EXHIBIT 4.1
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CREDIT AGREEMENT
among
SPECIALTY RETAILERS, INC.,
as Borrower
STAGE STORES, INC.,
as Guarantor
THE BANKS NAMED HEREIN,
and
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent, Collateral Agent, Swingline Bank, and L/C Bank
Dated as of June 17, 1997
$200,000,000
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS .....................................................1
Section 1.1 Definitions.............................................1
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES ..........................23
Section 2.1 Expansion Loans........................................23
Section 2.2 Revolving Loans and Swingline Loans....................24
Section 2.3 Notice of Borrowing....................................25
Section 2.4 Disbursement of Funds..................................25
Section 2.5 Evidence of Indebtedness; Notes........................26
Section 2.6 Interest...............................................27
Section 2.7 Interest Periods.......................................28
Section 2.8 Minimum Amount of Eurodollar Loans.....................28
Section 2.9 Conversion or Continuation.............................28
Section 2.10 Voluntary and Mandatory Reductions of Commitments
and Swingline Loan Commitment........................28
Section 2.11 Voluntary Prepayments.................................29
Section 2.12 Mandatory Prepayments.................................29
Section 2.13 Application of Prepayments............................30
Section 2.14 Method and Place of Payment...........................31
Section 2.15 Fees..................................................31
Section 2.16 Interest Rate Unascertainable, Increased
Costs, Illegality....................................31
Section 2.17 Funding Losses........................................33
Section 2.18 Increased Capital.....................................33
Section 2.19 Taxes.................................................34
Section 2.20 Action of Affected Banks and Swingline Bank...........35
Section 2.21 Use of Proceeds.......................................35
Section 2.22 Letters of Credit.....................................35
Section 2.23 Notice of Issuance; Agreement to Issue................36
Section 2.24 Payment of Amounts Drawn Under Letters of Credit......37
Section 2.25 Payment by Banks......................................38
Section 2.26 Compensation..........................................38
Section 2.27 Additional Payments; Illegality.......................39
Section 2.28 Obligations Absolute..................................39
Section 2.29 Indemnification; Nature of L/C Banks' Duties..........40
Section 2.30 Increase of Total Revolving Loan Commitment...........41
Section 2.31 Borrowing Subsidiaries................................41
SECTION 3. CONDITIONS PRECEDENT ...........................................41
Section 3.1 Conditions Precedent to Initial Loans..................41
Section 3.2 Conditions Precedent to All Loans......................45
SECTION 4. REPRESENTATIONS AND WARRANTIES..................................47
Section 4.1 Corporate Status.......................................47
Section 4.2 Corporate Power and Authority..........................47
Section 4.3 No Violation...........................................47
Section 4.4 Litigation.............................................47
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Section 4.5 Financial Statements; Financial Condition; etc.........48
Section 4.6 Solvency...............................................48
Section 4.7 Projections............................................48
Section 4.8 Material Adverse Change................................48
Section 4.9 Use of Proceeds; Margin Regulations....................48
Section 4.10 Governmental Approvals................................48
Section 4.11 Security Interests and Liens..........................48
Section 4.12 Tax Returns and Payments..............................48
Section 4.13 ERISA.................................................49
Section 4.14 Investment Company Act; Public Utility
Holding Company Act..................................49
Section 4.15 Representations and Warranties in
Transaction Documents................................49
Section 4.16 True and Complete Disclosure..........................49
Section 4.17 Corporate Structure; Capitalization...................49
Section 4.18 Environmental Matters.................................50
Section 4.19 Insurance.............................................50
Section 4.20 Patents, Trademarks, etc..............................51
Section 4.21 Ownership of Property.................................51
Section 4.22 No Default............................................51
Section 4.23 Licenses, etc.........................................51
Section 4.24 Compliance With Law...................................51
Section 4.25 No Burdensome Restrictions............................51
Section 4.26 Labor Matters.........................................51
SECTION 5. AFFIRMATIVE COVENANTS...........................................52
Section 5.1 Information Covenants..................................52
Section 5.2 Books, Records and Inspections.........................55
Section 5.3 Maintenance of Insurance...............................55
Section 5.4 Taxes..................................................55
Section 5.5 Corporate Franchises...................................55
Section 5.6 Compliance with Law....................................56
Section 5.7 Performance of Obligations.............................56
Section 5.8 Maintenance of Properties..............................56
Section 5.9 Further Assurances.....................................56
Section 5.10 Required Appraisals...................................57
Section 5.11 Receivables Program Refinancings......................57
SECTION 6. NEGATIVE COVENANTS..............................................57
Section 6.1 Financial Covenants....................................57
Section 6.2 Indebtedness...........................................59
Section 6.3 Liens..................................................60
Section 6.4 Restriction on Fundamental Changes.....................61
Section 6.5 Sale of Assets.........................................61
Section 6.6 Contingent Obligations.................................62
Section 6.7 Dividends..............................................62
Section 6.8 Advances, Investments and Loans........................62
Section 6.9 Transactions with Affiliates...........................63
Section 6.10 Limitation on Voluntary Payments and Modifications
of Certain Documents.................................63
Section 6.11 Changes in Business...................................64
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Section 6.12 Certain Restrictions..................................64
Section 6.13 Sales and Leasebacks..................................64
Section 6.14 Plans.................................................64
Section 6.15 Limitation on Dispositions of Subsidiary Stock........64
Section 6.16 Fiscal Year; Fiscal Quarter...........................64
SECTION 7. EVENTS OF DEFAULT...............................................65
Section 7.1 Events of Default......................................65
Section 7.2 Rights and Remedies....................................67
SECTION 8. THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT...................67
Section 8.1 Appointment............................................67
Section 8.2 Delegation of Duties...................................68
Section 8.3 Exculpatory Provisions.................................68
Section 8.4 Reliance by Agent......................................68
Section 8.5 Notice of Default......................................68
Section 8.6 Non-Reliance on Agent and Other Banks..................69
Section 8.7 Indemnification........................................69
Section 8.8 Agent in its Individual Capacity.......................69
Section 8.9 Successor Agent........................................70
SECTION 9. MISCELLANEOUS...................................................70
Section 9.1 Payment of Expenses, Indemnity, etc...................70
Section 9.2 Right of Setoff.......................................71
Section 9.3 Notices...............................................71
Section 9.4 Successors and Assigns; Participation; Assignments....72
Section 9.5 Amendments and Waivers................................73
Section 9.6 No Waiver; Remedies Cumulative........................74
Section 9.7 Sharing of Payments...................................74
Section 9.8 Governing Law; Submission to Jurisdiction.............74
Section 9.9 Counterparts..........................................75
Section 9.10 Effectiveness.........................................75
Section 9.11 Headings Descriptive..................................75
Section 9.12 Marshalling; Recapture................................75
Section 9.13 Severability..........................................75
Section 9.14 Survival..............................................75
Section 9.15 Domicile of Loans.....................................76
Section 9.16 Limitation of Liability...............................76
Section 9.17 Calculations; Computations............................76
Section 9.18 Waiver of Trial by Jury...............................76
Section 9.19 Nature of Borrowers' Obligations......................76
SECTION 10. PARENT GUARANTY................................................78
Section 10.1 The Parent Guaranty...................................78
Section 10.2 Bankruptcy............................................78
Section 10.3 Nature of Liability...................................78
Section 10.4 Independent Obligation................................78
Section 10.5 Authorization.........................................79
Section 10.6 Reliance..............................................79
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Section 10.7 Subordination.........................................79
Section 10.8 Waiver................................................80
Section 10.9 Maximum Liability.....................................80
Annex 1 -- Banks and Commitments
Schedule I -- Guarantors
Schedule II -- Mortgaged Properties
Schedule III -- Receivables Program Documents
Schedule IV -- Refinanced Debt
Schedule V -- Existing Letters of Credit
Schedule 4.8 -- Events Having Material Adverse Change
Schedule 4.10 -- Governmental Approvals
Schedule 4.13 -- ERISA Plans
Schedule 4.17 -- Subsidiaries; Capital Stock
Schedule 4.18 -- Environmental Matters
Schedule 4.19 -- Insurance
Schedule 4.21 -- Real Property
Schedule 4.26 -- Labor Matters
Schedule 6.2 -- Existing Indebtedness
Schedule 6.3 -- Existing Liens
Schedule 6.6 -- Existing Contingent Obligations
Schedule 6.9 -- Affiliate Transactions
Exhibit A -- Form of Notice of Borrowing
Exhibit B -- Form of Expansion Note
Exhibit C -- Form of Revolving Note
Exhibit D -- Form of Swingline Note
Exhibit E-1 -- Form of Notice of Conversion
Exhibit E-2 -- Form of Notice of Continuation
Exhibit F -- Form of Letter of Credit Request
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Pledge Agreement
Exhibit I -- Form of Mortgage
Exhibit J -- Form of Subsidiary Guaranty
Exhibit K-1 -- Form of Legal Opinion of Xxxxxxxx & Xxxxx, Counsel
to Loan Parties
Exhibit K-2 -- Form of Legal Opinion of Local Counsel to the Loan Parties
Exhibit L -- Form of Compliance Certificate
Exhibit M -- Form of Excess Cash Flow Certificate
Exhibit N -- Form of Transfer Supplement
Exhibit O -- Form of Commitment Increase Supplement
Exhibit P -- Form of Division Sales Analysis
Exhibit Q -- Form of Assumption Agreement
Exhibit R -- Form of Intercompany Note
Exhibit S -- Form of Solvency Certificate
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CREDIT AGREEMENT, dated as of June 16, 1997, among SPECIALTY
RETAILERS, INC., a Texas corporation (the "Borrower"), STAGE STORES, INC., a
Delaware corporation (the "Parent"), the Banks (such term and each other
capitalized term used herein having the meaning assigned to such term in Section
1), CREDIT SUISSE FIRST BOSTON, as Swingline Bank (the "Swingline Bank"), and
CREDIT SUISSE FIRST BOSTON, acting in its capacity as agent for the Banks (in
such capacity, the "Administrative Agent") and in its capacity as collateral
agent for the Banks (in such capacity, the "Collateral Agent").
The Borrower has requested that the Banks extend credit to the
Borrower to enable the Borrower (i) to borrow on a reducing revolver basis the
Expansion Loans in an aggregate principal amount not to exceed $100,000,000,
(ii) to borrow on a revolving basis Revolving Loans in an aggregate principal
amount at any time outstanding not to exceed $100,000,000 on the Closing Date
and up to $125,000,000 in the event the Total Revolving Loan Commitment is
increased pursuant to Section 2.30, (iii) to borrow on a revolving basis
Swingline Loans in an aggregate principal amount at any time not to exceed the
Swingline Loan Commitment and (iv) to have issued for its account Letters of
Credit in a stated amount not to exceed at any time outstanding $50,000,000;
provided that the aggregate outstanding amount of Revolving Loans, Swingline
Loans and Letter of Credit Outstandings shall not at any time exceed
$100,000,000 on the Closing Date and up to $125,000,000 in the event the Total
Revolving Loan Commitment is increased pursuant to Section 2.30.
The proceeds of the Expansion Loans will be used together with the
proceeds of the Senior Notes and Senior Subordinated Notes (a) to finance up to
$75 million of the purchase price of the Acquisition, (b) to pay the related
fees and expenses incurred in connection therewith, and (c) for Permitted
Acquisitions and other general corporate purposes of the Borrower. The proceeds
of the Revolving Loans will be used for working capital and for general
corporate purposes (including the purchase of X.X. Xxxxxxx Company receivables).
Accordingly, the Borrower, the Parent, the Banks, the L/C Banks, the
Swingline Bank, the Administrative Agent and the Collateral Agent hereby agree
as follows:
SECTION 1. DEFINITIONS.
SECTION 1.1 DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified unless the context otherwise requires.
Defined terms in this Agreement shall include in the singular number the plural
and in the plural number the singular.
"Acquisition" shall mean the consummation by the Borrower of the
purchase of X.X. Xxxxxxx Company and the other transactions contemplated by the
Acquisition Documents.
"Acquisition Documents" shall mean the Merger Agreement and all
agreements and instruments executed and delivered in connection therewith.
"Administrative Agent" shall mean Credit Suisse First Boston acting
in its capacity as administrative agent for the Banks and any successor agent
appointed in accordance with Section 8.9.
"Adjusted Leverage Ratio" shall mean on any day the ratio on such
day of (i) Consolidated Total Debt on such day determined on a Pro Forma Basis
to (ii) Consolidated Adjusted EBITDA for the four consecutive quarters of the
Parent (taken as one accounting period) most recently ended.
"Administrative Agent's Office" shall mean the office of the
Administrative Agent located at Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, or such other office as the Administrative Agent may hereafter designate
in writing as such to the other parties hereto.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power to (i) vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall have the meaning provided in Section 8.1.
"Agreement" shall mean this Credit Agreement as the same may from
time to time hereafter be modified, supplemented, restated, or amended.
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election exercised with respect to an Eligible Asset Sale, the
amount specified in the Reinvestment Notice delivered by the Borrower in
connection therewith as the amount of the Net Cash Proceeds from the related
Eligible Asset Sale that the Borrower intends to use to purchase, construct or
otherwise acquire Reinvestment Assets.
"Asset Sale" shall mean the sale, transfer or other disposition
(whether voluntary or involuntary) by the Parent or any of its Subsidiaries
(including, without limitation, by way of the damage, destruction or
condemnation thereof) to any Person other than any Loan Party of (a) any capital
stock of any Subsidiary of the Parent or any of its Subsidiaries; (b)
substantially all the assets of any geographic or other division or line of
business of the Parent or any of its Subsidiaries; or (c) any other asset or
assets (excluding inventory and other assets purchased for sale to others in the
ordinary course of business and sales of Receivables pursuant to the Receivables
Program) of the Parent or any of its Subsidiaries, PROVIDED that (i) any asset
sale included in clause (c) above shall be deemed not to be an "Asset Sale"
until the aggregate amount of all such sales after the Closing Date by the
Parent and its Subsidiaries, taken together, that have not previously become
Asset Sales under this Agreement equals or exceeds $1,000,000, (ii) any asset
sale or series of related asset sales described in clause (c) above having a
value less than $100,000 shall not be deemed an "Asset Sale" for purposes of
this Agreement and (iii) any sale of (x) the aircraft owned by the Borrower, (y)
any asset sale or series of asset sales related to the sale of the X.X. Xxxxxxx
Company corporate headquarters building located in Oklahoma City, Oklahoma or
the sale of equipment located at the X.X. Xxxxxxx Company distribution center
located in Oklahoma City, Oklahoma and (z) the sale of not more than five
leasehold interests per year relating to stores closed in the ordinary course of
business (so long as the value of each such leasehold interest does not exceed
$500,000), shall be deemed not to be an "Asset Sale" hereunder.
"Authorized Officer" shall mean with respect to any Person such
Person's Chairman, President or Principal Financial Officer.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes, together with all rules promulgated in connection therewith.
"Banks" shall mean the Persons listed on Annex 1 hereto and the
Persons which from time to time become a party hereto in accordance with Section
9.4(c).
"Base Rate" shall mean, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 2 of 1%. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the
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inability of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Base Rate shall be determined without
regard to clause (b) of the first sentence of this definition until the
circumstances giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate or the
Federal Funds Effective Rate, respectively, without notice to the Borrower.
"Base Rate Loans" shall mean Loans made and/or being maintained at a
rate of interest based upon the Base Rate. Each Swingline Loan shall be
maintained only as a Base Rate Loan.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower's Share of Excess Cash Flow" shall mean the amount of
Excess Cash Flow, determined on a cumulative basis from February 2, 1997 through
the last day of the fiscal year most recently ended prior to the date of
determination, that is not required to be applied to the prepayment of the Loans
and Swingline Loans pursuant to Section 2.12(c) MINUS the amount thereof
previously applied to make additional Capital Expenditures pursuant to Section
6.1(d).
"Borrowing" shall mean the incurrence of (x) one Type of Loan of one
Facility from all the Banks on a given date (or resulting from conversions or
continuations on a given date), having in the case of Eurodollar Loans the same
Interest Period or (y) a Swingline Loan from the Swingline Bank.
"Borrowing Subsidiary" means any wholly-owned Subsidiary of the
Parent (other than the Borrower and its Subsidiaries) so designated by the
Parent and the Borrower pursuant to Section 2.31.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government actions to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
for U.S. dollar deposits in the London Interbank Eurodollar market.
"Capital Expenditures" shall mean, for any period, the sum of
expenditures (whether paid in cash or accrued as a liability, including the
portion of Capital Leases originally incurred during such period that is
capitalized on the consolidated balance sheet of the Parent and its
Subsidiaries) by the Parent and its Subsidiaries during such period that, in
conformity with GAAP, are included in "capital expenditures", "additions to
property, plant or equipment" or comparable items in the consolidated financial
statements of the Parent and its Subsidiaries.
"Capital Lease" shall mean (i) any lease of property, real or
personal, the obligations under which are capitalized on the consolidated
balance sheet of the Parent and its Subsidiaries, and (ii) any other such lease
to the extent that the then present value of the minimum rental commitment
thereunder should, in accordance with GAAP, be capitalized on a balance sheet of
the lessee.
"Capital Lease Obligations" shall mean all obligations of the Parent
and its Subsidiaries under or in respect of Capital Leases.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 365 days from the date of acquisition, (ii) time deposits and certificates
of deposit of any Bank or any domestic commercial bank of recognized standing
having capital and surplus in excess of $500,000,000 with maturities
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of not more than 365 days from the date of acquisition, (iii) fully secured
repurchase obligations with a term of not more than 7 days for underlying
securities of the types described in clause (i) entered into with any bank
meeting the qualifications specified in clause (ii) above, and (iv) commercial
paper issued by the parent corporation of any Bank or any domestic commercial
bank of recognized standing having capital and surplus in excess of $500,000,000
and commercial paper rated at least A-1 or the equivalent thereof by Standard &
Poor's or at least P-1 or the equivalent thereof by Xxxxx'x and in each case
maturing within 270 days after the date of acquisition.
"Change of Control" shall mean (a) the Parent shall cease to own,
beneficially and of record, 100% of the outstanding capital stock of the
Borrower, (b) any Person or group of Persons (within the meaning of Section 13
or 14 of the Exchange Act) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act) of 35% or more of the outstanding shares of any class of
outstanding common stock of the Parent, (c) Continuing Directors shall cease to
constitute a majority of the board of directors of the Parent. "Continuing
Director" shall mean at any date a member of the Parent's board of directors who
was either a member of such board on the Closing Date or was nominated for
election to such board by at least two-thirds of the Continuing Directors then
in office or (d) a "Change of Control" as defined in either the Senior Note
Indenture or the Senior Subordinated Note Indenture.
"Cleanup" shall mean all actions required to: (a) cleanup, remove,
treat or remediate Materials of Environmental Concern in the indoor or outdoor
environment, (b) prevent the Release of Materials of Environmental Concern so
that they do not migrate, endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, (c) perform pre-remedial studies
and investigations and post-remedial monitoring and care, or (d) respond to any
government requests for information or documents in any way relating to cleanup,
removal, treatment or remediation or potential cleanup, removal, treatment or
remediation of Materials of Environmental Concern in the indoor or outdoor
environment.
"Closing Date" shall mean the date on which the conditions precedent
set forth in Section 3.1 have been satisfied.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, together with all rules and regulations
promulgated in connection therewith.
"Collateral" shall mean all property and interests in property now
owned or hereafter acquired in or upon which a Lien has been or is purported or
intended to have been granted to the Collateral Agent under any of the Security
Documents and shall also include the Mortgaged Properties.
"Collateral Agent" shall mean Credit Suisse First Boston acting in
its capacity as collateral agent for the Secured Creditors under the Security
Documents and any successor collateral agent appointed in accordance with
Section 8.9.
"Commitment" shall mean, for each Bank at any given time, the sum of
such Bank's Expansion Loan Commitment and its Revolving Loan Commitment.
"Commitment Fee" shall have the meaning set forth in Section
2.15(b).
"Compliance Certificate" shall mean a certificate of the Principal
Financial Officer of the Borrower in the form of Exhibit L hereto and delivered
pursuant to Section 5.1(f) hereto.
"Consolidated Adjusted EBITDA" shall mean, for any period, the
Consolidated EBITDA for such period determined on a Pro Forma Basis.
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"Consolidated Cash Interest Expense" shall mean, for any period,
Consolidated Interest Expense for such period MINUS the amount of such
Consolidated Interest Expense not paid or payable in cash.
"Consolidated Current Assets" shall mean, at any time, the current
assets (other than cash and Cash Equivalents) of the Parent and its Subsidiaries
at such time, determined on a consolidated basis in accordance with GAAP.
"Consolidated Current Liabilities" shall mean, at any time, the
current liabilities (other than the current portion of all long-term
Indebtedness) of the Parent and its Subsidiaries at such time, determined on a
consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum, without
duplication, of (i) Consolidated Net Income for such period PLUS (ii)
Consolidated Interest Expense for such period PLUS (iii) federal and state
income taxes deducted in calculating Consolidated Net Income for such period,
PLUS (iv) to the extent deducted in the calculation of Consolidated Net Income
for such period, depreciation and amortization expense, all determined on a
consolidated basis for the Parent and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" shall mean, without duplication, for
any period, the sum of (i) all Consolidated Interest Expense for such period,
PLUS (ii) scheduled payments due in the next succeeding four quarters for
principal of the Expansion Loans and other Indebtedness (including the principal
component of Capital Leases but excluding amounts due on the Final Maturity
Date), PLUS (iii) Consolidated Rental Expense PLUS (iv) all federal and state
income taxes paid or payable in cash during such period, all as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any fiscal period of
the Parent, the total interest expense (including, without limitation, interest
expense attributable to Capital Leases in accordance with GAAP) of the Parent
and its Subsidiaries for such period, MINUS all interest earnings received by
the Parent and its Subsidiaries in cash during such period, in each case
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" for any period, means the net income (or
loss) of the Parent and its Subsidiaries on a consolidated basis for such period
(taken as a single accounting period) determined in accordance with GAAP
provided that there shall be excluded (a) the income (or loss) of any Person in
which any other Person (other than the Borrower or any of its wholly owned
Subsidiaries or any directors holding qualifying shares) has a joint interest,
except to the extent of the amount of divi dends or other distributions actually
paid to the Borrower or any of its wholly owned Subsidiaries by such Person
during such period, (b) the income (or loss) of any Person accrued prior to the
date it becomes a Subsidiary or is merged into or consolidated with the Borrower
or any of its Subsidiaries or that Person's assets are acquired by the Borrower
or any of its Subsidiaries, (c) the income of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
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 such Subsidiary, (d) any after tax
gains or losses attributable to Asset Sales and (e) (to the extent not included
in clauses (a) through (d) above) any net extraordinary gains or net non-cash
extraordinary losses.
"Consolidated Net Tangible Assets" shall mean, at any particular
time, the aggregate amount of all assets (less applicable reserves and other
properly deductible items) after deducting therefrom all goodwill, trade names,
trademarks, patents, unamortized debt issue costs (to the extent included in
said aggregate amount of assets) and other like intangibles, as set forth on the
most recent consolidated balance sheet of the Parent and its Subsidiaries and
computed in accordance with GAAP. "Consolidated Rental Expense" shall mean for
any period all rents accrued during such period under operating leases under
which the Parent or any of its Subsidiaries is the lessee, as determined on a
consolidated basis in accordance with GAAP.
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"Consolidated Rental Expense" shall mean for any period all rents
accrued during such period under operating leases under which the parent or
any of its Subsidiaries is the lessee, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Debt" shall mean, at any time, all Indebtedness
of the Parent and its Subsidiaries, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Senior Debt" shall mean, at any time, all
Indebtedness of the Parent and its Subsidiaries other than the Senior
Subordinated Notes and Indebtedness which by its terms is expressly subordinated
to the Obligations and all other senior obligations of the Parent and its
Subsidiaries.
"Consolidated Working Capital" shall mean at any time an amount
equal to Consolidated Current Assets minus Consolidated Current Liabilities at
such time.
"Contingent Obligation" as to any Person shall mean any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("Primary Obligations") of any other Person (the
"Primary Obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such Primary Obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such Primary Obligation or (y) to maintain working
capital or equity capital of the Primary Obligor or otherwise to maintain the
net worth or solvency of the Primary Obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such Primary Obligation of the ability of the Primary Obligor to make payment of
such Primary Obligation or (iv) otherwise to assure or hold harmless the owner
of such Primary Obligation against loss in respect thereof; PROVIDED, HOWEVER,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the Primary Obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Credit Event" shall have the meaning provided in Section 3.2.
"Credit Exposure" shall have the meaning provided in Section 9.4(b).
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Default Rate" shall have the meaning provided in Section 2.6(c).
"Dividends" shall have the meaning provided in Section 6.7.
"Domestic Lending Office" shall mean, as to any Bank, the office of
such Bank designated as such on Annex 1, or such other office designated by such
Bank from time to time by written notice to the Administrative Agent and the
Borrower.
"Eligible Asset Sale" shall mean any Asset Sale, the Net Cash
Proceeds of which shall not exceed 5% of Consolidated Net Tangible Assets at the
time of such sale in the case of any individual Asset Sale or 10% of
Consolidated Net Tangible Assets in the aggregate for all such Asset Sales.
6
"Environmental Affiliate" shall mean, with respect to any Person,
any other Person whose liability for any Environmental Claim such Person has or
may have retained, assumed or otherwise become liable for (contingently or
otherwise), either contractually or by operation of law.
"Environmental Approvals" shall mean any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" shall mean, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"Environmental Laws" shall mean all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata), including without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"Equity Issuance" shall mean any issuance or sale by the Parent or
any of its Subsidiaries of any shares of capital stock or other equity
securities of such Person, or any obligations convertible into or exchangeable
for, or giving any Person a right, option or warrant to acquire such securities
or such convertible or exchangeable obligations, other than (a) sales or
issuances to the Parent or any of its wholly owned Subsidiaries and (b) sales or
issuances of common stock or options to manage ment or employees of the Parent
or any of its Subsidiaries under any employee stock option or stock purchase
plan or plan established pursuant to Section 401(k) of the Code in existence
from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated in connection therewith. Section references to ERISA are to ERISA,
as in effect at the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Controlled Group" means a group consisting of any ERISA
Person and all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control with such Person
that, together with such Person, are treated as a single employer under
regulations of the PBGC.
"ERISA Person" shall have the meaning set forth in Section 3(9) of
ERISA for the term "person."
"ERISA Plan" means any Plan that (i) is a Multiemployer Plan or (ii)
has Unfunded Benefit Liabilities in excess of $500,000.
"Eurodollar Lending Office" shall mean, as to any Bank, the office
of such Bank designated as such on Annex 1, or such other office designated by
such Bank from time to time by written notice to the Administrative Agent and
the Borrower.
"Eurodollar Loans" shall mean Loans made and/or being maintained at
a rate of interest based upon the Eurodollar Rate.
7
"Eurodollar Rate" shall mean, for any Interest Period for each
Eurodollar Loan, an interest rate per annum equal to the rate determined by the
Administrative Agent at approximately 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period by reference to the British
Bankers' Association Interest Settlement Rates for deposits in dollars (as set
forth by any services selected by the Administrative Agent which has been
nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to the
relevant Interest Period; PROVIDED that, to the extent that an interest rate is
not ascertainable pursuant to the foregoing provisions of this definition, the
"Eurodollar Rate" shall be the interest rate per annum determined by the
Administrative Agent to be the average (rounded upward to the nearest whole
multiple of one-sixteenth of one percent (0.0625%) per annum, if such average is
not such a multiple) of the rates per annum at which deposits in dollars are
offered to major banks in the London interbank market in London, England by the
Reference Banks at approximately 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period for such Interest Period.
"Event of Default" shall have the meaning provided in Section 7.
"Excess Cash Flow" shall mean, with respect to any fiscal period of
the Borrower, an amount equal to (i) Consolidated Net Income for such fiscal
period, PLUS (ii) depreciation and amortization expense to the extent deducted
in determining Consolidated Net Income for such fiscal period, PLUS (iii)
Consolidated Interest Expense (other than Consolidated Cash Interest Expense)
during such fiscal period, PLUS (or MINUS) (iv) any increase (or decrease) in
deferred taxes during such fiscal period, PLUS (or MINUS) (v) decreases (or
increases) in Consolidated Working Capital from the last day of the preceding
fiscal period to the last day of such fiscal period (excluding, however,
decreases in Consolidated Working Capital to the extent such decreases are
attributable to Asset Sales), MINUS (vi) the aggregate amount paid or payable in
cash by the Borrower and its Subsidiaries during such fiscal period for Capital
Expenditures permitted pursuant to Section 6.1(d) (except to the extent financed
with Capital Leases, the proceeds of purchase money Indebtedness, insurance
proceeds, Retained Equity Proceeds or the Borrower's Share of Excess Cash Flow
and except to the extent already deducted in the calculation of Excess Cash Flow
for any prior period), MINUS (vii) all scheduled principal repayments and
voluntary prepayments of the Loans made during such fiscal period, but only to
the extent accompanied by a permanent reduction in the Expansion Loan Commitment
or Revolving Loan Commitment, as the case may be, MINUS (viii) all regularly
scheduled principal payments made during such fiscal period in respect of other
Indebtedness to the extent such Indebtedness and payments are permitted to be
incurred and made hereunder MINUS (ix) the aggregate amount actually paid in
cash by the Parent and its Subsidiaries for Permitted Acquisitions (except to
the extent financed with the proceeds of any Indebtedness, including the Loans,
or any Equity Issuance).
"Excess Cash Flow Certificate" shall mean a certificate of the
Principal Financial Officer of the Borrower in the form of Exhibit M hereto and
delivered pursuant to Section 5.1(f) hereof.
"Existing Credit Agreement" shall mean the collective reference to
the two Amended and Restated Revolving Credit Agreements, each dated January 31,
1997, by and among Specialty Retailers, Inc., Palais Royal, Inc., The First
National Bank of Boston and the other lending institutions party thereto and The
First National Bank of Boston, as Agent.
"Existing Notes" shall mean the Existing Senior Notes and the
Existing Senior Subordinated Notes.
"Existing Senior Notes" shall mean the Borrower's 10% Senior Notes
due 2000.
"Existing Senior Subordinated Notes" shall mean the Borrower's
Series B and Series D 11% Senior Subordinated Notes due 2003.
8
"Expansion Loan" shall have the meaning provided in Section 2.1.
"Expansion Loan Commitment" shall mean at any time, for any Bank,
the amount set forth opposite such Bank's name in Annex 1 hereto under the
heading "Expansion Loan Commitment", as the same may be reduced from time to
time pursuant to Section 2.1(a), 2.10 or 9.4(c).
"Expansion Note" shall have the meaning provided in Section 2.5(b).
"Facility" shall mean either the Expansion Loans or the Revolving
Loans.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent
from three Federal funds brokers of recognized standing selected by it.
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fees" shall mean all fees and other amounts payable pursuant to the
Loan Documents including, without limitation, the fees payable pursuant to
Sections 2.15 and 2.26.
"Fee Letter" shall mean the letter between the Borrower and Credit
Suisse First Boston relating to the payment of certain fees and expenses in
connection with the transactions contemplated hereby.
"Final Maturity Date" shall mean June 14, 2002.
"GAAP" shall mean United States generally accepted accounting
principles as in effect on the date hereof and consistent with those utilized in
the preparation of the financial statements referred to in Section 4.5.
"Guaranteed Creditors" shall mean and include each of the
Administrative Agent, the Collateral Agent, the L/C Banks and the Banks to the
extent such party constitutes a Secured Creditor under the Security Documents.
"Guaranteed Obligations" shall mean (i) the full and prompt payment
when due (whether at the stated maturity, by acceleration or otherwise) of the
principal of and interest on each Note issued by the Borrower or any Borrowing
Subsidiary to each Bank, and Loans made, under this Agreement and all
reimbursement obligations with respect to Letters of Credit, together with all
the other obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code or any similar provision, would
become due) and liabilities (including, without limitation, indemnities, fees
and interest thereon) of the Borrower or any Borrowing Subsidiary to such Bank
now existing or hereafter incurred under, arising out of or in connection with
this Agreement or any other Loan Document and the due performance and compliance
with all the terms, conditions and agreements contained in the Loan Documents by
the Borrower or any Borrowing Subsidiary and (ii) the full and prompt payment
when due (whether by acceleration or otherwise) of all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due) of each Guarantor owing under the Parent
Guaranty or the Subsidiary Guaranty.
9
"Guarantor" shall mean the Parent and each Material Subsidiary of
the Borrower or the Parent specified on Schedule I hereto and any Material
Subsidiary of the Borrower or the Parent which shall have executed and delivered
a Subsidiary Guaranty pursuant to Section 5.9(c) hereof, other than the
Receivables Subsidiary.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than trade payables on terms of 90 days or
less incurred in the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument, (iii) the principal component of all Capital Lease Obligations of
such Person, (iv) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all unreimbursed amounts drawn
thereunder, (v) all indebtedness of any other Person secured by any Lien on any
property owned by such Person, whether or not such indebtedness has been
assumed, (vi) all Contingent Obligations of such Person, (vii) all net payment
obligations of such Person under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
and similar agreements) and currency swaps and similar agreements and (viii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender thereunder upon a default are
limited to repossession or sale of such property) .
"Intercompany Note" shall mean a promissory note issued by the
Parent to the Borrower substantially in the form of Exhibit R hereto evidencing
the loans, if any, made by the Borrower to the Parent pursuant to Section 6.8
(b)(ii) hereof.
"Interest Period" shall mean with respect to any Eurodollar Loan:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending on the numerically corresponding calendar day in the
calendar month that is one, two, three or six months thereafter, as
selected by the Borrower in its Notice of Borrowing, Notice of
Conversion or Notice of Continuation, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the last day
of the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the
then current Interest Period with respect thereto;
PROVIDED that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(A) if any Interest Period pertaining to a Eurodollar
Loan would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(B) no Interest Period in respect of Expansion Loans
shall extend beyond any date upon which a scheduled reduction of the
Expansion Loan Commitments will be required pursuant to Section 2.10
if the aggregate principal amount of Expansion Loans having Interest
Periods extending beyond such date will exceed the aggregate
principal amount of the Expansion Loan Commitments after giving
effect to such scheduled reduction;
(C) any Interest Period that would otherwise extend
beyond the Final Maturity Date shall end on the Final Maturity Date;
and
10
(D) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of a calendar month.
"Investment" shall have the meaning provided in Section 6.8.
"L/C Bank" shall mean Credit Suisse First Boston and any other Bank
or Banks designated by the Borrower who agree to serve as a L/C Bank hereunder
and are reasonably acceptable to the Administrative Agent.
"L/C Cash Collateral Account" shall mean the cash collateral account
established pursuant to the Security Agreement in favor of the Collateral Agent
for the benefit of the Secured Creditors.
"L/C Sublimit" shall mean $50,000,000.
"Lending Office" shall mean (i) with respect to any Bank, a
collective reference to such Bank's Eurodollar Lending Office and Domestic
Lending Office and (ii) with respect to the Swingline Bank, its Domestic Lending
Office.
"Letter of Credit" shall mean each Trade Letter of Credit and each
Standby Letter of Credit, as the case may be.
"Letter of Credit Exposure" shall mean, at any time, with respect to
any Bank, the product of its Pro Rata Share of the then Letter of Credit
Outstandings.
"Letter of Credit Outstandings" shall mean, with respect to Letters
of Credit, as at any date of determination, the sum of (a) the maximum aggregate
amount which at such date of determination is available to be drawn (assuming
the conditions for drawing thereunder have been met) under all Letters of Credit
then outstanding, PLUS (b) the aggregate amount of all drawings under Letters of
Credit honored by the applicable L/C Bank not theretofore reimbursed by the
Borrower (it being understood that for purposes of any request for a Loan
pursuant to Section 2.24, there shall be excluded from the amount determined in
accordance with the preceding clause (b) an amount equal to the proceeds of such
Loan).
"Letter of Credit Request" shall mean a Letter of Credit Request
substantially in the form of Exhibit F hereto.
"Leverage Ratio" shall mean on any day the ratio on such day of (i)
Consolidated Total Debt on such day to (ii) Consolidated EBITDA for the four
consecutive fiscal quarters of the Parent (taken as one accounting period) most
recently ended.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, charge, lien (statutory or other), or
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same effect as
any of the foregoing and the filing of any financing statement or similar
instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.
"Loans" shall mean and include the Revolving Loans and the Expansion
Loans.
11
"Loan Documents" shall mean this Agreement, the Notes, the
Subsidiary Guaranty, each Letter of Credit and the Security Documents and any
other documents or instruments executed or delivered in connection therewith,
together with all amendments, restatements and modifications thereto or thereof.
"Loan Party" shall mean and include the Borrower, any Borrowing
Subsidiary, the Parent and each Guarantor.
"Margin Percentage" shall mean at any time that percentage (a) to be
added to the Base Rate or the Eurodollar Rate, as appropriate, pursuant to
Section 2.6, for purposes of determining the per annum rate of interest
applicable from time to time to Base Rate Loans or Eurodollar Loans and (b) to
be used in computing the Commitment Fee pursuant to Section 2.15 and the Letter
of Credit fees pursuant to Section 2.26, which in each case on any date shall be
the applicable percentage set forth under the appropriate column below opposite
the category in which the Adjusted Leverage Ratio, determined (subject to the
last sentence hereof) as of the end of the most recent fiscal quarter for which
financial statements and Compliance Certificates are required to have been
delivered under Section 5.1(a), (b) and (f) (whether or not such financial
statements and Compliance Certificates for any subsequent quarter shall in fact
have been delivered):
================================================================================
Adjusted Commitment Eurodollar Base Rate
Leverage Fee Percentage Margin Margin
Ratio
--------------------------------------------------------------------------------
equal to or less than
Category 1 2.0 to 1.0 0.25% 1.00% 0.00%
--------------------------------------------------------------------------------
equal to or less than
Category 2 3.0 to 1.0 0.375% 1.50% 0.50%
and more than 2.0 to 1.0
--------------------------------------------------------------------------------
equal to or less than
Category 3 3.50 to 1.0 0.50% 1.75% 0.75%
and more than 3.0 to 1.0
--------------------------------------------------------------------------------
equal to or less than
Category 4 4.0 to 1.0 0.50% 2.00% 1.00%
and more than 3.50 to 1.0
--------------------------------------------------------------------------------
Category 5 more than 4.0 to 1.0 0.50% 2.25% 1.25%
================================================================================
PROVIDED that, notwithstanding the foregoing, (i) from the Closing Date until a
Compliance Certificate for the most recently ended fiscal quarter has been
received, the Margin Percentage shall be determined by reference to Category 4
and (ii) at any time during which the Borrower has failed to deliver the
financial statements and Compliance Certificates described in Section 5.1(a),
(b) and (f) with respect to a fiscal quarter or fiscal year in accordance with
the provisions thereof, or at any time during which an Event of Default shall
have occurred and shall be continuing, the Margin Percentage shall be determined
by reference to Category 5. Each change in the Margin Percentage shall be
applicable with respect to the Commitment Fees, Letter of Credit fees pursuant
to Section 2.26 and outstanding Expansion Loans, Revolving Loans and Swingline
Loans on the Business Day after the date on which the Administrative Agent shall
have received the financial statements and Compliance Certificates required to
be delivered pursuant to Section 5.1(a), (b) and (f) PROVIDED, HOWEVER, that on
the effective date of the Acquisition and any Permitted Acquisition, the
Borrower shall be required to deliver an additional Compliance Certificate
(together with pro forma financial statements) which calculates the Adjusted
Leverage Ratio as of such date after giving effect to the Acquisition or such
Permitted Acquisition and any other Permitted Acquisition occurring during such
period and any change in the Margin Percentage shall become effective on the
Business Day after the date of delivery of such additional Compliance
Certificate.
12
"Margin Stock" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" shall mean a material adverse effect upon
(i) the business, operations, properties, assets, prospects or condition
(financial or otherwise) of the Parent and its Subsidiaries taken as a whole or
(ii) the ability of any Loan Party to perform, or of the Administrative Agent,
any L/C Bank, the Swingline Bank, the Collateral Agent or any of the Banks to
enforce, any of the Obligations.
"Material Real Estate"" shall mean with respect to any real estate
acquired by any Loan Party or any of its Subsidiaries after the date hereof any
real estate, valued at the greater of cost and fair market value, which (i) has
a value in the case of any individual or contiguous properties, equal to or
greater than $3,000,000 and (ii) in the case of any individual or contiguous
properties having a value in excess of $1,000,000 but less than $3,000,000, has
a value in excess of $10,000,000 when aggregated with all other real estate
described in this clause (ii).
"Materials of Environmental Concern" shall mean and include
chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products.
"Material Subsidiary" means, as of any date, any Subsidiary of the
Parent (other than the Borrower), either alone or together with its
Subsidiaries, that has assets with a fair market value of $250,000 or more as of
the last day of the most recently ended fiscal quarter of the Parent or annual
revenues (or annualized revenues in the case of any Person that has not been a
Subsidiary of the Parent for a full year) of $1,000,000 or more as of the most
recently ended fiscal quarter of the Parent.
"Maximum Amount" shall have the meaning set forth in Section 6.1(d).
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated March 5, 1997, as amended as of May 20, 1997, between Stage Stores, Inc.
and X.X. Xxxxxxx Company, together with all schedules and exhibits referred to
therein, each in the form delivered to the Administrative Agent and the Banks on
the Closing Date, without giving effect to any amendment, modification or waiver
thereof effected without the written consent of the Banks.
"Moody's" shall mean Xxxxx'x Investors Service, Inc. or any of its
successors.
"Mortgaged Properties" shall mean the distribution center owned by
the Borrower and described on Schedule II.
"Mortgages" shall have the meaning set forth in Section 3.1(a)(v).
"Multiemployer Plan" shall mean a Plan which is a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean (a) with respect to any Asset Sale,
the cash payments (including cash payments received by way of insurance
proceeds, deferred payment pursuant to a note receivable or otherwise, but only
as and when so received) received therefrom, net of (i) bona fide direct costs
of sale (including payment of (x) the outstanding principal amount of, premium
or penalty, if any, and interest on any Indebtedness (other than Loans or
Swingline Loans) secured by or required to be repaid under the terms thereof as
a result of such Asset Sale and (y) reasonable fees associated with such Asset
Sale paid to Persons that are not Affiliates of the Parent and (ii) income taxes
paid or reasonably estimated to be payable in the year such Asset Sale occurs or
in the following year as a result thereof) and (b) with respect to any
incurrence or
13
disposition of Indebtedness or any Equity Issuance, the cash proceeds received
therefrom net of underwriting commissions or placement fees and expenses
directly incurred in connection therewith.
"Notes" shall mean and include each Revolving Note, each Expansion
Note and the Swingline Note.
"Notice of Borrowing" shall mean a notice of borrowing in the form
of Exhibit A hereto.
"Notice of Conversion" shall mean a notice of conversion in the form
of Exhibit E-1 hereto.
"Notice of Continuation" shall mean a notice of continuation in the
form of Exhibit E-2 hereto.
"Obligations" shall mean all obligations, liabilities and
indebtedness of every nature of the Borrower, any Borrowing Subsidiary and the
Guarantors from time to time owing to the Administrative Agent, the Collateral
Agent, any Bank, the Swingline Bank or any L/C Bank under or in connection with
this Agreement or any other Loan Document.
"Parent" shall have the meaning provided in the first paragraph of
this Agreement.
"Parent Guaranty" shall mean the guaranty of the Parent pursuant to
Section 10.
"Participant" shall have the meaning provided in Section 9.4(b).
"Participating Bank" shall have the meaning provided in Section
2.23(b).
"Payment Date" shall mean the last Business Day of each March, June,
September and December of each year.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permitted Acquired Indebtedness" shall mean Indebtedness of any
Subsidiary of the Parent or the Borrower acquired pursuant to a Permitted
Acquisition, which Indebtedness existed at the time of the consummation of any
such acquisition and was not created in contemplation thereof (and the
provisions of which were not altered in contemplation thereof), so long as (x)
the Parent or the Borrower and its other respective Subsidiaries (other than the
Subsidiary being so acquired) have no liability with respect to any such
Indebtedness other than the assumption of any such Indebtedness in connection
with a merger of such Subsidiary with, or the acquisition of all or
substantially all of the assets of such Person by, the Borrower or any
Subsidiary of the Parent or the Borrower and (y) any Liens securing such
Indebtedness apply only to assets of the Subsidiary so acquired (and so long as
additional assets of such Subsidiary are not granted as security following, or
in contemplation of, the respective Permitted Acquisition).
"Permitted Acquisition" shall mean the acquisition by the Parent or
the Borrower of assets constituting part of or an entire business, division or
product line of any Person not already a Subsidiary of the Parent or the
Borrower, as the case may be, or of 100% (or such lesser amount as shall be
necessary to immediately consummate a statutory "short-form" merger under the
laws of the relevant jurisdiction and which merger is thereafter immediately
consummated) of the capital stock of any such Person, which Person shall, as a
result of such acquisition, become a Subsidiary; provided that the Acquisition
shall constitute a Permitted Acquisition and provided further that an
acquisition shall only be a Permitted Acquisition if the following terms and
conditions shall be satisfied:
14
(a) (i) the consideration paid by the Parent or the
Borrower, as the case may be, consists of cash (including proceeds
of Expansion Loans) or common stock, the issuance of Indebtedness
otherwise permitted in Section 6.2 and the assumption/acquisition of
any Permitted Acquired Indebtedness (calculated at face value)
relating to such business, division or product line of any Person
which is permitted to remain outstanding in accordance with the
requirements of Section 6.2;
(ii) the assets acquired, or the business of the Person
whose stock is acquired shall (A) be in the same line of business or
reasonably incidental thereto as the business of the Parent or the
Borrower, as the case may be, and (B) be merged with or into the
Borrower or any Subsidiary of the Borrower or the Parent or become a
direct Subsidiary of the Borrower or any Subsidiary of the Borrower
or the Parent;
(iii) in the case of the acquisition of 100% of the
capital stock of any Person, such Person shall own no capital stock
of any other Person unless such Person owns 100% of the capital
stock of such other Person or such Investment is otherwise permitted
by Section 6.8(h);
(iv) no Default or Event of Default shall be in
existence at the time of the consummation of the proposed Permitted
Acquisition or immediately after giving effect thereto;
(v) the Parent or the Borrower, as the case may be,
shall have given the Administrative Agent at least 13 Business Days'
prior written notice of any Permitted Acquisition for which the
consideration to be paid is in excess of $25,000,000 or at least 8
Business Days' prior written notice of any Permitted Acquisition for
which the consideration to be paid is equal to or less than
$25,000,000 (such notices to include the compliance calculations
referred to in clauses (vi) and (vii) below and a brief business
description of the Permitted Acquisition and copies of which notices
the Administrative Agent shall promptly furnish to the Banks);
(vi) calculations are made by the Parent or the
Borrower, as the case may be, of compliance with the covenants
contained in Section 6.1 on a Pro Forma Basis for the period of four
consecutive fiscal quarters (taken as one accounting period) most
recently ended prior to the date of such Permitted Acquisition
(each, a "Calculation Period"), as if the respective Permitted
Acquisition (as well as all other Permitted Acquisitions theretofore
consummated after the first day of such Calculation Period) had
occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have
been complied with if the Permitted Acquisition had occurred on the
first day of such Calculation Period (for this purpose, if the first
day of the respective Calculation Period occurs prior to the Closing
Date, calculated as if the covenants contained in said Section 6.1
had been applicable from the first day of the Calculation Period);
provided that for the purposes of this clause (vi) and clause (vii)
below the Adjusted Leverage Ratio demonstrated by such
recalculations must be equal to or less than 4.0:1 from the Closing
Date until the third anniversary of the Closing Date and must be
equal to or less than 3.75:1 at any time thereafter;
(vii) based on good faith projections prepared by the
Borrower for the period from the date of the consummation of the
Permitted Acquisition to the date which is one year thereafter, the
level of financial performance measured by the covenants set forth
in Section 6.1 shall be better than or equal to such level as would
be required to provide that no Default or Event of Default would
exist under the financial covenants contained in Section 6.1 as
compliance with such covenants would be required through the date
which is one year from the date of the consummation of the
respective Permitted Acquisition;
(viii) the Administrative Agent shall have been
satisfied in its reasonable discretion that the proposed Permitted
Acquisition could not reasonably be expected to result in
15
materially increased tax, ERISA, environmental or other contingent
liabilities with respect to the Parent, the Borrower or any of their
respective Subsidiaries;
(ix) all representations and warranties contained herein
and in the other Loan Documents shall be true and correct in all
material respects with the same effect as though such
representations and warranties had been made on and as of the date
of such Permitted Acquisition (both before and after giving effect
thereto), unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and
correct in all material respects as of such earlier date;
(x) the Parent or the Borrower, as the case may be,
provides to the Administrative Agent as soon as available but not
later than 5 Business Days after the execution thereof, a copy of
any executed purchase agreement or similar agreement with respect to
such Permitted Acquisition;
(xi) the Parent or the Borrower, as the case may be,
shall have delivered to the Administrative Agent an officer's
certificate executed by an Authorized Officer of the Borrower,
certifying to the best of his knowledge, compliance with the
requirements of preceding clauses (iv) through (vii), inclusive,
(ix), and containing the calculations required by the preceding
clauses (vi) and (vii); and
(xii) if the total cash purchase price (including
Indebtedness assumed) of any acquisition exceeds $50,000,000, the
Administrative Agent and the Required Banks shall have given their
prior written consent thereto.
(b) At the time of each Permitted Acquisition involving
the creation or acquisition of a Subsidiary of the Borrower or the
Parent, or the acquisition of capital stock or other equity interest
of any Person by the Borrower or the Parent, all capital stock or
other equity interests thereof created or acquired in connection
with such Permitted Acquisition shall be pledged for the benefit of
the Secured Creditors pursuant to the Pledge Agreement.
(c) The Borrower shall cause each Subsidiary which it or
the Parent forms to effect, or it or the Parent acquires pursuant
to, a Permitted Acquisition to comply with, and to execute and
deliver, all of the documentation required by, Sections 2.31 and
5.9, to the satisfaction of the Administrative Agent.
(d) The consummation of each Permitted Acquisition shall
be deemed to be a representation and warranty by the Parent and the
Borrower that the certifications by the Borrower (or by one or more
of its Authorized Officers) required by clause (a) above are true
and correct and that all conditions thereto have been satisfied and
that such Permitted Acquisition is permitted in accordance with the
terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes
hereunder, including, without limitation, Sections 3 and 7.
"Permitted Subordinated Debt" shall mean unsecured subordinated
Indebtedness of the Borrower if (i) such Indebtedness has no amortization or
required sinking fund payments and a final maturity no earlier than, and
subordination provisions no more onerous or restrictive on the Borrower and no
less favorable to the Banks in any respect deemed material by the Required Banks
than, those terms and provisions of the Senior Subordinated Notes, (ii) the
interest rate payable in respect of such Indebted ness shall be a market
interest rate as of the time of the incurrence thereof and shall not, in case of
Indebtedness bearing interest at a floating rate, exceed the rate of interest
payable on the Loans and Swingline Loans, (iii) each of the covenants, events of
default and other provisions thereof shall be customary for issuances of similar
indebtedness by companies in a similar financial condition to the Borrower in
accordance with prevailing market conditions
16
in effect at the time of the issuance thereof and in any event shall be no more
onerous or restrictive on the Borrower than those contained in the Senior
Subordinated Notes and (iv) the Net Cash Proceeds thereof shall have been
applied to the prepayment of the Loans to the extent provided in Section
2.12(b).
"Person" shall mean and include any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or agency,
department or instrumentality thereof.
"Plan" means any employee benefit plan covered by Title IV of ERISA,
the funding requirements of which:
(a) were the responsibility of the Borrower or a member
of its ERISA Controlled Group at any time within the five years
immediately preceding the date hereof,
(b) are currently the responsibility of the Borrower or
a member of its ERISA Controlled Group, or
(c) hereafter become the responsibility of the Borrower
or a member of its ERISA Controlled Group,
including any such plans as may have been, or may hereafter be, terminated for
whatever reason.
"Pledge Agreement" shall have the meaning provided in Section
3.1(a)(iv).
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its Prime Rate in
effect at its principal office in New York City. The Prime Rate is a reference
rate and is not intended to be the lowest rate of interest charged by the
Administrative Agent in connection with extensions of credit. Each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective without notice to the Borrower, any Borrowing Subsidiary or any
Guarantor.
"Principal Financial Officer" shall mean, with respect to any
Person, such Person's Chief Financial Officer, Treasurer or Assistant Treasurer.
"Pro Forma Basis" shall mean, in connection with any calculation of
the Adjusted Leverage Ratio, Consolidated Adjusted EBITDA or compliance with any
financial covenant or financial term, the calculation thereof after giving
effect on a PRO FORMA basis to (i) if the relevant period to be tested includes
any period occurring prior to the Closing Date, the consummation of the
Transactions as if same had occurred on the first day of such period, (ii) the
incurrence of any Indebtedness (other than the Loans, except to the extent same
is incurred to finance the Transactions, to refinance other outstanding
Indebtedness or to finance Permitted Acquisitions) after the first day of the
relevant Calculation Period as if such Indebtedness had been incurred (and the
proceeds thereof applied) on the first day of the relevant Calculation Period,
(iii) the permanent repayment of any Indebtedness after the first day of the
relevant Calculation Period as if such Indebtedness had been retired or redeemed
on the first day of the relevant Calculation Period and (iv) the Permitted
Acquisitions, if any, then being consummated as well as any other Permitted
Acquisitions consummated after the first day of the relevant Calculation Period
and on or prior to the date of the respective Permitted Acquisitions then being
effected, with the following rules to apply in connection therewith:
(a) all Indebtedness (x) incurred or issued after the first
day of the relevant Calculation Period shall be deemed to have been incurred or
issued (and the proceeds thereof applied) on the first day of the respective
Calculation Period and remain outstanding through the date of determination (and
thereafter
17
in the case of projections pursuant to clause (vii) of the definition of
Permitted Acquisition and (y) permanently retired or redeemed after the first
day of the relevant Calculation Period shall be deemed to have been retired or
redeemed on the first day of the respective Calculation Period and remain
retired through the date of determination (and thereafter in the case of
projections pursuant to clause (vii) of the definition of Permitted
Acquisition);
(b) all Indebtedness assumed to be outstanding pursuant to the
preceding clause (i) shall be deemed to have borne interest or dividends at (x)
the rate applicable thereto, in the case of fixed rate indebtedness or (y) the
rates which would have been applicable thereto during the respective period when
same was deemed outstanding, in the case of floating rate Indebtedness (although
interest or dividends expense with respect to any Indebtedness actually
outstanding during the respective period shall be calculated using the actual
rates applicable thereto during such period); provided that for purposes of the
calculations pursuant to clause (vii) of the definition of Permitted
Acquisition, all Indebtedness (whether actually outstanding or deemed
outstanding) bearing interest at a floating rate of interest shall be tested on
the basis of the rates applicable at the time the determination is made pursuant
to said provisions; and
(c) in making any determination of Consolidated Adjusted
EBITDA, (i) in the case of the acquisition of 100% of the stock of a Person, pro
forma effect shall be given to the Transactions and any Permitted Acquisition
for the periods described above, taking into account, cost savings and expenses
which would otherwise be accounted for as an adjustment pursuant to Article 11
of Regulation S-X under the Securities Act of 1933, as amended and as in effect
on the Closing Date, as if such cost savings or expenses were realized on the
first day of the relevant Calculation Period and (ii) in the case of an asset
purchase, pro forma effect shall be given to the Transactions and any Permitted
Acquisition for the period described above, taking into account, cost savings
and expenses reasonably estimated to be realized based upon the good faith
estimates of management, as if such cost savings and expenses were realized on
the first day of the relevant Calculation Period; and
(d) the amounts to be used in calculating the Consolidated
Adjusted EBITDA for any period for the purposes of giving effect to the
Acquisition for each of the fiscal quarters ending on November 2, 1996, February
2, 1997 and May 2, 1997 shall be $3,978,000, $9,984,000 and $2,761,000,
respectively, and for the fiscal quarter ending on August 2, 1997 shall be the
consolidated EBITDA for such quarter for X.X. Xxxxxxx Company (the "CRA EBITDA")
PLUS $2,393,000, reflecting pro-forma cost savings. The CRA EBITDA for the
fiscal quarter ending on August 2, 1997 shall be the actual consolidated EBITDA
for X.X. Xxxxxxx Company for such period before the Acquisition PLUS the
Consolidated EBITDA for such period after the Acquisition adjusted to exclude
(to the extent included in either CRA EBITDA or Consolidated EBITDA) (i) option
payments calculated in accordance with the Merger Agreement and (ii) purchase
accounting adjustments including severance costs, contract buyouts, xxxx-down
accruals, lease payments, transaction fees and other purchase accounting
accruals, not to exceed a total of $30,000,000.
"Pro Rata Share" as to any Bank shall mean a fraction (expressed as
a percentage), the numerator of which shall be the aggregate amount of such
Bank's Commitments and the denominator of which shall be the Total Commitment.
"Purchasing Banks" shall have the meaning provided in Section
9.4(c).
"Receivables" means accounts, general intangibles or other rights to
payment from obligors arising from extensions of credit to obligors, together
with any finance charges or other fees or charges related thereto, and any
related assets which are transferred under the Receivables Program Documents.
"Receivables Program" shall mean the receivables securitization
program conducted by the Borrower, the Receivables Subsidiary and any other
special purpose receivables Subsidiary that may be formed
18
or become a Subsidiary in the future pursuant to the Receivables Program
Documents as in effect from time to time in accordance with the terms hereof.
"Receivables Program Documents" shall mean the documents listed on
Schedule III hereto, and all other documentation, agreements and instruments
entered into in connection therewith or pursuant to any other receivables
financing program created in the future, as the same may hereafter be amended,
modified, supplemented or refinanced from time to time in accordance with the
provisions hereof and thereof.
"Receivables Subsidiary" shall mean the collective reference to (i)
SRI Receivables Purchase Company, Inc., a Delaware corporation, (ii) any other
Subsidiary established by the Parent or the Borrower in connection with the
Receivables Program and whose sole business is to implement and carry out such
Receivables Program and (iii) any Subsidiary of the Borrower that is a bank
formed for the sole purpose, and whose sole business is, financing any credit
card program implemented by the Borrower.
"Reference Banks" shall mean Credit Suisse First Boston, Union Bank
of California and Deutsche Bank.
"Refinanced Debt" shall mean the Indebtedness of the Borrower and
its Subsidiaries identified on Schedule IV hereto, including without limitation
the Existing Credit Agreement, the Existing Senior Notes and the Existing Senior
Subordinated Notes to be repaid in full (or, in the case of the Existing Notes,
not less than the amounts specified in Section 3.1(w)) on the Closing Date with
the proceeds of the initial Loans, the Senior Notes and the Senior Subordinated
Notes.
"Regulation D" shall mean Regulation D of the Federal Reserve Board
as from time to time in effect and any successor to all or any portion thereof.
"Regulation G" shall mean Regulation G of the Federal Reserve Board
as from time to time in effect and any successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Federal Reserve Board
as from time to time in effect and any successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Federal Reserve Board
from time to time in effect and any successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Federal Reserve Board
as from time to time in effect and any successor to all or a portion thereof.
"Reinvestment Assets" shall mean any assets to be employed in the
business of the Borrower and its Subsidiaries as conducted on the date hereof.
"Reinvestment Election" shall have the meaning provided in Section
2.12(a).
"Reinvestment Notice" shall mean a written notice signed by an
authorized officer of the Borrower stating that the Borrower, in good faith,
intends and expects to use all or a specified portion of the Net Cash Proceeds
of an Eligible Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment Date
relating thereto by which (a) the Anticipated Reinvestment Amount in respect of
such Reinvestment Election exceeds (b) the aggregate amount thereof expended by
the Borrower and its Subsidiaries to acquire Reinvestment Assets.
19
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earliest of (i) the date, if any, upon which the
Administrative Agent, on behalf of the Required Banks, shall have delivered a
written termination notice to the Borrower, provided that such notice may only
be given while an Event of Default exists, (ii) the date occurring one year
after such Reinvestment Election and (iii) the date on which the Borrower shall
have determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Release" shall mean any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of Materials of
Environmental Concern through or in the air, soil, surface water, groundwater or
property.
"Reportable Event" has the meaning set forth in Section 4043(b) of
ERISA (other than a Reportable Event as to which the provision of 30 days notice
to the PBGC is waived under applicable regulations), or is the occurrence of any
of the events described in Section 4068 or 4063(a) of ERISA.
"Required Appraisal" shall have the meaning provided in Section
5.10.
"Required Banks" shall mean Banks holding more than 50% of the
principal amount of Loans outstanding or, if no Loans are outstanding, more than
50% of the Total Commitments.
"Restricted Payment" shall mean (i) the authorization, declaration
or payment of any Dividend by the Parent or any of its Subsidiaries or (ii) the
making of any payment by the Borrower or any of its Subsidiaries to the Parent,
including, without limitation, any payments under the Tax Sharing Agreement.
"Retained Equity Proceeds" shall mean at any time the cumulative
amount of Net Cash Proceeds received by the Borrower from Equity Issuances to
the extent such Net Cash Proceeds are not required to be applied to the
prepayment of the Loans and Swingline Loans pursuant to Section 2.12(e) MINUS
the amount thereof previously applied to make additional Capital Expenditures
pursuant to Section 6.1(d).
"Revolving Loan Commitment" shall mean at any time, for any Bank,
the amount set forth opposite such Bank's name on Annex 1 hereto under the
heading "Revolving Loan Commitment," as such amount may be reduced from time to
time pursuant to Sections 2.10 or 9.4(c).
"Revolving Loans" shall have the meaning provided in Section 2.2(a).
"Revolving Note" shall have the meaning provided in Section 2.5(b).
"Secured Creditors" shall mean the Administrative Agent, the
Collateral Agent, the Banks, the Swingline Bank and the L/C Banks.
"Secured Obligations" shall mean all Obligations owed by the Loan
Parties to the Administrative Agent, the Collateral Agent, the L/C Banks, the
Swingline Bank and the Banks.
"Security Agreement" shall have the meaning provided in Section
3.1(a)(iii) hereof.
"Security Documents" shall mean and include the Security Agreement,
the Pledge Agreement and the Mortgages.
20
"Senior Notes" shall mean the 82% Notes due 2005 issued by the
Borrower pursuant to the Senior Note Indenture.
"Senior Note Documents" shall mean the Senior Note Indenture, the
Senior Notes and the Purchase Agreement, dated June 11, 1997, among the Parent,
the Borrower, Credit Suisse First Boston Corporation, Bear, Xxxxxxx & Co. Inc,
and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation.
"Senior Note Indenture" shall mean the Indenture dated as of June
17, 1997 between the Borrower and the Senior Note Trustee pursuant to which the
Borrower issued the Senior Notes.
"Senior Note Trustee" shall mean State Street Bank and Trust
Company, in its capacity as trustee under the Senior Note Indenture.
"Senior Subordinated Notes" shall mean the 9% Notes due 2007 issued
by the Borrower pursuant to the Senior Subordinated Note Indenture.
"Senior Subordinated Note Documents" shall mean the Senior
Subordinated Note Indenture, the Senior Subordinated Notes and the Purchase
Agreement, dated June 11, 1997, among the Parent, the Borrower, Credit Suisse
First Boston Corporation, Bear, Xxxxxxx & Co. Inc, and Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation.
"Senior Subordinated Note Indenture" shall mean the Indenture dated
as of June 17, 1997 between the Borrower and the Senior Subordinated Note
Trustee pursuant to which the Borrower issued the Senior Subordinated Notes.
"Senior Subordinated Note Trustee" shall mean State Street Bank and
Trust Company in its capacity as trustee under the Senior Subordinated Note
Indenture.
"Solvent" as to any Person shall mean that (i) the sum of the assets
of such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undis puted,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability net of reasonably expected
reimbursements.
"Standard & Poor's" shall mean Standard & Poor's Rating Services, a
division of the XxXxxx-Xxxx Companies, Inc. or any of its successors.
"Standby Letter of Credit" shall mean each irrevocable letter of
credit issued pursuant to Section 2.22 under which the issuing L/C Bank agrees
to make payments for the account of the Borrower, on behalf of the Borrower, in
respect of obligations of the Borrower incurred pursuant to contracts made or
performances undertaken or like matters relating to contracts to which the
Borrower is or proposes to become a party in the ordinary course of the
Borrower's business.
21
"Standby Letter of Credit Outstandings" shall mean the Letter of
Credit Outstandings as determined with respect only to Standby Letters of
Credit.
"Standby L/C Sublimit" shall have the meaning provided in Section
2.22.
"Subsidiary" of any Person shall mean and include (i) any
corporation 50% or more of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such Person directly
or indirectly through Subsidiaries and (ii) any partnership, association, joint
venture, limited liability company or other entity in which such Person,
directly or indirectly through Subsidiaries, is either a general partner or has
a 50% or more equity interest at the time.
"Subsidiary Guaranty" shall have the meaning provided in Section
3.1(a)(vi).
"Swingline Bank" shall have the meaning provided in the introductory
paragraph hereof.
"Swingline Loan" shall mean a swingline loan made by the Swingline
Bank pursuant to Section 2.2.
"Swingline Loan Commitment" shall mean the commitment of the
Swingline Bank to make Swingline Loans hereunder as set forth in clause (d) of
Section 2.2, as the same may be reduced from time to time in accordance with the
terms of this Agreement.
"Swingline Loan Maturity Date" shall mean, as to any Swingline Loan,
the earlier of the Final Maturity Date and any Business Day at the option of the
Swingline Bank if (a) the aggregate principal amount of Swingline Loans is equal
to or exceeds $5,000,000 or (b) a Default has occurred and is continuing.
"Swingline Note" shall have the meaning provided in Section 2.5(b).
"Tax Sharing Agreement" shall mean a tax sharing agreement among the
Parent, the Borrower and its Subsidiaries, in form and substance satisfactory to
the Required Banks.
"Tender Offer" shall mean the offers commenced by Borrower on May 8,
1997, to purchase all of Borrower's Existing Senior Notes and Existing Senior
Subordinated Notes and the related consent solicitations to eliminate all of the
restrictive covenants contained in the indentures governing any Existing Notes
that remain outstanding.
"Termination Event" shall mean (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the Borrower's ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an underfunded ERISA
Plan (determined on a Plan termination basis) or the treatment of an amendment
to an underfunded ERISA Plan (determined on a Plan termination basis) as a
termination under ERISA, or (iii) the institution of proceedings by the PBGC
under Section 4042 of ERISA to terminate an ERISA Plan or to appoint a trustee
to administer any ERISA Plan.
"Total Commitment" shall mean, at any time, the sum of the
Commitments of all of the Banks at such time.
"Total Expansion Loan Commitment" shall have the meaning set forth
in Section 2.1(a).
"Total Revolving Loan Commitment" shall have the meaning set forth
in Section 2.2(a).
22
"Trade Letter of Credit" shall mean each commercial documentary
letter of credit issued by an L/C Bank for the account of the Borrower pursuant
to Section 2.22 for the purchase of goods in the ordinary course of the
Borrower's business or any letter of credit issued by an L/C Bank in support of
a commercial documentary letter of credit issued by any other bank prior to the
Closing Date (including the existing documentary letters of credit described on
Schedule V hereto) or within three months thereafter.
"Trade Letter of Credit Outstandings" shall mean the Letter of
Credit Outstandings as determined with respect only to Trade Letters of Credit.
"Transaction Costs" shall mean all costs and expenses paid or
payable by any Loan Party relating to the Transactions including, without
limitation, investment banking fees, financing fees, prepayment or related fees
incurred in connection with the refinancing of the Refinanced Debt, advisory
fees, appraisal fees, legal fees and accounting fees.
"Transaction Documents" shall mean the Loan Documents, the Senior
Note Documents, the Senior Subordinated Note Documents, the Receivables Program
Documents, the Tax Sharing Agreement, and the Acquisition Documents.
"Transactions" shall mean each of the transactions contemplated by
the Transaction Documents.
"Transferee" shall have the meaning provided in Section 9.4(d).
"Transfer Supplement" shall have the meaning provided in Section
9.4(c).
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, I.E., a Base Rate Loan or a Eurodollar Loan.
"Unfunded Benefit Liabilities" means with respect to any Plan at any
time, the amount (if any) by which (i) the actuarial present value of all
benefit liabilities under such Plan as defined in Section 4001(a)(16) of ERISA,
exceeds (ii) the fair market value of all Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such Plan
(on the basis of assumptions utilized by such Plan for minimum funding purposes
under ERISA).
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment.
SECTION 2. AMOUNT AND TERMS OF CREDIT FACILITIES.
SECTION 2.1 EXPANSION LOANS. (a) Subject to and upon the terms and
conditions herein set forth, each Bank severally and not jointly agrees at any
time and from time to time on and after the Closing Date and prior to the Final
Maturity Date, to make revolving loans (collectively, "Expansion Loans") to the
Borrower, which Expansion Loans shall not exceed in aggregate principal amount
at any time outstanding the Expansion Loan Commitment of such Bank at such time.
The sum of the Expansion Loan Commitments of all of the Banks (the "Total
Expansion Loan Commitment") on the Closing Date shall be $100,000,000. The
23
Expansion Loans of each Bank shall be maintained at the option of the Borrower
as Base Rate Loans and/or Eurodollar Loans, in accordance with the provisions
hereof.
(b) Expansion Loans may be voluntarily prepaid pursuant to Section
2.11, and, subject to the other provisions of this Agreement, any amounts so
prepaid may be reborrowed. Each Bank's Expansion Loan Commitment shall expire,
and each Expansion Loan shall mature on, the Final Maturity Date, without
further action on the part of the Banks or the Administrative Agent.
(c) Each Borrowing of Expansion Loans shall be in the aggregate
minimum amount of $3,000,000 or any integral multiple of $100,000 in excess
thereof.
SECTION 2.2 REVOLVING LOANS AND SWINGLINE LOANS. (a) Subject to and
upon the terms and conditions herein set forth, each Bank severally and not
jointly agrees, at any time and from time to time on and after the Closing Date
and prior to the Final Maturity Date, to make revolving loans (collectively,
"Revolving Loans") to the Borrower or any Borrowing Subsidiary, which Revolving
Loans shall not exceed in aggregate principal amount at any time outstanding the
Revolving Loan Commitment of such Bank at such time; provided that no Revolving
Loan shall be made if, after giving effect thereto and the use of the proceeds
thereof, the sum of (i) the outstanding principal amount of Revolving Loans,
(ii) the Letter of Credit Outstandings, and (iii) the outstanding principal
amount of Swingline Loans would exceed the Total Revolving Loan Commitment. The
sum of the Revolving Loan Commitments of all of the Banks (the "Total Revolving
Loan Commitment") on the Closing Date shall be $100,000,000 and may increase to
up to $125,000,000 subject to the terms and conditions of Section 2.30. The
Revolving Loans of each Bank shall be maintained at the option of the Borrower
as Base Rate Loans or Eurodollar Loans, in accordance with the provisions
hereof.
(b) Revolving Loans may be voluntarily prepaid pursuant to Section
2.11, and, subject to the other provisions of this Agreement, any amounts so
prepaid may be reborrowed. Each Bank's Revolving Loan Commitment shall expire,
and each Revolving Loan shall mature on, the Final Maturity Date, without
further action on the part of the Banks or the Administrative Agent.
(c) Each Borrowing of Revolving Loans shall be in the aggregate
minimum amount of $3,000,000 or any integral multiple of $100,000 in excess
thereof.
(d) On the terms and subject to the conditions and relying upon the
representations and warranties herein set forth, the Swingline Bank agrees, at
any time and from time to time from and including the Closing Date to but
excluding the earlier of the Final Maturity Date and the termination of the
Total Revolving Loan Commitment or Swingline Loan Commitment in accordance with
the terms hereof, to make Swingline Loans to the Borrower in an aggregate
principal amount at any time outstanding not to exceed the lesser of (i)
$10,000,000 and (ii) the excess of the Total Revolving Loan Commitments, as the
same may have been reduced from time to time pursuant to the terms of this
Agreement, over the sum of (A) the aggregate principal amount of the Revolving
Loans outstanding at such time and (B) the Letter of Credit Outstandings at such
time. Each Swingline Loan shall at all times be a Base Rate Loan. The Swingline
Bank shall make each Swingline Loan available to the Borrower by means of a
credit to an account designated by the Borrower in writing to the Swingline Bank
by 3:00 p.m. (New York City time) on the date such Swingline Loan is requested
to be made pursuant to paragraph (e) below. Within the limits set forth in the
first sentence of this paragraph, the Borrower may borrow, pay or prepay and
reborrow Swingline Loans on or after the Closing Date and prior to the Final
Maturity Date on the terms and subject to the conditions and limitations set
forth herein.
(e) The Borrower shall give the Administrative Agent and the
Swingline Bank telephonic, written or telecopy notice (in the case of telephonic
notice, such notice shall be promptly confirmed
24
by telecopy) not later than 12:30 p.m. (New York City time) on the day of a
proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested
date (which shall be a Business Day) and amount of such Swingline Loan.
(f) Upon the occurrence of an Event of Default, or on the applicable
Swingline Loan Maturity Date, the Swingline Bank may by written or telecopy
notice given to the Administrative Agent not later than 11:00 a.m. (New York
City time) on any Business Day require the Banks to purchase all or any portion
of the Swingline Loans outstanding. Such notice shall specify the aggregate
amount of Swingline Loans to be purchased and the Administrative Agent shall
promptly upon receipt of such notice give notice to each Bank, specifying in
such notice to each Bank such Bank's Pro Rata Share of such Swingline Loan or
Swingline Loans. Each Bank shall pay to the Administrative Agent, not later than
2:00 p.m., (New York City time), on the date of such notice, such Bank's Pro
Rata Share of the principal amount of such Swingline Loan or Swingline Loans.
Each such payment shall for all purposes hereunder be deemed to be a Base Rate
Revolving Loan (it being understood that (i) each Bank's obliga tion to make
such payment is absolute and unconditional and shall not be affected by any
event or circumstance whatsoever, including the occurrence of any Default or
Event of Default or the failure of any condition precedent set forth in Section
3 to be satisfied, and (ii) each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever). The Administrative Agent shall
promptly advise the Borrower of any notice received from the Swingline Bank
pursuant to this paragraph (f).
(g) The Borrower may prepay any Swingline Loan in whole or in part
at any time without premium or penalty, PROVIDED that the Borrower shall have
given the Administrative Agent and the Swingline Bank written or telecopy notice
(or telephonic notice promptly confirmed in writing or by telecopy) of such
prepayment not later than 12:30 p.m. (New York City time) on the Business Day
designated by the Borrower for such prepayment.
SECTION 2.3 NOTICE OF BORROWING. (a) Whenever the Borrower or any
Borrowing Subsidiary desires to borrow Revolving Loans or the Borrower desires
to borrow Expansion Loans hereunder, the Borrower shall give the Agent at the
Administrative Agent's Office prior to 11:00 a.m., (New York City time), at
least one Business Day's prior telecopy or telephonic notice (promptly confirmed
in writing) of each Base Rate Loan, and at least three Business Days' prior
telecopy or telephonic notice (promptly confirmed in writing) of each Eurodollar
Loan to be made hereunder. Each such notice (a "Notice of Borrowing") shall be
irrevocable, shall be in the form of Exhibit A hereto, and in any event shall
specify (i) the aggregate principal amount of the requested Loans, (ii) whether
such Loans shall be Expansion Loans or Revolving Loans, (iii) the date of
Borrowing (which shall be a Business Day), and (iv) whether such Loans shall
consist of Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto provided that no Notice of
Borrowing with respect to a Eurodollar Loan shall be delivered during any period
when a Default or Event of Default shall have occurred and be continuing.
(b) Promptly after receipt of a Notice of Borrowing, the
Administrative Agent shall provide each Bank with the details of the Notice of
Borrowing and inform each Bank as to its Pro Rata Share of the Loans requested
thereunder.
SECTION 2.4 DISBURSEMENT OF FUNDS. (a) No later than 12:00 p.m. (New
York City time), on the date specified in each Notice of Borrowing, each Bank
will make available its Pro Rata Share of the Loans requested to be made on such
date, in U.S. dollars and immediately available funds, at the Administrative
Agent's Office. Promptly after the Administrative Agent's receipt of the
proceeds of such Loans, the Administrative Agent will make available to the
Borrower or the relevant Borrowing Subsidiary by depositing in the Borrower's or
such Borrowing Subsidiary's account designated in writing to the Administrative
Agent the aggregate of the amounts so made available in the type of funds
actually received; PROVIDED that to the extent such Loan is being made pursuant
to Section 2.24, the Administrative Agent shall distribute
25
the proceeds directly to the L/C Bank which has honored the Letter of Credit
drawing in respect of which such Loan is being made.
(b) Unless the Administrative Agent shall have been notified by any
Bank prior to the date of a Borrowing that such Bank does not intend to make
available to the Administrative Agent its portion of the Loans to be made on
such date, the Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on such date and the Administrative
Agent in its sole discretion may, in reliance upon such assumption, make
available to the Borrower or the relevant Borrowing Subsidiary a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Bank and the Administrative Agent has made such
amount available to the Borrower or the relevant Borrowing Subsidiary, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Borrower or the relevant Borrowing Subsidiary
and the Borrower or such relevant Borrowing Subsidiary shall immediately repay
such corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from such Bank or the Borrower or such
relevant Borrowing Subsidiary, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower or such
relevant Borrowing Subsidiary to the date such corresponding amount is recovered
by the Administrative Agent, at a rate per annum equal to (a) in the case of the
Borrower or such relevant Borrowing Subsidiary, the then applicable rate of
interest, calculated in accordance with Section 2.6, for the respective Loans,
and (b) in the case of any Bank, the Federal Funds Effective Rate. Nothing
herein shall be deemed to relieve any Bank from its obligation to fulfill its
commitments hereunder or to prejudice any rights which the Borrower or such
relevant Borrowing Subsidiary may have against any Bank as a result of any
default by such Bank hereunder. Notwithstanding anything contained herein or in
any other Loan Document to the contrary, the Administrative Agent may apply all
funds and proceeds of Collateral available for the payment of any Obligations
first to repay any amount owing by any Bank to the Administrative Agent as a
result of such Bank's failure to fund its Loans hereunder.
SECTION 2.5 EVIDENCE OF INDEBTEDNESS; NOTES. (a) Each Bank and
Swingline Bank shall maintain in accordance with its usual practice an account
or accounts evidencing the indebtedness to such Bank and Swingline Bank
resulting from each Loan and Swingline Loan from time to time, including the
amounts of principal and interest payable and paid to such Bank and Swingline
Bank from time to time under this Agreement. The Administrative Agent shall
maintain accounts in which it will record (i) the amount of each Loan and
Swingline Loan made hereunder, the Type of each Loan and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Bank and Swingline Bank
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Bank's and Swingline Bank's Pro Rata Share
thereof. The entries made in the accounts maintained pursuant to this Section
2.5(a) shall be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided however, that the failure of any Bank,
Swingline Bank or the Administrative Agent to maintain such accounts or any
error therein shall not in any manner affect the obligations of the Borrower to
repay the Loans and Swingline Loans in accordance with their terms.
(b) Notwithstanding the foregoing, if requested by any Bank or the
Swingline Bank, the Borrower's or any Borrowing Subsidiary's obligation to pay
the principal of, and interest on, each Bank's or Swingline Bank's Loans or
Swingline Loans, as the case may be, shall be evidenced by (i) in the case of
such Bank's Expansion Loans, a promissory note (an "Expansion Note") duly
executed and delivered by the Borrower substantially in the form of Exhibit B
hereto in a principal amount equal to such Bank's Expansion Loan Commitment with
blanks appropriately completed in conformity herewith, (ii) in the case of such
Bank's Revolving Loans, a promissory note (a "Revolving Note") duly executed and
delivered by the Borrower or such Borrowing Subsidiary substantially in the form
of Exhibit C hereto in a principal amount equal to such
26
Bank's Revolving Loan Commitment, with blanks appropriately completed in
conformity herewith and (iii) in the case of the Swingline Bank's Swingline
Loans, a promissory note (a "Swingline Note") duly executed and delivered by the
Borrower substantially in the form of Exhibit D hereto in a principal amount
equal to such Swingline Bank's Swingline Loan Commitment. Each Note issued to a
Bank shall (x) be payable to such Bank or Swingline Bank, (y) be dated the
Closing Date, and (z) mature on the Final Maturity Date.
(c) Each Bank and Swingline Bank is hereby authorized, at its
option, either (i) to endorse on the schedule attached to each of its Expansion
Note, Revolving Note or Swingline Note (or on a continuation of such schedule
attached to such Note and made a part thereof) an appropriate notation
evidencing the date and amount of each Expansion Loan, Revolving Loan or
Swingline Loan, as the case may be, evidenced thereby and the date and amount of
each principal and interest payment in respect thereof, or (ii) to record such
Expansion Loans, Revolving Loans or Swingline Loans and such payments in its
books and records. Such schedule or such books and records, as the case may be,
shall constitute prima facie evidence of the accuracy of the information
contained therein. Failure to make any such endorsements or recordations or any
error in any such endorsements or notations shall not affect the Borrower's or
any Borrowing Subsidiary's obligations in respect of any Loans hereunder.
SECTION 2.6 INTEREST. (a) The Borrower and each Borrowing Subsidiary
agrees to pay interest in respect of the unpaid principal amount of each Base
Rate Loan from the date of the making of such Loan until such Loan shall be paid
in full at a rate per annum which shall be equal to the sum of the applicable
Margin Percentage plus the Base Rate in effect from time to time, such rate to
change as and when the Base Rate changes.
(b) The Borrower and each Borrowing Subsidiary agrees to pay
interest in respect of the unpaid principal amount of each Eurodollar Loan from
the date of the making of such Loan until such Loan shall be paid in full at a
rate per annum which shall be equal to the sum of the applicable Margin
Percentage plus the relevant Eurodollar Rate.
(c) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of all
Loans and Swingline Loans and overdue interest in respect of all Loans and
Swingline Loans and interest thereon, shall bear interest at a rate per annum
(the "Default Rate") equal to the greater of (i) the sum of (x) two percent (2%)
and (y) the Base Rate Margin Percentage for Category 5 and (ii) the rate which
is two percent (2%) in excess of the interest rate otherwise applicable
hereunder to such principal amount in effect from time to time.
(d) Interest on each Loan and Swingline Loan shall accrue from and
including the date of the Borrowing thereof to but excluding the date of any
repayment thereof (provided that any Loan and Swingline Loan borrowed and repaid
on the same day shall accrue one day's interest) and shall be payable (i) in
respect of each Base Rate Loan other than a Swingline Loan, quarterly in arrears
on each Payment Date, (ii) in respect of each Swingline Loan, on the first to
occur of each Payment Date or the Swingline Loan Maturity Date, (iii) in respect
of each Eurodollar Loan, on the last day of each Interest Period applicable to
such Loan and, in the case of an Interest Period of six months, on the date
occurring three months from the first day of such Interest Period and on the
last day of such Interest Period, and (iv) in the case of all Loans and
Swingline Loans, on any prepayment or conversion (on the amount prepaid or
converted); provided that if such Loans or Swingline Loans are Base Rate Loans,
interest accrued on such Loans and Swingline Loans shall be paid quarterly in
arrears on each Payment Date, at maturity (whether by acceleration or otherwise)
and, after such maturity, on demand.
(e) The Administrative Agent shall, upon determining the Eurodollar
Rate for any Interest Period, promptly notify the Borrower and the Banks
thereof.
27
(f) The Reference Banks shall provide to the Administrative Agent
the information to be provided by them under the definition of "Eurodollar Rate"
in accordance with the terms hereof.
SECTION 2.7 INTEREST PERIODS. (a) The Borrower shall, in each Notice
of Borrowing, Notice of Conversion or Notice of Continuation in respect of the
making of, conversion into or continuation of a Eurodollar Loan, select the
Interest Period applicable to such Eurodollar Loan.
(b) If upon the expiration of any Interest Period for any Eurodollar
Loan which is a Committed Loan, the Borrower has failed to elect a new Interest
Period to be applicable to the respective Eurodollar Loan as provided above, the
Borrower shall be deemed to have elected to convert such Eurodollar Loans into
Base Rate Loans effective as of the expiration date of such current Interest
Period.
SECTION 2.8 MINIMUM AMOUNT OF EURODOLLAR LOANS. All borrowings,
conversions, continuations, payments, prepayments and selection of Interest
Periods hereunder shall be made or selected so that, after giving effect
thereto, (i) the aggregate principal amount of any Borrowing comprised of
Eurodollar Loans shall not be less than $3,000,000 or an integral multiple of
$100,000 in excess thereof, and (ii) there shall be no more than 15 Borrowings
comprised of Eurodollar Loans outstanding at any time.
SECTION 2.9 CONVERSION OR CONTINUATION. (a) Subject to the other
provisions hereof, the Borrower shall have the option (i) to convert at any time
all or any part of outstanding Base Rate Loans (other than Swingline Loans)
which comprise part of the same Borrowing to Eurodollar Loans, (ii) to convert
all or any part of outstanding Eurodollar Loans which comprise part of the same
Borrowing to Base Rate Loans, on the expiration date of the Interest Period
applicable thereto, or (iii) to continue all or any part of outstanding
Eurodollar Loans which comprise part of the same Borrowing as Eurodollar Loans
for an additional Interest Period, on the expiration of the Interest Period
applicable thereto; PROVIDED that no Loan may be continued as, or converted
into, a Eurodollar Loan when any Default or Event of Default has occurred and is
continuing.
(b) In order to elect to convert or continue a Loan under this
Section 2.9, the Borrower shall deliver an irrevocable Notice of Continuation or
a Notice of Conversion to the Administrative Agent no later than 11:00 a.m.,
(New York City time), (i) at least one Business Day in advance of the proposed
conversion date in the case of a conversion to a Base Rate Loan and (ii) at
least three Business Days in advance of the proposed conversion or continuation
date in the case of a conver sion to, or a continuation of, a Eurodollar Loan.
Each Notice of Conversion or Notice of Continuation shall be in the forms of
Exhibits E-1 and E-2 hereto and in any event shall specify (w) the requested
conversion or continuation date (which shall be a Business Day), (x) the amount
and Facility of the Loan to be converted or continued, (y) whether a conversion
or continuation is requested, and (z) in the case of a conversion to, or a
continuation of, a Eurodollar Loan, the requested Interest Period. Promptly
after receipt of a Notice of Conversion or Notice of Continuation under this
Section 2.9(b), the Administrative Agent shall notify each Bank of the details
thereof.
SECTION 2.10 VOLUNTARY AND MANDATORY REDUCTIONS OF COMMITMENTS AND
SWINGLINE LOAN COMMITMENT. (a) Upon at least three Business Days' prior
irrevocable written notice (or telephonic notice promptly confirmed in writing)
to the Administrative Agent (which notice the Administrative Agent shall
promptly transmit to each of the Banks), the Borrower shall have the right,
without premium or penalty, to permanently reduce (x) each Bank's Pro Rata Share
of all or part of the Total Expansion Loan Commitment, (y) each Bank's Pro Rata
Share of all or part of the Total Revolving Loan Commitment and (z) the
Swingline Bank's Swingline Loan Commitment, provided that any such partial
reductions shall be (A) in the case of the Total Revolving Loan Commitment or
Total Expansion Loan Commitment, a minimum aggregate amount of $3,000,000 or any
integral multiple
28
of $100,000 in excess thereof (or any lesser amounts if the Total Revolving Loan
Commitment or Total Expansion Loan Commitment shall be reduced in full) and (B)
in the case of the Swingline Loan Commitment, a minimum aggregate amount of
$500,000 or any integral multiple of $100,000 in excess thereof (or any lesser
amounts if the Swingline Loan Commitment shall be reduced in full).
(b) Simultaneously with any required prepayment of the Expansion
Loans in accordance with the provisions of Sections 2.12 (other than Section
2.12(g) and 2.12(h)) and 2.13, each Bank's Expansion Loan Commitment shall be
permanently reduced by such Bank's Pro Rata Share of the amount of such
prepayment; PROVIDED that no such reduction of the Expansion Loan Commitments
(including the reduction pursuant to clause (c) below) shall be required to the
extent such reduction would cause the Total Expansion Loan Commitments to be
less than $50,000,000.
(c) On June 17, 2001 the Total Expansion Loan Commitment shall be
reduced by $25,000,000 MINUS the aggregate amount of reductions to the Expansion
Loan Commitments made pursuant to clause (b) above on or prior to such date.
SECTION 2.11 VOLUNTARY PREPAYMENTS. In addition to prepayments of
Swingline Loans permitted by Section 2.2(d), the Borrower or any Borrowing
Subsidiary shall have the right to prepay the Loans in whole or in part from
time to time on the following terms and conditions: (i) the Borrower shall give
the Administrative Agent written notice (or telephonic notice promptly confirmed
in writing) not later than 10:00 a.m. (New York City time), which notice shall
be irrevocable, of its intent to prepay the Loans, at least three Business Days
prior to a prepayment of Eurodollar Loans and at least one Business Day prior to
a prepayment of Base Rate Loans, which notice shall specify the amount of such
prepayment and what Types of Loans and which Facilities are to be prepaid and,
in the case of Eurodollar Loans, the specific Borrowing(s) pursuant to which
made, and which notice the Administrative Agent shall promptly transmit to each
of the Banks, (ii) each prepayment shall be in an aggregate principal amount of
$5,000,000 or any integral multiple of $1,000,000 in excess thereof (or, any
lesser amounts if all of the Loans shall be prepaid in full), and (iii) any such
prepayment shall be accompanied by any additional amount due pursuant to Section
2.17 hereof.
SECTION 2.12 MANDATORY PREPAYMENTS. (a) ASSET SALES. On each
Business Day immediately after the date on which the Parent or any of its
Subsidiaries receives any Net Cash Proceeds from an Asset Sale, the Borrower
shall prepay the outstanding Expansion Loans in an amount equal to 100% of the
amount of such Net Cash Proceeds, in accordance with the provisions of Section
2.13, PROVIDED that Net Cash Proceeds from Eligible Asset Sales shall not be
required to be used to so repay Expansion Loans to the extent the Borrower
elects, as hereinafter provided, to cause such Net Cash Proceeds to be
reinvested in Reinvestment Assets (a "Reinvestment Election"). The Borrower may
exercise its Reinvestment Election with respect to an Eligible Asset Sale if (x)
no Default or Event of Default exists and (y) the Borrower delivers a
Reinvestment Notice to the Administrative Agent on the Business Day after the
date of the consummation of the respective Eligible Asset Sale, with such
Reinvestment Election being effective with respect to the Net Cash Proceeds of
such Eligible Asset Sale equal to the Anticipated Reinvestment Amount specified
in such Reinvestment Notice. Notwithstanding the foregoing, the Borrower shall
in any event prepay the Loans to the extent necessary to avoid any requirement
to make an "Offer" under and as defined in Section 5.07 of the Senior Note
Indenture and the Senior Subordinated Note Indenture.
(b) ISSUANCE OF INDEBTEDNESS. On each date on which the Parent or
any of its Subsidiaries receives any Net Cash Proceeds from the issuance of any
debt securities or the incurrence of any other Indebtedness (other than
Indebtedness permitted by Section 6.2 (other than clause (h) thereof) as in
effect on the Closing Date), the Borrower shall prepay the outstanding Expansion
Loans in an amount equal to 50% of such Net Cash Proceeds, if on such date the
Borrower's senior unsecured Indebtedness is rated less than BBB by Standard &
Poor's or Baa2 by Xxxxx'x, in accordance with the provisions of Section 2.13. No
prepayments under this Section shall be required if the preceding sentence is
not applicable at the time such prepayment would be otherwise required hereby.
29
(c) EXCESS CASH FLOW. On the date occurring 90 days after the close
of each fiscal year of the Borrower (or, if earlier, the seventh day following
delivery of the financial statements referred to in Section 5.1(b) in respect of
such fiscal year) commencing with the fiscal year ending January 30, 1999, the
Borrower shall prepay the outstanding Expansion Loans in an amount equal to (i)
if the Adjusted Leverage Ratio as of the last day of such fiscal year is greater
than 3.5:1.0, 75% of the Excess Cash Flow for such preceding fiscal year and
(ii) if the Adjusted Leverage Ratio as of the last day of such fiscal year is
less than or equal to 3.5:1.0 and greater than 2.5:1.0, 50% of the Excess Cash
Flow for such preceding fiscal year, each in accordance with the provisions of
Section 2.13. No prepayments under this Section shall be required if neither
clause (i) or (ii) hereof is applicable at the time such prepayment would be
otherwise required hereby.
(d) REINVESTMENT PREPAYMENT DATE. On the Reinvestment Prepayment
Date with respect to a Reinvestment Election, an amount equal to the
Reinvestment Prepayment Amount, if any, for such Reinvestment Election shall be
applied as a repayment of the principal amount of the then outstanding Loans in
accordance with the provisions of Section 2.13.
(e) EQUITY ISSUANCES. On each date on which the Parent or any of its
Subsidiaries receives any Net Cash Proceeds from any Equity Issuance (other than
an Equity Issuance substantially contemporaneous with any Permitted Acquisition
to the extent that the Net Cash Proceeds thereof are used to finance such
Permitted Acquisition), if the Adjusted Leverage Ratio as of the last day of the
fiscal quarter most recently ended prior to such date for which financial
statements have been delivered pursuant to Section 5.1(a) or (b) is greater than
3.5:1.0, the Borrower shall prepay the outstanding Expansion Loans in an amount
equal to 50% of such Net Cash Proceeds, in accordance with the provisions of
Section 2.13.
(f) CLEAN DOWN PERIOD. The Borrower shall prepay, repay or not
borrow the Revolving Loans and Swingline Loans so as to cause the aggregate
outstanding principal amount of Revolving Loans and Swingline Loans to at all
times equal zero during a period of not less than forty-five consecutive days
during each period of twelve consecutive months following the Closing Date;
PROVIDED that if the Total Revolving Loan Commitment is increased pursuant to
Section 2.30, the aggregate outstanding principal amount of Revolving Loans and
Swingline Loans shall be reduced to an amount equal to or less than the amount
of such increase at all times during a period of not less than forty-five
consecutive days during each period of twelve consecutive months following the
Closing Date.
(g) VOLUNTARY AND MANDATORY COMMITMENT REDUCTIONS. On each day on
which the Total Revolving Loan Commitment, Total Expansion Loan Commitment or
Swingline Loan Commitment is reduced pursuant to Section 2.10, the Borrower
shall prepay the Revolving Loans, Expansion Loans and Swingline Loans to the
extent, if any, that the outstanding principal amount of the Revolving Loans,
Expansion Loans and Swingline Loans PLUS the aggregate Letter of Credit
Outstandings at such time exceeds such reduced Total Revolving Loan Commitment,
Total Expansion Loan Commitment and Swingline Loan Commitment.
(h) X.X. XXXXXXX COMPANY RECEIVABLES SALES. On the Business Day on
which the Parent or any of its Subsidiaries receives any Net Cash Proceeds from
the sale of receivables originally purchased in connection with the Acquisition,
the Borrower shall prepay the outstanding Revolving Loans in an amount equal to
100% of the amount of such Net Cash Proceeds. Such Net Cash Proceeds shall be
applied first to Base Rate Loans to the full extent thereof before application
to Eurodollar Loans, in each case in a manner which minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 2.17.
SECTION 2.13 APPLICATION OF PREPAYMENTS. All prepayments of the
Expansion Loans required by Section 2.12 shall be applied first to Base Rate
Loans to the full extent thereof before application to
30
Eurodollar Loans, in each case in a manner which minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 2.17.
SECTION 2.14 METHOD AND PLACE OF PAYMENT. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Notes shall be made to the Administrative Agent for the account of the
Banks, L/C Banks and the Swingline Bank entitled thereto not later than 12:00
p.m. (New York City time), on the date when due and shall be made in lawful
money of the United States of America in immediately available funds at the
Administrative Agent's Office, and any funds received by the Administrative
Agent after such time shall, for all purposes hereof (including the following
sentence), be deemed to have been paid on the next succeeding Business Day.
Except as otherwise specifically provided herein, the Administrative Agent shall
thereafter cause to be distributed on the date of receipt thereof to each Bank
and the Swingline Bank in like funds its Pro Rata Share of payments so received.
(b) Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest and Fees shall be payable at the applicable
rate during such extension.
(c) All payments made by the Borrower or any Borrowing Subsidiary
hereunder and under the other Loan Documents shall be made irrespective of, and
without any reduction for, any setoff or counterclaims.
SECTION 2.15 FEES. (a) The Borrower agrees to pay to the
Administrative Agent for its own account and for distribution to the Banks as
separately agreed between each Bank and the Administrative Agent the fees and
expenses in the amounts and on the dates specified in the Fee Letter.
(b) The Borrower agrees to pay to the Administrative Agent for the
account of each Bank a commitment fee (the "Commitment Fee"), computed at a per
annum rate equal to the applicable Margin Percentage from time to time on the
average daily unused portion of such Bank's Total Commitment, from and including
the Closing Date to the Final Maturity Date, payable quarterly in arrears on
each Payment Date and on the Final Maturity Date or such earlier date, if any,
on which the Total Commitment shall terminate in accordance with the terms
hereof. For the purposes of calculating the Commitment Fee, outstanding
Swingline Loans shall not constitute usage of the Total Revolving Loan
Commitment or of any Bank's or Swingline Bank's Revolving Loan Commitment.
SECTION 2.16 INTEREST RATE UNASCERTAINABLE, INCREASED COSTS,
ILLEGALITY. (a) In the event that the Administrative Agent, in the case of
clause (i) below, or any Bank, in the case of clauses (ii) and (iii) below,
shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for
any Interest Period, that by reason of any changes arising after the
date of this Agreement affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of the
Eurodollar Rate; or
(ii) at any time, that the relevant Eurodollar Rate
applicable to any of its Loans shall not represent the effective
pricing to such Bank for funding or maintaining a Eurodollar Loan,
or such Bank shall incur increased costs or reductions in the
amounts received or receivable hereunder in respect of any
Eurodollar Loan, in any such case because of (x) any change since
the date of this Agreement in any applicable law or governmental
rule, regulation,
31
guideline or order or any interpretation thereof and including the
introduction of any new law or governmental rule, regulation,
guideline or order (such as for example but not limited to a change
in official reserve requirements, but, in all events, excluding
reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate), whether or not having the force
of law and whether or not failure to comply therewith would be
unlawful, and/or (y) other circumstances affecting such Bank or the
interbank Eurodollar market or the position of such Bank in such
market; or
(iii) at any time, that the making or continuance by it
of any Eurodollar Loan has become unlawful by compliance by such
Bank in good faith with any law or governmental rule, regulation,
guideline or order (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) or has
become impracticable as a result of a contingency occurring after
the date of this Agreement which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, the Administrative Agent or such Bank shall,
promptly after making such determination, give notice (by telephone promptly
confirmed in writing) to the Borrower and (if applicable) the Administrative
Agent of such determination (which notice the Administrative Agent shall
promptly transmit to each of the other Banks). Thereafter (x) in the case of
clause (i) above, the Borrower's right to request Eurodollar Loans and
Eurodollar Auctions shall be suspended, and any Notice of Borrowing, Notice of
Conversion or Notice of Continuation given by the Borrower with respect to any
Borrowing of Eurodollar Loans, which has not yet been made shall be deemed
cancelled and rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower shall pay to such Bank, upon such Bank's delivery of written demand
therefor to the Borrower, with a copy to the Administrative Agent, such
additional amounts (in the form of an increased rate of interest, or a different
method of calculating interest, or otherwise, as such Bank in its sole
discretion shall determine) as shall be required to compensate such Bank for
such increased costs or reduction in amounts received or receivable hereunder
and (z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in clause (b) below as promptly as possible and, in any event,
within the time period required by law. The written demand provided for in
clause (y) shall demonstrate in reasonable detail the calculation of the amounts
demanded and shall, absent manifest error, be final and conclusive and binding
upon all of the parties hereto.
(b) In the case of any Eurodollar Loan or requested Eurodollar Loan
affected by the circumstances described in clause (a)(ii) above, the Borrower
may, and in the case of any Eurodollar Loan affected by the circumstances
described in clause (a)(iii) above the Borrower shall, either (i) if any such
Eurodollar Loan has not yet been made but is then the subject of a Notice of
Borrowing, a Notice of Conversion or Notice of Continuation, be deemed to have
cancelled and rescinded such notice, or (ii) if any such Eurodollar Loan is then
outstanding, require the affected Bank to convert each such Eurodollar Loan into
a Base Rate Loan at the end of the applicable Interest Period or such earlier
time as may be required by law, in each case by giving the Administrative Agent
notice (by telephone promptly confirmed in writing) thereof on the Business Day
that the Borrower was notified by the Bank pursuant to clause (a) above;
PROVIDED, HOWEVER, that all Banks whose Eurodollar Loans are affected by the
circumstances described in clause (a) above shall be treated in the same manner
under this clause (b).
(c) In the event that the Administrative Agent determines at any
time following its giving of notice based on the conditions described in clause
(a)(i) above that none of such conditions exist, the Administrative Agent shall
promptly give notice thereof to the Borrower and the Banks, whereupon the
Borrower's right to request Eurodollar Loans from the Banks and the Banks'
obligation to make Eurodollar Loans shall be restored.
(d) In the event that a Bank determines at any time following its
giving of a notice based on the conditions described in clause (a)(iii) above
that none of such conditions exist, such Bank shall promptly give notice thereof
to the Borrower and the Administrative Agent, whereupon the Borrower's right
32
to request Eurodollar Loans from such Bank and such Bank's obligation to make
Eurodollar Loans shall be restored.
(e) If any Bank or the Swingline Bank determines that any applicable
law, rule, or regulation or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank or Swingline Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank, or comparable agency shall make it unlawful or impossible for such
Bank or Swingline Bank to maintain its Commitment or Swingline Commitment, then
upon notice to the Administrative Agent and the Borrower by the Bank or
Swingline Bank, the Commitment or Swingline Commitment of such Bank or Swingline
Bank, as the case may be, shall terminate.
SECTION 2.17 FUNDING LOSSES. The Borrower shall compensate each
Bank, upon such Bank's delivery of a written demand therefor to the Borrower,
with a copy to the Administrative Agent (which demand shall, absent manifest
error, be final and conclusive and binding upon all of the parties hereto), for
all reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by such Bank in connection with the
liquidation or reemployment of deposits or funds required by it to make or carry
its Eurodollar Loans but excluding anticipated profits), that such Bank
sustains: (i) if for any reason (other than a default by such Bank) a Borrowing
of, or conversion from or into, or a continuation of, Eurodollar Loans does not
occur on a date specified therefor in a Notice of Borrowing, Notice of
Conversion or Notice of Continuation, (whether or not rescinded, cancelled or
withdrawn or deemed rescinded, cancelled or withdrawn, pursuant to Section
2.16(a) or 2.16(b) or otherwise), (ii) if any repayment (including, without
limitation, payment after acceleration) or conversion of any of its Eurodollar
Loans occurs on a date which is not the last day of the Interest Period
applicable thereto, (iii) if any prepayment of any of its Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Borrower,
or (iv) as a consequence of any default by the Borrower or any Borrowing
Subsidiary in repaying its Eurodollar Loans, or any other amounts owing
hereunder in respect of its Eurodollar Loans when required by the terms of this
Agreement. Calculation of all amounts payable to a Bank under this Section 2.17
shall be made on the assumption that such Bank has funded its relevant
Eurodollar Loan through the purchase of a Eurodollar deposit bearing interest at
the Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan
with a maturity equivalent to the Interest Period applicable to such Eurodollar
Loan, and through the transfer of such Eurodollar deposit from an offshore
office of such Bank to a domestic office of such Bank in the United States of
America, provided that each Bank may fund its Eurodollar Loans in any manner
that it in its sole discretion chooses and the foregoing assumption shall only
be made in order to calculate amounts payable under this Section 2.17.
SECTION 2.18 INCREASED CAPITAL. If at any time any Bank or the
Swingline Bank determines that the introduction after the Closing Date of, or
any change after the Closing Date in, any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change after the Closing Date
in interpretation or administration thereof by any governmental authority,
central bank or comparable agency, will have the effect of increasing the amount
of capital required or expected to be maintained by such Bank or Swingline Bank
or any corporation controlling such Bank or Swingline Bank based on the
existence of such Bank's Commitments or such Swingline Bank's Swingline Loan
Commitment hereunder or its obligations hereunder, or shall change the basis of
taxation of any amounts payable to any Bank or the Swingline Bank under this
Agreement or the Notes in respect of any such Loans (other than taxes imposed on
the overall net income of any Bank or Swingline Bank for any of such Loans by
the jurisdiction where such Bank or Swingline Bank is located) then the Borrower
shall pay to such Bank or Swingline Bank, within 15 days after its written
demand therefor, such additional amounts as shall be required to compensate such
Bank or Swingline Bank or such other corporation for the increased cost to such
Bank or Swingline Bank or such other corporation or the reduction in the rate of
return to such Bank or Swingline Bank or such other corporation as a result of
such increase of capital or
33
change in basis. In determining such additional amounts, each Bank and Swingline
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, PROVIDED that such Bank's or Swingline
Bank's reasonable good faith determination of compensation owing under this
Section 2.18 shall, absent manifest error, be final and conclusive and binding
on all the parties hereto. Each Bank or Swingline Bank, upon determining that
any additional amounts will be payable pursuant to this Section 2.18, will give
prompt written notice thereof to the Borrower, which notice shall show the basis
for calculation of such additional amounts, although the failure to give any
such notice shall not release or diminish any of the Borrower's Obligations to
pay additional amounts pursuant to this Section 2.18.
SECTION 2.19 TAXES. (a) All payments made by the Borrower or any
Borrowing Subsidiary under this Agreement shall be made free and clear of, and
without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any governmental authority excluding, in the case of the
Administrative Agent, each Bank and the Swingline Bank, net income and franchise
taxes imposed on the Administrative Agent, such Bank or Swingline Bank by the
jurisdiction under the laws of which the Administrative Agent, such Bank or
Swingline Bank is organized or any political subdivision or taxing authority
thereof or therein, or by any jurisdiction in which such Bank's or Swingline
Bank's Lending Office, as the case may be, is located or any political
subdivision or taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
the Administrative Agent, any Bank or the Swingline Bank hereunder or under the
Notes, the amounts so payable to the Administrative Agent, such Bank or
Swingline Bank shall be increased to the extent necessary to yield to the
Administrative Agent, such Bank or Swingline Bank (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Borrower or any Borrowing Subsidiary, as promptly as possible
thereafter, the Borrower shall send to the Administrative Agent for its own
account or for the account of such Bank or Swingline Bank, as the case may be, a
certified copy of an original official receipt received by the Borrower showing
payment thereof or other evidence of payment reasonably satisfactory to the
Administrative Agent, such Bank or the Swingline Bank, as the case may be. If
the Borrower fails to pay any Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent, the Banks and the Swingline Bank for any incremental taxes, interest or
penalties that may become payable by the Administrative Agent, any Bank or
Swingline Bank as a result of any such failure. The agreements in this Section
2.19 shall survive the termination of this Agreement and the payment of the
Notes and all other Obligations.
(b) Each Bank (including each Purchasing Bank that becomes a party
to this Agreement pursuant to Section 9.4) or Swingline Bank that is not
incorporated under the laws of the United States of America or a state thereof
(a "Non-U.S. Bank") agrees that, prior to the first date on which any payment is
due to it hereunder, it will deliver to the Borrower and the Administrative
Agent (i) two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may be, certifying
in each case that such Bank or Swingline Bank is entitled to receive payments
under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, or (ii) in the case of a
Non-U.S. Bank claiming exemption from U.S. federal withholding taxes under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest," an Internal Revenue Service Form W-8 or successor applicable form, as
the case may be, to establish an exemption from United States backup withholding
tax together with a certificate to the effect that such Non-U.S. Bank is not a
bank for purposes of Section 881(c) of the Code, is not a 10 percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower, is not
a controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code) and is entitled to a complete exemption from U.S.
federal withholding taxes. Each Bank and Swingline Bank which delivers to the
Borrower and the Administrative Agent a Form 1001 or 4224 and Form W-8 pursuant
to the preceding sentence further undertakes to deliver to the Borrower and the
Adminis-
34
trative Agent two further copies of Form 1001 or 4224 and Form W-8 (together
with the accompanying certificate), or successor applicable forms, or other
manner of certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the Borrower, and
such extensions or renewals thereof as may reasonably be requested by the
Borrower, certifying in the case of a Form 1001 or 4224 that such Bank or
Swingline Bank is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes, unless in
any such case an event (including, without limitation, any change in treaty, law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank or Swingline Bank from duly completing and delivering any such
form with respect to it and such Bank or Swingline Bank advises the Borrower
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax, and in the case of a Form W-8,
establishing an exemption from United States backup withholding tax.
SECTION 2.20 ACTION OF AFFECTED BANKS AND SWINGLINE BANK. Upon the
written request of the Borrower, each Bank and Swingline Bank agrees to use
reasonable efforts (including reasonable efforts to change the lending office
for its Loans) to avoid or minimize any illegality or any amounts which might
otherwise be payable by the Borrower pursuant to Sections 2.16, 2.18 or 2.19;
PROVIDED, HOWEVER, that such efforts shall not cause, in the sole determination
of such Bank or Swingline Bank, the imposition on such Bank or Swingline Bank of
any additional costs or legal or regulatory burdens and shall not be deemed by
such Bank or Swingline Bank to be otherwise contrary to its policies. In the
event that such reasonable efforts are insufficient to avoid all such illegality
or all amounts that might be payable pursuant to Sections 2.16, 2.18 or 2.19,
then such Bank or Swingline Bank (the "Affected Bank") shall use its reasonable
efforts to transfer to any other Bank (which itself is not then an Affected
Bank) its Loans and Commitments or Swingline Loans and Swingline Loan
Commitment, as the case may be, subject to the provisions of Section 9.4;
PROVIDED, HOWEVER, that such transfer shall not be deemed by such Affected Bank,
in its sole discretion, to be disadvantageous to it or contrary to its policies.
In the event that the Affected Bank is unable, or otherwise is unwilling, so to
transfer its Loans and Commitments or Swingline Loans and Swingline Loan
Commitment, as the case may be, the Borrower may designate an alternate lender
(reasonably acceptable to the Administrative Agent and the L/C Banks) to
purchase the Affected Bank's Loans and Commitments or Swingline Loans and
Swingline Loan Commitment, as the case may be, at par and including accrued
interest, and, subject to the provisions of Section 9.4, the Affected Bank shall
transfer its Commitments or Swingline Loan Commitment to such alternate lender
and such alternate lender shall become a Bank or Swingline Bank hereunder. Any
fee payable to the Administrative Agent pursuant to subsection 9.4(c) in
connection with such transfer shall be for the account of the Borrower.
SECTION 2.21 USE OF PROCEEDS. The proceeds of the Expansion Loans
(together with the proceeds of the Senior Notes and the Senior Subordinated
Notes) made on and after the Closing Date shall be used to fund up to $75
million of the purchase price of the Acquisition, to pay the Transaction Costs,
to finance additional Permitted Acquisitions and for general corporate purposes.
The proceeds of the Revolving Loans and Swingline Loans made on or after the
Closing Date shall be used for working capital and other general corporate
purposes (including the purchase of the X.X. Xxxxxxx Company receivables).
SECTION 2.22 LETTERS OF CREDIT. (a) Subject to and upon the terms
and conditions of, and in reliance upon the representations and warranties of
the Borrower set forth in, this Agreement, in addition to requesting that the
Banks or the Swingline Bank make Loans or Swingline Loans, the Borrower may
request, in accordance with the provisions of this Section 2.22 and Section
2.23, that, on and after the Closing Date and prior to the termination or
expiration of the Total Revolving Loan Commitment and Swingline Loan Commitment,
any L/C Bank issue one or more Letters of Credit for the account of the
Borrower; PROVIDED that any Letter of Credit issued by an L/C Bank shall be in a
form customarily used by such L/C Bank or in any
35
other form requested by the Borrower and approved by such L/C Bank; PROVIDED
FURTHER, that (i) no Letter of Credit shall have an expiration date that is
later than 12 months after the date of issuance thereof; (ii) in no event shall
any Letter of Credit issued by an L/C Bank have an expiration date (or be
extended or extendible so that it will expire) later than the fifth Business Day
prior to the Final Maturity Date; (iii) the Borrower shall not request that any
L/C Bank issue any Letter of Credit if, after giving effect to such issuance,
the aggregate Letter of Credit Outstandings PLUS the then outstanding aggregate
principal amount of Revolving Loans PLUS the outstanding principal amount of
Swingline Loans would exceed the Total Revolving Loan Commitment; (iv) the
Borrower shall not request the issuance of any Letter of Credit if, after giving
effect to such issuance, the aggregate Letter of Credit Outstandings would
exceed the L/C Sublimit; and (v) the Borrower shall not request the issuance of
any Standby Letter of Credit (other than Standby Letters of Credit issued in
connection with the purchase of inventory in the ordinary course of business
including those issued in connection with cooperative purchase programs) if
after giving effect to such issuance the aggregate Standby Letter of Credit
Outstandings would exceed $20,000,000 (the "Standby L/C Sublimit").
(b) Upon the occurrence of a Default or an Event of Default or the
acceleration of the maturity of the Loans or Swingline Loans, if payment is not
then due to the beneficiary, the Borrower shall deposit funds totalling 105% of
the Letter of Credit Outstandings in the L/C Cash Collateral Account to secure
payment to the beneficiary and to secure, for the benefit of the Secured
Creditors, the Secured Obligations. Any funds so deposited shall be paid to the
beneficiary of the Letter of Credit if conditions to such payment are satisfied.
Each payment or deposit of funds as provided in this paragraph shall be treated
for all purposes of this Agreement as a drawing duly honored by the L/C Bank
under the related Letter of Credit.
SECTION 2.23 NOTICE OF ISSUANCE; AGREEMENT TO ISSUE. (a) Whenever
the Borrower desires the issuance of a Letter of Credit, it shall deliver to the
desired L/C Bank and the Administrative Agent a written notice no later than
10:00 a.m. (New York City time) at least three Business Days in advance of the
proposed date of issuance (which prescribed time period may be waived at the
option of the L/C bank in its sole discretion). If on any day the Borrower shall
request that more than one Letter of Credit be issued, the Borrower shall
provide to the Administrative Agent a schedule of all such requests no later
than 12:00 p.m. (New York city time) on such day. Each such notice shall be in
substantially the form attached as Exhibit F or in such other form as shall be
reasonably acceptable to such L/C Bank (each a "Letter of Credit Request"), and
in any event shall specify (i) the proposed date of issuance (which shall be a
Business Day), (ii) the proposed face amount of the Letter of Credit, (iii) the
proposed expiration date of the Letter of Credit, (iv) the purpose of the Letter
of Credit, and (v) the name and address of the beneficiary with respect to such
Letter of Credit, and shall be accompanied by a precise description of the
documents and a verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit, which if presented by such beneficiary
prior to the expiration date of the Letter of Credit, would require the L/C Bank
to make payment under the Letter of Credit; PROVIDED that the applicable L/C
Bank may require changes in any such documents and the delivery of certificates
in accordance with its customary letter of credit practices; and, PROVIDED
FURTHER, that no Letter of Credit shall require payment against a conforming
draft to be made thereunder on the same Business Day that such draft is
presented. In determining whether to pay under any Letter of Credit, each L/C
Bank shall be responsible only to determine that the documents and certificates
required to be delivered under its Letter of Credit have been delivered and that
they comply on their face with the requirements of its Letter of Credit. The
submission of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with and will not violate the terms of Section
3.1(a)(i)-(v). Each L/C Bank shall furnish to the Administrative Agent a
specimen copy of each Letter of Credit issued by such L/C Bank pursuant to this
Agreement immediately upon the issuance thereof. The Administrative Agent shall
notify each Participating Bank of its participation with respect to the total of
Letters of Credit outstanding on a monthly basis, determined in accordance with
Section 2.23(b). Each L/C Bank shall immediately notify the Administrative Agent
of the terms of each issuance, amendment or termination of each Letter of Credit
issued, amended or terminated on the date of issuance, amended or termination.
36
(b) Each L/C Bank receiving a Letter of Credit Request from the
Borrower agrees, subject to the terms and conditions set forth in this
Agreement, and so long as it shall not have received any notice from any Bank
pursuant to the immediately succeeding sentence, to issue for the account of the
Borrower, on the date specified in such Letter of Credit Request, a Letter of
Credit in a face amount equal to the face amount requested in such Letter of
Credit Request. Immediately upon the issu ance of each Letter of Credit, each
Bank having a Revolving Loan Commitment (a "Participating Bank") shall be deemed
to, and hereby agrees to, have irrevocably purchased from the applicable L/C
Bank a participation in such Letter of Credit and any drawing thereunder in an
amount equal to such Participating Bank's Pro Rata Share of the maximum amount
which is or at any time may become available to be drawn thereunder; PROVIDED
that no Bank shall have delivered a notice to such L/C Bank prior to the
issuance of such Letter of Credit (with a copy to the Administrative Agent) to
the effect that one or more of the conditions set forth in Section 3.1 or 3.2,
as applicable, are not then satisfied or that the issuance of such Letter of
Credit or purchase of a participation therein by such Bank would violate Section
2.27. Upon any change in the Revolving Loan Commitments of the Banks, it is
hereby agreed that, with respect to all Letter of Credit Outstandings, there
shall be an automatic adjustment to the participations in the Letters of Credit
pursuant to this Section 2.23 to reflect the new Pro Rata Shares of all of the
Banks.
(c) Upon the request of any Bank, the applicable L/C Bank shall
promptly deliver to such Bank the information specified in the Letter of Credit
Request and copies of any Letters of Credit issued by such L/C Bank.
(d) Each L/C Bank shall, on the last Business Day of each calendar
month, provide to the Administrative Agent a report with respect to the Letters
of Credit issued by it, including the date of issue, account party amount,
expiration date and reference number of each Letter of Credit issued by it.
SECTION 2.24 PAYMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT. (a)
In the event of any request for payment under any Letter of Credit by the
beneficiary thereof, the L/C Bank shall promptly notify the Borrower and the
Administrative Agent (which shall in turn promptly notify the Participating
Banks), no later than 10:00 a.m. (New York City time) on the Business Day
immediately preceding the date on which such L/C Bank intends to honor such
drawing (which in no event shall be less than three Business Days after
presentation); and the Borrower shall reimburse such L/C Bank on the day on
which such drawing is honored in same day funds in an amount equal to the amount
of such drawing; PROVIDED that, unless the Borrower shall have notified the
Administrative Agent and such L/C Bank prior to 12:00 p.m. (New York City time)
on the Business Day immediately prior to the date on which such drawing is
honored that the Borrower intends to reimburse such L/C Bank for the amount of
such drawing with funds other than the proceeds of Revolving Loans, (i) the
Borrower shall be deemed to have timely given a Notice of Borrowing to the
Administrative Agent requesting a Borrowing of Revolving Loans which are Base
Rate Loans on the date on which such drawing is honored in an amount equal to
the amount of such drawing, and (ii) subject to Section 2.2, each Participating
Bank shall, by 12:00 p.m. (New York City time) on the date of the honoring of
such drawing, make a Revolving Loan which is a Base Rate Loan in an amount equal
to such Participating Bank's Pro Rata Share of the amount of such drawing, the
proceeds of which shall be applied directly by the Administrative Agent to
reimburse such L/C Bank for the amount of such drawing (PROVIDED that, solely
for purposes of such Borrowing, the conditions precedent set forth in Section
3.2 shall not be applicable); PROVIDED FURTHER that, if for any reason, proceeds
of Revolving Loans are not received by such L/C Bank on such date in an amount
equal to the amount of such drawing, the Borrower shall reimburse such L/C Bank,
on the Business Day immediately following the date of such drawing, in an amount
in dollars and immediately available funds equal to the excess of the amount of
such drawing over the amount of such Revolving Loans, if any, which are so
received by the Administrative Agent from the Participating Banks, plus accrued
interest on such amount at the applicable rate of interest for Base Rate Loans.
If the Borrower notifies the Administrative Agent and such L/C Bank prior to
12:00 p.m. (New York City time) on the Business Day immediately prior to the
date on which such drawing is honored that the Borrower intends to reimburse
such L/C Bank for the amount of such
37
drawing with funds other than the proceeds of Revolving Loans, the Borrower
shall reimburse such L/C Bank on the day on which such drawing is honored in an
amount in immediately available funds equal to the amount of such drawing.
Notwithstanding anything contained in this Agreement to the contrary, to the
extent the Borrower does not reimburse an L/C Bank in accordance with the
preceding provisions of this Section 2.24 or a Default or an Event of Default
exists at the time of the honoring of a drawing under a Letter of Credit,
amounts, if any, then held by the Collateral Agent in the L/C Cash Collateral
Account may be applied by the Administrative Agent to reimburse the applicable
L/C Bank for the honoring of such drawing, and the aggregate amount of Revolving
Loans, if any, required to be made by the Participating Banks pursuant to this
Section 2.24 shall be reduced by a corresponding amount. Any payments owed by
the Borrower pursuant to this Section 2.24 which are made later than 10:00 a.m.
(New York City time) shall be deemed to have been made on the next succeeding
Business Day.
(b) Each Participating Bank shall indemnify and hold harmless the
Administrative Agent and each L/C Bank from and against any and all losses,
liabilities (including liabilities for penalties), actions, suits, judgments,
demands, costs and expenses (including, without limitation, attorney's fees and
expenses) resulting from any failure on the part of such Participating Bank to
provide, on the same day of any drawing under a Letter of Credit, the
Administrative Agent with such Participating Bank's Pro Rata Share of the amount
of any drawing under such Letter of Credit in accordance with the provisions of
Section 2.24(a).
SECTION 2.25 PAYMENT BY BANKS. In the event that the Borrower shall
fail to reimburse an L/C Bank as provided in Section 2.24 by borrowing Revolving
Loans or otherwise for all or any portion, as the case may be, of any drawing
honored by such L/C Bank under a Letter of Credit issued by it, such L/C Bank
shall promptly notify the Administrative Agent which shall thereupon promptly
notify each Participating Bank of the unreimbursed amount of such drawing and
the amount of such Participating Bank's Pro Rata Share thereof. Whether or not a
Default or an Event of Default shall then exist, each Participating Bank shall
make available to the Administrative Agent an amount equal to its Pro Rata Share
of such unreimbursed payment in dollars and immediately available funds, at the
office of the Administrative Agent specified in such notice, not later than
12:00 p.m. (New York City time) on the Business Day after the date notified by
the Administrative Agent. In the event that any such Participating Bank fails to
make available to the Administrative Agent the amount of such Participating
Bank's Pro Rata Share of such unreimbursed payment as provided in this Section
2.25, the Administrative Agent shall be entitled to recover such amount on
demand from such Participating Bank together with interest at the Federal Funds
Effective Rate. Nothing in Section 2.24 or this Section 2.25 shall be deemed to
prejudice the right of any Participating Bank to recover any amounts made
available by such Participating Bank pursuant to Section 2.24 or this Section
2.25 in the event that the payment with respect to a Letter of Credit by such
L/C Bank in respect of which payment was made by such Participating Bank
constituted gross negligence or willful misconduct on the part of such L/C Bank.
The Administrative Agent shall distribute to each other Participating Bank which
has paid all amounts payable by it under this Section 2.25 with respect to any
Letter of Credit issued by such L/C Bank such other Participating Bank's share
(based on the proportionate aggregate amount funded by such Participating Bank
to the aggregate amount funded by all Participating Banks) of all payments
received by the Administrative Agent from the Borrower in reimbursement of
drawings honored by such L/C Bank under such Letter of Credit when such payments
are received (including interest payable under Section 2.6 with respect to the
period commencing on the date of the funding of such participation).
SECTION 2.26 COMPENSATION. (a) The Borrower agrees to pay to the
Administrative Agent for distribution to each Participating Bank in respect of
all (i) Standby Letters of Credit a commission equal to the then applicable
Margin Percentage for Eurodollar Loans less 0.25% on the total Standby Letter of
Credit Outstandings, from time to time and (ii) Trade Letters of Credit a
commission equal to the then applicable Margin Percentage for Eurodollar Loans
less 0.75% (but in no event shall the commission be equal to an amount less than
0.75% per annum) on the total Trade Letter of Credit Outstandings from time to
time, in each case such fee to be payable in arrears on each Payment Date.
Promptly upon receipt by the Administrative
38
Agent of any amount described in this Section 2.26(a), the Administrative Agent
shall distribute to each Participating Bank its Pro Rata Share of such amount.
(b) The Borrower agrees to pay to each L/C Bank in respect of each
Letter of Credit issued by it such fees (including, without limitation,
fronting, issuance, facing, processing and transfer fees), in such amounts, and
at such times, as such L/C Bank customarily charges for the issuance of letters
of credit or as may otherwise be agreed by the Borrower and such L/C Bank.
SECTION 2.27 ADDITIONAL PAYMENTS; ILLEGALITY. (a) If by reason of
any change in applicable law or governmental regulation, rule, guideline or
order or any interpretation thereof including the introduction of any new law or
governmental rule, regulation, guideline or order (such as for example but not
limited to a change in official reserve requirements) whether or not having the
force of law and whether or not failure to comply therewith would be unlawful:
(i) such Bank shall be subject to any tax, levy, charge
or withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under Sections 2.22 through 2.29, inclusive, whether
directly or by such being imposed on or suffered by such Bank;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letter of
Credit issued by such Bank or any participations purchased by such
Bank in any Letter of Credit (or in respect of such Bank's
commitment to purchase such a participation); or
(iii) there shall be imposed on such Bank any other
condition regarding Sections 2.22 through 2.29, inclusive, any
Letter of Credit or any participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to such Bank of committing to issue, purchase or purchasing or maintaining any
participation in any Letter of Credit, or to reduce the amount receivable in
respect thereof by such Bank, then and in any such case such Bank may, at any
time after the additional cost is incurred or the amount received is reduced,
promptly notify the Borrower and the Borrower shall pay to such Bank promptly
after a written demand therefor (which demand may be contained in such notice),
such additional amounts as shall be required to compensate such Bank for such
increased costs or reduction in amounts receivable hereunder (a written notice
as to additional amounts owed such Bank setting forth in reasonable detail the
conditions giving rise thereto and the calculation of such amounts, submitted to
the Borrower by such Bank shall, absent manifest error, be final and conclusive
and binding upon all parties hereto). The failure of any Bank to give any notice
or demand as provided in this Section shall not release or diminish any of the
Borrower's obligations to pay any additional costs to such Bank pursuant to this
Section.
(b) Notwithstanding any other provision contained in this Agreement,
no L/C Bank shall be obligated to issue any Letter of Credit if the issuance of
such Letter of Credit shall have become unlawful or prohibited by compliance by
such L/C Bank in good faith with any law, governmental rule, guideline, request,
order, injunction, judgement or decree (whether or not having the force of law).
SECTION 2.28 OBLIGATIONS ABSOLUTE. The respective obligations under
Sections 2.24 and 2.25 of the Borrower and the Participating Banks to reimburse
each L/C Bank for drawings made under the Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including, without limitation,
the following circumstances:
(a) any lack of validity or enforceability of any Letter of Credit;
39
(b) the existence of any claim, set-off, defense or other right
which the Borrower or any Subsidiary or Affiliate of the Borrower may have at
any time against a beneficiary or any transferee of any Letter of Credit (or any
Persons for whom any such beneficiary or transferee may be acting), any Bank or
any other Person, whether in connection with this Agreement, the transactions
contemplated herein or any unrelated transaction (including, without limitation,
any underlying transaction between the Borrower or any of its Subsidiaries or
Affiliates and the beneficiary for which the Letter of Credit was procured);
(c) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect;
(d) payment by such L/C Bank under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(e) any other circumstance or happening whatsoever, which is similar
to any of the foregoing; or
(f) the fact that a Default or an Event of Default shall have
occurred and be continuing.
SECTION 2.29 INDEMNIFICATION; NATURE OF L/C BANKS' DUTIES. (a) In
addition to amounts payable as elsewhere provided in Sections 2.22 through 2.29,
inclusive, the Borrower hereby agrees to protect, indemnify, pay and save each
L/C Bank harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and reasonable expenses (including reasonable
attorneys' fees and disbursements and allocated costs of internal counsel) which
such L/C Bank may incur or be subject to as a consequence, direct or indirect,
of (i) the issuance of any Letter of Credit for the account of the Borrower
other than as a result of the gross negligence or willful misconduct of such L/C
Bank or (ii) the failure of such L/C Bank to honor a drawing under any Letter of
Credit due to an act or omission (whether rightful or wrongful) of any present
or future DE JURE or DE FACTO government or governmental authority.
(b) As between the Borrower and each L/C Bank, the Borrower assumes
all risks of the acts and omissions of, or misuse of the Letters of Credit
issued by such L/C Bank, by the respective beneficiaries of such Letters of
Credit, other than losses resulting from the gross negligence or willful
misconduct of such L/C Bank. In furtherance and not in limitation of the
foregoing, no L/C Bank shall be responsible: (i) for the form, validity,
sufficiency, accuracy, genuineness or legal effects of any document submitted by
any party in connection with the application for and issuance of such Letters of
Credit, even if it should in fact prove to be in any or all respects
insufficient, inaccurate, fraudulent or forged or otherwise invalid; (ii) for
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) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in order
to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not they be in cipher; (v) for good
faith errors in interpretation of technical terms; (vi) for 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) for
the misapplication by the beneficiary of any such Letter of Credit; and (viii)
for any consequences arising from causes beyond the control of such L/C Bank,
including, without limitation, any act or omission, whether rightful or
wrongful, of any present or future DE JURE or DE FACTO government or
governmental authority. None of the above shall affect, impair, or prevent the
vesting of any such L/C Bank's rights or powers hereunder.
40
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by any
L/C Bank under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in the absence of gross negligence or
willful misconduct, shall not put such L/C Bank under any resulting liability to
the Borrower.
SECTION 2.30 INCREASE OF TOTAL REVOLVING LOAN COMMITMENT. (a) At any
time prior to the third anniversary of the Closing Date, at the request of the
Parent and the Borrower to the Administrative Agent, the Total Revolving Loan
Commitment hereunder may be increased after the Closing Date on one or more
occasions but on not more than two occasions; PROVIDED that (i) the aggregate of
all such increases pursuant to this Section 2.30 may total no more than
$25,000,000, (ii) the sum of the Total Revolving Loan Commitment and the Total
Expansion Loan Commitment shall not exceed $225,000,000, (iii) each such
increase is in a minimum amount of $10,000,000, (iv) each Bank whose Revolving
Loan Commitment is increased consents to its share of the increase and (v) the
consent of the Administrative Agent is obtained.
(b) In the event that the Borrower and one or more of the Banks (or
other financial institutions which may elect to participate with the consent of
the Administrative Agent and the L/C Banks) shall agree, in accordance with
Section 2.30(a), upon such an increase in the Total Revolving Loan Commitment,
the Borrower, the Administrative Agent and each financial institution in
question shall enter into a Commitment Increase Supplement (a form of which is
attached hereto) setting forth the amounts of the increase in Revolving Loan
Commitments and providing that the additional financial institutions
participating shall be deemed to be included as Banks for all purposes of this
Agreement. Upon the execution and delivery of such Commitment Increase
Supplement as provided above, and upon satisfaction of such other conditions as
the Administrative Agent may specify, this Agreement shall be deemed to be
amended accordingly.
(c) No Bank shall have any obligation to increase its Revolving Loan
Commitment in the event of such a request by the Borrower hereunder.
SECTION 2.31 BORROWING SUBSIDIARIES. The Parent and the Borrower
may, and, in the case of any Material Subsidiary resulting from a Permitted
Acquisition that is not a Subsidiary of the Borrower, shall, from time to time,
designate any other wholly-owned Subsidiary of the Parent to be a Borrowing
Subsidiary pursuant to this Section 2.31 effective on a date not later than
thirty days after written notice to the Administrative Agent accompanied by (a)
an Assumption Agreement in the form of Exhibit Q attached hereto executed by
such Subsidiary and acknowledged by the Borrower and each Guarantor, (b) a
certificate of good standing of such Subsidiary in the jurisdiction of its
incorporation, (c) certified resolutions of the Board of Directors of such
Borrowing Subsidiary authorizing the execution and delivery of the Assumption
Agreement, and any other documents required to be delivered by this Section
2.31, (d) a counterpart of the Security Agreement and the Pledge Agreement, if
applicable, executed by such Subsidiary and (e) such other information,
certificates or legal opinions as the Administrative Agent reasonably may
request. Unless the Administrative Agent notifies the Borrower to the contrary
prior to the effective date specified in the designation notice, such Subsidiary
shall become a Borrowing Subsidiary on that date or such earlier date as the
Administrative Agent may designate.
SECTION 3. CONDITIONS PRECEDENT.
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL LOANS. The obligation of
each Bank to make its initial Loans, the obligation of the Swingline Bank to
make any Swingline Loan and the obligation of each L/C Bank to issue any Letter
of Credit are each subject to the satisfaction on the Closing Date of the
following conditions precedent:
41
(a) LOAN DOCUMENTS.
(i) CREDIT AGREEMENT. The Borrower, the Parent and each
other party to this Agreement shall have executed and delivered this
Agreement to the Administrative Agent.
(ii) NOTES. The Borrower shall have executed and
delivered to each Bank or Swingline Bank which has requested Notes
the appropriate Notes in the amount, maturity and as otherwise
provided herein.
(iii) SECURITY AGREEMENT. Each of the Borrower, the
Parent and the Guarantors shall have executed and delivered to the
Collateral Agent a security agreement substantially in the form set
forth as Exhibit G hereto (as amended, modified or supplemented from
time to time, the "Security Agreement").
(iv) PLEDGE AGREEMENT. The Borrower, the Parent and any
other Subsidiary a party thereto shall have executed and delivered
to the Collateral Agent a pledge agreement substantially in the form
set forth as Exhibit H hereto (as amended, modified or supplemented
from time to time, the "Pledge Agreement").
(v) MORTGAGES. The Borrower and all Subsidiaries which
shall own Mortgaged Properties shall have executed and delivered to
the Collateral Agent mortgages substantially in the form set forth
as Exhibit I hereto (as amended, modified or supplemented from time
to time, the "Mortgages").
(vi) SUBSIDIARY GUARANTY. The Guarantors shall have
executed and delivered to the Collateral Agent a guaranty
substantially in the form set forth as Exhibit J hereto (as amended,
modified or supplemented from time to time, the "Subsidiary
Guaranty").
(b) PROCEEDS OF ISSUANCE OF SENIOR NOTES AND SENIOR
SUBORDINATED NOTES. The Borrower shall have received not less $300,000,000 (of
which not less than $100,000,000 will be subordinated to the Obligations) in
gross proceeds from the issuance of the Senior Notes and the Senior Subordinated
Notes and the terms and conditions (including, without limitation, terms and
conditions relating to the interest rate, fees, amortization, maturity,
subordination, covenants, events of default and remedies) of the Senior Notes
and the Senior Subordinated Notes and the respective Indentures and other
documents relating thereto, including, without limitation, the guarantees, if
any, thereof by the Parent, shall be reasonably satisfactory in all material
respects to the Banks.
(c) OPINIONS OF COUNSEL.
(i) The Administrative Agent shall have received a legal
opinion, dated the Closing Date, from Xxxxxxxx & Xxxxx, counsel to
the Loan Parties, substantially in the form set forth as Exhibit K-1
hereto, and the Borrower hereby instructs such counsel to deliver
such opinion.
(ii) The Administrative Agent shall have received
favorable legal opinions from local counsel satisfactory to the
Administrative Agent in each jurisdiction deemed necessary or
advisable by the Administrative Agent which opinions shall be
substantially in the form of Exhibit K-2 hereto and shall cover such
other matters relating to the Collateral, the Security Documents and
the other transactions contemplated hereby as the Administrative
Agent shall deem necessary or advisable.
42
(iii) The Administrative Agent shall have received a
legal opinion, dated the Closing Date, from Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, special counsel to the Administrative Agent.
(d) CORPORATE DOCUMENTS. The Administrative Agent shall have
received the Articles or Certificate of Incorporation of each of the Loan
Parties as amended, modified or supplemented to the Closing Date, certified to
be true, correct and complete by the appropriate Secretary of State as of a date
not more than five days prior to the Closing Date, together with a good standing
certificate from such Secretary of State and a good standing certificate from
the Secretaries of State (or the equivalent thereof) of each other State in
which each of them is required to be qualified to transact business, each to be
dated a date not more than five days prior to the Closing Date.
(e) CERTIFIED RESOLUTIONS, ETC. The Administrative Agent shall have
received a certificate of the Secretary or Assistant Secretary of each of the
Loan Parties and dated the Closing Date certifying (i) the names and true
signatures of the incumbent officers of such Person authorized to sign the
applicable Loan Documents, (ii) the By-Laws of such Person as in effect on the
Closing Date, (iii) the resolutions of such Person's Board of Directors
approving and authorizing the execution, delivery and performance of all Loan
Documents executed by such Person, and (iv) that there have been no changes in
the Articles or Certificate of Incorporation of such Person since the date of
the most recent certification thereof by the appropriate Secretary of State.
(f) TRANSACTION DOCUMENTS. The Administrative Agent shall have
received executed copies of the Transaction Documents (other than the Loan
Documents) and any amendments or supplements thereto, certified as of the
Closing Date by an Authorized Officer of the Borrower to be true, correct and
complete copies of such documents.
(g) OFFICER'S CERTIFICATE. The Administrative Agent, the Banks and
the Swingline Bank shall have received a certificate of an Authorized Officer of
the Borrower, dated the Closing Date, certifying that (i) the Transaction
Documents (other than the Loan Documents) are in full force and effect and no
material term or condition thereof has been amended from the form thereof
delivered to the Administrative Agent, or waived, except as disclosed to the
Administrative Agent or its counsel prior to the execution of this Agreement,
(ii) each of the Loan Parties and, to the best of his or her knowledge, the
other parties to the Transaction Documents, have performed or complied in all
material respects with all agreements and conditions contained in such
Transaction Documents and any agreements or documents referred to therein
required to be performed or complied with by each of them on or before the
Closing Date, and (iii) subject to the foregoing, neither any Loan Party nor, to
the best of his or her knowledge, any such other party is in default in the
performance or compliance with any of the terms or provisions thereof, except to
the extent that performance thereof or compliance therewith or default has been
waived with the prior written consent of the Banks and the Swingline Bank.
(h) CAPITALIZATION. The Administrative Agent shall be satisfied with
the Parent's and the Borrower's capital structure, including the Receivables
Program Documents and shall have received and be satisfied with the Borrower's
business plan.
(i) REFINANCING. The Administrative Agent shall have received
evidence satisfactory to it that the Refinanced Debt, together with all
interest, fees, penalties and other amounts payable in respect thereof, shall
have been repaid in full and that all commitments thereunder and agreements
relating thereto shall have been terminated.
(j) INSURANCE. The Administrative Agent shall have received a
certificate of insurance demonstrating insurance coverage in respect of each of
the Loan Parties of types, in amounts, with insurers
43
and with other terms satisfactory to the Banks and the Swingline Bank, which
certificate shall indicate that the Collateral Agent, the Banks and the
Swingline Bank are named additional insureds as their interests may appear and
shall contain a lenders loss payee endorsement in favor of the Collateral Agent
in form and substance satisfactory to the Administrative Agent.
(k) LIEN SEARCH REPORTS. The Administrative Agent shall have
received satisfactory reports of UCC, tax lien, judgment and litigation searches
conducted by a search firm acceptable to the Administrative Agent, the Banks and
the Swingline Bank with respect to the Loan Parties in each of the locations set
forth on Annex B to the Security Agreement and such other locations as the
Administrative Agent may request together with satisfactory searches of the
United States Patent and Trademark Office.
(l) UCC-1 FINANCING STATEMENTS AND MORTGAGE RECORDING. The
Administrative Agent shall have received (x) acknowledgment copies (or other
evidence of filing) of each UCC-1 financing statement signed by Borrower and the
other Loan Parties as debtors naming the Collateral Agent as secured party and
filed in the jurisdictions set forth on Annex B to the Security Agreement and
such other locations as the Administrative Agent may request, (y) satisfactory
evidence of the recording of the Security Agreement in the United States Patent
and Trademark Office and (z) satisfactory evidence of the recording of the
Mortgages in the necessary filing offices.
(m) PRO FORMA BALANCE SHEET. The Administrative Agent shall have
received a PRO FORMA consolidated balance sheet of the Parent, the Borrower and
their respective Subsidiaries, dated as of February 1, 1997, giving effect to
the Transactions and the payment or accrual of all Transaction Costs, certified
by the Principal Financial Officer of the Borrower.
(n) PLEDGED STOCK AND PLEDGED NOTES. The Collateral Agent shall have
received the original stock certificates evidencing the stock and the original
promissory notes evidencing the promissory note obligations, in each case,
pledged pursuant to the Pledge Agreement, together with undated stock and
promissory note powers duly executed in blank in connection therewith.
(o) REAL ESTATE SEARCH REPORTS. The Collateral Agent shall have
received satisfactory reports of title searches conducted by a search firm
satisfactory to the Administrative Agent, the Banks and the Swingline Bank with
respect to each of the Mortgaged Properties.
(p) FINANCIAL STATEMENTS. The Administrative Agent shall have
received the audited financial statements of the Parent and the Borrower for the
fiscal years ending February 1, 1997, February 1, 1996 and February 1, 1995 and
the unaudited financial statements of the Borrower for the fiscal period ending
on May 1, 1997.
(q) ENVIRONMENTAL MATTERS. The Administrative Agent shall be
satisfied that neither the Borrower, any of its Subsidiaries nor any Loan Party
is subject to any present or contingent environmental liability which could
reasonably be expected to have a Material Adverse Effect.
(r) FUNDS FLOW INSTRUCTIONS. The Administrative Agent shall have
received detailed instructions satisfactory to it describing the funds flow in
connection with the Transactions on the Closing Date.
(s) FEES AND EXPENSES. The Administrative Agent shall have received,
for its account and for the account of each Bank and the Swingline Bank, as
applicable, all Fees and other fees and expenses due and payable hereunder on or
before the Closing Date (if then invoiced), including, without limitation, the
reasonable fees and expenses accrued through the Closing Date, of Skadden, Arps,
Slate, Xxxxxxx & Xxxx
44
LLP and any other counsel retained by the Administrative Agent in connection
with the transactions contemplated by the Loan Documents.
(t) CONSENTS, LICENSES, APPROVALS, ETC. The Administrative Agent
shall have received copies of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by the
Borrower, the Loan Parties or any of their respective Subsidiaries, and the
validity and enforceability, of the Transaction Documents, or in connection with
any of the Transactions, and such consents, licenses and approvals shall be in
full force and effect.
(u) PROJECTIONS. The Administrative Agent shall have received
projections prepared by the Parent demonstrating the projected consolidated
financial condition and results of operations of the Parent and its Subsidiaries
after giving effect to the Transactions, for each fiscal year for the period
commencing on the Closing Date and ending on the Final Maturity Date and for
each fiscal quarter for the fiscal year ending February 1, 1998, which
projections shall be accompanied by a written statement of the assumptions
underlying the projections, and all of the foregoing shall be satisfactory to
the Banks and the Swingline Bank.
(v) RECEIVABLES PROGRAM DOCUMENTS. The Administrative Agent shall
have received copies of the Receivables Program Documents and shall be satisfied
with the terms thereof.
(w) PURCHASE OF EXISTING SENIOR NOTES AND EXISTING SENIOR
SUBORDINATED NOTES. The Borrower shall have purchased not less than 95% of the
aggregate principal amount of the Existing Senior Notes and not less than 95% of
the aggregate principal amount of the Existing Senior Subordinated Notes, each
pursuant to the Tender Offer at prices reasonably satisfactory to the Banks
(and, if fewer than 100% of all outstanding Existing Notes shall have been so
purchased, the indentures governing each of the Existing Senior Notes and
Existing Senior Subordinated Notes shall have been amended in a manner
reasonably satisfactory to the Banks in all material respects, which amendments
shall, among other things, eliminate substantially all of the restrictive
covenants contained therein and shall make such other changes as shall be
necessary so that after giving effect thereto and to the consummation of the
Transactions, and the other transactions contemplated thereby, no default or
event of default would exist thereunder).
(x) SOLVENCY CERTIFICATE. The Administrative Agent shall have
received a solvency certificate substantially in the form of Exhibit S hereto
executed by the Vice President, Financial Planning or the Chief Financial
Officer of the Borrower and the Parent, dated the Closing Date.
(y) ADDITIONAL MATTERS. The Administrative Agent shall have received
such other certificates, opinions, documents and instruments relating to the
Transactions as may have been reasonably requested by the Administrative Agent,
any Bank and the Swingline Bank, and all corporate and other proceedings and all
other documents (including, without limitation, all documents referred to herein
and not appearing as exhibits hereto) and all legal matters in connection with
the Transactions shall be satisfactory in form and substance to the Banks and
the Swingline Bank.
SECTION 3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of
each Bank to make any Loan, the obligation of each L/C Bank to issue (or renew
or extend pursuant to Section 2.22) any Letter of Credit and the obligation of
the Swingline Bank to make a Swingline Loan (each a "Credit Event"), including
the initial Credit Event on the Closing Date, is subject to the satisfaction on
the date of such Credit Event of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein and in the other Loan Documents (other than
representations and warranties which expressly speak only as of a different date
which representations and warranties shall be true and correct in all material
respects as
45
of such date) shall be true and correct in all material respects on such date
both before and after giving effect to such Credit Event.
(b) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
shall have occurred and be continuing on such date either before or after giving
effect to such Credit Event.
(c) NO INJUNCTION OR LITIGATION. No law or regulation shall have
been adopted, no order, judgment or decree of any governmental authority shall
have been issued, and no litigation, proceeding or investigation shall be
pending or threatened, which in the reasonable judgment of the Banks and the
Swingline Bank would (i) enjoin, prohibit or restrain, or impose or result in
the imposition of any material adverse condition upon, the making or repayment
of the Loans or Swingline Loans, the issuance of any Letter of Credit or the
Transactions or (ii) affect the legality, validity or enforceability of this
Agreement, any of the Loan Documents, the Transaction Documents, the
Transactions, or any document to be executed in connection therewith and the
Banks shall be satisfied as to any other material litigation and contingent
obligations to which the Company or its Subsidiaries may be subject.
(d) NO MATERIAL ADVERSE CHANGE. No event, act or condition shall
have occurred after February 1, 1997 which, in the reasonable judgment of the
Required Banks, has had or could reasonably be expected to have a Material
Adverse Effect.
(e) NOTICE OF BORROWING. The Administrative Agent shall have
received a fully executed Notice of Borrowing in respect of the Loans (other
than Swingline Loans), if any, to be made on such date. In the case of the
Swingline Loan, the Administrative Agent shall have received a notice of request
for such Swingline Loan in accordance with Section 2.2(e) hereof.
(f) DOCUMENTATION WITH RESPECT TO LETTERS OF CREDIT. The relevant
L/C Bank shall have received a fully executed Letter of Credit Request in
respect of the Letters of Credit, if any, to be issued on such date.
(g) PERMITTED ACQUISITIONS. In the case of any Loan the proceeds of
which are to be used to finance in whole or in part a Permitted Acquisition, the
Administrative Agent shall have received the certifications required by the
definition of Permitted Acquisition to demonstrate that such Permitted
Acquisition is permitted by the terms hereof.
(h) BORROWING SUBSIDIARIES. On the occasion of the initial Loan to
be made to any Borrowing Subsidiary, the Administrative Agent shall have
received all of the documents required by Section 2.31, in each case in form and
substance satisfactory to the Administrative Agent, in respect of such Borrowing
Subsidiary and the designation of such Subsidiary as a Borrowing Subsidiary
shall have become effective in accordance with the provisions of Section 2.31.
The acceptance of the proceeds of each Loan or Swingline Loan and
the delivery of a Letter of Credit Request shall constitute a representation and
warranty by the Borrower to each of the Banks and the Swingline Bank, as the
case may be, that all of the conditions required to be satisfied under this
Section 3 in connection with the making of such Loan or Swingline Loan or the
issuance of any Letter of Credit have been satisfied.
All of the Notes, certificates, agreements, legal opinions and other
documents and papers referred to in this Section 3, unless otherwise specified,
shall be delivered to the Administrative Agent for the account of each of the
Banks and the Swingline Bank and, except for the Notes, in sufficient
counterparts for each of the Banks and the Swingline Bank, and shall be
satisfactory in form and substance to each Bank and the Swingline Bank in its
sole discretion.
46
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce the Administrative Agent, the Collateral Agent,
the Swingline Bank, the L/C Banks and Banks to enter into this Agreement and to
make the Loans and the Swingline Loans, and in the case of the L/C Banks, to
issue Letters of Credit, each of the Parent and the Borrower makes the following
representations and warranties, which shall survive the execution and delivery
of this Agreement and the Notes and the making of the Loans and the Swingline
Loans:
SECTION 4.1 CORPORATE STATUS. Each Loan Party (i) is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its incorporation, (ii) has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged or presently proposes to engage and (iii) has duly qualified and
is authorized to do business and is in good standing as a foreign corporation in
every jurisdiction in which it owns or leases real property or in which the
nature of its business requires it to be so qualified, except where the failure
to so qualify, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.2 CORPORATE POWER AND AUTHORITY. Each Loan Party has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of each of the Transaction Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance by it of such Transaction Documents. Each Loan Party has duly
executed and delivered each such Transaction Document, and each such Transaction
Document constitutes its legal, valid and binding obligation, enforceable in
accordance with its terms.
SECTION 4.3 NO VIOLATION. Neither the execution, delivery or
performance by any Loan Party of the Transaction Documents (other than the
Acquisition Documents) to which it is a party, nor compliance by it with the
terms and provisions thereof nor the consummation of the Transactions (other
than the Acquisition), (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (ii) will conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien (except pursuant to the
Security Documents) upon any of the property or assets of any Loan Party
pursuant to the terms of any indenture, mortgage, deed of trust, agreement or
other instrument to which such Loan Party is a party or by which it or any of
its property or assets is bound or to which it may be subject, or (iii) will
violate any provision of the Articles or Certificate of Incorporation or By-Laws
of any Loan Party. Neither the execution, delivery or performance by any Loan
Party of the Acquisition Documents to which it is a party, nor compliance by it
with the terms and provisions thereof nor the consummation of the Acquisition,
(i) will contravene any applicable provision of any material law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or (ii) will conflict or be inconsistent with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property or assets of
any Loan Party pursuant to the terms of any material indenture, mortgage, deed
of trust, agreement or other instrument to which such Loan Party is a party or
by which it or any of its property or assets is bound or to which it may be
subject, or (iii) will violate any provision of the Articles or Certificate of
Incorporation or By-Laws of any Loan Party.
SECTION 4.4 LITIGATION. There are no actions, suits, investigations
or proceedings pending, or to the Parent's or the Borrower's best knowledge,
threatened (i) with respect to any of the Transactions or Transaction Documents
or (ii) that could, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
47
SECTION 4.5 FINANCIAL STATEMENTS; FINANCIAL CONDITION; ETC. Each of
the financial statements delivered pursuant to Sections 3.1(m) and 3.1(p) were
prepared in accordance with GAAP consistently applied and fairly present the
financial condition and the results of operations of the entities covered
thereby on the dates and for the periods covered thereby, except as disclosed in
the notes thereto and, with respect to interim financial statements, subject to
normally recurring year-end ad justments. As of the Closing Date, no Loan Party
has any material liability (contingent or otherwise) not reflected in such
financial statements or in the notes thereto other than as set forth on Schedule
6.6 hereto.
SECTION 4.6 SOLVENCY. On the Closing Date and after giving effect to
the Transactions, each Loan Party will be Solvent.
SECTION 4.7 PROJECTIONS. The projections delivered pursuant to
Section 3.1(u) have been prepared on the basis of the assumptions accompanying
them, and such projections and assumptions, as of the date of preparation
thereof and as of the Closing Date, are reasonable and represent the Parent's
good faith estimate of its future financial performance, it being understood
that nothing contained in this Section shall constitute a representation or
warranty that such future financial performance or results of operations will in
fact be achieved.
SECTION 4.8 MATERIAL ADVERSE CHANGE. Except as set forth on Schedule
4.8, since February 1, 1997 there has occurred no event, act or condition which
has had, or could reasonably be expected to have, a Material Adverse Effect.
SECTION 4.9 USE OF PROCEEDS; MARGIN REGULATIONS. All proceeds of
each Loan and Swingline Loan will be used by the Borrower and any Borrowing
Subsidiary only in accordance with the provisions of Section 2.21. No part of
the proceeds of any Loan or Swingline Loan will be used by the Borrower or any
Borrowing Subsidiary to purchase or carry any Margin Stock or to extend credit
to others for the purpose of purchasing or carrying any Margin Stock. Neither
the making of any Loan or Swingline Loan nor the use of the proceeds thereof
will violate or be inconsistent with the provisions of Regulations G, T, U or X
of the Federal Reserve Board.
SECTION 4.10 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
(i) the execution, delivery and performance of any Transaction Document or the
consummation of any of the Transactions or (ii) the legality, validity, binding
effect or enforceability of any Transaction Document, except (x) those listed on
Schedule 4.10 that have already been duly made or obtained and remain in full
force and effect and (y) the filing of UCC-1 financing statements in the
appropriate filing offices and the recording of the Mortgages in the appropriate
recording offices.
SECTION 4.11 SECURITY INTERESTS AND LIENS. The Security Documents
create, as security for the Secured Obligations, valid and enforceable Liens on
all of the Collateral, in favor of the Collateral Agent for the ratable benefit
of the Secured Creditors, and subject to no other Liens other than Liens
permitted by Section 6.3 hereunder. Upon the satisfaction of the conditions
precedent described in Section 3.1(l), such Liens on the Collateral shall be
superior to and prior to the rights of all third parties (except as disclosed on
Schedule 6.3), and no further recordings or filings are or will be required in
connection with the creation, perfection or enforcement of such Liens, other
than the filing of continuation statements in accordance with applicable law.
SECTION 4.12 TAX RETURNS AND PAYMENTS. The Parent and each of its
Subsidiaries has filed all tax returns required to be filed by it and has paid
all taxes and assessments payable by it which have become
48
due, other than those not yet delinquent or those that are reserved against in
accordance with GAAP which are being diligently contested in good faith by
appropriate proceedings.
SECTION 4.13 ERISA. As of the Closing Date, no Loan Party has any
Plans other than those listed on Schedule 4.13. No accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA) or
Reportable Event has occurred with respect to any Plan. As of the Closing Date,
Unfunded Benefit Liabilities under the Plans do not, in the aggregate, exceed
$6,000,000. As of the Closing Date, neither the Borrower nor any member of its
ERISA Controlled Group is a party to or has any responsibility, contingent or
otherwise, with respect to any Multiemployer Plan. To the best knowledge of the
Borrower and each member of its ERISA Controlled Group, no Multiemployer Plan is
or is likely to be in reorganization (as defined in Section 4241 of ERISA or
Section 418 of the Code) or is insolvent (as defined in Section 4245 of ERISA)
which reorganization or insolvency could reasonably be expected to have a
Material Adverse Effect. No liability to the PBGC (other than required premi um
payments), the Internal Revenue Service, any Plan or any trust established under
Title IV of ERISA has been, or is expected by the Borrower or any member of its
ERISA Controlled Group to be, incurred by the Borrower or any member of its
ERISA Controlled Group which liability could reasonably be expected to result in
a Material Adverse Effect. Except as otherwise disclosed on Schedule 4.13
hereto, neither the Borrower nor any member of its ERISA Controlled Group has
any material contingent liability with respect to any post-retirement benefit
under any "welfare plan" (as defined in Section 3(1) of ERISA), other than
liability for continuation coverage under Part 6 of Title I of ERISA or other
similar statute. No lien under Section 412(n) of the Code or Section 302(f) of
ERISA or requirement to provide security under Section 401(a)(29) of the Code or
Section 307 of ERISA has been or is reasonably expected by the Borrower or any
member of its ERISA Controlled Group to be imposed on the assets of the Borrower
or any member of its ERISA Controlled Group.
SECTION 4.14 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY
ACT. No Loan Party nor any of its Subsidiaries is (x) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, (y) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (z) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
SECTION 4.15 REPRESENTATIONS AND WARRANTIES IN TRANSACTION
DOCUMENTS. All representations and warranties made by any Loan Party in the
Transaction Documents (other than the Loan Documents), and, to the best of the
Borrower's knowledge, all representations made by each other Person in such
Transaction Documents, are true and correct in all material respects as of the
Closing Date. None of such representations and warranties are inconsistent in
any material respect with the representations and warranties of any Loan Party
made herein or in any other Loan Document.
SECTION 4.16 TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) furnished by or on behalf of any Loan Party in writing to the
Administrative Agent, any Bank or the Swingline Bank on or prior to the Closing
Date, for purposes of or in connection with this Agreement or any of the
Transactions is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of any Loan Party in writing to the
Administrative Agent, any Bank or the Swingline Bank will be, true and accurate
in all material respects on the date as of which such information is dated or
furnished and not incomplete by omitting to state any material fact necessary to
make such information (taken as a whole) not misleading at such time. As of the
Closing Date, there are no facts, events or conditions known to the Borrower
which, individually or in the aggregate, have or could reasonably be expected to
have a Material Adverse Effect.
SECTION 4.17 CORPORATE STRUCTURE; CAPITALIZATION. As of the Closing
Date, Schedule 4.17 hereto sets forth, both before and after giving effect to
the Transactions to be consummated on the Closing
49
Date, the number of authorized and issued shares of capital stock of the Parent,
the Borrower and each of its Subsidiaries, the par value thereof and, in the
case of Subsidiaries, the registered owner(s) thereof. All of such issued stock
has been duly and validly issued and is fully paid and non-assessable. Except as
set forth in such Schedule, as of the Closing Date neither the Parent, the
Borrower nor any such Subsidiary has outstanding any securities convertible into
or exchangeable for its capital stock nor does the Parent, the Borrower or any
such Subsidiary have outstanding any rights to subscribe for or to purchase, or
any options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
SECTION 4.18 ENVIRONMENTAL MATTERS. (a) Except as set forth in
Schedule 4.18, (i) each Loan Party and its Subsidiaries are in compliance with
all applicable Environmental Laws, (ii) each Loan Party and its Subsidiaries
have all Environmental Approvals required to operate their businesses as
presently conducted or as reasonably anticipated to be conducted, all such
Environmental Approvals are in effect, no appeal or other action is pending to
revoke any such Environmental Approval, and each Loan Party and each of its
Subsidiaries are in full compliance with all terms and conditions of such
Environmental Approvals, (iii) no Loan Party, its Subsidiaries nor any of their
Environmental Affiliates has received any communication (written or oral),
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that a Loan Party or such Subsidiary or Environmental Affiliate is
not in full compliance with all Environmental Laws, and (iv) to the Parent's and
the Borrower's best knowledge after due inquiry, there are no circumstances that
may prevent or interfere with such full compliance in the future.
(b) Except as set forth in Schedule 4.18, there is no Environmental
Claim pending or threatened against any Loan Party, any of its Subsidiaries or
any Environmental Affiliate.
(c) Except as set forth in Schedule 4.18, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge or disposal of
any Material of Environmental Concern, that could form the basis of any
Environmental Claims against any Loan Party, any of its Subsidiaries or any of
their Environmental Affiliates, which Environmental Claims, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
(d) No Release or Cleanup has occurred at any property currently or
formerly owned or leased by any Loan Party or its Subsidiaries that could
reasonably be expected to result in the assertion or creation of a Lien on said
property by any governmental body or agency with respect thereto, nor has any
such assertion of a Lien been made by any governmental body or agency with
respect thereto.
(e) The Borrower has heretofore delivered true and correct copies of
all environmental studies, assessments or reports conducted of the Parent or any
of its Subsidiaries and of each property currently or formerly owned or operated
by the Parent or any of its Subsidiaries, including but not necessarily limited
to Phase I or Phase II environmental assessments, underground storage tank
investigation reports, or asbestos surveys, that were prepared within the last
five years, except that such time limitation shall not apply to asbestos
surveys.
(f) Without in any way limiting the generality of the foregoing,
except as disclosed in Schedule 4.18, (i) there are no underground storage tanks
located on property owned or leased by any Loan Party or any of its Subsidiaries
and (ii) no polychlorinated biphenyls (PCB's) are used or stored at any property
owned or leased by the Borrower or any of its Subsidiaries.
SECTION 4.19 INSURANCE. Schedule 4.19 sets forth a complete and
accurate description of all policies of insurance maintained by the Parent and
its Subsidiaries as of the Closing Date. The Borrower has paid all premiums due
on or prior to the Closing Date in respect of such policies and all such
policies are in full force and effect.
50
SECTION 4.20 PATENTS, TRADEMARKS, ETC. Each Loan Party and its
Subsidiaries has obtained and holds in full force and effect all patents,
trademarks, servicemarks, trade names, copyrights and other such rights, free
from burdensome restrictions, which are reasonably necessary for the operation
of its business as presently conducted. No material product, process, method,
substance, part or other material presently sold by or employed by any Loan
Party or any of its Subsidiaries in connec tion with such business infringes any
patent, trademark, service xxxx, trade name, copyright, license or other right
owned by any other Person. There is not pending or overtly threatened any claim
or litigation against or affecting any Loan Party or any of its Subsidiaries
contesting its right to sell or use any such product, process, method,
substance, part or other material which would be reasonably likely to have a
Material Adverse Effect.
SECTION 4.21 OWNERSHIP OF PROPERTY. Schedule 4.21 sets forth all the
real property owned or leased by the Parent or any of its Subsidiaries as of the
Closing Date and identifies the street address, whether such property is leased
or owned and, if owned, the current owner thereof. The Parent and its
Subsidiaries have good and marketable fee simple title to or valid leasehold
interests in all of such real property and good title or valid leasehold
interests to all of their personal property subject to no Lien of any kind
except Liens permitted hereby. The Parent and its Subsidiaries enjoy peaceful
and undisturbed possession under all of their respective leases, except where
the failure would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.22 NO DEFAULT. No Loan Party nor any of its Subsidiaries
is in default under or with respect to any Transaction Document or any other
agreement, instrument or undertaking to which it is a party or by which it or
any of its property is bound in any respect which could reasonably be expected
to result in a Material Adverse Effect. No Default or Event of Default exists.
SECTION 4.23 LICENSES, ETC. Each Loan Party and its Subsidiaries
have obtained and hold in full force and effect, all material franchises,
licenses, permits, certificates, authorizations, qualifications, easements,
rights of way and other rights, consents and approvals which are reasonably
necessary for the operation of their respective businesses as presently
conducted.
SECTION 4.24 COMPLIANCE WITH LAW. Each Loan Party and each of its
Subsidiaries is in compliance with all laws, rules, regulations, orders,
judgments, writs and decrees except where such non-compliance, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.25 NO BURDENSOME RESTRICTIONS. No Loan Party nor any of
its Subsidiaries is a party to any agreement or instrument or subject to any
other obligation or any charter or corporate restriction or any provision of any
applicable law, rule or regulation which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.26 LABOR MATTERS. Except as set forth on Schedule 4.26, as
of the Closing Date there are no collective bargaining agreements or
Multiemployer Plans covering the employees of any Loan Party or any of its
Subsidiaries. None of the Loan Parties has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years and to
the best knowledge of such Persons, there are none now threatened.
Section 4.27 PARENT BUSINESS. As of the Closing Date, the Parent
conducts no business other than the ownership of 100% of the capital stock of
the Borrower and has no assets or liabilities other than those reflected in the
financial statements previously delivered to the Banks. At any time after the
Closing Date, the Parent conducts no business other than that expressly
permitted by the terms of this Agreement, including,
51
without limitation, the consummation of, and ownership of Subsidiaries purchased
or created pursuant to, Permitted Acquisitions.
SECTION 5. AFFIRMATIVE COVENANTS.
The Parent and the Borrower covenant and agree that on and after the
Closing Date and until the Total Commitment has terminated, and the Obligations
are paid in full:
SECTION 5.1 INFORMATION COVENANTS. With respect to the information
required to be delivered pursuant to clauses (a) through (d) below, the Borrower
shall furnish to the Administrative Agent sufficient copies of such information
for the Administrative Agent to promptly furnish such information to the Banks
and with respect to the information required to be delivered in clauses (e)
through (k), the Borrower shall furnish to each Bank, the Swingline Bank and to
the Administrative Agent:
(a) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the close
of each quarterly accounting period in each fiscal year of the Parent (other
than the fourth quarterly accounting period), the consolidated and consolidating
balance sheet of the Parent and its Subsidiaries as at the end of such quarterly
period and the related consolidated statements of income, cash flow and
shareholders' equity and consolidating statements of income, for such quarterly
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly period, and in the case of such consolidated statements of income
setting forth comparative figures for the related periods in the prior fiscal
year.
(b) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the close of
each fiscal year of the Parent, the consolidated and consolidating balance sheet
of the Parent and its Subsidiaries as at the end of such fiscal year and the
related consolidated statements of income, cash flow and shareholders' equity
and consolidating statements of income for such fiscal year, setting forth, in
the case of such consolidated financial statements, comparative figures for the
preceding fiscal year and, with respect to such consolidated financial
statements, certified without qualification by Price Waterhouse or any other
"big six" accounting firm or any other independent certified public accountants
of recognized national standing reasonably acceptable to the Required Banks, in
each case together with a report of such accounting firm stating that in the
course of its regular audit of the consolidated financial statements of the
Borrower, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default under Section 6.1, or if in the opinion of such
accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof.
(c) MONTHLY FINANCIAL STATEMENTS. Within 30 days after the end of
each monthly reporting period in the twelve month period following the Closing
Date, the consolidated and consolidating balance sheet of the Parent and its
Subsidiaries as at the end of such monthly reporting period and the related
consolidated and consolidating statements of income for such monthly reporting
period and for the elapsed portion of current fiscal year ended on the last day
of such monthly reporting period, and in each case setting forth, in the case of
such consolidated financial statements, comparative figures for the related
periods in the prior fiscal year, including, without limitation, a division
sales analysis in the form of Exhibit P attached hereto.
(d) MANAGEMENT LETTERS. Promptly after the Borrower's or the
Parent's receipt thereof, a copy of any "management letter" or other material
report received by the Borrower or the Parent from its certified public
accountants.
(e) BUDGETS. Within 45 days after the first day of each fiscal year
of the Parent, a quarterly budget and quarterly financial forecast of results of
operations and sources and uses of cash (in form
52
satisfactory to the Required Banks) for the Parent and its Subsidiaries and for
the Borrower and its Subsidiaries prepared by the Parent for such fiscal year,
accompanied by a written statement of the assumptions used in connection
therewith, together with a certificate of the Principal Financial Officer of the
Parent to the effect that such budget and financial forecast and assumptions are
reasonable and represent the Borrower's good faith estimate of its future
financial requirements and performance. The financial statements required to be
delivered pursuant to clauses (a), (b) and (c) above shall be accompanied by a
comparison of the actual financial results set forth in such financial
statements to those contained in the forecasts delivered pursuant to this clause
(e) together with an explanation of any material variations from the results
anticipated in such forecasts.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements under clauses (a), (b) and (c) above, a compliance
certificate of the Principal Financial Officer of the Borrower in the form of
Exhibit L (a "Compliance Certificate") which certifies that such financial
statements fairly present the financial condition and the results of operations
of the Parent and the Borrower and their respective Subsidiaries on the dates
and for the periods indicated, subject, in the case of interim financial
statements, to normally recurring year-end adjustments and at the time of
delivery of the financial statements under clauses (a) and (b) above such
Compliance Certificate shall certify that such officer has reviewed the terms of
the Loan Documents and has made, or caused to be made under his or her
supervision, a review in reasonable detail of the business and condition of the
Parent and the Borrower and their respective Subsidiaries during the accounting
period covered by such financial statements, and that as a result of such review
such officer has concluded that no Default or Event of Default has occurred
during the period commencing at the beginning of the accounting period covered
by the financial statements accompanied by such certificate and ending on the
date of such certificate or, if any Default or Event of Default has occurred,
specifying the nature and extent thereof and, if continuing, the action the
Borrower has taken or proposes to take in respect thereof. The Compliance
Certificate delivered pursuant to the financial statements delivered under
clauses (a) and (b) above shall also set forth the calculations as required to
establish (i) whether the Parent was in compliance with the provisions of
Section 6.1 during and as at the end of the accounting period covered by the
financial statements accompanied by such certificate, (ii) the Adjusted Leverage
Ratio as in effect on the date of such statements for purposes of determining
the Margin Percentage, and (iii) the amount of the Borrower's Share of Excess
Cash Flow and Retained Equity Proceeds as of the date of such statements. At the
time of delivery of the financial statements delivered pursuant to clause (b)
above, the Borrower shall furnish a certificate in the form of Exhibit M hereto
(the "Excess Cash Flow Certificate") of the Principal Financial Officer of the
Borrower setting forth the calculation of the amount of Excess Cash Flow for the
relevant fiscal year.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly and in any event
within three Business Days after any Loan Party obtains knowledge thereof,
notice of (i) the occurrence of any Default or Event of Default, (ii) any
litigation or governmental proceeding pending or threatened against any Loan
Party which could reasonably be expected to result in a Material Adverse Effect
and (iii) any other event, act or condition which could reasonably be expected
to result in a Material Adverse Effect.
(h) ERISA.
(i) As soon as possible and in any event within 10 days
after any Loan Party or any member of its ERISA Controlled Group
knows, that:
(A) any Termination Event has occurred or
will occur, or
(B) any condition exists with respect to a
Plan which, in the case of an ERISA Plan, presents a
material risk of termination of the ERISA Plan and, in
the case of any Plan, presents a material risk of the
imposition of a material excise tax or other liability
on any Loan Party or any member of its ERISA Controlled
Group, or
53
(C) any Loan Party or any member of its
ERISA Controlled Group has applied for a waiver of the
minimum funding standard under Section 412 of the Code
or Section 302 of ERISA, or
(D) any Loan Party or any member of its
ERISA Controlled Group has engaged in a "prohibited
transaction," as defined in Section 4975 of the Code or
as described in Section 406 of ERISA, that is not exempt
under Section 4975 of the Code and Section 408 of ERISA
where such transaction could reasonably be expected to
have a Material Adverse Effect, or
(E) the aggregate present value of the
Unfunded Benefit Liabilities under all Plans has in any
year increased to an amount in excess of $10,000,000, or
(F) any condition exists with respect to a
Multiemployer Plan which presents a material risk of a
partial or complete withdrawal (as described in Section
4203 or 4205 of ERISA) by any Loan Party or any member
of its ERISA Controlled Group from a Multiemployer Plan
that would have a Material Adverse Effect, or
(G) any Loan Party or any member of its
ERISA Controlled Group is in "default" (as defined in
Section 4219(c)(5) of ERISA) with respect to payments to
a Multiemployer Plan, or
(H) a Multiemployer Plan is in
"reorganization" (as defined in Section 418 of the Code
or Section 4241 of ERISA) or is "insolvent" (as defined
in Section 4245 of ERISA), or
(I) the potential withdrawal liability (as
determined in accordance with Title IV of ERISA) of any
Loan Party and the members of its ERISA Controlled Group
with respect to all Multiemployer Plans has in any year
increased to an amount in excess of $5,000,000, or
(J) there is an action brought against any
Loan Party or any member of its ERISA Controlled Group
under Section 502 of ERISA with respect to its failure
to comply with Section 515 of ERISA,
a certificate of an Authorized Officer of the
Borrower setting forth the details of each of
the events described in clauses (A) through (F)
above as applicable and the action which the
Borrower or the applicable member of its ERISA
Controlled Group has taken or proposes to take
with respect thereto, together with a copy of
any notice or filing from the PBGC or which may
be required by the PBGC or other agency of the
United States government with respect to each of
the events described in claus es (A) through (J)
above, as applicable.
(ii) As soon as possible and in any event (i) within
three Business Days after the receipt by any Loan Party or (ii)
within ten Business Days after the receipt by any member of its
ERISA Controlled Group of a demand letter from the PBGC notifying
such Loan Party or such member of its ERISA Controlled Group of its
final decision finding liability and the date by which such
liability must be paid, a copy of such letter, together with a
certificate of the president or Principal Financial Officer of the
Borrower setting forth the action which such Loan Party or such
member of its ERISA Controlled Group has taken or proposes to take
with respect thereto.
54
(i) SEC FILINGS. Promptly upon transmission thereof,
copies of all regular and periodic financial information, proxy
materials and other information and reports, if any, which any Loan
Party shall file with the Securities and Exchange Commission or any
governmental agencies substituted therefore or which any Loan Party
shall send to its stockholders.
(j) ENVIRONMENTAL. Promptly and in any event within two
Business Days after the existence of any of the following
conditions, a certificate of an Authorized Officer of the Borrower
specifying in detail the nature of such condition and the applicable
Loan Party's proposed response thereto: (i) the receipt by any Loan
Party of any communication (written or oral), whether from a
governmental authority, citizens group, employee or otherwise, that
alleges that such Loan Party or an Environmental Affiliate is not in
compliance with applicable Environmental Laws, or (ii) any Loan
Party shall obtain actual knowledge that there exists any
Environmental Claim pending or threatened against such Loan Party or
Environmental Affiliate.
(k) OTHER INFORMATION. From time to time, such other
information or documents (financial or otherwise) as the
Administrative Agent or any Bank may reasonably request.
SECTION 5.2 BOOKS, RECORDS AND INSPECTIONS. Each Loan Party shall,
and shall cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries in conformity with GAAP and all
requirements of law shall be made of all dealings and transactions in relation
to its business and activities. Each Loan Party shall, and shall cause each of
its Subsidiaries to, permit officers and designated representatives of any Bank
to visit and inspect any of its properties, and to examine its books of record
and account, and discuss the affairs, finances and accounts of each Loan Party
or any of its Subsidiaries with, and be advised as to the same by, its and their
officers and independent accountants, all upon reasonable notice and at such
reasonable times as such Bank may desire. Nothing contained in this Section 5.2
shall preclude any Loan Party from attending any meeting with such Loan Party's
independent accountants.
SECTION 5.3 MAINTENANCE OF INSURANCE. Each Loan Party shall, and
shall cause each of its Subsidiaries to, (a) maintain with financially sound and
reputable insurance companies insurance on itself and its properties in at least
such amounts and against at least such risks as are customarily insured against
in the same general area by companies engaged in the same or a similar business,
which insurance shall in any event not provide for materially less coverage than
the insurance in effect on the Closing Date as set forth on Schedule 4.19, (b)
maintain the Administrative Agent and the Banks as named additional insureds and
loss payees in respect of such insurance at least to the extent the
Administrative Agent and the Banks are so named on the Closing Date, and (c)
furnish to each Bank from time to time, upon written request, the policies under
which such insurance is issued, certificates of insurance and such other
information relating to such insurance as such Bank may reasonably request.
SECTION 5.4 TAXES. (a) Each Loan Party shall pay or cause to be
paid, and shall cause each of its Subsidiaries to pay or cause to be paid, when
due, all taxes, charges and assessments and all other lawful claims required to
be paid by such Loan Party or such Subsidiaries, except as contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
have been established with respect thereto in accordance with GAAP.
(b) No Loan Party shall, and shall not permit any of its
Subsidiaries to, file or consent to the filing of any consolidated tax return
with any Person (other than the Borrower and its Subsidiaries and the Parent).
SECTION 5.5 CORPORATE FRANCHISES. Each Loan Party shall, and shall
cause each of its Subsidiaries to, do or cause to be done, all things necessary
to preserve and keep in full force and effect its existence and its patents,
trademarks, servicemarks, tradenames, copyrights, franchises, licenses, permits,
55
certificates, authorizations, qualifications, accreditation, easements, rights
of way and other rights, consents and approvals except where the failure to so
preserve any of the foregoing (other than existence) could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
SECTION 5.6 COMPLIANCE WITH LAW. Each Loan Party shall, and shall
cause each of its Subsidiaries to, comply with all applicable laws, rules,
statutes, regulations, decrees and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of their business and the ownership of their property, including,
without limitation, all Environmental Laws, except such non-compliance as could
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.
SECTION 5.7 PERFORMANCE OF OBLIGATIONS. Each Loan Party shall, and
shall cause each of its Subsidiaries to, perform all of its obligations under
the terms of each mortgage, indenture, security agreement, debt instrument,
lease, undertaking and contract by which it or any of its properties is bound or
to which it is a party if the failure to so perform, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
SECTION 5.8 MAINTENANCE OF PROPERTIES. Each Loan Party shall, and
shall cause each of its Subsidiaries to, ensure that its properties reasonably
necessary to its business are kept in good repair, working order and condition,
normal wear and tear excepted, except to the extent no Material Adverse Effect
could result therefrom.
SECTION 5.9 FURTHER ASSURANCES. (a) The Parent shall, and shall
cause each Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all further action (including
filing Uniform Commercial Code and other financing statements, mortgages and
deeds of trust), that may be required under applicable law or which the Required
Banks, the Administrative Agent or the Collateral Agent may reasonably request,
in order to effectuate the Transac tions and in order to grant, preserve,
protect and perfect the validity and first priority of the Liens created or
intended to be created by the Security Documents.
(b) In addition, from time to time, each Loan Party, at its own cost
and expense, will promptly secure the Secured Obligations by pledging or
creating, or causing to be pledged or created, perfected Liens with respect to
its assets and properties (and the assets and properties of its Subsidiaries) of
a nature similar to the Collateral as of the Closing Date as the Administrative
Agent or the Required Banks shall reasonably request (it being understood that
it is the intent of the parties that the Secured Obligations shall be secured
by, among other things, substantially all such assets of the Loan Parties
granted pursuant to the Security Documents (including those acquired subsequent
to the Closing Date)). Such Liens will be created under the Security Documents
or such other security agreements, mortgages, deeds of trust and other
instruments and documents as are satisfactory to the Collateral Agent, and each
Loan Party shall deliver or cause to be delivered to the Administrative Agent
all such instruments and documents (including legal opinions, title insurance
policies, surveys and lien searches) as the Collateral Agent shall reasonably
request to evidence compliance with this Section 5.9. The Borrower agrees to
provide such evidence as the Collateral Agent or the Required Banks shall
reasonably request as to the perfection and priority status of each such Lien.
In connection with any additional Liens in respect of real property, the
Borrower shall upon request by the Adminis trative Agent or the Required Banks,
at its expense, cause to be delivered to the Administrative Agent satisfactory
real estate appraisals. Notwithstanding the foregoing, mortgages shall only be
required on Material Real Estate.
(c) The Parent shall cause each Material Subsidiary incorporated or
organized after the Closing Date (other than a Receivables Subsidiary) to
promptly execute and deliver a counterpart of the Subsidiary Guaranty, the
Security Agreement, the Pledge Agreement and any other instruments or documents
56
related thereto as the Collateral Agent shall reasonably request, and in the
case of any such Material Subsidiary which is not a Subsidiary of the Borrower,
to become a Borrowing Subsidiary as provided in Section 2.31, in each case
within 30 days of such Person's having become a Subsidiary.
SECTION 5.10 REQUIRED APPRAISALS. In the event that the
Administrative Agent or the Required Banks at any time after the Closing Date
determine in their sole discretion (whether as a result of a position taken by
an applicable bank regulatory agency or official, or otherwise) that real estate
appraisals satisfying the requirements set forth in 12 C.F.R., Part 34-Subpart
C, or any successor or similar statute, rule, regulations, guideline or order
(any such appraisal a "Required Appraisal") are or were required to be obtained,
or should be obtained, in connection with any Mortgaged Property or Mortgaged
Properties, then, within 60 days (or such earlier period as may be required by
law) after receiving written notice thereof from the Administrative Agent or the
Required Banks, as the case may be, the Borrower shall cause such Required
Appraisal to be delivered, at the expense of the Borrower, to the Administrative
Agent, which Required Appraisal, and the respective appraiser, shall be
satisfactory to the Administrative Agent.
SECTION 5.11 RECEIVABLES PROGRAM REFINANCINGS. On or prior to June
30 of each year commencing June 30, 2000, the Borrower shall furnish evidence
reasonably satisfactory to the Required Banks demonstrating either (x) that the
Borrower has refinanced, extended, renewed or replaced the Receivables Program,
or has written binding commitments therefor, in either case in such amounts and
pursuant to such terms and provisions as are sufficient to provide the Borrower
with sufficient liquidity for the twelve months following such date or (y) that
on a Pro Forma Basis, it shall have sufficient liquidity for such twelve month
period without the renewal, refinancing, extension or replacement of the
Receivables Program.
SECTION 5.12 MAINTENANCE OF CORPORATE SEPARATENESS. The Parent will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting
and the maintenance of corporate offices and records. Other than pursuant to any
Parent Guaranty or Subsidiary Guaranty entered into pursuant to this Agreement,
neither the Parent nor any of its Subsid iaries shall make any payment to a
creditor of any other Subsidiary in respect of any liability of any such
Subsidiary, and no bank account of any Subsidiary shall be commingled with any
bank account of the Parent or any other Subsidiary. Any financial statements
distributed to any creditors of any Subsidiary shall clearly establish or
indicate the corporate separateness of such Subsidiary from the Parent and its
other Subsidiaries. Finally, neither the Parent nor any of its Subsidiaries
shall take any action, or conduct its affairs in a manner, which is likely to
result in the corporate existence of the Parent or any of its Subsidiaries being
ignored, or in the assets and liabilities of the Parent or any of its
Subsidiaries being substantively consolidated with those of any other such
Person in a bankruptcy, reorganization or other insolvency proceeding.
SECTION 6. NEGATIVE COVENANTS.
Each of the Parent and the Borrower covenants and agrees that on and
after the Closing Date until the Total Commitment has terminated, and the
Obligations are paid in full:
SECTION 6.1 FINANCIAL COVENANTS.
(a) LEVERAGE RATIOS. (i) The Parent shall not permit the
Adjusted Leverage Ratio, as of the last day of each four consecutive
fiscal quarter period ended during the time periods set forth below
(taken as one accounting period), to exceed the ratio set forth
below:
DATE RATIO
---- -----
57
From the Closing Date until 4.5:1
the third anniversary of the
Closing Date
From the third anniversary of 4.0:1
the Closing Date and thereafter
(ii) The Parent shall not permit the ratio
of Consolidated Total Senior Debt to Consolidated
Adjusted EBITDA, as of the last day of each four
consecutive fiscal quarter period ended during the time
periods set forth below (taken as one accounting period)
to exceed the ratio set forth below:
DATE RATIO
---- -----
From the Closing Date until 4.0:1
the third anniversary of the
Closing Date
From the third anniversary of 3.5:1
the Closing Date and thereafter
(b) INTEREST COVERAGE RATIO. The Parent shall not permit
the ratio of Consolidated EBITDA to Consolidated Interest Expense
for each four consecutive fiscal quarter period ended during the
time periods set forth below (taken as one accounting period), to be
less than the ratio set forth below:
FOUR FISCAL
QUARTERS ENDING ON RATIO
------------------ -----
From the Closing Date 2.25:1
until the first anniversary
of the Closing Date
From the first anniversary 2.5:1
of the Closing Date until
the third anniversary of the
Closing Date
From the third anniversary 3.0:1
of the Closing Date and thereafter
(c) FIXED CHARGE COVERAGE RATIO. The Parent shall not
permit the ratio of (x) the sum of (i) Consolidated EBITDA plus (ii)
Consolidated Rental Expense to (y) Consolidated Fixed Charges for
each four consecutive fiscal quarter period (taken as one accounting
period), ending on or after the Closing Date to be less than 1.25:1.
(d) CAPITAL EXPENDITURES. The Parent and the Borrower
shall not make or incur (or commit to make or incur) and shall not
permit any of its Subsidiaries to make or incur (or commit to make
or incur) any Capital Expenditures, except Capital Expenditures of
the Parent and its Subsidiaries in any fiscal year of the Borrower
set forth below not in excess, in the aggregate of the amount (the
"Maximum Amount") set forth below opposite such fiscal year:
58
FISCAL YEAR ENDING
CLOSEST TO DECEMBER 31 MAXIMUM AMOUNT
---------------------- --------------
1997 70,000,000
1998 67,000,000
1999 63,000,000
2000 70,000,000
2001 76,000,000
2002 84,000,000
PROVIDED that (a) up to $15,000,000 of any Capital Expenditures permitted to be
incurred during any fiscal year and not made in such fiscal year may be carried
over and expended during the next succeeding fiscal year (it being understood
and agreed that any Capital Expenditures made during such next succeeding fiscal
year shall count, FIRST, against the amount permitted to be carried over to such
next succeeding fiscal year pursuant to this proviso and, SECOND, against any
amounts permitted to be made during such next succeeding fiscal year as set
forth in the table above) and (b) the amount of Capital Expenditures permitted
to be incurred during any fiscal year may be increased to the extent of the then
available Retained Equity Proceeds and the Borrower's Share of Excess Cash Flow.
Any Permitted Acquisition that would otherwise constitute a Capital Expenditure
in accordance with GAAP shall not be included in the computation of the amount
of Capital Expenditures permitted under this Section 6.1(d). Upon the occurrence
of a Permitted Acquisition (other than the Acquisition), the Banks hereby agree
that the Maximum Amount for the fiscal year in which such Permitted Acquisition
occurs (the "Subject Year") and each fiscal year thereafter will increase by
$20,000 per store (net of any stores scheduled to be closed as a result of such
Permitted Acquisition) being acquired pursuant to such Permitted Acquisition,
with the amount of such increase for the Subject Year to be proportionately
decreased by multiplying such amount by a fraction where the numerator equals
the remaining number of full months remaining in the Subject Year and the
denominator is twelve.
SECTION 6.2 INDEBTEDNESS. The Parent shall not, and shall not permit
any of its Subsidiaries to, create, incur, assume, suffer to exist or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, other than:
(a) Indebtedness hereunder and under the other Loan Documents and
any Indebtedness, if any, in relation to the Receivables Program;
(b) Indebtedness outstanding on the Closing Date and set forth on
Schedule 6.2 hereto (including, without limitation, the Senior Notes and the
Senior Subordinated Notes, including the guarantees thereof by the Parent, in
the aggregate principal amount not in excess of $300,000,000);
(c) Indebtedness of the Borrower or any of its Subsidiaries
permitted under Section 6.6;
(d) Indebtedness of the Borrower or any of its Subsidiaries with
respect to Capital Leases and other purchase money Indebtedness, in each case
incurred to finance Capital Expenditures permitted under Section 6.1(d), not in
excess of $6,000,000 in the aggregate at any one time outstanding; provided that
any such Indebtedness shall not exceed the purchase price or the fair market
value of the asset so financed;
59
(e) Other Indebtedness created, incurred or assumed by the
Borrower after the date hereof not enumerated in clauses (a) through (d) above,
provided that (i) the aggregate outstanding principal amount of such
Indebtedness shall not exceed $50,000,000 at any one time outstanding (less the
amount by which the remaining outstanding principal amount of the Existing Notes
from time to time exceeds $1,000,000); (ii) up to $25,000,000 may be used for
the increase of the Total Revolving Loan Commitment pursuant to Section 2.30;
and (iii) to the extent the Indebtedness permitted to be incurred by this clause
(e) is not utilized to increase the Total Revolving Loan Commitment, such
Indebtedness shall be Permitted Subordinated Debt;
(f) Indebtedness incurred in the ordinary course of business owed by
(x) Subsidiaries of the Borrower to the Borrower or (y) by any Loan Party to any
other Loan Party;
(g) Unsecured letters of credit in an aggregate stated amount equal
to the L/C Sublimit minus the Letter of Credit Outstandings;
(h) Permitted Acquired Indebtedness;
(i) Any other unsecured Indebtedness of the Parent and its
Subsidiaries in an aggregate outstanding principal amount not to exceed at any
time $1,000,000; and
(j) Indebtedness of the Borrower resulting from the refinancing of
Indebtedness permitted by Sections (b) through (i) above; PROVIDED, HOWEVER,
that (i) the principal amount of any such refinancing Indebtedness (as
determined as of the date of the incurrence of such refinancing Indebtedness in
accordance with GAAP) does not exceed the principal or face amount of the
Indebtedness refinanced thereby on such date; (ii) the Weighted Average Life to
Maturity of such Indebtedness is not decreased; (iii) the covenants, defaults
and similar provisions applicable to such refinancing Indebtedness or
obligations are no more restrictive in any material respect than the
Indebtedness being refinanced and do not conflict in any material respect with
the provisions of this Agreement and (iv) such refinancing Indebtedness is
otherwise upon terms and conditions no more onerous or restrictive in any
material respect (as determined by the Required Banks) on the Borrower than the
Indebtedness being refinanced.
SECTION 6.3 LIENS. The Parent shall not, and shall not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist, directly or
indirectly, any Lien on any of its property now owned or hereafter acquired,
other than:
(a) Liens existing on the Closing Date and set forth on Schedule 6.3
hereto;
(b) Liens created or contemplated by the Receivables Program
Documents on the Receivables of the Borrower and its Subsidiaries transferred to
the Receivables Subsidiary pursuant thereto;
(c) inchoate Liens for taxes, assessments or governmental charges
not yet due or which are being contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves are
being maintained in accordance with GAAP;
(d) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by Law (other than
any Lien imposed by ERISA or pursuant to any Environmental Law) created in the
ordinary course of business for amounts not yet due or which are being contested
in good faith by appropriate proceedings diligently conducted and with respect
to which adequate bonds have been posted or which are solely informational in
nature and do not, and do not purport to, create a security interest;
60
(e) Liens (other than any Lien imposed by ERISA or pursuant to any
Environmental Law) 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,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(f) Easements (including construction, operating and reciprocal
easement agreements), rights-of-way, zoning and similar restrictions and other
similar charges, covenants or encumbrances not interfering with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries and which do
not detract materially from the value of the property to which they attach or
impair materially the use thereof by the Borrower or any of its Subsidiaries or
materially adversely affect the Liens of the Collateral Agent or the Banks
therein;
(g) Liens granted to the Collateral Agent for the benefit of the
Secured Creditors pursuant to the Security Documents securing the Secured
Obligations;
(h) Judgment Liens so long as the claims secured thereby do not
exceed $10,000,000 in the aggregate and are being contested in good faith
pursuant to appropriate proceedings;
(i) Liens created pursuant to Capital Leases and to secure other
purchase-money Indebtedness permitted pursuant to Section 6.2(d), PROVIDED that
such Liens are only in respect of the property or assets subject to, and secure
only, the respective Capital Lease or other purchase-money Indebtedness; and
(j) Liens in addition to those listed above provided that the
obligations secured thereby shall not exceed $50,000 for any such Lien or
$1,000,000 in the aggregate for all such Liens.
SECTION 6.4 RESTRICTION ON FUNDAMENTAL CHANGES.
(a) The Parent shall not, and shall not permit any of its
Subsidiaries to, enter into any merger or consolidation, or liquidate, wind-up
or dissolve (or suffer any liquidation or dissolution), discontinue its business
or convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, all or any substantial part of its business or property,
whether now or hereafter acquired, except (i) as otherwise permitted under
Section 6.5, and (ii) any wholly-owned Subsidiary of the Borrower may merge into
or convey, sell, lease or transfer all or substantially all of its assets to,
the Borrower or any other wholly-owned Subsidiary of the Borrower.
(b) The Parent shall not and shall not permit any of its
Subsidiaries to, amend its certificate of incorporation or by-laws to the extent
such amendment is adverse to the Banks in any respect.
SECTION 6.5 SALE OF ASSETS. The Parent shall not, and shall not
permit any of its Subsidiaries to, convey, lease, sell, transfer or otherwise
dispose of (or agree to do so at any future time) all or any part of its
property or assets, except (i) sales of inventory in the ordinary course of
business; (ii) sales in the ordinary course of business of furniture, fixtures,
leasehold improvements and equipment which, consistent with past practice, is
uneconomic, obsolete or no longer useful in its business; (iii) sales of
Receivables pursuant to and in accordance with the provisions of the Receivables
Program Documents; and (iv) sales of other assets of the Borrower and its
Subsidiaries PROVIDED that (x) at least 80% of the aggregate consideration
therefor shall be in the form of cash or Cash Equivalents, (y) the aggregate Net
Cash Proceeds or net book value, whichever is greater, of all assets sold or
otherwise disposed of pursuant to this clause (iv) shall not exceed 5% of
Consolidated Net Tangible Assets during any fiscal year of the Borrower and (z)
the Net Cash Proceeds of each such sale are applied in accordance with the
provisions of Sections 2.12(a).
61
SECTION 6.6 CONTINGENT OBLIGATIONS. The Parent shall not, and shall
not permit any of its Subsidiaries to, create or become or be liable with
respect to any Contingent Obligation, except:
(a) pursuant to the Parent Guaranty, Subsidiary Guaranty, the
Security Documents or the Receivables Program Documents; and
(b) Contingent Obligations which are in existence on the Closing
Date and which are set forth on Schedule 6.6, including, without limitation, the
guarantees, if any, by the Borrower of the Senior Notes and the Senior
Subordinated Notes.
SECTION 6.7 DIVIDENDS. The Parent shall not, and shall not permit
any of its Subsidiaries to (x) make any Restricted Payment or (y) declare or pay
any dividends (other than dividends payable solely in common stock), or return
any capital to, its stockholders or authorize or make any other distribution,
payment or delivery of property or cash to its stockholders as such, or redeem,
retire, purchase or otherwise acquire, directly or indirectly, any shares of any
class of its capital stock now or hereafter outstanding (or any options or
warrants issued with respect to its capital stock), or set aside any funds for
any of the foregoing purposes (all the foregoing "Dividends"), except that
(a) Dividends may be made to the Borrower or any of its Subsidiaries
by any of its wholly-owned Subsidiaries;
(b) so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof) the Borrower may
make Restricted Payments to the Parent, so long as the proceeds thereof are
promptly used by the Parent to pay operating and administrative expenses in the
ordinary course of business and other similar corporate overhead costs and
expenses; PROVIDED that the maximum amount of Restricted Payments made pursuant
to this clause (b) in any fiscal year of the Borrower shall not exceed $500,000
in the aggregate and shall only be made if there exists no Default or Event of
Default (both before and after giving effect to the payment thereof);
(c) so long as the Borrower is a member of the same consolidated
group as the Parent for federal income tax purposes, payments required by such
Person pursuant to the Tax Sharing Agreement as in effect on the Closing Date
and delivered to the Administrative Agent pursuant to Section 3.1(f) shall be
permitted; and
(d) the Parent may make, and the Borrower may pay cash Restricted
Payments to the Parent to enable the Parent to make, payments to repurchase the
Parent's common stock and/or options to purchase the Parent's common stock held
by directors, executive officers, member of management or employees of the
Parent or any of its Affiliates upon the death, disability, retirement or
termination of such director, executive officers, member of management or
employee, so long as (x) no Default or Event of Default then exists or would
exist after giving effect thereto and (y) the aggregate net amount of cash
expended by the Borrower and the Parent pursuant to this clause (v) in any
fiscal year shall not exceed $2,000,000.
SECTION 6.8 ADVANCES, INVESTMENTS AND LOANS. The Parent shall not,
and shall not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or directly or indirectly purchase or acquire any stock,
obligations or securities of, or any other interest in, or purchase all or
substantially all of the assets of, or make any capital contribution to any
Person (each an "Investment"), except that the following shall be permitted:
(a) accounts receivable owned by the Parent and its Subsidiaries, if
created in the ordinary course of the business of the Parent and its
Subsidiaries and payable or dischargeable in accordance with customary trade
terms;
62
(b) (i) intercompany loans and advances permitted by Section 6.2(f)
and (ii) loans by the Borrower to the Parent to finance the cash portion of
Permitted Acquisitions, the proceeds of which shall be used within one Business
Day directly or indirectly by the Parent to consummate such Permitted
Acquisition, which loans shall be evidenced by an Intercompany Note pledged by
the Borrower to the Collateral Agent under the Pledge Agreement;
(c) loans and advances by the Borrower and its Subsidiaries to their
employees in the ordinary course of its business not exceeding $5,000,000 in the
aggregate at any one time outstanding;
(d) Investments by the Borrower in the Receivables Subsidiary to the
extent contemplated by the Receivables Program;
(e) evidences of Indebtedness issued by the purchaser of assets and
received by the Borrower or any of its Subsidiaries in connection with asset
sales to the extent permitted by Section 6.5(iv);
(f) extensions of credit to the customers of the Parent or its
Subsidiaries in the ordinary course of the business of the Parent or such
Subsidiary pursuant to any credit card programs to enable such customer to
purchase inventory from the Parent or any of its Subsidiaries;
(g) Investments by the Parent or the Borrower constituting a
Permitted Acquisition and related Investments by the Parent or the Borrower in
one or more of their Subsidiaries in connection with, and substantially
contemporaneously with, such Permitted Acquisition; PROVIDED that the Parent and
the Borrower shall have complied with all of the terms and conditions set forth
in the definition of Permitted Acquisition;
(h) other Investments by the Parent, the Borrower or any Subsidiary
not to exceed $5,000,000 in any fiscal year of the Borrower;
(i) Investments in customers of the Parent or its Subsidiaries
received in the ordinary course of business in exchange for receivables owed by
such customer to the Parent or such Subsidiary as a result of the workout of
such receivable or the bankruptcy of such customer; and
(j) the Borrower and its Subsidiaries may acquire and hold Cash
Equivalents.
SECTION 6.9 TRANSACTIONS WITH AFFILIATES. The Parent shall not, and
shall not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate (other than a Loan Party), other than (i) on terms
and conditions substantially as favorable to the Parent or such Subsidiary as
would be obtainable at the time in a comparable arm's-length transaction with a
Person other than an Affiliate, (ii) pursuant to the Receivables Program, (iii)
Restricted Payments permitted to be paid to the extent provided in Section 6.7,
(iv) leases in existence on the date hereof entered into with PR Investments and
described on Schedule 6.9 hereto, (v) the consulting agreement dated as of
February 1, 1997, by and among the Parent and Xxxxxx Xxxxx and described on
Schedule 6.9 hereto, and (vi) those Investments permitted pursuant to Section
6.8.
SECTION 6.10 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
CERTAIN DOCUMENTS. The Parent shall not, and shall not permit any of its
Subsidiaries to, (a) make any voluntary or optional payment or prepayment on or
redemption or acquisition for value of (including, without limitation, by way of
depositing with the trustee with respect thereto money or securities before due
for the purpose of paying when due) or exchange of any Indebtedness other than
(i) the Indebtedness hereunder and under the other Loan Documents and (ii) so
long as no Default or Event of Default has occurred and is continuing, any
Indebtedness
63
outstanding under the Existing Notes; PROVIDED that the amount to be paid for
each $1,000 principal amount of Existing Notes shall not exceed the amount to be
paid for a corresponding amount of the Existing Notes pursuant to the Tender
Offer, (b) amend, modify, supplement, or waive, or permit the amendment,
modification, supplementation, or waiver of, any provision of any Transaction
Document (other than the Loan Documents) PROVIDED, HOWEVER, that the Receivables
Program Documents and the Acquisition Documents may be amended, modified,
supplemented or waived in a manner not materially adverse to the Administrative
Agent or the Banks or (c) resign as Servicer under the Receivables Program.
SECTION 6.11 CHANGES IN BUSINESS. The Parent shall not, and shall
not permit any of its Subsidiaries to, enter into any business which is
substantially different from, or not reasonably incidental to, that conducted by
the Parent or such Subsidiary, as the case may be, on the Closing Date after
giving effect to the Transactions; PROVIDED that the Parent shall not incur, and
shall not become liable with respect to, any Indebtedness other than as
expressly permitted pursuant to Section 6.2.
SECTION 6.12 CERTAIN RESTRICTIONS. The Parent shall not, and shall
not permit any of its Subsidiaries or any Person controlling the Borrower to,
enter into any agreement (other than the Transaction Documents and agreements
evidencing Indebtedness outstanding on the Closing Date, in each case as in
effect on the Closing Date) which restricts the ability of the Parent or any of
its Subsidiaries (other than the Receivables Subsidiary) to (a) enter into
amendments, modifications or waivers of the Loan Documents, (b) sell, transfer
or otherwise dispose of its assets (other than the Receivables), (c) create,
incur, assume or suffer to exist any Lien upon any of its property (other than
the Receivables), (d) create, incur, assume, suffer to exist or otherwise become
liable with respect to any Indebtedness, or (e) pay any Dividend, provided that
Capital Leases or agreements governing purchase money Indebtedness which contain
restrictions of the types referred to in clauses (b) or (c) with respect to the
property covered thereby shall be permitted. The Parent shall not, and shall not
permit any of its Subsidiaries or any Person controlling the Borrower to, enter
into any amendment of the Receivables Program Documents as in effect on the
Closing Date or any refinancing of the Receivables Program that would materially
and adversely affect any Loan Party's ability to perform its Obligations under
this Agreement or any other Loan Document.
SECTION 6.13 SALES AND LEASEBACKS. The Parent shall not, and shall
not permit any of its Subsidiaries to, become liable, directly or indirectly,
with respect to any lease, whether an operating lease or a Capital Lease, of any
property (whether real or personal or mixed) whether now owned or hereafter
acquired, (i) which the Parent or such Subsidiary has sold or transferred or is
to sell or transfer to any other Person, or (ii) which the Parent or such
Subsidiary intends to use for sub stantially the same purposes as any other
property which has been or is to be sold or transferred by the Borrower or such
Subsidiary to any other Person in connection with such Lease.
SECTION 6.14 PLANS. The Parent shall not, nor shall it permit any
member of its ERISA Controlled Group to, take any action which would increase
the aggregate present value of the Unfunded Benefit Liabilities under all Plans
to an amount in excess of $15,000,000.
SECTION 6.15 LIMITATION ON DISPOSITIONS OF SUBSIDIARY STOCK. The
Parent shall not, nor shall it permit any of its Subsidiaries to, directly or
indirectly sell, assign, pledge or otherwise encumber or dispose of, or issue or
permit any of its Subsidiaries to issue to any other Person, any shares of
capital stock or other equity securities of (or warrants, rights or options to
acquire shares or other equity securities of) any of their Subsidiaries except
(i) to the extent permitted by the Security Documents, (ii) to qualify directors
if and to the extent required by applicable law, (iii) to the Borrower or any
wholly-owned Subsidiary of the Borrower and (iv) sales of equity securities
pursuant to the Receivables Program as in effect on the date hereof.
SECTION 6.16 FISCAL YEAR; FISCAL QUARTER. The Parent shall not, and
shall not permit any of its Subsidiaries to, change its fiscal year or any of
its fiscal quarters, except that any Subsidiary acquired after
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the date hereof shall be permitted to change its fiscal quarters and fiscal year
to conform to the fiscal quarters and fiscal year of the Parent.
SECTION 7. EVENTS OF DEFAULT.
SECTION 7.1 EVENTS OF DEFAULT. Each of the following events, acts,
occurrences or conditions shall constitute an Event of Default under this
Agreement, regardless of whether such event, act, occurrence or condition is
voluntary or involuntary or results from the operation of law or pursuant to or
as a result of compliance by any Person with any judgment, decree, order, rule
or regulation of any court or administrative or governmental body:
(a) FAILURE TO MAKE PAYMENTS. The Borrower or any Borrowing
Subsidiary shall (i) default in the payment when due of any principal of the
Loans or Swingline Loans, (ii) default, and such default shall continue
unremedied for three or more Business Days, in the payment when due of any
interest on the Loans or Swingline Loans or in the payment when due of any Fees
or any other amounts owing hereunder or (iii) default in the payment within two
Business Days of when due, of any reimbursement obligation in respect of the
honoring or drawing under any Letter of Credit.
(b) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made by any Loan Party herein or in any other Loan Document or in any
certificate or statement delivered pursuant hereto or thereto shall prove to be
false or misleading in any material respect on the date as of which made or
deemed made.
(c) BREACH OF COVENANTS.
(i) Any Loan Party shall fail to perform or observe any
agreement, covenant or obligation arising under Sections 5.1(g), 5.5
or 6.
(ii) Any Loan Party shall fail to perform or observe any
agreement, covenant or obligation arising under this Agreement
(except those described in subsections (a), (b) and (c)(i) above),
and such failure shall continue for fifteen days.
(iii) Any Loan Party shall fail to perform or observe
any agreement, covenant or obligation arising under any provision of
the Loan Documents other than this Agreement, which failure shall
continue after the end of the applicable grace period, if any,
provided therein.
(d) DEFAULT UNDER OTHER AGREEMENTS. Any Loan Party shall default in
the payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any
Indebtedness (other than the Obligations) in the aggregate principal amount of
$2,000,000 or more; or any Loan Party shall default in the performance or
observance of any obligation or condition with respect to any such Indebtedness
or any other event shall occur or condition exist, if the effect of such
default, event or condition is to accelerate the maturity of any such
Indebtedness or to permit (without regard to any required notice or lapse of
time) the holder or holders thereof, or any trustee or agent for such holders,
to accelerate the maturity of any such Indebtedness, or any such Indebtedness
shall become or be declared to be due and payable prior to its stated maturity
other than as a result of a regularly scheduled payment.
(e) RECEIVABLES PROGRAM. Any default shall have occurred and be
continuing under any Receivable Program Document and as a result of such
default, the Receivables Program or any successor program may be terminated or
be suspended prior to the Final Maturity Date.
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(f) BANKRUPTCY, ETC. (i) Any Loan Party or any of its Subsidiaries
shall commence a voluntary case concerning itself under the Bankruptcy Code; or
(ii) an involuntary case is commenced against any Loan Party or any of its
Subsidiaries and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or (iii) a custodian
(as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of any Loan Party or any of its Subsidiaries
or any Loan Party or any of its Subsidiaries commences any other proceedings
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to any Loan Party or any of its
Subsidiaries or there is commenced against any Loan Party or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days; or (iv) any order of relief or other order approving any such case or
proceeding is entered; or (v) any Loan Party or any of its Subsidiaries is
adjudicated insolvent or bankrupt; or (vi) any Loan Party or any of its
Subsidiaries suffers any appointment of any custodian or the like for it or any
substantial part of its property which continues undischarged or unstayed for a
period of 60 days; or (vii) any Loan Party or any of its Subsidiaries makes a
general assignment for the benefit of creditors; or (viii) any Loan Party or any
of its Subsidiaries shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due; or (ix) any
Loan Party or any of its Subsidiaries shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or (x) any Loan
Party or any of its Subsidiaries shall by any act or failure to act consent to,
approve of or acquiesce in any of the foregoing; or (xi) any corporate action is
taken by any Loan Party or any of its Subsidiaries for the purpose of effecting
any of the foregoing.
(g) ERISA. (i) Any Termination Event shall occur, or (ii) any Plan
shall incur an "accumulated funding deficiency" (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived or (iii) any Loan Party
or any member of its ERISA Controlled Group shall fail to pay when due any
amount which it shall have become liable to pay to the PBGC, any Plan or a trust
established under Title IV of ERISA, or (iv) a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that, for
financial reasons, an ERISA Plan must be terminated or a trustee must be
appointed to administer any ERISA Plan, or (v) any Loan Party or a member of its
ERISA Controlled Group is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan, or (vi) any other event
or condition shall occur or exist with respect to any Plan which could subject
any Loan Party or any member of its ERISA Controlled Group to any tax, penalty
or other liability, which in any such case described in clauses (i) through (vi)
above could reasonably be expected to result in a Material Adverse Effect.
(h) SECURITY DOCUMENTS. Any of the Security Documents (i) shall for
any reason cease to be in full force and effect or the Borrower or any other
Loan Party which is a party to any of the Security Documents or any other Loan
Document shall so assert, or (ii) shall cease to give the Administrative Agent
the Liens, rights, powers and privileges purported to be created thereby
including, without limitation, a perfected first priority security interest in,
and Lien on, all of the Collateral in accordance with the terms thereof.
(i) PARENT GUARANTY AND SUBSIDIARY GUARANTY. The Parent Guaranty,
the Subsidiary Guaranty or any provision thereof shall cease to be in full force
and effect, or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm all or any portion of such Guarantor's
obligations hereunder or under such Parent Guaranty or Subsidiary Guaranty.
(j) CHANGE OF CONTROL. A Change of Control shall have occurred.
(k) JUDGMENTS. One or more judgments or decrees in an aggregate
amount of $2,000,000 or more shall be entered by a court or courts of competent
jurisdiction against the Parent and/or its Subsidiaries (other than any judgment
as to which, and only to the extent, a reputable insurance company
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has acknowledged coverage of such claim in writing) and (i) any such judgments
or decrees shall not be stayed, discharged, paid, bonded or vacated within 30
days or (ii) enforcement proceed ings shall be commenced by any creditor on any
such judgments or decrees.
(l) ENVIRONMENTAL MATTERS. (i) Any Environmental Claim shall have
been asserted against the Parent or any of its Subsidiaries or any Environmental
Affiliate thereof which, if determined adversely, could be reasonably expected
to have a Material Adverse Effect, or (ii) the Parent or any of its Subsidiaries
or Environmental Affiliates shall have failed to obtain any Environmental
Approval necessary for the management, use, control, ownership, or operation of
its business, property or assets or any such Environmental Approval shall be
revoked, terminated, or otherwise cease to be in full force and effect, in each
case, if the existence of such condition could be reasonably expected to have a
Material Adverse Effect.
SECTION 7.2 RIGHTS AND REMEDIES. Upon the occurrence of any Event of
Default described in Section 7.1(f) with respect to any Loan Party, the
Commitments and the Swingline Loan Commitment shall automatically and
immediately terminate and the unpaid principal amount of and any and all accrued
interest on the Loans and Swingline Loans and any and all accrued Fees and other
Obligations shall automatically become immediately due and payable, with all
additional interest from time to time accrued thereon and without presentation,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by Borrower and each Borrowing Subsidiary, and the obligation
of each Bank and the Swingline Bank to make any Loan or Swingline Loan hereunder
shall thereupon terminate; and upon the occurrence and during the continuance of
any other Event of Default, the Administrative Agent shall at the request, or
may with the consent, of the Required Banks, by written notice to Borrower, (i)
declare that the Commitments and the Swingline Loan Commitment are terminated,
whereupon the Commitments and the Swingline Loan Commitment and the obligation
of each Bank and the Swingline Bank to make any Loan or Swingline Loan hereunder
shall immediately terminate, and (ii) declare the unpaid principal amount of and
any and all accrued and unpaid interest on the Loans and Swingline Loans and any
and all accrued Fees and other Obligations to be, and the same shall thereupon
be, immediately due and payable with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by
Borrower and each Borrowing Subsidiary.
Upon an Event of Default, each of the Parent and its Subsidiaries
shall permit any designated representative or representatives of the
Administrative Agent, including, but not limited to, environmental consultants
or other professionals, upon reasonable notice to Borrower or its Subsidiaries,
to enter any property owned or operated by the Borrower or its Subsidiaries for
the purpose of conducting an environmental investigation of said property. Said
investigations may include, but not be limited to, testing the integrity of
underground storage tanks; taking soil and groundwater borings and samples;
testing for the presence of radon; and collecting samples to test for the
presence of asbestos. Borrower shall reimburse Administrative Agent for all
reasonable costs and expenses incurred in connection with any investigation
conducted hereunder.
SECTION 8. THE ADMINISTRATIVE AGENT AND COLLATERAL AGENT.
SECTION 8.1 APPOINTMENT. Each Bank and the Swingline Bank hereby
irrevocably, subject to Section 8.9 hereof, designates and appoints Credit
Suisse First Boston as the Administrative Agent and Credit Suisse First Boston
as Collateral Agent (the Administrative Agent and the Collateral Agent for the
purposes of this Section are collectively referred to as the "Agent") of such
Bank and Swingline Bank under this Agreement and each other Loan Document, and
each such Bank and the Swingline Bank irrevocably authorizes Credit Suisse First
Boston as the Agent for such Bank and Swingline Bank, to take such action on
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its behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and each other Loan Document,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Bank and the Swingline
Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities on the part of the Agent shall be read into this Agreement or
otherwise exist against the Agent. The provisions of this Section 8 are solely
for the benefit of the Agent, the Banks and the Swingline Bank and no Loan Party
shall have any rights as a third party beneficiary or otherwise under any of the
provisions hereof. In performing its functions and duties hereunder and under
the other Loan Documents, the Agent shall act solely as the agent of the Banks
and the Swingline Bank and does not assume nor shall be deemed to have assumed
any obligation or relationship of trust or agency with or for any Loan Party or
any of their respective successors and permitted assigns.
SECTION 8.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement or the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
SECTION 8.3 EXCULPATORY PROVISIONS. The Agent shall not be (i)
liable for any action lawfully taken or omitted to be taken by it or any Person
described in Section 8.2 under or in connection with this Agreement or any other
Loan Document (except for its own gross negligence or willful misconduct), or
(ii) responsible in any manner to any of the Banks or the Swingline Bank for any
recitals, statements, representations or warranties made by any Loan Party
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, or any other Loan Document or for any failure of any Loan
Party to perform their obligations hereunder or thereunder. The Agent shall not
be under any obligation to any Bank or the Swingline Bank to ascer tain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party. This Section is intended
solely to govern the relationship between the Agent, on the one hand, and the
Banks and the Swingline Bank, on the other.
SECTION 8.4 RELIANCE BY AGENT. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limita tion, counsel to any Loan Party), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless the
Agent shall have received an executed Transfer Supplement in respect thereof.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of the Required Banks as it deems appropriate or it
shall first be indemnified to its satisfaction by the Banks and the Swingline
Bank against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Banks, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Banks and the Swingline Bank and all
future holders of the Notes.
SECTION 8.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Bank or the Swingline Bank or the Borrower
referring to this Agreement, describing such Default or Event of Default and
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stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall promptly give notice thereof to the
Banks and the Swingline Bank. The Agent shall take such action with respect to
such Default or Event of Default as shall be directed by the Required Banks;
PROVIDED that unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as the
Agent shall deem advisable and in the best interests of the Banks and the
Swingline Bank.
SECTION 8.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank and the
Swingline Bank expressly acknowledges that neither the Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates has made
any representations or warranties to it and that no act by the Agent hereafter
taken, including, without limitation, any review of the affairs of any Loan
Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Bank and the Swingline Bank represents and warrants to the Agent
that it has, independently and without reliance upon the Agent or any other Bank
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Loan
Parties and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Bank and the Swingline Bank also represents that it will,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
prospects, financial and other condition and creditworthiness of the Loan
Parties. Except for notices, reports and other documents expressly required
under the Loan Documents to be furnished to the Banks and the Swingline Bank by
the Agent, the Agent shall not have any duty or responsibility to provide any
Bank or the Swingline Bank with any credit or other information concerning the
business, operations, property, prospects, financial and other condition or
creditworthiness of the Loan Parties which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 8.7 INDEMNIFICATION. The Banks and the Swingline Bank agree
to indemnify the Agent and its officers, directors, employees, representatives
and agents (to the extent not reimbursed by the Loan Parties and without
limiting the obligation of the Loan Parties to do so), ratably according to
their Pro Rata Shares, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatso ever (including, without limitation,
the fees and disbursements of counsel for the Agent or such Person in connection
with any investigative, or judicial proceeding commenced or threatened, whether
or not the Agent or such Person shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against the Agent or
such Person as a result of, or arising out of, or in any way related to or by
reason of, any of the Transactions or the execution, delivery or performance of
any Loan Document or any other Transaction Document (but excluding any such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the gross negligence or
willful misconduct of the Agent or such Person as finally determined by a court
of competent jurisdiction). In the event the Agent shall recover any amounts
paid by any Bank pursuant to this Section 8.7, it shall reimburse such payments
to each Bank on a Pro Rata basis.
SECTION 8.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Loan Parties as though the Agent were not the Agent
hereunder or under any other Loan Document. With respect to Loans made or
renewed by it and any Note issued to it, the Agent shall have the same rights
and powers under this Agreement as any Bank and may exercise the same as though
it were not the Agent, and the terms "Bank" and "Banks" shall include the Agent
in its individual capacity.
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SECTION 8.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30
days' written notice to the Borrower, the Banks and the Swingline Bank. If the
Agent shall resign as Agent under this Agreement, then the Required Banks during
such 30-day period shall appoint from among the Banks a successor agent which
shall be reasonably acceptable to the Borrower. If no successor shall have been
so appointed by the Required Banks and shall have accepted such appointment
within 30 days after the retiring Agent gives written notice of its resignation,
then the retiring Agent may, on behalf of the Banks and the Swingline Bank,
appoint a successor Agent, which shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank which shall be reasonably acceptable to the Borrower.
Any such successor agent shall succeed to the rights, powers and duties of the
Agent and the term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Section 8 and Section 9.1 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
SECTION 9. MISCELLANEOUS.
SECTION 9.1 PAYMENT OF EXPENSES, INDEMNITY, ETC. The Parent, the
Borrower and each Borrowing Subsidiary shall:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent and the Collateral Agent in connection with the
negotiation, preparation, execution or delivery of the Loan Documents and the
documents and instruments referred to therein, the creation, perfection or
protection of the Liens in the Collateral (including, without limitation, fees
and expenses for title and lien searches and filing and recording fees); and the
reasonable fees and disbursements of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
special counsel to the Administrative Agent and any other attorneys retained by
the Administrative Agent);
(b) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent and Collateral Agent in connection with any amendment,
waiver or consent relating to any of the Loan Documents (including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent and Collateral Agent);
(c) pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent, the Collateral Agent, the Swingline Bank and each Bank in
connection with the preservation of rights under, and enforcement of, the Loan
Documents and the documents and instruments referred to therein or in connection
with any restructuring or rescheduling of the Obligations (including, without
limitation, the reasonable fees and disbursements of counsel for each of the
Administrative Agent, the Collateral Agent, the Swingline Bank and each of the
Banks);
(d) pay, and hold the Administrative Agent, the Collateral Agent,
each of the Banks and the Swingline Bank harmless from and against, any and all
present and future stamp, excise and other similar taxes with respect to the
foregoing matters and hold the Administrative Agent, the Collateral Agent, each
Bank and the Swingline Bank harmless from and against any and all liabilities
with respect to or resulting from any delay or omission (other than to the
extent attributable to such Bank or the Swingline Bank) to pay such taxes; and
(e) indemnify the Administrative Agent, the Collateral Agent, each
Bank and the Swingline Bank, its officers, directors, employees,
representatives, affiliates and agents (each an "Indemnitee") from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages,
expenses,
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obligations, penalties, actions, judgments, suits, costs or disbursements of any
kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for such Indemnitee in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto) that may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, asserted against or incurred by any Indemnitee
as a result of, or arising out of, or in any way related to or by reason of, (i)
any of the Transactions or the execution, delivery or performance of any Loan
Document or any other Transaction Document, (ii) any violation by any Loan Party
or its Environmental Affiliate of any applicable Environmental Law, (iii) any
Environmental Claim arising out of the management, use, control, ownership or
operation of property or assets by any of the Loan Parties or any of their
Environmental Affiliates, including, without limitation, all on-site and
off-site activities involving Materials of Environmental Concern, (iv) the
breach of any environmental representation or warranty set forth in Section
4.19, (v) the grant to the Administrative Agent, the Collateral Agent, the Banks
or the Swingline Bank of any Lien in any property or assets of any of the Loan
Parties or any stock or other equity interest in any of the Loan Parties, and
(vi) the exercise by the Administrative Agent, the Collateral Agent, the Banks
or the Swingline Bank of their rights and remedies (including, without
limitation, foreclosure) under any agreements creating any such Lien (but
excluding, as to any Indemnitee, any such losses, liabilities, claims, damages,
expenses, obligations, penalties, actions, judgments, suits, costs or
disbursements incurred solely by reason of the gross negligence or willful
misconduct of such Indemnitee as finally determined by a court of competent
jurisdiction). The Borrower's and each Borrowing Subsidiary's obligations under
this Section shall survive the termination of this Agreement and the payment of
the Obligations.
SECTION 9.2 RIGHT OF SETOFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Bank and the Swingline Bank is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Loan Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special, time or demand, provisional or final) and any
other indebtedness at any time held or owing by such Bank or Swingline Bank
(including, without limitation, by branches and agencies of such Bank or
Swingline Bank wherever located) to or for the credit or the account of any Loan
Party against and on account of the Obligations of the Loan Parties to such Bank
or Swingline Bank under this Agreement or under any of the other Loan Documents,
including, without limitation, all interests in Obligations purchased by such
Bank pursuant to Section 9.7, and all other claims of any nature or description
arising out of or connected with this Agreement or any other Loan Document,
irrespective of whether or not such Bank or Swingline Bank shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
SECTION 9.3 NOTICES. Except as otherwise expressly provided herein,
all notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and shall be deemed to
have been duly given or made when delivered by hand, or five days after being
sent by certified or registered United States mail, postage prepaid, or, in the
case of telecopy notice, when sent, or, in the case of a nationally recognized
overnight courier service, one Business Day after delivery to such courier
service, addressed, in the case of each party hereto, at its address specified
opposite its signature below or on the appropriate Transfer Supplement, or to
such other address as may be designated by any party in a written notice to the
other parties hereto, provided that notices and communications to the
Administrative Agent shall not be effective until received by the Administrative
Agent.
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SECTION 9.4 SUCCESSORS AND ASSIGNS; PARTICIPATION; ASSIGNMENTS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Parent, the Borrower, each Borrowing Subsidiary, the
Banks, the Swingline Bank, the Administrative Agent, the Collateral Agent, all
future holders of the Notes and their respective successors and assigns, except
that neither the Parent, the Borrower nor any Borrowing Subsidiary may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Bank and the Swingline Bank. No Bank or Swingline Bank
may participate, assign or sell any of its Credit Exposure (as defined in clause
(b) below) except as required by operation of law, in connection with the
merger, consolidation or dissolution of any Bank or Swingline Bank or as
provided in this Section 9.4.
(b) PARTICIPATION. Any Bank may at any time sell to one or more
Persons (each a "Participant") participating interests in any Loan owing to such
Bank, any Note held by such Bank, any Commitment of such Bank, any Letter of
Credit issued by such Bank, any participation in any Letter of Credit issued by
an L/C Bank and or any other interest of such Bank hereunder (in respect of any
such Bank, its "Credit Exposure"). Notwithstanding any such sale by a Bank of
participating interests to a Participant, such Bank's rights and obligations
under this Agreement shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, such Bank shall remain the holder of
any such Note for all purposes under this Agreement (except as expressly
provided below), and the Borrower and the Administrative Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. The Borrower and each Borrowing Subsidiary
agree that if any Obligations are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence and during the continuance
of an Event of Default, each Participant shall be deemed, to the fullest extent
permitted by law, to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and any Note to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement or any Note, provided that such right of setoff shall
be subject to the obligations of such Participant to share with the Banks as
provided in Section 9.7. The Borrower and each Borrowing Subsidiary also agree
that each Participant shall be entitled to the benefits of Sections 2.16, 2.17,
2.18, 2.19 and 9.1, PROVIDED that no Participant shall be entitled to receive
any greater amount pursuant to such sections than the transferor Bank would have
been entitled to receive in respect of the amount of the participating interest
transferred by such transferor Bank to such Participant had no such transfer
occurred. Each Bank agrees that any agreement between such Bank and any such
Participant in respect of such participating interest shall not restrict such
Bank's right to agree to any amendment, supplement, waiver or modification to
this Agreement or any other Loan Document, except where the result of any of the
foregoing would be to extend the final maturity of any Obligation or any
regularly scheduled installment thereof or reduce the rate or extend the time of
payment of interest or fees thereon or reduce the principal amount thereof or
release all or substantially all of the Collateral (except as expressly provided
in the Loan Documents).
(c) ASSIGNMENTS TO PURCHASING BANKS. Any Bank may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to any Bank or any affiliate thereof or, with the prior written consent of the
Borrower and the Administrative Agent, which consent shall not be unreasonably
withheld, to any other Person ("Purchasing Banks") all or any part of its Credit
Exposure pursuant to a supplement to this Agreement, substantially in the form
of Exhibit N hereto (a "Transfer Supplement"), executed by such Purchasing Bank,
such transferor Bank and the Administrative Agent; PROVIDED that (x) the minimum
amount of the Credit Exposure of any Bank so assigned shall not be less than
$5,000,000 (or if the assignor shall assign its entire Credit Exposure, any
lesser amount) and (y) such assignment must be on a pro rata basis as between
the Expansion Loan Commitment and Revolving Loan Commitment of such Transferor
Bank and; PROVIDED FURTHER that the prior written consent of the L/C Banks,
which shall not be unreasonably withheld, shall be required for assignments to
any Purchasing Bank unless such Purchasing Bank's long term indebtedness is
rated at or higher than
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BBB+ by Standard & Poor's or Baa1 by Xxxxx'x or if such rating is unavailable,
such Purchasing Bank's long term certificate of deposit rating is at or higher
than BBB+ by Standard & Poor's or Baa1 by Xxxxx'x. No L/C Bank shall at any time
assign or transfer to any Purchasing Bank its rights and obligations as L/C Bank
without (i) the prior written consent of the Borrower and the Administrative
Agent, which consent shall not be unreasonably withheld, and (ii) providing to
the Administrative Agent such documents and instruments executed by such L/C
Bank or assignee or transferee as the Administrative Agent may reasonably
request for purposes of effecting such assignment or transfer and the admission
of such assignee or transferee as L/C Bank. Upon (i) such execution of such
Transfer Supplement, (ii) delivery of an executed copy thereof to the Borrower
and the Administrative Agent and (iii) payment by such Purchasing Bank to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Purchasing Bank and payment to the Administrative Agent
by such Purchasing or Transferor Bank a non-refundable processing fee of $3,500,
such transferor Bank shall be released from its obligations hereunder to the
extent of such assignment and such Purchasing Bank shall for all purposes be a
Bank party to this Agreement and shall have all the rights and obligations of a
Bank under this Agreement to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Banks or the
Administrative Agent shall be required. Such Transfer Supplement shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Bank as a Bank and the resulting
adjustment of the Commit ments, if any, arising from the purchase by such
Purchasing Bank of all or a portion of the Credit Exposure of such transferor
Bank. If the transferor Bank shall then be in possession of a Note and if
requested by the Purchasing Bank, promptly after the consummation of any
transfer to a Purchasing Bank pursuant hereto, the transferor Bank, the
Administrative Agent and the Borrower shall, at the expense of the Purchasing
Bank, make appropriate arrangements so that a replacement Note is issued to such
transferor Bank and a new Note is issued to such Purchasing Bank, in each case
in principal amounts reflecting such transfer.
(d) DISCLOSURE OF INFORMATION. The Borrower and each Borrowing
Subsidiary authorizes each Bank to disclose to any Participant or Purchasing
Bank (each, a "Transferee") and any prospective Transferee any and all financial
and other information in such Bank's possession concerning the Borrower which
has been delivered to such Bank by the Borrower pursuant to this Agreement or
which has been delivered to such Bank by the Borrower in connection with such
Bank's credit evaluation of the Borrower and each Borrowing Subsidiary prior to
entering into this Agreement.
(e) FEDERAL RESERVE BANKS. Notwithstanding the limitations set forth
in paragraph (c) above, any Bank may at any time assign all or any portion of
its rights under this Agreement or any Note for purposes of assignment to a
Federal Reserve Bank without the prior written consent of the Borrower or the
Administrative Agent, PROVIDED that no such assignment shall release a Bank from
any of its obligations hereunder or substitute any such Federal Reserve Bank for
such Bank as a party hereto.
SECTION 9.5 AMENDMENTS AND WAIVERS. Neither this Agreement, any
Note, any other Loan Document to which the Parent, the Borrower or any Borrowing
Subsidiary is a party nor any terms hereof or thereof may be amended,
supplemented, modified or waived except in accordance with the provisions of
this Section. The Required Banks, the Parent, the Borrower and the Borrowing
Subsidiaries may, from time to time, enter into written amendments, supplements,
modifications or waivers for the purpose of adding, deleting, changing or
waiving any provisions to this Agreement, the Notes, or the other Loan Documents
to which the Parent, the Borrower or any Borrowing Subsidiary is a party,
PROVIDED, that no such amendment, supplement, modification or waiver shall (a)
extend the Final Maturity Date or reduce the rate or extend the time of payment
of interest on any Obligations, or reduce the principal amount of any
Obligations or reduce any fee payable to the Banks or the Swingline Bank
hereunder, or release all or substantially all of the Collateral (except as
expressly contemplated by the Loan Documents) or change the amount of any
Commitment of any Bank or Swingline Loan Commitment of the Swingline Bank, or
amend, modify or waive any provision of this Section 9.5 or the definition of
Required Banks, or consent to or permit the assignment or transfer by the
Borrower or any Borrowing Subsidiary of any of its rights and obligations under
this Agreement or any other Loan Document, in each case without the written
consent of all the Banks and the Swingline Bank
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effected thereby, (b) amend, modify or waive any provision of Section 8 or any
other provision of any Loan Document if the effect thereof is to affect the
rights or duties of the Administrative Agent, without the written consent of the
then Administrative Agent, (c) amend, modify or waive any provision of Sections
2.22 through and including 2.29 or any other provision of any Loan Document if
the effect thereof is to affect the rights or duties of an L/C Bank, without the
written consent of such L/C Bank, (d) release the Parent from any of its
obligations under Section 10 or (e) amend, modify or waive any provision of
Section 2.2(d), (e), (f) or (g) or any other provision of any Loan Document if
the effect thereof is to affect the rights and duties of the Swingline Bank,
without the written consent of the Swingline Bank. Any such amendment,
supplement, modification or waiver shall apply to each of the Banks and the
Swingline Bank equally and shall be binding upon the Parent, the Borrower, each
Borrowing Subsidiary, the Banks, the Administrative Agent, the Swingline Bank
and all future holders of the Notes. In the case of any waiver, the Parent, the
Borrower, each Borrowing Subsidiary, the Banks, the Swingline Bank and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes, and any Default or Event of Default
waived shall be deemed to be cured and not continuing, but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
SECTION 9.6 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of the Administrative Agent, the Collateral Agent, any Bank, the
Swingline Bank or any holder of a Note in exercising any right, power or
privilege hereunder or under any other Loan Document and no course of dealing
between any Loan Party and the Administrative Agent, the Collateral Agent, any
Bank, the Swingline Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof of the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent, the Collateral Agent, any Bank, the Swingline Bank or the holder of any
Note would otherwise have. No notice to or demand on any Loan Party in any case
shall entitle any Loan Party to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Banks, the Swingline Bank, the Collateral Agent or the
holder of any Note to any other or further action in any circumstances without
notice or demand.
SECTION 9.7 SHARING OF PAYMENTS. Each of the Banks agrees that if it
should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise) which is applicable to the payment of any
Obligations, of a sum which with respect to the related sum or sums received by
other Banks is in a greater proportion than the total of such Obligation then
owed and due to such Bank bears to the total of such Obligation then owed and
due to all of the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Banks an interest in such Obligations owing to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in such amount; provided that if all or any portion of such excess
amount is thereafter recovered from such Bank, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without
interest.
SECTION 9.8 GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN THE
MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of
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the State of New York or of the United States of America for the Southern
District of New York, and, by execution and delivery of this Agreement, the
Borrower and each Borrowing Subsidiary hereby accept for itself and in respect
of its property, generally and unconditionally, the non-exclusive jurisdiction
of the aforesaid courts and appellate courts from any thereof. The Borrower and
each Borrowing Subsidiary irrevocably consent to the service of process out of
any of the aforementioned courts in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, the Borrower
at its address set forth opposite its signature below. The Borrower and each
Borrowing Subsidiary hereby irrevocably waive any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Administrative
Agent, any Bank, the Swingline Bank or any holder of a Note to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against the Borrower or any Borrowing Subsidiary in any other
jurisdiction.
SECTION 9.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 9.10 EFFECTIVENESS. This Agreement shall become effective on
the date on which all of the parties hereto shall have signed a counterpart
hereof and shall have delivered the same to the Administrative Agent which
delivery, in the case of the Banks and the Swingline Bank, may be given to the
Administrative Agent by telecopy (with the originals delivered promptly to the
Administrative Agent via overnight courier service).
SECTION 9.11 HEADINGS DESCRIPTIVE. The headings of the several
Sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
SECTION 9.12 MARSHALLING; RECAPTURE. Neither the Administrative
Agent, the Collateral Agent nor any Bank shall be under any obligation to
xxxxxxxx any assets in favor of any Loan Party or any other party or against or
in payment of any or all of the Obligations. To the extent any Bank receives any
payment by or on behalf of any Loan Party, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to such Loan Party or its estate, trustee, receiver,
custodian or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of such Loan Party to such Bank as of the date
such initial payment, reduction or satisfaction occurred.
SECTION 9.13 SEVERABILITY. In case any provision in or obligation
under this Agreement or the Notes or the other Loan Documents 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.
SECTION 9.14 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 2.16, 2.17, 2.18, 2.19, 2.27, 2.29, 8.7 and 9.1
and the limitation of liability set forth in Section 9.16 shall survive the
execution and delivery of this Agreement and the Notes, the issuance of and
reimbursement for any Letter of Credit and the making and repayment of the Loans
hereunder.
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SECTION 9.15 DOMICILE OF LOANS. Each Bank and the Swingline Bank may
transfer and carry its Loans or Letters of Credit at, to or for the account of
any branch office, subsidiary or affiliate of such Bank or Swingline Bank.
SECTION 9.16 LIMITATION OF LIABILITY. No claim may be made by any
Loan Party or any other Person against the Administrative Agent, the Collateral
Agent, any Bank, the L/C Banks, the Swingline Bank or the Affiliates, directors,
officers, employees, attorneys or agent of any of them for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Transactions, or any
act, omission or event occurring in connection therewith; and each Loan Party
hereby waives, releases and agrees not to xxx upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
SECTION 9.17 CALCULATIONS; COMPUTATIONS. The financial statements to
be furnished to the Administrative Agent, the Banks and the Swingline Bank
pursuant hereto shall be made and prepared in accordance with GAAP consistently
applied throughout the periods involved and consistent with GAAP as used in the
preparation of the financial statements referred to in Section 4.5, and, except
as otherwise specifically provided herein, all computations of Excess Cash Flow,
Borrower's Share of Excess Cash Flow and Retained Equity Proceeds and
computations determining compliance with Section 6 hereof shall utilize GAAP.
All computations of interest (other than interest calculated by reference to the
Base Rate during such periods that the Base Rate is determined by reference to
the Prime Rate), Commitment Fees and other Fees shall be made on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest,
Commitment Fee or other Fees are payable. All computations of interest
calculated by reference to the Base Rate during such periods that the Base Rate
is determined by reference to the Prime Rate shall be made on the basis of a
year of 365 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.
SECTION 9.18 WAIVER OF TRIAL BY JURY. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARENT, THE BORROWER, EACH BORROWING SUBSIDIARY, THE
ADMINISTRATIVE AGENT, THE CO-AGENTS, THE COLLATERAL AGENT, THE BANKS, THE L/C
BANKS AND THE SWINGLINE BANK HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY MATTER ARISING HEREUNDER
OR THEREUNDER.
SECTION 9.19 NATURE OF BORROWERS' OBLIGATIONS. (a) The obligations
of the Borrower and the Borrowing Subsidiaries hereunder and under the other
Loan Documents are joint and several.
(b) The Borrower and each Borrowing Subsidiary agree that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of any Secured Creditor with respect thereto. The
liability of the Borrower and each Borrowing Subsidiary shall be joint, several,
absolute and unconditional, in accordance with its terms and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any change in the time, place or
manner of payment of, or in any other term of, all or any of the Obligations,
any waiver, indulgence, renewal, extension, amendment or modification of, or
addition, consent or supplement to, or deletion from, or any other action or
inac tion under, or in respect of the Credit Agreement, any Note, any other Loan
Document or any documents, instruments or agreements relating to the Obligations
or any other instrument or agreement referred to therein or any assignment or
transfer of any thereof; (ii) any lack of
76
validity or enforceability of the Credit Agreement, any Note, any other Loan
Document or any other documents, instruments or agreements referred to therein
or any assignment or transfer of any thereof; (iii) any furnishing of any addi
tional security to the Secured Creditors or their assignees or any acceptance
thereof or any release of any security by the Secured Creditors, or their
assignees; (iv) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement, or any term thereof; (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Borrower, or any action
taken with respect to this Agreement by any trustee or receiver, or by any
court, in any such proceeding, whether or not the Borrower or any Borrowing
Subsidiary shall have notice or knowledge of any of the foregoing and each of
the Borrower or any Borrowing Subsidiary waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding; (vi)
any exchange, release or nonperfection of any other collateral, or any release,
or amendment or waiver of, or consent to, departure from any guaranty or
security, for all or any of the Obligations; (vii) any direction as to
application of payment by the Borrower, any Borrowing Subsidiary or by any other
party; (viii) any dissolution, termination or increase, decrease or change in
personnel by the Borrower or any Borrowing Subsidiary; or (ix) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower or any Borrowing Subsidiary. This Agreement shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment of any of the Obligations is rescinded or must otherwise be returned
by any Secured Creditor upon the insolvency, bankruptcy or reorganization of the
Borrower, any Borrowing Subsidiary or any Guarantor or otherwise, all as though
such payment had not been made.
(c) The Borrower and each Borrowing Subsidiary hereby irrevocably
agrees to subordinate any Subrogation Rights (as defined below) to the rights of
any Secured Creditor to recover from the Borrower and any Borrowing Subsidiary
all Obligations. "Subrogation Rights" shall mean any and all rights of
subrogation, reimbursement, exoneration, contribution or indemnification, any
right to participate in any claim or remedy of the Secured Creditors or any
collateral which the Administrative Agent, any other Secured Creditor or the
Collateral Agent now has or hereafter acquires in connection with the payment,
performance or enforcement of the Borrower's or such Borrowing Subsidiary's
obligations under this Agreement or any Loan Document, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including the right to take or receive, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. To effectuate such subordination, the
Borrower and each Borrowing Subsidiary hereby agree that they shall not be
entitled to any payment by the Borrower or any Borrowing Subsidiary, as the case
may be, in respect of any Subrogation Right until all of the Obligations have
been indefeasibly paid in full. If any amount shall be paid to the Borrower or
any Borrowing Subsidiary in violation of the preceding sentence and the
Obligations shall not have been paid in full or any commitment of any Secured
Creditor under the Credit Agreement shall not have been irrevocably terminated,
such amount shall be deemed to have been paid to the Borrower or such Borrowing
Subsidiary for the benefit of, and held in trust for, the Administrative Agent
for the benefit of the Secured Creditors, and shall forthwith be paid to the
Administrative Agent to be credited and applied to the Obligations, whether
matured or unmatured. Each of the Borrower and each Borrowing Subsidiary
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by the Credit Agreement and that the
subordination set forth in this Section is knowingly made in contemplation of
such benefits.
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SECTION 10. PARENT GUARANTY.
SECTION 10.1 THE PARENT GUARANTY. In order to induce the
Administrative Agent and the Banks to enter into this Agreement and to extend
credit hereunder, and in recognition of the direct benefits to be received by
the Parent from the proceeds of the Loans and the issuance of the Letters of
Credit, the Parent hereby agrees with the Guaranteed Creditors as follows: the
Parent hereby unconditionally and irrevocably guarantees as primary obligor and
not merely as surety the full and prompt payment when due, whether upon
maturity, acceleration or otherwise, of any and all of the Guaranteed
Obligations of the Borrower or any Borrowing Subsidiary to the Guaranteed
Creditors. If any or all of the Guaranteed Obligations of the Borrower or any
Borrowing Subsidiary to the Guaranteed Creditors becomes due and payable
hereunder, the Parent irrevocably and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, together with any
and all expenses which may be incurred by the Guaranteed Creditors in collecting
any of the Guaranteed Obligations. If claim is ever made upon any Guaranteed
Creditor for repayment or recovery of any amount or amounts received in payment
or on account of any of the Guaranteed Obligations and any of the aforesaid
payees repays all or part of said amount by reason of (i) any judgment, decree
or order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrower or any
Borrowing Subsidiary), then and in such event the Parent agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon the
Parent, notwithstanding any revocation of this Parent Guaranty, and the Parent
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
SECTION 10.2 BANKRUPTCY. Additionally, the Parent unconditionally
and irrevocably guarantees the payment of any and all of the Guaranteed
Obligations to the Guaranteed Creditors whether or not due or payable by the
Borrower or any Borrowing Subsidiary upon the occurrence of any of the events
specified in Section 7.1(f), and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, in lawful money
of the United States.
SECTION 10.3 NATURE OF LIABILITY. The liability of the Parent
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations whether executed by the Parent, any other guarantor
or by any other party, and the liability of the Parent hereunder is not affected
or impaired by (a) any direction as to application of payment by the Borrower or
any Borrowing Subsidiary or by any other party, or (b) any other continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the Guaranteed Obligations, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower or any Borrowing
Subsidiary, or (e) any payment made to any Guaranteed Creditor on the Guaranteed
Obligations which any such Guaranteed Creditor repays to the Borrower or any
Borrowing Subsidiary pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and Parent waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
SECTION 10.4 INDEPENDENT OBLIGATION. The obligations of the Parent
hereunder are independent of the obligations of any other guarantor, any other
party, the Borrower or any Borrowing Subsidiary, and a separate action or
actions may be brought and prosecuted against the Parent whether or not action
is brought against any other guarantor, any other party, the Borrower or any
Borrowing Subsidiary and whether or not any other guarantor, any other party,
the Borrower or any Borrowing Subsidiary be joined in any such action or
actions. The Parent waives, to the full extent permitted by law, the benefit of
any statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by the Borrower or other circumstance which operates to
toll any statute of limitations as to the Borrower or any Borrowing Subsidiary
shall operate to toll the statute of limitations as to the Parent. This Parent
Guaranty is a continuing
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one and all liabilities to which it applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon.
SECTION 10.5 AUTHORIZATION. The Parent authorizes the Guaranteed
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate of
interest thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the Parent Guaranty herein made shall apply
to the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Loan Party or others or otherwise act or refrain from
acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower, any Borrowing Subsidiary or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether due
or not) of the Borrower or any Borrowing Subsidiary to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower or any Borrowing Subsidiary to the
Guaranteed Creditors regardless of what liability or liabilities of the Parent,
the Borrower or any Borrowing Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of the
Parent from its liabilities under this Parent Guaranty.
SECTION 10.6 RELIANCE. It is not necessary for any Guaranteed
Creditor to inquire into the capacity or powers of the Borrower or any Borrowing
Subsidiary or the officers, directors, partners or agents acting or purporting
to act on their behalf, and any Guaranteed Obligations made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
SECTION 10.7 SUBORDINATION. Any of the indebtedness of the Borrower
or any Borrowing Subsidiary now or hereafter owing to the Parent, is hereby
subordinated to the Guaranteed Obligations of the Borrower and each Borrowing
Subsidiary owing to the Guaranteed Creditors; and if the Administrative Agent so
requests at a time when an Event of Default exists, all such indebtedness of the
Borrower or any Borrowing
79
Subsidiary to the Parent shall be collected, enforced and received by the Parent
for the benefit of the Guaranteed Creditors and be paid over to the
Administrative Agent on behalf of the Guaranteed Creditors on account of the
Guaranteed Obligations of the Borrower and each Borrowing Subsidiary to the
Guaranteed Creditors, but without affecting or impairing in any manner the
liability of the Parent under the other provisions of this Parent Guaranty.
Prior to the transfer by the Parent of any note or negotiable instrument
evidencing any of the indebtedness of the Borrower or any Borrowing Subsidiary
to the Parent, the Parent shall xxxx such note or negotiable instrument with a
legend that the same is subject to this subordination. Without limiting the
generality of the foregoing, the Parent hereby agrees with the Guaranteed
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Parent Guaranty (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash.
SECTION 10.8 WAIVER. (a) The Parent waives any right (except as
shall be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Borrower, any Borrowing
Subsidiary, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any Borrowing Subsidiary, any other
guarantor or any other party or (iii) pursue any other remedy in any Guaranteed
Creditor's power whatsoever. The Parent waives any defense based on or arising
out of any defense of the Borrower, any Borrowing Subsidiary, any other
guarantor or any other party, other than payment in full of the Guaranteed
Obligations, based on or arising out of the disability of the Borrower, any
Borrowing Subsidiary, any other guarantor or any other party, or the validity,
legality or unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
or any Borrowing Subsidiary other than payment in full of the Guaranteed
Obligations. The Guaranteed Creditors may, at their election, foreclose on any
security held by the Collateral Agent, or any other Guaranteed Creditor by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Guaranteed Creditors
may have against the Borrower, any Borrowing Subsidiary, any other party or any
security, without affecting or impairing in any way the liability of the Parent
hereunder except to the extent the Guaranteed Obligations have been paid. The
Parent waives any defense arising out of any such election by the Guaranteed
Creditors, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of the Parent against
the Borrower, any Borrowing Subsidiary, any other party or any security.
(b) The Parent waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Parent
Guaranty, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. The Parent assumes all responsibility for
being and keeping itself informed of the Borrower's and each Borrowing
Subsidiary's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks which the Parent assumes and incurs
hereunder, and agrees that neither the Agents nor any Bank shall have any duty
to advise the Parent of information known to them regarding such circumstances
or risks.
SECTION 10.9 MAXIMUM LIABILITY. It is the desire and intent of the
Parent and the Guaranteed Creditors that this Parent Guaranty shall be enforced
against the Parent to the fullest extent permissible under the laws and public
policies applied in each jurisdiction in which enforcement is sought. If,
however, and to the extent that, the obligations of the Parent under this Parent
Guaranty shall be adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state or federal law
relating to fraudulent conveyances or transfers), then the amount of the
Guaranteed Obligations of the Parent shall be deemed to be reduced and the
Parent shall pay the maximum amount of the Guaranteed Obligations which would be
permissible under applicable law.
80
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
written above.
SPECIALTY RETAILERS, INC.
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Vice President, Financial Planning
Notice Address: 00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
STAGE STORES, INC.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President &
Chief Financial Officer
Notice Address: 00000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
CREDIT SUISSE FIRST BOSTON, as Administrative
Agent and Collateral Agent, as a Bank and L/C Bank
and as a Swingline Bank
By: /s/ Xxxxx Xxxxxx
Title: Vice President
By: /s/ Xxx Xxxxxxxx
Title: Vice President
Notice Address: Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Notice Address: Commercial Finance Division
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANK UNITED
By: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxx Xxxxxxxxx
Title: Director
Notice Address: 0000 Xxxxxxxxx Xxxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
CREDITANSTALT BANKVEREIN
By: /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: Senior Associate
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
Notice Address: Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ Xxxxx X. X'Xxxxxx
Name: Xxxxx X. X'Xxxxxx
Title: Director
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Assistant Vice President
Notice Address: 00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X'Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
HIBERNIA NATIONAL BANK
By: /s/ Xxxx X. Xxxxxxxxxx
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
Notice Address: 000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ROYAL BANK OF SCOTLAND
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President
Notice Address: 00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE FUJI BANK, LIMITED
By: /s/ Xxxxxx X. Xxxxxxxx III
Name: Xxxxxx X. Xxxxxxxx III
Title: Vice President & Manager
Notice Address: 0000 XxXxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Fort
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BANQUE PARIBAS
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Vice President
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Vice President
Notice Address: 0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IMPERIAL BANK, A CALIFORNIA BANKING CORPORATION
By: /s/
Name:
Title:
Notice Address: 0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
(Notification Methods)
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxx Xxxxxx (Borrowings,
Paydowns, Interest,
Fees)
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
ANNEX 1 TO
CREDIT AGREEMENT
BANKS AND COMMITMENTS
NAME OF BANK REVOLVING COMMITMENT EXPANSION LOAN COMMITMENT
------------ -------------------- -------------------------
Credit Suisse First Boston $22,500,000 $22,500,000
Union Bank of California 17,500,000 17,500,000
Bank United 12,500,000 12,500,000
Creditanstalt 7,500,000 7,500,000
Deutsche Bank AG 7,500,000 7,500,000
Hibernia Bank 7,500,000 7,500,000
Royal Bank of Scotland 7,500,000 7,500,000
The Fuji Bank, Ltd 7,500,000 7,500,000
Banque Paribas 5,000,000 5,000,000
Imperial Bank 5,000,000 5,000,000
------------- ------------ ------------
Total $100,000,000 $100,000,000
