Loans shall
have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Notice of
Issuance of Letter of Credit, in each case signed by the chief
executive officer, the chief financial officer or the treasurer or
corporate controller of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company
in a writing delivered to Administrative Agent, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 4.2B shall be satisfied to
the same extent as if the issuance of such Letter of Credit were the
making of a Revolving Loan and the date of issuance of such Letter of
Credit were a Funding Date.
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SECTION 5.
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make (or
maintain, as the case may be) the Revolving Loans, to induce Issuing Lenders to
issue Letters of Credit and to induce other Lenders to purchase participations
therein, Company represents and warrants to each Lender, on the date of this
Agreement, on each Funding Date, on the Restatement Effective Date and on the
date of issuance of each Letter of Credit, that the following statements are
true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES.
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation as specified in Schedule 5.1 annexed hereto as it
may be supplemented pursuant to subsection 6.1(xvi). Each Loan Party has all
requisite corporate power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to enter
into the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which it is a party and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to do
business and in good standing in every jurisdiction where its assets are located
and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 7.12.
D. SUBSIDIARIES. All of the Subsidiaries of Company as of the
Restatement Effective Date (after giving effect to the Anagram Acquisition) are
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1 may be
supplemented from time to time pursuant to the provisions of subsection
6.1(xvi). The capital stock of each of the Subsidiaries of Company identified in
Schedule 5.1 annexed hereto (as so supplemented) is duly authorized, validly
issued, fully paid and nonassessable and none of such capital stock constitutes
Margin Stock. Each of the Subsidiaries of Company identified in Schedule 5.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except
92
where failure to be so qualified or in good standing or a lack of such corporate
power and authority has not had and could not reasonably be expected to have a
Material Adverse Effect. Schedule 5.1 annexed hereto (as so supplemented)
correctly sets forth, as of the Closing Date, the ownership interest of Company
and each of its Subsidiaries in each of the Subsidiaries of Company identified
therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by Loan Parties
of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which they are parties and the consummation of the
transactions contemplated by the Revolving Loan Documents, the Related
Agreements and the Anagram Acquisition Agreement do not and will not (i) violate
any provision of any law or any governmental rule or regulation applicable to
Company or any of its Subsidiaries, the Certificate or Articles of Incorporation
or Bylaws of Company or any of its Subsidiaries or any order, judgment or decree
of any court or other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Company or any of its Subsidiaries, except for any breach or default which could
not reasonably be expected to have a Material Adverse Effect, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Revolving Loan Documents in favor of Administrative Agent on behalf
of Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of Company or any of its
Subsidiaries, except for such approvals or consents which will be obtained on or
before the Restatement Effective Date and disclosed in writing to Lenders and
such consents the failure of which to receive could not reasonably be expected
to have a Material Adverse Effect.
C. GOVERNMENTAL CONSENTS. Except as specified in Schedule 3.9(b) to the
Anagram Acquisition Agreement, the execution, delivery and performance by Loan
Parties of the Revolving Loan Documents, the Related Agreements and the Anagram
Acquisition Agreement to which they are parties and the consummation of the
transactions contemplated by the Revolving Loan Documents, such Related
Agreements and the Anagram Acquisition Agreement do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body the failure of which to receive could not reasonably be expected to cause a
Material Adverse Effect. Any such required consents, approvals, notices
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or other actions shall have been received, given or performed, as the case may
be, on or prior to the Restatement Effective Date.
D. BINDING OBLIGATION. Each of the Revolving Loan Documents,
the Related Agreements and the Anagram Acquisition Agreement has been duly
executed and delivered by each Loan Party that is a party thereto and is the
legally valid and binding obligation of such Loan Party, enforceable against
such Loan Party in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability.
E. VALID ISSUANCE OF COMPANY COMMON STOCK AND SENIOR SUBORDINATED
NOTES.
(i) Company Common Stock. The Company Common Stock to be
issued in the Merger on the Closing Date has been duly and validly
issued and is fully paid and nonassessable. The New Company Shares to
be issued in partial consideration for the Anagram Acquisition on or
before the Restatement Effective Date, when issued and delivered, will
be duly and validly issued, fully paid and nonassessable. No
stockholder of Company has or will have any preemptive rights to
subscribe for any additional equity Securities of Company. The issuance
and sale of such Company Common Stock or New Company Shares, upon such
issuance and sale, either (a) have been or will have been registered or
qualified under applicable federal and state securities laws or (b)
have been or will be exempt therefrom.
(ii) Senior Subordinated Notes. The Senior Subordinated Notes
are the legally valid and binding obligations of Company, enforceable
against Company in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability. The subordination
provisions of the Senior Subordinated Notes will be enforceable against
the holders thereof and the Revolving Loans and all other monetary
Obligations hereunder are and will be within the definition of "Senior
Debt" and "Designated Senior Debt" included in such provisions. The
Senior Subordinated Notes either (a) have been registered or qualified
under applicable federal and state securities laws or (b) are exempt
therefrom.
5.3 FINANCIAL CONDITION.
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheets of Company and its Subsidiaries as at December 31, 1997 and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended, (ii) the
unaudited consolidated balance sheets of Company and its Subsidiaries as at June
30, 1998 and the related unaudited consolidated statements
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of income, stockholders' equity and cash flows of Company and its Subsidiaries
for the six-months then ended, (iii) the audited consolidated balance sheets of
Anagram International, Inc. and its Subsidiaries as at December 31, 1997 and the
consolidated statements of income, stockholders' equity and cash flows of
Anagram International, Inc. and its Subsidiaries for its fiscal year then ended
and (iv) the unaudited combined and combining balance sheets of Anagram and its
Subsidiaries as at June 30, 1998 and the unaudited combined and combining
statements of income of Anagram and its Subsidiaries for the six-months then
ended. All such statements were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as otherwise
indicated therein or in the Anagram Acquisition Agreement) and fairly present,
in all material respects, the financial position of the entities described in
such financial statements as of such respective dates and the results of
operations of the entities described therein for each of the periods then ended,
subject, in the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments. Company does not (and did
not immediately following the funding of the initial Revolving Loans) have any
Contingent Obligation, contingent liability or liability for taxes, long-term
lease or unusual forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto and which in any such case
is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries (after giving effect to the Anagram Acquisition).
5.4 NO MATERIAL ADVERSE CHANGE.
Since December 31, 1997, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect.
5.5 TITLE TO PROPERTIES; LIENS; REAL PROPERTY.
A. TITLE TO PROPERTIES; LIENS. After giving effect to the transactions
contemplated by this Agreement and the Anagram Acquisition Agreement to occur on
the Restatement Effective Date, except for Permitted Encumbrances and Liens,
Company and its Subsidiaries have (i) good, sufficient and legal title to (in
the case of fee interests in real property), (ii) valid leasehold interests in
(in the case of leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of their respective
properties and assets reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements delivered pursuant to
subsection 6.1 of the Existing Revolving Loan Credit Agreement or this
Agreement, in each case except for assets disposed of since the date of such
financial statements in the ordinary course of business or as otherwise
permitted under subsection 7.7. All such properties and assets are free and
clear of Liens other than Permitted Encumbrances and other Liens permitted under
this Agreement.
B. REAL PROPERTY. After giving effect to the transactions contemplated
by this Agreement and the Anagram Acquisition Agreement, as of the Restatement
Effective Date,
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Schedule 5.5 annexed hereto contains a true, accurate and complete list of (i)
all Fee Properties and (ii) all leases, subleases or assignments of leases
(together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Real Property Asset of any Loan Party,
regardless of whether such Loan Party is the landlord or tenant (whether
directly or as an assignee or successor in interest) under such lease, sublease
or assignment. As of the Restatement Effective Date, except as specified in
Schedule 5.5 annexed hereto, each agreement listed in clause (ii) of the
immediately preceding sentence is in full force and effect and Company does not
have knowledge of any material default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding
obligation of each applicable Loan Party, enforceable against such Loan Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles.
5.6 LITIGATION; ADVERSE FACTS.
Except as set forth in Schedule 5.6 annexed hereto, there are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of Company or any of its Subsidiaries) at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or, to
the knowledge of Company, threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidiaries and that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect. Neither Company nor any of its Subsidiaries (i) is in
violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect, or (ii) is subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court
or any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.
5.7 PAYMENT OF TAXES.
Except to the extent permitted by subsection 6.3, all material tax
returns and reports of Company and its Subsidiaries required to be filed by any
of them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid when
due and payable. Company knows of no proposed material tax assessment against
Company or any of its Subsidiaries which is not being actively contested by
Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or provided therefor.
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5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
CONTRACTS.
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
Material Contracts in effect on the Restatement Effective Date. Except as
described on Schedule 5.8, all such Material Contracts are in full force and
effect and no defaults currently exist thereunder other than any such defaults
or failure to be in force and effect which could not reasonably be expected to
result in a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 SECURITIES ACTIVITIES.
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each AXEL under the AXEL
Credit Agreement and each Revolving Loan, not more than 25% of the value of the
assets (either of Company only or of Company and its Subsidiaries on a
consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
A. Company, each of its Subsidiaries and each of their respective ERISA
Affiliates are in compliance with all applicable provisions and requirements of
ERISA and
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the regulations and published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Internal Revenue Code is so qualified.
B. No ERISA Events have occurred or are reasonably expected to occur
which could reasonably be expected to result in liabilities to the Company or
any of its Subsidiaries in excess of $1,000,000 in the aggregate.
C. As of the most recent valuation date for any Pension Plan, the
excess of (1) the actuarial present value (determined on the basis of reasonable
assumptions employed by the independent actuary for each Pension Plan for
purposes of Section 412 of the Internal Revenue Code or Section 302 of ERISA) of
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) over (2) the
fair market value of the assets of such Pension Plan, individually or in the
aggregate for all Pension Plans (excluding for purposes of such computation any
Pension Plans with respect to which assets exceed benefit liabilities), does not
exceed $5,000,000.
D. As of the most recent valuation date for each Multiemployer Plan for
which the actuarial report is available, the potential liability of Company, its
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
5.12 CERTAIN FEES.
Except as described in the Confidential Information Memorandum and the
advisory fee payable by Company to Xxxxx Xxxxxxx in an amount not to exceed
$700,000, no broker's or finder's fee or commission has been or will be payable
by Company with respect to this Agreement or any of the transactions
contemplated hereby, and Company hereby indemnifies Lenders against, and agrees
that it will hold Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.
5.13 ENVIRONMENTAL PROTECTION.
Except as set forth in Schedule 5.13 annexed hereto:
(i) neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any
outstanding written order, consent decree or settlement agreement with
any Person relating to (a) any Environmental Law, (b) any Environmental
Claim, or (c) any Hazardous Materials Activity;
98
(ii) neither Company nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. [Section] 9604) or any comparable state law;
(iii) there are and, to Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim
against Company or any of its Subsidiaries;
(iv) neither Company nor any of its Subsidiaries nor, to
Company's knowledge, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment of Hazardous Materials at any
Facility, and none of Company's or any of its Subsidiaries' operations
involves the generation, transportation, treatment, storage or disposal
of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any
state equivalent;
(v) compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of
giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity, including any matter disclosed
on Schedule 5.13 annexed hereto, which individually or in the aggregate has had
or could reasonably be expected to have a Material Adverse Effect.
5.14 EMPLOYEE MATTERS.
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.15 SOLVENCY.
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
5.16 MATTERS RELATING TO COLLATERAL.
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the
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date hereof pursuant to subsections 4.1I, 6.8 and 6.9 of the Existing Revolving
Loan Credit Agreement and subsections 4.1I, 6.8 and 6.9 of this Agreement and
(ii) the delivery to Collateral Agent of any Pledged Collateral not delivered to
Collateral Agent at the time of execution and delivery of the applicable
Collateral Document (all of which Pledged Collateral has been so delivered) are
effective to create in favor of Collateral Agent for the benefit of Secured
Parties, as security for the respective Secured Obligations (as defined in the
applicable Collateral Document in respect of any Collateral), a valid and
perfected First Priority Lien on all of the Collateral, and all filings and
other actions necessary or desirable to perfect and maintain the perfection and
First Priority status of such Liens have been duly made or taken and remain in
full force and effect, other than the filing of any UCC financing statements
delivered to Collateral Agent for filing (but not yet filed) and the periodic
filing of UCC continuation statements in respect of UCC financing statements
filed by or on behalf of Collateral Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Collateral Agent pursuant to
any of the Collateral Documents or (ii) the exercise by Collateral Agent of any
rights or remedies in respect of any Collateral (whether specifically granted or
created pursuant to any of the Collateral Documents or created or provided for
by applicable law), except for filings or recordings contemplated by subsection
5.16A and except as may be required, in connection with the disposition of any
Pledged Collateral, by laws generally affecting the offering and sale of
securities.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed
in favor of Collateral Agent as contemplated by subsection 5.16A, no effective
UCC financing statement, fixture filing or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or recording
office.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to
the Collateral Documents does not violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to
Collateral Agent by or on behalf of any Loan Party with respect to any of the
Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.17 RELATED AGREEMENTS.
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to
Lenders complete and correct copies of each Related Agreement and the Anagram
Acquisition Agreement and of all exhibits and schedules thereto.
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B. WARRANTIES OF COMPANY.
(i) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Recapitalization Agreement is true and correct in all
material respects as of the Closing Date (or as of any earlier date to
which such representation and warranty specifically relates) and will
be true and correct in all material respects as of the Closing Date (or
as of such earlier date, as the case may be), in each case subject to
the qualifications set forth in the schedules to the Recapitalization
Agreement.
(ii) Except to the extent otherwise set forth herein or in the
schedules hereto, each of the representations and warranties given by
Company in the Anagram Acquisition Agreement is true and correct in all
material respects as of the Restatement Effective Date (or as of any
earlier date to which such representation and warranty specifically
relates) and will be true and correct in all material respects as of
the date hereof (or as of such earlier date, as the case may be), in
each case subject to the qualifications set forth in the schedules to
the Anagram Acquisition Agreement.
C. SURVIVAL. Notwithstanding anything in the Recapitalization Agreement
or the Anagram Acquisition Agreement to the contrary, (i) the representations
and warranties of Company set forth in subsection 5.17B(i) shall, solely for
purposes of this Agreement, survive the Closing Date for the benefit of Lenders
and (ii) the representations and warranties of Company set forth in subsection
5.17B(ii) shall, solely for purposes of this Agreement, survive the Restatement
Effective Date for the benefit of Lenders.
5.18 DISCLOSURE.
No representation or warranty of Company or any of its Subsidiaries
contained in the Confidential Information Memorandum or in any Loan Document or
in any other document, certificate or written statement furnished to Lenders by
or on behalf of Company or any of its Subsidiaries for use in connection with
the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state a material fact (known to Company, in the case
of any document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Company to be reasonable at the time made, it being recognized by
Lenders that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to Company
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and
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that have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
5.19 AXEL CREDIT AGREEMENT.
A. Delivery of AXEL Credit Agreement. Company has delivered to Lenders
complete and correct copies of the AXEL Credit Agreement, as amended and
restated as of the Restatement Effective Date, and of all exhibits and schedules
thereto.
B. Warranties of Company. Except to the extent otherwise set forth
herein or in the schedules hereto, each of the representations and warranties
given by Company in the AXEL Credit Agreement, as amended and restated as of the
Restatement Effective Date, is true and correct in all material respects as of
the date hereof (or as of any earlier date to which such representation and
warranty specifically relates) and will be true and correct in all material
respects as of the Restatement Effective Date (or as of such earlier date, as
the case may be), in each case subject to the qualifications set forth in the
schedules to the AXEL Credit Agreement, as so amended and restated.
SECTION 6.
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the Revolving Loan
Commitments hereunder shall remain in effect and until payment in full of all of
the Revolving Loans and other Obligations and the cancellation or expiration of
all Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Administrative Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event
within 30 days after the end of each month ending after the Restatement
Effective Date, commencing with the calendar month of August 1998 (or
within 45 days after the end of each month which ends a Fiscal
Quarter), the consolidated balance sheets of Company and its
Subsidiaries as at the end of such month and the related consolidated
statements of income, stockholders' equity and cash flows of Company
and its Subsidiaries for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month,
setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and
the corresponding figures from the Financial Plan for the
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current Fiscal Year, to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of
Company that they fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, for such month and for the period from the
beginning of the then current Fiscal Year to the end of such month;
(ii) Quarterly Financials: as soon as available and in any
event within 45 days after the end of each of first three Fiscal
Quarters of each year, (a) the consolidated balance sheets of Company
and its Subsidiaries as at the end of such Fiscal Quarter and the
related consolidated statements of income, stockholders' equity and
cash flows of Company and its Subsidiaries for such Fiscal Quarter and
for the period from the beginning of the then current Fiscal Year to
the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year and the corresponding figures from
the Financial Plan for the current Fiscal Year, all in reasonable
detail and certified by the chief financial officer of Company that
they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments, and (b) a narrative report describing the operations of
Company and its Subsidiaries in the form of the MD&A, which is prepared
by the Company for public filing for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of
such Fiscal Quarter;
(iii) Year-End Financials: as soon as available and in any
event within 90 days after the end of each Fiscal Year, (a) the
consolidated balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated statements of
income, stockholders' equity and cash flows of Company and its
Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the Financial Plan for the Fiscal
Year covered by such financial statements, all in reasonable detail and
certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management
for such Fiscal Year, and (c) a report thereon of independent certified
public accountants of recognized national standing selected by Company
and satisfactory to Administrative Agent, which report shall be
unqualified, shall express no doubts about the ability of Company and
its Subsidiaries to continue as a going concern, and shall state that
such consolidated financial statements fairly present, in all material
respects, the consolidated financial position of Company and
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its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as
otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally
accepted auditing standards;
(iv) Officers' and Compliance Certificates: together with each
delivery of financial statements of Company and its Subsidiaries
pursuant to subdivisions (ii) and (iii) above, (a) an Officers'
Certificate of Company stating that the signers have reviewed the terms
of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting period,
and that the signers do not have knowledge of the existence as at the
date of such Officers' Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is
taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail (1) compliance during
and at the end of the applicable accounting periods with the
restrictions contained in Section 7, in each case to the extent
compliance with such restrictions is required to be tested at the end
of the applicable accounting period and (2) with respect to any Net
Asset Sale Proceeds received by Company or any of its Subsidiaries
during the second Fiscal Quarter immediately preceding the Fiscal
Quarter in which the applicable accounting period ends, whether or not
all or any portion of such Net Asset Sale Proceeds shall have become
Unreinvested Asset Sale Proceeds;
(v) Reconciliation Statements: if, as a result of any change
in accounting principles and policies from those used in the
preparation of the audited financial statements referred to in
subsection 5.3, the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions (ii), (iii) or
(xiii) of this subsection 6.1 will differ in any material respect from
the consolidated financial statements that would have been delivered
pursuant to such subdivisions had no such change in accounting
principles and policies been made, then (a) together with the first
delivery of financial statements pursuant to subdivision (ii), (iii) or
(xiii) of this subsection 6.1 following such change, consolidated
financial statements of Company and its Subsidiaries for (y) the
current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which
such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together
with each delivery of financial statements pursuant to subdivision
(ii), (iii) or (xiii) of this subsection 6.1 following such change, a
written statement of the chief accounting officer or chief
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financial officer of Company setting forth the differences (including
any differences that would affect any calculations relating to the
financial covenants set forth in subsection 7.6) which would have
resulted if such financial statements had been prepared without giving
effect to such change;
(vi) Accountants' Certification: together with each delivery
of consolidated financial statements of Company and its Subsidiaries
pursuant to subdivision (iii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating that their audit examination has included a review of the terms
of this Agreement and the other Revolving Loan Documents as they relate
to accounting matters, (b) stating whether, in connection with their
audit examination, any condition or event that constitutes an Event of
Default or Potential Event of Default has come to their attention and,
if such a condition or event has come to their attention, specifying
the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default
that would not be disclosed in the course of their audit examination,
and (c) stating that based on their audit examination nothing has come
to their attention that causes them to believe either or both that the
information contained in the certificates delivered therewith pursuant
to subdivision (iv) above is not correct or that the matters set forth
in the Compliance Certificates delivered therewith pursuant to clause
(b) of subdivision (iv) above for the applicable Fiscal Year are not
stated in accordance with the terms of this Agreement;
(vii) Accountants' Reports: promptly upon receipt thereof
(unless restricted by applicable professional standards), copies of all
reports submitted to Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of Company and its Subsidiaries made by such
accountants, including any comment letter submitted by such accountants
to management in connection with their annual audit;
(viii) SEC Filings and Press Releases: promptly upon their
becoming available, copies of (a) all financial statements, reports,
notices and proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary of Company to its
security holders other than Company or another Subsidiary of Company,
(b) all regular and periodic reports and all registration statements
(other than on Form S-8 or a similar form) and prospectuses, if any,
filed by Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or
any of its Subsidiaries to the public concerning material developments
in the business of Company or any of its Subsidiaries;
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(ix) Events of Default, etc.: promptly upon any officer of
Company obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or
becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of Default, (b) that any
Person has given any notice to Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2, (c) of any
condition or event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange Commission on
Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the date
hereof) if Company were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officers' Certificate specifying the nature and
period of existence of such condition, event or change, or specifying
the notice given or action taken by any such Person and the nature of
such claimed Event of Default, Potential Event of Default, default,
event or condition, and what action Company has taken, is taking and
proposes to take with respect thereto;
(x) Litigation or Other Proceedings: (a) promptly upon any
officer of Company obtaining knowledge of (X) the institution of, or
non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or
any property of Company or any of its Subsidiaries (collectively,
"PROCEEDINGS") not previously disclosed in writing by Company to
Lenders or (Y) any material development in any Proceeding that, in any
case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as
a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged
liability of, or claims against or affecting, Company or any of its
Subsidiaries equal to or greater than $500,000, and promptly after
request by Administrative Agent such other information as may be
reasonably requested by Administrative Agent to enable Administrative
Agent and its counsel to evaluate any of such Proceedings;
(xi) ERISA Events: promptly upon becoming aware of the
occurrence of or forthcoming occurrence of any ERISA Event, a written
notice specifying the
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nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates 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 Department of Labor or
the PBGC with respect thereto;
(xii) ERISA Notices: with reasonable promptness, copies of (a)
each Schedule B (Actuarial Information) to the annual report (Form 5500
Series) filed by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by Company or
any of its Subsidiaries from a Multiemployer Plan sponsor concerning an
ERISA Event; and (c) copies of such other documents or governmental
reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable and in any
event no later than 30 days prior to the beginning of each Fiscal Year,
a consolidated plan and financial forecast for such Fiscal Year and
each succeeding Fiscal Year through the Revolving Loan Commitment
Termination Date (the "FINANCIAL PLAN" for such Fiscal Years),
including (a) forecasted consolidated balance sheets and forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for each such Fiscal Year, together with pro forma
Compliance Certificates for each such Fiscal Year and an explanation of
the assumptions on which such forecasts are based, (b) forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for each month of the first such Fiscal Year, together
with an explanation of the assumptions on which such forecasts are
based, and (c) such other information and projections as any Lender may
reasonably request;
(xiv) Insurance: as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance
satisfactory to Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by Company and its
Subsidiaries and all material insurance coverage planned to be
maintained by Company and its Subsidiaries in the immediately
succeeding Fiscal Year;
(xv) Board of Directors: with reasonable promptness, written
notice of any change in the Board of Directors of Company;
(xvi) New Subsidiaries: promptly upon any Person becoming a
Subsidiary of Company, a written notice setting forth with respect to
such Person (a) the date on which such Person became a Subsidiary of
Company and (b) all of the data required to be set forth in Schedule
5.1 annexed hereto with respect to all Subsidiaries of Company (it
being understood that such written notice shall be deemed to supplement
Schedule 5.1 annexed hereto for all purposes of this Agreement);
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(xvii) Material Contracts: promptly, and in any event within
ten Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially
adverse to Company or such Subsidiary, as the case may be, or any new
Material Contract is entered into, a written statement describing such
event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xviii) Borrowing Base Certificate: As soon as available and
in any event within ten Business Days after the last Business Day of
each month ending after the Closing Date, a Borrowing Base Certificate
dated as of the last Business Day of such month, together with any
additional schedules and other information that Administrative Agent
may reasonably request (it being understood that (a) Company, in
addition to such monthly Borrowing Base Certificates, may from time to
time deliver to Administrative Agent and Lenders, on any Business Day
after the Closing Date, a Borrowing Base Certificate dated as of a
recent day, together with any additional schedules and other
information that Administrative Agent may reasonably request, and (b)
the most recent Borrowing Base Certificate described in this
subdivision (xix) that is delivered to Administrative Agent shall be
used in calculating the Borrowing Base as of any date of
determination); and
(xix) Other Information: with reasonable promptness, such
other information and data with respect to Company or any of its
Subsidiaries as from time to time may be reasonably requested by any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company, such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
A. Company will, and will cause each of its Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon it or
any of its properties or assets or in respect of any of its income, businesses
or franchises before any penalty accrues thereon, and all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or claim need be
paid if it is being contested
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in good faith by appropriate proceedings promptly instituted and diligently
conducted, so long as (1) such reserve or other appropriate provision, if any,
as shall be required in conformity with GAAP shall have been made therefor and
(2) in the case of a charge or claim which has or may become a Lien against any
of the Collateral, such contest proceedings conclusively operate to stay the
sale of any portion of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE; APPLICATION OF NET INSURANCE/
CONDEMNATION PROCEEDS.
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof except where the failure
to maintain such properties could not reasonably be expected in any individual
case or in the aggregate to have a Material Adverse Effect.
B. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms and conditions as shall be customary for
corporations similarly situated in the industry. Without limiting the generality
of the foregoing, Company will maintain or cause to be maintained (i) flood
insurance with respect to each Flood Hazard Property that is located in a
community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors of
the Federal Reserve System, and (ii) replacement value casualty insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, with such deductibles, and covering such risks as are at all times
satisfactory to Administrative Agent in its commercially reasonable judgment.
Each such policy of insurance shall (a) name Collateral Agent for the benefit of
Secured Parties as an additional insured thereunder as its interests may appear
and (b) in the case of each business interruption and casualty insurance policy,
contain a loss payable clause or endorsement, satisfactory in form and substance
to Collateral Agent, that names Collateral Agent for the benefit of Secured
Parties as the loss payee thereunder for any covered loss in excess of
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$1,500,000 and provides for at least 30 days prior written notice to
Administrative Agent of any modification or cancellation of such policy.
C. APPLICATION OF NET INSURANCE/CONDEMNATION PROCEEDS.
(i) Business Interruption Insurance. Upon receipt by Company
or any of its Subsidiaries of any business interruption insurance
proceeds constituting Net Insurance/Condemnation Proceeds, (a) so long
as no Event of Default shall have occurred and be continuing, Company
or such Subsidiary may retain and apply such Net Insurance/Condemnation
Proceeds for working capital purposes, and (b) if an Event of Default
shall have occurred and be continuing, Company shall apply an amount
equal to such Net Insurance/Condemnation Proceeds to prepay AXELs under
the AXEL Credit Agreement and the Revolving Loans (and/or the Revolving
Loan Commitments shall be reduced) as provided in subsection
2.4A(iii)(b);
(ii) Casualty Insurance/Condemnation Proceeds. Upon receipt by
Company or any of its Subsidiaries of any Net Insurance/Condemnation
Proceeds other than from business interruption insurance, (a) so long
as no Event of Default shall have occurred and be continuing, Company
shall, or shall cause one or more of its Subsidiaries to, (1) subject
to clause (iv) below, promptly and diligently and in any event within
six months of receipt apply such Net Insurance/Condemnation Proceeds to
pay or reimburse the costs of repairing, restoring or replacing the
assets in respect of which such Net Insurance/Condemnation Proceeds
were received or (2) to the extent not so applied or applied pursuant
to clause (iv) below within six months of receipt by Company or any of
its Subsidiaries, to prepay the AXELs under the AXEL Credit Agreement
and the Revolving Loans (and/or the Revolving Loan Commitments shall be
reduced) as provided in subsection 2.4A(iii)(b), and (b) if an Event of
Default shall have occurred and be continuing, Company shall apply an
amount equal to such Net Insurance/Condemnation Proceeds to prepay the
AXELs under the AXEL Credit Agreement and the Revolving Loans (and/or
the Revolving Loan Commitments shall be reduced) as provided in
subsection 2.4A(iii)(b).
(iii) Net Insurance/Condemnation Proceeds Received by
Collateral Agent. Upon receipt by Collateral Agent of any Net
Insurance/Condemnation Proceeds as loss payee, such loss proceeds shall
be held and applied in accordance with the terms of the Intercreditor
Agreement.
(iv) Reinvestment of Insurance Proceeds. So long as no Event
of Default or Potential Event of Default shall have occurred and be
continuing, Company and its Subsidiaries may reinvest in the business
of Company and its Subsidiaries up to $1,000,000 per year of Net
Insurance/Condemnation Proceeds recovered by Company or any of its
Subsidiaries provided that such funds are reinvested within six months
of receipt by Company or any of its Subsidiaries.
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6.5 INSPECTION RIGHTS; AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE; LENDER
MEETING.
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. AUDITS OF INVENTORY AND ACCOUNTS RECEIVABLE. Company shall, and
shall cause each of its Subsidiaries to, permit any authorized representatives
designated by Administrative Agent to conduct audits of all Inventory and
accounts receivable of Loan Parties at any time and from time to time after the
Closing Date, such audit to be in form and substance reasonably acceptable to
Administrative Agent, all upon reasonable notice and at such reasonable times
during normal business hours as may reasonably be requested, provided that so
long as no Event of Default shall exist and be continuing Administrative Agent
may not conduct more than one such audit in any twelve month period.
C. LENDER MEETING. Company will, upon the request of Arranger,
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
Company shall comply, and shall cause each of its Subsidiaries and all
other Persons on or occupying any Facilities to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
(including all Environmental Laws), noncompliance with which could reasonably be
expected to cause, individually or in the aggregate, a Material Adverse Effect.
6.7 ENVIRONMENTAL REVIEW AND INVESTIGATION, DISCLOSURE, ETC.; COMPANY'S
ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS
AND VIOLATIONS OF ENVIRONMENTAL LAWS.
A. ENVIRONMENTAL REVIEW AND INVESTIGATION. Company agrees that
Administrative Agent may, from time to time and in its reasonable discretion,
(i) retain, at Company's expense, an independent professional consultant to
review any environmental audits, investigations, analyses and reports relating
to Hazardous Materials prepared by or for Company and (ii) conduct its own
investigation of any Facility; provided that, in the case of any Facility no
longer owned, leased, operated or used by Company or any of its
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Subsidiaries, Company shall only be obligated to use its good faith and
reasonable efforts to obtain permission for Administrative Agent's professional
consultant to conduct an investigation of such Facility. For purposes of
conducting such a review and/or investigation, Company hereby grants to
Administrative Agent and its agents, employees, consultants and contractors the
right to enter into or onto any Facilities currently owned, leased, operated or
used by Company or any of its Subsidiaries and to perform such tests on such
property (including taking samples of soil, groundwater and suspected
asbestos-containing materials) as are reasonably necessary in connection
therewith. Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by Company and Administrative Agent, during normal business
hours and, to the extent reasonably practicable, shall be conducted so as not to
interfere with the ongoing operations at such Facility or to cause any damage or
loss to any property at such Facility. Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7A will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders' internal credit decisions, to monitor and police the Revolving Loans
and to protect Lenders' security interests, if any, created by the Revolving
Loan Documents. Administrative Agent agrees to deliver a copy of any such report
to Company with the understanding that Company acknowledges and agrees that (x)
it will indemnify and hold harmless Administrative Agent and each Lender from
any costs, losses or liabilities relating to Company's use of or reliance on
such report, (y) neither Administrative Agent nor any Lender makes any
representation or warranty with respect to such report, and (z) by delivering
such report to Company, neither Administrative Agent nor any Lender is requiring
or recommending the implementation of any suggestions or recommendations
contained in such report.
B. ENVIRONMENTAL DISCLOSURE. Company will deliver to Administrative
Agent and Lenders:
(i) Environmental Audits and Reports. As soon as practicable
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility or
with respect to any Environmental Claims;
(ii) Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the occurrence thereof, written notice describing in
reasonable detail (a) any Release required to be reported by Company or
any of its Subsidiaries to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws, (b) any
remedial action taken by Company or any of its Subsidiaries or any
other Person of which Company has knowledge in response to (1) any
Hazardous Materials Activities the existence of which has a reasonable
possibility of resulting in one or more Environmental Claims having,
individually or in the aggregate, a
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Material Adverse Effect, or (2) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of
resulting in a Material Adverse Effect, and (c) Company's discovery of
any occurrence or condition on any real property adjoining or in the
vicinity of any Facility that reasonably could be expected to cause
such Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or use
thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims,
Releases, Etc. As soon as practicable following the sending or receipt
thereof,by Company or any of its Subsidiaries, a copy of any and all
written communications with respect to (a) any Environmental Claims
that, individually or in the aggregate, are reasonably expected to have
a Material Adverse Effect, (b) any Release required to be reported by
Company or any of its Subsidiaries to any federal, state or local
governmental or regulatory agency, and (c) any request made to Company
or any of its Subsidiaries for information from any governmental agency
that suggests such agency is investigating whether Company or any of
its Subsidiaries may be potentially responsible for any Hazardous
Materials Activity.
(iv) Notice of Certain Proposed Actions Having Environmental
Impact. Prompt written notice describing in reasonable detail (a) any
proposed acquisition of stock, assets, or property by Company or any of
its Subsidiaries that could reasonably be expected to (1) expose
Company or any of its Subsidiaries to, or result in, Environmental
Claims that would have, individually or in the aggregate, a Material
Adverse Effect or (2) result in Company or any of its Subsidiaries
failing to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their
respective operations and (b) any proposed action to be taken by
Company or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject Company or any of
its Subsidiaries to any additional obligations or requirements under
any Environmental Laws.
(v) Other Information. With reasonable promptness, such other
documents and information as from time to time may be reasonably
requested by Administrative Agent in relation to any matters disclosed
pursuant to this subsection 6.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials
Activities. Company shall promptly undertake, and shall cause each of
its Subsidiaries promptly to undertake, any and all investigations,
studies, sampling, testing, abatement, cleanup, removal, remediation or
other response actions necessary to remove, remediate, clean up or
xxxxx any Hazardous Materials Activity on, under or about any Facility
that is in violation of any Environmental Laws or that presents a
material
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risk of giving rise to an Environmental Claim. In the event Company or
any of its Subsidiaries undertakes any such action with respect to any
Hazardous Materials, Company or such Subsidiary shall conduct and
complete such action in compliance with all applicable Environmental
Laws and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities except when, and only
to the extent that, Company's or such Subsidiary's liability with
respect to such Hazardous Materials Activity is being contested in good
faith by Company or such Subsidiary.
(ii) Actions with Respect to Environmental Claims and
Violations of Environmental Laws. Company shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all
actions necessary to (i) cure any violation of applicable Environmental
Laws by Company or its Subsidiaries and (ii) make an appropriate
response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder.
6.8 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
DOCUMENTS. In the event that any Domestic Subsidiary existing on the Restatement
Effective Date that has not previously executed the Subsidiary Guaranty
hereafter owns or acquires assets with an aggregate fair market value (without
netting such fair market value against any liability of such Subsidiary)
exceeding $500,000, or in the event that any Person becomes a Material Domestic
Subsidiary after the date hereof, Company will promptly notify Collateral Agent
of that fact and cause such Subsidiary to execute and deliver to Collateral
Agent a counterpart of the Subsidiary Guaranty and a Subsidiary Pledge Agreement
and a Subsidiary Security Agreement and to take all such further actions and
execute all such further documents and instruments (including actions, documents
and instruments comparable to those described in subsection 4.1H) as may be
necessary or, in the opinion of Collateral Agent, desirable to create in favor
of Collateral Agent, for the benefit of Secured Parties, a valid and perfected
First Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Collateral Agent, together with such Revolving Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Collateral Agent, (ii) a copy of such Subsidiary's Bylaws, certified
by its corporate secretary or an assistant
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secretary as of a recent date prior to their delivery to Collateral Agent, (iii)
a certificate executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the fact that the attached resolutions of the Board of
Directors of such Subsidiary approving and authorizing the execution, delivery
and performance of such Revolving Loan Documents are in full force and effect
and have not been modified or amended and (b) the incumbency and signatures of
the officers of such Subsidiary executing such Revolving Loan Documents, and
(iv) a favorable opinion of counsel to such Subsidiary, in form and substance
satisfactory to Collateral Agent and its counsel, as to (a) the due organization
and good standing of such Subsidiary, (b) the due authorization, execution and
delivery by such Subsidiary of such Revolving Loan Documents, (c) the
enforceability of such Revolving Loan Documents against such Subsidiary, (d)
such other matters (including matters relating to the creation and perfection of
Liens in any Collateral pursuant to such Revolving Loan Documents) as Collateral
Agent may reasonably request, all of the foregoing to be satisfactory in form
and substance to Administrative Agent and its counsel.
C. FOREIGN SUBSIDIARY LOAN DOCUMENTS. In the event that any Foreign
Subsidiary existing on the Restatement Effective Date whose shares have not been
pledged pursuant to an Auxiliary Pledge Agreement owns or acquires assets with
an aggregate fair market value (without netting such fair market value against
any liability of such Subsidiary) exceeding $1,500,000, or in the event that any
person becomes a Foreign Subsidiary which owns assets with an aggregate fair
market value (without netting such fair market value against any liability of
such Subsidiary) exceeding $1,500,000, Company will promptly notify Collateral
Agent of that fact and shall or cause the applicable subsidiary which owns
equity in such Foreign Subsidiary to execute and deliver to Collateral Agent an
Auxiliary Pledge Agreement in form and substance satisfactory to Collateral
Agent; to take all such further actions and execute such further documents and
instruments as may be necessary or, in the opinion of Collateral Agent
reasonably desirable, to perfect a Lien on the equity interests of such Foreign
Subsidiary for the benefit of Secured Parties and to deliver to Collateral Agent
an opinion of counsel (which counsel shall be reasonably acceptable to
Collateral Agent) as to the enforceability of the Auxiliary Pledge Agreement
under the laws of such Foreign Subsidiary's jurisdiction of organization and
such other matters as Collateral Agent may reasonably request (including as to
the perfection of liens on such equity interests).
D. If at any time JCS Realty acquires any personal property assets with
an aggregate fair market value (without netting such fair market value against
any liability of JCS Realty) in excess of $500,000, Company will promptly notify
Collateral Agent of that fact and cause JCS Realty to execute and deliver all
documents and to take all such further actions as may be necessary or, in the
opinion of Collateral Agent, desirable to create in favor of Collateral Agent,
for the benefit of Secured Parties, a valid and perfected First Priority Lien on
such property in all relevant jurisdictions.
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6.9 CONFORMING LEASEHOLD INTERESTS; MATTERS RELATING TO REAL PROPERTY
COLLATERAL
A. CONFORMING LEASEHOLD INTERESTS. From and after the Restatement
Effective Date, if Company or any of its Subsidiaries acquires any Leasehold
Property, Company shall, or shall cause such Subsidiary to, use its reasonable
and good faith efforts (without requiring Company or such Subsidiary to
relinquish any material rights or incur any material obligations or to expend
more than a nominal amount of money over and above the reimbursement, if
required, of the Landlord's reasonable out-of-pocket costs, including attorneys'
fees) to cause such Leasehold Property to be a Conforming Leasehold Interest.
B. MORTGAGES, ETC. From and after the Restatement Effective Date, in
the event that (i) Company or any Subsidiary Guarantor acquires any fee interest
in real property or any Material Leasehold Property, (ii) with respect to any
Material Leasehold Property or any real property in which Company has a fee
interest in on or prior to the Restatement Effective Date, any first priority
mortgage existing on or prior to the Restatement Effective Date on such property
is removed or (iii) at the time any Person (including Eden Prairie Holdings)
becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in
real property or any Material Leasehold Property, in all cases excluding (A) any
such Real Property Asset the encumbrancing of which requires the consent of any
applicable lessor or (in the case of clause (iii) above) then-existing senior
lienholder, where Company and its Subsidiaries are unable to obtain such
lessor's or senior lienholder's consent and (B) the Anagram Headquarters
Facility in the event (a) the mortgage recording tax payable in respect of a
Mortgage thereon would be based on an amount greater than the amount of Eden
Prairie Holdings' Additional Guarantor's Obligations under and as defined in the
Subsidiary Guaranty, or (b) in the opinion of counsel (which counsel shall be
reasonably satisfactory to Collateral Agent) in the state in which the Anagram
Headquarters Facility is located, there is a reasonable likelihood that a
mortgage to secure Eden Prairie Holdings' obligations under the Subsidiary
Guaranty in the form requested by the Collateral Agent would not be valid and
enforceable in the applicable jurisdictions of such state (any such non-excluded
Real Property Asset described in the foregoing clause (i), (ii) or (iii) a
"MORTGAGED PROPERTY"), Company or such Subsidiary Guarantor shall promptly
notify Collateral Agent, and shall deliver upon Collateral Agent's written
request, as soon as practicable after such Person acquires such Mortgaged
Property or becomes a Subsidiary Guarantor, as the case may be, the following:
(i) Mortgage. A fully executed and notarized Mortgage duly
recorded in all appropriate places in all applicable jurisdictions,
encumbering the interest of such Loan Party in such Mortgaged Property;
(ii) Opinions of Counsel. (a) A favorable opinion of counsel
to such Loan Party, in form and substance satisfactory to Collateral
Agent and its counsel, as to the due authorization, execution and
delivery by such Loan Party of such Mortgage and such other matters as
Collateral Agent may reasonably request, and (b) if required by
Collateral Agent, an opinion of counsel (which counsel shall be
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reasonably satisfactory to Collateral Agent) in the state in which such
Mortgaged Property is located with respect to the enforceability of
such Mortgage and such other matters (including any matters governed by
the laws of such state regarding personal property security interests
in respect of any Collateral) as Collateral Agent may reasonably
request, in each case in form and substance reasonably satisfactory to
Collateral Agent;
(iii) Landlord Consent and Estoppel; Recorded Leasehold
Interest. In the case of a Mortgaged Property consisting of a Leasehold
Property, (a) if such Leasehold Property is holding or will hold
inventory or equipment with an aggregate fair market value exceeding
$500,000, a Landlord Consent and Estoppel provided that Company shall
only be required to use reasonable and good faith efforts to obtain
such Landlord Consent and Estoppel and in no event shall Company be
obligated to pay any fee, charge or other consideration to any landlord
in order to obtain such Landlord Consent and Estoppel, other than, if
required, the landlord's reasonable out-of-pocket costs, including
attorneys' fees and (b) if such Leasehold Property is a Recorded
Leasehold Interest, evidence to that effect
(iv) Title Insurance. (a) If reasonably requested by
Collateral Agent, an ALTA mortgagee title insurance policy or an
unconditional commitment therefor (a "MORTGAGE POLICY") issued by the
Title Company with respect to such Mortgaged Property, in an amount
satisfactory to Collateral Agent, insuring fee simple title to, or a
valid leasehold interest in, such Mortgaged Property vested in such
Loan Party and assuring Collateral Agent that such Mortgage creates a
valid and enforceable First Priority mortgage Lien on such Mortgaged
Property, subject only to, if available in the state in which such
Mortgaged Property is located, a standard survey exception and to
Permitted Encumbrances, which Mortgage Policy (1) shall include, if
available in the state in which such Mortgaged Property is located, an
endorsement for mechanics' liens, for future advances under this
Agreement and for any other matters reasonably requested by Collateral
Agent and (2) shall provide for such affirmative insurance and such
reinsurance as Collateral Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to Collateral
Agent; and (b) evidence satisfactory to Collateral Agent that such Loan
Party has (i) delivered to the Title Company all certificates and
affidavits customarily required by the Title Company in connection with
the issuance of the Mortgage Policy and (ii) paid to the Title Company
or to the appropriate governmental authorities all expenses and
premiums of the Title Company in connection with the issuance of the
Mortgage Policy and all recording and stamp taxes (including mortgage
recording and intangible taxes) payable in connection with recording
the Mortgage in the appropriate real estate records; provided however,
that Administrative Agent shall allow for such reasonable revisions to
the applicable mortgage and shall otherwise take such steps as are
reasonable and customary to minimize recording, mortgage recording,
stamp, documentary and intangible taxes, at Company's cost; provided,
further, that in no event shall such Loan Party be required to pay any
additional
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mortgage recording tax after the initial recording of any such Mortgage
which may be required in order to maintain the secured or priority
status of such Mortgage.
(v) Title Report. If no Mortgage Policy is required with
respect to such Mortgaged Property, a title report issued by the Title
Company with respect thereto, dated not more than 30 days prior to the
date such Mortgage is to be recorded and satisfactory in form and
substance to Collateral Agent;
(vi) Copies of Documents Relating to Title Exceptions. Copies
of all recorded documents listed as exceptions to title or otherwise
referred to in the Mortgage Policy or title report delivered pursuant
to clause (iv) or (v) above;
(vii) Matters Relating to Flood Hazard Properties. (a)
Evidence, which may be in the form of a letter from an insurance broker
or a municipal engineer, as to (1) whether such Mortgaged Property is a
Flood Hazard Property and (2) if so, whether the community in which
such Flood Hazard Property is located is participating in the National
Flood Insurance Program, (b) if such Mortgaged Property is a Flood
Hazard Property, such Loan Party's written acknowledgement of receipt
of written notification from Collateral Agent (1) that such Mortgaged
Property is a Flood Hazard Property and (2) as to whether the community
in which such Flood Hazard Property is located is participating in the
National Flood Insurance Program, and (c) in the event such Mortgaged
Property is a Flood Hazard Property that is located in a community that
participates in the National Flood Insurance Program, evidence that
Company has obtained flood insurance in respect of such Flood Hazard
Property to the extent required under the applicable regulations of the
Board of Governors of the Federal Reserve System; and
(viii) Environmental Audit. If required by Collateral Agent,
reports and other information, in form, scope and substance
satisfactory to Collateral Agent and prepared by environmental
consultants satisfactory to Collateral Agent, concerning any
environmental hazards or liabilities to which Company or any of its
Subsidiaries may be subject with respect to such Mortgaged Property.
C. REAL ESTATE APPRAISALS. Company shall, and shall cause each of its
Subsidiaries to, permit an independent real estate appraiser satisfactory to
Collateral Agent, upon reasonable notice, to visit and inspect any Additional
Mortgaged Property for the purpose of preparing an appraisal of such Mortgaged
Property satisfying the requirements of any applicable laws and regulations (in
each case to the extent required under such laws and regulations as determined
by Collateral Agent in its discretion).
6.10 INTEREST RATE PROTECTION.
A. REVOLVING LOANS AND EXISTING AXELS. Company shall at all times
maintain in effect one or more Interest Rate Agreements with respect to the
Existing AXELs and the
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Revolving Loans, each such Interest Rate Agreement to be for a term of not less
than three years from the Closing Date and in form and substance reasonably
satisfactory to Administrative Agent, which Interest Rate Agreements shall
effectively limit the Unadjusted Eurodollar Rate Component (as hereinafter
defined) of the interest costs to Company (i) with respect to an aggregate
notional principal amount of not less than 25% of the aggregate principal amount
of the Existing AXELs outstanding on the Closing Date (based on the assumption
that such notional principal amount was a Eurodollar Rate Loan (as defined under
the AXEL Credit Agreement) with an Interest Period (as defined under the AXEL
Credit Agreement) of three months) to a rate equal to not more than 9% per annum
and (ii) with respect to an aggregate notional principal amount of not less than
25% of the aggregate principal amount of the Existing AXELs outstanding on the
Closing Date (based on the assumption that such notional principal amount was a
Eurodollar Rate Loan (as defined under the AXEL Credit Agreement) with an
Interest Period (as defined under the AXEL Credit Agreement) of three months) to
a rate equal to not more than 10% per annum. For purposes of this subsection
6.10, the term "UNADJUSTED EURODOLLAR RATE COMPONENT" means that component of
the interest costs to Company under the AXEL Credit Agreement in respect of a
Eurodollar Rate Loan that is based upon the rate obtained pursuant to the
definition of Adjusted Eurodollar Rate under the AXEL Credit Agreement without
giving effect to the last paragraph thereof.
B. ADDITIONAL AXELS. At all times after the date which is 45 days after
the Restatement Effective Date, Company shall maintain in effect one or more
Interest Rate Agreements with respect to the Additional AXELs, each such
Interest Rate Agreement to be for a term of not less than three years from the
Restatement Effective Date and in form and substance reasonably satisfactory to
Administrative Agent, which Interest Rate Agreements shall effectively limit the
Unadjusted Eurodollar Rate Component of the interest costs to Company (i) with
respect to an aggregate notional principal amount of not less than 25% of the
aggregate principal amount of the Additional AXELs outstanding on the
Restatement Effective Date (based on the assumption that such notional principal
amount was a Eurodollar Rate Loan (as defined under the AXEL Credit Agreement)
with an Interest Period (as defined under the AXEL Credit Agreement) of three
months) to a rate equal to not more than 9% per annum and (ii) with respect to
an aggregate notional principal amount of not less than 25% of the aggregate
principal amount of the Additional AXELs outstanding on the Restatement
Effective Date (based on the assumption that such notional principal amount was
a Eurodollar Rate Loan (as defined under the AXEL Credit Agreement) with an
Interest Period (as defined under the AXEL Credit Agreement) of three months) to
a rate equal to not more than 10% per annum.
6.11 CASH MANAGEMENT SYSTEMS.
Company shall at all times maintain a cash management system for the
Loan Parties in form and substance reasonably satisfactory to the Arranger and
the Administrative Agent. The terms and conditions of such cash management
system shall be as set forth in Schedule 6.11 annexed hereto.
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6.12 TRADEMARKS AND PATENTS.
If Company or any of its Subsidiaries acquires any material patents,
trademarks or copyrights, Company shall promptly notify the Collateral Agent of
that fact and, if requested by Administrative Agent, Company shall, or cause the
applicable Subsidiary to, execute and deliver to Collateral Agent supplemental
security agreements and take such other actions as the Collateral Agent may
reasonably request to create in favor of Collateral Agent, for the benefit of
Secured Parties, a valid and perfected First Priority Lien on such patents,
trademarks or copyrights.
SECTION 7.
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the Revolving Loan
Commitments hereunder shall remain in effect and until payment in full of all of
the Revolving Loans and other Obligations and the cancellation or expiration of
all Letters of Credit, unless Requisite Lenders shall otherwise give prior
written consent, Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Company may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations permitted by subsection 7.4 and,
upon any matured obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iii) Company may become and remain liable with respect to
Indebtedness to any of its wholly-owned Subsidiaries, and any
wholly-owned Subsidiary of Company may become and remain liable with
respect to Indebtedness to Company or any other wholly-owned Subsidiary
of Company; provided that (a) all such intercompany Indebtedness shall
be evidenced by promissory notes subject to a first priority perfected
pledge in favor of Lenders, (b) all such intercompany Indebtedness owed
by Company to any of its Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations pursuant to the terms
of the applicable promissory notes or an intercompany subordination
agreement, (c) any payment by
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any Subsidiary of Company under any guaranty of the Obligations shall
result in a pro tanto reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to any of its
Subsidiaries for whose benefit such payment is made, and (d) the
aggregate principal amount of all Indebtedness of all Foreign
Subsidiaries to Company and its Domestic Subsidiaries shall not exceed
$2,000,000 at any time outstanding;
(iv) Company and its Subsidiaries, as applicable, may remain
liable with respect to Indebtedness described in Schedule 7.1 annexed
hereto;
(v) Company may become and remain liable with respect to
Indebtedness evidenced by the Senior Subordinated Notes in an amount
not to exceed $110,000,000;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Indebtedness in an aggregate amount not to exceed
$5,000,000 at any time outstanding in respect of (i) purchase money
Indebtedness incurred to finance the purchase price of specific assets
and Capital Leases so long as, upon default, the holder of such
Indebtedness may seek recourse or payment against Company and its
Subsidiaries only through the return or sale of the assets financed
thereby and (ii) Indebtedness of a person which becomes a Subsidiary,
provided such Indebtedness is recourse only to such Subsidiary, and
neither Company nor any of its other Subsidiaries have any obligations
in respect thereof;
(vii) Company's Foreign Subsidiaries may become and remain
liable with respect to Indebtedness in an aggregate amount not to
exceed $2,000,000 outstanding at any time under any overdraft facility
with a foreign bank used to fund working capital obligations of such
Foreign Subsidiary;
(viii) Company may become and remain liable for additional
unsecured subordinated Indebtedness with substantially the same terms
as the Subordinated Notes, the net proceeds of which additional
subordinated Indebtedness are used solely to fund Permitted Business
Acquisitions; provided that (a) no Event of Default or Potential Event
of Default shall exist and be continuing at the time of the incurrence
thereof, (b) the aggregate amount of such additional subordinated
Indebtedness shall not exceed $90,000,000, (c) after giving effect to
the Permitted Business Acquisition being financed with such
Indebtedness (and the incurrence of such Indebtedness), Company and its
Subsidiaries are in compliance with the financial covenants under
subsection 7.6 on a Pro Forma Basis and (d) Company shall deliver to
Administrative Agent at least 10 days prior to such incurrence an
Officer's Certificate certifying the matters set forth in clauses
(a)-(c) above.
(ix) Company and its Subsidiaries may become and remain liable
for any Indebtedness replacing or refinancing any Indebtedness
permitted under clauses (iv),
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(vi), (vii), (viii) or (xi) of this subsection 7.1 provided that (a)
the principal amount of such Indebtedness does not exceed the principal
amount of the Indebtedness being refinanced or replaced, (b) such
Indebtedness has a final maturity on or later than the final maturity
of the Indebtedness being refinanced or replaced and a weighted average
life to maturity equal to or greater than the weighted average life to
maturity of the Indebtedness being refinanced or replaced, (c) the
interest rate (or, where applicable, interest rate margin) and fees
applicable to such Indebtedness is not higher than those applicable to
the Indebtedness being refinanced or replaced, (d) the covenants,
defaults and prepayment provisions, taken as a whole, are not more
burdensome or restrictive on the Company and its Subsidiaries than
those applicable to the Indebtedness being refinanced or replaced, (e)
such Indebtedness is secured only by Liens permitted under Section 7.2
for the Indebtedness being refinanced or replaced; (f) such
Indebtedness is incurred by Company or the Restricted Subsidiary who is
the obligor on the Indebtedness being refinanced or replaced, (g) if
the Indebtedness being refinanced or replaced is subordinated to the
Obligations, such Indebtedness is subordinated to the Obligations on
terms not less favorable to the Lenders than those applicable to the
Indebtedness being refinanced or replaced, and (h) without limiting the
generality of the foregoing clauses (a)-(g), any Indebtedness incurred
to replace or refinance any Indebtedness permitted under clause (viii)
of this subsection 7.1 shall be unsecured and shall have substantially
the same terms as the Indebtedness so replaced or refinanced;
(x) Company may become and remain liable for AXELs under the
AXEL Credit Agreement in an aggregate principal amount not to exceed
$157,000,000 at any time (reduced by any principal payments actually
made thereon); and
(xi) Company and its Subsidiaries may become and remain liable
with respect to other Indebtedness in an aggregate principal amount not
to exceed $5,000,000 at any time outstanding.
7.2 LIENS AND RELATED MATTERS.
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
122
(ii) Liens granted pursuant to the Collateral Documents
securing the Obligations and obligations of Company and its
Subsidiaries under the AXEL Loan Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
(iv) Indebtedness incurred under subsection 7.1(vi) may be
secured by Liens on assets acquired or financed through the incurrence
of such Indebtedness or on the assets of the newly acquired Subsidiary,
provided that such Indebtedness was not created in contemplation of the
acquisition of such Subsidiary by Company or one of its Subsidiaries;
(v) Other Liens securing Indebtedness in an aggregate amount
not to exceed $5,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither Company
nor any of its Subsidiaries shall enter into any agreement (other than the
Senior Subordinated Note Indenture or any other agreement prohibiting only the
creation of Liens securing Subordinated Indebtedness and the AXEL Credit
Agreement) prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein or in the AXEL Credit Agreement, Company
will not, and will not permit any of its Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by Company or any other Subsidiary of Company, (ii) repay or prepay
any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other Subsidiary of
Company, or (iv) transfer any of its property or assets to Company or any other
Subsidiary of Company.
123
7.3 INVESTMENTS; JOINT VENTURES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments
in Cash Equivalents;
(ii) Company and its Subsidiaries may make intercompany loans
to the extent permitted under subsection 7.1(iii);
(iii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.8;
(iv) Company and its Subsidiaries may continue to own the
Investments owned by them and described in Schedule 7.3 annexed hereto;
(v) Company and its wholly owned Domestic Subsidiaries may
make and own investments in other wholly owned Domestic Subsidiaries;
(vi) Company and its wholly owned Domestic Subsidiaries may
make and own Investments in Persons that, as a result of such
Investments, become additional wholly-owned Domestic Subsidiaries, to
the extent such Investments are permitted under subsections 7.7(vi) and
7.7(vii); provided that Company shall, and shall cause its Subsidiaries
to, comply with the requirements of subsections 6.8 and 6.9 with
respect to each such additional Domestic Subsidiaries;
(vii) Company and its wholly owned Domestic Subsidiaries may
make additional Investments in their respective Foreign Subsidiaries;
provided that (a) the amount of all such Investments constituting
equity Investments does not exceed $7,000,000 in the aggregate for all
such Investments since the Closing Date and (b) the amount of all such
Investments constituting loans or advances does not exceed the amount
permitted under subsection 7.1(iii);
(viii) Company and its Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time
$7,000,000.
Notwithstanding the foregoing, so long as no Event of Default or Potential Event
of Default shall exist and be continuing, Company and its Subsidiaries may make
and hold investments funded solely with the proceeds of any issuance of Company
Common Stock in a private issuance after the Closing Date.
7.4 CONTINGENT OBLIGATIONS.
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Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with
respect to Contingent Obligations in respect of the Subsidiary
Guaranty;
(ii) Company and its Subsidiaries may become and remain liable
in respect of obligations under any Hedge Agreements;
(iii) Company may become and remain liable with respect to
Contingent Obligations in respect of Letters of Credit; Company and its
Domestic Subsidiaries may become and remain liable with respect to
Contingent Obligations in respect of other Commercial Letters of Credit
in an aggregate amount not to exceed at any time $3,000,000 and
Contingent Obligations in respect of other Standby Letters of Credit in
an aggregate amount not to exceed at any time $2,000,000; and Foreign
Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of other Commercial Letters of Credit obtained
in the ordinary course of business in an aggregate amount not to exceed
at any time $2,000,000;
(iv) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of customary
indemnification, purchase price adjustment and contingent earnout
obligations incurred in connection with Asset Sales or other sales or
purchases of assets, provided that the aggregate amount of all
obligations of Company and its Subsidiaries in respect of purchase
price adjustments and contingent earnouts may not exceed $5,000,000 at
any time;
(v) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations under guarantees in the ordinary
course of business of the obligations of suppliers, customers,
franchisees and licensees of Company and its Subsidiaries in an
aggregate amount not to exceed at any time $1,000,000;
(vi) Company and its Subsidiaries may become and remain liable
with respect to Contingent Obligations in respect of any Indebtedness
of Company or any of its Subsidiaries permitted by subsection 7.1;
(vii) Company and its Subsidiaries, as applicable, may remain
liable with respect to Contingent Obligations described in Schedule 7.4
annexed hereto; and
(viii) Company and its Subsidiaries may become and remain
liable with respect to other Contingent Obligations; provided that the
maximum aggregate liability, contingent or otherwise, of Company and
its Subsidiaries in respect of all such Contingent Obligations shall at
no time exceed $5,000,000.
125
7.5 RESTRICTED JUNIOR PAYMENTS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall then exist and be continuing Company may (i)
make regularly scheduled payments of interest in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the extent required
by, and subject to the subordination provisions contained in, the indenture or
other agreement pursuant to which such Subordinated Indebtedness was issued, as
such indenture or other agreement may be amended from time to time to the extent
permitted under subsection 7.15B and (ii) repurchase stock and options from
officers, directors and employees in accordance with the terms of the
Stockholders' Agreement in an aggregate amount not to exceed (i) $5,000,000 per
year in the case of any then current or former chief executive officer, (ii)
$2,500,000 per year in the aggregate in the case of all other officers,
directors and employees and (iii) $10,000,000 in the aggregate for all such
Persons after the Closing Date.
7.6 FINANCIAL COVENANTS.
A. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for
any four-Fiscal Quarter period ending on any of the dates set forth below to be
less than the correlative ratio indicated:
126
=============================== ==============================
MINIMUM
PERIOD FIXED CHARGE
ENDING COVERAGE RATIO
=============================== ==============================
September 30, 1998 1.00:1.00
------------------------------- ------------------------------
December 31, 1998 1.00:1.00
------------------------------- ------------------------------
March 31, 1999 1.00:1.00
------------------------------- ------------------------------
June 30, 1999 1.00:1.00
------------------------------- ------------------------------
September 30, 1999 1.00:1.00
------------------------------- ------------------------------
December 31, 1999 1.00:1.00
------------------------------- ------------------------------
March 31, 2000 1.10:1.00
------------------------------- ------------------------------
June 30, 2000 1.10:1.00
------------------------------- ------------------------------
September 30, 2000 1.10:1.00
------------------------------- ------------------------------
December 31, 2000 1.10:1.00
------------------------------- ------------------------------
March 31, 2001 1.15:1.00
------------------------------- ------------------------------
June 30, 2001 1.15:1.00
------------------------------- ------------------------------
September 30, 2001 1.15:1.00
------------------------------- ------------------------------
December 31, 2001 1.15:1.00
------------------------------- ------------------------------
March 31, 2002 1.20:1.00
------------------------------- ------------------------------
June 30, 2002 1.20:1.00
------------------------------- ------------------------------
September 30, 2002 1.20:1.00
------------------------------- ------------------------------
December 31, 2002 1.20:1.00
=============================== ==============================
B. MINIMUM CONSOLIDATED ADJUSTED EBITDA. Company shall not permit
Consolidated Adjusted EBITDA for any four Fiscal Quarter period ending on the
dates set forth below to be less than the correlative amount indicated:
127
============================== =============================
MINIMUM
PERIOD CONSOLIDATED ADJUSTED
ENDING EBITDA
============================== =============================
September 30, 1998 41,735,000
------------------------------ -----------------------------
December 31, 1998 45,560,000
------------------------------ -----------------------------
March 31, 1999 46,750,000
------------------------------ -----------------------------
June 30, 1999 47,090,000
------------------------------ -----------------------------
September 30, 1999 49,300,000
------------------------------ -----------------------------
December 31, 1999 52,360,000
------------------------------ -----------------------------
March 31, 2000 53,520,000
------------------------------ -----------------------------
June 30, 2000 54,680,000
------------------------------ -----------------------------
September 30, 2000 55,840,000
------------------------------ -----------------------------
December 31, 2000 57,000,000
------------------------------ -----------------------------
March 31, 2001 58,410,000
------------------------------ -----------------------------
June 30, 2001 59,825,000
------------------------------ -----------------------------
September 30, 2001 61,235,000
------------------------------ -----------------------------
December 31, 2001 62,645,000
------------------------------ -----------------------------
March 31, 2002 64,110,000
------------------------------ -----------------------------
June 30, 2002 65,575,000
------------------------------ -----------------------------
September 30, 2002 67,040,000
------------------------------ -----------------------------
December 31, 2002 68,510,000
============================== =============================
128
C. CONSOLIDATED LEVERAGE RATIO. Company shall not permit the
Consolidated Leverage Ratio as of the last day of any four Fiscal Quarter period
ending on any of the dates set forth below to exceed the correlative ratio
indicated:
============================== =============================
MAXIMUM
PERIOD DEBT TO EBITDA RATIO
ENDING
============================== =============================
September 30, 1998 6.60:1.00
------------------------------ -----------------------------
December 31, 1998 6.40:1.00
------------------------------ -----------------------------
March 31, 1999 6.20:1:00
------------------------------ -----------------------------
June 30, 1999 6.00:1.00
------------------------------ -----------------------------
September 30, 1999 5.80:1.00
------------------------------ -----------------------------
December 31, 1999 5.50:1.00
------------------------------ -----------------------------
March 31, 2000 5.40:1.00
------------------------------ -----------------------------
June 30, 2000 5.25:1.00
------------------------------ -----------------------------
September 30, 2000 5.10:1.00
------------------------------ -----------------------------
December 31, 2000 5.00:1.00
------------------------------ -----------------------------
March 31, 2001 4.85:1.00
------------------------------ -----------------------------
June 30, 2001 4.70:1.00
------------------------------ -----------------------------
September 30, 2001 4.55:1.00
------------------------------ -----------------------------
December 31, 2001 4.40:1.00
------------------------------ -----------------------------
March 31, 2002 4.20:1.00
------------------------------ -----------------------------
June 30, 2002 4.10:1.00
------------------------------ -----------------------------
September 30, 2002 3.90:1.00
------------------------------ -----------------------------
December 31, 2002 3.70:1.00
============================== =============================
D. CERTAIN CALCULATIONS.
With respect to calculations of Consolidated Adjusted EBITDA and
Consolidated Fixed Charges for any four-Fiscal Quarter period including the
Closing Date, such
129
calculations shall be made on a pro forma basis assuming, in each case, that the
Closing Date, the Merger, the repayment of debt to be repaid on the Closing
Date, the issuance and sale of the Company Common Stock in connection with the
Recapitalization Financing Requirements and the related borrowings by Company
pursuant to the Existing Revolving Loan Credit Agreement, the AXEL Credit
Agreement and the Senior Subordinated Note Indenture occurred on the first day
of the applicable four-Fiscal Quarter period and assuming further, for purposes
of calculation of the pro forma interest accrued on AXELs and Revolving Loans
during such four quarter periods prior to the Closing Date, that (i) all
Revolving Loans outstanding were Eurodollar Rate Loans and that the applicable
reference interest rates were the average effective Adjusted Eurodollar Rates on
the Revolving Loans for the period from the Closing Date through the date of
determination and (ii) all AXELs outstanding were Eurodollar Rate Loans (as
defined in the AXEL Credit Agreement) and that the applicable reference interest
rates were the average effective Adjusted Eurodollar Rates (as defined in the
AXEL Credit Agreement) on the AXELs for the period from the Closing Date through
the date of determination, all such calculations to be in form and substance
satisfactory to Arranger and Administrative Agent.
With respect to calculations of Consolidated Adjusted EBITDA and
Consolidated Fixed Charges for any four-Fiscal Quarter period including the
Restatement Effective Date, such calculations shall be made on a pro forma basis
assuming, in each case, that the Restatement Effective Date, the Anagram
Acquisition, the repayment of debt to be repaid on the Restatement Effective
Date, the issuance and sale of the New Company Shares and the related borrowings
on or about the Restatement Effective Date by Company pursuant to this Agreement
and the AXEL Credit Agreement occurred on the first day of the applicable
four-Fiscal Quarter period and assuming further, for purposes of calculation of
the pro forma interest accrued on AXELs and Revolving Loans during such four
quarter periods prior to the Restatement Effective Date, that (i) all Revolving
Loans outstanding were Eurodollar Rate Loans and that the applicable reference
interest rates were the average effective Adjusted Eurodollar Rates on the
Revolving Loans for the period from the Restatement Effective Date through the
date of determination and (ii) all AXELs outstanding were Eurodollar Rate Loans
(as defined in the AXEL Credit Agreement) and that the applicable reference
interest rates were the average effective Adjusted Eurodollar Rates (as defined
in the AXEL Credit Agreement) on the AXELs for the period from the Restatement
Effective Date through the date of determination, all such calculations to be in
form and substance satisfactory to Arranger and Administrative Agent.
During the first three Fiscal Quarters of Fiscal Year 1998, in
calculating Consolidated Fixed Charges for any such period, such calculation
shall be made using actual Consolidated Capital Expenditures paid in Cash from
the beginning of Fiscal Year 1998 and annualized.
With respect to any period during which new Subsidiaries, assets or
businesses are acquired pursuant to subsection 7.7(vi) or 7.7(vii), for purposes
of determining compliance with the financial covenants set forth in this
subsection 7.6, calculations of Consolidated Adjusted EBITDA and Consolidated
Fixed Charges shall exclude non-recurring restructuring
130
charges associated with such transactions, one time costs associated with
financing raised and equity issued pursuant to subsections 7.1 (viii) and 7.1(x)
and the costs associated with the realization of cost savings described in the
next sentence, provided that such exclusion shall not apply with respect to any
non recurring restructuring charges and charges in connection with cost savings
to the extent they are paid in cash but only in the period in which they are
paid in cash. Consolidated Adjusted EBITDA and Consolidated Fixed Charges shall
also be calculated with respect to such periods and such Subsidiaries, assets or
businesses on a pro forma basis (including (without duplication for amounts
otherwise included in Consolidated Adjusted EBITDA) pro forma adjustments for
cost savings which have actually occurred (annualizing such cost savings) and
arise out of events which are directly attributable to a specific transaction,
are factually supportable and are expected to have a continuing impact,
including, without limitation, cost savings resulting from head count
reductions, closure of facilities and similar restructuring charges, which pro
forma adjustments shall be certified in an Officers Certificate of the Company)
using the historical financial statements of all entities or assets so acquired
or to be acquired and the consolidated financial statements of Company and its
Subsidiaries which shall be reformulated (i) as if such acquisition, and any
acquisitions which have been consummated during such four quarter period, and
any Indebtedness or other liabilities incurred in connection with any such
acquisition had been consummated or incurred at the beginning of such four
quarter period (and assuming that such Indebtedness bears interest during any
portion of the applicable measurement period prior to the relevant acquisition
at the weighted average of the interest rates applicable to such Indebtedness
during the period in which it is actually outstanding), and (ii) otherwise in
conformity with certain procedures to be agreed upon between Administrative
Agent and Company, all such calculations to be in form and substance
satisfactory to Administrative Agent.
In addition, in calculating compliance with Subsection 7.6A,
discontinued operations will be given pro forma effect as follows:
(1) Consolidated Adjusted EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the
calculation date, shall be excluded, and
(2) Consolidated Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and
operations or businesses disposed of on or prior to the
calculation date, shall be excluded, but only to the extent
that the obligations giving rise to such Consolidated Fixed
Charges will not be obligations of the Company or any of its
Subsidiaries following the Calculation Date.
131
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Subsidiary of Company may be merged with or into
Company or any wholly-owned Subsidiary Guarantor, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed
of, in one transaction or a series of transactions, to Company or any
wholly-owned Subsidiary Guarantor; provided that, in the case of such a
merger, Company or such wholly-owned Subsidiary Guarantor shall be the
continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated
Capital Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete,
worn out or surplus property in the ordinary course of business and any
assets acquired in connection with the acquisition of another Person or
a division or line of business of such Person which the Company
reasonably determines are surplus assets;
(iv) Company and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales;
provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof;
(v) subject to subsection 7.12, Company and its Subsidiaries
may (x) sell the Xxxxxxx, New York, Melbourne, Australia and Montreal,
Quebec real estate and (y) make other Asset Sales of assets having a
fair market value not in excess of $1,000,000 per year; provided that
(1) the consideration received for such assets shall be in an amount at
least equal to the fair market value thereof; (2) the consideration
received shall be at least 85% cash; and (3) no later than the first
Business Day following the date of receipt by Company or any of its
Subsidiaries of any Net Asset Sale Proceeds of such Asset Sale, Company
shall deliver to Agent an Officers' Certificate, satisfactory in form
and substance to Administrative Agent, demonstrating the derivation of
the Net Asset Sale Proceeds of such Asset Sale from the gross sales
price received in connection therewith;
132
(vi) In addition to the Anagram Acquisition (which is
addressed in subsection 7.7 (vii)), Company and its Subsidiaries may
acquire all or substantially all the business, property or fixed assets
of, or stock or other evidence of beneficial ownership of, any Person
or any division or line of business of any Person that is in the same
line of business as Company and its Subsidiaries ("PERMITTED BUSINESS
ACQUISITIONS"); provided that, in the case of any Permitted Business
Acquisition that is financed in whole or in part with any consideration
other than (a) common stock of Company transferred to the seller, (b)
proceeds of additional cash common equity contributions by GSII to
Company, and/or (c) proceeds of additional subordinated indebtedness
incurred in compliance with the provisions of subsection 7.1(viii), (1)
Company and its Subsidiaries are in compliance with the financial
covenants under subsection 7.6 on a Pro Forma Basis for the four Fiscal
Quarters most recently completed prior to the consummation of such
Permitted Business Acquisition and (2) the Consolidated Senior Leverage
Ratio on a Pro Forma Basis for the four Fiscal Quarters most recently
completed prior to the consummation of such Permitted Business
Acquisition shall not exceed (A) for any such four-Fiscal Quarter
period ending on or before the last day of Fiscal Year 1999, 4.00:1.00,
and (b) for any such four-Fiscal Quarter period ending thereafter,
3.50:1.00; and
(vii) Company and its Subsidiaries may acquire the Anagram
Shares pursuant to the Anagram Acquisition Agreement on the Restatement
Effective Date.
7.8 CONSOLIDATED CAPITAL EXPENDITURES
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year ending on a date set
forth below (or any four quarter period ending on any date set forth below on or
prior to December 31, 1998), in an aggregate amount in excess of the
corresponding amount (the "MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES AMOUNT")
set forth below opposite such date; provided that the Maximum Consolidated
Capital Expenditures Amount for any Fiscal Year, commencing with Fiscal Year
1999, shall be increased by an amount equal to the excess, if any, (but in no
event more than 50% of the Maximum Consolidated Capital Expenditures Amount for
the previous Fiscal Year (or, in the case of Fiscal Year 1999, for the four
Fiscal Quarter period ending as of December 31, 1998) of the Maximum
Consolidated Capital Expenditures Amount (as adjusted in accordance with this
proviso) over the actual amount of Consolidated Capital Expenditure for the
previous Fiscal Year (or, in the case of Fiscal Year 1999, for the four Fiscal
Quarter period ending as of December 31, 1998):
133
============================== =============================
PERIOD MAXIMUM CONSOLIDATED CAPITAL
ENDING EXPENDITURES
------------------------------ -----------------------------
September 30, 1998 $8,000,000
------------------------------ -----------------------------
December 31, 1998 9,000,000
------------------------------ -----------------------------
December 31, 1999 14,000,000
------------------------------ -----------------------------
December 31, 2000 15,000,000
------------------------------ -----------------------------
December 31, 2001 15,000,000
------------------------------ -----------------------------
December 31, 2002 15,000,000
============================== =============================
Notwithstanding the foregoing, the Company and its Subsidiaries may
fund Consolidated Capital Expenditures in excess of the foregoing limits from
any proceeds of an additional issuance of Company common stock in a private
issuance after the Restatement Effective Date.
7.9 SALES AND LEASE-BACKS.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease, provided that, for the period commencing the Restatement Effective
Date up to and including the second anniversary of the Restatement Effective
Date, Company and its Subsidiaries may become liable with respect to any such
leases relating to the Xxxxxxx, New York and Montreal, Quebec real estate.
7.10 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 10% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case
134
may be, than those that might be obtained at the time from Persons who are not
such a holder or Affiliate; provided that the foregoing restriction shall not
apply to (i) any transaction between Company and any of its wholly owned
Subsidiaries or between any of its wholly owned Subsidiaries, (ii) any
transaction between Company or any of its wholly owned Subsidiaries and Xxxxxxx,
Sachs & Co., GSCP or GSII or any Affiliate of any of them, (iii) reasonable and
customary fees paid to members of the Boards of Directors of Company and its
Subsidiaries or (iv) any transactions described on Schedule 7.10.
7.11 DISPOSAL OF SUBSIDIARY STOCK.
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries in compliance with the provisions of
subsection 7.7(v), Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries, except to qualify directors if
required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to
sell, assign, pledge or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applicable law.
7.12 CONDUCT OF BUSINESS.
From and after the Restatement Effective Date, Company shall not, and
shall not permit any of its Subsidiaries to, engage in any business other than
(i) the businesses engaged in by Company and its Subsidiaries on the Restatement
Effective Date and similar or related businesses and (ii) such other lines of
business as may be consented to by Requisite Lenders.
7.13 AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS AND THE ANAGRAM
ACQUISITION AGREEMENT; AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED
INDEBTEDNESS.
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Neither Company
nor any of its Subsidiaries will agree to any material amendment to, or waive
any of its material rights under, any Related Agreement (other than any Related
Agreement evidencing or governing any Subordinated Indebtedness) or the Anagram
Acquisition Agreement after the Restatement Effective Date without in each case
obtaining the prior written consent of Requisite Lenders to such amendment or
waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an
135
amendment thereof or change thereto, if the effect of such amendment or change
is to increase the interest rate on such Subordinated Indebtedness, change (to
earlier dates) any dates upon which payments of principal or interest are due
thereon, change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions of such
Subordinated Indebtedness (or of any guaranty thereof), or change any collateral
therefor (other than to release such collateral), or if the effect of such
amendment or change, together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder or to confer any
additional rights on the holders of such Subordinated Indebtedness (or a trustee
or other representative on their behalf) which would be adverse to Company or
Lenders.
7.14 FISCAL YEAR
Company shall not change its Fiscal Year-end from December 31.
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
Failure by Company to pay any installment of principal of any Revolving
Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; failure by Company
to pay when due any amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure by Company to pay any interest on
any Revolving Loan or any fee or any other amount due under this Agreement
within three days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations with an aggregate principal amount of $5,000,000
or more, in each case beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries with respect to any
other material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement (including the AXEL Credit
Agreement), mortgage, indenture or other agreement relating to such item(s) of
Indebtedness or Contingent Obligation(s), if the effect of such breach or
default is to cause, or to permit the holder or
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holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf
of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation, as the case may be
(upon the giving or receiving of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER REVOLVING LOAN DOCUMENTS.
Any Loan Party shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Revolving Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an executive officer of Company or such Loan Party
becoming aware of such default or (ii) receipt by Company and such Loan Party of
notice from Administrative Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its
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Subsidiaries, and any such event described in this clause (ii) shall continue
for 60 days unless dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
Any money judgment, writ or warrant of attachment or similar process
involving in the aggregate at any time an amount in excess of $5,000,000 (in
either case not adequately covered by insurance as to which a solvent and
unaffiliated insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
8.9 DISSOLUTION.
Any order, judgment or decree shall be entered against Company or any
of its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company or any of its Subsidiaries in excess of $5,000,000 during the term of
this Agreement; or the excess of (1) the actuarial present value (determined on
the basis of reasonable assumptions employed by the independent actuary for each
Pension Plan for purposes of Section 412 of the Internal Revenue Code or Section
302 of ERISA) of benefit liabilities (as defined in Section 4001(a)(16) of
ERISA) over (2) the fair market value of the assets of such Pension Plan,
individually or in the aggregate for all Pension Plans (excluding for purposes
of such
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computation any Pension Plans with respect to which assets exceed benefit
liabilities), exceeds $7,500,000; or
8.11 CHANGE IN CONTROL.
If (i) prior to a Qualified Public Offering GSII together with any
Affiliates of GSII shall cease to beneficially own and control 51% or more of
the combined voting power of all Securities of the Company, (ii) following
consummation of a Qualified Public Offering any Person or any two or more
Persons acting in concert shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act), directly or indirectly, of Securities of Company (or other
Securities convertible into such Securities) representing more of the combined
voting power of all Securities of Company than is owned by GSII and its
Affiliates at such time, or (iii) a "Change of Control" as defined in the Senior
Subordinated Notes Indenture occurs; or
8.12 INVALIDITY OF SUBSIDIARY GUARANTY; FAILURE OF SECURITY; REPUDIATION OF
OBLIGATIONS
At any time after the execution and delivery thereof, (i) the
Subsidiary Guaranty for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any Collateral
purported to be covered thereby, in each case for any reason other than the
failure of Administrative Agent or any Lender to take any action within its
control, or (iii) any Loan Party shall contest the validity or enforceability of
any Loan Document in writing or deny in writing that it has any further
liability, including with respect to future advances by Lenders, under any Loan
Document to which it is a party; or
8.13 FAILURE TO CONSUMMATE ANAGRAM ACQUISITION.
The Anagram Acquisition shall not be consummated in accordance with
this Agreement, or the Anagram Acquisition shall be unwound, reversed or
otherwise rescinded in whole or in any material part for any reason; or
8.14 AMENDMENT OF CERTAIN DOCUMENTS OF COMPANY.
Company shall agree to any material amendment to, or waive any of its
material rights under, or otherwise change any material terms of, any of the
Recapitalization Documents, in each case as in effect on the Closing Date, in a
manner adverse to Company or any of its Subsidiaries or to Lenders without the
prior written consent of Administrative Agent and Requisite Lenders;
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THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Revolving Loans, (b) an amount equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding (whether or not any
beneficiary under any such Letter of Credit shall have presented, or shall be
entitled at such time to present, the drafts or other documents or certificates
required to draw under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of each Lender to make any
Revolving Loan, the obligation of Administrative Agent to issue any Letter of
Credit and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate, and (ii) upon the occurrence and during the continuation of
any other Event of Default, Administrative Agent shall, upon the written request
or with the written consent of Requisite Lenders, by written notice to Company,
declare all or any portion of the amounts described in clauses (a) through (c)
above to be, and the same shall forthwith become, immediately due and payable,
and the obligation of each Lender to make any Revolving Loan, the obligation of
Administrative Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon terminate; provided that
the foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Collateral Agent pursuant to the terms of
the Intercreditor Agreement and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Revolving Loans
pursuant to clause (ii) of such paragraph Company shall pay all arrears of
interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the rates specified in
this Agreement) and all Events of Default and Potential Events of Default (other
than non-payment of the principal of and accrued interest on the Revolving
Loans, in each case which is due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders,
by written notice to Company, may at their option rescind and annul such
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right
consequent thereon. The provisions of this paragraph are intended merely to bind
Lenders to a decision which may be made at the election of Requisite Lenders and
are not intended, directly or indirectly, to benefit Company, and such
provisions shall not at any time be construed so as to grant Company the right
to require Lenders to rescind or annul any acceleration hereunder or to preclude
Administrative Agent or Lenders from exercising any of the rights or remedies
available to them under any of the Revolving Loan Documents, even if the
conditions set forth in this paragraph are met.
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SECTION 9.
AGENTS
9.1 APPOINTMENT.
A. APPOINTMENT OF AGENTS. GSCP is hereby appointed Arranger and
Syndication Agent hereunder, and each Lender hereby authorizes Arranger and
Syndication Agent to act as its agent in accordance with the terms of this
Agreement and the other Revolving Loan Documents. Fleet is hereby appointed
Administrative Agent hereunder and under the other Revolving Loan Documents and
each Lender hereby authorizes Administrative Agent to act as its agent in
accordance with the terms of this Agreement and the other Revolving Loan
Documents. Fleet is also being appointed Collateral Agent under the
Intercreditor Agreement and each Lender hereby authorizes Collateral Agent to
act as its agent in accordance with the terms of the Intercreditor Agreement and
the other Revolving Loan Documents. Each Agent hereby agrees to act upon the
express conditions contained in this Agreement and the other Revolving Loan
Documents, as applicable. The provisions of this Section 9 are solely for the
benefit of Agents and Lenders and Company shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Company or any of its
Subsidiaries. Each of Arranger and Syndication Agent, without consent of or
notice to any party hereto, may assign any and all of its rights or obligations
hereunder to any of its Affiliates. As of the Restatement Effective Date, all
obligations of Arranger and Syndication Agent hereunder shall terminate.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose of
this Agreement and the other Revolving Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee in
such jurisdiction. It is recognized that in case of litigation under this
Agreement or any of the other Revolving Loan Documents, and in particular in
case of the enforcement of any of the Revolving Loan Documents, or in case
Administrative Agent deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the rights, powers or remedies granted
herein or in any of the other Revolving Loan Documents or take any other action
which may be desirable or necessary in connection therewith, it may be necessary
that Administrative Agent appoint an additional individual or institution as a
separate trustee, co-trustee, collateral agent or collateral co-agent (any such
additional individual or institution being referred to herein individually as a
"SUPPLEMENTAL COLLATERAL AGENT" and collectively as "SUPPLEMENTAL COLLATERAL
AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Revolving Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such
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Collateral shall be exercisable by and vest in such Supplemental Collateral
Agent to the extent, and only to the extent, necessary to enable such
Supplemental Collateral Agent to exercise such rights, powers and privileges
with respect to such Collateral and to perform such duties with respect to such
Collateral, and every covenant and obligation contained in the Revolving Loan
Documents and necessary to the exercise or performance thereof by such
Supplemental Collateral Agent shall run to and be enforceable by either Agent or
such Supplemental Collateral Agent, and (ii) the provisions of this Section 9
and of subsections 10.2 and 10.3 that refer to Administrative Agent shall inure
to the benefit of such Supplemental Collateral Agent and all references therein
to Administrative Agent shall be deemed to be references to Administrative Agent
and/or such Supplemental Collateral Agent, as the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral Agent,
or a successor thereto, shall die, become incapable of acting, resign or be
removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
X. XXXXXX; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Revolving Loan Documents as
are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Revolving Loan
Documents. Each Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. No Agent shall have, by
reason of this Agreement or any of the other Revolving Loan Documents, a
fiduciary relationship in respect of any Lender; and nothing in this Agreement
or any of the other Revolving Loan Documents, expressed or implied, is intended
to or shall be so construed as to impose upon any Agent any obligations in
respect of this Agreement or any of the other Revolving Loan Documents except as
expressly set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any of Agent to Lenders or by or on behalf of
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Company to any Agent or any Lender in connection with the Revolving Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall any Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Revolving Loan
Documents or as to the use of the proceeds of the Revolving Loans or as to the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Revolving Loans or the Letter of Credit Usage or the
component amounts thereof.
C. EXCULPATORY PROVISIONS. None of Agents nor any of their respective
officers, partners, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any Agent under or in connection with any of
the Revolving Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Revolving Loan Documents or
from the exercise of any power, discretion or authority vested in it hereunder
or thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Revolving Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Revolving Loans and the Letters of
Credit, each Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties and
functions delegated to it hereunder, and the term "Lender" or "Lenders" or any
similar term shall, unless the context clearly otherwise indicates, include each
Agent in its individual capacity. Any Agent and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other
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business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
CREDITWORTHINESS.
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Revolving Loans and the
issuance of Letters of Credit hereunder and that it has made and shall continue
to make its own appraisal of the creditworthiness of Company and its
Subsidiaries. No Agent shall have any duty or responsibility, either initially
or on a continuing basis, to make any such investigation or any such appraisal
on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Revolving Loans or at any time or times thereafter, and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against such
Agent in exercising its powers, rights and remedies or performing its duties
hereunder or under the other Revolving Loan Documents or otherwise in its
capacity as such Agent in any way relating to or arising out of this Agreement
or the other Revolving Loan Documents; provided that no Lender shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from such
Agent's gross negligence or willful misconduct and provided further that any
such indemnification of the Collateral Agent shall be on the terms described in
section 6(c) of the Intercreditor Agreement. If any indemnity furnished to any
Agent for any purpose shall, in the opinion of such Agent, be insufficient or
become impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
9.5 SUCCESSOR AGENT.
SUCCESSOR ADMINISTRATIVE AGENT. Administrative Agent may resign at any
time by giving 30 days' prior written notice thereof to Lenders and Company, and
Administrative Agent may be removed at any time with or without cause by an
instrument or concurrent
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instruments in writing delivered to Company and Administrative Agent and signed
by Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by Requisite Lenders and shall
have accepted such appointment within 30 days after the notice of the intent of
the Administrative Agent to resign, then the retiring Administrative Agent may,
on behalf of the Lenders, appoint a successor Administrative Agent. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, that successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Administrative Agent and the retiring or removed
Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring or removed Administrative Agent's resignation
or removal hereunder as Administrative Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into the Intercreditor Agreement and
to appoint the Collateral Agent thereunder as agent for and representative of
Lenders. Under the terms of the Intercreditor Agreement the Collateral Agent is
authorized to enter into each Collateral Document as secured party and to be the
agent for and representative of Secured Parties under the Subsidiary Guaranty,
and each Lender agrees to be bound by the terms of the Intercreditor Agreement,
each Collateral Document and the Subsidiary Guaranty. Administrative Agent shall
not enter into or consent to any material amendment, modification or termination
of the Intercreditor Agreement without the prior consent of Requisite Lenders.
Each Lender acknowledges that under the terms of the Intercreditor Agreement
without further written consent or authorization from Lenders, Collateral Agent
may execute any documents or instruments necessary to (a) release any Lien
encumbering any item of Collateral that is the subject of a sale or other
disposition of assets permitted by this Agreement or to which Requisite Lenders
have otherwise consented or (b) release any Subsidiary Guarantor from the
Subsidiary Guaranty if all of the capital stock of such Subsidiary Guarantor is
sold to any Person (other than an Affiliate of Company) pursuant to a sale or
other disposition permitted hereunder or to which Requisite Lenders or Lenders
(as applicable) have otherwise consented. Anything contained in any of the
Revolving Loan Documents to the contrary notwithstanding, Company,
Administrative Agent and each Lender hereby agree that (X) no Lender shall have
any right individually to realize upon any of the Collateral under any
Collateral Document or to enforce the Subsidiary Guaranty, it being understood
and agreed that all powers, rights and remedies under the Collateral Documents
and the Subsidiary Guaranty may be exercised solely by Collateral Agent for the
benefit of Secured Parties in accordance with the terms thereof, and (Y) in the
event of a foreclosure by Collateral Agent on any of the Collateral pursuant to
a public or private sale, Collateral Agent or any Secured Party may be the
purchaser of any or all of such Collateral
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at any such sale and Collateral Agent, as agent for and representative of
Secured Parties (but not any Secured Party or Secured Parties in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by Collateral Agent at
such sale. The Lenders each further acknowledge and agree that pursuant to the
Intercreditor Agreement and the Collateral Documents, Collateral Agent will act
as the fonde de pouvoir (holder of the power of attorney) of the holders from
time to time of Notes issued pursuant hereto to the extent necessary or
desirable for the purposes of creating, maintaining or enforcing any Liens or
guarantees created or established under any Collateral Documents contemplated
hereby to be executed under the laws of the Province of Quebec, Canada
including, without limiting the generality of the foregoing, entering into any
such Collateral Documents and exercising all or any of the rights, powers,
trusts or duties conferred upon the Collateral Agent therein and in the
Intercreditor Agreement and each holder of Notes by receiving and holding same
accepts and confirms the appointment of the Collateral Agent as fonde de pouvoir
(holder of the power of attorney) of such holder for such purposes.
SECTION 10.
MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Revolving Loan
Commitments or any Revolving Loan or Revolving Loans made by it or its Letters
of Credit or participations therein or any other interest herein or in any other
Obligations owed to it; provided that no such sale, assignment, transfer or
participation shall, without the consent of Company, require Company to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities
laws of any state; provided, further that no such sale, assignment or transfer
described in clause (i) above shall be effective unless and until an Assignment
Agreement effecting such sale, assignment or transfer shall have been accepted
by Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii); provided, further that no such sale, assignment, transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a corresponding
interest in the Revolving Loan Commitment and the Revolving Loans of the Lender
effecting such sale, assignment, transfer or participation. Except as otherwise
provided in this subsection 10.1, no Lender shall, as between Company and such
Lender, be relieved of any of its obligations hereunder as a result of any sale,
assignment or transfer of, or any granting of participations in, all or any part
of its Revolving Loan Commitments or the
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Revolving Loans, the Letters of Credit or participations therein, or the other
Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Revolving Loan
Commitment, Revolving Loan, Letter of Credit or participation therein,
or other Obligation may (a) be assigned in any amount to another
Lender, or to a Related Fund or an Affiliate of the assigning Lender or
another Lender, with the giving of notice to Company, Administrative
Agent and Syndication Agent or (b) be assigned in an aggregate amount
of not less than $5,000,000 (or such lesser amount as shall constitute
the aggregate amount of the Revolving Loan Commitments, Revolving
Loans, Letters of Credit and participations therein, and other
Obligations of the assigning Lender) to any other Eligible Assignee
with the giving of notice to Company and with the consent of
Administrative Agent and Syndication Agent (which consent shall not be
unreasonably withheld or delayed). To the extent of any such assignment
in accordance with either clause (a) or (b) above, the assigning Lender
shall be relieved of its obligations with respect to its Revolving Loan
Commitments, Revolving Loans, Letters of Credit or participations
therein, or other Obligations or the portion thereof so assigned. The
parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register,
an Assignment Agreement, together with a processing and recordation fee
of $500, if such assignment is to another Lender or an Affiliate or
Related Fund of the assigning Lender, or $2000, if such assignment is
to any other Eligible Assignee, and such forms, certificates or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment Agreement may
be required to deliver to Administrative Agent pursuant to subsection
2.7B(iii)(a). Upon such execution, delivery, acceptance and
recordation, from and after the effective date specified in such
Assignment Agreement, (y) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive
the termination of this Agreement under subsection 10.9B) and be
released from its obligations under this Agreement (and, in the case of
an Assignment Agreement covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto; provided that, anything
contained in any of the Revolving Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to
any outstanding Letters of Credit such Lender shall continue to have
all rights and obligations of an Issuing Lender with respect to such
Letters of Credit until the cancellation or expiration of such Letters
of Credit and the reimbursement of any amounts drawn thereunder). The
Revolving Loan
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Commitments hereunder shall be modified to reflect the Revolving Loan
Commitment of such assignee and any remaining Revolving Loan Commitment
of such assigning Lender and, if any such assignment occurs after the
issuance of the Revolving Notes hereunder, the assigning Lender shall,
upon the effectiveness of such assignment or as promptly thereafter as
practicable, surrender its applicable Revolving Notes to Administrative
Agent for cancellation, and thereupon new Revolving Notes shall be
issued to the assignee and/or to the assigning Lender, substantially in
the form of Exhibit V annexed hereto, as the case may be, with
appropriate insertions, to reflect the new Revolving Loan Commitments
of the assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in
Register. Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible
Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence
with respect to United States federal income tax withholding matters
that such assignee may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if
Administrative Agent has consented to the assignment evidenced thereby
(to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a
counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such
assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Company. Administrative
Agent shall maintain a copy of each Assignment Agreement delivered to
and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Revolving Loan allocated
to such participation or (ii) a reduction of the principal amount of or the rate
of interest payable on any Revolving Loan allocated to such participation, and
all amounts payable by Company hereunder (including amounts payable to such
Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5,
(a) any participation will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Revolving
Loans, the other Obligations owed to such Lender, and its Revolving Notes to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any
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operating circular issued by such Federal Reserve Bank; provided that (i) no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any such assignment and pledge and (ii) in
no event shall such Federal Reserve Bank be considered to be a "Lender" or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of or investing in loans such as the Revolving
Loans; and (iii) that it will make its Revolving Loans for its own account in
the ordinary course of its business and without a view to distribution of such
Revolving Loans within the meaning of the Securities Act or the Exchange Act or
other federal securities laws (it being understood that, subject to the
provisions of this subsection 10.1, the disposition of such Revolving Loans or
any interests therein shall at all times remain within its exclusive control).
Each Lender that becomes a party hereto pursuant to an Assignment Agreement
shall be deemed to agree that the representations and warranties of such Lender
contained in Section 2(c) of such Assignment Agreement are incorporated herein
by this reference.
10.2 EXPENSES.
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Revolving Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the costs
of furnishing all opinions by counsel for Company (including any opinions
requested by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Revolving Loan
Documents including with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to Arranger and counsel to Administrative Agent (in
each case including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Revolving Loan
Documents and any consents, amendments, waivers or other modifications thereto
and any other documents or matters requested by Company; (iv) all the actual
costs and reasonable expenses of creating and perfecting Liens in favor of
Collateral Agent on behalf of Secured Parties pursuant to any Collateral
Document, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Arranger and counsel to Administrative
Agent and of counsel providing any opinions that Arranger, Administrative Agent
or Requisite Lenders may
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request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any auditors, accountants or
appraisers and any environmental or other consultants, advisors and agents
employed or retained by Administrative Agent or Arranger and its counsel) of
obtaining and reviewing any appraisals provided for under subsection 4.1J or
6.9C, any environmental audits or reports provided for under subsection 4.1K or
6.9B(viii) and any audits or reports provided for under subsection 4.1L or 6.5B
with respect to Inventory and accounts receivable of Company and its
Subsidiaries; (vi) all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any consultants, advisors and
agents employed or retained by Administrative Agent and its counsel) in
connection with the custody or preservation of any of the Collateral; (vii) all
other actual and reasonable costs and expenses incurred by Syndication Agent,
Arranger or Administrative Agent in connection with the syndication of the
Revolving Loan Commitments and the negotiation, preparation and execution of the
Revolving Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (viii)
after the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Arranger, Administrative Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Revolving Loan Documents by reason of such
Event of Default (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of the
Subsidiary Guaranty) or in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agents and Lenders, and the officers, partners,
directors, employees, agents and affiliates of any of Agents and Lenders
(collectively called the "INDEMNITEES"), from and against any and all
Indemnified Liabilities (as hereinafter defined); provided that Company shall
not have any obligation to any Indemnitee hereunder with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise solely
from the gross negligence or willful misconduct of that Indemnitee as determined
by a final, non-appealable judgment of a court of competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or xxxxx any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the
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reasonable fees and disbursements of counsel for Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced or threatened
by any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto, and any fees or expenses incurred by Indemnitees
in enforcing this indemnity), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Revolving Loan Documents or the Related Agreements or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Revolving Loans hereunder or the use or intended use of the proceeds
thereof or the issuance of Letters of Credit hereunder or the use or intended
use of any thereof, or any enforcement of any of the Revolving Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty)), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous Materials
Activity relating to or arising from, directly or indirectly, any past or
present activity, operation, land ownership, or practice of Company or any of
its Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence of any
Event of Default each Lender is hereby authorized by Company at any time or from
time to time, subject to the consent of Administrative Agent, without notice to
Company or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not including trust
accounts) and any other Indebtedness at any time held or owing by that Lender to
or for the credit or the account of Company against and on account of the
obligations and liabilities of Company to that Lender under this Agreement, the
Letters of Credit and participations therein and the other Revolving Loan
Documents, including all claims of any nature or description arising out of or
connected with this Agreement, the Letters of Credit and participations therein
or any other Revolving Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Revolving Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become due and payable
pursuant to Section 8 and
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although said obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to Collateral Agent and each Lender a
security interest in all deposits and accounts maintained with Administrative
Agent or such Lender as security for the Obligations.
10.5 RATABLE SHARING.
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Revolving
Loans made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the enforcement of any
right under the Revolving Loan Documents or otherwise, or as adequate protection
of a deposit treated as cash collateral under the Bankruptcy Code, receive
payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the other Revolving
Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which
is greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify Administrative Agent and each
other Lender of the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to have purchased
from each seller of a participation simultaneously upon the receipt by such
seller of its portion of such payment) in the Aggregate Amounts Due to the other
Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by
all Lenders in proportion to the Aggregate Amounts Due to them; provided that if
all or part of such proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without interest.
Company expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing
by Company to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
A. No amendment, modification, termination or waiver of any provision
of the Revolving Loan Documents, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that no such amendment, modification, termination,
waiver or consent shall, without the consent of each Lender (with Obligations
directly affected in the case of the following clause (i)): (i) extend the
scheduled final maturity of any Revolving Loan or Revolving Note, or extend the
stated expiration date of any Letter of Credit beyond the Revolving Loan
Commitment Termination Date, or reduce the rate of interest on any Revolving
Loan (other
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than any waiver of any increase in the interest rate applicable to any Revolving
Loan pursuant to subsection 2.2E) or any commitment fees or letter of credit
fees payable hereunder, or extend the time for payment of any such interest or
fees, or reduce the principal amount of any Revolving Loan or any reimbursement
obligation in respect of any Letter of Credit, (ii) amend, modify, terminate or
waive any provision of this subsection 10.6, (iii) reduce the percentage
specified in the definition of "Requisite Lenders" (it being understood that,
with the consent of Requisite Lenders, additional extensions of credit pursuant
to this Agreement may be included in the determination of "Requisite Lenders" on
substantially the same basis as the Revolving Loan Commitments and the Revolving
Loans are included on the Closing Date), (iv) consent to the assignment or
transfer by the Company of any of its rights and obligations under this
Agreement or (v) release all or substantially all the Liens granted pursuant to
the Collateral Documents (including Liens on real property) or to release any
Subsidiary from the Subsidiary Guaranty if such release would constitute a
release of all or substantially all of the Collateral; provided, further that no
such amendment, modification, termination or waiver shall (1) increase the
Revolving Loan Commitments of any Lender over the amount thereof then in effect
without the consent of such Lender (it being understood that no amendment,
modification or waiver of any condition precedent, covenant, Potential Event of
Default or Event of Default shall constitute an increase in the Revolving Loan
Commitment of any Lender, and that no increase in the available portion of any
Revolving Loan Commitment of any Lender shall constitute an increase in such
Revolving Loan Commitment of such Lender); (2) amend, modify, terminate or waive
any obligation of Lenders relating to the purchase of participations in Letters
of Credit as provided in subsection 3.1C without the written concurrence of
Administrative Agent and of each Issuing Lender which has a Letter of Credit
then outstanding or which has not been reimbursed for a drawing under a Letter
of Credit issued it; or (3) amend, modify, terminate or waive any provision of
Section 9 as the same applies to any Agent, or any other provision of this
Agreement as the same applies to the rights or obligations of any Agent, in each
case without the consent of such Agent.
B. Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Company in any case shall entitle Company to any
other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, the Company.
10.7 INDEPENDENCE OF COVENANTS.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another
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covenant shall not avoid the occurrence of an Event of Default or Potential
Event of Default if such action is taken or condition exists.
10.8 NOTICES.
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Arranger, Syndication Agent or
Administrative Agent shall not be effective until received. For the purposes
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or (i) as to Company and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent and Company.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the
Revolving Loans and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Revolving Loans, the
cancellation or expiration of the Letters of Credit and the reimbursement of any
amounts drawn thereunder, and the termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of Administrative Agent or any Lender
in the exercise of any power, right or privilege hereunder or under any other
Revolving Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement and the other Revolving Loan
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
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10.11 MARSHALLING; PAYMENTS SET ASIDE.
Neither Administrative Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other party or
against or in payment of any or all of the Obligations. To the extent that
Company makes a payment or payments to Administrative Agent or Lenders (or to
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
In case any provision in or obligation under this Agreement or the
Revolving Notes shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Revolving Loan Commitments of any other
Lender hereunder. Nothing contained herein or in any other Loan Document, and no
action taken by Lenders pursuant hereto or thereto, shall be deemed to
constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled to
protect and enforce its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 HEADINGS.
Section and subsection 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 or be given any substantive effect.
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10.15 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither Company's
rights or obligations hereunder nor any interest therein may be assigned or
delegated by Company without the prior written consent of all Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN XXX XXXXX, XXXXXX XXX XXXX XX XXX XXXX. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
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(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17
RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO
THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1402 OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER REVOLVING LOAN DOCUMENTS OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any and all disputes
that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. Each party hereto acknowledges that
this waiver is a material inducement to enter into a business relationship, that
each has already relied on this waiver in entering into this Agreement, and that
each will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER REVOLVING LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE OBLIGATIONS MADE HEREUNDER. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
10.19 CONFIDENTIALITY.
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement in accordance with such Lender's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices (and any Lender without such
customary procedures agrees to keep such information confidential), it being
understood and agreed by Company that in any event a Lender may make disclosures
to Affiliates or Related Funds of such Lender or disclosures
157
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Revolving Loans or any participations therein (so long as such Persons agree in
advance in writing to keep such information confidential) or disclosures
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically prohibited by
applicable law or court order, each Lender shall notify Company of any request
by any governmental agency or representative thereof (other than any such
request in connection with any examination of the financial condition of such
Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and provided, further that
in no event shall any Lender be obligated or required to return any materials
furnished by Company or any of its Subsidiaries.
10.20 COUNTERPARTS; EFFECTIVENESS.
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Administrative Agent of written or telephonic authorization of delivery thereof.
It is the intention of each of the parties hereto that the Existing
Revolving Loan Credit Agreement be amended and restated so as to preserve the
perfection and priority of all security interests securing indebtedness and
obligations under the Existing Revolving Loan Credit Agreement and the other
Loan Documents and that all indebtedness and obligations of Company and its
Subsidiaries hereunder and thereunder shall be secured by the Collateral
Documents and that this Agreement shall not constitute a novation of the
obligations and liabilities existing under the Existing Revolving Loan Credit
Agreement or be deemed to evidence or constitute repayment of all or any portion
of any such obligations or liabilities. The parties hereto further acknowledge
and agree that this Agreement constitutes an amendment of the Existing Revolving
Loan Credit Agreement made under the terms of subsection 10.6 thereof.
This Agreement shall become effective upon the execution of a
counterpart hereof by Company, Administrative Agent, Arranger and Requisite
Lenders (as such term is defined in the Existing Revolving Loan Credit
Agreement) and receipt by Company and Administrative Agent of written or
telephonic notification of such execution and authorization of delivery thereof;
provided that, unless and until all of the conditions set forth in subsections
4.1 and 4.2 have been satisfied or waived in accordance with subsection 10.6 of
the Existing Revolving Loan Credit Agreement, the Existing Revolving Loan Credit
158
Agreement shall remain in full force and effect without giving effect to the
amendments set forth herein, all as if this Agreement had never been executed
and delivered.
[Remainder of page intentionally left blank]
159
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY:
AMSCAN HOLDINGS, INC.
By:/s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
Notice Address:
Amscan Holdings, Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
S-1
AGENTS AND LENDERS:
XXXXXXX SACHS CREDIT PARTNERS L.P.,
as Arranger and Syndication Agent
By:/s/
--------------------------------
Authorized Signatory
Notice Address:
Xxxxxxx Xxxxx Credit Partners L.P.
16th Floor
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx (Credit)
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxx Credit Partners L.P.
27th Floor
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx (Operations)
Telecopy: (000) 000-0000
S-2
FLEET NATIONAL BANK,
individually and as Administrative Agent
By:/s/ Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: AVP
Notice Address:
Fleet National Bank
One Federal Street, 5th Floor
Mail Stop MAOFD05P
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxx
Telecopy: (000) 000-0000
with a copy to:
Fleet National Bank
One Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxx Xxxx XXXXX00X
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopy: (000) 000-0000
S-3
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ Xxxxx Xxxxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Duly Auhtorized Signatory
Notice Address:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxx,
Associate
Telecopy: (000) 000-0000
With a copy to:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx,
Senior Vice President
Telecopy: (000) 000-0000
S-4
SOUTHERN PACIFIC BANK
By:/s/ Xxxxxx X Xxxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Vice President
Notice Address:
Southern Pacific Bank
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
S-5
TRANSAMERICA BUSINESS CREDIT CORPORATION
By:/s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
Notice Address:
Transamerica Business Credit Corporation
000 Xxxxxxxx Xxxxx Xxxxxx, Xxxxx X-000
Xxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx
S-6
