1
EXHIBIT 4.05
EXECUTION COPY
================================================================================
________________________________________
CSK AUTO, INC.
CREDIT AGREEMENT
dated as of October 30, 1996
________________________________________
$200,000,000
Credit Facility
________________________________________
THE CHASE MANHATTAN BANK,
as Administrative Agent,
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Documentation Agent,
and
CHASE SECURITIES INC.,
as Arranger
________________________________________
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2. TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.3 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Proceeds of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . 26
3.4 Swing Line Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 Issuance of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.6 Participating Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.7 Procedure for Opening Letters of Credit . . . . . . . . . . . . . . . . . . . . 28
3.8 Payments in Respect of Letters of Credit . . . . . . . . . . . . . . . . . . . . 28
3.9 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.10 Letter of Credit Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.12 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.13 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.14 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS . . . . . . . . . . . . . . . . . . . . . . 32
4.1 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.2 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . 33
4.3 Changes of Commitment Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.4 Optional and Mandatory Prepayments; Repayments of Term Loans . . . . . . . . . . 34
4.5 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . 37
4.6 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . 38
4.7 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.8 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . 39
4.9 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . 39
4.10 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.11 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.12 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.13 Repayment of Loans; Evidence of Debt . . . . . . . . . . . . . . . . . . . . . 45
4.14 Replacement of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▇▇
-▇-
▇
▇▇▇▇▇▇▇ ▇. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . 48
5.4 Corporate Power; Authorization . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.5 Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.6 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.7 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.8 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.9 Federal Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.10 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.13 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.15 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.16 Copyrights, Permits, Trademarks and Licenses . . . . . . . . . . . . . . . . . 53
5.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.18 Accuracy and Completeness of Information . . . . . . . . . . . . . . . . . . . 54
SECTION 6. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1 Conditions to Initial Loans and Letters of Credit . . . . . . . . . . . . . . . 55
6.2 Conditions to All Loans and Letters of Credit . . . . . . . . . . . . . . . . . 59
SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . 60
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.4 Conduct of Business and Maintenance of Existence . . . . . . . . . . . . . . . . 62
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . 63
7.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . 63
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Landlord Lien Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
7.10 Lockbox Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.2 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.3 Limitation on Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . 69
8.4 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . 70
8.5 Prohibition on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.6 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . 72
8.7 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.8 Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
8.9 Debt to EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
8.10 Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
-ii-
4
8.11 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . 78
8.13 Prepayments and Amendments of Subordinated Debt. . . . . . . . . . . . . . . . 78
8.14 Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . . . . . . . 79
8.15 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER . . . . . . . . . . . . . . . . . . . 82
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . 83
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.6 Non-Reliance on Administrative Agent and Other Lenders . . . . . . . . . . . . 84
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.8 The Administrative Agent in its Individual Capacity . . . . . . . . . . . . . . 85
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.10 Issuing Lender as Issuer of Letters of Credit . . . . . . . . . . . . . . . . 86
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . 88
11.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . 88
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.6 Successors and Assigns; Participations and Assignments . . . . . . . . . . . . 90
11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
11.9 Governing Law; No Third Party Rights . . . . . . . . . . . . . . . . . . . . . 95
11.10 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . 95
11.11 Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
11.12 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.13 Special Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.14 Permitted Payments and Transactions . . . . . . . . . . . . . . . . . . . . . 97
-iii-
5
SCHEDULES
Schedule I List of Addresses for Notices; Lending Offices;
Commitment Amounts
Schedule 5.12 Subsidiaries
Schedule 5.13 Fee and Leased Properties
Schedule 5.15(b) UCC Filing Offices
Schedule 5.16 Trademarks and Copyrights
Schedule 8.1(a) Indebtedness to Remain Outstanding
Schedule 8.2 Existing Liens
Schedule 8.3(d) Existing Contingent Obligations
EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Term Loan Note
EXHIBIT C Form of Swing Line Note
EXHIBIT D Form of Assignment and Acceptance
EXHIBIT E-1 Form of Company Security Agreement
EXHIBIT E-2 Form of Subsidiary Security Agreement
EXHIBIT F-1 Form of Holdings Guarantee
EXHIBIT F-2 Form of Subsidiary Guarantee
EXHIBIT G-1 Form of Holdings Pledge Agreement
EXHIBIT G-2 Form of Company Pledge Agreement
EXHIBIT H Form of L/C Participation Certificate
EXHIBIT I Form of Landlord Lien Waiver
EXHIBIT J Form of Swing Line Loan Participation Certificate
EXHIBIT K-1 Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
EXHIBIT K-2 Form of Opinion of Arizona Counsel
EXHIBIT L Form of Subsection 4.11(d)(2) Certificate
EXHIBIT M-1 Form of Company Closing Certificate
EXHIBIT M-2 Form of Holdings Closing Certificate
EXHIBIT N Form of Borrowing Base Certificate
-iv-
6
CREDIT AGREEMENT, dated as of October 30, 1996, among CSK
AUTO, INC., an Arizona corporation (the "Company"), the several lenders from
time to time parties hereto (the "Lenders"), THE CHASE MANHATTAN BANK, a New
York banking corporation, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and ▇▇▇▇▇▇ COMMERCIAL PAPER INC., a
Delaware corporation, as documentation agent for the Lenders (in such capacity,
the "Documentation Agent").
W I T N E S S E T H:
WHEREAS, Investcorp Investment Equity Limited and certain of
its affiliates and other international investors (collectively, the
"Investors") intend to acquire common stock of CSK Group, Ltd., a Delaware
corporation ("Holdings") from the Carmel Trust, a trust governed by the laws of
Canada (the "Carmel Trust"), representing, after giving effect to all the
transactions contemplated to occur on the Closing Date (as defined below; such
transactions, the "Closing Date Transactions"), 51% of the voting power of the
stock of Holdings (the "Investor Holdings Stock") for $105,000,024 (the
"Investor Equity Investment");
WHEREAS, the Investors intend to purchase subordinated debt of
Holdings for $40,000,000 (the "Investor Holdings Subordinated Debt"; together
with the Investor Equity Investment, the "Investor Investment"); and an
affiliate of the Carmel Trust shall have purchased subordinated debt of
Holdings for $10,000,000 (the "Seller Holdings Subordinated Debt"; together
with the Investor Holdings Subordinated Debt, the "Holdings Subordinated
Debt");
WHEREAS, Holdings intends to acquire preferred stock of the
Company for an aggregate purchase price equal to the aggregate principal amount
of the Holdings Subordinated Debt and having terms consistent with those
applicable to the Holdings Subordinated Debt;
WHEREAS, Holdings intends to redeem (the "Redemption") its
capital stock (other than the Investor Holdings Stock) for $238,467,655;
WHEREAS, following the Redemption, the Carmel Trust intends to
acquire newly issued voting stock of Holdings from Holdings for $100,882,376
representing, after giving effect to the Closing Date Transactions, 49% of the
voting power of the stock of Holdings (the "Seller Holdings Stock"; together
with the Investor Holdings Stock, the "Holdings Stock");
WHEREAS, the Company intends to pay or prepay its existing
bank indebtedness for approximately $98,019,000 and make payments, or cause
Holdings to make payments, on account of "phantom stock" of approximately
$9,942,792;
WHEREAS, all of the foregoing shall be consummated pursuant to
the Stock Purchase Agreement, dated as of September 29, 1996 (the "Stock
Purchase Agreement"), among the Investors, the Trust, Holdings and CSK
Holdings, Ltd., a Delaware corporation; and
7
2
WHEREAS, the Company has requested the Lenders to make loans
and other extensions of credit available to the Company for the purposes set
forth herein.
NOW, THEREFORE, the Company, the Administrative Agent and the
Lenders agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms
defined in the caption hereto shall have the meanings set forth therein, and
the following terms have the following meanings:
"Affiliate": of any Person (a) any Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, (b) any
Person who is a director or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause
(a) above or (c) in the case of a trust, its protectors or trustees,
any Person who is or has been a beneficiary thereof, or any Person who
is or has been able to appoint a beneficiary thereof. For purposes of
this definition, control of a Person shall mean the power, direct or
indirect (i) to vote 25% or more of the securities having ordinary
voting power for the election of directors of such Person, whether by
ownership of securities, contract, proxy or otherwise, or (ii) to
direct or cause the direction of the management and policies of such
Person, whether by ownership of securities, contract, proxy or
otherwise.
"Agents": the Administrative Agent and the Documentation
Agent.
"Agreement": this Credit Agreement, as amended, supplemented
or modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
shall mean the rate of interest per annum publicly announced from time
to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended
to be the lowest rate of interest charged by the Administrative Agent
in connection with extensions of credit to debtors); "Base CD Rate"
shall mean the sum of (a) the product of (i) the Three-Month Secondary
CD Rate and (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the C/D Reserve Percentage and (b)
the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean,
for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall
not be a Business Day, the next preceding Business Day) by the Board
of Governors of the Federal Reserve System (together with any
successor, the "Board") through the public information
8
3
telephone line of the Federal Reserve Bank of New York (which rate
will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such
day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major
money center banks in New York City received at approximately 10:00
A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the
Administrative Agent from three New York City negotiable certificate
of deposit dealers of recognized standing selected by it; and "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 which 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. Any change in
the Alternate Base Rate due to a change in the Prime Rate, the Base CD
Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Alternate Base Rate Lending Office": as to each Lender, the
office of such Lender located within the United States which shall be
making or maintaining Alternate Base Rate Loans.
"Alternate Base Rate Loans": Loans at such time as they are
made and/or being maintained at a rate of interest based upon the
Alternate Base Rate.
"Applicable Margin": for Term Loans, Revolving Credit Loans
and Swing Line Loans of the Types set forth below, the rate per annum
set forth under the relevant column heading opposite such Loans below:
Alternate
Base Rate Eurodollar
Loans Loans
----------- ------------
Term Loans: 2.00% 3.00%
Revolving Credit Loans: 1.50% 2.50%
Swing Line Loans: 1.50% Not applicable
"Asset Sale": any sale, sale-leaseback, or other disposition
by the Company or any Subsidiary thereof of any of its property or
assets, including the stock of any Subsidiary of the Company, other
than sales and dispositions permitted by subsections 8.5(a), (b), (c),
(e), (f) and (g).
"Assignee": as defined in subsection 11.6(c).
9
4
"Assignment and Acceptance": an assignment and acceptance
substantially in the form of Exhibit D.
"Available Revolving Credit Commitment": as to any Lender, at
a particular time, an amount equal to (a) the amount of such Lender's
Revolving Credit Commitment at such time, less (b) the sum of (i) the
aggregate unpaid principal amount at such time of all Revolving Credit
Loans made by such Lender pursuant to subsection 3.1, (ii) such
Lender's Revolving Credit Commitment Percentage of the aggregate
unpaid principal amount at such time of all Swing Line Loans, provided
that for purposes of calculating the Revolving Credit Commitments
pursuant to subsection 3.2 the amount referred to in this clause (ii)
shall be zero, (iii) such Lender's L/C Participating Interest in the
aggregate amount available to be drawn at such time under all
outstanding Letters of Credit issued by the Issuing Lender and (iv)
such Lender's Revolving Credit Commitment Percentage of the aggregate
outstanding amount of L/C Obligations; collectively, as to all the
Lenders, the "Available Revolving Credit Commitments".
"Bankruptcy Code": Title I of the Bankruptcy Reform Act of
1978, as amended and codified at Title 11 of the United States Code.
"Board": as defined in the definition of "Alternate Base
Rate".
"Borrowing Base": an amount, calculated on a monthly basis
based upon the most recent Borrowing Base Certificate delivered
pursuant to subsection 7.2(g), equal to (i) the sum (without
duplication) of (a) 65% of Eligible DC Inventory, (b) 50% of Eligible
Store Inventory, (c) 50% of Eligible Depot Inventory and (d) 25% of
Slow Moving Inventory (up to a maximum of $7,500,000) (ii) minus the
Reserve Amount. All determinations in connection with the Borrowing
Base shall be made by the Company and certified to the Administrative
Agent by a Responsible Officer of the Company; provided, however, that
the Administrative Agent shall have the final right to review and
adjust, in its reasonable judgment, any such determination to the
extent such determination is not in accordance with this Agreement.
Each Borrowing Base Certificate shall remain in effect from and
including the date on which such Borrowing Base Certificate is
delivered, to, but excluding the date on which the next Borrowing Base
Certificate is delivered.
"Borrowing Base Certificate": as defined in subsection
7.2(g).
"Borrowing Base Deficiency": a condition wherein the sum of
(a) the aggregate principal amount of all Revolving Credit Loans and
Swing Line Loans outstanding at such time, (b) the aggregate unexpired
and undrawn face amount of all Letters of Credit outstanding at such
time and (c) the aggregate amount of L/C Obligations outstanding at
such time exceeds the Borrowing Base as set forth on the most recent
Borrowing Base Certificate delivered by the Company.
10
5
"Borrowing Date": any Business Day specified in a notice
pursuant to (a) subsection 3.4 or 4.1 as a date on which the Company
requests the Swing Line Lender or the Lenders to make Loans hereunder
or (b) subsection 3.5 as a date on which the Company requests the
Issuing Lender to issue a Letter of Credit hereunder.
"Bridge Subordinated Debt Agreement": the Bridge Subordinated
Debt Agreement dated as of October __, 1996 among the Company, DLJ
Bridge Finance, Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation, as the
same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms and the terms of this Agreement.
"Bridge Subordinated Debt": the subordinated bridge
indebtedness of the Company outstanding from time to time pursuant to
the Bridge Subordinated Debt Agreement.
"Bridge Subordinated Debt Documents": the Bridge Subordinated
Debt Agreement and the notes evidencing the Bridge Subordinated Debt.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.
"Capital Expenditures": for any period, all amounts which
would, in accordance with GAAP, be set forth as capital expenditures
(exclusive of any amount attributable to capitalized interest) on the
consolidated statement of cash flows or other similar statement of the
Company and its Subsidiaries for such period and shall in any event
include expenditures to acquire all or a portion of the Capital Stock
or assets of any Person (exclusive of expenditures for the acquisition
of cash) but shall exclude any expenditures made with the proceeds of
condemnation or eminent domain proceedings affecting real property or
with insurance proceeds; provided that any Capital Expenditures
financed with the proceeds of any Indebtedness permitted hereunder
(other than Indebtedness incurred hereunder) shall be deemed to be a
Capital Expenditure only in the period in which, and by the amount
which, any principal of such Indebtedness is repaid.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Carmel Trust": as defined in the recitals to this Agreement.
"Cash Equivalents": (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof having maturities of not more than
six months from the date of acquisition, (b) certificates of deposit
and eurodollar time deposits with maturities of six months or less
from the date of acquisition, bankers' acceptances with maturities not
exceeding six months and overnight
11
6
bank deposits, in each case with any Lender or with any domestic
commercial bank having capital and surplus in excess of $300,000,000,
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (a) and (b)
entered into with any financial institution meeting the qualifications
specified in clause (b) above, and (d) commercial paper issued by any
Lender or the parent corporation of any Lender, and commercial paper
rated A-1 or the equivalent thereof by Standard & Poor's Ratings Group
or P-1 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc.
and in each case maturing within six months after the date of
acquisition.
"C/D Assessment Rate": for any day the net annual assessment
rate (rounded upwards, if necessary, to the next 1/100 of 1%)
determined by the Administrative Agent to be payable on such day to
the Federal Deposit Insurance Corporation or any successor ("FDIC")
for FDIC's insuring time deposits made in Dollars at offices of the
Administrative Agent in the United States.
"C/D Reserve Percentage": for any day as applied to any Base
CD Rate, that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board for determining maximum
reserve requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal time
deposits in Dollars having a maturity of 30 days or more.
"Change in Law": with respect to any Lender, the adoption of
any law, rule, regulation, policy, guideline or directive (whether or
not having the force of law) or any change therein or in the
interpretation or application thereof by any Governmental Authority
having jurisdiction over such Lender, in each case after the Closing
Date.
"Change of Control": shall be considered to have occurred if
(i) at any time prior to an IPO by the Company or Holdings, (A) the
Initial Shareholders shall cease to own, directly or indirectly, in
the aggregate, at least 51% of the issued and outstanding voting stock
of Holdings or a majority of the directors of Holdings shall cease to
be nominees of the Investcorp Shareholders or (B) Holdings shall cease
to own 100% of the issued and outstanding voting stock of the Company,
in each case free and clear of all Liens (except, in the case of the
Capital Stock of the Company owned by Holdings, for Liens created by
the Holdings Pledge Agreement), and (ii) at any time after an IPO by
the Company or Holdings, (A)(1) if any Person, whether singly or in
concert with one or more Persons, other than the Initial Shareholders
or any Person acting in the capacity of an underwriter, shall,
directly or indirectly, have acquired, or acquire the power to vote or
direct the voting of, 30% or more on a fully diluted basis, of the
outstanding common stock of the Company or of the common stock of
Holdings and (2) the percentage of such outstanding voting stock held
by such Person or Persons shall be greater than the percentage of such
outstanding common stock held by the Investcorp Shareholders or (B) a
majority of the directors of Holdings shall cease to be nominees of
the Investcorp Shareholders.
"Chase": The Chase Manhattan Bank, a New York banking
corporation, and its successors.
12
7
"Closing Date": the date (which shall be on or prior to
December 15, 1996) on which the Lenders make their initial Loans or
the Issuing Lender issues the initial Letter of Credit.
"Closing Date Transactions": as defined in the recitals to
this Agreement.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all assets of the Credit Parties, now owned or
hereinafter acquired, upon which a Lien is purported to be created by
any Security Document.
"Commercial L/C": a commercial documentary Letter of Credit
under which the Issuing Lender agrees to make payments in Dollars for
the account of the Company, on behalf of the Company or a Subsidiary
thereof, in respect of obligations of the Company or such Subsidiary
in connection with the purchase of goods or services in the ordinary
course of business.
"Commitment": as to any Lender at any time, such Lender's
Swing Line Commitment, Term Loan Commitment and Revolving Credit
Commitment; collectively, as to all the Lenders, the "Commitments".
"Commitment Percentage": as to any Lender at any time, its
Term Loan Commitment Percentage or its Revolving Credit Commitment
Percentage, as the context may require.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 414(b) or (c) of the Code.
"Company": CSK Auto, Inc., an Arizona corporation.
"Company Pledge Agreement": the Company Pledge Agreement,
substantially in the form of Exhibit G-2, to be made by the Company in
favor of the Administrative Agent for the ratable benefit of the
Lenders, as the same may be amended, modified or supplemented from
time to time.
"Company Security Agreement": the Company Security Agreement,
substantially in the form of Exhibit ▇- ▇, to be made by the Company
in favor of the Administrative Agent for the ratable benefit of the
Lenders, as the same may be amended, modified or supplemented from
time to time.
"Consolidated Current Assets": at a particular date, all
amounts which would, in conformity with GAAP, be included under
current assets on a consolidated balance sheet of the Company and its
Subsidiaries as at such date.
13
8
"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be included under
current liabilities on a consolidated balance sheet of the Company and
its Subsidiaries as at such date, excluding the current portion of
long-term debt and the entire outstanding principal amount of the
Revolving Credit Loans.
"Consolidated EBITDA": for any period, the Consolidated Net
Income of the Company and its Subsidiaries for such period, plus,
without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of
(a) total income tax expense (including any tax benefit or expense
related to the dividend on any preferred stock), (b) interest expense,
amortization or writeoff of debt discount, debt issuance, warrant and
other equity (including any preferred stock) issuance costs and
commissions, discounts, redemption premium and other fees and charges
associated with the Loans (including commitment fees and other
periodic bank charges), Standby L/Cs, the Subordinated Debt or with
the acquisition or repayment of any debt securities of the Company
permitted hereunder, and net costs associated with Interest Rate
Agreements to which the Company is a party in respect of the Loans,
(c) costs of surety bonds, (d) depreciation and amortization expense,
(e) amortization of inventory write-up under APB 16, amortization of
intangibles (including, but not limited to, goodwill and costs of
interest-rate caps, leasehold interests and the cost of
non-competition agreements) and organization costs, (f) non-cash
amortization of Financing Leases, (g) franchise taxes, (h) management
fees paid as contemplated by subsection 11.14(a), (i) all cash
dividend payments, (j) any fees and expenses incurred in connection
with the Closing Date Transactions, (k) phantom stock payments paid as
contemplated by Section 4.15 of the Stock Purchase Agreement, (l) any
other write-downs, write-offs, minority interests and other non-cash
charges in determining such Consolidated Net Income for such period
and (m) all extraordinary losses in determining such Consolidated Net
Income for such period, and minus, without duplication and to the
extent reflected as a credit in the statement of such Consolidated Net
Income for such period, the sum of (A) extraordinary gains, (B)
non-cash income and (C) non-cash gains; provided that: (i) the
cumulative effect of a change in accounting principles (effected
either through cumulative effect adjustment or a retroactive
application) shall be excluded and (ii) the impact of foreign currency
translations shall be excluded.
"Consolidated Funded Indebtedness": at a particular date, all
Indebtedness (other than Indebtedness described in clauses (b), (c) or
(d) (but only to the extent such Indebtedness consists of leases
entered into in connection with the Real Estate Financing Agreement
which on the Closing Date would be classified as off- balance sheet
operating leases but which, due to a change in Securities and Exchange
Commission regulations, accounting requirements or the opinion of the
Company's auditors, are included as on-balance sheet indebtedness) of
the definition of "Indebtedness" included in this subsection 1.1) of
the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP at such date.
14
9
"Consolidated Net Income": for any period, net income of the
Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that: (i) the net income (but not loss)
of any Person that is not a Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of
the amount of dividends or distributions paid in cash to the Company
or a wholly-owned Subsidiary, (ii) the net income of any Person
acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded and (iii) net income of
any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of
that net income is prohibited or not permitted at the date of
determination.
"Contingent Obligation": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness,
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 (a) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) 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 (d)
otherwise to assure or hold harmless the owner of any 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 (based on the
maximum reasonably anticipated net liability in respect thereof as
determined by the Company in good faith) of the primary obligation or
portion thereof in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated
net liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by the Company in good faith.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of
the property owned by it is bound.
"Credit Documents": the collective reference to this
Agreement, the Notes, the Pledge Agreements, the Security Agreements
and the Guarantees.
"Credit Parties": the collective reference to Holdings, the
Company and each Subsidiary of the Company from time to time party to
a Guarantee.
"Default": any of the events specified in Section 9, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
15
10
"Documentation Agent": ▇▇▇▇▇▇, in its capacity as
documentation agent hereunder.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"Domestic Subsidiary": any Subsidiary of the Company other
than a Foreign Subsidiary.
"Eligible DC Inventory": all Eligible Inventory of the
Company and its Subsidiaries, less Slow Moving Inventory, located at
any distribution center.
"Eligible Depot Inventory": all Eligible Inventory of the
Company and its Subsidiaries, less Slow Moving Inventory, located at
any depot.
"Eligible Inventory": all Inventory of the Company and its
Subsidiaries that consists of finished goods available for sales to
customers, excluding all Inventory located at a distribution center
received from a third-party customer in exchange for the initial
stocking of Inventory of such third-party customer in any changeover
or conversion. In determining the amount to be so included, the
amount of such Inventory shall be valued at the lower of cost or
market on a basis consistent with the Company's or such Subsidiary's
current and historical accounting practice less reserves taken, if
any, (i) on account of physical inventory adjustments, (ii) for
warranty and price changes as recorded in the Company's or such
Subsidiary's accounting records, (iii) for any goods returned or
rejected by the Company's or such Subsidiary's customers as damaged or
defective, scrap, obsolete or otherwise non-salable, return to vendor
goods, miscellaneous non-perpetual inventory, cores, rental tools,
supplies, (iv) for goods in transit to third parties that are not
excluded pursuant to clause (a), (b), (c), (d) or (e) below, (v) for
Liens referred to in clause (c)(i) below, provided that the aggregate
amount of such Rent Reserves shall not exceed $3,000,000, and (vi) for
Liens referred to in clause (c)(ii) below as established by the
Administrative Agent in its sole discretion. Unless otherwise
approved in writing by the Administrative Agent, no Inventory shall be
deemed Eligible Inventory of the Company or its Subsidiaries if:
(a) the Inventory is not owned solely by the Company or
such Subsidiary or is leased or on consignment or the Company
or such Subsidiary does not have good and valid title thereto;
(b) the Inventory is not located at or in transit to
property that is owned or leased by the Company or such
Subsidiary;
(c) the Inventory is not subject to a perfected Lien in
favor of the Administrative Agent prior to all other Liens
except for (i) Liens arising by operation of law with respect
to which either a Landlord Lien Waiver has been obtained or a
Rent Reserve has been established (a Rent Reserve with respect
to
16
11
all such Liens shall be deemed to have been established if an
amount equal to the maximum amount set forth in clause (v) of
this definition is established) and (ii) with respect to
Eligible Inventory located at or in transit to sites described
in clause (b) above, for Liens for normal and customary
warehousing and transportation charges (appropriate reserves
for which have been reasonably established for borrowing base
purposes by the Company or such Subsidiary);
(d) the Inventory is not located in the United States; or
(e) the Inventory does not conform in all material
respects to the representations and warranties contained in
this Agreement or any of the Security Documents.
"Eligible Store Inventory": all Eligible Inventory of the
Company and its Subsidiaries, less Slow Moving Inventory, located at
any store.
"Environmental Laws": any and all Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or requirements of any Governmental Authority or
requirements of law (including court-ordered requirements of common
law) regulating or imposing liability or standards of conduct
concerning, environmental or public health protection matters,
including, without limitation, Hazardous Materials, as now or may at
any time hereafter be in effect.
"Environmental Reports": the Phase 1 environmental
assessments covering certain owned and leased real properties of the
Company and its Subsidiaries made available by the Company to the
Administrative Agent.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": as defined in the
definition of Eurodollar Rate.
"Eurodollar Lending Office": as to any Lender the office of
such Lender which shall be making or maintaining Eurodollar Loans.
"Eurodollar Loans": Loans at such time as they are made
and/or being maintained at a rate of interest based upon a Eurodollar
Rate.
"Eurodollar Rate": with respect to each day during any
Interest Period for any Eurodollar Loan, the rate per annum equal to
the quotient of (a) the average (rounded upwards to the nearest whole
multiple of one sixteenth of one percent) of the respective rates
notified to the Administrative Agent by the Reference Lender as the
rate at which each of their Eurodollar Lending Offices is offered
Dollar deposits two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the
17
12
foreign currency and exchange operations of such Eurodollar Lending
Office are customarily conducted at or about 10:00 A.M., New York City
time, for delivery on the first day of such Interest Period for the
number of days comprised therein and in an amount comparable to the
amount of the Eurodollar Loan of such Reference Lender to be
outstanding during such Interest Period, divided by (b) a number equal
to 1.00 minus the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements current on such day
(including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto), as
now and from time to time hereafter in effect, dealing with reserve
requirements prescribed for Eurocurrency funding (currently referred
to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System (such rates of reserve
requirements being referred to herein as "Eurocurrency Reserve
Requirements") (such Eurodollar Rate to be rounded upwards, if
necessary, to the next higher 1/100 of one percent).
"Event of Default": any of the events specified in Section 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.
"Excess Cash Flow": at the end of any fiscal year of the
Company ending on or after January 28, 1998, the excess of (a) the
sum, without duplication, of (i) Consolidated EBITDA for the period
from the Closing Date to the end of such fiscal year and (ii)
extraordinary cash gains with respect to such period over (b) the sum,
without duplication, of (i) the aggregate amount actually paid by the
Company and its Subsidiaries in cash since the Closing Date on account
of capital expenditures (other than capital expenditures made with the
proceeds of eminent domain or condemnation proceedings to the extent
such proceeds are not included in the determination of EBITDA for such
period), (ii) the aggregate amount of payments of principal in respect
of any Indebtedness since the Closing Date (other than any such
payments of principal pursuant to subsections 4.4(b)(i), (ii)), (iii)
and (iv) or any such payment of principal in respect of any revolving
credit facility to the extent that there is not an equivalent
reduction in such facility), (iii) increases in working capital
(calculated as Consolidated Current Assets at the end of such period
minus Consolidated Current Liabilities as at the end of such period)
of the Company and its Subsidiaries since the Closing Date (excluding
any increase in cash or Cash Equivalents above an increase deemed in
good faith by the Company to be necessary or desirable for the
operation of the business of the Company and its Subsidiaries), (iv)
cash interest expense (including fees paid in connection with Letters
of Credit, surety bonds, commitment fees and other periodic bank
charges) of the Company since the Closing Date, (v) the amount of
dividends actually paid in cash by the Company to Holdings since the
Closing Date as permitted by subsections 8.11(c)(iv) and 8.11(c)(v)
and, to the extent not deducted from revenues in determining
Consolidated Net Income of the Company and its Subsidiaries for such
period, by subsection 8.11(c)(i) and (ii), (vi) the amount of taxes
actually paid in cash by the Company and its Subsidiaries since the
Closing Date either during such period or within a normal payment
period thereof, (vii) the amount of cash actually paid to repurchase
Capital Stock of Holdings pursuant to subsection 8.11(c)(iii) since
the Closing Date, (viii) extraordinary cash losses with respect to
such period, (ix)
18
13
any fees and expenses incurred in connection with the Closing Date
Transactions and (x) to the extent added to Consolidated Net Income of
the Company and its Subsidiaries in calculating Consolidated EBITDA
for such period, the net cost of Interest Rate Agreements, franchise
taxes and management fees during such period.
"Fee Property": as defined in subsection 5.13.
"Financing Lease": (a) any lease of property, real or
personal, the obligations under which are capitalized on a
consolidated balance sheet of the Company and its consolidated
Subsidiaries and (b) any other such lease to the extent that the then
present value of any rental commitment thereunder should, in
accordance with GAAP, be capitalized on a balance sheet of the lessee.
"Foreign Subsidiary": any Subsidiary of the Company which is
not organized under the laws of the United States of America or any
state thereof or the District of Columbia.
"GAAP": generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantees": the collective reference to the Holdings
Guarantee, the Subsidiary Guaranty and any other guarantee which may
from time to time be executed and delivered by a Subsidiary of the
Company pursuant to subsection 8.6(b).
"Hazardous Materials": any hazardous materials, hazardous
wastes, hazardous pesticides, hazardous or toxic substances, defined,
listed, classified or regulated as such in or under any Environmental
Law, including, without limitation, asbestos, petroleum, any other
petroleum products (including gasoline, crude oil or any fraction
thereof) polychlorinated biphenyls and urea-formaldehyde insulation.
"Holdings": CSK Group, Ltd., a Delaware corporation.
"Holdings Guarantee": the Holdings Guarantee, substantially
in the form of Exhibit F-1, to be made by Holdings in favor of the
Administrative Agent for the ratable benefit of the Lenders, as the
same may be amended, modified or supplemented from time to time.
"Holdings Pledge Agreement": the Holdings Pledge Agreement,
substantially in the form of Exhibit G-1, to be made by Holdings in
favor of the Administrative Agent for the ratable benefit of the
Lenders, as the same may be amended, modified or supplemented from
time to time.
19
14
"Holdings Subordinated Debt": as defined in the recitals to
this Agreement.
"Indebtedness": of a Person, at a particular date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, (b) the undrawn face amount of
all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder and unpaid
reimbursement obligations with respect thereto, (c) all liabilities
(other than Lease Obligations) secured by any Lien on any property
owned by such Person, even though such Person has not assumed or
become liable for the payment thereof, (d) Financing Leases and (e)
all indebtedness of such Person arising under acceptance facilities;
but excluding (i) trade and other accounts payable and accrued
expenses payable in the ordinary course of business and (ii) letters
of credit supporting the purchase of goods in the ordinary course of
business and expiring no more than six months from the date of
issuance.
"Initial Shareholders": (a) INVESTCORP SA and its Affiliates
(provided that for purposes of clauses (a) and (b) of this definition
only, the reference to 25% in the definition of Affiliate contained in
this subsection 1.1 shall be deemed to be 51%) and Subsidiaries
(collectively, the "Investcorp Shareholders") and (b) the Carmel Trust
and its beneficiaries and their respective immediate family members,
heirs, estate, administrators and executors and trusts benefitting
them and Affiliates thereof.
"Insolvency": with respect to a Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term
as used in Section 4245 of ERISA.
"Installment Payment Date": as defined in subsection 4.4(c).
"Interest Coverage Ratio": on the last day of any fiscal
quarter of the Company, the ratio of (a) Consolidated EBITDA for the
period of four fiscal quarters ending on such day, or, if shorter, the
period commencing on the first day of the first fiscal quarter
commencing on or after the Closing Date and ending on such day, to (b)
cash interest expense (excluding fees payable on account of Letters of
Credit and, to the extent included in interest expense in accordance
with GAAP, net costs associated with Interest Rate Agreements to which
the Company is party in respect of the Loans, amortization of debt
discount (including discount of liabilities and reserves established
under APB 16), costs of debt issuance and interest expense on customer
deposits) for the period described in clause (a) above net of interest
income, in each case for or during such period on a consolidated basis
for the Company and its Subsidiaries.
"Interest Payment Date": (a) as to Alternate Base Rate Loans,
the last day of each March, June, September and December, commencing
on the first such day to occur after any Alternate Base Rate Loans are
made or any Eurodollar Loans are converted to Alternate Base Rate
Loans, (b) as to any Eurodollar Loan in respect of which the Company
has selected an Interest Period of one, two or three months, the last
day of such Interest Period and (c) as to any Eurodollar Loan in
respect of which the Company has
20
15
selected an Interest Period longer than three months, on each
successive date three months after the first day of such Interest
Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on, as the case
may be, the Borrowing Date or conversion date with respect to
such Eurodollar Loan and ending one, two, three, six or, if
and when available to all the relevant Lenders, nine or twelve
months thereafter as selected by the Company in its notice of
borrowing as provided in subsection 4.1 or its notice of
conversion as provided in subsection 4.2; and
(b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three, six or, if and
when available to all the relevant Lenders, nine or twelve
months thereafter as selected by the Company 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 to such Eurodollar Loan;
provided that the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period would otherwise end on a
day which is not a Business Day, that 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) any Interest Period that would otherwise extend
beyond (i) in the case of an Interest Period for a Term Loan,
the final Installment Payment Date for such Term Loan shall
end on such Installment Payment Date or, if such Installment
Payment Date shall not be a Business Day, on the next
preceding Business Day and (ii) in the case of any Interest
Period for a Revolving Credit Loan, the Revolving Credit
Termination Date shall end on the Revolving Credit Termination
Date, or if the Revolving Credit Termination Date shall not be
a Business Day, on the next preceding Business Day;
(C) if the Company shall fail to give notice as
provided above in clause (b), it shall be deemed to have
selected a conversion of a Eurodollar Loan into an Alternate
Base Rate Loan (which conversion shall occur automatically and
without need for compliance with the conditions for conversion
set forth in subsection 4.2);
(D) any Interest Period that begins on the last day
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar
21
16
month at the end of such Interest Period) shall end on the
last Business Day of a calendar month; and
(E) the Company shall select Interest Periods so as
not to require a prepayment (to the extent practicable) or a
scheduled payment of a Eurodollar Loan during an Interest
Period for such Eurodollar Loan.
"Interest Rate Agreement": any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, currency
hedge agreement or other similar agreement or arrangement; provided
that the amount of any such Interest Rate Agreement for purposes of
Section 9(e) shall be based on calculation of payments for early
termination in a reasonable manner in accordance with customary
industry practices.
"Inventory": as defined in the Uniform Commercial Code as in
effect in the State of New York; and, with respect to the Company and
its Subsidiaries, all such Inventory of the Company or such Subsidiary
including, without limitation, all finished goods, wares and
merchandise, finished or unfinished parts, components, assemblies held
for sale to third party customers by the Company or such Subsidiary.
"Investcorp Shareholders": as defined in the definition of
"Initial Shareholders."
"Investment Documents": the Stock Purchase Agreement and each
exhibit or schedule thereto.
"Investor Investment": as defined in the recitals hereto.
"Investors": as defined in the recitals hereto.
"IPO": any sale by either the Company or Holdings through a
public offering of its common (or other voting) stock pursuant to an
effective registration statement (other than a registration statement
on Form ▇-▇, ▇-▇ or any successor or similar forms) filed under the
Securities Act of 1933, as amended.
"Issuing Lender": Chase and any of its Affiliates, including
Chase Bank Delaware, as issuer of the Letters of Credit.
"Landlord Lien Waiver": a written agreement, in substantially
the form of Exhibit I or as otherwise is reasonably acceptable to the
Administrative Agent, pursuant to which a Person shall waive or
subordinate its rights and claims as landlord in any Inventory of the
Company or its Subsidiaries for unpaid rents, grant access to the
Administrative Agent for the repossession and sale of such inventory
and make other agreements relative thereto.
"L/C Application": as defined in subsection 3.5(a).
22
17
"L/C Obligations": the obligations of the Company to reimburse
the Issuing Lender for any payments made by the Issuing Lender under
any Letter of Credit that have not been reimbursed by the Company
pursuant to subsection 3.8(a).
"L/C Participating Interest": an undivided participating
interest (equal to such Lender's Revolving Credit Commitment
Percentage) in the face amount of each issued and outstanding Letter
of Credit and the L/C Application relating thereto.
"L/C Participation Certificate": the certificate in
substantially the form of Exhibit H.
"Lease Obligations": of the Company and its Subsidiaries, as
of the date of any determination thereof, the rental commitments of
the Company and its Subsidiaries determined on a consolidated basis,
if any, under leases for real and/or personal property (net of rental
commitments from sub-leases thereof), excluding however, obligations
under Financing Leases.
"Leased Properties": as defined in subsection 5.13.
"▇▇▇▇▇▇": ▇▇▇▇▇▇ Commercial Paper Inc., a Delaware
corporation.
"Letters of Credit": the collective reference to the
Commercial L/Cs and the Standby L/Cs; individually, a "Letter of
Credit".
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing except for the filing of financing
statements in connection with Lease Obligations incurred by the
Company or its Subsidiaries to the extent that such financing
statements relate to the property subject to such Lease Obligations).
"Loans": the collective reference to the Swing Line Loans,
the Term Loans and the Revolving Credit Loans; individually, a "Loan".
"Maturity Date": October 31, 2003.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Proceeds": the aggregate cash proceeds received by
Holdings, the Company or any Subsidiary of the Company in respect of:
23
18
(a) (i) any issuance or borrowing of any debt
securities or loans by the Company or any Subsidiary other
than debt or loans permitted to be incurred or borrowed
pursuant to subsection 8.1 (except for the amount of any
Permanent Subordinated Indebtedness incurred in accordance
with subsection 8.1(d)(ii) in excess of the outstanding
principal amount of any Bridge Subordinated Indebtedness at
the time of such incurrence, which excess amount shall be "Net
Proceeds") or (ii) any issuance of Capital Stock.
(b) any Asset Sale, excluding (i) any net proceeds
received upon any condemnation or exercise of rights of
eminent domain to the extent the same shall be deemed not to
constitute Net Proceeds pursuant to the proviso to subsection
8.5(d) and (ii) any proceeds of insurance received upon any
casualty or loss;
(c) any cash received in respect of substantially
like-kind exchanges of property to the extent provided in the
proviso to subsection 8.5(e); and
(d) any cash payments received in respect of
promissory notes delivered to the Company or such Subsidiary
in respect of an Asset Sale;
in each case net of (without duplication) (A) the amount required to
repay any Indebtedness (other than the Loans) secured by a Lien on any
assets of the Company or a Subsidiary of the Company that are
collateral for any such debt securities or loans that are sold or
otherwise disposed of in connection with such Asset Sale, (B) the
reasonable expenses (including legal fees and brokers' and
underwriters' commissions, lenders fees or credit enhancement fees, in
any case, paid to third parties or, to the extent permitted hereby,
Affiliates) incurred in effecting such issuance or sale and (C) any
taxes reasonably attributable to such sale and reasonably estimated by
the Company or such Subsidiary to be actually payable.
"Non-Funding Lender": as defined in subsection 4.9(c).
"Notes": the collective reference to the Swing Line Note, the
Revolving Credit Notes and the Term Loan Notes; each of the Notes, a
"Note".
"Offering Memorandum": the Preliminary Offering Memorandum,
dated October 9, 1996 with respect to the Permanent Subordinated Debt.
"Participants": as defined in subsection 11.6(b).
"Participating Lender": any Lender (other than the Issuing
Lender) with respect to its L/C Participating Interest in each Letter
of Credit.
"Payment Sharing Notice": a written notice from the Company
or any Lender informing the Administrative Agent that an Event of
Default has occurred and is
24
19
continuing and directing the Administrative Agent to allocate payments
thereafter received from or on behalf of the Company in accordance
with the provisions of subsection 4.9.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor.
"Permanent Subordinated Debt": (a) unsecured notes or
debentures of the Company, subordinated to the prior payment of the
Loans and the other obligations under the Credit Documents, that may
be issued by the Company on or after the Closing Date, provided that
either (x) such notes or debentures have terms consistent with those
described in the Offering Memorandum or (y) (i) unless otherwise
agreed to by the Required Lenders, no part of the principal amount of
any such notes or debentures shall have a maturity date earlier than
October 31, 2004, (ii) unless otherwise agreed to by the Required
Lenders, the subordination provisions of which are as favorable to the
Lenders as the Exchange Notes issued under, and as defined in the
Bridge Subordinated Debt Agreement, the other terms and conditions
thereof (including, without limitation, covenant and event of default
provisions thereof but excluding any call protection provisions) taken
as a whole shall be at least as favorable to the Company and the
Lenders as the Exchange Notes issued under, and as defined in, the
Bridge Subordinated Debt Agreement and the non-default cash interest
rate thereon shall not exceed 15% per annum and the total non-default
interest rate shall not exceed 16% per annum, (iii) no covenant
contained in this Agreement or any of the other Credit Documents would
be violated on the proposed issuance date after giving effect to (A)
the issuance of such notes or debentures, (B) the payment of all
issuance costs, commissions, discounts, redemption premiums and other
fees and charges associated therewith, (C) the use of proceeds thereof
and (D) the redemption, repayment, retirement and repurchase of all
Indebtedness of the Company and its Subsidiaries to be redeemed,
repaid or repurchased in connection therewith and (iv) substantially
final drafts of the documentation governing any such notes or
debentures, showing the terms thereof, shall have been furnished to
the Lenders at least 10 days prior to the date of issuance of such
notes or debentures and (b) unsecured notes or debentures of the
Company, subordinated to the prior payment of the Loans and the other
obligations under the Credit Documents, that may be issued by the
Company in order to refinance previously issued Permanent Subordinated
Debt, provided that (i) the maturity date, the interest rate, the
scheduled amortization, the final maturity and the subordination
provisions shall be at least as favorable to the Company and the
Lenders as such refinanced Permanent Subordinated Debt and the other
terms and conditions thereof (including, without limitation, the
covenant and event of default provisions thereof) taken as a whole
shall be at least as favorable to the Company and the Lenders as such
refinanced Permanent Subordinated Debt and (ii) the conditions
contained in clauses (a)(iii) and (iv) of this definition shall be
met.
"Permitted Liens": Liens permitted to exist under subsection
8.2.
25
20
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": at any particular time, any employee benefit plan as
defined in Section 3(3) of ERISA and not excluded by Section 4(b) of
ERISA and in respect of which the Company or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": the collective reference to the Holdings
Pledge Agreement, the Company Pledge Agreement and any pledge
agreement from time to time executed and delivered by any Subsidiary
of the Company providing for the pledge of the Capital Stock of any
Subsidiary pursuant to subsection 8.6(b).
"Real Estate Financing Agreement": the Agreement, to be dated
as of the Closing Date, between Carmel Trust and the Company, in
substantially the form of Exhibit I to the Stock Purchase Agreement.
"Reference Lender": Chase.
"Refunded Swing Line Loans": as defined in subsection 3.4(b).
"Register": as defined in subsection 11.6(d).
"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System, as from time to time in effect.
"Related Document": any agreement, certificate, document or
instrument relating to a Letter of Credit.
"Rent Reserve": with respect to any store, distribution
center or depot where any Inventory subject to Liens arising by
operation of law is located, a reserve equal to three (3) months' rent
at such store, distribution center or depot; provided, that the
aggregate amount of Rent Reserves for all stores, distribution centers
or depots shall not exceed $3,000,000.
"Reorganization": with respect to a Multiemployer Plan, the
condition that such Plan is in reorganization as such term is used in
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA other than those events as to which the thirty day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
26
21
"Required Lenders": at a particular time, the holders of at
least 51% of the sum of (i) the aggregate unpaid principal amount of
the Term Loans, if any, and (ii) the Revolving Credit Commitments or,
if the Revolving Credit Commitments are terminated, the aggregate
unpaid principal amount of the Revolving Credit Loans, and
participations in Swingline Loans, the aggregate amount available to
be drawn at such time under all outstanding Letters of Credit and L/C
Obligations. The Term Loans and the Revolving Credit Commitments of
any Non-Funding Lender shall be disregarded in determining Required
Lenders at any time.
"Requirement of Law": as to any Person, the Articles or
Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation, order, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property, or to which such Person or
any of its property is subject.
"Responsible Officer": with respect to any Person, the
president, chief executive officer, the chief operating officer, the
chief financial officer, treasurer, controller or any vice president
of such Person.
"Reserve Amount": $25,000,000, provided that, at any time
when the aggregate outstanding principal amount of the Term Loans is
less than $25,000,000, the Reserve Amount shall be reduced by an
amount equal to the amount by which the aggregate outstanding
principal amount of the Term Loans is less than $25,000,000 at such
time.
"Revolving Credit Commitment": as to any Lender, its
obligations to make Revolving Credit Loans to the Company pursuant to
subsection 3.1, and to purchase its L/C Participating Interest in any
Letter of Credit, in an aggregate amount not to exceed the amount set
forth under such Lender's name in Schedule I opposite the caption
"Revolving Credit Commitment" or in Schedule 1 to the Assignment and
Acceptance by which such Lender acquired its Revolving Credit
Commitment, as the same may be reduced from time to time pursuant to
subsection 4.3 or 4.4(b) or adjusted pursuant to subsection 11.6(c);
collectively, as to all the Lenders, the "Revolving Credit
Commitments". The original aggregate principal amount of the
Revolving Credit Commitments is $100,000,000.
"Revolving Credit Commitment Percentage": as to any Lender at
any time, the percentage of the aggregate Revolving Credit Commitments
then constituted by such Lender's Revolving Credit Commitment.
"Revolving Credit Commitment Period": the period from and
including the Closing Date to but not including the Revolving Credit
Termination Date.
"Revolving Credit Loan" and "Revolving Credit Loans": as
defined in subsection 3.1(a).
27
22
"Revolving Credit Note": as defined in subsection 4.13(e).
"Revolving Credit Termination Date": the earlier of (a)
October 31, 2001 and (b) such other date as the Revolving Credit
Commitments shall terminate hereunder.
"Section 4.4 Lenders": at a particular time, the holders of
(a) at least 51% of the aggregate unpaid principal amount of the Term
Loans, if any, and (b) at least 51% of the Revolving Credit
Commitments or, if the Revolving Credit Commitments are terminated,
the aggregate unpaid principal amount of the Revolving Credit Loans,
and participations in Swingline Loans and the aggregate amount
available to be drawn at such time under all outstanding Letters of
Credit. The Term Loans and the Revolving Credit Commitments of any
Non-Funding Lender shall be disregarded in determining Section 4.4
Lenders at any time.
"Security Agreements": the collective reference to the
Company Security Agreement, the Subsidiary Security Agreement and any
other security agreement which may from time to time be executed and
delivered by a Subsidiary of the Company pursuant to subsection
8.6(b).
"Security Documents": the collective reference to the Pledge
Agreements and the Security Agreements.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA and which is not a Multiemployer Plan.
"Slow Moving Inventory": Inventory in excess of a 52 week
supply based on sales for the preceding 52 weeks and determined on an
individual SKU basis.
"Standby L/C": an irrevocable letter of credit under which
the Issuing Lender agrees to make payments in Dollars for the account
of the Company, on behalf of the Company or any Subsidiary thereof in
respect of obligations of the Company or such Subsidiary incurred
pursuant to contracts made or performances undertaken or to be
undertaken or like matters relating to contracts to which the Company
or such Subsidiary is or proposes to become a party in the ordinary
course of the Company's or such Subsidiary's business, including,
without limiting the foregoing, for insurance purposes or in respect
of advance payments or as bid or performance bonds or for any other
purpose for which a standby letter of credit might customarily be
issued.
"Stock Purchase Agreement": as defined in the recitals
hereto.
"Subordinated Debt": the collective term for the Bridge
Subordinated Debt and the Permanent Subordinated Debt.
"Subsection 4.11(d)(2) Certificate": as defined in subsection
4.11(d).
28
23
"Subsidiary": as to any Person, any corporation of which
shares of stock of each class having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned by such Person or
by one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person. (A Subsidiary shall be deemed
wholly-owned by a Person who owns all of the voting shares of stock of
such Subsidiary having voting power under ordinary circumstances to
vote for directors, except for directors' qualifying shares.) Unless
otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Subsidiary Guarantee": the Subsidiary Guarantee,
substantially in the form of Exhibit F-2, to be made by each Domestic
Subsidiary of the Company in favor of the Administrative Agent for the
ratable benefit of the Lenders, as the same may be amended, modified
or supplemented from time to time.
"Subsidiary Security Agreement": the Subsidiary Security
Agreement, substantially in the form of Exhibit E-2, to be made by
each Domestic Subsidiary of the Company in favor of the Administrative
Agent for the ratable benefit of the Lenders, as the same may be
amended, modified or supplemented from time to time.
"Supermajority Lenders": at a particular time, the holders of
at least 66-2/3% of the sum of (i) the aggregate unpaid principal
amount of the Term Loans, if any, and (ii) the Revolving Credit
Commitments or, if the Revolving Credit Commitments are terminated,
the aggregate unpaid principal amount of the Revolving Credit Loans,
and participations in Swingline Loans and the aggregate amount
available to be drawn at such time under all outstanding Letters of
Credit. The Term Loans and the Revolving Credit Commitments of any
Non-Funding Lender shall be disregarded in determining Supermajority
Lenders at any time.
"Supplemental Reporting": as described in Schedule 1 to the
Form of Borrowing Base Certificate.
"Swing Line Commitment": the Swing Line Lender's obligation
to make Swing Line Loans pursuant to subsection 3.4.
"Swing Line Lender": Chase in its capacity as lender of the
Swing Line Loans.
"Swing Line Loan Participation Certificate": a certificate in
substantially the form of Exhibit J.
"Swing Line Loans": as defined in subsection 3.4(a).
"Swing Line Note": as defined in subsection 4.13(e).
29
24
"Term Loan Commitment": as to any Lender, its obligation to
make a Term Loan to the Company pursuant to subsection 2.1 in an
aggregate amount not to exceed the amount set forth under such
Lender's name in Schedule I opposite the caption "Term Loan
Commitment" or in Schedule 1 to the Assignment and Acceptance pursuant
to which a Lender acquires its Term Loan Commitment, as the same may
be adjusted pursuant to subsection 11.6(c); collectively, as to all
the Lenders, the "Term Loan Commitments". The original aggregate
principal amount of the Term Loan Commitments is $100,000,000.
"Term Loan Commitment Percentage": as to any Lender at any
time, the percentage of the aggregate Term Loan Commitments then
constituted by such Lender's Term Loan Commitment.
"Term Loan Note": as defined in subsection 4.13(e).
"Term Loans": as defined in subsection 2.1.
"Transferee": as defined in subsection 11.6(f).
"Type": as to any Loan, its nature as an Alternate Base Rate
Loan or Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any amendments thereof.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the Notes, any other Credit Document or any certificate
or other document made or delivered pursuant hereto.
(b) As used herein and in the Notes, any other Credit
Document and any certificate or other document made or delivered pursuant
hereto, accounting terms relating to the Company and its Subsidiaries not
defined in subsection 1.1 and accounting terms partly defined in subsection 1.1
to the extent not defined, shall have the respective meanings given to them
under GAAP. All computations determining compliance with financial covenants
or terms, including definitions used therein, shall be prepared in accordance
with generally accepted accounting principles in effect at the time of the
preparation of, and in conformity with those used to prepare, the historical
financial statements delivered to the Administrative Agent pursuant to
subsection 7.1. If at any time the computations for determining compliance
with financial covenants or provisions relating thereto utilize generally
accepted accounting principles different than those then being utilized in the
financial statements then being delivered to the Administrative Agent, such
financial statements shall be accompanied by a reconciliation statement with
respect to such computations.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
30
25
provision of this Agreement, and section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be
equally applicable to the singular and plural forms of such terms.
SECTION 2. TERM LOANS
2.1 Term Loans. Subject to the terms and conditions hereof,
each Lender severally agrees to make a loan in Dollars (individually, a "Term
Loan"; and collectively, the "Term Loans") to the Company on the Closing Date,
in an aggregate principal amount equal to such Lender's Term Loan Commitment.
The Term Loans shall be made initially as Alternate Base Rate Loans.
2.2 Repayment of Term Loans. The Company shall repay the
Term Loans as provided in subsection 4.4(c).
2.3 Use of Proceeds. The proceeds of the Term Loans,
together with part of the proceeds of the Revolving Credit Loans, will be used
to finance in part the Closing Date Transactions and to pay certain of the
fees, expenses and financing costs related to the Closing Date Transactions.
SECTION 3. AMOUNT AND TERMS OF REVOLVING
CREDIT COMMITMENTS
3.1 Revolving Credit Commitments. (a) Subject to the terms
and conditions hereof, each Lender severally agrees to the extent of its
Revolving Credit Commitment to extend credit to the Company from time to time
on any Borrowing Date during the Revolving Credit Commitment Period (i) by
purchasing an L/C Participating Interest in each Letter of Credit issued by the
Issuing Lender and (ii) by making loans in Dollars (individually, such a Loan
is a "Revolving Credit Loan", and collectively such Loans are the "Revolving
Credit Loans") to the Company from time to time. Notwithstanding the above,
(x) in no event shall any Letter of Credit be issued if after giving effect
thereto the sum of the undrawn amount of all outstanding Letters of Credit and
the amount of all L/C Obligations would exceed $15,000,000 and (y) in no event
shall any Revolving Credit Loans be made, or Letters of Credit be issued, (A)
if the aggregate amount of the Revolving Credit Loans to be made or Letters of
Credit to be issued would, after giving effect to the use of proceeds, if any,
thereof, exceed the aggregate Available Revolving Credit Commitments or (B) if,
after giving effect to such Revolving Credit Loan or Letter of Credit, a
Borrowing Base Deficiency would exist. During the Revolving Credit Commitment
Period, the Company may use the Revolving Credit Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all
in accordance with the terms and conditions hereof, and/or by having the
Issuing Lender issue Letters of Credit, having such Letters of Credit
31
26
expire undrawn upon or if drawn upon, reimbursing the Issuing Lender for such
drawing, and having the Issuing Lender issue new Letters of Credit.
(b) The Revolving Credit Loans made on the Closing Date shall
be made initially as Alternate Base Rate Loans. Each borrowing of Revolving
Credit Loans pursuant to the Revolving Credit Commitments shall be in an
aggregate principal amount of the lesser of (i) $1,000,000 or a whole multiple
of $100,000 in excess thereof, in the case of Alternate Base Rate Loans, and
$2,000,000 or a whole multiple of $1,000,000 in excess thereof, in the case of
Eurodollar Loans and (ii) the Available Revolving Credit Commitments, except
that any borrowing of Revolving Credit Loans to be used solely to pay a like
amount of Swing Line Loans may be in the aggregate principal amount of such
Swing Line Loans.
3.2 Commitment Fee. The Company agrees to pay to the
Administrative Agent for the account of each Lender (other than any Non-Funding
Lender) a commitment fee from and including the Closing Date to and including
the Revolving Credit Termination Date, computed at the rate of 1/2 of 1% per
annum on the average daily amount of the Available Revolving Credit Commitment
of such Lender during the period for which payment is made (whether or not the
Company shall have satisfied the applicable conditions to borrowing or issuance
of a Letter of Credit set forth in Section 6). Such commitment fee shall be
payable quarterly in arrears on the last day of each March, June, September and
December and on the Revolving Credit Termination Date, commencing on the first
such date to occur on or following the Closing Date (or, if earlier, the
Revolving Credit Termination Date).
3.3 Proceeds of Revolving Credit Loans. The Company shall
use the proceeds of Revolving Credit Loans (a) as set forth in subsection 2.3
and (b) for general corporate purposes of the Company and its Subsidiaries.
3.4 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, the Swing Line Lender agrees, so long as the Administrative
Agent has not received notice that an Event of Default has occurred and is
continuing, to make swing line loans (individually, a "Swing Line Loan";
collectively, the "Swing Line Loans") to the Company from time to time during
the Revolving Credit Commitment Period in an aggregate principal amount at any
one time outstanding not to exceed $15,000,000, provided that no Swing Line
Loan may be made if the aggregate principal amount of the Swing Line Loans to
be made would exceed the aggregate Available Revolving Credit Commitments at
such time, and provided, further, that no Swing Line Loan may be made if, after
giving effect thereto, a Borrowing Base Deficiency would exist. Amounts
borrowed by the Company under this subsection 3.4 may be repaid and, through
but excluding the Revolving Credit Termination Date, reborrowed. All Swing
Line Loans shall be made as Alternate Base Rate Loans and shall not be entitled
to be converted into Eurodollar Loans. The Company shall give the Swing Line
Lender irrevocable notice (which notice must be received by the Swing Line
Lender prior to 3:00 p.m., New York City time) on the requested Borrowing Date
specifying the amount of each requested Swing Line Loan, which shall be in an
aggregate minimum amount of $250,000 or a whole multiple of $100,000 in excess
thereof. The proceeds of each Swing Line Loan will be made available by the
Swing Line Lender to the Company by crediting the account of the Company at the
office of the Swing Line Lender with
32
27
such proceeds. The proceeds of Swing Line Loans may be used solely for the
purposes referred to in subsection 3.3.
(b) The Swing Line Lender at any time in its sole and
absolute discretion may, and on the fifteenth day (or if such day is not a
Business Day, the next Business Day) and last Business Day of each month shall,
on behalf of the Company (which hereby irrevocably directs the Swing Line
Lender to act on its behalf) request each Lender, including the Swing Line
Lender, to make a Revolving Credit Loan in an amount equal to such Lender's
Revolving Credit Commitment Percentage of the amount of the Swing Line Loans
(the "Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in paragraph (f) of Section 9 shall have
occurred (in which event the procedures of paragraph (c) of this subsection 3.4
shall apply) each Lender shall make the proceeds of its Revolving Credit Loan
available to the Swing Line Lender for the account of the Swing Line Lender at
the Alternate Base Rate Lending Office of the Swing Line Lender prior to 2:00
p.m. (New York City time) in funds immediately available on the Business Day
next succeeding the date such notice is given. The proceeds of such Revolving
Credit Loans shall be immediately applied to repay the Refunded Swing Line
Loans.
(c) If prior to the making of a Revolving Credit Loan
pursuant to paragraph (b) of this subsection 3.4 one of the events described in
paragraph (f) of Section 9 shall have occurred, each Lender will, on the date
such Loan was to have been made, purchase an undivided participating interest
in the Refunded Swing Line Loan in an amount equal to its Revolving Credit
Commitment Percentage of such Refunded Swing Line Loan. Each Lender will
immediately transfer to the Swing Line Lender in immediately available funds,
the amount of its participation and upon receipt thereof the Swing Line Lender
will deliver to such Lender a Swing Line Loan Participation Certificate dated
the date of receipt of such funds and in such amount.
(d) Whenever, at any time after the Swing Line Lender has
received from any Lender such Lender's participating interest in a Refunded
Swing Line Loan, the Swing Line Lender receives any payment on account thereof,
the Swing Line Lender will distribute to such Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender's participating interest
was outstanding and funded) in like funds as received; provided, however, that
in the event that such payment received by the Swing Line Lender is required to
be returned, such Lender will return to the Swing Line Lender any portion
thereof previously distributed by the Swing Line Lender to it in like funds as
such payment is required to be returned by the Swing Line Lender.
(e) Each Lender's obligation to purchase participating
interests pursuant to subsection 3.4(c) shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set- off, counterclaim, recoupment, defense or other right which such
Lender may have against the Swing Line Lender, the Company or any other Person
for any reason whatsoever; (ii) the occurrence or continuance of an Event of
Default; (iii) any adverse change in the condition (financial or otherwise) of
the Company; (iv) any breach of this Agreement by the Company or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.
33
28
3.5 Issuance of Letters of Credit. (a) The Company may from
time to time request the Issuing Lender to issue a Standby L/C or a Commercial
L/C by delivering to the Administrative Agent at its address specified in
subsection 11.2 a letter of credit application in the Issuing Lender's then
customary form (the "L/C Application") completed to the satisfaction of the
Issuing Lender, together with the proposed form of such Letter of Credit (which
shall comply with the applicable requirements of paragraph (b) below) and such
other certificates, documents and other papers and information as the Issuing
Lender may reasonably request; provided that if the Issuing Lender informs the
Company that it is for any reason unable to open such Letter of Credit, the
Company may request any Lender to open such Letter of Credit upon the same
terms offered to the Issuing Lender and each reference to the Issuing Lender
for purposes of subsections 3.5 through 3.14, 6.1 and 6.2 shall be deemed to be
a reference to such issuing Lender.
(b) Each Standby L/C and Commercial L/C issued hereunder
shall, among other things, (i) be in such form requested by the Company as
shall be acceptable to the Issuing Lender in its sole discretion and (ii) in
the case of each Standby L/C, have an expiry date occurring not later than 365
days after the date of issuance of such Standby L/C and, in the case of each
Commercial L/C, have an expiry date occurring not later than 120 days after the
date of issuance of such Commercial L/C and, in all cases, may be automatically
renewed on its expiry date for an additional period equal to the initial term
but in no case shall any Letter of Credit have an expiry date occurring later
than three Business Days before the Revolving Credit Termination Date. Each
L/C Application and each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.
3.6 Participating Interests. Effective in the case of each
Standby L/C and Commercial L/C as of the date of the opening thereof, the
Issuing Lender agrees to allot and does allot, to itself and each other Lender,
and each Lender severally and irrevocably agrees to take and does take in such
Letter of Credit and the related L/C Application, an L/C Participating Interest
in a percentage equal to such Lender's Revolving Credit Commitment Percentage.
3.7 Procedure for Opening Letters of Credit. The Issuing
Lender will notify each Lender after the end of each calendar month of any L/C
Applications received by the Issuing Lender from the Company during such month.
Upon receipt of any L/C Application from the Company, the Issuing Lender will
process such L/C Application, and the other certificates, documents and other
papers delivered to the Issuing Lender in connection therewith, in accordance
with its customary procedures and, subject to the terms and conditions hereof,
shall promptly open such Letter of Credit by issuing the original of such
Letter of Credit to the beneficiary thereof and by furnishing a copy thereof to
the Company, provided that no such Letter of Credit shall be issued if
subsection 3.1 would be violated thereby.
3.8 Payments in Respect of Letters of Credit. (a) The
Company agrees forthwith upon demand by the Issuing Lender and otherwise in
accordance with the terms of the L/C Application relating thereto (i) to
reimburse the Issuing Lender for any payment made by the Issuing Lender under
any Letter of Credit issued for the account of the Company and (ii) to pay
34
29
interest on any unreimbursed portion of any such payment from the date of such
payment until reimbursement in full thereof at a rate per annum equal to (A) on
or prior to the date which is one Business Day after the day on which the
Issuing Lender demands reimbursement from the Company for such payment, the
Alternate Base Rate plus the Applicable Margin for the Revolving Credit Loans
and (B) thereafter, the Alternate Base Rate plus the Applicable Margin for
Revolving Credit Loans plus 2%.
(b) In the event that the Issuing Lender makes a payment
under any Letter of Credit and is not reimbursed in full therefor forthwith
upon demand of the Issuing Lender, and otherwise in accordance with the terms
of the L/C Application relating to such Letter of Credit, the Issuing Lender
will promptly notify each other Lender. Forthwith upon its receipt of any such
notice, each other Lender will transfer to the Issuing Lender, in immediately
available funds, an amount equal to such other Lender's pro rata share of the
L/C Obligation arising from such unreimbursed payment. Promptly, upon its
receipt from such other Lender of such amount, the Issuing Lender will
complete, execute and deliver to such other Lender an L/C Participation
Certificate dated the date of such receipt and in such amount.
(c) Whenever, at any time after the Issuing Lender has made a
payment under any Letter of Credit and has received from any other Lender such
other Lender's pro rata share of the L/C Obligation arising therefrom, the
Issuing Lender receives any reimbursement on account of such L/C Obligation or
any payment of interest on account thereof, the Issuing Lender will promptly
distribute to such other Lender its pro rata share thereof in like funds as
received; provided, however, that in the event that the receipt by the Issuing
Lender of such reimbursement or such payment of interest (as the case may be)
is required to be returned, such other Lender will return to the Issuing Lender
any portion thereof previously distributed by the Issuing Lender to it in like
funds as such reimbursement or payment is required to be returned by the
Issuing Lender.
3.9 Letter of Credit Fees. (a) In lieu of any letter of
credit commissions and fees provided for in any L/C Application relating to
Standby or Commercial L/Cs (other than standard issuance, amendment and
negotiation fees), the Company agrees to pay the Administrative Agent, for the
account of the Issuing Lender and the Participating Lenders, with respect to
each Standby or Commercial L/C issued for the account of the Company, a Standby
or Commercial L/C fee, as the case may be, equal to the Applicable Margin for
Revolving Credit Loans which are Eurodollar Loans (of which the Issuing Lender
shall retain for its own account, as the issuing bank and not on account of
its L/C Participating Interest therein, 1/4 of 1% per annum) on the daily
average amount available to be drawn under each Standby L/C in the case of a
Standby L/C and on the maximum face amount of each Commercial L/C in the case
of a Commercial L/C, in either case payable, in arrears, on the last day of
each fiscal quarter of the Company. The Administrative Agent will disburse any
Standby or Commercial L/C fees received pursuant to this subsection 3.9(a) to
the respective Lenders promptly following the receipt of any such fees in the
case of a Standby L/C and, in the case of a Commercial L/C, following the end
of the calendar month in which such Commercial L/C fees were received.
Notwithstanding the foregoing, the Company agrees to pay standard issuance,
amendment and negotiation fees to the Issuing Lender.
35
30
(b) For purposes of any payment of fees required pursuant to
this subsection 3.9, the Administrative Agent agrees to provide to the Company
a statement of any such fees to be so paid; provided that the failure by the
Administrative Agent to provide the Company with any such invoice shall not
relieve the Company of its obligation to pay such fees.
3.10 Letter of Credit Reserves. (a) If any Change in Law
shall either (i) impose, modify, deem or make applicable any reserve, special
deposit, assessment or similar requirement against letters of credit issued by
the Issuing Lender or (ii) impose on the Issuing Lender any other condition
regarding this Agreement (with respect to Letters of Credit) or any Letter of
Credit, and the result of any event referred to in clause (i) or (ii) above
shall be to increase the cost of the Issuing Lender of issuing or maintaining
any Letter of Credit (which increase in cost shall be the result of the Issuing
Lender's reasonable allocation of the aggregate of such cost increases
resulting from such events), then, upon demand by the Issuing Lender, the
Company shall immediately pay to the Issuing Lender, from time to time as
specified by the Issuing Lender, additional amounts which shall be sufficient
to compensate the Issuing Lender for such increased cost, together with
interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the rate applicable to Alternate Base Rate
Loans pursuant to subsection 4.5(b). The Company shall not be required to make
any payments to the Issuing Lender for any additional amounts pursuant to this
subsection 3.10(a) unless the Issuing Lender has given written notice to the
Company of its intent to request such payments prior to or within 60 days after
the date on which the Issuing Lender became entitled to claim such amounts. A
certificate, setting forth in reasonable detail the calculation of the amounts
involved, submitted by the Issuing Lender to the Company concurrently with any
such demand by the Issuing Lender, shall be conclusive, absent manifest error,
as to the amount thereof.
(b) In the event that any Change in Law with respect to the
Issuing Lender shall, in the opinion of the Issuing Lender, require that any
obligation under any Letter of Credit be treated as an asset or otherwise be
included for purposes of calculating the appropriate amount of capital to be
maintained by the Issuing Lender or any corporation controlling the Issuing
Lender, and such Change in Law shall have the effect of reducing the rate of
return on the Issuing Lender's or such corporation's capital, as the case may
be, as a consequence of the Issuing Lender's obligations under such Letter of
Credit to a level below that which the Issuing Lender or such corporation, as
the case may be, could have achieved but for such Change in Law (taking into
account the Issuing Lender's or such corporation's policies, as the case may
be, with respect to capital adequacy) by an amount deemed by the Issuing Lender
to be material, then from time to time following notice by the Issuing Lender
to the Company of such Change in Law, within 15 days after demand by the
Issuing Lender, the Company shall pay to the Issuing Lender such additional
amount or amounts as will compensate the Issuing Lender or such corporation, as
the case may be, for such reduction. The Issuing Lender agrees that, upon the
occurrence of any event giving rise to the operation of paragraph (a) or (b) of
this subsection 3.10 with respect to the Issuing Lender, it will, if requested
by the Company and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to avoid or minimize the
increase in costs or reduction in payments resulting from such event; provided,
however, that such avoidance or minimization can be made in such a manner that
the Issuing Lender, in its sole determination, suffers no economic, legal or
regulatory disadvantage. The Company shall not be required to
36
31
make any payments to the Issuing Lender for any additional amounts pursuant to
this subsection 3.10(b) unless the Issuing Lender has given written notice to
the Company of its intent to request such payments prior to or within 60 days
after the date on which the Issuing Lender became entitled to claim such
amounts. A certificate, in reasonable detail setting forth the calculation of
the amounts involved, submitted by the Issuing Lender to the Company
concurrently with any such demand by the Issuing Lender, shall be conclusive,
absent manifest error, as to the amount thereof.
(c) The Company and each Participating Lender agrees that the
provisions of the foregoing paragraphs (a) and (b) shall apply equally to each
Participating Lender in respect of its L/C Participating Interest in such
Letter of Credit, as if the references in such paragraphs and provisions
referred to, where applicable, such Participating Lender or, in the case of
paragraph (b), any corporation controlling such Participating Lender.
3.11 Further Assurances. The Company hereby agrees, from
time to time, to do and perform any and all acts and to execute any and all
further instruments reasonably requested by the Issuing Lender more fully to
effect the purposes of this Agreement and the issuance of Letters of Credit
hereunder.
3.12 Obligations Absolute. The payment obligations of the
Company under this Agreement with respect to 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:
(i) the existence of any claim, set-off, defense
or other right which the Company or any of its Subsidiaries may have
at any time against any beneficiary, or any transferee, of any Letter
of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender, the Administrative
Agent or any Lender, or any other Person, whether in connection with
this Agreement, any Credit Document, the transactions contemplated
herein, or any unrelated transaction;
(ii) any statement or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid
or any statement therein being untrue or inaccurate in any respect;
(iii) payment by the Issuing Lender under any
Letter of Credit against presentation of a draft or certificate or
other document which does not comply with the terms of such Letter of
Credit or is insufficient in any respect, except where such payment
constitutes gross negligence or willful misconduct on the part of the
Issuing Lender; or
(iv) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing, except for
any such circumstances or happening constituting gross negligence or
willful misconduct on the part of the Issuing Lender.
37
32
3.13 Assignments. No Participating Lender's participation in
any Letter of Credit or any of its rights or duties hereunder shall be
subdivided, assigned or transferred (other than in connection with a transfer
of part or all of such Participating Lender's Revolving Credit Commitment in
accordance with subsection 11.6(c)) without the prior written consent of the
Issuing Lender, which consent will not be unreasonably withheld. Such consent
may be given or withheld without the consent or agreement of any other
Participating Lender. Notwithstanding the foregoing, a Participating Lender
may subparticipate its L/C Participating Interest without obtaining the prior
consent or agreement of the Issuing Lender.
3.14 Participations. Each Lender's obligation to purchase
participating interests pursuant to subsection 3.6 shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or other right
which such Lender may have against the Issuing Lender, the Company or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of an
Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Company; (iv) any breach of this Agreement by the Company or
any other Lender; or (v) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
SECTION 4. GENERAL PROVISIONS APPLICABLE TO LOANS
4.1 Procedure for Borrowing. (a) The Company may borrow
under the Commitments on any Business Day, provided that, with respect to any
borrowing, the Company shall give the Administrative Agent irrevocable notice
(which notice must be received by the Administrative Agent prior to 2:00 p.m.
(or, with respect to Swing Line Loans, 3:00 p.m.), New York City time), (i)
three Business Days prior to the requested Borrowing Date if all or any part of
the Loans are to be Eurodollar Loans and (ii) one Business Day prior to the
requested Borrowing Date (or, in the case of Swing Line Loans and Loans made on
the Closing Date, on the requested Borrowing Date) if the borrowing is to be
solely of Alternate Base Rate Loans and specifying (A) the amount of the
borrowing, (B) whether such Loans are initially to be Eurodollar Loans or
Alternate Base Rate Loans or a combination thereof, (C) if the borrowing is to
be entirely or partly Eurodollar Loans, the length of the Interest Period for
such Eurodollar Loans and (D) whether the Loan is a Term Loan (with respect to
Loans made on the Closing Date), a Swing Line Loan or a Revolving Credit Loan;
provided, however, that the Loans made on the Closing Date shall be made
initially as Alternate Base Rate Loans. Upon receipt of such notice the
Administrative Agent shall promptly notify each Lender. Not later than 2:00
p.m., New York City time, on the Borrowing Date specified in such notice, each
Lender shall make available to the Administrative Agent at the office of the
Administrative Agent specified in subsection 11.2 (or at such other location as
the Administrative Agent may direct) an amount in immediately available funds
equal to the amount of the Loan to be made by such Lender (except that proceeds
of Swing Line Loans will be made available to the Company in accordance with
subsection 3.4(a)). Loan proceeds received by the Administrative Agent
hereunder shall promptly be made available to the Company by the Administrative
Agent's crediting the account of the Company, at the office of the
Administrative Agent specified in subsection 11.2, with the aggregate amount
actually received by
38
33
the Administrative Agent from the Lenders and in like funds as received by the
Administrative Agent.
(b) Any borrowing of Eurodollar Loans hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (i) the aggregate principal amount of all Eurodollar Loans
having the same Interest Period shall not be less than $2,000,000 or a whole
multiple of $1,000,000 in excess thereof and (ii) no more than sixteen Interest
Periods shall be in effect at any one time.
4.2 Conversion and Continuation Options. (a) Subject to
subsection 4.12, the Company may elect from time to time to convert Eurodollar
Loans into Alternate Base Rate Loans by giving the Administrative Agent
irrevocable notice of such election, to be received by the Administrative Agent
prior to 2:00 p.m., New York City time, at least three Business Days prior to
the proposed conversion date. The Company may elect from time to time to
convert all or a portion of the Alternate Base Rate Loans (other than Swing
Line Loans) then outstanding to Eurodollar Loans by giving the Administrative
Agent irrevocable notice of such election, to be received by the Administrative
Agent prior to 2:00 p.m., New York City time, at least three Business Days
prior to the proposed conversion date, specifying the Interest Period selected
therefor, and, unless a Default or Event of Default has occurred and is
continuing and the Administrative Agent or the Required Lenders have given
written notice thereof to the Company, such conversion shall be made on the
requested conversion date or, if such requested conversion date is not a
Business Day, on the next succeeding Business Day. Upon receipt of any notice
pursuant to this subsection 4.2, the Administrative Agent shall promptly notify
each Lender thereof. All or any part of the outstanding Loans (other than
Swing Line Loans) may be converted as provided herein, provided that partial
conversions of Alternate Base Loans shall be in the aggregate principal amount
of $1,000,000 or a whole multiple of $100,000 in excess thereof and the
aggregate principal amount of the resulting Eurodollar Loans outstanding in
respect of any one Interest Period shall be at least $2,000,000 or a whole
multiple of $1,000,000 in excess thereof.
(b) Any Eurodollar Loans may be continued as such upon
the expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in subsection
1.1, of the length of the next Interest Period to be applicable to such Loans,
provided that no Eurodollar Loan may be continued as such (i) when any Event of
Default has occurred and is continuing and the Administrative Agent or the
Required Lenders have, by written notice to the Company, determined that such a
continuation is not appropriate, (ii) if, after giving effect thereto,
subsection 4.1(b) would be contravened or (iii) after the date that is one
month prior to the Revolving Credit Termination Date (in the case of
continuations of Revolving Credit Loans) or the date of the final installment
of principal of the Term Loans, as applicable.
(c) Notwithstanding anything in this Agreement to the
contrary, unless otherwise agreed to by the Administrative Agent, no Loan shall
be made as, converted to or continued as a Eurodollar Loan during the period
commencing on the Closing Date and ending on the 33rd day following the Closing
Date; provided that all or a portion of the Loans made on the
39
34
Closing Date may, at the Company's option, subject to the other provisions of
this Agreement, be converted to Eurodollar Loans with an Interest Period of one
month on or after the third day following the Closing Date.
4.3 Changes of Commitment Amounts. (a) The Company shall
have the right, upon not less than five Business Days' notice to the
Administrative Agent, to terminate or, from time to time, permanently reduce
the Revolving Credit Commitments, subject to the provisions of this subsection
4.3. To the extent, if any, that the sum of the amount of the Revolving Credit
Loans, Swing Line Loans and L/C Obligations then outstanding and the amounts
available to be drawn under outstanding Letters of Credit exceeds the amount of
the Revolving Credit Commitments as then reduced, the Company shall be required
to make a prepayment equal to such excess amount, the proceeds of which shall
be applied first, to payment of the Swing Line Loans then outstanding, second,
to payment of the Revolving Credit Loans then outstanding, third, to payment of
any L/C Obligations then outstanding, and fourth, to cash collateralize any
outstanding Letters of Credit on terms reasonably satisfactory to the
Administrative Agent. Any such termination of the Revolving Credit Commitments
shall be accompanied by prepayment in full of the Revolving Credit Loans, Swing
Line Loans and L/C Obligations then outstanding and by cash collateralization
of any outstanding Letters of Credit on terms reasonably satisfactory to the
Administrative Agent. Upon termination of the Revolving Credit Commitments,
any Letter of Credit then outstanding which has been so cash collateralized
shall no longer be considered a "Letter of Credit" as defined in subsection 1.1
and any L/C Participating Interests heretofore granted by the Issuing Lender to
the Lenders in such Letter of Credit shall be deemed terminated (subject to
automatic reinstatement in the event that such cash collateral is returned and
the Issuing Lender is not fully reimbursed for any such L/C Obligations) but
the Letter of Credit fees payable under subsection 3.9 shall continue to accrue
to the Issuing Lender and the Participating Lenders (or, in the event of any
such automatic reinstatement, as provided in subsection 3.9) with respect to
such Letter of Credit until the expiry thereof.
(b) In the case of termination of the Revolving Credit
Commitments, interest accrued on the amount of any prepayment relating thereto
and any unpaid commitment fee accrued hereunder shall be paid on the date of
such termination. Any such partial reduction of the Revolving Credit
Commitments shall be in an amount of $2,000,000, or a whole multiple of
$1,000,000 in excess thereof, and shall, in each case, reduce permanently the
amount of the Revolving Credit Commitments then in effect.
4.4 Optional and Mandatory Prepayments; Repayments of Term
Loans. (a) Subject to subsection 4.12, the Company may at any time and from
time to time prepay Loans, in whole or in part, without premium or penalty,
upon at least one Business Day's (or, in the case of Swing Line Loans, by 2:00
p.m., New York City time, on the same Business Day) irrevocable notice to the
Administrative Agent in the case of Alternate Base Rate Loans, and three
Business Days' irrevocable notice to the Administrative Agent in the case of
Eurodollar Loans, specifying the date and amount of prepayment and whether the
prepayment is of Revolving Credit Loans or Term Loans. Upon receipt of such
notice the Administrative Agent shall promptly notify each Lender thereof. If
such notice is given, the Company shall make such prepayment, and the payment
amount specified in such notice shall be due and payable, on the date specified
therein.
40
35
Partial prepayments (i) of Term Loans shall be in an aggregate principal amount
equal to the lesser of (A) (I) $2,000,000, or a whole multiple of $1,000,000 in
excess thereof with respect to Eurodollar Loans or (II) $1,000,000, or a whole
multiple of $100,000 in excess thereof with respect to Alternate Base Rate
Loans and (B) the aggregate unpaid principal amount of the Term Loans and (ii)
of Revolving Credit Loans shall be in an aggregate principal amount equal to
the lesser of (A) (I) $2,000,000 or a whole multiple of $1,000,000 in excess
thereof with respect to Eurodollar Loans or (II) $1,000,000, or a whole
multiple of $100,000 in excess thereof with respect to Alternate Base Rate
Loans and (B) the aggregate unpaid principal amount of the Revolving Credit
Loans, as the case may be. Prepayments of the Term Loans pursuant to this
subsection 4.4(a) shall be applied to the remaining installments thereof
ratably according to the amounts of such installments.
(b) (i) Unless the Section 4.4 Lenders shall otherwise
agree, if Holdings, the Company or any of its Subsidiaries shall issue any
Capital Stock subsequent to the Closing Date, 50% of the Net Proceeds thereof
(excluding amounts provided by the Initial Shareholders or their Affiliates or
by management employees of such issuer) shall be promptly applied toward the
prepayment of the Term Loans (applied to the remaining installments thereof
ratably according to the amounts thereof); provided, that Net Proceeds of such
issuance shall be deemed to be Net Proceeds of such issuance for purposes of
this subsection 4.4(b)(i) only after deducting therefrom the redemption or
repurchase or cancellation of the preferred stock of the Company held by
Holdings (and the concurrent redemption or repurchase by Holdings of the
Holdings Subordinated Debt with the proceeds of such repurchase, redemption or
cancellation) and the redemption of up to 35% of the Permanent Subordinated
Debt under the "equity clawback" provision and, in each case, the payment of
any premium or penalties or accrued interest or dividends with respect thereto.
(ii) Unless the Section 4.4 Lenders and the
Company shall otherwise agree, if the Company or any of its Subsidiaries shall
incur or permit the incurrence of any Indebtedness subsequent to the Closing
Date (other than Indebtedness permitted pursuant to subsections 8.1(b), (c),
(d) (except as otherwise provided in subsection 8.1(d)), (e), (f), (g), (h),
(i), (j), (k) and subordinated Indebtedness provided by the Initial
Shareholders or their Affiliates), 100% of the Net Proceeds thereof shall be
promptly applied toward the prepayment of the Loans and reduction of the
Commitments as set forth in clause (v) of this subsection 4.4(b).
(iii) Unless the Section 4.4 Lenders shall
otherwise agree, the Company or any of its Subsidiaries shall receive Net
Proceeds from any Asset Sale subsequent to the Closing Date, such Net Proceeds
shall be promptly applied toward the prepayment of the Loans and reduction of
the Commitments as set forth in clause (v) of this subsection 4.4(b); provided
that such Net Proceeds need not be applied to the prepayment of the Loans and
the reduction of the Commitments until the earlier of the date that the
aggregate amount of Net Proceeds received by the Company or any of its
Subsidiaries from any Asset Sales exceeds $2,000,000 (and has not yet been
applied to the prepayment of the Loans and the reduction of the Commitments
hereunder) and the date which is six months after the last application of Net
Proceeds pursuant to this subsection 4.4(b)(iii).
41
36
(iv) So long as there are any Term Loans
outstanding, unless the Section 4.4 Lenders and the Company shall otherwise
agree, if there shall be Excess Cash Flow as at the end of any fiscal year
commencing with the Company's fiscal year ending on December 31, 1997, 75% of
such Excess Cash Flow, less the portion of any Excess Cash Flow which has been
previously applied toward prepayments of the Term Loans pursuant to this clause
(iv), shall be applied toward prepayment of the Term Loans (applied to the
remaining installments thereof ratably according to the amounts thereof). Each
such prepayment shall be made not later than 120 days after the end of such
fiscal year.
(v) Except as otherwise provided in this
subsection 4.4(b), prepayments made pursuant to this subsection 4.4(b) shall be
applied by the Company, first, to the prepayment of the Term Loans (applied to
the remaining installments thereof ratably according to the amounts thereof)
and, second, to reduce permanently the Revolving Credit Commitments. Any such
reduction of the Revolving Credit Commitments shall be accompanied by
prepayment of, first, the Swing Line Loans, second, the Revolving Credit Loans
and, third, the L/C Obligations to the extent, if any, that the sum of the
aggregate outstanding principal amount of Revolving Credit Loans, the aggregate
outstanding principal amount of all Swing Line Loans, the aggregate amount
available to be drawn under all outstanding Letters of Credit and the aggregate
outstanding amount of all L/C Obligations, in each case of all Lenders, exceeds
the amount of the aggregate Revolving Credit Commitments as so reduced,
provided that if the aggregate principal amount of Revolving Credit Loans,
Swing Line Loans and L/C Obligations then outstanding is less than the amount
of such excess (because Letters of Credit constitute a portion thereof), the
Company shall, to the extent of the balance of such excess, replace outstanding
Letters of Credit and/or deposit an amount in cash in a cash collateral account
established for the benefit of the Lenders.
(vi) If, at any time, a Borrowing Base Deficiency
shall exist, the Company shall immediately prepay the Revolving Credit Loans,
Swing Line Loans and L/C Obligations then outstanding in an aggregate principal
amount sufficient to eliminate such Borrowing Base Deficiency, provided that if
the aggregate principal amount of Revolving Credit Loans, Swing Line Loans and
L/C Obligations then outstanding is less than the amount of such Borrowing Base
Deficiency (because Letters of Credit constitute a portion thereof), the
Company shall, to the extent of the balance of such Borrowing Base Deficiency
in excess of such amount of Revolving Credit Loans, Swing Line Loans and L/C
Obligations then outstanding, immediately replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account established for
the benefit of the Lenders. Prepayments of Loans made pursuant to this
subsection 4.4(b)(vi) shall be applied, first, to the aggregate outstanding
Swing Line Loans, second, to the aggregate outstanding Revolving Credit Loans
and, third, to the aggregate outstanding L/C Obligations.
(vii) The Company shall give the Administrative
Agent (which shall promptly notify each Lender) at least one Business Day's
notice of each prepayment or mandatory reduction pursuant to this subsection
4.4(b) setting forth the date and amount thereof. Except as otherwise may be
agreed by the Company and the Required Lenders, any prepayment of Loans
pursuant to this subsection 4.4 shall be applied, first, to any Alternate Base
Rate Loans then
42
37
outstanding and the balance of such prepayment, if any, to the Eurodollar Loans
then outstanding; provided that prepayments of Eurodollar Loans, if not on the
last day of the Interest Period with respect thereto, shall, at the Company's
option, be prepaid subject to the provisions of subsection 4.12 or the amount
of such prepayment (after application to any Alternate Base Rate Loans) shall
be deposited with the Administrative Agent as cash collateral for the Loans on
terms reasonably satisfactory to the Administrative Agent and thereafter shall
be applied in the order of the Interest Periods next ending most closely to the
date such prepayment is required to be made and on the last day of each such
Interest Period. After such application, unless an Event of Default shall have
occurred and be continuing, any remaining interest earned on such cash
collateral shall be paid to the Company.
(c) The Term Loans shall be repaid in fourteen consecutive
semi-annual installments each on the dates set forth below (each such day, an
"Installment Payment Date") in an aggregate amount equal to the amount
specified for each such Installment Payment Date, as such amounts may be
reduced pursuant to subsection 4.4(b):
Installment Payment Date Installment Amount
------------------------ ------------------
June 30, 1997 $500,000
December 31, 1997 $500,000
June 30, 1998 $500,000
December 31, 1998 $500,000
June 30, 1999 $500,000
December 31, 1999 $500,000
June 30, 2000 $500,000
December 31, 2000 $500,000
June 30, 2001 $13,000,000
December 31, 2001 $13,000,000
June 30, 2002 $17,500,000
December 31, 2002 $17,500,000
June 30, 2003 $17,500,000
October 31, 2003 $17,500,000
(d) Any and all amounts repaid on account of the Term Loans
pursuant to this subsection 4.4 or otherwise may not be reborrowed. Accrued
interest on the amount of any prepayments shall be paid on the Interest Payment
Date next succeeding the date of any partial prepayment and on the date on such
prepayment in the case of a prepayment in full of any Loans.
4.5 Interest Rates and Payment Dates. (a) Eurodollar Loans
shall bear interest for each day during each Interest Period applicable
thereto, commencing on (and including) the first day of such Interest Period
to, but excluding, the last day of such Interest Period, on the unpaid
principal amount thereof at a rate per annum equal to the Eurodollar Rate
determined for such Interest Period plus the Applicable Margin.
43
38
(b) Alternate Base Rate Loans shall bear interest for the
period from and including the date such Loans are made to, but excluding, the
maturity date thereof, or to, but excluding, the conversion date if such Loans
are earlier converted into Eurodollar Loans on the unpaid principal amount
thereof at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin.
(c) If all or a portion of (i) the principal amount of any of
the Loans or (ii) any interest payable thereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise) such Loan, if a
Eurodollar Loan, shall be converted into an Alternate Base Rate Loan at the end
of the then-current Interest Period for said Eurodollar Loan (which conversion
shall occur automatically and without need for compliance with the conditions
for conversion set forth in subsection 4.2), and any such overdue amount shall,
without limiting the rights of the Lenders under Section 9, bear interest
(which shall be payable on demand) at a rate per annum which is 2% above the
Alternate Base Rate plus the Applicable Margin (or, in the case of a Eurodollar
Loan, the Eurodollar Rate for the Interest Period plus the Applicable Margin
plus 2%, if higher) from the date of such non-payment until paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date and on the date of payment in full of the respective Loans and in
the case of the Revolving Credit Loans on date of termination of the Revolving
Credit Commitments.
4.6 Computation of Interest and Fees. (a) Interest in
respect of Alternate Base Rate Loans, at any time that the Alternate Base Rate
is determined by reference to the Prime Rate, and all fees hereunder shall be
calculated on the basis of a 365 (or 366 as the case may be) day year for the
actual days elapsed. Interest in respect of Eurodollar Loans and in respect of
Alternate Base Rate Loans, at any time that the Alternate Base Rate is
determined by reference to the Base CD Rate or the Federal Funds Effective
Rate, shall be calculated on the basis of a 360 day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Company and the Lenders of each determination of a Eurodollar Rate. Any change
in the interest rate on a Loan resulting from a change in the Alternate Base
Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change in the Alternate Base Rate
is announced or such change in the Eurocurrency Reserve Requirements becomes
effective, as the case may be. The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of the effective date and the
amount of each such change.
(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Company and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the Company,
deliver to the Company a statement showing the quotations used by the
Administrative Agent in determining the Eurodollar Rate.
(c) If at any time the Reference Lender shall cease to be
a Lender hereunder, such Lender shall cease to be the Reference Lender, and
then the Administrative Agent, upon
44
39
Agreement with the Company, shall, by notice to the Company and the Lenders,
designate another Lender as reference Lender.
(d) Each Reference Lender shall use its best efforts to
furnish quotations of rates to the Administrative Agent as contemplated hereby.
4.7 Certain Fees. The Company agrees to pay to the
Administrative Agent, for its own account, a non- refundable agent's fee, in
the amount per annum as set forth in the fee letter, dated as of September 27,
1996, between Chase and Investcorp Investment Equity Limited payable in advance
on the Closing Date and annually thereafter.
4.8 Inability to Determine Interest Rate. In the event that
the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that (a) by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate for any Interest Period with respect
to (i) proposed Loans that the Company has requested be made as Eurodollar
Loans, (ii) any Eurodollar Loans that will result from the requested conversion
of all or part of the Alternate Base Rate Loans into Eurodollar Loans or (iii)
the continuation of any Eurodollar Loan as such for an additional Interest
Period, or (b) dollar deposits in the relevant amount and for the relevant
period with respect to any such Eurodollar Loan are not generally available to
the Lenders in their respective Eurodollar Lending Offices' interbank
eurodollar markets, the Administrative Agent shall forthwith give telecopy
notice of such determination, confirmed in writing, to the Company and the
Lenders at least one day prior to, as the case may be, the requested Borrowing
Date, the conversion date or the last day of such Interest Period. If such
notice is given (i) any requested Eurodollar Loans shall be made as Alternate
Base Rate Loans, (ii) any Alternate Base Rate Loans that were to have been
converted to Eurodollar Loans shall be continued as Alternate Base Rate Loans,
and (iii) any outstanding Eurodollar Loans shall be converted, on the last day
of the then current Interest Period applicable thereto, into Alternate Base
Rate Loans. Until such notice has been withdrawn by the Administrative Agent,
no further Eurodollar Loans shall be made and no Alternate Base Rate Loans
shall be converted to Eurodollar Loans.
4.9 Pro Rata Treatment and Payments. (a) Except to the
extent otherwise provided herein, each borrowing of Loans by the Company from
the Lenders and any reduction of the Commitments of the Lenders hereunder shall
be made pro rata according to the relevant Commitment Percentages of the
Lenders with respect to the Loans borrowed or the Commitments to be reduced.
(b) Whenever any payment received by the Administrative Agent
under this Agreement or any Note or any Credit Document is insufficient to pay
in full all amounts then due and payable to the Administrative Agent and the
Lenders under this Agreement:
(i) If the Administrative Agent has not received
a Payment Sharing Notice (or, if the Administrative Agent has received
a Payment Sharing Notice but the Event of Default specified in such
Payment Sharing Notice has been cured or waived in
45
40
accordance with the provisions of this Agreement), such payment shall
be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the following order: First,
to the payment of fees and expenses due and payable to the
Administrative Agent under and in connection with this Agreement and
the other Credit Documents; Second, to the payment of all expenses due
and payable under subsection 11.5, ratably among the Lenders in
accordance with the aggregate amount of such payments owed to each
such Lender; Third, to the payment of fees due and payable under
subsections 3.2 and 3.9, ratably among the Lenders in accordance with
the Commitment Percentage of each Lender of the Commitment for which
such payment is owed and, in the case of the Issuing Lender, the
amount retained by the Issuing Lender for its own account pursuant to
subsection 3.9; Fourth, to the payment of interest then due and
payable on the Loans and on the L/C Obligations, ratably in accordance
with the aggregate amount of interest owed to each such Lender; and
Fifth, to the payment of the principal amount of the Loans and the L/C
Obligations which is then due and payable, ratably among the Lenders
in accordance with the aggregate principal amount owed to each such
Lender; or
(ii) If the Administrative Agent has received a
Payment Sharing Notice which remains in effect, all payments received
by the Administrative Agent under this Agreement or any Note shall be
distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the following order: First, to
the payment of all amounts described in clauses "First" through
"Third" of the foregoing clause (i), in the order set forth therein;
Second, to the payment of the interest accrued on all Loans and L/C
Obligations, regardless of whether any such amount is then due and
payable, ratably among the Lenders in accordance with the aggregate
accrued interest plus the aggregate principal amount owed to such
Lender; and Third, to the payment of the principal amount of all Loans
and L/C Obligations, regardless of whether any such amount is then due
and payable, ratably among the Lenders in accordance with the
aggregate principal amount owed to such Lender.
(c) If any Lender (a "Non-Funding Lender") has (x) failed to
make a Revolving Credit Loan required to be made by it hereunder, and the
Administrative Agent has determined that such Lender is not likely to make such
Revolving Credit Loan or (y) given notice to the Company or the Administrative
Agent that it will not make, or that it has disaffirmed or repudiated any
obligation to make, any Revolving Credit Loan, in each case by reason of the
provisions of the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, as amended, or otherwise, (i) any payment made on account of the
principal of the Revolving Credit Loans outstanding shall be made as follows:
(A) in the case of any such payment made on any date when and
to the extent that, in the determination of the Administrative Agent,
the Company would be able, under the terms and conditions hereof, to
reborrow the amount of such payment under the Commitments and to
satisfy any applicable conditions precedent set forth in Section 6 to
such reborrowing, such payment shall be made on account of the
outstanding Revolving Credit Loans held by the Lenders other than the
Non-Funding Lender pro rata according
46
41
to the respective outstanding principal amounts of the Revolving
Credit Loans of such Lenders; and
(B) otherwise, such payment shall be made on account of the
outstanding Revolving Credit Loans held by the Lenders pro rata
according to the respective outstanding principal amounts of such
Revolving Credit Loans; and
(ii) any payment made on account of interest on the Revolving Credit Loans
shall be made pro rata according to the respective amounts of accrued and
unpaid interest due and payable on the Revolving Credit Loans with respect to
which such payment is being made. The Company agrees to give the
Administrative Agent such assistance in making any determination pursuant to
subparagraph (i)(A) of this paragraph as the Administrative Agent may
reasonably request. The Administrative Agent shall notify the Lenders of any
such determination, which shall be conclusive and binding on the Lenders.
(d) All payments (including prepayments) to be made by the
Company on account of principal, interest and fees shall be made without
set-off or counterclaim and shall be made to the Administrative Agent, for the
account of the Lenders at the Administrative Agent's office located at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, in lawful money of the United States of
America and in immediately available funds. The Administrative Agent shall
promptly distribute such payments in accordance with the provisions of
subsection 4.9(b) promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on Eurodollar Loans) would become due
and payable on a day other than a Business Day, such payment shall become due
and payable on the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension), unless the result of such extension would be to extend such
payment into another calendar month in which event such payment shall be made
on the immediately preceding Business Day.
(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount which would constitute its Commitment Percentage of such borrowing
available to the Administrative Agent, the Administrative Agent may assume that
such Lender is making such amount available to the Administrative Agent in
accordance with subsection 4.1 and the Administrative Agent may, in reliance
upon such assumption, make available to the Company thereof a corresponding
amount. If such amount is not made available to the Administrative Agent by
the required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this subsection 4.9(e) shall be conclusive,
absent manifest error. If such Lender's Commitment Percentage of such
borrowing is not in fact made available to the
47
42
Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to Alternate Base
Rate Loans hereunder, on demand, from the Company, without prejudice to any
rights which the Company or the Administrative Agent may have against such
Lender hereunder. Nothing contained in this subsection 4.9 shall relieve any
Lender which has failed to make available its ratable portion of any borrowing
hereunder from its obligation to do so in accordance with the terms hereof.
(f) The failure of any Lender to make the Loan to be made by
it on any Borrowing Date shall not relieve any other Lender of its obligation,
if any, hereunder to make its Loan on such Borrowing Date, but no Lender shall
be responsible for the failure of any other Lender to make the Loan to be made
by such other Lender on such Borrowing Date.
(g) All payments and optional prepayments (other than
prepayments as set forth in subsection 4.11 with respect to increased costs) of
Eurodollar Loans hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of all Eurodollar Loans with the same Interest Period shall not be less
than $2,000,000 or a whole multiple of $1,000,000 in excess thereof.
4.10 Illegality. Notwithstanding any other provision herein,
if any Change in Law occurring after the date that any lender becomes a Lender
party to this Agreement, shall make it unlawful for such Lender to make or
maintain Eurodollar Loans as contemplated by this Agreement, the commitment of
such Lender hereunder to make Eurodollar Loans or to convert all or a portion
of Alternate Base Rate Loans into Eurodollar Loans shall forthwith be suspended
until such time, if any, as such illegality shall no longer exist and such
Lender's Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans for the duration of the respective
Interest Periods (or, if permitted by applicable law, at the end of such
Interest Periods) and all payments of principal which would otherwise be
applied to such Eurodollar Loans shall be applied instead to such Lender's
Alternate Base Rate Loans. The Company hereby agrees to pay any Lender,
promptly upon its demand, any amounts payable pursuant to subsection 4.12 in
connection with any conversion in accordance with this subsection 4.10 (such
Lender's notice of such costs, as certified in reasonable detail as to such
amounts to the Company through the Administrative Agent, to be conclusive
absent manifest error).
4.11 Requirements of Law. (a) In the event that any Change
in Law or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority occurring after the date that any lender becomes a Lender party to
this Agreement:
(i) does or shall subject any such Lender or its
Eurodollar Lending Office to any tax of any kind whatsoever with
respect to this Agreement, any Note or any Eurodollar Loans made by
it, or change the basis of taxation of payments to such Lender or its
Eurodollar Lending Office of principal, the commitment fee, interest
or any other amount payable hereunder (except for (x) net income and
franchise taxes imposed on the net income of such Lender or its
Eurodollar Lending Office by the jurisdiction under the
48
43
laws of which such Lender is organized or any political subdivision or
taxing authority thereof or therein, or by any jurisdiction in which
such Lender's Eurodollar Lending Office is located or any political
subdivision or taxing authority thereof or therein, including changes
in the rate of tax on the overall net income of such Lender or such
Eurodollar Lending Office, and (y) taxes resulting from the
substitution of any such system by another system of taxation,
provided that the taxes payable by Lenders subject to such other
system of taxation are not generally charged to borrowers from such
Lenders having loans or advances bearing interest at a rate similar to
the Eurodollar Rate);
(ii) does or shall impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities
in or for the account of, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such
Lender which are not otherwise included in the determination of the
Eurodollar Rate; or
(iii) does or shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such Lender
or its Eurodollar Lending Office of making, converting, renewing or maintaining
advances or extensions of credit or to reduce any amount receivable hereunder,
in each case, in respect of its Eurodollar Loans, then, in any such case, the
Company shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such additional cost or reduced amount
receivable which such Lender deems to be material as determined by such Lender
with respect to such Eurodollar Loans, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the Alternate Base Rate plus 1%.
(b) In the event that any Change in Law occurring after the
date that any lender becomes a Lender party to this Agreement with respect to
any such Lender shall, in the opinion of such Lender, require that any
Commitment of such Lender be treated as an asset or otherwise be included for
purposes of calculating the appropriate amount of capital to be maintained by
such Lender or any corporation controlling such Lender, and such Change in Law
shall have the effect of reducing the rate of return on such Lender's or such
corporation's capital, as the case may be, as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation, as the case may be, could have achieved but for such Change in Law
(taking into account such Lender's or such corporation's policies, as the case
may be, with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time following notice by such Lender to the
Company of such Change in Law as provided in paragraph (c) of this subsection
4.11, within 15 days after demand by such Lender, the Company shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
corporation, as the case may be, for such reduction.
(c) The Company shall not be required to make any payments to
any Lender for any additional amounts pursuant to this subsection 4.11 unless
such Lender has given written notice to the Company, through the Administrative
Agent, of its intent to request such payments
49
44
prior to or within 60 days after the date on which such Lender became entitled
to claim such amounts. If any Lender has notified the Company through the
Administrative Agent of any increased costs pursuant to paragraph (a) of this
subsection 4.11, the Company at any time thereafter may, upon at least three
Business Days' notice to the Administrative Agent (which shall promptly notify
the Lenders thereof), and subject to subsection 4.12, prepay (or convert into
Alternate Base Rate Loans) all (but not a part) of the Eurodollar Loans then
outstanding. Each Lender agrees that, upon the occurrence of any event giving
rise to the operation of paragraph (a) of this subsection 4.11 with respect to
such Lender, it will, if requested by the Company and to the extent permitted
by law or by the relevant Governmental Authority, endeavor in good faith to
avoid or minimize the increase in costs or reduction in payments resulting from
such event (including, without limitation, endeavoring to change its Eurodollar
Lending Office); provided, however, that such avoidance or minimization can be
made in such a manner that such Lender, in its sole determination, suffers no
economic, legal or regulatory disadvantage. If any Lender requests
compensation from the Company under this subsection 4.11, the Company may, by
notice to such Lender (with a copy to the Administrative Agent), suspend the
obligation of such Lender thereafter to make or continue Loans of the Type with
respect to which such compensation is requested, or to convert Loans of any
other Type into Loans of such Type, until the Requirement of Law giving rise to
such request ceases to be in effect, provided that such suspension shall not
affect the right of such Lender to receive the compensation so requested.
(d) Each Lender that is not a United States Person (as
defined in Section 7701(a)(30) of the Code) for federal income tax purposes
either (1) in the case of a Lender that is a "bank" within the meaning of
Section 881(c)(3)(A) of the Code, (i) represents to the Company (for the
benefit of the Company and the Administrative Agent) that under applicable law
and treaties no taxes are required to be withheld by the Company or the
Administrative Agent with respect to any payments to be made to such Lender in
respect of the Loans or the L/C Participating Interests, (ii) agrees to furnish
to the Company, with a copy to the Administrative Agent, either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein
such Lender claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder) and (iii) agrees (for the
benefit of the Company and the Administrative Agent), to the extent it may
lawfully do so at such times, to provide the Company, with a copy to the
Administrative Agent, a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Lender, and to comply from time to time with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption or (2) in the case of a Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, (i) represents to the Company (for
the benefit of the Company and the Administrative Agent) that it is not a bank
within the meaning of Section 881(c)(3)(A) of the Code, (ii) agrees to furnish
to the Company, with a copy to the Administrative Agent, (A) a certificate
substantially in the form of Exhibit L hereto (any such certificate, a
"Subsection 4.11(d)(2) Certificate") and (B) two accurate and complete original
signed copies of Internal Revenue Service Form W-8, certifying to such Lender's
legal entitlement at the Closing Date to an exemption from U.S. withholding
tax under the provisions of Section 881(c) of the Code with respect to all
payments to be made under this Agreement, and (iii) agrees, to the extent
legally entitled to do so, upon reasonable request by the
50
45
Company, to provide to the Company (for the benefit of the Company and the
Administrative Agent) such other forms as may be required in order to establish
the legal entitlement of such Lender to an exemption from withholding with
respect to payments under this Agreement. Notwithstanding any provision of
this subsection 4.11 to the contrary, the Company shall have no obligation to
pay any amount to or for the account of any Lender (or the Eurodollar Lending
Office of any Lender) on account of any taxes pursuant to this subsection 4.11,
to the extent that such amount results from (i) the failure of any Lender to
comply with its obligations pursuant to this subsection 4.11, (ii) any
representation or warranty made or deemed to be made by any Lender pursuant to
this subsection 4.11(d) proving to have been incorrect, false or misleading in
any material respect when so made or deemed to be made or (iii) any Change in
Law or compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental Authority,
the effect of which would be to subject to any taxes any payment made pursuant
to this Agreement to any Lender making the representation and covenants set
forth in subsection 4.11(d)(2), which payment would not be subject to such
taxes were such Lender eligible to make and comply with, and actually made and
complied with, the representation and covenants set forth in subsection
4.11(d)(1) hereinabove.
(e) A certificate in reasonable detail as to any amounts
submitted by such Lender, through the Administrative Agent, to the Company,
shall be conclusive in the absence of manifest error. The covenants contained
in this subsection 4.11 shall survive the termination of this Agreement and
repayment of the Loans.
4.12 Indemnity. The Company agrees to indemnify each Lender
and to hold such Lender harmless from any loss or expense (but without
duplication of any amounts payable as default interest) which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment of
the principal amount of or interest on any Eurodollar Loans of such Lender,
including, but not limited to, any such loss or expense arising from interest
or fees payable by such Lender to lenders of funds obtained by it in order to
make or maintain its Eurodollar Loans hereunder, (b) default by the Company in
making a borrowing after the Company has given a notice in accordance with
subsection 4.1 or in making a conversion of Alternate Base Rate Loans to
Eurodollar Loans or in continuing Eurodollar Loans as such, in either case,
after the Company has given notice in accordance with subsection 4.2, (c)
default by the Company in making any prepayment after the Company has given a
notice in accordance with subsection 4.4 or (d) a payment or prepayment of a
Eurodollar Loan or conversion (including without limitation, a conversion
pursuant to subsection 4.10) of any Eurodollar Loan into an Alternate Base
Rate Loan, in either case on a day which is not the last day of an Interest
Period with respect thereto, including, but not limited to, any such loss or
expense arising from interest or fees payable by such Lender to lenders of
funds obtained by it in order to maintain its Eurodollar Loans hereunder (but
excluding loss of profit). This covenant shall survive termination of this
Agreement and repayment of the Loans.
4.13 Repayment of Loans; Evidence of Debt. (a) The Company
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender (i) the then unpaid principal amount of each Revolving
Credit Loan of such Lender on the Revolving Credit Termination Date, (ii) the
principal amount of the Term Loan of such Lender, in fourteen
51
46
consecutive installments, payable on each Installment Payment Date (or the then
unpaid principal amount of such Term Loan, or the date that the Term Loans
become due and payable pursuant to Section 9 and on the Maturity Date and (iii)
the then unpaid principal amount of the Swing Line Loans of the Swing Line
Lender on the Revolving Credit Termination Date. The Company hereby further
agrees to pay interest on the unpaid principal amount of the Loans from time to
time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 4.5.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of the Company to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain the Register
pursuant to subsection 11.6(d), and a subaccount therein for each Lender, in
which shall be recorded (i) the amount of each Revolving Credit Loan and Term
Loan made hereunder, the Type thereof and each Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Company to each Lender hereunder and (iii) both
the amount of any sum received by the Administrative Agent hereunder from the
Company and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each
Lender maintained pursuant to subsection 4.13(b) shall, to the extent permitted
by applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Company therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Company to repay (with applicable interest) the Loans made to
such Company by such Lender in accordance with the terms of this Agreement.
(e) The Company agrees that, upon the request to the
Administrative Agent by any Lender, the Company will execute and deliver to
such Lender (i) a promissory note of the Company evidencing the Revolving
Credit Loans of such Lender, substantially in the form of Exhibit A with
appropriate insertions as to date and principal amount (a "Revolving Credit
Note"), and/or (ii) a promissory note of the Company evidencing the Term Loan
of such Lender, substantially in the form of Exhibit B with appropriate
insertions as to date and principal amount (a "Term Loan Note"), and/or (iii)
in the case of the Swing Line Lender, a promissory note of the Company
evidencing the Swing Line Loans of the Swing Line Lender, substantially in the
form of Exhibit C with appropriate insertions as to date and principal amount
(the "Swing Line Note ").
4.14 Replacement of Lenders. In the event any Lender or the
Issuing Lender exercises its rights pursuant to subsection 4.10 or requests
payments pursuant to subsections 3.10 or 4.11, the Company may require, at the
Company's expense and subject to subsection 4.12, such Lender or the Issuing
Lender to assign, at par plus accrued interest and fees, without recourse (in
accordance with subsection 11.6) all of its interests, rights and obligations
hereunder (including all of its Commitments and the Loans and other amounts at
the time owing to it hereunder and its
52
47
Notes and its interest in the Letters of Credit) to a bank, financial
institution or other entity specified by the Company, provided that (i) such
assignment shall not conflict with or violate any law, rule or regulation or
order of any court or other Governmental Authority, (ii) the Company shall have
received the written consent of the Administrative Agent, which consent shall
not be unreasonably withheld, to such assignment, (iii) the Company shall have
paid to the assigning Lender or the Issuing Lender all monies other than
principal, interest and fees accrued and owing hereunder to it (including
pursuant to subsections 3.10, 4.10 and 4.11) and (iv) in the case of a required
assignment by the Issuing Lender, the Letters of Credit shall be canceled and
returned to the Issuing Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement
and to make the Loans and to induce the Issuing Lender to issue, and the
Participating Lenders to participate in, the Letters of Credit, the Company
hereby represents and warrants to each Lender and the Administrative Agent, as
of the Closing Date and as of the making of any extension of credit hereunder:
5.1 Financial Condition. (a) The consolidated balance sheet
of the Company and its consolidated Subsidiaries as at January 28, 1996 and the
related consolidated statement of operations for the fiscal year ended on such
date, audited by Price Waterhouse LLP, a copy of which has heretofore been
furnished to each Lender, present fairly in accordance with GAAP the
consolidated financial condition of the Company and its consolidated
Subsidiaries as at such date, and the consolidated results of their operations
and their consolidated cash flows for the fiscal year then ended. All such
financial statements have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither the Company nor any of its
consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Contingent Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any material interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto or expressly permitted to be
incurred hereunder.
(b) The unaudited consolidated balance sheets of the Company
as at July 28, 1996, certified by a Responsible Officer of the Company, copies
of which have heretofore been furnished to each Lender, present fairly in
accordance with GAAP the financial position of the Company and its consolidated
Subsidiaries as at such dates. Such balance sheets, including the related
schedules and notes thereto, have been prepared in accordance with GAAP (except
as approved by such Responsible Officer and disclosed therein). The Company
and its consolidated Subsidiaries did not have at the date of such balance
sheets, any material Contingent Obligation, contingent liability or liability
for taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency exchange
transaction, which is not reflected in such balance sheets or in the notes
thereto. During the period from July 28, 1996 to the Closing Date, no
dividends or other distributions have been
53
48
declared, paid or made upon the Capital Stock of the Company or any of its
consolidated Subsidiaries nor has any of the Capital Stock of the Company or
any of its consolidated Subsidiaries been redeemed, retired, purchased or
otherwise acquired for value by the Company or any of its consolidated
Subsidiaries, respectively except as described in the Stock Purchase Agreement.
(c) The unaudited consolidated pro forma balance sheet of the
Company and its consolidated Subsidiaries as at the Closing Date, certified by
a Responsible Officer of the Company (the "Pro Forma Balance Sheet"), a copy of
which has heretofore been furnished to each Lender, is the unaudited balance
sheet of the Company and its consolidated Subsidiaries, adjusted to give effect
(as if such events had occurred on such date) to (i) the Closing Date
Transactions, (ii) and the issuance of the Letters of Credit to be incurred or
issued, as the case may be, on the Closing Date; and (iii) the incurrence of
the Subordinated Debt and all other Indebtedness that the Company and its
consolidated Subsidiaries expects to incur, and the payment of all amounts the
Company and its consolidated Subsidiaries expects to pay, in connection with
the Closing Date Transactions. The Pro Forma Balance Sheet, together with the
notes thereto, was prepared based on good faith assumptions in accordance with
GAAP and is based on the best information available to the Company and its
consolidated Subsidiaries as of the date of delivery thereof, and reflects on a
pro forma basis the financial position of the Company and its consolidated
Subsidiaries as of the Closing Date as adjusted, as described above, assuming
that the events specified in the preceding sentence had actually occurred at
the Closing Date.
5.2 No Change. Since January 28, 1996, (a) there has been no
change, and (as of the Closing Date only) no development or event, which has
had or could reasonably be expected to have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of operations
of the Company and its Subsidiaries taken as a whole and (b) no dividends or
other distributions have been declared except as described in the Stock
Purchase Agreement, paid or made upon the Capital Stock of the Company nor has
any of the Capital Stock of the Company been redeemed, retired, repurchased or
otherwise acquired for value by the Company or any of its Subsidiaries, except
as permitted by subsection 8.11 and as described in the Stock Purchase
Agreement.
5.3 Corporate Existence; Compliance with Law. Each of the
Company and its Subsidiaries (a) is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation, (b) has full
corporate power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary to enable it to use
its corporate name and to own, lease or otherwise hold its properties and
assets and to carry on its business as presently conducted other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, would not have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries, taken as a whole, (c) is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership, leasing or holding of its properties
makes such qualification necessary, except such jurisdictions where the failure
so to qualify would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, taken as a
54
49
whole, and (d) except as disclosed in the Environmental Reports, is in
compliance with all applicable statutes, laws, ordinances, rules, orders,
permits and regulations of any governmental authority or instrumentality,
domestic or foreign (including, without limitation, those related to Hazardous
Materials and substances), except where noncompliance would not be reasonably
likely to have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole. Except as disclosed in the Environmental
Reports, none of the Company or any of its Subsidiaries has received any
written communication from a Governmental Authority that alleges that the
Company or any of its Subsidiaries is not in compliance, in all material
respects, with all material federal, state, local or foreign laws, ordinances,
rules and regulations.
5.4 Corporate Power; Authorization. Each of the Company and
its Subsidiaries has the corporate power and authority to make, deliver and
perform each of the Credit Documents to which it is a party, and the Company
has the corporate power and authority and legal right to borrow hereunder and
to have Letters of Credit issued for its account hereunder. Each of the
Company and its Subsidiaries has taken all necessary corporate action to
authorize the execution, delivery and performance of each of the Credit
Documents to which it is or will be a party and the Company has taken all
necessary corporate action to authorize the borrowings hereunder and the
issuance of Letters of Credit for its account hereunder. No consent or
authorization of, or filing with, any Person (including, without limitation,
any Governmental Authority) is required in connection with the execution,
delivery or performance by the Company or any of its Subsidiaries, or for the
validity or enforceability against the Company or any of its Subsidiaries, of
any Credit Document except for consents, authorizations and filings which have
been obtained or made and are in full force and effect and except (i) such
consents, authorizations and filings, the failure to obtain or perform (x)
which would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries taken as a whole and (y) which would not adversely affect the
validity or enforceability of any of the Credit Documents or the rights or
remedies of the Administrative Agent or the Lenders thereunder and (ii) such
filings as are necessary to perfect the Liens of the Lenders created pursuant
to this Agreement and the Security Documents.
5.5 Enforceable Obligations. This Agreement and the Stock
Purchase Agreement have been, and each of the other Credit Documents and any
other agreement to be entered into by any Credit Party pursuant to the Stock
Purchase Agreement will be, duly executed and delivered on behalf of such
Credit Party that is party thereto. The Stock Purchase Agreement has been duly
executed and delivered, to the best knowledge of the Company, on behalf of the
other parties thereto. This Agreement constitutes, and each of the other
Credit Documents and any other agreement to be entered into by any Credit Party
pursuant to the Stock Purchase Agreement will constitute upon execution and
delivery, the legal, valid and binding obligation of such Credit Party, and is
enforceable against such Credit Party in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). The Stock Purchase Agreement constitutes the
legal, valid and binding obligation of, to the best knowledge of the Company,
the parties thereto enforceable against such Persons in accordance with its
terms, except, in each case, as may be
55
50
limited by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting creditors' rights generally and by general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity
or at law).
5.6 No Legal Bar. The execution, delivery and performance of
each Credit Document, the incurrence or issuance of and use of the proceeds of
the Loans, the Bridge Subordinated Debt, any Permanent Subordinated Debt and of
drawings under the Letters of Credit and the transactions contemplated by the
Investment Documents, the Credit Documents and the Bridge Subordinated Debt
Documents, (a) will not violate any Requirement of Law or any Contractual
Obligation applicable to or binding upon the Company or any Subsidiary of the
Company or any of their respective properties or assets, in any manner which,
individually or in the aggregate, (i) would have a material adverse effect on
the ability of the Company or any such Subsidiary to perform its obligations
under the Credit Documents, the Stock Purchase Agreement, or any other
agreement to be entered into pursuant to the Stock Purchase Agreement to which
it is a party, (ii) would give rise to any liability on the part of the
Administrative Agent or any Lender or (iii) would have a material adverse
effect on the business, assets, condition (financial or otherwise) or results
of operations of the Company and its Subsidiaries taken as a whole, and (b)
will not result in the creation or imposition of any Lien on any of its
properties or assets pursuant to any Requirement of Law applicable to it, as
the case may be, or any of its Contractual Obligations, except for the Liens
arising under the Security Documents.
5.7 No Material Litigation. No litigation by, investigation
known to the Company by, or proceeding of, any Governmental Authority is
pending against the Company or any of its Subsidiaries (including after giving
effect to the Closing Date Transactions) with respect to the validity, binding
effect or enforceability of any Investment Document, any Credit Document, the
Loans made hereunder, the use of proceeds thereof, of the Bridge Subordinated
Debt, any Permanent Subordinated Debt or of any drawings under a Letter of
Credit and the other transactions contemplated hereby or by the Stock Purchase
Agreement. No lawsuits (except as described in the Offering Memorandum),
claims, proceedings or investigations pending or, to the best knowledge of the
Company, threatened as of the Closing Date against or affecting the Company or
any Subsidiary of the Company or any of their respective properties, assets,
operations or businesses (including after giving effect to the Closing Date
Transactions) in which there is a probability of an adverse determination, is
reasonably likely, if adversely decided, to have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole.
5.8 Investment Company Act. Neither the Company nor any
Subsidiary of the Company is an "investment company" or a company "controlled"
by an "investment company" (as each of the quoted terms is defined or used in
the Investment Company Act of 1940, as amended).
5.9 Federal Regulation. No part of the proceeds of any of
the Loans or any drawing under a Letter of Credit will be used for any purpose
which violates the provisions of Regulation G, T, U or X of the Board. Neither
the Company nor any of its Subsidiaries is engaged or will engage, principally
or as one of its important activities, in the business of
56
51
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under said
Regulation U.
5.10 No Default. The Company and each of its Subsidiaries
have performed all material obligations required to be performed by them under
their respective Contractual Obligations (including after giving effect to the
Closing Date Transactions) and they are not (with or without the lapse of time
or the giving of notice, or both) in breach or default in any respect
thereunder, except to the extent that such breach or default would not have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken
as a whole. Neither the Company nor any of its Subsidiaries (including after
giving effect to the Closing Date Transactions) is in default under any
material judgment, order or decree of any Governmental Authority domestic or
foreign, applicable to it or any of its respective properties, assets,
operations or business, except to the extent that any such defaults would not,
in the aggregate, have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries taken as a whole.
5.11 Taxes. Each of the Company and its Subsidiaries
(including after giving effect to the Closing Date Transactions) has filed or
caused to be filed all material tax returns which, to the best knowledge of the
Company, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than any the amount of which is
currently being contested in good faith by appropriate proceedings and with
respect to which reserves (or other sufficient provisions) in conformity with
GAAP have been provided on the books of the Company or its Subsidiaries
(including after giving effect to the Closing Date Transactions), as the case
may be); no tax Lien has been filed, and, to the best knowledge of the Company,
no written claim is being asserted, with respect to any such taxes, fees or
other charges.
5.12 Subsidiaries. As of the Closing Date, the only
Subsidiaries of the Company are those listed on Schedule 5.12. On the Closing
Date and at all times prior to any occurrence of an IPO pursuant to which the
Capital Stock of the Company is sold in a public offering, Holdings owns 100%
of the issued and outstanding Capital Stock of the Company.
5.13 Ownership of Property; Liens. As of the Closing Date
and as of the making of any extension of credit hereunder (subject to transfers
and dispositions of property permitted under subsection 8.5) each of the
Company and its Subsidiaries has good and valid title to all of its material
assets (other than real property or interests in real property) in each case
free and clear of all mortgages, liens, security interests or encumbrances of
any nature whatsoever except Permitted Liens. With respect to real property or
interests in real property, as of the Closing Date, each of the Company and its
Subsidiaries has (i) fee title to all of the real property listed on Schedule
5.13 under the heading "Fee Properties" (each, a "Fee Property"), and (ii) good
and valid title to the leasehold estates in all of the real property leased by
it and listed on Schedule 5.13 under the heading "Leased Properties" (each, a
"Leased Property"), in each case free and clear of all mortgages, liens,
security interests, easements, covenants, rights-of-way and other
57
52
similar restrictions of any nature whatsoever, except Permitted Liens. The Fee
Properties and the Leased Properties constitute, as of the Closing Date, all of
the real property owned in fee or leased by the Company and its Subsidiaries.
5.14 ERISA. The "amount of unfunded benefit liabilities"
(within the meaning of Section 4001(a)(18) of ERISA) of any Single Employer
Plan of the Company or any Commonly Controlled Entity would not result in a
material liability to the Company if any or all such Single Employer Plans were
terminated. None of the Company, any Subsidiary of the Company or any Commonly
Controlled Entity would be liable for any amount pursuant to Sections 4063 or
4064 of ERISA, if any Single Employer Plan were to terminate. Neither the
Company nor any Commonly Controlled Entity has been involved in any transaction
that would cause the Company to be subject to material liability with respect
to a Single Employer Plan to which the Company or any Commonly Controlled
Entity contributed or was obligated to contribute during the six-year period
ending on the date this representation is made under Sections 4062 or 4069 of
ERISA. Neither the Company nor any Commonly Controlled Entity has incurred any
material liability under Title IV of ERISA which could become or remain a
material liability of the Company after the Closing Date and the consummation
of the Closing Date Transactions. None of the Company, any Subsidiary of the
Company, or, to the best knowledge of the Company, any director, officer or
employee thereof, or any of the Plans or any trust created thereunder, or any
fiduciary thereof, has engaged in a transaction or taken any other action or
omitted to take any action involving any Plan which could constitute a
prohibited transaction within the meaning of Section 406 of ERISA which is not
otherwise exempted and which would result in a material liability to the
Company, or would cause the Company to be subject to either a material
liability or material civil penalty assessed pursuant to Sections 409 or 502(i)
or (l) of ERISA or a material tax imposed pursuant to Sections 4975 or 4976 of
the Code. Each of the Plans (to the best knowledge of the Company with respect
to any Multiemployer Plan) has been operated and administered in all material
respects in accordance with applicable laws, including but not limited to ERISA
and the Code. There are no material pending or, to the best knowledge of the
Company, threatened claims by or on behalf of any of the Plans or any
fiduciary, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan or fiduciary for which the Company could have
any material liability (other than routine claims for benefits). To the best
knowledge of the Company, no condition exists, and no event has occurred with
respect to any Multiemployer Plan which presents a material risk of a complete
or partial withdrawal under Subtitle E of Title IV of ERISA for which the
Company could have any material liability, nor has the Company or any Commonly
Controlled Entity been notified that any such Multiemployer Plan is insolvent
or in reorganization within the meaning of Section 4241 of ERISA. Neither the
Company nor any Commonly Controlled Entity nor any Subsidiary has been a party
to any transaction or agreement to which the provisions of Section 4204 of
ERISA were applicable (a "4204 Agreement"). None of the Company, or any
Commonly Controlled Entity or any of their respective Subsidiaries is obligated
to contribute to a Multiemployer Plan, on behalf of any current or former
employee of the Company, any Commonly Controlled Entity or such Subsidiary.
The liability to which the Company, any Commonly Controlled Entity or any of
their respective Subsidiaries would become subject under ERISA if all such
Persons were to withdraw completely from all Plans on the Closing Date (after
giving effect to the Closing Date Transactions) is not in excess of $2,000,000.
None of the Plans or any trust established thereunder has incurred any
"accumulated funding
58
53
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of
each of the Plans. No contribution failure has occurred with respect to any
Plan sufficient to give rise to a lien under Section 302(f) of ERISA.
5.15 Collateral Documents. (a) Upon execution and delivery
thereof by the parties thereto, each of the Pledge Agreements will be effective
to create in favor of the Administrative Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in the pledged stock
described therein and, when stock certificates representing or constituting the
pledged stock described in each of the Pledge Agreements are delivered to the
Administrative Agent, such security interest shall, subject to the existence of
Permitted Liens, constitute a perfected first lien on, and security interest
in, all right, title and interest of the pledgor party thereto in the pledged
stock described therein.
(b) Upon execution and delivery thereof by the parties
thereto, each of the Security Agreements will be effective to create in favor
of the Administrative Agent, for the ratable benefit of the Lenders, a legal,
valid and enforceable security interest in the collateral described therein and
Uniform Commercial Code financing statements have been filed in each of the
jurisdictions listed on Schedule 5.15(b), or arrangements have been made for
such filing in such jurisdictions, and upon such filing, and upon the taking of
possession by the Administrative Agent of any such collateral the security
interests in which may be perfected only by possession, such security interests
will, subject to the existence of Permitted Liens, constitute perfected first
liens on, and security interests in, all right, title and interest of the
debtor party thereto in the collateral described therein, except to the extent
that a security interest cannot be perfected therein by the filing of a
financing statement or the taking of possession under the Uniform Commercial
Code of the relevant jurisdiction.
5.16 Copyrights, Permits, Trademarks and Licenses. Schedule
5.16 sets forth a true and complete list of all material trademarks (registered
or unregistered), trade names, service marks and copyrights and applications
therefor owned, used or filed by or licensed to the Company and its
Subsidiaries (after giving effect to the Closing Date Transactions) and, with
respect to registered trademarks (if any), contains a list of all jurisdictions
in which such trademarks are registered or applied for and all registration and
application numbers. Except as disclosed on Schedule 5.16, the Company or a
Subsidiary (after giving effect to the Closing Date Transactions) owns or has
the right to use, without payment to any other party, trademarks (registered or
unregistered), trade names, service marks, copyrights and applications therefor
referred to in such Schedule. To the best knowledge of the Company, no claims
are pending by any Person with respect to the ownership, validity,
enforceability or the Company's or any Subsidiary's use of any such trademarks
(registered or unregistered), trade names, service marks, copyrights, or
applications therefor, challenging or questioning the validity or effectiveness
of any of the foregoing, in any jurisdiction, domestic or foreign.
5.17 Environmental Matters. Except as set forth in the
Environmental Reports and except to the extent that the facts and circumstances
giving rise to the failure of any of the following to be true and correct would
not be reasonably likely to have a material adverse effect
59
54
on the business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole:
(a) To the best knowledge of the Company, no parcel of real
property owned or operated by the Company or any of its Subsidiaries contains,
and has not previously contained, in, on or under including, without
limitation, the soil and groundwater thereunder, any Hazardous Materials in
amounts or concentrations that constitute or constituted a material violation
of, or could reasonably give rise to material liability under, Environmental
Laws.
(b) To the best knowledge of the Company, each parcel of real
property owned or operated by the Company or any of its Subsidiaries and all
operations and facilities at such properties taken as a whole are in material
compliance with all Environmental Laws, and there is no contamination or
violation of any Environmental Law which could materially interfere with the
continued operation of, or materially impair the fair saleable value of, the
such property taken as a whole.
(c) To the best knowledge of the Company, neither the Company
nor any of its Subsidiaries has received or is aware of any complaint, notice
of violation, alleged violation, or notice of investigation or of potential
liability under Environmental Laws with regard to any parcel of real property
owned or operated by the Company or any of its Subsidiaries or the operations
of the Company or its Subsidiaries, nor does the Company or any of its
Subsidiaries have knowledge that any such action is being contemplated,
considered or threatened.
(d) To the best knowledge of the Company, Hazardous Materials
have not been generated, treated, stored, disposed of, at, on or under any
parcel of real property owned or operated by the Company or any of its
Subsidiaries, nor have any Hazardous Materials been transported from such
properties, in material violation of or in a manner that could reasonably give
rise to material liability under any Environmental Laws.
(e) There are no governmental administrative actions or
judicial proceedings pending or, to the best knowledge of the Company and its
Subsidiaries, threatened, under any Environmental Law to which the Company or
any of its Subsidiaries is a party with respect to any parcel of real property
owned or operated by the Company or any of its Subsidiaries, nor are there any
consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements, other than
permits authorizing operations at facilities at the Mortgaged Property,
outstanding under any Environmental Law with respect to such properties.
5.18 Accuracy and Completeness of Information. The factual
statements contained in the financial statements referred to in subsection
5.1(a), the Credit Documents, the Stock Purchase Agreement and any other
certificates or documents furnished or to be furnished to the Administrative
Agent or the Lenders from time to time in connection with this Agreement, taken
as a whole, do not and will not, to the best knowledge of the Company, as of
the date when made, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances in
60
55
which the same were made, all except as otherwise qualified herein or therein,
such knowledge qualification being given only with respect to factual
statements made by Persons other than the Company or any of its Subsidiaries.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Loans and Letters of Credit. The
obligation of each Lender to make its Loans and the obligation of the Issuing
Lender to issue any Letter of Credit on the Closing Date are subject to the
satisfaction, or waiver by such Lender, immediately prior to or concurrently
with the making of such Loans or the issuance of such Letters of Credit, as the
case may be, of the following conditions:
(a) Agreement; Notes; Investment Documents. The
Administrative Agent shall have received (w) a counterpart of this
Agreement for each Lender duly executed and delivered by a duly
authorized officer of the Company, (x) for the account of each
Revolving Credit Lender requesting the same pursuant to subsection
4.13, a Revolving Credit Note of the Company conforming to the
requirements hereof and executed by a duly authorized officer of the
Company, (y) for the account of each Lender holding a Term Loan and
requesting the same pursuant to subsection 4.13, a Term Loan Note of
the Company conforming to the requirements hereof and executed by a
duly authorized officer of the Company, and (z) for the account of
Chase, a Swing Line Note, conforming to the requirements hereof and
executed by a duly authorized officer of the Company. The
Administrative Agent shall have received, with a copy for each Lender,
a copy of the Stock Purchase Agreement and each exhibit or schedule
thereto, certified by a Responsible Officer of the Company.
(b) Closing Date Transactions. The Closing Date Transactions
(other than the "phantom stock" payments) shall have been consummated.
After the Investor Investment, (i) the Investors shall own not less
than 51% of the voting stock of Holdings and (ii) Holdings shall own
all of the capital stock of the Company. All of the conditions
precedent set forth in Article V of the Stock Purchase Agreement shall
have been satisfied or waived, and no material provision of the Stock
Purchase Agreement shall have been amended, supplemented, waived or
otherwise modified without the prior written consent of the
Administrative Agent and the Documentation Agent, which consent shall
not be unreasonably withheld.
(c) Subordinated Debt; Other Indebtedness; Capital Structure.
(i)(x) The Bridge Subordinated Debt Agreement shall have been
executed and delivered by the parties thereto in form and substance
satisfactory to the Administrative Agent and the Documentation Agent
(it being agreed that the terms and conditions of the Bridge
Subordinated Debt included in the Subordinated Indebtedness Term Sheet
furnished to the Administrative Agent are satisfactory to the
Administrative Agent and the Documentation Agent in all respects)
shall be in full force and effect and none of the provisions thereof
shall have been amended, waived, supplemented or otherwise modified
without the prior
61
56
written consent of the Administrative Agent; and the Company shall
have issued the Bridge Subordinated Debt in an aggregate principal
amount of at least $125,000,000 or (y) the Company shall have issued
Permanent Subordinated Debt in an aggregate principal amount of at
least $125,000,000.
(ii) After giving effect to the Closing Date
Transactions, Holdings and its Subsidiaries shall have no material
indebtedness (not including trade payables) other than the Holdings
Subordinated Debt, approximately $25,000,000 of capital leases,
approximately $17,500,000 of indebtedness due to Carmel Trust and
other Affiliates of Holdings, indebtedness under this Agreement and
the Bridge Subordinated Debt or the Permanent Subordinated Debt.
(iii) The terms and conditions, and
documentation, of all equity securities of the Company or any of its
Subsidiaries to be outstanding at or after the Closing Date, the
certificate of incorporation, by-laws, other governing documents and
the corporate and capital structure of the Company and its
Subsidiaries, in each case after giving effect to the consummation of
the Closing Date Transactions, shall be in form and substance
satisfactory to the Administrative Agent and the Documentation Agent
(the execution and delivery of this Agreement by the Lenders, the
Documentation Agent and the Administrative Agent being deemed to
evidence the satisfaction of the Administrative Agent and the
Documentation Agent with such of the above-referenced matters as shall
have been disclosed and made available to the Administrative Agent and
the Documentation Agent prior to the date hereof).
(d) Fees. The Administrative Agent, the Documentation Agent
and the Lenders shall have received all fees, expenses and other
consideration required to be paid or delivered on or before the
Closing Date.
(e) Lien Searches. The Administrative Agent shall have
received the results of searches requested by the Agent of Uniform
Commercial Code, tax and judgment filings made with respect to each of
Holdings, the Company and its Subsidiaries in the jurisdictions set
forth on Schedule 5.15(b), together with copies of financing
statements disclosed by such searches and such searches shall disclose
no Liens on any assets encumbered by any Security Document, except for
Liens permitted hereunder or, if unpermitted Liens are disclosed, the
Administrative Agent shall have received satisfactory evidence of
release of such Liens.
(f) Solvency Opinion. The Administrative Agent shall have
received an opinion or opinions of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co. in form and
substance satisfactory to it which shall document the solvency of the
Company and its Subsidiaries after giving effect to the consummation
of the transactions contemplated by the consummation of the Closing
Date Transactions and the financings contemplated hereby.
(g) Holdings Pledge Agreement. The Administrative Agent
shall have received the Holdings Pledge Agreement executed and
delivered by a duly authorized officer of
62
57
Holdings, together with stock certificates representing 100% of all
issued and outstanding shares of Capital Stock of the Company, and
undated stock powers for each certificate, executed in blank and
delivered by a duly authorized officer of Holdings and the
acknowledgment and consent of the Company thereunder, in the form
annexed to the Holdings Pledge Agreement.
(h) Company Pledge Agreement. The Administrative Agent shall
have received the Company Pledge Agreement executed and delivered by a
duly authorized officer of the Company, together with stock
certificates representing 100% of all issued and outstanding shares of
Capital Stock of each of the Domestic Subsidiaries of the Company, and
undated stock powers for each certificate, executed in blank and
delivered by a duly authorized officer of the Company and the
acknowledgment and consent of the issuer thereunder, in the form
annexed to the Company Pledge Agreement.
(i) Company Security Agreement. The Administrative Agent
shall have received the Company Security Agreement, executed and
delivered by a duly authorized officer of the Company.
(j) Subsidiary Security Agreement. The Administrative Agent
shall have received a Security Agreement, executed and delivered by a
duly authorized officer of each of the Domestic Subsidiaries of the
Company.
(k) Holdings Guarantee. The Administrative Agent shall have
received the Holdings Guarantee, executed and delivered by a duly
authorized officer of Holdings.
(l) Subsidiary Guarantee. The Administrative Agent shall
have received a Guarantee, executed and delivered by a duly authorized
officer of each of the Domestic Subsidiaries of the Company.
(m) Legal Opinions. The Administrative Agent shall have
received, dated the Closing Date and addressed to the Administrative
Agent and the Lenders, an opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel
to Holdings and the Company, in substantially the form of Exhibit K-1
with such changes thereto as may be approved by the Administrative
Agent and its counsel. The Administrative Agent shall have received,
dated the Closing Date and addressed to the Administrative Agent and
the Lenders, an opinion of Arizona counsel to the Company, in
substantially the form of Exhibit K-2 with such changes as may be
approved by the Administrative Agent and its counsel.
(n) Closing Certificate. The Administrative Agent shall have
received a Closing Certificate of the Company and Holdings dated the
Closing Date, in substantially the form of Exhibits M-1 and M-2,
respectively, with appropriate insertions and attachments, in form and
substance satisfactory to the Administrative Agent and its counsel,
executed by the President or any Vice President and the Secretary or
any Assistant Secretary of the Company and Holdings, respectively.
63
58
(o) Consents, Authorizations and Filings, etc. Except for
the financing statements contemplated by the Company Security
Agreement, all consents, authorizations and filings, if any, required
in connection with the execution, delivery and performance by Holdings
or the Company, and the validity and enforceability against Holdings
and the Company, of the Credit Documents to which any of them is a
party, shall have been obtained or made, and such consents,
authorizations and filings shall be in full force and effect, except
such consents, authorizations and filings, the failure to obtain which
would not have a material adverse effect on the business, assets,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole.
(p) Insurance. The Administrative Agent shall have received
(i) a schedule describing all insurance maintained by the Company and
its Subsidiaries pursuant to subsection 7.5 and (ii) binders (or other
customary evidence as to the obtaining and maintenance by the Company
of such insurance) for each policy set forth on such schedule insuring
against casualty and other usual and customary risks.
(q) Financial Statements. The Lenders shall have received
(i) audited consolidated financial statements of the Company for its
two most recently completed fiscal years, which financial statements
shall have been prepared in accordance with generally accepted
accounting principles and shall be in form and substance satisfactory
to the Administrative Agent, (ii) unaudited interim consolidated
financial statements of the Company for each fiscal month and
quarterly period ended during the portion of the current fiscal year
ending 30 days preceding the Closing Date, and such financial
statements shall not reflect any material adverse change in the
consolidated financial condition of the Company as reflected in the
financial statements or projections previously delivered to the
Lenders and (iii) satisfactory pro forma balance sheets of Holdings
and, on a consolidated basis, of the Company and its subsidiaries as
of the Closing Date reflecting and giving effect to the Closing Date
Transactions and other transactions contemplated hereby.
(r) Real Estate Financing. The Administrative Agent shall
have received a copy of the executed Real Estate Financing Agreement.
(s) Borrowing Base. The Administrative Agent shall be
satisfied as to form and substance of the Borrowing Base and the forms
of the Borrowing Base Certificate and Supplemental Reporting on or
before the Closing Date and on the Closing Date and after giving
effect to the extensions of credit hereunder on the Closing Date, the
Borrowing Base shall exceed by at least $70,000,000 the sum of (i)
aggregate principal amount of all Revolving Credit Loans and Swing
Line Loans outstanding at such time, (ii) the aggregate unexpired and
undrawn face of all Letters of Credit outstanding at such time and
(iii) the aggregate amount of L/C Obligations outstanding at such
time.
6.2 Conditions to All Loans and Letters of Credit. The
obligation of each Lender to make any Loan (other than any Revolving Credit
Loan the proceeds of which are to be used to repay Refunded Swing Line Loans)
and the obligation of the Issuing Lender to issue any Letter of
64
59
Credit is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date:
(a) Representations and Warranties. Each of the
representations and warranties made in or pursuant to Section 5 or
which are contained in any other Credit Document shall be true and
correct in all material respects on and as of the date of such Loan or
of the issuance of such Letter of Credit as if made on and as of such
date (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).
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such Borrowing Date
or after giving effect to such Loan to be made or such Letter of
Credit to be issued on such Borrowing Date.
Each borrowing by the Company hereunder and the issuance of each Letter of
Credit by the Issuing Lender hereunder shall constitute a representation and
warranty by the Company as of the date of such borrowing or issuance that the
conditions in clauses (a) and (b) and of this subsection 6.2 have been
satisfied.
SECTION 7. AFFIRMATIVE COVENANTS
The Company hereby agrees that, so long as the Commitments
remain in effect, any Loan, Note or L/C Obligation remains outstanding and
unpaid, any amount (unless cash in an amount equal to such amount has been
deposited to a cash collateral account established by the Administrative Agent)
remains available to be drawn under any Letter of Credit or any other amount is
owing to any Lender or the Administrative Agent hereunder or under any of the
other Credit Documents, it shall, and, in the case of the agreements contained
in subsections 7.3 through 7.6, 7.8 and 7.9, the Company shall cause each of
its Subsidiaries to:
7.1 Financial Statements. Furnish to the Administrative
Agent (with sufficient copies for each Lender which the Administrative Agent
shall promptly furnish to each Lender):
(a) as soon as available, but in any event within 90 days
(or, in the case of the first fiscal year ending after the Closing
Date, 120 days) after the end of each fiscal year of the Company, a
copy of the consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such fiscal year and the
related consolidated statements of stockholders' equity and cash flows
and the consolidated statements of income of the Company and its
Subsidiaries for such fiscal year, setting forth in each case in
comparative form the figures for the previous year and, in the case of
the consolidated balance sheet referred to above, reported on, without
a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, or qualification which would
affect the computation of financial covenants, by independent
certified public accountants of nationally recognized standing;
65
60
(b) as soon as available, but in any event not later than 45
days (or, in the case of a quarterly period occurring during the first
fiscal year ending after the Closing Date, 60 days) after the end of
each of the first three quarterly periods of each fiscal year of the
Company, the unaudited consolidated balance sheet of the Company and
its Subsidiaries as at the end of each such quarter and the related
unaudited consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and the portion
of the fiscal year of the Company through such date, setting forth in
each case in comparative form the figures for the corresponding
quarter in, and year to date portion of, the previous year, and the
figures for such periods in the budget prepared by the Company and
furnished to the Administrative Agent, certified by the chief
financial officer, controller or treasurer of the Company as being
fairly stated in all material respects;
(c) as soon as practicable, and in any event within 30 days
after the end of each calendar month of each year, commencing with the
first full month ended following the Closing Date, the unaudited
consolidated balance sheet of the Company and its Subsidiaries as at
the end of such month and the related unaudited consolidated statement
of income of the Company and its Subsidiaries for such month and for
the portion of the fiscal year of the Company through such date in the
form and detail similar to those customarily prepared by management of
the Company for internal use, setting forth in each case in
comparative form the consolidated figures for the corresponding month
of, and year to date portion of, the previous year and the figures for
such periods in the budget prepared by the Company and furnished to
the Administrative Agent, certified by the chief financial officer,
controller or treasurer of the Company as being fairly stated in all
material respects; and
(d) (i) as soon as available, but in any event not later than
30 days after the beginning of each fiscal year of the Company to
which such budget relates, a preliminary consolidated operating budget
for the Company and its Subsidiaries taken as a whole and (ii) as soon
as available, any material revision to or any final revision of, any
such preliminary annual operating budget or any such consolidated
operating budget.
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and (except in the case of
the statements referred to in paragraphs (c) and (d) of this subsection 7.1)
in accordance with GAAP.
7.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender which the
Administrative Agent shall promptly deliver to each Lender):
(a) concurrently with the delivery of the consolidated
financial statements referred to in subsection 7.1(a), a letter from
the independent certified public accountants reporting on such
financial statements stating that in making the examination necessary
to express their opinion on such financial statements no knowledge was
obtained of any Default or
66
61
Event of Default under subsections 4.4(b), 8.1, 8.3, and 8.6 through
8.11, except as specified in such letter;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), a certificate of
the chief financial officer of the Company (i) stating that, to the
best of such officer's knowledge, each of the Company and its
Subsidiaries has observed or performed all of its respective covenants
and other agreements, and satisfied every material condition,
contained in this Agreement, the Notes and the other Credit Documents
to be observed, performed or satisfied by it, and that such officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate, (ii) showing in detail as of the end of
the related fiscal period the figures and calculations supporting such
statement in respect of subsections 8.7 through 8.12 and any other
calculations reasonably requested by the Administrative Agent with
respect to the quantitative aspects of the other covenants contained
herein and (iii) if not specified in the financial statements
delivered pursuant to subsection 7.1, specifying the aggregate amount
of interest paid or accrued by the Company and its Subsidiaries, and
the aggregate amount of depreciation, depletion and amortization
charged on the books of the Company and its Subsidiaries, during such
accounting period;
(c) promptly upon receipt thereof, copies of all final
reports submitted to the Company or to any of its Subsidiaries by
independent certified public accountants in connection with each
annual, interim or special audit of the books of the Company or any of
its Subsidiaries made by such accountants, including, without
limitation, any final comment letter submitted by such accountants to
management in connection with their annual audit;
(d) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or
made available to holders of the Subordinated Debt and the public
generally by the Company or any of its Subsidiaries, if any, and all
regular and periodic reports and all final registration statements and
final prospectuses, if any, filed by the Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any Governmental Authority succeeding to any of
its functions;
(e) concurrently with the delivery of the financial
statements referred to in subsections 7.1(a) and (b), and within 45
days following each calendar month with respect to which the financial
statements referred to in subsection 7.1(c) are required to be
delivered, a management summary describing and analyzing the
performance of the Company and its Subsidiaries during the periods
covered by such financial statements;
(f) within 45 days after the end of each fiscal quarter, a
summary of all Asset Sales during such fiscal quarter including the
amount of all Net Proceeds from such Asset Sales not previously
applied to prepayments of the Loans and reductions of the Commitments
pursuant to the proviso to subsection 4.4(b)(iii);
67
62
(g) within 10 days after the end of each calendar month and,
if requested by the Administrative Agent, at any other time when the
Administrative Agent reasonably believes that the then existing
Borrowing Base is materially inaccurate (which requests may not be
made more frequently than once per calendar week), as soon as
reasonably available but in no event later than 10 days after the date
of such request, a borrowing base certificate calculating the
Borrowing Base as of the last day in such calendar month,
substantially in the form of Exhibit N hereto (a "Borrowing Base
Certificate"), executed by a Responsible Officer of the Borrower;
(h) within 30 days after the end of each calendar month, the
Supplemental Reporting as of the last day in such calendar month,
executed by a Responsible Officer of the Borrower; and
(i) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations and liabilities of whatever nature including tax
liabilities, except (a) when the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Company
or any of its Subsidiaries, as the case may be, (b) for delinquent obligations
which do not have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole and (c) for trade and other accounts payable in
the ordinary course of business.
7.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted by it
(after giving effect to the Closing Date Transactions), and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all material rights, material privileges, franchises,
copyrights, trademarks and trade names necessary or desirable in the normal
conduct of its business except for rights, privileges, franchises, copyrights,
trademarks and tradenames the loss of which would not in the aggregate have a
material adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its Subsidiaries taken
as a whole, and except as otherwise permitted by subsections 8.4 and 8.5; and
comply with all applicable Requirements of Law and Contractual Obligations
except to the extent that the failure to comply therewith would not, in the
aggregate, have a material adverse effect on the business, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
7.5 Maintenance of Property; Insurance. (a) Keep all
property useful and necessary in its business in good working order and
condition (ordinary wear and tear excepted); and
68
63
(b) Maintain with financially sound and reputable insurance
companies (x) insurance on all its property in at least such amounts and with
only such deductibles as are usually maintained by, and against at least such
risks (but including, in any event, public liability insurance) as are usually
insured against in the same general area, by companies engaged in the same or a
similar business and (y) the flood insurance, if any, required pursuant to
subsection 7.10(b)(ii); and furnish to each Lender, (i) annually, a schedule
disclosing (in a manner substantially similar to that used in the schedule
provided pursuant to subsection 6.1(o)) all insurance against products
liability risk maintained by the Company and its Subsidiaries pursuant to this
subsection 7.5(b) or otherwise and (ii) upon written request of any Lender,
full information as to the insurance carried; provided that the Company may
implement programs of self insurance in the ordinary course of business and in
accordance with industry standards for a company of similar size so long as
reserves are maintained in accordance with GAAP for the liabilities associated
therewith.
7.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, complete and
correct entries in conformity with all material Requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities; and permit representatives of any Lender upon reasonable notice
(but, with respect to all Lenders, no more frequently than monthly unless a
Default or Event of Default shall have occurred and be continuing) to visit and
inspect any of its properties and examine and, to the extent reasonable, make
abstracts from any of its books and records, including, without limitation, in
connection with any collateral review or appraisal described in paragraph (b)
below, and to discuss the business, operations, properties and financial and
other condition of the Company and its Subsidiaries with officers and employees
of the Company and its Subsidiaries and with its independent certified public
accountants, in each case at any reasonable time, upon reasonable notice, and
as often as may reasonably be desired.
(b) At any time upon the request of the Administrative Agent,
permit the Administrative Agent or its professionals (including investment
bankers, consultants, accountants, lawyers and appraisers) retained by the
Administrative Agent to conduct evaluations and appraisals of (i) the Company's
practices in the computation of the Borrowing Base, (ii) the assets included in
the Borrowing Base, (iii) systems and procedures relating to the Borrowing Base
items, and (iv) other related procedures deemed necessary by the Administrative
Agent and pay the reasonable fees and expenses in connection therewith
(including, without limitation, the fees and expenses associated with services
performed by the Administrative Agent's Collateral Monitoring Department);
provided, however, that the Administrative Agent shall not be entitled to
conduct such evaluations and appraisals more frequently than twice per year
unless (x) a Default or Event of Default has occurred and is continuing or (y)
the Administrative Agent determines that any material event or material change
has occurred with respect to the Credit Parties, their inventory practices or
the performance of the Collateral and that as a result of such event or change
more frequent evaluations or appraisals are required to effectively monitor the
Borrowing Base, in which case the Company will permit the Administrative Agent
to conduct such evaluations and appraisals at such reasonable times and as
often as may be reasonably requested, in each case so long as any Revolving
Credit Loans or Letters of Credit shall be outstanding or shall have been
requested by the Company hereunder.
69
64
(c) In connection with any evaluation and appraisal relating
to the computation of the Borrowing Base, agree to maintain such additional
reserves (for purposes of computing the Borrowing Base) in respect of Eligible
Inventory and make such other adjustments to its parameters for including
Eligible Inventory in the Borrowing Base as the Administrative Agent shall
require based upon the results of such evaluation and appraisal, provided that
the reasons for any such additional reserves or adjustments shall be specified
in writing.
7.7 Notices. Promptly give notice to the Administrative
Agent and each Lender:
(a) of the occurrence of any Default or Event of Default;
(b) of any (i) default or event of default under any
instrument or other agreement, guarantee or collateral document of the
Company or any of its Subsidiaries which default or event of default
has not been waived and would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, or
any other default or event of default under any such instrument,
agreement, guarantee or other collateral document which, but for the
proviso to clause (e) of Section 9, would have constituted a Default
or Event of Default under this Agreement, or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, or
receipt of any notice of any environmental claim or assessment against
the Company or any of its Subsidiaries by any Governmental Authority,
which in any such case would have a material adverse effect on the
business, assets, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole;
(c) of any litigation or proceeding against the Company or
any of its Subsidiaries (i) in which more than $2,000,000 of the
amount claimed is not covered by insurance or (ii) in which injunctive
or similar relief is sought which if obtained would have a material
adverse effect on the business, assets, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole;
(d) of the following events, as soon as practicable after,
and in any event within 30 days after, the Company knows or has reason
to know thereof: (i) the occurrence of any Reportable Event with
respect to any Plan which Reportable Event could reasonably result in
material liability to the Company and its Subsidiaries taken as a
whole or (ii) the institution of proceedings or the taking of any
other action by PBGC, the Company or any Commonly Controlled Entity to
terminate, withdraw or partially withdraw from any Plan and, with
respect to a Multiemployer Plan, the Reorganization or Insolvency of
the Plan, in each of the foregoing cases which could reasonably result
in material liability to the Company and its Subsidiaries taken as a
whole, and in addition to such notice, deliver to the Administrative
Agent and each Lender whichever of the following may be applicable:
(A) a certificate of a Responsible Officer of the Company setting
forth details as to such Reportable Event and the action that the
Company or such Commonly Controlled Entity proposes to take with
respect thereto, together with a copy of any notice of such
70
65
Reportable Event that may be required to be filed with PBGC or (B) any
notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be terminated,
as the case may be; and
(e) of a material adverse change known to the Company or its
Subsidiaries in the business, assets, condition (financial or
otherwise) or results of operations of the Company and its
Subsidiaries taken as a whole.
Each notice pursuant to this subsection 7.7 shall be accompanied by a statement
of a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and (in the cases of clauses (a) through (d)) stating what
action the Company proposes to take with respect thereto.
7.8 Environmental Laws. (a) Comply with, and use reasonable
efforts to insure compliance by all tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply with and maintain, and
require that all tenants and subtenants obtain and comply with and maintain,
all licenses, approvals, registrations or permits required by Environmental
Laws, except to the extent that failure to do so would not be reasonably likely
to have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of the Company and its Subsidiaries
taken as a whole or on the validity or enforceability of any of the Credit
Documents or the rights and remedies of the Administrative Agent or the Lenders
thereunder;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions, lawfully
required under applicable Environmental Laws, and promptly comply with all
lawful orders and directives of all Governmental Authorities respecting
Environmental Laws, except to the extent that the same are being contested in
good faith by appropriate proceedings; and
(c) In regard to this Agreement or in any way relating to the
Company or its Subsidiaries or their current or former operations, defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective employees, agents, officers and directors, from and against any
claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to Hazardous Material or Environmental
Laws, including, without limitation, any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
reasonable attorney's and consultant's fees, investigation and laboratory fees,
remediation costs, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor. The agreements in
this subsection 7.8(c) shall survive repayment of the Loans and all other
amounts payable hereunder.
7.9 Landlord Lien Waivers. Each of the Company and its
Subsidiaries shall use commercially reasonable efforts (without being required
to make concessions or additional payments to landlords) to obtain Landlord
Lien Waivers with respect to each parcel of real
71
66
property subject to Liens described in clause (c)(i) of the definition of
"Eligible Inventory" leased by it existing on or after the Closing Date within
90 days after the Closing Date or upon its entering into a lease therefor, but
without liability for its failure to do so (except for the imposition of Rent
Reserves, where permitted hereto).
7.10 Lockbox Accounts. Each of the Company and its
Subsidiaries shall use commercially reasonable efforts to execute a lockbox
agreement within 45 days after the Closing Date (or upon the opening of such
account with respect to accounts not in existence on the Closing Date) with
each bank at which the Company or such Subsidiary maintains an account into
which proceeds of Collateral payable in the United States are deposited, which
agreements shall be reasonably acceptable to the Administrative Agent in form
and substance.
SECTION 8. NEGATIVE COVENANTS
The Company hereby agrees that it shall not, and the Company
shall not permit any of its Subsidiaries to, directly or indirectly so long as
the Commitments remain in effect or any Loan, Note or L/C Obligation remains
outstanding and unpaid, any amount (unless cash in an amount equal to such
amount has been deposited to a cash collateral account established by the
Administrative Agent) remains available to be drawn under any Letter of Credit
or any other amount is owing to any Lender or the Administrative Agent
hereunder or under any other Credit Document (it being understood that each of
the permitted exceptions to each of the covenants in this Section 8 is in
addition to, and not overlapping with, any other of such permitted exceptions
except to the extent expressly provided):
8.1 Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:
(a) the Indebtedness outstanding on the Closing Date and
reflected on Schedule 8.1(a), but excluding the refinancing of any
such Indebtedness;
(b) Indebtedness consisting of the Loans and in connection
with the Letters of Credit and this Agreement;
(c) Indebtedness (i) of the Company to any Subsidiary and
(ii) of any Subsidiary to the Company or any other Subsidiary;
(d) Indebtedness of the Company in respect of:
(i) up to $125,000,000 principal
amount of Bridge Subordinated Debt issued on the Closing
Date, and additional principal amount of Bridge Subordinated
Debt issued in lieu of cash interest on the outstanding Bridge
Subordinated Debt;
72
67
(ii) any Permanent Subordinated Debt
the net proceeds of which are used, first, to prepay, redeem,
retire or repurchase the outstanding principal amount of the
Bridge Subordinated Debt (if any) or the then outstanding
Permanent Subordinated Debt (if any) (including fees and
expenses in connection therewith) and, second, if the net
proceeds of such Permanent Subordinated Debt are used to
prepay, redeem, retire or repurchase outstanding Bridge
Subordinated Debt or Permanent Subordinated Debt to the extent
there are additional net proceeds after such repayment,
redemption, retirement or repurchase to prepay the Loans and
reduce the Commitments in accordance with subsection
4.4(b)(ii);
(e) (i) Indebtedness of the Company and its Subsidiaries for
(A) industrial revenue bonds or other similar governmental and
municipal bonds and (B) the deferred purchase price of newly acquired
property of the Company and its Subsidiaries (pursuant to purchase
money mortgages or otherwise, whether owed to the seller or otherwise)
used in the ordinary course of business of the Company and its
Subsidiaries (provided such financing is entered into within 180 days
of the acquisition of such property) in an amount (based on the
remaining balance of the obligations therefor on the books of the
Company and its Subsidiaries) which in the case of preceding clauses
(A) and (B) shall not exceed $10,000,000 in the aggregate at any one
time outstanding and (ii) Indebtedness of the Company and its
Subsidiaries in respect of Financing Leases to the extent subsections
8.7 and 8.10 would not be contravened;
(f) Indebtedness of the Company and Subsidiaries in an
aggregate principal amount at any one time outstanding not in excess
of $10,000,000;
(g) Indebtedness in respect of letters of credit (other than
Letters of Credit issued hereunder) not to exceed an aggregate amount
equal to $5,000,000;
(h) (i) Indebtedness assumed in connection with acquisitions
permitted by subsection 8.6(h) (so long as such Indebtedness was not
incurred in anticipation of such acquisitions), (ii) Indebtedness of
newly acquired Subsidiaries acquired in such acquisitions (so long as
such Indebtedness was not incurred in anticipation of such
acquisition) and (iii) Indebtedness owed to the seller in any
acquisition permitted by subsection 8.6(h) constituting part of the
purchase price thereof, all of which Indebtedness permitted by this
subsection 8.1(h) shall not exceed in the aggregate at any time
$5,000,000;
(i) Indebtedness in connection with workmen's compensation
obligations and general liability exposure of the Company and its
Subsidiaries; and
(j) Indebtedness in an aggregate principal amount not to
exceed $1,000,000 under the promissory note made by the Company in
favor of Transatlantic, Ltd.; and
(k) subordinated Indebtedness in an aggregate principal
amount not to exceed $10,000,000 plus any additional principal amount
of such subordinated Indebtedness
73
68
issued in lieu of cash interest thereon (and any refinancing thereof
shall be permitted in the amount of such sum), which subordinated
Indebtedness (i) is subordinated to the Indebtedness hereunder on
terms not less favorable to the Lenders than the subordination
provisions of the Subordinated Debt, (ii) has an interest rate not
exceeding 12% per annum and (iii) has a maturity date after the
Maturity Date.
8.2 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its property, assets, income or profits, whether now
owned or hereafter acquired, except:
(a) Liens for taxes, assessments or other governmental
charges not yet delinquent or which are being contested in good faith
and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Company or such Subsidiary,
as the case may be, in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business in respect of obligations which are not yet due or
which are bonded or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or such Subsidiary, as the case
may be, in accordance with GAAP;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, tenders,
trade or government contracts (other than for borrowed money), leases,
licenses, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) easements (including, without limitation, reciprocal
easement agreements), rights-of-way, building, zoning and similar
restrictions, utility agreements, covenants, reservations,
restrictions, encroachments, changes, and other similar encumbrances
or title defects incurred, or leases or subleases granted to others,
in the ordinary course of business, which do not in the aggregate
materially detract from the aggregate (i) value of the properties of
the Company and its Subsidiaries, taken as a whole or (ii) materially
interfere with or adversely affect in any material respect the
ordinary conduct of the business of the Company and its Subsidiaries
taken as a whole;
(f) Liens in favor of the Administrative Agent and the
Lenders pursuant to the Credit Documents and bankers' liens arising by
operation of law;
(g) Liens on property of the Company or any of its
Subsidiaries created solely for the purpose of securing Indebtedness
permitted by subsection 8.1(e) or 8.1(h)(i) or (ii) (so long as such
Lien was not incurred in anticipation of the related acquisition),
representing or incurred to finance, refinance or refund the purchase
price of property, provided that no such Lien shall extend to or cover
other property of the Company or such Subsidiary other
74
69
than the respective property so acquired, and the principal amount of
Indebtedness secured by any such Lien shall at no time exceed the
original purchase price of such property;
(h) Liens existing on the Closing Date after giving effect to
the consummation of the Closing Date Transactions, and described in
subsection 5.13 or Schedule 8.2, provided that no such Lien shall
extend to or cover other property of the Company or the respective
Subsidiary other than the respective property so encumbered, and the
principal amount of Indebtedness secured by any such Lien shall at no
time exceed the original principal amount of the Indebtedness so
secured;
(i) Liens on documents of title and the property covered
thereby (and Proceeds thereof) securing Indebtedness in respect of the
Commercial L/Cs or securing reimbursement obligations in respect of
letters of credit permitted under this Agreement;
(j) (i) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been placed by
any developer, landlord or other third party on property over which
the Company or any Subsidiary of the Company has easement rights or on
any Leased Property and subordination or similar agreements relating
thereto and (ii) any condemnation or eminent domain proceedings
affecting any real property;
(k) Liens in connection with workmen's compensation
obligations and general liability exposure of the Company and its
Subsidiaries; and
(l) Liens on Fee Properties and/or Leased Properties
consisting of (i) any conditions that may be shown by a current,
accurate survey or physical inspection of such Fee Property or Leased
Property, (ii) as to Leased Property, the terms and provisions of the
respective lease therefor and any matters affecting the fee title and
any estate superior to the leasehold estate related thereto, and (iii)
title defects, or leases or subleases granted to others, which are not
material to the Fee Properties or Leased Properties, as the case may
be, taken as a whole.
8.3 Limitation on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligation except:
(a) the Guarantees;
(b) other guarantees by the Company incurred in the ordinary
course of business for an aggregate amount not to exceed $2,000,000 at
any one time;
(c) guarantees by the Company of obligations of its
Subsidiaries;
(d) Contingent Obligations existing on the Closing Date and
described in Schedule 8.3(d);
75
70
(e) guarantees of obligations to third parties in
connection with relocation of employees of the Company or any of its
Subsidiaries, in an amount which, together with all loans and advances
made pursuant to subsection 8.6(f), shall not exceed $2,000,000 at any
time outstanding;
(f) Contingent Obligations in connection with workmen's
compensation obligations and general liability exposure of the Company
and its Subsidiaries; and
(g) subordinated guarantees of the Subordinated Debt issued
by Subsidiaries of the Company which have also issued Guarantees,
provided such subordinated guarantees are subordinated to the
Guarantees on the same basis as the Subordinated Debt is subordinated
to the Loans;
(h) guarantees by the Company of loans to employees of the
Company and its Subsidiaries, the proceeds of which are used to
purchase stock of Holdings, in an aggregate amount not to exceed, when
added to the amount of loans made by the Company to employees pursuant
to subsection 8.6(g), at any one time outstanding $8,000,000; and
(i) guarantees by the Company of loans to employees of the
Company and its Subsidiaries, the proceeds of which are used for
travel and other ordinary expenses for which advances to employees are
generally made, in an aggregate amount not to exceed, when added to
the amount of loans made by the Company to employees pursuant to
subsection 8.6(i), at any one time outstanding $1,000,000.
8.4 Prohibition of Fundamental Changes. Enter into any
merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or engage in any type of
business other than of the same general type now conducted by it, except (a)
for the transactions otherwise permitted pursuant to clause (b) of subsection
8.5, (b) any Subsidiary of the Company may be merged with and into the Company
or a Subsidiary of the Company, (c) any Subsidiary with a net book value not
greater than $100,000 may be dissolved and (d) the Company may be
reincorporated under the laws of Delaware, provided that the Administrative
Agent, in its sole discretion, determines that such reincorporation will not
alter the obligations of any Credit Party under any Credit Document or cause a
material impairment of the value of the Collateral taken as a whole, after
giving effect to such reincorporation.
8.5 Prohibition on Sale of Assets. Convey, sell, lease
(other than a sublease of real property), assign, transfer or otherwise dispose
of (including through a transaction of merger or consolidation of any
Subsidiary of the Company) any of its property, business or assets (including,
without limitation, tax benefits and receivables but excluding leasehold
interests), whether now owned or hereafter acquired, except:
(a) for (i) sales or other dispositions of inventory made in
the ordinary course of business and (ii) sales or other dispositions
of uneconomic, obsolete or worn-out property in the ordinary course of
business;
76
71
(b) that any Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to, or merge with and into, the
Company or a wholly-owned Subsidiary of the Company and any Subsidiary
of the Company may sell or otherwise dispose of, or part with control
of any or all of, the stock of any Subsidiary to a wholly-owned
Subsidiary of the Company, provided that no such transaction may be
effected if it would result in the transfer of any assets of, or any
stock of, a Subsidiary to, or the merger with and into, another
Subsidiary all of the Capital Stock of which owned by the Company or
any Subsidiary has not been pledged to the Administrative Agent and
which has not guaranteed the obligations of the Company under the
Notes and this Agreement, and granted liens or security interests in
favor of the Administrative Agent, for the benefit of the Lenders, on
substantially all of its assets to secure such guarantee, pursuant to
a guarantee, security agreement and other documentation reasonably
satisfactory to the Administrative Agent;
(c) leases of Fee Properties and other real property owned in
fee and subleases of Leased Properties;
(d) any condemnation or eminent domain proceedings affecting
any real property, provided, however, that the parties hereto agree
that the net proceeds received in connection with such proceeding
shall be deemed not to constitute "Net Proceeds" if such net proceeds
are reinvested in new or existing properties within eighteen months;
(e) substantially like-kind exchanges of real property
provided that any cash received by the Company or any Subsidiary of
the Company in connection with such an exchange (net of all costs and
expenses incurred in connection with such transaction or with the
commencement of operation of real property received in such exchange)
shall be deemed to be Net Proceeds and shall be applied as provided
for herein; and
(f) for the sale or other disposition of any property the
aggregate amount of the net proceeds received in respect of which
shall not exceed $1,000,000; and
(g) for the sale of (i) the Fee Properties and (ii)
properties described in clause (i) of the proviso to subsection 8.7.
8.6 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of, or make any other
investment in (including, without limitation, any acquisition of all or any
substantial portion of the assets, and any acquisition of a business or a
product line, of other companies, other than the acquisition of inventory in
the ordinary course of business), any Person, except:
(a) the Company may make loans or advances to any Subsidiary,
and any Subsidiary may make loans or advances to the Company or any
other Subsidiary, to the
77
72
extent in each case the Indebtedness created thereby is permitted by
paragraph (c) of subsection 8.1;
(b) (i) any Subsidiary may make investments in the Company
(by way of capital contribution or otherwise) and (ii) the Company and
any Subsidiary may make investments in, or create, any wholly-owned
Domestic Subsidiary (by way of capital contribution or otherwise) or
make investments permitted by subsection 8.5(b), provided that, in any
such case, (x) if stock is issued or otherwise acquired in connection
with such investment, or if the stock of such Subsidiary was not
previously pledged to the Administrative Agent, such stock is pledged
to the Administrative Agent for the benefit of the Lenders so that
100% of the Capital Stock of such Subsidiary is pledged to the
Administrative Agent and (y) such Subsidiary guarantees the
obligations of the Company under the Notes and this Agreement, and
grants liens or security interests in favor of the Administrative
Agent, for the benefit of the Lenders, on substantially all of its
assets to secure such guarantee, pursuant to a guarantee, a security
agreement and other documentation reasonably satisfactory to the
Administrative Agent;
(c) the Company and its Subsidiaries may invest in, acquire
and hold Cash Equivalents;
(d) the Company or any of its Subsidiaries may make payroll
advances in the ordinary course of business;
(e) the Company or any of its Subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with
customary trade terms, (provided that nothing in this clause (e) shall
prevent the Company or any Subsidiary from offering such concessionary
trade terms, or from receiving such investments in connection with the
bankruptcy or reorganization of their respective suppliers or
customers or the settlement of disputes with such customers or
suppliers arising in the ordinary course of business, as management
deems reasonable in the circumstances); and
(f) the Company or any of its Subsidiaries may make
relocation and other loans to officers and employees of the Company or
any such Subsidiary, provided that the aggregate principal amount of
all such loans and advances outstanding at any one time, together with
the guarantees of such loans and advances made pursuant to subsection
8.3(e), shall not exceed $2,000,000 at any one time outstanding;
(g) the Company may make loans to employees of the Company
and its Subsidiaries the proceeds of which are used by such employees
to purchase stock of Holdings, provided that the aggregate principal
amount of all such loans shall not exceed, together with any
guarantees of loans made pursuant to subsection 8.3(h), at any one
time outstanding $8,000,000;
78
73
(h) the Company and its Subsidiaries may make acquisitions of
companies engaged primarily in businesses similar to the businesses in
which the Company and its Subsidiaries are engaged to the extent that
the amount expended to make such Acquisitions constitutes a Capital
Expenditure permitted pursuant to subsection 8.7; and
(i) the Company make loans to employees of the Company and
its Subsidiaries, the proceeds of which are used by such employees for
travel and other ordinary expenses for which advances to employees are
generally made in an aggregate principal amount not to exceed when
added to the amount of guarantees made by the Company pursuant to
subsection 8.3(i), at any one time outstanding $1,000,000.
8.7 Capital Expenditures. Make or commit to make any Capital
Expenditures, except that the Company and its Subsidiaries may make or commit
to make Capital Expenditures not exceeding the amount set forth below (the
"Base Amount") for each of the fiscal years of the Company (or other period)
set forth below:
Fiscal Year
or Period Base Amount
----------- -----------
Closing Date $35,000,000
through end of
fiscal year 1997
1998 $30,000,000
1999 $30,000,000
2000 $30,000,000
2001 $30,000,000
2002 $30,000,000
2003 $30,000,000
provided, however, that (i) for any fiscal year of the Company, the Base Amount
for such fiscal year set forth above shall be increased by an amount equal to
the aggregate amount of proceeds received by the Company or any of its
Subsidiaries in such fiscal year with respect to sales of real property by the
Company or such Subsidiary, which real property had been originally acquired or
developed by the Company or such Subsidiary with the proceeds of Revolving
Credit Loans, but only if such acquisition and development costs had been
originally included as Capital Expenditures in the fiscal year or years when
such acquisition and development costs were incurred and (ii) for any fiscal
year of the Company, the Base Amount for such fiscal year set forth above (as
increased with respect to such fiscal year pursuant to clause (i) of this
proviso) may be increased by an amount not in excess of $15,000,000 by carrying
over to such fiscal year the unused portion of the Base Amount for the
immediately preceding fiscal year (as increased pursuant to this proviso).
8.8 Consolidated EBITDA. At the last day of any fiscal
quarter set forth below, commencing with the first full fiscal quarter of the
1997 fiscal year of the Company beginning on or after the Closing Date, permit
Consolidated EBITDA for the period of four fiscal quarters
79
74
ending on such day (or, if shorter, the period commencing on the first day of
the first fiscal quarter commencing on or after the Closing Date and ending on
such day) to be less than the amount set forth opposite such fiscal quarter
below:
Fiscal Year Fiscal Quarter Amount
---------- -------------- ------
1997 First $21,000,000
Second $32,000,000
Third $45,000,000
Fourth $50,000,000
1998 First $54,000,000
Second $60,000,000
Third $65,000,000
Fourth $70,000,000
1999 First $74,000,000
Second $75,000,000
Third $75,000,000
Fourth $75,000,000
2000 First $75,000,000
Second $75,000,000
Third $75,000,000
Fourth $75,000,000
2001 First $75,000,000
Second $75,000,000
Third $75,000,000
Fourth $75,000,000
2002 First $75,000,000
Second $75,000,000
Third $75,000,000
Fourth $75,000,000
2003 First $75,000,000
Second $75,000,000
Third $75,000,000
Fourth $75,000,000
8.9 Debt to EBITDA. At the last day of any fiscal quarter
set forth below, commencing with the first fiscal quarter of the 1997 fiscal
year of the Company, permit the ratio of Consolidated Funded Indebtedness as at
such day to Consolidated EBITDA for the period of four fiscal quarters ending
on such day to be greater than the ratio set forth below for such fiscal
quarter; provided, that (i) for the first fiscal quarter set forth below,
Consolidated EBITDA for the period of four fiscal quarters ending on the last
day of such fiscal quarter shall be deemed to be the Consolidated EBITDA for
such fiscal quarter multiplied by four, (ii) for the second fiscal quarter set
forth below, Consolidated EBITDA for the period of four fiscal quarters ending
on the last day of such fiscal quarter shall be deemed to be the Consolidated
EBITDA for the first two fiscal quarters set forth below multiplied by two, and
(iii) for the third fiscal quarter set forth
80
75
below, Consolidated EBITDA for the period of four fiscal quarters ending on
the last day of such fiscal quarter shall be deemed to be the Consolidated
EBITDA for the first three fiscal quarters set forth below multiplied by four
thirds; and provided further, that, with respect to any acquisition permitted
by subsection 8.6(h), the last four fiscal quarters of Consolidated EBITDA (as
may be adjusted for post-acquisition cost savings reasonably agreed to by the
Company and the Administrative Agent) of the acquired company shall be added
for the purposes of calculating this ratio:
Fiscal Year Fiscal Quarter Ratio
----------- -------------- -----
1997 First 6.00 to 1
Second 6.00 to 1
Third 6.00 to 1
Fourth 5.75 to 1
1998 First 5.75 to 1
Second 5.75 to 1
Third 5.75 to 1
Fourth 4.50 to 1
1999 First 4.50 to 1
Second 4.50 to 1
Third 4.50 to 1
Fourth 4.00 to 1
2000 First 4.00 to 1
Second 4.00 to 1
Third 4.00 to 1
Fourth 4.00 to 1
2001 First 4.00 to 1
Second 4.00 to 1
Third 4.00 to 1
Fourth 4.00 to 1
2002 First 4.00 to 1
Second 4.00 to 1
Third 4.00 to 1
Fourth 4.00 to 1
2003 First 4.00 to 1
Second 4.00 to 1
Third 4.00 to 1
Fourth 4.00 to 1
8.10 Interest Coverage. At the last day of any fiscal
quarter set forth below, permit the Interest Coverage Ratio to be less than the
ratio set forth below for such fiscal quarter:
81
76
Interest
Coverage
Fiscal Year Fiscal Quarter Ratio
----------- -------------- ---------
1997 First 1.75 to 1
Second 1.75 to 1
Third 1.75 to 1
Fourth 1.75 to 1
1998 First 1.75 to 1
Second 1.75 to 1
Third 1.75 to 1
Fourth 2.25 to 1
1999 First 2.25 to 1
Second 2.25 to 1
Third 2.25 to 1
Fourth 2.75 to 1
2000 First 2.75 to 1
Second 2.75 to 1
Third 2.75 to 1
Fourth 2.75 to 1
2001 First 2.75 to 1
Second 2.75 to 1
Third 2.75 to 1
Fourth 2.75 to 1
2002 First 2.75 to 1
Second 2.75 to 1
Third 2.75 to 1
Fourth 2.75 to 1
2003 First 2.75 to 1
Second 2.75 to 1
Third 2.75 to 1
Fourth 2.75 to 1
8.11 Limitation on Dividends. Declare any dividends on any
shares of any class of stock, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
retirement or other acquisition of any shares of any class of stock, or any
warrants or options to purchase such stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any of its Subsidiaries; except that:
(a) Subsidiaries may pay dividends to the Company or to
Subsidiaries which are directly or indirectly wholly owned by the
Company;
(b) the Company may pay or make dividends or distributions to
any holder of its capital stock in the form of additional shares of
Capital Stock of the same class and type, provided such shares of
Capital Stock are pledged to the Administrative Agent for the benefit
of the Lenders; and
82
77
(c) the Company may pay dividends or make other
distributions:
(i) to Holdings in amounts equal to
amounts required for Holdings to pay franchise taxes and other
fees required to maintain its corporate existence and provide
for other operating costs of up to $500,000 per fiscal year;
(ii) to Holdings in amounts equal to
amounts required for Holdings to pay Federal, state and local
income taxes to the extent such income taxes are attributable
to the income of the Company and its Subsidiaries;
(iii) to Holdings in amounts equal to
amounts expended by Holdings to repurchase Capital Stock of
Holdings owned by former employees of the Company or its
Subsidiaries or their assigns, estates and heirs, provided
that the aggregate amount paid, loaned or advanced to Holdings
pursuant to this clause (iii) shall not, in the aggregate,
exceed the sum of $5,000,000 plus any amounts contributed by
Holdings to the Company as a result of resales of such
repurchased shares of Capital Stock;
(iv) to Holdings in amounts equal to
amounts required for Holdings to make phantom stock payments
in an aggregate amount not to exceed $10,000,000 on or around
the Closing Date as described in the recitals hereto and
$10,000,000 during the 1997 fiscal year of the Company;
(v) the Company may pay cash dividends
on its preferred stock to Holdings to enable Holdings to pay
scheduled interest payments on the Holdings Subordinated Debt
to the holders of the Holdings Subordinated Debt, provided
that (A) such dividends are made in respect of a fiscal
quarter the financial statements for which have been delivered
pursuant to subsections 7.1(a) and (b), (B) after giving
effect to the payment of such dividends no Default or Event of
Default has occurred and is continuing and, assuming that such
dividends had been paid on the last day of such fiscal
quarter, would have occurred and be continuing on such last
day and (C) within 20 days Holdings uses such dividends to pay
current or accrued cash dividends on the Holdings Subordinated
Debt; and
(vi) if the Company is prohibited from
paying cash dividends pursuant to subsection 8.11(c)(v)
because of the occurrence of a Default or Event of Default,
the Company may pay the cash dividends which it would have
otherwise paid on its preferred stock to Holdings on a prior
date on any succeeding date to enable Holdings to pay interest
at a non-default rate per annum not in excess of 12% to the
holders of the Holdings Subordinated Debt in respect of any
prior period (or accrued deferred interest in respect of any
prior period), provided that (A) so long as, after giving
effect thereto, no Default or Event of Default has occurred
and is continuing (including compliance with the Interest
Coverage Ratio set forth in subsection 8.10 on a pro forma
basis assuming such dividends that are proposed to be paid at
such time pursuant to this clause (vi) but
83
78
were not paid under subsection 8.11(c)(v) had been paid on the
last day of the most recently ended fiscal quarter of the
Company (for purposes of calculating compliance with the
Interest Coverage Ratio pursuant to this subsection
8.11(c)(vi) only, the denominator of the Interest Coverage
Ratio shall include the amount of such dividends paid in cash
by the Company to Holdings pursuant to this subsection
8.11(c)(vi)), (B) the financial statements required to be
delivered in respect of such fiscal quarter have been
delivered pursuant to subsections 7.1(a) or (b) and (C) within
20 days Holdings uses such dividends to pay current or accrued
interest on the Holdings Subordinated Debt.
8.12 Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate except
for transactions which are otherwise permitted under this Agreement and which
are in the ordinary course of the Company's or a Subsidiary's business and
which are upon fair and reasonable terms no less favorable to the Company or
such Subsidiary than it would obtain in a hypothetical comparable arm's length
transaction with a Person not an Affiliate; provided, however, that nothing in
this subsection 8.12 shall prohibit the Company or any of its Subsidiaries from
engaging in the following transactions: (x) the performance of the Company's
or such Subsidiary's obligations under any employment contract, collective
bargaining agreement, employee benefit plan, related trust agreement or any
other similar arrangement heretofore or hereafter entered into in the ordinary
course, (y) payment of compensation to employees, officers, directors or
consultants in the ordinary course of business and (z) maintenance of benefit
programs or arrangements for employees, officers or directors, including,
without limitation, vacation plans, health and life insurance plans, deferred
compensation plans, and retirement or savings plans and similar plans.
8.13 Prepayments and Amendments of Subordinated Debt. (a)
Optionally prepay, optionally retire, optionally redeem, optionally purchase,
optionally defease or optionally exchange, or make any mandatory prepayment of
any Subordinated Debt (other than (x) redemption of the Bridge Subordinated
Debt with proceeds of the Permanent Subordinated Debt (y) any refinancing of
the Permanent Subordinated Debt contemplated in the definition thereof and (z)
any redemption of the Permanent Subordinated Debt with the proceeds of the
issuance of Capital Stock to the extent permitted by subsection 4.4(b)) or pay
any interest on Subordinated Debt in cash if such interest may be paid by the
issuance of additional Subordinated Debt or (b) amend, supplement or otherwise
modify any documentation governing any Subordinated Debt (other than (i)
amendments to such Subordinated Debt which reduce the interest rate or extend
the maturity thereof and (ii) waivers of compliance by the Company with any of
the terms or conditions of such Subordinated Debt (except those terms or
conditions which by their terms run to the benefit of the Lenders).
8.14 Limitation on Changes in Fiscal Year. Permit the fiscal
year of the Company to end on a day other than the Sunday closest to January
31.
84
79
8.15 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Company is engaged on the date of this Agreement or
which are directly related thereto.
SECTION 9. EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the
following events:
(a) The Company shall fail (i) to pay any principal of any
Note when due in accordance with the terms hereof or thereof or to
reimburse the Issuing Lender in accordance with subsection 3.8 or (ii)
pay any interest on any Loan or any other amount payable hereunder
within five days after any such interest or other amount becomes due
in accordance with the terms thereof or hereof; or
(b) Any representation or warranty made or deemed made by any
Credit Party in any Credit Document shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) The Company shall default in the observance or
performance of any agreement contained in subsection 7.7(a) or Section
8 of this Agreement or Holdings shall default in the observance or
performance of any agreement contained in Section 5 of the Holdings
Pledge Agreement or the Company shall default in the observance or
performance of any agreement contained in subsections 3(a), (h)
through (k) and (o) of the Company Security Agreement or Holdings
shall default in the observance or performance of any agreement
contained in Section 10 of the Holdings Guarantee, or, with respect to
any Subsidiary which becomes a Credit Party on or after the Closing
Date, the Company or such Subsidiary shall default in the observance
or performance of the corresponding provisions of the pledge
agreement, guarantee and security agreement to which it is a party; or
(d) Any Credit Party shall default in the observance or
performance of any other agreement contained in any Credit Document
and such default shall continue unremedied for a period of 30 days; or
(e) The Company or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on or other amounts in
respect of any Indebtedness (other than the Loans, the L/C Obligations
and any inter-company debt) or Interest Rate Agreement or in the
payment of any Contingent Obligation, beyond the period of grace, if
any, provided in the instrument or agreement under which such
Indebtedness, Interest Rate Agreement or Contingent Obligation was
created; or (ii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness, Interest
Rate Agreement or Contingent Obligation or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Contingent Obligation (or a
85
80
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity, any
applicable grace period having expired, or such Contingent Obligation
to become payable, any applicable grace period having expired; in each
case, provided that the aggregate principal amount of all such
Indebtedness, Interest Rate Agreements and Contingent Obligations
under which a payment default exists as in (a) above or which would
then become due or payable equals or exceeds $5,000,000; or
(f) (i) The Company or any of its Subsidiaries or Holdings
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it as bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its assets, or the Company or any of its Subsidiaries or Holdings
shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against the Company or any of its
Subsidiaries or Holdings any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Company or any of its
Subsidiaries or Holdings any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Company or any of
its Subsidiaries or Holdings shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Company or any of its Subsidiaries or Holdings shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan which is not otherwise exempted, (ii) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed,
to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is likely to result in the termination of such Single Employer
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Company or
any Commonly Controlled Entity shall incur any material liability in
connection with a withdrawal from, or the Insolvency or Reorganization
of, a Multiemployer Plan; and in each case in clauses (i) through (v)
above, such event or condition, together with all other such events or
conditions relating
86
81
to a Plan, if any, would be reasonably likely to subject the Company
or any of its Subsidiaries to any tax, penalty or other liabilities in
the aggregate material in relation to the business, assets, condition
(financial or otherwise) or results of operations of the Company and
its Subsidiaries taken as a whole; or
(h) One or more judgments or decrees shall be entered against
the Company or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $5,000,000 or
more and all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within the time required
by the terms of such judgment; or
(i) Any Credit Document shall cease, for any reason, to be in
full force and effect or any Credit Party or any of its Subsidiaries
shall so assert in writing, or any Pledge Agreement or Security
Agreement shall cease to be effective to grant a perfected Lien on the
collateral described therein with the priority purported to be created
thereby (other than as a result of any action or inaction on the part
of the Administrative Agent or the Lenders), subject to such
exceptions as may be permitted therein, and in the case of any
Security Agreement such condition shall continue unremedied for 30
days after notice thereof to the Company by the Administrative Agent
or any Lender; or
(j) There shall have occurred a Change in Control; or
(k) Holdings shall engage in any business or activity other
than owning the Capital Stock of the Company and activities reasonably
incidental thereto;
(l) (i) There shall have occurred any amendment, supplement
or other modification of the Bridge Subordinated Debt Documents or the
Bridge Subordinated Debt, or any other Subordinated Debt or the
documents governing such Subordinated Debt, which in any such case
shall not have been consented to in advance in writing by the
Administrative Agent and the Required Lenders, except (A) as otherwise
expressly permitted by subsection 8.13 or (B) to the extent such
amendment, supplement or modification gives effect to any prepayment,
retirement or redemption of Subordinated Debt expressly permitted by
this Agreement or (ii) the subordination provisions of any Bridge
Subordinated Debt Document or any document governing any Subordinated
Debt shall cease, for any reason, to be valid or any Credit Party or
any of its Subsidiaries shall so assert in writing;
then, and in any such event, (a) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Company,
automatically (i) the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under
this Agreement, the Notes and the other Credit Documents shall immediately
become due and payable, and (ii) all obligations of the Company in respect of
the Letters of Credit, although contingent and unmatured, shall become
immediately due and payable and the Issuing Lender's obligations to issue the
Letters of Credit shall immediately terminate and (b) if such event is any
other Event of Default, so long as any such Event of Default shall be
87
82
continuing, either or both of the following actions may be taken: (i) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Company, declare the Commitments and the Issuing Lender's obligations to
issue the Letters of Credit to be terminated forthwith, whereupon the
Commitments and such obligations shall immediately terminate; and (ii) with the
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice of
default to the Company, (A) declare all or a portion of the Loans hereunder
(with accrued interest thereon) and all other amounts owing under this
Agreement and the Notes to be due and payable forthwith, whereupon the same
shall immediately become due and payable, and (B) declare all or a portion of
the obligations of the Company in respect of the Letters of Credit, although
contingent and unmatured, to be due and payable forthwith, whereupon the same
shall immediately become due and payable and/or demand that the Company
discharge any or all of the obligations supported by the Letters of Credit by
paying or prepaying any amount due or to become due in respect of such
obligations. All payments under this Section 9 on account of undrawn Letters
of Credit shall be made by the Company directly to a cash collateral account
established by the Administrative Agent for such purpose for application to the
Company's reimbursement obligations under subsection 3.8 as drafts are
presented under the Letters of Credit, with the balance, if any, to be applied
to the Company's obligations under this Agreement and the Notes as the
Administrative Agent shall determine with the approval of the Required Lenders.
Except as expressly provided above in this Section 9, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 10. THE ADMINISTRATIVE AGENT; THE ISSUING LENDER
10.1 Appointment. Each Lender hereby irrevocably designates
and appoints Chase as the Administrative Agent and ▇▇▇▇▇▇ as the Documentation
Agent under this Agreement and irrevocably authorizes Chase as Administrative
Agent for such Lender, to take such action on its behalf under the provisions
of the Credit Documents and to exercise such powers and perform such duties as
are expressly delegated to the Administrative Agent by the terms of the Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, neither the Administrative Agent nor the Documentation Agent shall
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into the Credit Documents or otherwise exist against the Administrative Agent
or the Documentation Agent.
10.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and each of the other Credit
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
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care, except
as otherwise provided in subsection 10.3.
88
83
10.3 Exculpatory Provisions. None of the Administrative
Agent or any of its officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with the Credit Documents
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Credit Party or any
officer thereof contained in the Credit Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Administrative Agent under or in connection with the Credit Documents or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of the Credit Documents or for any failure of any Credit Party to
perform its obligations thereunder. The Administrative Agent shall not be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, any Credit Document or to inspect the properties, books or records of any
Credit Party.
10.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, the writings maintained in the Register, 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 limitation, counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take
any action under any Credit Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, where a higher percentage of the
Lenders is expressly required hereunder, such Lenders) as it deems appropriate
or it shall first be indemnified to its satisfaction by the Lenders 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 Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under any
Credit Document in accordance with a request of the Required Lenders (or, where
a higher percentage of the Lenders is expressly required hereunder, such
Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Notes.
10.5 Notice of Default. The Administrative Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default hereunder unless the Administrative Agent has received written
notice from a Lender or the Company referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice,
the Administrative Agent shall promptly give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or
89
84
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
10.6 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender expressly acknowledges that none of the Administrative Agent, the
Documentation Agent or any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Administrative Agent, the Documentation
Agent or any such Person hereinafter taken, including any review of the affairs
of the Credit Parties, shall be deemed to constitute any representation or
warranty by the Administrative Agent, the Documentation Agent or any such
Person to any Lender. Each Lender represents to the Administrative Agent and
the Documentation Agent that it has, independently and without reliance upon
the Administrative Agent, the Documentation Agent or any such Person or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of
Holdings, the Company and its Subsidiaries and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Administrative Agent,
the Documentation Agent or any such Person or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under the Credit Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of Holdings, the Company and
its Subsidiaries. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Credit Parties which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
10.7 Indemnification. The Lenders agree to indemnify the
each of the Administrative Agent and the Documentation Agent in its capacity as
such (to the extent not reimbursed by the Credit Parties and without limiting
the obligation of the Credit Parties to do so), ratably according to the
respective amounts of their respective Commitments (or, to the extent such
Commitments have been terminated, according to the respective outstanding
principal amounts of the Loans and the L/C Obligations and the respective
obligations, whether as Issuing Lender or a Participating Lender, under the
Letter of Credit), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including without
limitation at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent or the Documentation
Agent in any way relating to or arising out of the Credit Documents or any
documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted by the Administrative Agent
or the Documentation Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
90
85
Administrative Agent's or the Documentation Agent's respective gross negligence
or willful misconduct. The agreements in this subsection 10.7 shall survive
the payment of the Notes and all other amounts payable hereunder.
10.8 The Administrative Agent in its Individual Capacity.
The Administrative Agent, the Documentation Agent and their respective
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Holdings, the Company and its Subsidiaries as though the
Administrative Agent was not the Administrative Agent hereunder and the
Documentation Agent was not the Documentation Agent hereunder. With respect to
its Loans made or renewed by it and any Note issued to either of them, the
Administrative Agent and the Documentation Agent shall each have the same
rights and powers, duties and liabilities under the Credit Documents as any
Lender and may exercise the same as though it were not the Administrative Agent
and the Documentation Agent, respectively, and the terms "Lender" and "Lenders"
shall include the Administrative Agent and the Documentation Agent in their
respective individual capacities.
10.9 Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under the Credit
Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall, so long as no
Event of Default has occurred and is continuing, be approved by the Company,
which shall not unreasonably withhold its approval, whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent and the term "Administrative Agent" shall mean such successor agent
effective upon its appointment and approval, and the former Administrative
Agent's rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Notes. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Credit Documents.
10.10 Issuing Lender as Issuer of Letters of Credit. Each
Lender which is a holder of a Revolving Credit Commitment (collectively
"Revolving Credit Lenders") hereby acknowledges that the provisions of this
Section 10 shall apply to the Issuing Lender, in its capacity as issuer of the
Letters of Credit, in the same manner as such provisions are expressly stated
to apply to the Administrative Agent, except that obligations to indemnify the
Issuing Lender shall be ratable among the Revolving Credit Lenders in
accordance with their respective Revolving Credit Commitments (or, if the
Revolving Credit Commitments have been terminated, the outstanding principal
amount of their respective Revolving Credit Loans and L/C Obligations and their
respective participating interests in the outstanding Letters of Credit).
SECTION 11. MISCELLANEOUS
91
86
11.1 Amendments and Waivers. Except as otherwise expressly
set forth in this Agreement, no Credit Document nor any terms thereof may be
amended, supplemented, waived or modified except in accordance with the
provisions of this subsection 11.1. With the written consent of the Required
Lenders, the Administrative Agent and the respective Credit Parties or their
Subsidiaries may, from time to time, enter into written amendments, supplements
or modifications hereto for the purpose of adding any provisions to any Credit
Document to which they are parties or changing in any manner the rights of the
Lenders or of any such Credit Party or its Subsidiaries thereunder or waiving,
on such terms and conditions as the Administrative Agent may specify in such
instrument, any of the requirements of any such Credit Document or any Default
or Event of Default and its consequences; provided, however, that:
(a) no such waiver and no such amendment, supplement or
modification shall release collateral not required or permitted by any
Credit Document to be released and which, in the aggregate with all
other collateral released pursuant to this clause (a) (other than
collateral released pursuant to the proviso to this clause (a)) during
the calendar year in which such proposed release would be effected and
the immediately preceding calendar year, has fair market value on the
proposed date of release in excess of 20% of the fair market value of
all collateral on such date without the written consent of the
Supermajority Lenders; provided that, notwithstanding the foregoing,
this clause (a) shall not be applicable to and no consent shall be
required for (i) releases of collateral in connection with any Asset
Sales permitted by subsection 8.5 as in effect on the Closing Date,
(ii) releases of collateral in accordance with subsection 11.11 or
(iii) upon the reincorporation of the Company or any Subsidiary in a
new jurisdiction or the creation of a new Subsidiary of the Company,
any release of collateral in connection with the transfer of such
released collateral to such reincorporated entity or new Subsidiary in
compliance with subsection 8.4, provided that the Administrative
Agent, in its sole discretion, determines that such release and
transfer, together with any grant and perfection of a new Lien therein
in favor of the Administrative Agent, will cause no material
impairment of the value of the collateral taken as a whole, after
giving effect to such release and transfer;
(b) no such waiver and no such amendment, supplement or
modification shall extend the final maturity date of any Note or the
scheduled payment date of any installment of any Loan, or reduce the
rate or extend the time of payment of interest thereon, or change the
method of calculating interest thereon, or reduce any fee payable to
the Lenders hereunder, or reduce the principal amount thereof, or
change the amount of any Lender's Commitment or Commitment Percentage,
or amend, modify or waive any provision of subsection 4.9(b) or this
subsection 11.1 or reduce the percentage specified in the definition
of Required Lenders or reduce the percentage specified in the
definition of Supermajority Lenders or reduce the percentage specified
in the definition of Section 4.4 Lenders or consent to the assignment
or transfer by any Credit Party of any of its rights and obligations
under any Credit Document, in each case, without the prior written
consent of each Lender directly affected thereby;
(c) no such waiver and no such amendment, supplement or
modification affecting the then Administrative Agent or Issuing Lender
shall amend, modify or waive any
92
87
provision of Section 10 without the written consent of such
Administrative Agent or Issuing Lender;
(d) without the consent of the Lenders which are holders of
the Revolving Credit Loans only, the Lenders which are holders of all
the Term Loans may amend this Agreement and the Term Loan Notes to
extend the maturities of the installments of the Term Loans; and
without the consent of the Lenders which are holders of the Term
Loans, all the Revolving Credit Lenders may amend this Agreement and
the Revolving Credit Notes to extend the Revolving Credit Termination
Date; and
(e) no such waiver, and no such amendment, supplement or
modification shall amend, modify or waive the Section 4.4 Lenders'
ability to act pursuant to subsection 4.4(b)(i), (ii), (iii) or (iv)
without the written consent of the Section 4.4 Lenders.
Any such waiver and any such amendment, supplement or modification described in
this subsection 11.1 shall apply equally to each of the Lenders and shall be
binding upon each Credit Party and its Subsidiaries, the Lenders, the
Administrative Agent and Issuing Lender and all future holders of the Notes
and the Loans. Any extension of a Letter of Credit by the Issuing Lender shall
be treated hereunder as a new Letter of Credit. In the case of any waiver, the
Credit Parties, the Lenders, the Administrative Agent and Issuing Lender 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.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy or telex, if one is listed), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or three Business Days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when sent, confirmation of receipt received,
or, in the case of telex notice, when sent, answerback received, addressed as
follows in the case of the Company and the Administrative Agent and as set
forth in Schedule I in the case of any Lender, or to such other address as may
be hereafter notified by the respective parties hereto and any future holders
of the Notes:
The Company: CSK Auto, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
93
88
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telex: 177920 GIBTRASK NYK
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative Agent: The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: The Chase Manhattan Bank Agent Bank
Services
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to subsections 3.4, 3.5, 4.1, 4.2, 4.3 and 4.4 shall
not be effective until received and provided that the failure to provide the
copies of notices to the Company provided for in this subsection 11.2 shall not
result in any liability to the Administrative Agent.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement, the Letters of Credit and the
Notes.
11.5 Payment of Expenses and Taxes. The Company agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
the Credit Documents and any other documents prepared in connection herewith,
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the reasonable fees and disbursements of one
counsel to the Administrative Agent, (b) to pay or reimburse each Lender and
the Administrative Agent for all their costs and expenses incurred in
connection with, and to pay, indemnify, and hold the
94
89
Administrative Agent and each Lender harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
arising out of or in connection with, the enforcement or preservation of any
rights under any Credit Document and any such other documents, including,
without limitation, reasonable fees and disbursements of counsel to the
Administrative Agent and each Lender incurred in connection with the foregoing
and in connection with advising the Administrative Agent with respect to its
rights and responsibilities under this Agreement and the documentation relating
thereto, (c) to pay, indemnify, and to hold the Administrative Agent and each
Lender harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other similar taxes (other than withholding taxes), if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, any Credit Document and any such other documents, and (d) to pay,
indemnify, and hold the Administrative Agent and each Lender and their
respective Affiliates, officers, directors, trustees, employees or agents
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever (including, without limitation, reasonable
fees and disbursements of counsel) which may be incurred by or asserted against
the Administrative Agent or the Lenders or such Affiliates, officers,
directors, trustees, employees, and agents (x) arising out of or in connection
with any investigation, litigation or proceeding related to this Agreement, the
other Credit Documents, the proceeds of the Loans or the Subordinated Debt and
the transactions contemplated by or in respect of such use of proceeds, or any
of the other transactions contemplated hereby, whether or not the Company, the
Administrative Agent or any of the Lenders or such Affiliates, officers or
directors is a party thereto, including, without limitation, any of the
foregoing relating to the violation of, noncompliance with or liability under,
any Environmental Law applicable to the operations of the Company, any of its
Subsidiaries or any of the facilities and properties owned, leased or operated
by the Company or any of its Subsidiaries, or (y) without limiting the
generality of the foregoing, by reason of or in connection with the execution
and delivery or transfer of, or payment or failure to make payments under,
Letters of Credit (it being agreed that nothing in this subsection 11.5(d)(y)
is intended to limit the Company's obligations pursuant to subsection 3.8) (all
the foregoing, collectively, the "indemnified liabilities"), provided that the
Company shall have no obligation hereunder with respect to indemnified
liabilities of the Administrative Agent or any Lender or any of their
respective Affiliates, officers and directors arising from (i) the gross
negligence or willful misconduct of such Administrative Agent or Lender or
their respective directors or officers or (ii) legal proceedings commenced
against the Administrative Agent or a Lender by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such or (iii) legal proceedings commenced
against the Administrative Agent or any such Lender by any Transferee (as
defined in subsection 11.6). The agreements in this subsection 11.5 shall
survive repayment of the Loans and all other amounts payable hereunder.
11.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Company, the Lenders, the
95
90
Administrative Agent, all future holders of the Notes and the Loans, and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking or lending business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any participating interest in the
Letters of Credit of such Lender, any Note held by such Lender, any Commitment
of such Lender or any other interest of such Lender hereunder. In the event of
any such sale by a Lender of participating interests to a Participant, such
Lender's obligations under this Agreement and the other Credit Documents to the
other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Note for all purposes under this Agreement and Holdings,
the Company and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Credit Documents. The Company
agrees that if amounts outstanding under this Agreement and the Notes are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed 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 Lender under this
Agreement or any Note; provided, that such right of setoff shall be subject to
the obligation of such Participant to share with the Lenders, and the Lenders
agree to share with such Participant, as provided in subsection 11.7. The
Company also agrees that each Participant shall be entitled to the benefits of
subsections 3.10, 4.11 and 4.12 with respect to its participation in the
Letters of Credit and in the Commitments and the Loans outstanding from time to
time as if it were a Lender; provided, that no Participant shall be entitled to
receive any greater amount pursuant to any such subsection than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred. Each Lender agrees that the participation agreement
pursuant to which any Participant acquires its participating interest (or any
other document) may afford voting rights to such Participant, or any right to
instruct such Lender with respect to voting hereunder, only with respect to
matters requiring the consent of either all of the Lenders hereunder or all of
the Lenders holding the relevant Term Loans or Revolving Credit Commitments
subject to such participation.
(c) Subject to paragraph (g) of this subsection 11.6, any
Lender may, in the ordinary course of its commercial banking, lending or other
business and in accordance with applicable law, (i) at any time and from time
to time assign all or any part of its rights and obligations under this
Agreement and the Notes to any Lender or any Affiliate thereof, provided that,
in the event of a sale of less than all of such rights and obligations, such
assigning Lender after any such sale to any other Lender or any Affiliate of
such Lender shall retain Commitments and/or Loans and/or L/C Participating
Interests aggregating at least $5,000,000 (or such lesser amount as the
Administrative Agent may determine), and, (ii) with the consent of the Company
and the Administrative Agent (which in each case shall not be unreasonably
withheld or delayed) at any time and from time to time assign to one or more
additional banks, mutual funds or
96
91
financial institutions or entities (each, an "Assignee"), all or any part of
its rights and obligations under this Agreement and the Notes, pursuant to an
Assignment and Acceptance, executed by such Assignee, such transferor Lender
(and, in the case of an Assignee that is not then a Lender or an Affiliate
thereof, by the Company and the Administrative Agent), and delivered to the
Administrative Agent for its acceptance and recording in the Register (as
defined below); provided that, unless otherwise consented to by the Company and
the Administrative Agent, (A) each such sale pursuant to clause (ii) of this
subsection 11.6(c) shall be in a principal amount of $5,000,000 or more unless
the Assigning Lender is transferring all of its rights and obligations and (B)
in the event of a sale of less than all of such rights and obligations, such
Lender after any such sale shall retain Commitments and/or Loans and/or L/C
Participating Interests aggregating at least $5,000,000. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Commitment, if any, as set forth therein, and (y) the
assigning Lender thereunder shall, to the extent of the interest transferred,
as reflected in such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of a transferor Lender's
rights and obligations under this Agreement, such transferor Lender shall cease
to be a party hereto, except that it shall remain entitled to the benefit of
all indemnities and other provisions stated to survive the termination hereof).
(d) The Administrative Agent, which for purposes of this
subsection 11.6(d) only shall be deemed the agent of the Company, shall
maintain at the address of the Administrative Agent referred to in subsection
11.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitments of, and principal amounts of the Loans owing to, each
Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of a Loan or other obligation hereunder as the owner thereof for all
purposes of this Agreement and the other Credit Documents, notwithstanding any
notice to the contrary. Any assignment of any Loan or other obligation
hereunder shall be effective only upon appropriate entries with respect thereto
being made in the Register. The Register shall be available for inspection by
the Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an Affiliate thereof, by the Company and the
Administrative Agent), together with payment to the Administrative Agent of a
registration and processing fee of $4,000 if the Assignee is not a Lender prior
to the execution of such supplement and $1,000 otherwise, the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Company. On or prior to such effective date, the Company
at its own expense, shall execute and deliver to the Administrative Agent (in
exchange for any or all of the Term Loan Note, or Revolving Credit Notes of the
97
92
assigning Lender, if any ) new Term Loan Note, or Revolving Credit Notes, as
the case may be, to the order of such Assignee (if requested by such Assignee)
in an amount equal to the Revolving Credit Commitment or the Term Loans, as the
case may be, assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained a Commitment or any Term Loans hereunder, new
Term Loan Note, or Revolving Credit Notes, as the case may be, to the order of
the assigning Lender in an amount equal to the Commitment or such Term Loans,
as the case may be, retained by it hereunder (if requested). Such new Notes
shall be dated the Closing Date and shall otherwise be in the form of the Notes
replaced thereby.
(f) The Lenders agree that they will use reasonable efforts
to protect the confidentiality of any confidential information concerning
Holdings, the Company and its Subsidiaries and Affiliates. Notwithstanding the
foregoing, the Company authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning Holdings, the Company and
its Subsidiaries which has been delivered to such Lender by or on behalf of
Holdings or the Company pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of Holdings, or the Company in connection with
such Lender's credit evaluation of Holdings, the Company and its Subsidiaries
and Affiliates prior to becoming a party to this Agreement; provided that each
Lender shall cause its respective prospective Transferees to agree in writing
to protect the confidentiality of any confidential information concerning
Holdings, the Company and its Subsidiaries.
(g) If, pursuant to this subsection 11.6, any interest in
this Agreement or any Note is transferred to any Transferee which is organized
under the laws of any jurisdiction other than the United States or any State
thereof, the transferor Lender shall cause such Transferee, concurrently with
the effectiveness of such transfer either (1) in the case of a Transferee that
is a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) to
represent to the transferor Lender (for the benefit of the transferor Lender,
the Administrative Agent and the Company) that under applicable law and
treaties no taxes will be required to be withheld by the Administrative Agent,
the Company or the transferor Lender with respect to any payments to be made to
such Transferee in respect of the Loans or L/C Participating Interests, (ii) to
furnish to the transferor Lender (and, in the case of any Transferee registered
in the Register, the Administrative Agent and the Company) either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder) and (iii) to agree
(for the benefit of the transferor Lender, the Administrative Agent and the
Company) to provide the transferor Lender (and, in the case of any Transferee
registered in the Register, the Administrative Agent and the Company) a new
Form 4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption or (2) in the case of
any Transferee that is not a "bank" within the meaning of Section 881(c)(3)(A)
of the Code, (i) to represent to the transferor Lender (for the benefit of the
transferor Lender, the Administrative Agent and the Company) that it is not a
"bank" within the meaning of Section 881(c)(3)(A) of the Code, (ii) to furnish
to the transferor Lender (and, in the
98
93
case of any Transferee registered in the Register, to the Company), with a copy
to the Administrative Agent, (A) a Subsection 4.11(d)(2) Certificate and (B)
two (2) accurate and complete original signed copies of Internal Revenue
Service form W-8, certifying to such Transferee's legal entitlement on the date
of the effectiveness of such transfer to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Code with respect to all payments
to be made under this Agreement, and (iii) to agree (for the benefit of the
transferor Lender, the Administrative Agent and the Company), to the extent
legally entitled to do so, upon reasonable request by the transferor Lender
(or, in the case of any Transferee registered in the Register, the
Administrative Agent or the Company), to provide to the transferor Lender, the
Administrative Agent and the Company such other forms as may be required in
order to establish the legal entitlement of such Transferee to an exemption
from withholding tax with respect to payments under this Agreement.
(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this subsection concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
11.7 Adjustments; Set-off. (a) If any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of any of its
Loans or L/C Participating Interests, as the case may be, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in clause (f) of Section 9, or otherwise) in a greater proportion
than any such payment to and collateral received by any other Lender, if any,
in respect of such other Lender's Loans or L/C Participating Interests, as the
case may be, or interest thereon, such benefitted Lender shall purchase for
cash from the other Lenders such portion of each such other Lender's Loans or
L/C Participating Interests, as the case may be, or shall provide such other
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such benefitted Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Company agrees that each Lender so
purchasing a portion of another Lender's Loans and/or L/C Participating
Interests may exercise all rights of payment (including, without limitation,
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion. The Administrative Agent shall promptly
give the Company notice of any set-off, provided that the failure to give such
notice shall not affect the validity of such set-off.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon the filing of a petition under any of the
provisions of the federal bankruptcy code or amendments thereto, by or against;
the making of an assignment for the benefit of creditors by; the application
for the appointment, or the appointment, of any receiver of, or of any
substantial portion of the property of; the issuance
99
94
of any execution against any substantial portion of the property of; the
issuance of a subpoena or order, in supplementary proceedings, against or with
respect to any substantial portion of the property of; or the issuance of a
warrant of attachment against any substantial portion of the property of; the
Company to set-off and apply against any indebtedness, whether matured or
unmatured, of the Company to such Lender, any amount owing from such Lender to
the Company, at or at any time after, the happening of any of the above
mentioned events, and as security for such indebtedness, the Company hereby
grants to each Lender a continuing security interest in any and all deposits,
accounts or moneys of the Company then or thereafter maintained with such
Lender, subject in each case to subsection 11.7(a) of this Agreement. The
aforesaid right of set-off may be exercised by such Lender against the Company
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
the Company, or against anyone else claiming through or against the Company or
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the making, filing or issuance, or service
upon such Lender of, or of notice of, any such petition; assignment for the
benefit of creditors; appointment or application for the appointment of a
receiver; or issuance of execution, subpoena, order or warrant. Each Lender
agrees promptly to notify the Company and the Administrative Agent after any
such set-off and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
11.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument. A set of the copies of this Agreement signed by all
the parties shall be lodged with the Company and the Administrative Agent.
This Agreement shall become effective with respect to the Company, the
Administrative Agent and the Lenders when the Administrative Agent shall have
received copies of this Agreement executed by the Company and the Lenders, or,
in the case of any Lender, shall have received telephonic confirmation from
such Lender stating that such Lender has executed counterparts of this
Agreement or the signature pages hereto and sent the same to the Administrative
Agent.
11.9 Governing Law; No Third Party Rights. This Agreement
and the Notes and the rights and obligations of the parties under this
Agreement and the Notes shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York. This Agreement is solely
for the benefit of the parties hereto and their respective successors and
assigns, and, except as set forth in subsection 11.6, no other Persons shall
have any right, benefit, priority or interest under, or because of the
existence of, this Agreement.
11.10 Submission to Jurisdiction; Waivers. (a) Each party
to this Agreement hereby irrevocably and unconditionally:
(i) submits for itself and its property in any
legal action or proceeding relating to this Agreement or any of the
other Credit Documents, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
100
95
of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;
(ii) consents that any such action or proceeding
may be brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(iii) agrees that service of process in any such
action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such party at its address set forth in
subsection 11.2 or at such other address of which the Administrative
Agent shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by
law or shall limit the right to ▇▇▇ in any other jurisdiction.
(b) Each party hereto unconditionally waives trial by jury in
any legal action or proceeding referred to in paragraph (a) above and any
counterclaim therein.
11.11 Releases. The Administrative Agent and the Lenders
agree to cooperate with the Company and its Subsidiaries with respect to any
sale or other disposition permitted by subsection 8.5 and promptly take such
action and execute and deliver such instruments and documents necessary to
release the liens and security interests created by the Security Documents
relating to any of the assets or property affected by any such sale permitted
by subsection 8.5 including, without limitation, any Uniform Commercial Code
amendment, release or termination or partial release or termination statements.
11.12 Interest. Each provision in this Agreement and each
other Credit Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement or any
other Credit Document or otherwise (including any sums paid as required by any
covenant or obligation contained herein or in any other Credit Document which
is for the use, forbearance or detention of such money), exceed that amount of
money which would cause the effective rate of interest to exceed the highest
lawful rate permitted by applicable law (the "Highest Lawful Rate"), and all
amounts owed under this Agreement and each other Credit Document shall be held
to be subject to reduction to the effect that such amounts so paid or agreed to
be paid which are for the use, forbearance or detention of money under this
Agreement or such Credit Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Notwithstanding any provision in this Agreement or any other Credit
Document to the contrary, if the maturity of the Loans or the obligations in
respect of the other Credit Documents are accelerated for any reason, or in the
event of any prepayment of all or any portion of the Loans or the obligations
in respect of the other Credit Documents by the Company or in any other event,
earned interest on the
101
96
Loans and such other obligations of the Company may never exceed the Highest
Lawful Rate, and any unearned interest otherwise payable on the Loans or the
obligations in respect of the other Credit Documents that is in excess of the
Highest Lawful Rate shall be cancelled automatically as of the date of such
acceleration or prepayment or other such event and (if theretofore paid) shall,
at the option of the holder of the Loans or such other obligations, be either
refunded to the Company or credited on the principal of the Loans. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Highest Lawful Rate, the Company and the Lenders
shall, to the maximum extent permitted by applicable law, amortize, prorate,
allocate and spread, in equal parts during the period of the actual term of
this Agreement, all interest at any time contracted for, charged, received or
reserved in connection with this Agreement.
11.13 Special Indemnification. Notwithstanding any provision
in this Agreement to the contrary, (A) each Lender, or Transferee of any Lender
pursuant to subsection 11.6(g) of this Agreement, shall indemnify the Company
and the Administrative Agent, and hold each of them harmless against any and
all payments, expenses or taxes which the Company or the Administrative Agent
may become subject to or obligated to pay if and to the extent that, (i) on the
Closing Date or the effective date of transfer, as the case may be, such
Lender, or such Transferee of a Lender pursuant to subsection 11.6(g) of this
Agreement, (a) makes the representation and covenants set forth in subsection
4.11(d)(2) of this Agreement, or, in the case of a Transferee, pursuant to
subsection 11.6(g)(2) of this Agreement and the Assignment and Acceptance and
(b) is not in fact also qualified to make the representation and covenants set
forth in subsection 4.11(d)(1) of this Agreement or, in the case of a
Transferee, pursuant to subsection 11.6(g)(1) of this Agreement and the
Assignment and Acceptance and (ii) as a result of any Change in Law or
compliance by such Lender, or Transferee, with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority the Company or the Administrative Agent are required to
make any additional payments on account of U.S. withholding taxes and amounts
related thereto with respect to any payments under this Agreement, any Note, or
a Eurodollar Loan, made prior to such Change in Law or request or directive,
none of which payments would have been required if such Lender, or Transferee,
was qualified on the Closing Date or the date of the transfer, as the case may
be, to make the representation and covenants set forth in subsection 4.11(d)(1)
of this Agreement or pursuant to subsection 11.6(g)(1) of this Agreement and
the Assignment and Acceptance, as the case may be, and (B) each Lender, or
Transferee, agrees that to the extent any amount payable by such Lender or
Transferee pursuant to this subsection 11.13 remains unpaid on any Interest
Payment Date or the date on which any prepayment is made, the Company shall
have the right to set-off against any payment due to such Lender or Transferee
on such date any amounts owing to the Company pursuant to this subsection
11.13.
11.14 Permitted Payments and Transactions. Notwithstanding
any provision to the contrary contained in this Agreement, the Company and its
Subsidiaries shall be permitted to pay fees and expenses pursuant to or in
respect of, the following agreements, and, in the case of clauses (a) and (d)
below, to engage in the following transactions: (a)(i) the Management Advisory,
Strategic Planning and Consulting Services Agreement between Investcorp
International, Inc. ("III") and the Company, (ii) the Loan Finance Advisory
Agreement between
102
97
III and the Company, (iii) the Mergers and Acquisitions Advisory Agreement
between III and Holdings, (iv) the Standby Commitment Fee payable by Holdings
to Invifin S.A., (v) the Loan Discount Fee payable by the Company to Auto
Equity Limited, (vi) the Stock Purchase Agreement and the exhibits and
schedules thereto, (vii) the Real Estate Financing Agreement, (viii)
Indebtedness payable to Transatlantic Finance, Ltd. in the aggregate amount of
$16.5 million and (ix) payments made under the equity participation program
resulting from the Closing Date Transactions, (b) agreements with any Person or
Persons providing for the payment of customary fees in connection with serving
as a director of the Company or any Subsidiary of the Company; (c) agreements
providing for the payment of commercially reasonable fees in connection with
any permitted financing, refinancing, sale, transfer, sale and leaseback or
other permitted disposition of any stock or assets of the Company or its
Subsidiaries; (d) the borrowing of any Indebtedness to the extent, and upon the
terms and conditions, the same is expressly permitted under subsection 8.1; and
(e) agreements providing for commercially reasonable fees in connection with
any permitted purchase or acquisition of assets by the Company or any of its
Subsidiaries.
103
98
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
CSK AUTO, INC.
By: ------------------------------
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent, Issuing Lender
and a Lender
By: ------------------------------
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Documentation Agent and a Lender
By: ------------------------------
Title: Authorized Signatory
104
SCHEDULE I
LIST OF ADDRESSES FOR NOTICES;
COMMITMENT AMOUNTS
THE CHASE MANHATTAN BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
Telecopy: (212)
Commitment Amounts:
Revolving Credit Commitment
Term Loan Commitment
Commitment Percentage:
Revolving Credit
Term Loan
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Commitment Amount:
Revolving Credit Commitment
Term Loan Commitment
Commitment Percentage:
Revolving Credit
Term Loan
