EXECUTION COPY
Exhibit (b)(3)
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CREDIT AGREEMENT
dated as of October 30, 2003
among
TDG MERGER CO.,
(to be merged as of the Closing Date into The Xxxxx Group, Inc.)
as Borrower,
THE FINANCIAL INSTITUTIONS PARTY HERETO,
as Lenders,
and
MADISON CAPITAL FUNDING LLC,
as Agent
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Table of Contents
Page
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Section 1 Definitions; Interpretation...................................................................1
1.1 Definitions...........................................................................1
1.2 Interpretation.......................................................................17
Section 2 Credit Facilities............................................................................17
2.1 Commitments..........................................................................17
2.1.1 Revolving Loan Commitments..................................................17
2.1.2 Term Loan Commitments.......................................................17
2.2 Loan Procedures......................................................................18
2.2.1 Loan Types..................................................................18
2.2.2 Borrowing...................................................................18
2.2.3 Conversion; Continuation....................................................18
2.3 Letters of Credit....................................................................19
2.3.1 Commitment..................................................................19
2.3.2 Application.................................................................19
2.3.3 Reimbursement Obligations...................................................20
2.3.4 Participations in Letters of Credit.........................................21
2.4 Commitments Several..................................................................21
2.5 Certain Conditions...................................................................21
2.6 Loan Accounting......................................................................21
2.6.1 Recordkeeping...............................................................21
2.6.2 Notes.......................................................................22
2.7 Interest.............................................................................22
2.7.1 Interest Rates..............................................................22
2.7.2 Interest Payment Dates......................................................22
2.7.3 Setting and Notice of LIBOR Rates...........................................22
2.7.4 Computation of Interest.....................................................22
2.8 Fees.................................................................................23
2.8.1 Commitment Fee..............................................................23
2.8.2 Letter of Credit Fees.......................................................23
2.8.3 Agent's Fees................................................................23
2.9 Commitment Reduction.................................................................23
2.9.1 Voluntary Reduction or Termination of Revolving Loan Commitment.............23
2.9.2 Mandatory Reduction of Revolving Loan Commitment............................23
2.9.3 All Reductions of Revolving Loan Commitment.................................24
2.10 Prepayment............................................................................24
2.10.1 Voluntary Prepayment........................................................24
2.10.2 Mandatory Prepayment........................................................24
2.10.3 All Prepayments.............................................................25
2.11 Repayment.............................................................................25
2.11.1 Revolving Loans.............................................................25
2.11.2 Term A Loan.................................................................25
2.11.3 Term B Loan.................................................................25
2.12 Payment..............................................................................25
2.12.1 Making and Settlement of Payments...........................................26
2.12.2 Application of Certain Payments.............................................26
2.12.3 Payment Dates...............................................................26
2.12.4 Set-off.....................................................................26
2.12.5 Proration of Payments.......................................................26
Section 3 Yield Protection.............................................................................27
3.1 Taxes................................................................................27
3.2 Increased Cost.......................................................................27
3.3 Inadequate or Unfair Basis...........................................................28
3.4 Change in Law........................................................................28
3.5 Funding Losses.......................................................................29
3.6 Manner of Funding; Alternate Funding Offices.........................................29
3.7 Mitigation of Circumstances; Replacement of Lenders..................................29
3.8 Conclusiveness of Statements; Survival...............................................30
Section 4 Conditions Precedent.........................................................................30
4.1 Initial Credit Extension.............................................................30
4.1.1 Capitalization..............................................................30
4.1.2 Initial Loans; Availability.................................................30
4.1.3 Prior Debt..................................................................30
4.1.4 Related Transactions........................................................30
4.1.5 Fees........................................................................30
4.1.6 Delivery of Loan Documents..................................................30
4.2 All Credit Extensions................................................................32
Section 5 Representations and Warranties...............................................................33
5.1 Organization..........................................................................33
5.2 Authorization; No Conflict............................................................33
5.3 Validity; Binding Nature..............................................................33
5.4 Financial Condition...................................................................33
5.5 No Material Adverse Change............................................................34
5.6 Litigation............................................................................34
5.7 Ownership of Properties; Liens........................................................34
5.8 Capitalization........................................................................34
5.9 Pension Plans.........................................................................34
5.10 Investment Company Act................................................................35
5.11 Public Utility Holding Company Act....................................................35
5.12 Margin Stock..........................................................................35
5.13 Taxes.................................................................................35
5.14 Solvency..............................................................................35
5.15 Environmental Matters.................................................................35
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5.16 Insurance.............................................................................36
5.17 Information...........................................................................36
5.18 Intellectual Property.................................................................36
5.19 Restrictive Provisions................................................................36
5.20 Labor Matters.........................................................................36
5.21 No Default............................................................................37
5.22 Related Agreements....................................................................37
5.23 Anti-Terrorism Laws...................................................................37
Section 6 Affirmative Covenants........................................................................38
6.1 Information..........................................................................38
6.1.1 Annual Report...............................................................38
6.1.2 Interim Reports.............................................................39
6.1.3 Compliance Certificate......................................................39
6.1.4 Reports to SEC and Shareholders.............................................39
6.1.5 Notice of Default; Litigation; ERISA Matters................................39
6.1.6 Availability Certificate....................................................40
6.1.7 Management Report...........................................................40
6.1.8 Projections.................................................................40
6.1.9 Subordinated Debt Notices...................................................41
6.1.10 Other Information...........................................................41
6.2 Books; Records; Inspections..........................................................41
6.3 Maintenance of Property; Insurance...................................................41
6.4 Compliance with Laws; Payment of Taxes and Liabilities...............................42
6.5 Maintenance of Existence.............................................................42
6.6 Employee Benefit Plans...............................................................42
6.7 Environmental Matters................................................................42
6.8 Further Assurances...................................................................42
6.9 Intentionally Omitted................................................................43
6.10 Tax Shelter Registration.............................................................43
6.11 The Xxxxx Group Canada Inc...........................................................43
Section 7 Negative Covenants...........................................................................43
7.1 Debt.................................................................................43
7.2 Liens................................................................................44
7.3 Intentionally Omitted................................................................45
7.4 Restricted Payments..................................................................45
7.5 Mergers; Consolidations; Asset Sales.................................................45
7.6 Modification of Organizational Documents.............................................46
7.7 Use of Proceeds......................................................................46
7.8 Transactions with Affiliates.........................................................46
7.9 Inconsistent Agreements..............................................................46
7.10 Business Activities..................................................................46
7.11 Investments..........................................................................46
7.12 Restriction of Amendments to Certain Documents.......................................47
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7.13 Fiscal Year..........................................................................47
7.14 Financial Covenants..................................................................47
7.14.1 Fixed Charge Coverage Ratio.................................................47
7.14.2 Intentionally Omitted.......................................................48
7.14.3 Senior Debt to EBITDA Ratio.................................................48
7.14.4 Total Debt to EBITDA Ratio..................................................48
7.14.5 EBITDA......................................................................49
7.14.6 Capital Expenditures........................................................49
7.15 Sale-Leasebacks......................................................................49
Section 8 Events of Default; Remedies..................................................................50
8.1 Events of Default....................................................................50
8.1.1 Non-Payment of Credit.......................................................50
8.1.2 Default Under Other Debt....................................................50
8.1.3 Bankruptcy; Insolvency......................................................50
8.1.4 Non-Compliance with Loan Documents..........................................50
8.1.5 Representations; Warranties.................................................50
8.1.6 Pension Plans...............................................................51
8.1.7 Judgments...................................................................51
8.1.8 Invalidity of Collateral Documents..........................................51
8.1.9 Invalidity of Subordination Provisions......................................51
8.1.10 Change of Control...........................................................51
8.2 Remedies.............................................................................51
Section 9 Agent........................................................................................52
9.1 Appointment; Authorization...........................................................52
9.2 Delegation of Duties.................................................................52
9.3 Limited Liability....................................................................52
9.4 Reliance.............................................................................52
9.5 Notice of Default....................................................................53
9.6 Credit Decision......................................................................53
9.7 Indemnification......................................................................53
9.8 Agent Individually...................................................................54
9.9 Successor Agent......................................................................54
9.10 Collateral Matters...................................................................54
Section 10 Miscellaneous................................................................................55
10.1 Waiver; Amendments...................................................................55
10.2 Notices..............................................................................55
10.3 Computations.........................................................................55
10.4 Costs; Expenses......................................................................56
10.5 Indemnification by Borrower..........................................................56
10.6 Marshaling; Payments Set Aside.......................................................56
10.7 Nonliability of Lenders..............................................................57
10.8 Assignments; Participations..........................................................57
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10.8.1 Assignments.................................................................57
10.8.2 Participations..............................................................58
10.9 Confidentiality......................................................................59
10.10 Captions.............................................................................59
10.11 Nature of Remedies...................................................................59
10.12 Counterparts.........................................................................59
10.13 Severability.........................................................................59
10.14 Entire Agreement.....................................................................60
10.15 Successors; Assigns..................................................................60
10.16 Governing Law........................................................................60
10.17 Forum Selection; Consent to Jurisdiction.............................................60
10.18 Waiver of Jury Trial.................................................................60
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Annexes
Annex I Commitments and Pro Rata Shares
Annex II Addresses
Exhibits
Exhibit A Form of Assignment Agreement
Exhibit B Form of Compliance Certificate
Exhibit C Form of Availability Certificate
Exhibit D Form of Note
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Notice of Conversion/Continuation
Exhibit G Form of Equity Call Agreement
Exhibit H Form of Borrower Assignment and Assumption Agreement
Schedules
Schedule 4.1.3 Prior Debt
Schedule 4.1.6(v) Historical EBITDA
Schedule 5.6 Litigation
Schedule 5.8 Capitalization
Schedule 5.16 Insurance
Schedule 5.21 Labor Matters
Schedule 7.1 Existing Debt
Schedule 7.2 Existing Liens
Schedule 7.11 Existing Investments
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CREDIT AGREEMENT
Credit Agreement dated as of October 30, 2003 (this "Agreement") among
TDG Merger Co., a Delaware corporation ("Mergeco") (to be merged on the Closing
Date into The Xxxxx Group, Inc., a Delaware corporation ("Xxxxx")), the
financial institutions party hereto from time to time (together with their
respective successors and assigns, "Lenders") and Madison Capital Funding LLC
(in its individual capacity, "Madison"), as Agent for all Lenders.
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
Section 1 Definitions; Interpretation.
1.1 Definitions. When used herein the following terms shall have
the following meanings:
Account has the meaning set forth in the Guarantee and Collateral
Agreement and in each case shall include a Note Receivable.
Account Debtor means any Person who is obligated to Borrower or any
Subsidiary with respect to any Account.
Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or equity
of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a
merger or consolidation or any other combination with another Person (other than
a Person that is already a Subsidiary).
Adjusted Working Capital means the remainder of (a) the consolidated
current assets of Borrower (including Note Receivables) and the Subsidiaries
minus the amount of cash and cash equivalents included in such consolidated
current assets, minus (b) the consolidated current liabilities of Borrower and
the Subsidiaries minus the amount of short-term Debt (including current
maturities of long-term Debt) of Borrower and the Subsidiaries included in such
consolidated current liabilities.
Advisory Agreement means the Advisory Agreement, by and between
Riverside Partners, L.L.C. and Xxxxx in form and substance reasonably
satisfactory to Agent, which Advisory Agreement will provide for increases in
the Advisory Fee consistent with the past business practices of Riverside
Partners, L.L.C.
Affiliate of any Person means (a) any other Person which, directly or
indirectly, controls or is controlled by or is under common control with such
Person, (b) any officer or director of such Person and (c) with respect to any
Lender, any entity administered or managed by such Lender or an Affiliate or
investment advisor thereof which is engaged in making, purchasing, holding or
otherwise investing in commercial loans. A Person shall be deemed to be
"controlled by" any other Person if such Person possesses, directly or
indirectly, power to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or
power to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. Unless
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expressly stated otherwise herein, neither Agent nor any Lender shall be deemed
an Affiliate of Borrower or of any Subsidiary.
Agent means Madison in its capacity as agent for all Lenders hereunder
and any successor thereto in such capacity.
Agreement has the meaning set forth in the Preamble.
Anti-Terrorism Laws has the meaning set forth in Section 5.23(a).
Applicable Margin means 2.75% for Revolving Loans and Term A Loans
which are Base Rate Loans, 3.25% for Term B Loans which are Base Rate Loans,
4.25% for Revolving Loans and Term A Loans which are LIBOR Loans and 4.75% for
Term B Loans which are LIBOR Loans.
Assignee has the meaning set forth in Section 10.8.1.
Assignment Agreement means an agreement substantially in the form of
Exhibit A.
Availability Certificate means a certificate substantially in the form
of Exhibit C.
Base Rate means, for any day, the greater of (a) the rate of interest
which is identified as the "Prime Rate" and normally published in the Money
Rates section of The Wall Street Journal (or, if such rate ceases to be so
published, as quoted from such other generally available and recognizable source
as Agent may select) and (b) the sum of the Federal Funds Rate plus 0.5%. Any
change in the Base Rate due to a change in such Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in such Prime Rate
or the Federal Funds Rate.
Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.
Borrower means, initially, Mergeco, and on the Closing Date after
giving effect to the Merger, Xxxxx.
Borrower Assignment and Assumption Agreement means an agreement
substantially in the form of Exhibit H.
Borrowing Availability means, at the time of determination, an amount
equal to the lesser of (a) the Revolving Loan Commitment less the Personal
Holding Company Tax Reserve and (b) the sum of (i) 85% of the unpaid amount of
all Eligible Accounts (other than Eligible Accounts which are Note Receivables)
plus (ii) 50% of the unpaid amount of all Eligible Accounts which are Note
Receivables minus (iii) the Personal Holding Company Tax Reserve, and in the
case of clauses (i) and (ii) less such reserves and allowances as the Required
Lenders deem necessary in their Permitted Discretion, which reserves and
allowances will take effect 5 Business Days after Borrower receives notice of
such reserves and allowances from Agent in writing.
Business Day means any day on which commercial banks are open for
commercial banking business in Chicago, Illinois and New York, New York, and, in
the case of a Business Day which relates to a LIBOR Loan, on which dealings are
carried on in the London interbank eurodollar market.
Calculation Date has the meaning set forth in Exhibit C.
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Capital Expenditures means all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of Borrower, but excluding expenditures made in connection with the
replacement, substitution or restoration of assets to the extent financed (a)
from insurance proceeds (or other similar recoveries) paid on account of the
loss of or damage to the assets being replaced or restored, (b) with awards of
compensation arising from the taking by eminent domain or condemnation of the
assets being replaced or (c) with proceeds of Dispositions that are reinvested
in accordance with clause (a)(v) of the definition of Net Cash Proceeds.
Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government, any agency thereof or any political subdivision of
any state or any public instrumentality thereof, (b) commercial paper, or
corporate demand notes, in each case (unless issued by a Lender or its holding
company) rated at least A-l by Standard & Poor's Ratings Group or P-l by Xxxxx'x
Investors Service, Inc., (c) any certificate of deposit (or time deposit
represented by a certificate of deposit) or banker's acceptance maturing not
more than one year after such time, or any overnight Federal Funds transaction
that is issued or sold by any Lender (or by a commercial banking institution
that is a member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $150,000,000), (d) any repurchase
agreement entered into with any Lender (or commercial banking institution of the
nature referred to in clause (c) above) which (i) is secured by a fully
perfected security interest in any obligation of the type described in any of
clauses (a) through (c) above and (ii) has a market value at the time such
repurchase agreement is entered into of not less than 100% of the repurchase
obligation of such Lender (or other commercial banking institution) thereunder,
(e) shares of any money market mutual fund that (i) has at least 95% of its
assets invested continuously in types of investments referred to in clause (a)
above, (ii) has net assets of not less than $500,000,000 and (iii) has a rating
of at least A-1 by Standard & Poor's Ratings Group or P-1 by Xxxxx'x Investors
Service, Inc., (f) money market accounts or mutual funds which invest
exclusively in assets satisfying the foregoing requirements, and (g) other short
term liquid investments approved in writing by Agent.
Change of Control means the occurrence of any of the following: (a)
Sponsor and its Affiliates collectively cease to, directly or indirectly, own
and control at least (i) 51% of the outstanding equity interests of Holdings or
(ii) possess the right to elect (through contract, ownership of voting
securities or otherwise) a majority of the board of directors (or similar
governing body) of Holdings and to direct the management policies and decisions
of Holdings, (b) any Person or "group" (within the meaning of Rules 13d-3 and
13d-5 under the Securities Exchange Act of 1934 as in effect on the Closing
Date) other than Sponsor or any of its Affiliates acquires a greater beneficial
ownership in Holdings' voting equity interests than that held collectively by
Sponsor and its Affiliates, (c) a majority of Holdings' board of directors (or
similar governing body) ceases to consist of the directors (or similar parties)
of Holdings on the Closing Date (after giving effect to the Related
Transactions) and other directors (or similar parties) whose nomination for
election to Holdings' board of directors (or similar governing body) is
recommended by at least a majority of the foregoing described directors (or
similar parties), (d) Holdings ceases to directly own and control 100% of each
class of the outstanding equity interests of Borrower or (e) Borrower ceases to,
directly or indirectly, own and control 100% of each class of the outstanding
equity interests of each Subsidiary.
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Chief Financial Officer shall mean the most senior currently available
(as determined in the Borrower's reasonable discretion) financial officer or
employee.
Closing Date means the date on which all conditions precedent set forth
in Section 4.1 have been satisfied or waived in writing by Agent and Lenders.
Closing Fee means the fee payable by the Borrower to the Sponsor on the
Closing Date in an amount not to exceed $1,300,000.
Code means the Internal Revenue Code of 1986, as amended.
Collateral has the meaning set forth in the Guarantee and Collateral
Agreement.
Collateral Access Agreement means an agreement in form and substance
reasonably satisfactory to Agent pursuant to which a mortgagee or lessor of real
property on which Collateral is stored or otherwise located, or a warehouseman,
processor or other bailee of Inventory or other property owned by Borrower or
any Subsidiary, acknowledges the Liens of Agent and waives any Liens held by
such Person on such property, and, in the case of any such agreement with a
mortgagee or lessor, permits Agent reasonable access to and use of such real
property during the continuance of an Event of Default to assemble, complete and
sell any Collateral stored or otherwise located thereon.
Collateral Documents means, collectively, the Guarantee and Collateral
Agreement, each Mortgage, each Collateral Access Agreement, each Intellectual
Property Agreement and each other agreement or instrument pursuant to or in
connection with which Borrower, any Subsidiary or any other Person grants
Collateral to Agent for the benefit of Lenders, each as amended, restated or
otherwise modified.
Commitment means, as to any Lender, such Lender's Pro Rata Share of the
Revolving Loan Commitment, the Term A Loan Commitment and the Term B Loan
Commitment.
Commitment Fee means the fee payable by Borrower to Lenders pursuant to
Section 2.8.1.
Compliance Certificate means a certificate substantially in the form of
Exhibit B.
Computation Date has the meaning set forth in Exhibit B.
Computation Period means each period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.
Consolidated Net Income means, with respect to Borrower and the
Subsidiaries for any period, the net income (or loss) of Borrower and the
Subsidiaries for such period, excluding any gains (or losses) from Dispositions,
any extraordinary gains (or losses) and any gains (or losses) from discontinued
operations.
Contingent Obligation means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to or otherwise to invest in a
debtor, or otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of dividends
or other distributions upon the shares of any other Person; provided however,
that
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"Contingent Obligation" does not include any liability required to be included
on the financial statements of the Borrower or its Subsidiaries with respect to
any personal holding company tax liability. The amount of any Person's
obligation in respect of any Contingent Obligation shall (subject to any
limitation set forth therein) be deemed to be the principal amount of the debt,
obligation or other liability supported thereby.
Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with
Borrower, are treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
Copyright Security Agreement means the Copyright Security Agreement
dated as of the Closing Date by each Loan Party signatory thereto in favor of
Agent and Lenders, as amended, restated or otherwise modified.
Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been or should be recorded as liabilities on a balance
sheet of such Person in accordance with GAAP, (c) all obligations of such Person
to pay the deferred purchase price of property or services (excluding trade
accounts payable in the ordinary course of business), (d) all indebtedness
secured by a Lien on the property of such Person, whether or not such
indebtedness shall have been assumed by such Person (measured as the fair market
value of such property), (e) all obligations, contingent or otherwise, with
respect to the face amount of all letters of credit (whether or not drawn) and
banker's acceptances issued for the account of such Person (including the
Letters of Credit), (f) all Hedging Obligations of such Person, (g) all
Contingent Obligations of such Person, (h) all Debt of any partnership of which
such Person is a general partner and (i) all obligations of such Person under
any synthetic lease transaction, where such obligations are considered borrowed
money indebtedness for tax purposes but the transaction is classified as an
operating lease in accordance with GAAP.
Default means any event that, if it continues uncured, will, with the
lapse of time or the giving of notice or both, constitute an Event of Default.
Disposition means, as to any asset or right of Borrower or any
Subsidiary, (a) any sale, lease, assignment or other transfer for value thereof
(other than to Borrower or any Subsidiary), (b) any loss, destruction or damage
thereof or (c) any actual condemnation, confiscation, requisition, seizure or
taking thereof, in each case excluding (i) assets subject to a Disposition which
are replaced within 200 days with assets performing the same or a similar
function or otherwise useful in the business of the Borrower or any Loan Party,
(ii) Dispositions in any Fiscal Year, the Net Cash Proceeds of which do not in
the aggregate exceed $250,000, (iii) the sale or other transfer of Inventory in
the ordinary course of business and (iv) the sale or other transfer of obsolete
and immaterial assets or immaterial assets not used or useful in the business of
the Borrower or any Subsidiary.
Dollar and $ mean lawful money of the United States of America.
Domestic Subsidiary means any Subsidiary other than a Foreign
Subsidiary.
Xxxxx has the meaning set forth in the Preamble.
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EBITDA means, for any period, Consolidated Net Income for such period
plus, to the extent deducted in determining such Consolidated Net Income, all
fees and expenses paid to directors as permitted by Section 7.4, all cash and
non-cash Interest Expense, income tax expense, depreciation and amortization,
Management Fees permitted by Section 7.4, Transaction Expenses, actual non-cash
costs and expenses in an amount not to exceed $500,000 in the aggregate relating
to the write-down or write-off of any Account to the extent such write-down or
write-off occurs on or before December 31, 2003, non-recurring costs that are
approved by the Required Lenders in their Permitted Discretion relating to
acquisitions of capital assets that are not otherwise capitalized, non-cash
charges as a result of any grants to any members of management of any common
stock or options to acquire common stock and any non-recurring cash or non-cash
charges reasonably acceptable to Required Lenders, in each case occurring in
such period; provided, however, EBITDA for purposes of this Agreement for the
fiscal quarter ending December 31, 2002 shall be deemed to be $1,755,613 and for
the fiscal quarter ending March 31, 2003 shall be deemed to be $1,397,895 and
for the fiscal quarter ending June 30, 2003 shall be deemed to be $1,791,776 and
for the fiscal quarter ending September 30, 2003 shall be deemed to be
$2,501,107.
Eligible Account means an Account owing to Borrower or any Subsidiary
which meets each of the following requirements:
(a) other than with respect to a Note Receivable, it arises
from the sale of goods (which goods comply with such Account Debtor's
specifications (if any) and have been delivered to such Account Debtor)
or the rendering of services by Borrower or the applicable Subsidiary;
(b) if it is a Note Receivable, it is evidenced by a
promissory note the original of which shall have been assigned and
delivered to the Agent and is in the "possession" of the Agent within
the meaning of Section 9-313 of the UCC;
(c) it (i) is subject to a perfected Lien in favor of Agent
and (ii) is not subject to any other assignment, claim or Lien other
than a Lien permitted by Section 7.2;
(d) it is a valid, legally enforceable and unconditional
obligation of the Account Debtor with respect thereto and is not
subject to any counterclaim, credit, allowance, discount, rebate or
adjustment by the Account Debtor or to any claim by such Account Debtor
denying liability thereunder in whole or in part; provided that in the
event any counterclaim, credit, allowance, rebate or adjustment is
asserted, or discount is granted, the Account shall only be ineligible
pursuant to this clause (c) to the extent thereof;
(e) there is no bankruptcy, insolvency or liquidation
proceeding pending by or against the Account Debtor with respect
thereto;
(f) the Account Debtor with respect thereto is a resident or
citizen of, and is located within, the United States or Canada
(excluding Newfoundland, the Northwest Territories and Nunavit), unless
the sale of goods or services giving rise to such Account is on letter
of credit, banker's acceptance or other credit support terms reasonably
satisfactory to Agent;
(g) it is not an Account arising from a "sale on approval,"
"sale or return," "consignment" or "xxxx and hold" or subject to any
other repurchase or return agreement;
(h) it is not an Account with respect to which possession
and/or control of the goods sold giving rise thereto is held,
maintained or retained by Borrower or any Subsidiary (or by any
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agent or custodian of Borrower or any Subsidiary) for the account of or
subject to further and/or future direction from the Account Debtor with
respect thereto;
(i) it arises in the ordinary course of business of Borrower
or the applicable Subsidiary;
(j) if the Account Debtor is the United States or any
department, agency or instrumentality thereof, Borrower or the
applicable Subsidiary has assigned its right to payment of such Account
to Agent pursuant to the Assignment of Claims Act of 1940, as amended;
(k) if Borrower maintains a credit limit for an Account
Debtor, the aggregate dollar amount of Accounts due from such Account
Debtor, including such Account, does not exceed such credit limit;
(l) if the Account is evidenced by chattel paper or an
instrument, the original copy of such chattel paper or instrument shall
have been endorsed and/or assigned and delivered to Agent or, in the
case of electronic chattel paper, shall be in control of Agent, in each
case in a manner reasonably satisfactory to Agent;
(m) such Account (other than an Account which is a Note
Receivable) is not more than (i) 60 days past the due date thereof or
(ii) 90 days past the original invoice date thereof, in each case
according to the original terms of sale, as applicable;
(n) the payment of principal and interest on such Account, in
the case of a Note Receivable, is not more than 60 days past due;
(o) the Account Debtor with respect thereto is not Borrower or
an Affiliate of Borrower;
(p) it is not owed by an Account Debtor with respect to which
either (i) 15% or more of the aggregate amount of outstanding Accounts
owed at such time by such Account Debtor is classified as ineligible
under clause (m) above; or (ii) any Account is classified as ineligible
under clause (n) above; provided however, that the foregoing limitation
shall not apply to any Account Debtor whose Accounts total less than
$2,000 in the aggregate;
(q) if the Account consists of licensing, franchise or other
royalty payments from a Franchisee, the franchise agreement pursuant to
which such Account arises (i) shall not contain any restriction on the
assignment by the Borrower or any Subsidiary to the Agent of the
Borrower's or such Subsidiary's rights under such franchise agreement,
unless the Franchisee has otherwise agreed in writing to such
assignment; and (ii) shall have been assigned to the Agent pursuant to
the Collateral Documents;
(r) if the aggregate amount of the Accounts owed by the
Account Debtor thereon exceeds 10% of the aggregate amount of all
Accounts at such time, then all Accounts owed by such Account Debtor in
excess of such amount shall be deemed ineligible.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, (an "Account Default") shall
forthwith cease to be an Eligible Account until such Account Default ceases to
exist. Further, with respect to any Account, if Agent or Required Lenders at any
time hereafter determine in its or their Permitted Discretion that the prospect
of payment or
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performance by the Account Debtor with respect thereto is materially impaired
for any reason whatsoever, such Account shall cease to be an Eligible Account
after notice of such determination is given to Borrower.
Notwithstanding the foregoing, the Borrower and its Subsidiaries may: (i)
renegotiate Franchise Notes that have ceased to be Eligible Accounts, up to an
aggregate amount of $300,000 of such renegotiated Franchise Notes at any one
time outstanding (the "Franchise Basket," and such notes, the "Renegotiated
Franchise Notes"); provided, that the terms of such Renegotiated Franchise Notes
are consistent with the past business practices of the Borrower and its
Subsidiaries; provided further, that such Renegotiated Franchise Notes shall
provide for equal monthly amortization beginning no more than three months after
the date of such renegotiations; provided still further, that such Renegotiated
Franchise Notes shall be deemed Eligible Accounts only after the applicable
obligor has made two consecutive current payments thereupon and so long as such
Renegotiated Franchise Notes at such time otherwise meet the requirements of an
Eligible Account and at which time, such Renegotiated Franchise Notes shall no
longer be included for purposes of calculating the Franchise Basket and shall
otherwise be treated as Eligible Accounts until such time as such Renegotiated
Franchise Notes otherwise fail to meet the requirements of an Eligible Account;
and (ii) receive Royalty Notes in replacement, in whole or in part, of any
accounts receivable that have ceased to be Eligible Accounts, up to an aggregate
amount of $50,000 at any one time outstanding (the "Royalty Basket," and such
Royalty Notes, the "Ineligible Royalty Notes"); provided that an Ineligible
Royalty Note shall become an Eligible Account after the applicable obligor has
made two consecutive current payments thereupon and so long as such Royalty Note
at such time otherwise meets the requirements of an Eligible Account and at
which time, such Royalty Note shall no longer be included for purposes of
calculating the Royalty Basket and shall otherwise be treated as an Eligible
Account until such time as such Royalty Note otherwise fails to meet the
requirements of an Eligible Account; provided, (x) that the Franchise Basket and
the Royalty Basket each shall increase or decrease, as applicable, each Fiscal
Year by 1% for each percentage point that consolidated revenue increases or
decreases, as applicable, over the prior Fiscal Year; provided, further,
however, that the Franchise Basket and the Royalty Basket shall in no event
decrease below $300,000 and $50,000, respectively; and (y) in no event shall the
sum of outstanding principal amount of Renegotiated Franchise Notes and Royalty
Notes exceed 20% of the current amount of Eligible Accounts.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.
Environmental Laws means all present or future federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all enforceable administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any governmental authority,
in each case relating to any matter arising out of or relating to health and
safety, or pollution or protection of the environment or workplace safety,
including any of the foregoing relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
discharge, release, control or cleanup of any Hazardous Substance.
Equity Call Agreement means the equity call agreement executed by
Sponsor in the form attached hereto as Exhibit G.
Equity Call Termination Date has the meaning assigned to such term in
the Equity Call Agreement.
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ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Event of Default means any of the events described in Section 8.1.
Excess Cash Flow means, for any period, the remainder of (a) the sum of
(i) EBITDA for such period, plus (ii) any net decrease in Adjusted Working
Capital during such period, minus (b) the sum, without duplication, of (i)
scheduled repayments of principal of Term Loans made during such period, plus
(ii) voluntary prepayments of the Term Loans pursuant to Section 2.10.1 during
such period, plus (iii) cash payments (not financed with the proceeds of Debt)
made in such period with respect to Capital Expenditures permitted under Section
7.14.6, plus (iv) all federal, state, local and foreign income taxes paid in
cash by Borrower and the Subsidiaries, or paid in cash by Holdings on account of
the income of Borrower and the Subsidiaries, during such period, plus (v)
Interest Expense paid in cash during such period, plus (vi) any net increase in
Adjusted Working Capital during such period, plus (vii) Management Fees paid in
cash during such period, plus (viii) Transaction Expenses paid in cash during
such period.
Excluded Issuances means any issuances by Holdings, the Borrower or any
Subsidiary of equity securities pursuant to Section 7.11 or pursuant to the
terms of the Equity Call Agreement or with proceeds from the Reimbursement
Agreement.
Executive Order has the meaning set forth in Section 5.23(a).
Federal Funds Rate means, for any day, a rate per annum (rounded upward
to the nearest 1/100th of 1%) equal to the rate published by the Federal Reserve
Bank of New York on the preceding Business Day or, if no such rate is so
published, the average rate per annum, as determined by Agent, quoted for
overnight Federal Funds transactions last arranged prior to such day by three
(3) Federal Funds brokers of recognized standing.
Fee Letter means, that certain letter agreement dated of even date
herewith by Agent and acknowledged by Borrower, as amended, restated or
otherwise modified.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of Borrower and the Subsidiaries,
which period shall be the 12-month period ending on December 31 of each year.
Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of (a) the total for such period of EBITDA minus the sum of all income
taxes (other than any one time tax payment by the Borrower for historical tax
liabilities arising out of a determination by the Internal Revenue Service that
40 percent or more of the Borrower's adjusted ordinary gross income for prior
reporting periods was "personal holding company income" within the meaning of
Code section 543) and tax distributions described in Section 7.4 paid by
Borrower and the Subsidiaries, all fees and expenses paid to directors as
permitted by Section 7.4, Management Fees and all Capital Expenditures (to the
extent such Capital Expenditures do not constitute Capital Leases) other than
Waco Build-out Capex permitted by Section 7.14.6.(c) paid during such period to
(b) Fixed Charges. Notwithstanding the foregoing, (i) Fixed Charges for the
Computation Period ended December 31, 2003 shall be deemed to be the sum of
Fixed Charges for the months of November, 2003 and December, 2003 multiplied by
3/2, (ii) Fixed Charges for the Computation Period ended March 31, 2004 shall be
deemed to be the sum of Fixed Charges for the months of November, 2003 and
December, 2003 multiplied by 3/2 plus Fixed Charges for the Fiscal Quarter ended
March 31, 2004, multiplied by two; (iii) Fixed Charges for the Computation
Period ended
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June 30, 2004 shall be deemed to be the sum of Fixed Charges for the months of
November, 2003 and December, 2003 multiplied by 3/2 plus Fixed Charges for the
Fiscal Quarter ended March 31, 2004 plus Fixed Charges for the Fiscal Quarter
ended June 30, 2004, multiplied by 4/3; and (iv) Fixed Charges for the
Computation Period ended September 30, 2004 shall be deemed to be the sum of
Fixed Charges for the months of November, 2003 and December, 2003 multiplied by
3/2 plus Fixed Charges for the Fiscal Quarter ended March 31, 2004 plus Fixed
Charges for the Fiscal Quarter ended June 30, 2004 plus Fixed Charges for the
Fiscal Quarter ended September 30, 2004.
Fixed Charges means for any period, the sum for such period of (i)
Interest Expense to the extent paid in cash plus (ii) scheduled payments of
principal of Debt to be paid during such period (including the Term Loans but
excluding the Revolving Loans).
Foreign Subsidiary means any Subsidiary that is organized under the
laws of a jurisdiction other than the United States of America or any state
thereof or the District of Columbia.
Franchisee means a Person who has entered into a franchise agreement
with the Borrower or any Subsidiary of the Borrower.
Franchise Note means a note evidencing the obligation of a Franchisee
to Borrower or any Subsidiary to pay the purchase price of a franchise
acquisition by a Franchisee.
FRB means the Board of Governors of the Federal Reserve System or any
successor thereto.
GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.
Guarantee and Collateral Agreement means the Guarantee and Collateral
Agreement dated as of the Closing Date by each Loan Party signatory thereto in
favor of Agent and Lenders, as amended, restated or otherwise modified.
Hazardous Substances means hazardous waste, hazardous substance,
pollutant, contaminant, toxic substance, oil, hazardous material, chemical or
other substance regulated by any Environmental Law.
Hedging Obligation means, with respect to any Person, any liability of
such Person under any interest rate, currency or commodity swap agreement, cap
agreement or collar agreement, and any other agreement or arrangement designed
to protect a Person against fluctuations in interest rates, currency exchange
rates or commodity prices. The amount of any Person's obligation in respect of
any Hedging Obligation shall be deemed to be the incremental obligation that
would be reflected in the financial statements of such Person in accordance with
GAAP.
Holdings means TDG Holding Company, a Delaware corporation.
Indemnified Liabilities has the meaning set forth in Section 10.5.
Intellectual Property Agreements means each of the Trademark Security
Agreement, Copyright Security Agreement and Patent Security Agreement.
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Interest Expense means for any period the consolidated interest expense
of Borrower and the Subsidiaries.
Interest Period means, as to any LIBOR Loan, the period commencing on
the date such Loan is borrowed or continued as, or converted into, a LIBOR Loan
and ending on the date one, two, three or six months thereafter, as selected by
Borrower pursuant to Section 2.2.2 or 2.2.3, as the case may be; provided that:
(a) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the following 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 preceding
Business Day; (b) any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period shall end on the last Business Day of the calendar month at the end of
such Interest Period; (c) Borrower may not select any Interest Period for a
Revolving Loan which would extend beyond the scheduled Termination Date; and (d)
Borrower may not select any Interest Period for a Term Loan if, after giving
effect to such selection, the aggregate principal amount of all Term Loans
having Interest Periods ending after any date on which an installment of the
Term Loans is scheduled to be repaid would exceed the aggregate principal amount
of the Term Loans scheduled to be outstanding after giving effect to such
repayment.
Interest Settlement Date has the meaning set forth in Section 2.12.1.
Inventory has the meaning set forth in the Guarantee and Collateral
Agreement.
Investment means with respect to any Person, any of (a) the purchase of
any debt or equity security of any other Person, (b) the making of any loan or
advance to any other Person, other than advances to customers in the ordinary
course of business, (c) becoming obligated with respect to a Contingent
Obligation in respect of obligations of any other Person (other than travel and
similar advances to employees in the ordinary course of business) or (d) the
making of an Acquisition.
Issuing Lender means a Lender which is an issuer of Letters of Credit
hereunder and its successors and assigns, all in such capacity.
Legal Costs means, with respect to any Person, (a) all reasonable fees
and charges of any counsel, accountants, auditors, appraisers, consultants and
other professionals to such Person, (b) the reasonable invoiced allocable cost
of internal legal services of such Person and all reasonable invoiced
disbursements of such internal counsel, to the extent not duplicative of the
fees and charges in clause (a) and (c) all court costs and similar legal
expenses.
Lenders has the meaning set forth in the Preamble.
Lender Party has the meaning set forth in Section 10.5.
Letter of Credit has the meaning set forth in Section 2.3.1.
Letter of Credit Fee means the fee payable by Borrower to Lenders
pursuant to Section 2.8.2.
LIBOR Loan means any Loan which bears interest at a rate determined by
reference to the LIBOR Rate.
LIBOR Rate means, with respect to any LIBOR Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to (a) the rate of interest which appears
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on Telerate Page 3750 as of 11:00 a.m. London time (or, if not so appearing, as
published in the money rates section of the The Wall Street Journal or, if not
so published, as quoted from such other generally available and recognizable
source as Agent may select) as the offered rate for deposits in Dollars two
Business Days prior to the first day of such Interest Period (for a period
comparable to such Interest Period and for an amount comparable to the amount of
such LIBOR Loan), divided by (b) the sum of one minus the daily average during
such Interest Period of the aggregate maximum reserve requirement (expressed as
a decimal) then imposed under Regulation D of the FRB for "Eurocurrency
Liabilities" (as defined therein).
Lien means, with respect to any Person, any interest granted by such
Person in any real or personal property, asset or other right owned or being
purchased or acquired by such Person which secures payment or performance of any
obligation and shall include any mortgage, lien, encumbrance, charge or other
security interest of any kind, whether arising by contract, as a matter of law,
by judicial process or otherwise.
Loan Documents means this Agreement, the Subordination Agreement, the
Notes, the Letters of Credit, the Equity Call Agreement, the Collateral
Documents, the Fee Letter and all documents, instruments and agreements
delivered in connection with the foregoing.
Loan Party means Holdings, Borrower and each Domestic Subsidiary.
Loans means Revolving Loans and Term Loans.
Madison has the meaning set forth in the Preamble.
Management Fees means management fees paid to Riverside pursuant to the
Advisory Agreement.
Margin Stock means any "margin stock" as defined in Regulation T, U or
X of the FRB.
Material Adverse Effect means (a) a material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of Borrower and the Subsidiaries taken as a
whole, (b) a material impairment of the ability of Borrower or any Subsidiary to
perform any of its Obligations under any Loan Document or (c) a material adverse
effect upon any substantial portion of the Collateral under the Collateral
Documents or upon the legality, validity, binding effect or enforceability
against Borrower or any Subsidiary of any Loan Document.
Mergeco has the meaning set forth in the Preamble.
Merger means the merger of Mergeco with and into Xxxxx on the Closing
Date in accordance with General Corporation Law of the State of Delaware and
pursuant to the Merger Documents.
Merger Agreement means that certain Agreement and Plan of Merger dated
as of May 11, 2003 among Mergeco, Xxxxx and Holdings as in effect on the date
hereof and as modified in accordance with the terms of the Agreement.
Merger Documents means the Merger Agreement and all documents,
instruments and agreements delivered in connection with the Merger Agreement.
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Mortgage means a mortgage, deed of trust, leasehold mortgage or similar
instrument granting Agent a Lien on real property of Borrower or any Subsidiary,
each as amended, restated or otherwise modified.
Multiemployer Pension Plan means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which Borrower or any member of the Controlled
Group may have any liability.
Net Cash Proceeds means:
(a) with respect to any Disposition, the aggregate cash
proceeds (including cash proceeds received pursuant to policies of
insurance and by way of deferred payment of principal pursuant to a
note, installment receivable or otherwise, but only as and when
received) received by Borrower or any Subsidiary pursuant to such
Disposition net of (i) the direct costs relating to such Disposition
(including sales commissions and legal, accounting and investment
banking fees, commissions and expenses), (ii) any portion of such
proceeds deposited in an escrow account pursuant to the documentation
relating to such Disposition (provided that such amounts shall be
treated as Net Cash Proceeds upon their release from such escrow
account to Borrower or the applicable Subsidiary), (iii) taxes paid or
reasonably estimated by Borrower to be payable as a result thereof
(after taking into account any available tax credits or deductions and
any tax sharing arrangements), (iv) amounts required to be applied to
the repayment of any Debt secured by a Lien on the asset subject to
such Disposition (other than the Loans) and (v) with respect to any
Disposition described in clause (b) or (c) of the definition thereof,
all money actually applied to repair, replace or reconstruct damaged
property or property affected by loss, destruction, damage,
condemnation, confiscation, requisition, seizure or taking, all of the
costs and expenses reasonably incurred in connection with the
collection of such proceeds, award or other payments, and any amounts
retained by or paid to parties having superior rights to such proceeds,
awards or other payments; and
(b) with respect to any issuance of equity securities, the
aggregate cash proceeds received by Borrower or any Subsidiary pursuant
to such issuance, net of the direct costs relating to such issuance
(including sales and customary underwriter's commissions, legal,
accounting and investment banking fees).
Note means a promissory note substantially in the form of Exhibit D.
Note Receivable means any interest or principal payments due and owing
to the Borrower or any Subsidiary from a Franchisee of Borrower or such
Subsidiary in respect of Debt owed by such Franchisee to the Borrower or such
Subsidiary.
Notice of Borrowing has the meaning set forth in Section 2.2.2. Notice
of Conversion/Continuation has the meaning set forth in Section 2.2.3.
Obligations means all obligations (monetary (including post-petition
interest, allowed or not) or otherwise) of any Loan Party under this Agreement,
any other Loan Document, any Collateral Document or any other document or
instrument executed in connection herewith or therewith and, in the case of the
Borrower, all Hedging Obligations permitted hereunder which are owed to any
Lender or its Affiliate, in each case howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing,
or due or to become due.
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Participant has the meaning set forth in Section 10.8.2.
Patent Security Agreement means the Patent Security Agreement dated as
of the Closing Date by each Loan Party signatory thereto in favor of Agent and
Lenders, as amended, restated or otherwise modified.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in Section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
Pension Plan), and to which Borrower or any member of the Controlled Group may
have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
Permitted Discretion means as to any Person the reasonable good faith
credit judgment of such Person.
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
Personal Holding Company has the meaning assigned thereto in the Equity
Call Agreement.
Personal Holding Company Tax Reserve means (i) until such date as the
Equity Call Agreement is terminated pursuant to clause (ii) of the definition of
Equity Call Termination Date, an amount equal to $1,000,000 or such lesser
amount as may be agreed to by the Agent, and (ii) thereafter, $1,000,000 plus
the Remaining Infusion Amount as of such Equity Call Termination Date or such
lesser amount as may be agreed to by the Agent.
Primary Syndication means the date upon which Agent receives written
commitments from other Lenders with respect to at least $7,000,000 of the Loans.
Projections means the consolidated financial projections contained in
the Riverside model dated April 21, 2003.
Prior Debt means the Debt listed on Schedule 4.1.3.
Pro Rata Revolving Share means, with respect to any Lender, the
applicable percentage (as adjusted from time to time in accordance with the
terms hereof) specified opposite such Lender's name on Annex I which corresponds
to the Revolving Loan Commitment, which percentage shall be with respect to
Revolving Outstandings if the Revolving Loan Commitment has terminated.
Pro Rata Share means, with respect to any Lender, the applicable
percentage (as adjusted from time to time in accordance with the terms hereof)
specified opposite such Lender's name on Annex I which corresponds to the
Revolving Loan Commitment, the Term A Loan Commitment or the Term B Loan
Commitment, which applicable percentage shall be with respect to Revolving
Outstandings if the Revolving Loan Commitment has terminated, the Term A Loan if
the Term A Loan Commitment has terminated, and the Term B Loan if the Term B
Loan Commitment has terminated.
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Reimbursement Agreement means that certain Reimbursement Agreement
dated as of May 11, 2003 between Xxxxx Investments, Ltd. and Holdings as in
effect on the date hereof and as modified in accordance with the terms of this
Agreement.
Related Agreements means the Merger Documents, Subordinated Notes
Documents and the Advisory Agreement.
Related Transactions means the transactions contemplated by the Related
Agreements.
Remaining Infusion Amount has the meaning assigned to such term in the
Equity Call Agreement.
Replacement Lender has the meaning set forth in Section 3.7(b).
Required Lenders means Lenders having Pro Rata Shares the aggregate
Dollar equivalent amount of which equals or exceeds 66 2/3% of the outstanding
Loans and Commitments, collectively; provided, however, to the extent that there
are only two Lenders outstanding at any time, the term Required Lenders shall
mean all Lenders.
Revolving Loan Commitment means $6,000,000, as reduced from time to
time pursuant to Section 2.9.
Revolving Loans has the meaning set forth in Section 2.1.1.
Revolving Outstandings means, at any time, the sum of (a) the aggregate
principal amount of all outstanding Revolving Loans, plus (b) the Stated Amount
of all Letters of Credit.
Riverside means Riverside Partners, L.L.C. or its Affiliates.
Royalty Note means a Franchisee obligation to Borrower or any of its
Subsidiaries that consolidates accounts receivable balances with respect to
royalty payments.
SEC has the meaning set forth in Section 6.1.4.
Senior Debt means all Debt of Borrower and the Subsidiaries other than
Subordinated Debt.
Senior Debt to EBITDA Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (i) Senior Debt as of such day to (ii) EBITDA for the
Computation Period ending on such day.
Settlement Date has the meaning set forth in Section 2.12.1.
Sponsor means 2003 Riverside Capital Appreciation Fund, L.P., a
Delaware limited partnership and 2003 Riverside Capital Appreciation Fund (QC),
L.P., a Delaware limited partnership and their Affiliates.
Stated Amount means, with respect to any Letter of Credit at any date
of determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances, plus (b) the aggregate amount of all
unreimbursed payments and disbursements under such Letter of Credit.
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Subordinated Debt means (a) the Subordinated Notes and (b) any other
unsecured Debt of Borrower which has subordination terms, covenants, pricing and
other terms which have been approved in writing by Required Lenders.
Subordinated Notes means the subordinated promissory notes issued
pursuant to the Securities Purchase Agreement dated as of the date hereof among
Holdings, Borrower and the other Purchasers (as defined therein).
Subordinated Notes Documents means the Subordinated Notes and all
documents, instruments and agreements delivered in connection with the
Subordinated Notes, in each case on terms and conditions satisfactory to Agent
and Lenders.
Subordination Agreement means that certain Subordination and
Intercreditor Agreement dated as of the Closing Date among Borrower, Agent and
the Purchasers (as defined in the Subordinated Notes Documents).
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such Person
owns, directly or indirectly, such number of outstanding shares or other equity
interests as to have more than 50% of the ordinary voting power for the election
of directors or other managers of such corporation, partnership, limited
liability company or other entity. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of
Borrower.
Taxes has the meaning set forth in Section 3.1.
Term A Loan Commitment means $10,000,000.
Term A Loan Maturity Date means October 30, 2008 or such earlier date
on which the Commitments terminate pursuant to Section 8.
Term A Loans has the meaning set forth in Section 2.1.2.
Term B Loan Commitment means $8,500,000.
Term B Loan Maturity Date means October 30, 2009 or such earlier date
on which the Commitments terminate pursuant to Section 8.
Term B Loans has the meaning set forth in Section 2.1.2.
Term Loans means the Term A Loans and the Term B Loans, collectively.
Termination Date means October 30, 2008 or such earlier date on which
the Commitments terminate pursuant to Section 2.9 or Section 8.
Total Debt means all Debt of Borrower and the Subsidiaries, determined
on a consolidated basis, excluding any Debt of any Loan Party to any other Loan
Party.
Total Debt to EBITDA Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (a) Total Debt as of such day to (b) EBITDA for the
Computation Period ending on such day.
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Trademark Security Agreement means the Trademark Security Agreement
dated as of the Closing Date by each Loan Party signatory thereto in favor of
Agent and Lenders, as amended, restated or otherwise modified.
Transaction Expenses means those non-recurring cash fees and expenses
paid by the Borrower before or within 90 days of the Closing Date in connection
with the Related Transactions (to the extent not capitalized).
UCC has the meaning set forth in the Guarantee and Collateral
Agreement.
Waco Build-out Capex means Capital Expenditures incurred by the
Borrower solely in connection with the build-out of the Borrower's owned real
property in Waco, Texas.
Wholly-Owned Subsidiary means, as to any Person, another Person all of
the equity interests of which (except directors' qualifying shares) are at the
time directly or indirectly owned by such Person and/or another Wholly-Owned
Subsidiary of such Person.
1.2 Interpretation. In the case of this Agreement and each other Loan
Document, (a) the meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms; (b) Annex, Exhibit, Schedule and
Section references are to such Loan Document unless otherwise specified; (c) the
term "including" is not limiting and means "including but not limited to"; (d)
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding", and the word "through" means "to and including";
(e) unless otherwise expressly provided in such Loan Document, (i) references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document, and (ii) references to any statute or regulation shall be
construed as including all statutory and regulatory provisions amending,
replacing, supplementing or interpreting such statute or regulation; (f) this
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters, all of which are
cumulative and each shall be performed in accordance with its terms; and (g)
this Agreement and the other Loan Documents are the result of negotiations among
and have been reviewed by counsel to Agent, Borrower, Lenders and the other
parties thereto and are the products of all parties; accordingly, they shall not
be construed against Agent or Lenders merely because of Agent's or Lenders'
involvement in their preparation.
Section 2 Credit Facilities.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each Lender, severally and for itself alone, agrees as follows:
2.1.1 Revolving Loan Commitments. Each Lender will make loans on a
revolving basis ("Revolving Loans") from time to time until the Termination Date
in such Lender's applicable Pro Rata Share of such aggregate amounts as Borrower
may request from time to time; provided that, after giving effect to such
Revolving Loans, the Revolving Outstandings will not at any time exceed
Borrowing Availability.
2.1.2 Term Loan Commitments. Each Lender agrees to make (a) a loan to
Borrower (each such loan, a "Term A Loan") on the Closing Date in such Lender's
applicable Pro Rata Share of the Term
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A Loan Commitment and (b) a loan to Borrower (each such loan, a "Term B Loan")
on the Closing Date in such Lender's applicable Pro Rata Share of the Term B
Loan Commitment. The Commitments of Lenders to make Term Loans shall expire
concurrently with the making of the Term Loans on the Closing Date.
2.2 Loan Procedures.
2.2.1 Loan Types. Each Loan shall be either a Base Rate Loan or a LIBOR
Loan, as Borrower shall specify in the related Notice of Borrowing or Notice of
Conversion/Continuation pursuant to Section 2.2.2 or 2.2.3. Base Rate Loans and
LIBOR Loans may be outstanding at the same time, provided that not more than six
different Interest Periods shall exist among outstanding LIBOR Loans at any one
time. All borrowings, conversions and repayments of Revolving Loans shall be
effected so that each Lender will have a ratable share (according to its Pro
Rata Revolving Share) of all Loans and all Interest Periods of LIBOR Loans.
Notwithstanding the foregoing or any other provision of this Agreement, Borrower
may not select any Interest Period for a LIBOR Loan which is longer than one
month prior to the earlier of (a) 60 days after the Closing Date and (b) the
date that Agent notifies Borrower that it has completed its Primary Syndication
of the Loans and the Commitments.
2.2.2 Borrowing. Borrower shall give written notice or telephonic
notice (followed immediately by written confirmation thereof) to Agent of each
proposed borrowing not later than (a) in the case of a Base Rate borrowing,
11:00 a.m. Chicago time on the proposed date of such borrowing, and (b) in the
case of a LIBOR Rate borrowing, 11:00 a.m. Chicago time at least three Business
Days prior to the proposed date of such borrowing. Each such notice shall be
effective upon receipt by Agent, shall be irrevocable, shall specify the date,
amount and type of borrowing and, in the case of a LIBOR Rate borrowing, the
initial Interest Period therefor, and shall be substantially in the form of
Exhibit E hereto (each such notice or written confirmation of telephonic notice,
a "Notice of Borrowing"). Promptly upon receipt of such notice, Agent shall
advise each Revolving Lender thereof. Not later than 1:00 p.m. Chicago time on
the date of a proposed borrowing, each Lender shall provide Agent at the office
specified by Agent with immediately available funds covering such Lender's
applicable Pro Rata Share of such borrowing and, so long as Agent has not
received written notice that the conditions precedent set forth in Section 4
with respect to such borrowing have not been satisfied, Agent shall pay over the
funds received by Agent to Borrower on the requested borrowing date. Each
borrowing shall be on a Business Day. Each Base Rate borrowing shall be in an
aggregate amount of at least $100,000 and an integral multiple of $50,000, and
each LIBOR borrowing shall be in an aggregate amount of at least $100,000 and an
integral multiple of at least $50,000.
2.2.3 Conversion; Continuation. (a) Subject to Section 2.2.1, Borrower
may, upon irrevocable written notice to Agent in accordance with clause (b)
below, elect (i) as of any Business Day, to convert any Loans (or any part
thereof in an aggregate amount of not less than $100,000 or a higher integral
multiple of $50,000) into Loans of the other type or (ii) as of the last day of
the applicable Interest Period, to continue any LIBOR Loans having Interest
Periods expiring on such day (or any part thereof in an aggregate amount not
less than $100,000 or a higher integral multiple of $50,000) for a new Interest
Period; provided that any conversion of a LIBOR Loan on a day other than the
last day of an Interest Period therefor shall be subject to Section 3.5.
(b) Borrower shall give written or telephonic notice (followed
promptly by written confirmation thereof) to Agent of each proposed conversion
or continuation not later than (i) in the case of conversion into Base Rate
Loans, 11:00 a.m. Chicago time on the proposed date of such conversion and (ii)
in the case of conversion into or continuation of LIBOR Loans, 11:00 a.m.
Chicago time at least
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three Business Days prior to the proposed date of such conversion or
continuation, substantially in the form of Exhibit F hereto (each such notice or
written confirmation of telephonic notice, a "Notice of
Conversion/Continuation") and specifying in each case: (w) the proposed date of
conversion or continuation; (x) the aggregate amount of Loans to be converted or
continued; (y) the type of Loans resulting from the proposed conversion or
continuation; and (z) in the case of conversion into, or continuation of, LIBOR
Loans, the duration of the requested Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Loans, Borrower has failed to select timely a new Interest Period to be
applicable to such LIBOR Loans, Borrower shall be deemed to have elected to
convert such LIBOR Loan into Base Rate Loans effective on the last day of such
Interest Period.
(d) Agent will promptly notify each applicable Lender of its
receipt of a notice of conversion or continuation pursuant to this Section 2.2.3
or, if no timely notice is provided by Borrower, of the details of any automatic
conversion.
2.3 Letters of Credit.
2.3.1 Commitment. At the request of Borrower, Issuing Lender will issue
from time to time before the date which is 30 days prior to the Termination Date
(a) letters of credit and/or (b) participation agreements confirming payment to
issuers (reasonably acceptable to Issuing Lender) of letters of credit, in each
case for the account of Borrower or any Subsidiary and containing terms and
conditions which are consistent with this Agreement and reasonably satisfactory
to Issuing Lender (each such letter of credit or participation agreement, a
"Letter of Credit"). After giving effect to each such issuance, (i) the
aggregate Stated Amount of all Letters of Credit shall not at any time exceed
$1,000,000 and (ii) Revolving Outstandings will not at any time exceed Borrowing
Availability.
2.3.2 Application. Borrower shall give notice to Agent and Issuing
Lender of the proposed issuance of each Letter of Credit on a Business Day which
is at least seven Business Days (or such lesser number of days as Agent and
Issuing Lender shall agree) prior to the proposed date of issuance of such
Letter of Credit. Each such notice shall be accompanied by a Letter of Credit
application in Issuing Lender's form (or, as the case may be, in the form of
application of the underlying letter of credit), duly executed by Borrower and
in all respects satisfactory to Agent and Issuing Lender, together with such
other documentation as Agent or Issuing Lender may request in support thereof,
it being understood that each Letter of Credit application (or, as the case may
be, form of application of underlying letter of credit) shall specify, among
other things, the date on which the proposed Letter of Credit is to be issued,
and the expiration date of such Letter of Credit (which shall not be later than
the earlier to occur of (a) one year after the date of issuance thereof and (b)
30 days prior to the scheduled Termination Date). So long as Issuing Lender has
not received written notice that the conditions precedent set forth in Section 4
with respect to the issuance of such Letter of Credit have not been satisfied,
Issuing Lender shall issue such Letter of Credit on the requested issuance date.
Issuing Lender shall promptly advise Agent of the issuance of each Letter of
Credit and of any amendment thereto, extension thereof or event or circumstance
changing the amount available for drawing thereunder. In the event of any
inconsistency between the terms of any Letter of Credit application and the
terms of this Agreement, the terms of this Agreement shall control. Issuing
Lender shall deliver to Agent upon its request a list of all outstanding Letters
of Credit issued by Issuing Lender, together with such information related
thereto as Agent may reasonably request.
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2.3.3 Reimbursement Obligations. (a) Borrower hereby unconditionally
and irrevocably agrees to reimburse Issuing Lender for each payment or
disbursement made by Issuing Lender under any Letter of Credit honoring any
demand for payment made thereunder, in each case on the date that such payment
or disbursement is made. Issuing Lender shall promptly notify Borrower and Agent
whenever any demand for payment is made under any Letter of Credit; provided
that the failure of Issuing Lender to so notify Borrower shall not affect the
rights of Issuing Lender or Lenders in any manner whatsoever. Any amount not
reimbursed on the date of such payment or disbursement (whether or not through
the making of a Loan pursuant to Section 2.3.4) shall bear interest from the
date of such payment or disbursement to the date that Issuing Lender is
reimbursed by Borrower therefor, payable on demand, at the interest rate per
annum from time to time in effect for Revolving Loans which are Base Rate Loans;
provided, that such rate shall increase by 2% if such reimbursement is not made
within one Business Day; provided, however, that, anything contained in this
Agreement to the contrary notwithstanding, (i) unless the Borrower shall have
notified Agent and the Issuing Lender prior to 10:00 a.m. (Chicago time) on the
Business Day following receipt of such notice that the Issuing Lender will be
reimbursed for the amount of such Letter of Credit with funds other than with
the proceeds of Revolving Loans, the Borrower shall be deemed to have timely
given a Notice of Borrowing to Agent requesting each Revolving Lender to make
Revolving Loans which are Base Rate Loans on the date on which such Letter of
Credit is honored in an amount equal to the amount of such Letter of Credit and
Agent shall, if such Notice of Borrowing is deemed given, promptly notify the
Lenders thereof and (ii) unless any of the events described in Section 8.1.3
shall have occurred (in which event the procedures of Section 2.3.4 shall
apply), each such Revolving Lender shall, on the date such drawing is honored,
make Revolving Loans which are Base Rate Loans in the amount of its Pro Rata
Revolving Share of such Letter of Credit, the proceeds of which shall be applied
directly by Agent to reimburse the Issuing Lender for the amount of such Letter
of Credit; and provided, further, that, if for any reason, proceeds of Revolving
Loans are not received by the Issuing Lender on such date in an amount equal to
the amount of such drawing, the Borrower shall reimburse the Issuing Lender, on
the Business Day immediately following the date such drawing is honored, in an
amount in same day funds equal to the excess of the amount of such drawing over
the amount of such Revolving Loans, if any, which are so received, plus accrued
interest on such amount at the rate set forth in Section 2.7.1.
(b) Borrower's reimbursement obligations hereunder shall be
irrevocable and unconditional under all circumstances, including (i) any lack of
validity or enforceability of any Letter of Credit, this Agreement or any other
Loan Document, (ii) the existence of any claim, set-off, defense or other right
which any Loan Party may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), Agent, Issuing Lender, any Lender or any
other Person, whether in connection with any Letter of Credit, this Agreement,
any other Loan Document, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between any Loan Party and
the beneficiary named in any Letter of Credit), (iii) the validity, sufficiency
or genuineness of any document which Issuing Lender (or, as applicable, the
issuer of any underlying letter of credit) has determined in its reasonable
judgment complies on its face with the terms of the applicable Letter of Credit
(or, if applicable, underlying letter of credit), even if such document should
later prove to have been forged, fraudulent, invalid or insufficient in any
respect or any statement therein shall have been untrue or inaccurate in any
respect, or (iv) the surrender or impairment of any security for the performance
or observance of any of the terms hereof. Any action taken or omitted to be
taken by Issuing Lender under or in connection with any Letter of Credit issued
by it if taken or omitted in the absence of gross negligence, bad faith or
willful misconduct as determined by a final and non-appealable judgment rendered
by a court of competent jurisdiction, shall not create for Issuing Lender any
resulting liability to the Borrower or any Lender.
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2.3.4 Participations in Letters of Credit. (a) Concurrently with the
issuance of each Letter of Credit, Issuing Lender shall be deemed to have sold
and transferred to each other Lender, and each other Lender shall be deemed
irrevocably and unconditionally to have purchased and received from Issuing
Lender, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender's Pro Rata Revolving Share, in such Letter of
Credit and Borrower's reimbursement obligations with respect thereto. If
Borrower does not pay any reimbursement obligation when due, then Borrower shall
be deemed to have immediately requested that Lenders make a Revolving Loan which
is a Base Rate Loan in a principal amount equal to such reimbursement
obligation. Agent shall promptly notify Lenders of such deemed request and,
without the necessity of compliance with the requirements of Section 2.2.2 or
4.2, each Lender shall make available to Agent its Pro Rata Revolving Share of
such Loan. The proceeds of such Loan shall be paid over by Agent to Issuing
Lender for the account of Borrower in satisfaction of such reimbursement
obligations.
(b) If Issuing Lender makes any payment or disbursement under any
Letter of Credit and (i) Borrower has not reimbursed Issuing Lender in full for
such payment or disbursement in accordance with Section 2.3.3, (ii) a Revolving
Loan may not be made pursuant to Section 2.3.4(a) or (iii) any reimbursement
received by Issuing Lender from Borrower is or must be returned or rescinded
upon or during any bankruptcy or reorganization of any Loan Party or otherwise,
each other Lender shall be irrevocably and unconditionally obligated to pay to
Agent for the account of Issuing Lender its Pro Rata Revolving Share of such
payment or disbursement (but no such payment shall diminish the Obligations of
Borrower under Section 2.3.3). Upon notice from Issuing Lender to Agent that it
has not received any such amount, Agent shall promptly notify each such other
Lender thereof. To the extent any Lender shall not have made such amount
available to Agent by 2:00 p.m. Chicago time on the Business Day on which such
Lender receives notice from Agent of such payment or disbursement (it being
understood that any such notice received after 12:00 noon Chicago time on any
Business Day shall be deemed to have been received on the next following
Business Day), such Lender agrees to pay interest on such amount to Agent for
Issuing Lender's account forthwith on demand, for each day from the date such
amount was to have been delivered to Agent to the date such amount is paid, at a
rate per annum equal to (x) for the first three days after demand, the Federal
Funds Rate from time to time in effect and (y) thereafter, the Base Rate from
time to time in effect for Revolving Loans. Any Lender's failure to make
available to Agent its Pro Rata Revolving Share of any such payment or
disbursement shall not relieve any other Lender of its obligation hereunder to
make available to Agent such other Lender's Pro Rata Revolving Share of such
payment, but no Lender shall be responsible for the failure of any other Lender
to make available to Agent such other Lender's Pro Rata Revolving Share of any
such payment or disbursement.
2.4 Commitments Several. The failure of any Lender to make a requested
Loan on any date shall not relieve any other Lender of its obligation (if any)
to make a Loan on such date, but no Lender shall be responsible for the failure
of any other Lender to make any Loan to be made by such other Lender.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Lender shall have an obligation to make any Loan, or to permit the
continuation of or any conversion into any LIBOR Loan, and Issuing Lender shall
not have any obligation to issue any Letter of Credit, if an Event of Default or
Default exists.
2.6 Loan Accounting.
2.6.1 Recordkeeping. Agent, on behalf of each Lender, shall record in
its records the date and amount of each Loan made by each Lender, each repayment
or conversion thereof and, in the case of each
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LIBOR Loan, the dates on which each Interest Period for such Loan shall begin
and end. The aggregate unpaid principal amount so recorded shall be rebuttably
presumptive evidence of the principal amount of the Loans owing and unpaid. The
failure to so record any such amount or any error in so recording any such
amount shall not, however, limit or otherwise affect the Obligations of Borrower
hereunder or under any Note to repay the principal amount of the Loans
hereunder, together with all interest accruing thereon.
2.6.2 Notes. At the request of any Lender, the Loans of such Lender
shall be evidenced by a Note, with appropriate insertions, payable to the order
of such Lender in a face principal amount equal to the sum of such Lender's Pro
Rata Share of the Revolving Loan Commitment plus the principal amount of such
Lender's Term Loans.
2.7 Interest.
2.7.1 Interest Rates. Borrower promises to pay interest on the unpaid
principal amount of each Loan for the period commencing on the date of such Loan
until such Loan is paid in full as follows: (a) at all times while such Loan is
a Base Rate Loan, at a rate per annum equal to the sum of the Base Rate from
time to time in effect plus the Applicable Margin from time to time in effect;
and (b) at all times while such Loan is a LIBOR Loan, at a rate per annum equal
to the sum of the LIBOR Rate applicable to each Interest Period for such Loan
plus the Applicable Margin from time to time in effect; provided that (i) at any
time an Event of Default exists, if requested by Required Lenders, the
Applicable Margin corresponding to each Loan shall be increased by 2% (and, in
the case of Obligations not subject to an Applicable Margin, such Obligations
shall bear interest at the Base Rate applicable to Revolving Loans plus 2%),
(ii) such increase may thereafter be rescinded by Required Lenders,
notwithstanding Section 10.1, and (iii) upon the occurrence of an Event of
Default under Section 8.1.1 or 8.1.4, such increase shall occur automatically.
Notwithstanding anything else herein to the contrary, at any time the LIBOR Rate
falls below 2.00%, the LIBOR Rate shall be deemed to be 2.00% until such time as
the LIBOR Rate otherwise exceeds such percentage.
2.7.2 Interest Payment Dates. Accrued interest on each Base Rate Loan
shall be payable in arrears on the last day of each calendar month and at
maturity. Accrued interest on each LIBOR Loan shall be payable on the last day
of each Interest Period relating to such Loan (and, in the case of a LIBOR Loan
with an Interest Period in excess of three months, on the last day of each
three-month interval of such Interest Period), upon a prepayment of such Loan in
accordance with Section 2.10.3 and at maturity. After maturity and at any time
an Event of Default exists, accrued interest on all Loans shall be payable on
demand.
2.7.3 Setting and Notice of LIBOR Rates. The applicable LIBOR Rate for
each Interest Period shall be determined by Agent, and notice thereof shall be
given by Agent promptly to Borrower and each Lender. Each determination of the
applicable LIBOR Rate by Agent shall be conclusive and binding upon the parties
hereto, in the absence of demonstrable error. Agent shall, upon written request
of Borrower or any Lender, deliver to Borrower or such Lender a statement
showing the computations used by Agent in determining any applicable LIBOR Rate
hereunder.
2.7.4 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of (a) 360 days for
interest calculated at the LIBOR Rate and (b) 365/366 days for interest
calculated at the Base Rate. The applicable interest rate for each Base Rate
Loan shall change simultaneously with each change in the Base Rate.
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2.8 Fees.
2.8.1 Commitment Fee. For the period from the Closing Date to the
Termination Date, Borrower agrees to pay to Agent, for the account of each
Lender according to such Lender's Pro Rata Revolving Share (as adjusted from
time to time), a Commitment Fee equal to 0.50% multiplied by the average daily
unused amount (for the determination period) of the Revolving Loan Commitment.
For purposes of calculating usage under this Section 2.8.1, the Revolving Loan
Commitment shall be deemed used to the extent of the aggregate principal amount
of all outstanding Revolving Loans plus the Stated Amount of all Letters of
Credit. The Commitment Fee shall be payable in arrears on the last day of each
calendar quarter and on the Termination Date for any period then ending for
which the Commitment Fee shall not have previously been paid. The Commitment Fee
shall be computed for the actual number of days elapsed on the basis of a year
of 360 days.
2.8.2 Letter of Credit Fees. (a) Borrower agrees to pay to Agent, for
the account of each Lender according to such Lender's Pro Rata Revolving Share
(as adjusted from time to time), a Letter of Credit Fee equal to the Applicable
Margin in effect from time to time for Revolving Loans which are LIBOR Rate
Loans multiplied by the Stated Amount of each Letter of Credit. Each Letter of
Credit Fee shall be payable in arrears on the last day of each calendar quarter
and on the Termination Date for the period from the date of the issuance of each
Letter of Credit (or the last day on which the Letter of Credit Fee was paid
with respect thereto) to the date such payment is due or, if earlier, the date
on which such Letter of Credit expired or was terminated. Each Letter of Credit
Fee shall be computed for the actual number of days elapsed on the basis of a
year of 360 days.
(a) In addition, with respect to each Letter of Credit, Borrower
agrees to pay to Issuing Lender, for its own account, (i) such fees and expenses
as Issuing Lender customarily requires (or, as the case may be, is required to
pay to the issuer of the letter of credit) in connection with the issuance,
negotiation, processing and/or administration of letters of credit in similar
situations and (ii) a letter of credit fronting fee in the amount and at the
times agreed to by Borrower and Issuing Lender.
2.8.3 Agent's Fees. Borrower agrees to pay to Agent, on the Closing
Date pursuant to the Fee Letter and as otherwise agreed to from time to time by
Borrower and Agent, fees in the amounts agreed to between Borrower and Agent.
2.9 Commitment Reduction.
2.9.1 Voluntary Reduction or Termination of Revolving Loan Commitment.
Borrower may from time to time on at least five Business Days' prior written
notice to Agent (which shall promptly advise each Lender thereof) permanently
reduce the Revolving Loan Commitment to an amount not less than the Revolving
Outstandings. Any such reduction shall be in an amount not less than $500,000 or
a higher integral multiple of $100,000. Concurrently with any reduction of the
Revolving Loan Commitment to zero, Borrower shall pay all interest on the
Revolving Loans, all commitment fees and all letter of credit fees and shall
cash collateralize in full all Obligations arising with respect to the Letters
of Credit in a manner acceptable to Agent.
2.9.2 Mandatory Reduction of Revolving Loan Commitment. On the date of
any mandatory prepayment of Revolving Loans pursuant to Section 2.10.2(a), the
Revolving Loan Commitment shall be permanently reduced by the amount of such
mandatory prepayment applied to prepay the Revolving Loans pursuant to Section
2.10.2(a).
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2.9.3 All Reductions of Revolving Loan Commitment. All reductions of
the Revolving Loan Commitment shall reduce the Commitments pro rata among
Lenders according to their respective Pro Rata Shares of the Revolving Loan
Commitment.
2.10 Prepayment.
2.10.1 Voluntary Prepayment. Borrower may from time to time, on at
least one Business Day's written notice or telephonic notice (followed promptly
by written confirmation thereof) to Agent (which shall promptly advise each
Lender thereof) not later than 11:00 a.m. Chicago time on such day, prepay the
Loans in whole or in part; provided that Borrower shall give Agent written
notice, specifying the Loans to be prepaid and the date and amount of
prepayment. Any such partial prepayment shall be in an amount equal to $100,000
or a higher integral multiple of $50,000.
2.10.2 Mandatory Prepayment. (a) Borrower shall (x) prepay the Term
Loans until paid in full (to be applied in accordance with Section 2.10.3) and
(y) thereafter repay the Revolving Loans, in each case, at the following times
and in the following amounts:
(i) within five (5) days following the receipt by Borrower or
any Subsidiary of any Net Cash Proceeds from any Disposition, in an
amount equal to such Net Cash Proceeds;
(ii) within five (5) days following the receipt by Holdings,
Borrower or any Subsidiary of any Net Cash Proceeds in excess of
$500,000 from any issuance other than Excluded Issuances of its equity
securities when aggregated with all other issuances other than Excluded
Issuances of equity securities by Holdings, Borrower or any Subsidiary,
in an amount equal to such excess Net Cash Proceeds; provided, however,
if an Event of Default is in existence at the time of any such
issuance, all Net Cash Proceeds from any issuance of equity securities
shall be prepaid other than Excluded Issuances; and
(iii) within one hundred (100) days after the end of each
Fiscal Year (commencing with Fiscal Year 2004), in an amount equal to
(x) 50% of Excess Cash Flow for such Fiscal Year if the Total Debt to
EBITDA Ratio is less than 4.0 to 1.0 as of the end of such Fiscal Year;
or (y) 75% of Excess Cash Flow for such Fiscal Year if the Total Debt
to EBTIDA Ratio is equal to or greater than 4.0 to 1.0 as of the end of
such Fiscal Year.
(b) If on any day the Revolving Outstandings exceed Borrowing
Availability, whether pursuant to a reduction of the Revolving Loan Commitment
pursuant to Section 2.9.2 or otherwise, Borrower shall immediately prepay
Revolving Loans and/or cash collateralize the outstanding Letters of Credit in a
manner acceptable to Agent, or effect a combination of the foregoing, in an
amount sufficient to eliminate such excess.
(c) In the event that Borrower makes a voluntary prepayment of
all or any portion of the Term Loans or elects to permanently reduce the
Revolving Loan Commitment, the Borrower shall, together with any such prepayment
or election, pay to Agent for distribution to the Lenders whose Term Loans are
being repaid or whose Revolving Loan Commitment has been reduced, a prepayment
fee as additional compensation, and not as a penalty, equal to (x) two percent
(2.0%) of the principal amount of such Lender's Term Loans so repaid and/or
Revolving Loan Commitment so reduced during the period from the Closing Date to
but excluding the first anniversary of the Closing Date, (y) one percent (1.0%)
of the principal amount of such Lender's Term Loans so repaid and/or Revolving
Loan Commitment so
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reduced during the period from and including the first anniversary of the
Closing Date to but excluding the second anniversary of the Closing Date and (z)
zero percent (0.0%) thereafter.
2.10.3 All Prepayments. (a) Any prepayment of a LIBOR Loan on a day
other than the last day of an Interest Period therefor shall include interest on
the principal amount being repaid and shall be subject to Section 3.5. All
prepayments of a Loan shall be applied first to that portion of such Loan
comprised of Base Rate Loans and then to that portion of such Loan comprised of
LIBOR Loans, in direct order of Interest Period maturities. All prepayments of
Term Loans shall be applied pro rata among the Term Loans according to the
principal amounts thereof and, as to each Term Loan, pro rata to the remaining
installments thereof.
(b) Borrower shall give written notice or telephonic notice
(followed promptly by written confirmation thereof) to Agent not later than
11:00 a.m. Chicago time at least one Business Day prior to each mandatory
prepayment pursuant to clause (a) of Section 2.10.2, and Agent shall promptly
notify each Lender of such notice. Notwithstanding anything to the contrary
contained in this Section 2.10 and so long as the Term A Loan is outstanding,
each Lender of the Term B Loan may elect not to have such Lender's Pro Rata
Share of the Term B Loan prepaid in the case of a prepayment pursuant hereto by
notice to Agent received not later 3:00 p.m. Chicago time one Business Day prior
to the date of such prepayment. The amount of any such prepayment which would
have been applied to the Term B Loan but for such elections shall be applied to
the Term A Loan until paid in full and, thereafter, to the Term B Loan, all
otherwise in accordance with clause (a) above.
2.11 Repayment.
2.11.1 Revolving Loans. The Revolving Loans shall be paid, for the
account of each Lender according to its Pro Rata Share of the Revolving Loans,
in full on the Termination Date.
2.11.2 Term A Loan. The Term A Loan shall be paid, for the account of
each Lender according to its Pro Rata Share thereof, in the installments and on
the dates set forth below:
Date Installment
---- -----------
March 31, 2004 $666,666.66
June 30, 2004 $666,666.67
September 30, 2004 $666,666.67
December 31, 2004 and the
last day of each
Fiscal Quarter thereafter $500,000.00
Notwithstanding the foregoing, the outstanding principal balance of the
Term A Loan shall be paid in full on the Term A Loan Maturity Date.
2.11.3 Term B Loan. The outstanding principal balance of the Term B
Loan shall be paid in full, for the account of each Lender according to its Pro
Rata Share thereof, on the Term B Loan Maturity Date.
2.12 Payment.
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2.12.1 Making and Settlement of Payments. All payments of principal of
or interest on the Notes, and of all fees, shall be made by Borrower to Agent in
immediately available funds at the office specified by Agent not later than
12:00 noon Chicago time on the date due, and funds received after that hour
shall be deemed to have been received by Agent on the following Business Day.
Agent shall promptly remit to each Lender its share of all principal payments
received in collected funds by Agent for the account of such Lender. On the
first Business Day of each week or more frequently as Agent may elect (each such
day being a "Settlement Date"), Agent will notify each Lender of the amount of
such Lender's actual share of the Revolving Loans as of the close of business of
the Business Day immediately preceding the Settlement Date. In the event that
payments are necessary to adjust the amount of such Lender's actual share of the
Revolving Loans to equal such Lender's Pro Rata Share of the Revolving Loans as
of any Settlement Date, such Lender will pay to Agent, or Agent will pay to such
Lender (as applicable) the amount necessary in same day funds by wire transfer
to the other's account not later than 2:00 p.m. Chicago time on the Business Day
following the Settlement Date. On the first Business Day of each month (each, an
"Interest Settlement Date"), Agent will notify each Lender of the amount of such
Lender's applicable Pro Rata Share of interest and fees on each Loan as of the
end of the last day of the immediately preceding month. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender's account not
later than 2:00 p.m. Chicago time on the next Business Day following the
Interest Settlement Date, such Lender's applicable Pro Rata Share of interest
and fees, in each instance, received by Agent for the immediately preceding
month.
2.12.2 Application of Certain Payments. Except as set forth in Section
2.10.3, each payment of principal shall be applied to such Loans as Borrower
shall direct by notice to be received by Agent on or before the date of such
payment or, in the absence of such notice or during the existence of a Default
or an Event of Default, as Required Lenders shall determine in their discretion.
Concurrently with each remittance to any Lender of its share of any such
payment, Agent shall advise such Lender as to the application of such payment.
2.12.3 Payment Dates. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is not a
Business Day, then such due date shall be extended to the immediately following
Business Day (unless, in the case of a LIBOR Loan, such immediately following
Business Day is the first Business Day of a calendar month, in which case such
due date shall be the immediately preceding Business Day) and, in the case of
principal, additional interest shall accrue and be payable for the period of any
such extension.
2.12.4 Set-off. Borrower agrees that Agent and each Lender have all
rights of set-off and bankers' lien provided by applicable law, and in addition
thereto, Borrower agrees that at any time any Event of Default exists, Agent and
each Lender may apply to the payment of any Obligations of Borrower hereunder,
whether or not then due, any and all balances, credits, deposits, accounts or
moneys of Borrower then or thereafter with Agent or such Lender.
2.12.5 Proration of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of set-off or
otherwise, on account of (a) principal of or interest on any Loan, but excluding
(i) any payment pursuant to Section 3.8 or 10.8 and (ii) payments of interest on
any Base Rate Loan referred to in the last sentence of Section 3.4, or (b) its
participation in any Letter of Credit) in excess of its applicable Pro Rata
Share of payments and other recoveries obtained by all Lenders on account of
principal of and interest on the Loans (or such participation) then held by
them, then such Lender shall purchase from the other Lenders such participations
in the Loans or sub-participations in Letters of Credit held by them as shall be
necessary to cause such purchasing Lender to
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share the excess payment or other recovery ratably with each of them; provided
that if all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery.
Section 3 Yield Protection.
3.1 Taxes. (a) All payments of principal and interest on the Loans and
all other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp, documentary, excise,
property or franchise taxes and other taxes, fees, duties, levies, withholdings
or other charges of any nature whatsoever imposed by any taxing authority,
excluding taxes imposed on or measured by any Agent or Lender's net income (or
franchise taxes in lieu thereof) by the jurisdiction under which Agent or such
Lender is organized or conducts business or, in the case of any Lender, the
jurisdiction in which a Lender's applicable lending office is located (all
non-excluded items being called "Taxes"). Except as provided in Section 3.1(c),
if any withholding or deduction from any payment to be made by Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then Borrower will: (a) pay directly to the relevant
authority the full amount required to be so withheld or deducted; (b) promptly
forward to Agent an official receipt or other documentation reasonably
satisfactory to Agent evidencing such payment to such authority; and (c) pay to
Agent for the account of Lenders such additional amount or amounts as is
necessary to ensure that the net amount actually received by each Lender will
equal the full amount such Lender would have received had no such withholding or
deduction been required. If any Taxes are directly asserted against Agent or any
Lender with respect to any payment received by Agent or such Lender hereunder,
Agent or such Lender may pay such Taxes and Borrower will promptly pay such
additional amounts (including any penalty, interest or expense) as is necessary
in order that the net amount received by such Person after the payment of such
Taxes (including any Taxes on such additional amount) shall equal the amount
such Person would have received had such Taxes not been asserted so long as such
amounts have accrued on or after the day which is 180 days prior to the date on
which Agent or such Lender first made demand therefor.
(b) If Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence of
payment, Borrower shall indemnify Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this Section 3.1, a distribution hereunder by Agent or any
Lender to or for the account of any Lender shall be deemed a payment by
Borrower.
(c) Each Lender that (i) is organized under the laws of a jurisdiction
other than the United States of America and (ii)(A) is a party hereto on the
Closing Date or (B) becomes an assignee of an interest under this Agreement
under Section 10.8.1 after the Closing Date (unless such Lender was already a
Lender hereunder immediately prior to such assignment) shall execute and deliver
to Borrower and Agent one or more (as Borrower or Agent may reasonably request)
Forms W-8ECI, W-8BEN, W-8IMY (as applicable) or other applicable form,
certificate or document prescribed by the United States Internal Revenue Service
certifying as to such Lender's entitlement to complete exemption from (or, in
the case of Form W-8IMY, entitlement to receive payments under the Loans without
any) withholding or deduction of Taxes on payments of interest hereunder.
Borrower shall not be required to pay additional amounts to any Lender pursuant
to this Section 3.1 to the extent that the obligation to pay such additional
amounts would not have arisen but for the failure of such Lender to comply with
this paragraph.
3.2 Increased Cost. (a) If, after the Closing Date, the adoption of, or
any change in, any applicable law, rule or regulation, or any change in the
interpretation or administration of any applicable
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law, rule or regulation by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency: (i)
shall impose, modify or deem applicable any reserve (including any reserve
imposed by the FRB, but excluding any reserve included in the determination of
the LIBOR Rate pursuant to Section 2.7), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Lender; or (ii) shall impose on any Lender any other condition affecting its
LIBOR Loans, its Note or its obligation to make LIBOR Loans; and the result of
anything described in clauses (i) above and (ii) is to increase the cost to (or
to impose a cost on) such Lender of making or maintaining any LIBOR Loan, or to
reduce the amount of any sum received or receivable by such Lender under this
Agreement or under its Note with respect thereto, then upon demand by such
Lender (which demand shall be accompanied by a statement setting forth the basis
for such demand and a calculation of the amount thereof in reasonable detail, a
copy of which shall be furnished to Agent), Borrower shall pay directly to such
Lender such additional amount as will compensate such Lender for such increased
cost or such reduction, so long as such amounts have accrued on or after the day
which is 180 days prior to the date on which such Lender first made demand
therefor.
(a) If any Lender shall reasonably determine that any change
in, or the adoption or phase-in of, any applicable law, rule or regulation
regarding capital adequacy, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or the
compliance by any Lender or any Person controlling such Lender with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such controlling
Person's capital as a consequence of such Lender's obligations hereunder or
under any Letter of Credit to a level below that which such Lender or such
controlling Person could have achieved but for such change, adoption, phase-in
or compliance (taking into consideration such Lender's or such controlling
Person's policies with respect to capital adequacy) by an amount deemed by such
Lender or such controlling Person to be material, then from time to time, upon
demand by such Lender (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof in
reasonable detail, a copy of which shall be furnished to Agent), Borrower shall
pay to such Lender such additional amount as will compensate such Lender or such
controlling Person for such reduction, so long as such amounts have accrued on
or after the day which is 180 days prior to the date on which such Lender first
made demand therefor.
3.3 Inadequate or Unfair Basis. If Agent reasonably determines (which
determination shall be binding and conclusive on Borrower) that, by reason of
circumstances affecting the interbank eurodollar market, adequate and reasonable
means do not exist for ascertaining the applicable LIBOR Rate, then Agent shall
promptly notify the Lenders and the Borrower thereof and, so long as such
circumstances shall continue, (a) no Lender shall be under any obligation to
make or convert any Base Rate Loans into LIBOR Loans and (b) on the last day of
the current Interest Period for each LIBOR Loan, such Loan shall, unless then
repaid in full, automatically convert to a Base Rate Loan.
3.4 Change in Law. If any change in, or the adoption of any new, law or
regulation, or any change in the interpretation of any applicable law or
regulation by any governmental or other regulatory body charged with the
administration thereof, would make it (or in the good faith judgment of any
Lender cause a substantial question as to whether it is) unlawful for any Lender
to make, maintain or fund LIBOR Loans, then such Lender shall promptly notify
each of the other parties hereto and, so long as such circumstances shall
continue, (a) such Lender shall have no obligation to make or convert any Base
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Rate Loan into a LIBOR Loan (but shall make Base Rate Loans concurrently with
the making of or conversion of Base Rate Loans into LIBOR Loans by Lenders which
are not so affected, in each case in an amount equal to the amount of LIBOR
Loans which would be made or converted into by such Lender at such time in the
absence of such circumstances) and (b) on the last day of the current Interest
Period for each LIBOR Loan of such Lender (or, in any event, on such earlier
date as may be required by the relevant law, regulation or interpretation), such
LIBOR Loan shall, unless then repaid in full, automatically convert to a Base
Rate Loan. Each Base Rate Loan made by a Lender which, but for the circumstances
described in the foregoing sentence, would be a LIBOR Loan shall remain
outstanding for the period corresponding to the Interest Period originally
applicable to such LIBOR Loan absent such circumstances.
3.5 Funding Losses. Borrower hereby agrees that upon demand by any
Lender (which demand shall be accompanied by a statement setting forth the basis
for the amount being claimed, a copy of which shall be furnished to Agent),
Borrower will indemnify such Lender against any net loss or expense which such
Lender may sustain or incur (including any net loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain any LIBOR Loan), as reasonably determined by
such Lender, as a result of (a) any payment, prepayment or conversion of any
LIBOR Loan of such Lender on a date other than the last day of an Interest
Period for such Loan (including any conversion pursuant to Section 3.3 or 3.4)
or (b) any failure of Borrower to borrow, convert or continue any Loan on a date
specified therefor in a notice of borrowing, conversion or continuation pursuant
to this Agreement. For the purposes of this Section 3.5, all determinations
shall be made as if such Lender had actually funded and maintained each LIBOR
Loan during each Interest Period for such Loan through the purchase of deposits
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the LIBOR Rate for such Interest Period.
3.6 Manner of Funding; Alternate Funding Offices. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner as
it may determine at its sole discretion. Each Lender may, if it so elects,
fulfill its commitment to make any LIBOR Loan by causing any branch or Affiliate
of such Lender to make such Loan; provided that in such event for the purposes
of this Agreement such Loan shall be deemed to have been made by such Lender and
the obligation of Borrower to repay such Loan shall nevertheless be to such
Lender and shall be deemed held by it, to the extent of such Loan, for the
account of such branch or Affiliate.
3.7 Mitigation of Circumstances; Replacement of Lenders. (a) Each
Lender shall promptly notify Borrower and Agent of any event of which it has
knowledge which will result in, and will use reasonable commercial efforts
available to it (and not, in such Lender's sole judgment, otherwise
disadvantageous to such Lender) to mitigate or avoid, (i) any obligation by
Borrower to pay any amount pursuant to Section 3.1 or 3.2 or (ii) the occurrence
of any circumstances described in Section 3.3 or 3.4 (and, if any Lender has
given notice of any such event described in clause (i) or (ii) above and
thereafter such event ceases to exist, such Lender shall promptly so notify
Borrower and Agent). Without limiting the foregoing, each Lender will designate
a different funding office if such designation will avoid (or reduce the cost to
Borrower of) any event described in clause (i) or (ii) above and such
designation would not, in such Lender's sole judgment, be otherwise
disadvantageous to such Lender.
(a) If Borrower becomes obligated to pay additional amounts to any
Lender pursuant to Section 3.1 or 3.2, or any Lender gives notice of the
occurrence of any circumstances described in Section 3.3 or 3.4, Borrower may
designate another bank which is acceptable to Agent and Issuing Lender in their
reasonable discretion (such other bank being called a "Replacement Lender") to
purchase
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the Loans of such Lender and such Lender's rights hereunder, without recourse to
or warranty by, or expense to, such Lender, for a purchase price equal to the
outstanding principal amount of the Loans payable to such Lender plus any
accrued but unpaid interest on such Loans and all accrued but unpaid fees owed
to such Lender and any other amounts payable to such Lender under this
Agreement, and to assume all the obligations of such Lender hereunder, and, upon
such purchase and assumption (pursuant to an Assignment Agreement), such Lender
shall no longer be a party hereto or have any rights hereunder (other than
rights with respect to indemnities and similar rights applicable to such Lender
prior to the date of such purchase and assumption) and shall be relieved from
all obligations to Borrower hereunder, and the Replacement Lender shall succeed
to the rights and obligations of such Lender hereunder.
3.8 Conclusiveness of Statements; Survival. Determinations and
statements of any Lender pursuant to Section 3.1, 3.2, 3.3, 3.4 or 3.5 shall be
conclusive absent demonstrable error. Lenders may use reasonable averaging and
attribution methods in determining compensation under Sections 3.1, 3.2 and 3.5,
and the provisions of such Sections shall survive repayment of the Loans,
cancellation of the Notes, expiration or termination of the Letters of Credit
and termination of this Agreement.
Section 4 Conditions Precedent.
The obligation of each Lender to make its Loans and of Issuing Lender
to issue Letters of Credit is subject to the following conditions precedent:
4.1 Initial Credit Extension. The obligation of Lenders to make the
initial Loans and the obligation of Issuing Lender to issue the initial Letter
of Credit hereunder (whichever first occurs) is, in addition to the conditions
precedent specified in Section 4.2, subject to the following conditions
precedent, each of which shall be satisfactory in all respects to Agent:
4.1.1 Capitalization. Borrower has received cash equity contributions
in an amount of not less than $29,100,000 (including rollover equity from
management of Borrower in an amount of not to exceed $4,200,000) of which at
least $22,100,000 shall have been contributed in cash by Sponsor and its
Affiliates and cash proceeds from the issuance of $8,750,000 in principal amount
of the Subordinated Notes.
4.1.2 Initial Loans; Availability. Not more than $1,200,000 in
Revolving Loans shall be advanced on the Closing Date, and after giving effect
to the consummation of the Related Transactions and funding of the initial Loans
on the Closing Date, Borrowing Availability shall exceed Revolving Outstandings
by at least $3,000,000.
4.1.3 Prior Debt. The Prior Debt, which is listed on Schedule 4.1.3,
has been (or concurrently with the initial borrowing will be) paid in full.
4.1.4 Related Transactions. Borrower has completed (or concurrently
with the initial credit extension hereunder will complete) the Related
Transactions in accordance with the terms of the Related Agreements (without any
amendment thereto or waiver thereunder unless consented to by Lenders).
4.1.5 Fees. Borrower shall have paid all fees, costs and expenses of
the Agent due and payable on the Closing Date.
4.1.6 Delivery of Loan Documents. Borrower shall have delivered the
following documents in form and substance satisfactory to Agent (and, as
applicable, duly executed and dated the Closing Date or an earlier date
satisfactory to Agent):
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(a) Agreement. This Agreement.
(b) Notes. Notes, for each Lender requesting a Note.
(c) Collateral Documents. The Guarantee and Collateral Agreement,
all other Collateral Documents, and all instruments, documents, certificates and
agreements executed or delivered pursuant thereto (including intellectual
property assignments and pledged Collateral, with undated irrevocable transfer
powers executed in blank).
(d) Financing Statements. Properly completed UCC financing
statements and other filings and documents required by law or the Loan Documents
and requested by Agent to provide Agent first priority perfected Liens (subject
only to Liens permitted pursuant to Section 7.2) in the Collateral.
(e) Lien Searches. Copies of UCC search reports listing all
effective financing statements filed against any Loan Party, with copies of such
financing statements.
(f) Mortgages. Mortgages providing Agent first priority perfected
Liens (subject only to Liens permitted pursuant to Section 7.2) in the real
property Collateral, with ALTA loan title insurance policies issued by insurers
reasonably acceptable to Agent, ALTA surveys and such flood and/or earthquake
insurance as Agent may reasonably request.
(g) Collateral Access Agreements. Collateral Access Agreements
reasonably requested by Agent with respect to the Collateral.
(h) Payoff; Release. Payoff letters evidencing repayment in full
of all Prior Debt, termination of all agreements relating thereto and the
release of all Liens granted in connection therewith, with UCC or other
appropriate termination statements and documents to evidence the foregoing or
granting permission to the Borrower to file the same.
(i) Subordination Agreements. The Subordination Agreement and any
other subordination agreements with respect to Subordinated Debt.
(j) Availability Certificate. Availability Certificate reflecting
required information as of a date not more than five days prior to the Closing
Date.
(k) Letter of Direction. A letter of direction containing funds
flow information, with respect to the proceeds of the Loans on the Closing Date.
(l) Authorization Documents. For each Loan Party, such Person's
(i) charter (or similar formation document), certified by the appropriate
governmental authority, (ii) good standing certificates in its state of
incorporation (or formation) and in each other state in which the failure to
qualify to do business could reasonably be expected to have a Material Adverse
Effect, (iii) bylaws (or similar governing document), (iv) resolutions of its
board of directors (or similar governing body) approving and authorizing such
Person's execution, delivery and performance of the Loan Documents to which it
is party and the transactions contemplated thereby, and (v) signature and
incumbency certificates of its officers executing any of the Loan Documents, all
certified by its secretary or an assistant secretary (or similar officer) as
being in full force and effect without modification.
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(m) Opinions of Counsel. Opinions of counsel for each Loan Party,
including opinions from Xxxxx Day and all other opinions issued pursuant to the
Related Transactions, and Borrower hereby requests such counsel to deliver such
opinions and authorizes Agent and Lenders to rely thereon; and (ii) a
certificate signed by an officer of the Borrower (or other evidence reasonably
satisfactory to the Agent) stating that the Borrower has received from Xxxxxx
Xxxxxx & Xxxxx (or other tax counsel reasonably acceptable to the Agent) a
written opinion dated as of the Closing Date addressed to the Borrower
concluding that the Borrower should not be treated as a "personal holding
company" for the taxable years ended December 31, 2000, 2001 and 2002.
(n) Insurance. Certificates or other evidence of insurance in
effect as required by Section 6.3(b), with endorsements naming Agent as lenders'
loss payee and/or additional insured, as applicable.
(o) Financials. The financial statements, projections and pro
forma balance sheet of Borrower described in Section 5.4.
(p) Environmental Reports. Environmental site assessment reports
reasonably requested by Agent, prepared by environmental engineers reasonably
satisfactory to Agent.
(q) Consents. Evidence that all necessary consents, permits and
approvals (governmental or otherwise) required for the execution, delivery and
performance by each Loan Party of the Loan Documents and the Related
Transactions have been duly obtained and are in full force and effect.
(r) Equity Call Agreement. A copy of the Equity Call Agreement
duly executed and delivered by Sponsor.
(s) Intentionally Omitted.
(t) Certified Documents. Copies of the Related Agreements
certified by Borrower's secretary or an assistant secretary (or similar officer)
as being true, accurate and complete.
(u) Financial Condition. As of the Closing Date, in each case for
the Computation Period ending on the most recently ended Fiscal Quarter, the
Senior Debt to EBITDA Ratio shall not exceed 2.75 to 1.0 and the Total Debt to
EBITDA Ratio shall not exceed 4.0 to 1.0.
(v) Historical EBITDA. As of the Closing Date, EBITDA for the
trailing twelve month period ending on the most recently ended month shall be at
least $7,100,000, which was calculated in accordance with Schedule 4.1.6(v).
(w) Borrower Assignment and Assumption Agreement. Xxxxx and
Mergeco shall have delivered the Borrower Assignment and Assumption Agreement on
the Closing Date upon the consummation of the Merger.
(x) Other Documents. Such other certificates, documents and
agreements as Agent may reasonably request.
4.2 All Credit Extensions. The obligation of each Lender to make each
Loan and of Issuing Lender to issue each Letter of Credit is subject to the
additional conditions precedent that, both before and
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after giving effect to any borrowing and the issuance of any Letter of Credit,
(a) the representations and warranties of Borrower and each Subsidiary set forth
in this Agreement and the other Loan Documents shall be true and correct in all
material respects with the same effect as if then made (except to the extent
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct as of such earlier date) and (b) no
Event of Default or Default shall have then occurred and be continuing. Each
request by Borrower for the making of a Loan or the issuance of a Letter of
Credit shall be deemed to constitute a representation and warranty by Borrower
that the conditions precedent set forth in Section 4.2 will be satisfied at the
time of the making of such Loan or the issuance of such Letter of Credit.
Section 5 Representations and Warranties.
To induce Agent and Lenders to enter into this Agreement and to induce
Lenders to make Loans and to issue and participate in Letters of Credit
hereunder, Borrower represents and warrants to Agent and Lenders that, both
before and after giving effect to the Related Transactions:
5.1 Organization. Borrower is a corporation validly existing and in
good standing under the laws of the State of Delaware; each other Loan Party is
validly existing and in good standing under the laws of the jurisdiction of its
organization; and each Loan Party is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or properties, such
qualification is required, except for such jurisdictions where the failure to so
qualify would not have a Material Adverse Effect.
5.2 Authorization; No Conflict. Each Loan Party is duly authorized to
execute and deliver each Loan Document to which it is a party, Borrower is duly
authorized to borrow monies hereunder, and each Loan Party is duly authorized to
perform its Obligations under each Loan Document to which it is a party. The
execution, delivery and performance by Borrower of this Agreement and by each
Loan Party of each Loan Document to which it is a party, and the borrowings by
Borrower hereunder, do not and will not (a) require any consent or approval of
any governmental agency or authority (other than any consent or approval which
has been obtained and is in full force and effect), (b) conflict with (i) any
provision of law, (ii) the charter, by-laws or other organizational documents of
any Loan Party or (iii) any agreement, indenture, instrument or other document,
or any judgment, order or decree, which is binding upon any Loan Party or any of
their respective properties or (c) require, or result in, the creation or
imposition of any Lien on any asset of any Loan Party or any Subsidiary of any
Loan Party (other than Liens in favor of Agent created pursuant to the
Collateral Documents).
5.3 Validity; Binding Nature. Each of this Agreement and each other
Loan Document to which any Loan Party is a party is the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance with
its terms, subject to bankruptcy, insolvency, moratorium and similar laws
affecting the enforceability of creditors' rights generally and to general
principles of equity.
5.4 Financial Condition. (a) The audited consolidated financial
statements of Borrower and the Subsidiaries as at its Fiscal Years ending
December 31, 2002 and December 31, 2001, and the unaudited consolidated
financial statements of Borrower and the Subsidiaries for the Fiscal Quarters
ended March 31, 2003 and June 30, 2003 and the months ended July 31, 2003 and
August 31, 2003, copies of each of which have been delivered pursuant hereto,
were prepared in accordance with GAAP (subject, in the case of such unaudited
statements, to the absence of footnotes and to normal year-end adjustments) and
present fairly in all material respects the consolidated financial condition of
such Persons as at such dates and the results of their operations for the
periods then ended.
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(b) The Projections delivered to Agent and Lenders on or before the
Closing Date and each of the budgets and projections delivered after the Closing
Date pursuant to Section 6.1.8, (i) were prepared by Borrower in good faith and
(ii) were prepared in accordance with assumptions for which Borrower had a
reasonable basis at the time such projections were delivered, and the
accompanying consolidated pro forma balance sheet of Borrower as at the Closing
Date, adjusted to give effect to the consummation of the Related Transactions
and the financings contemplated hereby as if such transactions had occurred on
such date, is consistent in all material respects with the Projections. As of
the Closing Date, there are no facts known to the Borrower which, if reflected
in the Projections, could reasonably be expected to result in a material adverse
change in the liabilities, assets, results or operations or cash flows set forth
therein.
5.5 No Material Adverse Change. Since December 31, 2002, there has been
no material adverse change in the financial condition, operations, assets,
business, properties or prospects of Borrower and the Subsidiaries taken as a
whole.
5.6 Litigation. No litigation (including derivative actions),
arbitration proceeding or governmental investigation or proceeding is pending
or, to Borrower's knowledge, threatened against any Loan Party which could
reasonably be expected to have a Material Adverse Effect, except as set forth in
Schedule 5.6. As of the Closing Date, other than any liability incident to such
litigation or proceedings, neither Borrower nor any Subsidiary has any material
Contingent Obligations not listed on Schedule 7.1.
5.7 Ownership of Properties; Liens. Each of Borrower and each
Subsidiary owns good and, in the case of owned real property, marketable title
to all of its properties and assets, real and personal, tangible and intangible,
of any nature whatsoever (including patents, trademarks, trade names, service
marks and copyrights), free and clear of all Liens, charges and claims
(including infringement claims with respect to patents, trademarks, service
marks, copyrights and the like), except as permitted by Section 7.2.
5.8 Capitalization. All issued and outstanding equity securities of
Borrower and the Subsidiaries are duly authorized and validly issued, fully
paid, non-assessable, and free and clear of all Liens other than those in favor
of Agent, and such securities were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. Schedule 5.8 sets
forth the authorized equity securities of each Loan Party as of the Closing
Date. All of the issued and outstanding equity of Holdings is owned as set forth
on Schedule 5.8 as of the Closing Date, all of the issued and outstanding equity
of Borrower is owned by Holdings, and all of the issued and outstanding equity
of each Wholly-Owned Subsidiary is, directly or indirectly, owned by Borrower.
As of the Closing Date, except as set forth on Schedule 5.8, there are no
pre-emptive or other outstanding rights, options, warrants, conversion rights or
other similar agreements or understandings for the purchase or acquisition of
any equity interests of Borrower or any Subsidiary.
5.9 Pension Plans. During the twelve-consecutive-month period prior to
the Closing Date or the making of any Loan or the issuance of any Letter of
Credit, (i) no steps have been taken to terminate any Pension Plan and (ii) no
contribution failure has occurred with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA. No condition exists or event
or transaction has occurred with respect to any Pension Plan which could result
in the incurrence by Borrower of any liability, fine or penalty that could
reasonably be expected to have a Material Adverse Effect. All contributions (if
any) have been made to any Multiemployer Pension Plan that are required to be
made by Borrower or any other member of the Controlled Group under the terms of
the plan or of any collective bargaining agreement or by applicable law; neither
Borrower nor any member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension Plan, incurred any withdrawal
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liability with respect to any such plan or received notice of any claim or
demand for withdrawal liability or partial withdrawal liability from any such
plan, and no condition has occurred which, if continued, could result in a
withdrawal or partial withdrawal from any such plan, and neither Borrower nor
any member of the Controlled Group has received any notice that any
Multiemployer Pension Plan is in reorganization, that increased contributions
may be required to avoid a reduction in plan benefits or the imposition of any
excise tax, that any such plan is or has been funded at a rate less than that
required under Section 412 of the IRC, that any such plan is or may be
terminated, or that any such plan is or may become insolvent.
5.10 Investment Company Act. Neither Borrower nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company" or a
"subsidiary" of an "investment company", within the meaning of the Investment
Company Act of 1940.
5.11 Public Utility Holding Company Act. Neither Borrower nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.
5.12 Margin Stock. Borrower is not engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
5.13 Taxes. Each of Borrower and each Subsidiary has filed all material
tax returns and reports required by law to have been filed by it and has paid
all taxes and governmental charges thereby shown to be owing, except any such
taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.
5.14 Solvency. On the Closing Date, and immediately prior to and after
giving effect to the issuance of each Letter of Credit and each borrowing
hereunder and the use of the proceeds thereof, with respect to Borrower and its
Subsidiaries, on a consolidated basis, (a) the fair value of their assets is
greater than the amount of its liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated, (b) the present fair saleable value of their assets is not less than
the amount that will be required to pay the probable liability on their debts as
they become absolute and matured, (c) they are able to realize upon their assets
and pay their debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business, (d)
they do not intend to, and do not believe that they will, incur debts or
liabilities beyond their ability to pay as such debts and liabilities mature and
(e) they are not engaged in any business or a transaction, and are not about to
engage in business or a transaction, for which their property would constitute
unreasonably small capital.
5.15 Environmental Matters. Except as set forth on Schedule 5.15, the
on-going operations of Borrower and each Subsidiary comply in all respects with
all Environmental Laws, except such non-compliance which could not (if enforced
in accordance with applicable law) reasonably be expected to result in a
Material Adverse Effect. Borrower and each Subsidiary have obtained, and
maintained in good standing, all licenses, permits, authorizations and
registrations required under any Environmental Law and necessary for their
respective ordinary course operations, and Borrower and each Subsidiary are in
compliance with all material terms and conditions thereof, except where the
failure to do so could not reasonably be expected to result in material
liability to Borrower or any Subsidiary and could not reasonably be expected to
result in a Material Adverse Effect. None of Borrower, any Subsidiary or any
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of their respective properties or operations is subject to any outstanding
written order from or agreement with any Federal, state or local governmental
authority, nor subject to any judicial or docketed administrative proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous Substance
that would reasonably be expected to result in a Material Adverse Effect. There
are no Hazardous Substances or other conditions or circumstances existing with
respect to any property, or arising from operations prior to the Closing Date,
of Borrower or any Subsidiary that would reasonably be expected to result in a
Material Adverse Effect. Neither Borrower nor any Subsidiary has any underground
storage tanks that are not properly registered or permitted under applicable
Environmental Laws or that are leaking or disposing of Hazardous Substances that
would reasonably be expected to result in a Material Adverse Effect.
5.16 Insurance. Borrower and each Subsidiary and their respective
properties are insured with financially sound and reputable insurance companies
which are not Affiliates of Borrower, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where Borrower or such
Subsidiary operates. A true and complete listing of such insurance as of the
Closing Date, including issuers, coverages and deductibles, is set forth on
Schedule 5.16.
5.17 Information. All factual information heretofore or
contemporaneously herewith furnished in writing by Borrower or any other Loan
Party to Agent or any Lender for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all written factual
information hereafter furnished by or on behalf of Borrower or any Loan Party to
Agent or any Lender pursuant hereto or in connection herewith will be, true and
accurate in every material respect on the date as of which such information is
dated or certified, and none of such information is or will be incomplete by
omitting to state any material fact necessary to make such information not
misleading in light of the circumstances under which made (it being recognized
by Agent and Lenders that any projections and forecasts provided by Borrower are
based on good faith estimates and assumptions believed by Borrower to be
reasonable as of the date of the applicable projections or assumptions and that
actual results during the period or periods covered by any such projections and
forecasts may differ from projected or forecasted results).
5.18 Intellectual Property. Borrower and each Subsidiary owns and
possesses or has a license or other right to use all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service xxxx rights and copyrights as are necessary for the conduct of the
business of Borrower and the Subsidiaries, without any infringement upon rights
of others which could reasonably be expected to have a Material Adverse Effect.
5.19 Restrictive Provisions. Neither Borrower nor any Subsidiary is a
party to any agreement or contract or subject to any restriction contained in
its operative documents which could reasonably be expected to have a Material
Adverse Effect.
5.20 Labor Matters. Except as set forth on Schedule 5.20, neither
Borrower nor any Subsidiary is subject to any labor or collective bargaining
agreement. There are no existing or threatened strikes, lockouts or other labor
disputes involving Borrower or any Subsidiary that singly or in the aggregate
could reasonably be expected to have a Material Adverse Effect. To the
Borrower's knowledge, hours worked by and payment made to employees of Borrower
and the Subsidiaries are not in violation of the Fair Labor Standards Act or any
other applicable material law, rule or regulation dealing with such matters.
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5.21 No Default. No Event of Default or Default exists or would result
from the incurrence by Borrower of any Debt hereunder or under any other Loan
Document.
5.22 Related Agreements. (a) Borrower has furnished Agent a true and
correct copy of the Related Agreements pursuant hereto. Each of Borrower and, to
Borrower's knowledge, each other party to the Related Agreements, has duly taken
all necessary organizational action to authorize the execution, delivery and
performance of the Related Agreements and the consummation of transactions
contemplated thereby. The Related Transactions will comply with all applicable
legal requirements, and all necessary governmental, regulatory, creditor,
shareholder, partner and other material consents, approvals and exemptions
required to be obtained by Borrower and, to Borrower's knowledge, each other
party to the Related Agreements in connection with the Related Transactions will
be, prior to consummation of the Related Transactions, duly obtained and will be
in full force and effect. As of the date of the Related Agreements, all
applicable waiting periods with respect to the Related Transactions will have
expired without any action being taken by any competent governmental authority
which restrains, prevents or imposes material adverse conditions upon the
consummation of the Related Transactions. The execution and delivery of the
Related Agreements did not, and the consummation of the Related Transactions
will not, violate any statute or regulation of the United States (including any
securities law) or of any state or other applicable jurisdiction, or any order,
judgment or decree of any court or governmental body binding on Borrower or, to
Borrower's knowledge, any other party to the Related Agreements, or result in a
breach of, or constitute a default under, any material agreement, indenture,
instrument or other document, or any judgment, order or decree, to which
Borrower is a party or by which Borrower is bound or, to Borrower's knowledge,
to which any other party to the Related Agreements is a party or by which any
such party is bound. No statement or representation made in the Related
Agreements by Borrower or, to Borrower's knowledge, any other Person, contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading.
(a) All Obligations constitute Senior Debt entitled to the
benefits of the subordination provisions contained in the Subordinated Debt.
Borrower acknowledges that Agent and each Lender are entering into this
Agreement and are extending the Commitments and making the Loans in reliance
upon the subordination provisions of the Subordinated Debt and this Section
5.22.
5.23 Anti-Terrorism Laws.
(a) None of the Loan Parties or, to the knowledge of any of the
Loan Parties, any of their Affiliates, is in violation of any laws relating to
terrorism or money laundering ("Anti-Terrorism Laws"), including Executive Order
No. 13224 on Terrorist Financing, effective September 24, 2001 (the "Executive
Order"), and the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law
107-56.
(b) No Loan Party or, to the knowledge of any of the Loan Parties,
any of their Affiliates or their respective brokers or other agents acting or
benefiting in any capacity in connection with the Loans, is any of the
following:
(i) a Person or entity that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order;
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(ii) a Person or entity owned or controlled by, or acting for
or on behalf of, any Person or entity that is listed in the annex to,
or is otherwise subject to the provisions of, the Executive Order;
(iii) a Person or entity with which any Lender is prohibited
from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
(iv) a Person or entity that commits, threatens or conspires
to commit or supports "terrorism" as defined in the Executive Order; or
(v) a Person or entity that is named as a "specially
designated national and blocked person" on the most current list
published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other
replacement official publication of such list.
(c) No Loan Party or to the knowledge of any Loan Party, any of
its brokers or other agents acting in any capacity in connection with the Loans
(i) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Person described in clause
(b) above, (ii) deals in, or otherwise engages in any transaction relating to,
any property or interests in property blocked pursuant to the Executive Order,
or (iii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any Anti-Terrorism Law.
Section 6 Affirmative Covenants.
Until the expiration or termination of the Commitments and thereafter
until all Obligations (other than contingent indemnification obligations to the
extent no claim giving rise thereto has been asserted) of Borrower hereunder and
under the other Loan Documents are paid in full and all Letters of Credit have
been terminated, Borrower agrees that, unless at any time Required Lenders shall
otherwise expressly consent in writing, it will:
6.1 Information. Furnish to Agent and each Lender:
6.1.1 Annual Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year: (a) a copy of the annual audit report
of Borrower and the Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets and statements of earnings and cash flows of
Borrower and the Subsidiaries as at the end of such Fiscal Year, certified
without qualification (except for qualifications relating to changes in
accounting principles or practices reflecting changes in generally accepted
principles of accounting and required or approved by Borrower's independent
certified public accountants) by independent auditors of recognized standing
selected by Borrower and reasonably acceptable to Agent, together with (i) a
written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe that
Borrower was not in compliance with any provision of Section 7.1, 7.4 or 7.14
insofar as such provision relates to accounting matters or, if something has
come to their attention that caused them to believe that Borrower was not in
compliance with any such provision, describing such non-compliance in reasonable
detail and (ii) a comparison with the budget for such Fiscal Year and a
comparison with the previous Fiscal Year; and (b) a consolidating balance sheet
of Borrower and the Subsidiaries as of the end of such Fiscal Year and
consolidated
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statements of earnings and cash flows for Borrower and the Subsidiaries for such
Fiscal Year, certified by the Chief Financial Officer of Borrower.
6.1.2 Interim Reports. (a) Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter, consolidated and
consolidating balance sheets of Borrower and the Subsidiaries as of the end of
such Fiscal Quarter, together with consolidated and consolidating statements of
earnings and cash flows for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such Fiscal
Quarter, together with a comparison with the corresponding period of the
previous Fiscal Year and a comparison with the budget for such period of the
current Fiscal Year, certified by the Chief Financial Officer of Borrower; and
(b) promptly when available and in any event within 30 days after the end of
each month (other than (i) with respect to the first 3 months following the
Closing Date, in which case within 45 days after the end of such months or (ii)
with respect to any month that is the last day of a Fiscal Quarter, in which
case 45 days after the end of the such months), consolidated and consolidating
balance sheets of Borrower and the Subsidiaries as of the end of such month,
together with consolidated and consolidating statements of earnings and a
consolidated statement of cash flows for such month and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such month,
together with a comparison with the corresponding period of the previous Fiscal
Year and a comparison with the budget for such period of the current Fiscal Year
and together with a statement of accounts receivable aging, certified by the
Chief Financial Officer of Borrower.
6.1.3 Compliance Certificate. Contemporaneously with the furnishing of
a copy of each annual audit report pursuant to Section 6.1.1 and each set of
quarterly statements pursuant to Section 6.1.2 a duly completed Compliance
Certificate, with appropriate insertions, dated the date of such annual report
or such quarterly statements, and signed by the Chief Financial Officer of
Borrower, containing (a) a computation of each of the financial ratios and
restrictions set forth in Section 7.14 and to the effect that such officer has
not become aware of any Event of Default or Default that has occurred and is
continuing or, if there is any such event, describing it and the steps, if any,
being taken to cure it, (b) a written statement of Borrower's management setting
forth a discussion of Borrower's financial condition, changes in financial
condition and results of operations and (c) Borrower shall use its reasonable
efforts to obtain from Xxxxxx Xxxxxx & Xxxxx (or other tax counsel reasonably
acceptable to the Agent) a written opinion dated 45 days after the close of the
prior Fiscal Year addressed to the Borrower concluding that it is at least "more
likely than not" that less than 40 percent of the adjusted ordinary gross income
(as defined in Code section 543(b)(2) of the Borrower is "personal holding
company income" within the meaning of Code section 543 and shall provide a
certification in the case of each annual audit report, signed by an officer of
the Borrower (or other evidence reasonably satisfactory to the Agent) stating
that such opinion has been received or that such opinion was unable to be
obtained despite Borrower's reasonable efforts.
6.1.4 Reports to SEC and Shareholders. Promptly upon the filing or
sending thereof, copies of (a) all regular, periodic or special reports of
Borrower or any Subsidiary filed with the Securities and Exchange Commission
(the "SEC"), (b) all registration statements of Borrower or any Subsidiary filed
with the SEC (other than on Form S-8) and (c) all proxy statements or other
communications made to security holders generally.
6.1.5 Notice of Default; Litigation; ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by Borrower or the Subsidiary affected thereby with
respect thereto:
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(a) the occurrence of an Event of Default or a Default;
(b) any litigation, arbitration or governmental investigation
or proceeding not previously disclosed by Borrower to Lenders which has
been instituted or, to the knowledge of Borrower, is threatened against
Borrower or any Subsidiary or to which any of the properties of any
thereof is subject which could reasonably be expected to have a
Material Adverse Effect;
(c) except as would not reasonably be expected to have a
Material Adverse Effect, the institution of any steps by any member of
the Controlled Group or any other Person to terminate any Pension Plan,
or the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer
Pension Plan, or the taking of any action with respect to a Pension
Plan which could result in the requirement that Borrower furnish a bond
or other security to the PBGC or such Pension Plan, or the occurrence
of any event with respect to any Pension Plan or Multiemployer Pension
Plan which could result in the incurrence by any member of the
Controlled Group of any material liability, fine or penalty (including
any claim or demand for withdrawal liability or partial withdrawal from
any Multiemployer Pension Plan), or any material increase in the
contingent liability of Borrower with respect to any post-retirement
welfare plan benefit, or any notice that any Multiemployer Pension Plan
is in reorganization, that increased contributions may be required to
avoid a reduction in plan benefits or the imposition of an excise tax,
that any such plan is or has been funded at a rate less than that
required under Section 412 of the IRC, that any such plan is or may be
terminated, or that any such plan is or may become insolvent;
(d) any cancellation or material change in any insurance
maintained by Borrower or any Subsidiary; or
(e) any other event (including (i) any violation of any
Environmental Law or the assertion of any Environmental Claim or (ii)
the enactment or effectiveness of any law, rule or regulation) which
could reasonably be expected to have a Material Adverse Effect.
6.1.6 Availability Certificate. Within 15 days of the end of each
month, an Availability Certificate dated as of the end of the most recently
ended month and executed by a Chief Financial Officer of Borrower on behalf of
Borrower; provided that at any time an Event of Default exists, Agent may
require Borrower to deliver Availability Certificates more frequently.
6.1.7 Management Report. Promptly upon receipt thereof, copies of all
detailed financial and management reports submitted to Borrower by independent
auditors in connection with each annual or interim audit made by such auditors
of the books of Borrower.
6.1.8 Projections. As soon as practicable, and in any event within 60
days of the commencement of Fiscal Year 2004, and within 30 days of the
commencement of each Fiscal Year thereafter, financial projections for Borrower
and the Subsidiaries for such Fiscal Year (including monthly operating and cash
flow budgets) prepared in a manner consistent with the projections delivered by
Borrower to Lenders prior to the Closing Date or otherwise in a manner
reasonably satisfactory to Agent, accompanied by a certificate of a Chief
Financial Officer of Borrower on behalf of Borrower to the effect that (a) such
projections were prepared by Borrower in good faith, (b) Borrower had a
reasonable basis for the assumptions contained in such projections at the time
delivered and (c) such projections have been prepared in accordance with such
assumptions.
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6.1.9 Subordinated Debt Notices. Promptly following receipt, copies of
any material notices (including notices of default or acceleration) received
from any holder or trustee of, under or with respect to any Subordinated Debt.
6.1.10 Other Information. Promptly from time to time, such other
information concerning Borrower and the Subsidiaries as any Lender or Agent may
reasonably request.
6.2 Books; Records; Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance with
GAAP; permit, and cause each Subsidiary to permit, Agent (accompanied by any
Lender) or any representative thereof to inspect the properties and operations
of Borrower or such Subsidiary; and permit, and cause each Subsidiary to permit,
during normal business hours and with reasonable notice (or at any time without
notice if an Event of Default exists), Agent (accompanied by any Lender) or any
representative thereof to visit any or all of its offices, to discuss its
financial matters with its officers and its independent auditors (and Borrower
hereby authorizes such independent auditors to discuss such financial matters
with any Lender or Agent or any representative thereof), and to examine (and, at
the expense of Borrower or the applicable Subsidiary, photocopy extracts from)
any of its books or other records; and permit, and cause each Subsidiary to
permit, Agent and its representatives to inspect the Collateral and other
tangible assets of Borrower or such Subsidiary, to perform appraisals of the
equipment of Borrower or such Subsidiary, and to inspect, audit, check and make
copies of and extracts from the books, records, computer data, computer
programs, journals, orders, receipts, correspondence and other data relating to
any Collateral. All such inspections or audits by Agent shall be at Borrower's
expense, provided that so long as no Event of Default or Default exists,
Borrower shall not be required to reimburse Agent for appraisals more frequently
than once each Fiscal Year.
6.3 Maintenance of Property; Insurance. (a) Keep, and cause each
Subsidiary to keep, all property useful and necessary in the business of
Borrower or such Subsidiary in substantially the same working order and
condition as of the Closing Date or as of the date such property was acquired if
such date is a later date, ordinary wear and tear excepted.
(a) Maintain, and cause each Subsidiary to maintain, with
responsible insurance companies, such insurance coverage as shall be required by
all laws, governmental regulations and court decrees and orders applicable to it
and such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly situated;
provided that in any event, such insurance shall insure against all risks and
liabilities of the type insured against as of the Closing Date and shall have
insured amounts no less than, and deductibles no higher than, those amounts
provided for as of the Closing Date. Upon request of Agent or any Lender,
Borrower shall furnish to Agent or such Lender a certificate setting forth in
reasonable detail the nature and extent of all insurance maintained by Borrower
and the Subsidiaries. Borrower shall cause each issuer of an insurance policy to
provide Agent with an endorsement (i) showing Agent as a loss payee with respect
to each policy of property or casualty insurance and naming Agent as an
additional insured with respect to each policy of liability insurance, (ii)
providing that 30 days' notice will be given to Agent prior to any cancellation
of, or material reduction or change in coverage provided by or other material
modification to such policy and (iii) reasonably acceptable in all other
respects to Agent. Borrower shall execute and deliver to Agent a collateral
assignment, in form and substance satisfactory to Agent, of each business
interruption insurance policy maintained by Borrower.
Unless Borrower provides Agent with evidence of the continuing
insurance coverage required by this Agreement, Agent may purchase insurance at
Borrower's expense to protect
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Agent's and Lenders' interests in the Collateral. This insurance may, but need
not, protect Borrower's interests. The coverage that Agent purchases may, but
need not, pay any claim that is made against Borrower in connection with the
Collateral. Borrower may later cancel any insurance purchased by Agent, but only
after providing Agent with evidence that Borrower has obtained the insurance
coverage required by this Agreement. If Agent purchases insurance for the
Collateral, as set forth above, Borrower will be responsible for the costs of
that insurance, including interest and any other charges that may be imposed
with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance and the costs of the insurance may
be added to the principal amount of the Loans owing hereunder.
6.4 Compliance with Laws; Payment of Taxes and Liabilities. (a) Comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, rules, regulations, decrees, orders, judgments, licenses and
permits, except where failure to comply could not reasonably be expected to have
a Material Adverse Effect; and (b) pay, and cause each Subsidiary to pay, prior
to delinquency, all taxes and other governmental charges against it or any of
its property, as well as claims of any kind which, if unpaid, could become a
Lien on any of its property; provided that the foregoing shall not require
Borrower or any Subsidiary to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto in accordance with
GAAP.
6.5 Maintenance of Existence. Maintain and preserve, and (subject to
Section 7.5) cause each Subsidiary to maintain and preserve, (a) its existence
and good standing in the jurisdiction of its organization and (b) its
qualification to do business and good standing in each jurisdiction where the
nature of its business makes such qualification necessary, other than any such
jurisdiction where the failure to be qualified or in good standing could not
reasonably be expected to have a Material Adverse Effect.
6.6 Employee Benefit Plans. Except as would not reasonably be expected
to have a Material Adverse Effect, maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
6.7 Environmental Matters. If any release or disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any other
assets of Borrower or any Subsidiary, cause, or direct the applicable Subsidiary
to cause, the prompt containment and removal of such Hazardous Substances and
the remediation of such real property or other assets as is necessary to comply
with all Environmental Laws and to materially preserve the value of such real
property or other assets. Without limiting the generality of the foregoing,
Borrower shall, and shall cause each Subsidiary to, materially comply with each
valid and enforceable Federal or state judicial or administrative order
requiring the performance at any real property by Borrower or any Subsidiary of
activities in response to the release or threatened release of a Hazardous
Substance.
6.8 Further Assurances. Take, and cause each Subsidiary to take, such
actions as are necessary or as Agent or the Required Lenders may reasonably
request from time to time to ensure that the Obligations of Borrower and each
Subsidiary under the Loan Documents are secured by substantially all of the
assets of Borrower and each domestic Subsidiary (as well as all equity interests
of each domestic Subsidiary and 65% of all equity interests of each direct
foreign Subsidiary) and guaranteed by each domestic Subsidiary (including,
promptly upon the acquisition or creation thereof, any Subsidiary acquired or
created after the Closing Date), in each case including (a) the execution and
delivery of guaranties, security agreements, pledge agreements, mortgages, deeds
of trust, financing statements and
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other documents, and the filing or recording of any of the foregoing and (b) the
delivery of certificated securities and other Collateral with respect to which
perfection may be obtained by possession.
6.9 Intentionally Omitted.
6.10 Tax Shelter Registration. If a Lender or the Agent reasonably
determines that the transactions contemplated hereby (or any single transaction
contemplated hereby) is part of a transaction that is subject to Treasury
Regulation Section 1.6011-4 or Treasury Regulation Section 301.6112-1, such
Lender or Agent, as applicable, may file the returns or maintain the lists and
other records required by such Treasury Regulations. To the extent a Lender or
Agent determines to maintain such list, the Borrower and each Subsidiary shall
cooperate with the Lender and Agent in obtaining the information required under
such Treasury Regulations.
6.11 The Xxxxx Group Canada Inc. Borrower shall, promptly upon the
commercially reasonable request by Agent, cause to be delivered to Agent a
pledge agreement effective under Canadian law with respect to the 65% of the
capital stock of The Xxxxx Group Canada Inc. along with an opinion of Canadian
counsel in form and substance reasonably satisfactory to Agent opining as to the
enforceability of such pledge and such other matters as the Agent may reasonably
request.
Section 7 Negative Covenants.
Until the expiration or termination of the Commitments and thereafter
until all Obligations (other than contingent indemnification obligations to the
extent no claim giving rise thereto has been asserted) of Borrower hereunder and
under the other Loan Documents are paid in full and all Letters of Credit have
been terminated, Borrower agrees that, unless at any time Required Lenders shall
otherwise expressly consent in writing, Holdings and Borrower will:
7.1 Debt. Not, and not permit any Subsidiary to, create, incur, assume
or suffer to exist any Debt, except:
(a) Obligations under this Agreement and the other Loan
Documents;
(b) Debt secured by Liens permitted by Section 7.2(d), and
extensions, renewals and refinancings thereof; provided that the
aggregate amount of all such Debt at any time outstanding shall not
exceed $350,000;
(c) Debt of Borrower to any domestic Wholly-Owned Subsidiary
or Debt of any domestic Wholly-Owned Subsidiary to Borrower or another
domestic Wholly-Owned Subsidiary; provided that such Debt shall be
evidenced by note in form and substance reasonably satisfactory to
Agent and pledged and delivered to Agent pursuant to the Guarantee and
Collateral Agreement as additional collateral security for the
Obligations, and the obligations under such note shall be subordinated
to the Obligations of Borrower hereunder in a manner reasonably
satisfactory to Agent;
(d) Hedging Obligations incurred for bona fide hedging
purposes and not for speculation;
(e) Debt described on Schedule 7.1 as of the Closing Date, and
any extension, renewal or refinancing thereof so long as the principal
amount thereof is not increased;
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(f) Debt evidenced by the Subordinated Notes to the extent
permitted by the Subordination Agreement;
(g) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions permitted under Section 7.5; and
(h) other Debt, in addition to the Debt listed above, in an
aggregate outstanding amount not at any time exceeding $250,000.
7.2 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except:
(a) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in each case,
for which it maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as
(i) Liens of carriers, warehousemen, mechanics and materialmen and
other similar Liens imposed by law, (ii) Liens that constitute
restrictions, easements or other encumbrances on real property and
(iii) Liens incurred in connection with worker's compensation,
unemployment compensation and other types of social security (excluding
Liens arising under ERISA) or in connection with surety bonds, bids,
performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred
purchase price of property or services and, in each case, for which it
maintains adequate reserves;
(c) Liens described on Schedule 7.2 as of the Closing Date;
(d) subject to the limitation set forth in Section 7.1(b),
Liens (i) arising in connection with Capital Leases (and attaching only
to the property being leased), (ii) existing on property at the time of
the acquisition thereof by Borrower or any Subsidiary (and not created
in contemplation of such acquisition) and (iii) that constitute
purchase money security interests on any property securing debt
incurred for the purpose of financing all or any part of the cost of
acquiring such property, provided that any such Lien attaches to such
property within 90 days of the acquisition thereof and attaches solely
to the property so acquired;
(e) attachments, appeal bonds, judgments and other similar
Liens, for sums not exceeding $100,000 arising in connection with court
proceedings; provided that the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of Borrower
or any Subsidiary;
(g) Liens arising under the Loan Documents; and
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(h) the replacement, extension or renewal of any Lien
permitted by clause (c) above upon or in the same property subject
thereto arising out of the extension, renewal or replacement of the
Debt secured thereby (without increase in the amount thereof).
7.3 Intentionally Omitted.
7.4 Restricted Payments. Not, and not permit any Subsidiary to, (a)
make any distribution to any of its equity holders, (b) purchase or redeem any
of its equity interests or any warrants, options or other rights in respect
thereof, (c) pay any management fees or similar fees to any of its equity
holders or any Affiliate thereof, (d) make any redemption, prepayment,
defeasance, repurchase or any other payment in respect of any Subordinated Debt
or (e) set aside funds for any of the foregoing. Notwithstanding the foregoing,
(i) any Subsidiary may pay dividends or make other distributions to Borrower or
to a domestic Wholly-Owned Subsidiary; (ii) Borrower may make distributions to
Holdings to permit Holdings to pay federal and state income taxes then due and
owing by Holdings (or its equity holders), so long as the amount of such
distributions shall not be greater, nor the receipt by Borrower and its
subsidiaries of tax benefits less, than they would have been had Borrower not
filed consolidated income tax returns with such Person; (iii) so long as no
Event of Default or Default exists or would result therefrom, Borrower may pay
Management Fees to Riverside pursuant to the terms of the Advisory Agreement in
an aggregate amount not exceeding $350,000 in any Fiscal Year (the "Advisory
Fee") plus any increases to such Advisory Fee required by the Advisory Agreement
(provided, however, that in the event any Management Fee is not permitted to be
paid pursuant this clause (iii) because an Event of Default or Default exists or
would result therefrom, such Management Fee shall accrue and may be paid at such
time as no Event of Default or Default exists or would result therefrom) and
provided, further, that reasonable out-of-pocket costs and expenses incurred
solely with respect to the activities of Borrower and its Subsidiaries in the
ordinary course of business may be paid, regardless of whether an Event of
Default has occurred, in an amount not to exceed $200,000 in any Fiscal Year;
(iv) Borrower may pay to the Sponsor on the Closing Date the Closing Fee; (v)
Borrower may make regularly scheduled payments of interest in respect of
Subordinated Debt (other than the Subordinated Notes) to the extent permitted
under the subordination provisions thereof; (vi) Borrower may make payments in
respect of the Subordinated Notes to the extent permitted by the Subordination
Agreement, (vii) Borrower may make distributions to Holdings to pay director's
fees and expenses (including fees and expenses paid in connection with board
observer rights) not to exceed $100,000 in any Fiscal Year and Holdings may pay
such fees and expenses with such distributions; (viii) Borrower may make
distributions to Holdings in an amount not to exceed $500,000 in the aggregate
to permit Holdings to repurchase common stock or vested options of Holdings from
employees of the Borrower and its Subsidiaries provided that no Default or Event
of Default then exists or would result therefrom and provided, further, that
Borrowing Availability shall exceed Revolving Outstandings by at least
$1,000,000 after giving effect to such payment (and Holdings may apply such
distributions to repurchase such stock or options); and (ix) Holdings may redeem
its capital stock from its equity holders to the extent contemplated by the
terms of the Reimbursement Agreement as in effect on the date hereof.
7.5 Mergers; Consolidations; Asset Sales. (a) Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, except for (i) any
such merger or consolidation of any Subsidiary into Borrower or any domestic
Wholly-Owned Subsidiary and (ii) Acquisitions permitted under Section 7.11.
(b) Not, and not permit any Subsidiary to, sell, transfer, convey
or lease all or any substantial part of its assets or equity interests, or sell
or assign with or without recourse any receivables, except for (i) the sale of
Inventory in the ordinary course of business, and (ii) sales and dispositions of
- 45 -
assets (excluding any equity interests of Borrower or any Subsidiary) for at
least fair market value (as determined by the Board of Directors of Borrower) so
long as the net book value of all assets sold or otherwise disposed of in any
Fiscal Year does not exceed 10% of the net book value of the consolidated assets
of Borrower and the Subsidiaries as of the last day of the preceding Fiscal
Year.
7.6 Modification of Organizational Documents. Not permit the charter,
by-laws or other organizational documents of Borrower or any Subsidiary to be
amended or modified in any way which could reasonably be expected to materially
adversely affect the interests of Agent or any Lender.
7.7 Use of Proceeds. Use the proceeds of the Loans, and the Letters of
Credit, solely to finance the Related Transactions, for working capital, for
Capital Expenditures and for other general business purposes; and not use or
permit any proceeds of any Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of "purchasing or
carrying" any Margin Stock.
7.8 Transactions with Affiliates. Other than those transactions listed
on Schedule 7.8, not, and not permit any Subsidiary to, enter into, or cause,
suffer or permit to exist any transaction, arrangement or contract with any of
its other Affiliates other than Borrower and the Subsidiaries, which is on terms
which are less favorable than are obtainable from any Person which is not one of
its Affiliates.
7.9 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would (a) be violated or
breached by any borrowing by Borrower hereunder or by the performance by
Borrower or any Subsidiary of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit Borrower or any Subsidiary from granting to
Agent and Lenders a Lien on any of its assets or (c) create or permit to exist
or become effective (other than on the Closing Date with respect to the
Subordinated Notes Documents) any encumbrance or restriction on the ability of
any Subsidiary to (i) pay dividends or make other distributions to Borrower or
any other Subsidiary, or pay any Debt owed to Borrower or any other Subsidiary,
(ii) make loans or advances to Borrower or any Subsidiary or (iii) transfer any
of its assets or properties to Borrower or any Subsidiary, other than (A)
customary restrictions and conditions contained in agreements relating to the
sale of all or a substantial part of the capital stock or assets of any
Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary to be sold and such sale is permitted hereunder (B)
restrictions or conditions imposed by any agreement relating to purchase money
Debt, Capital Leases and other secured Debt permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Debt and (C) customary provisions in leases and other contracts restricting the
assignment thereof.
7.10 Business Activities. Not, and not permit any Subsidiary to, engage
in any line of business other than the businesses engaged in on the Closing Date
and businesses reasonably related thereto. Not, and not permit any other Loan
Party to, issue any equity interest other than (a) any issuance of shares of
Holdings' common equity securities pursuant to any employee or director option
or stock purchase program, benefit plan or compensation program, (b) any
issuance by a Subsidiary to Borrower or another Subsidiary in accordance with
Section 7.4, or (c) the warrants for common stock of Holdings issued on the
Closing Date (and the common stock issuable upon exercise thereof).
7.11 Investments. Not, and not permit any Subsidiary to, make or permit
to exist any Investment in any other Person, except the following:
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(a) contributions by Borrower to the capital of any domestic
Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any
other domestic Wholly-Owned Subsidiary, so long as the recipient of any
such capital contribution has guaranteed the Obligations and such
guaranty is secured by a pledge of all of its equity interests and
substantially all of its real and personal property, in each case in
accordance with Section 6.8;
(b) Investments constituting Debt permitted by Section 7.1(c);
(c) Contingent Obligations constituting Debt permitted by
Section 7.1 or Liens permitted by Section 7.2;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business;
(f) Investments in securities of Account Debtors received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such Account Debtors;
(g) Investments listed on Schedule 7.11 as of the Closing
Date;
(h) Investments by the Borrower and its Subsidiaries
consisting of advances to employees of such Persons in connection with
travel, moving and emergency expenses in an amount not to exceed
$150,000 in the aggregate at any one time outstanding;
(i) any purchase or other acquisition by Borrower or any
domestic Wholly-Owned Subsidiary of the assets or equity interests of
any Subsidiary;
(j) other Investments not listed above in an aggregate amount
not to exceed $250,000 in the aggregate.
7.12 Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under (a) any Related Agreement (other
than the Subordinated Notes Documents), other than immaterial amendments,
modifications and waivers not adverse to the interests of Agent or any Lender or
(b) any provisions of any Subordinated Debt (other than the Subordinated Notes
Documents) except as expressly permitted by the terms of the applicable
Subordination Agreement; (c) the Subordinated Notes Documents except as
expressly permitted by the terms of the Subordination Agreement.
7.13 Fiscal Year. Not change its Fiscal Year.
7.14 Financial Covenants.
7.14.1 Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio for any Computation Period to be less than the applicable ratio
set forth below for such Computation Period:
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Computation Period Ending Ratio
------------------------- -----
December 31, 2003 1.05:1.0
March 31, 2004 1.05:1.0
June 30, 2004 1.05:1.0
September 30, 2004 1.05:1.0
December 31, 2004 1.05:1.0
March 30, 2005 and thereafter 1.10:1.0
7.14.2 Intentionally Omitted.
7.14.3 Senior Debt to EBITDA Ratio. Not permit the Senior Debt to
EBITDA Ratio as of the last day of any Computation Period to exceed the
applicable ratio set forth below for such Computation Period:
Computation Period Ending Ratio
------------------------- -----
December 31, 2003 3.20:1.0
March 31, 2004 3.00:1.0
June 30, 2004 2.75:1.0
September 30, 2004 2.65:1.0
December 31, 2004 2.50:1.0
March 31, 2005 2.50:1.0
June 30, 2005 2.25:1.0
September 30, 2005 2.00:1.0
December 31, 2005 1.75:1.0
March 31, 2006 1.75:1.0
June 30, 2006 1.50:1.0
September 30, 2006 1.50:1.0
December 31, 2006 1.35:1.0
March 31, 2007 1.35:1.0
June 30, 2007 1.25:1.0
September 30, 2007 1.25:1.0
December 31, 2007 1.25:1.0
March 31, 2008 1.25:1.0
June 30, 2008 and thereafter 1.00:1.0
7.14.4 Total Debt to EBITDA Ratio. Not permit the Total Debt to EBITDA
Ratio as of the last day of any Computation Period to exceed the applicable
ratio set forth below for such Computation Period:
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Computation Period Ending Ratio
------------------------- -----
December 31, 2003 4.40:1.0
March 31, 2004 4.15:1.0
June 30, 2004 3.90:1.0
September 30, 2004 3.85:1.0
December 31, 2004 3.70:1.0
March 31, 2005 3.50:1.0
June 30, 2005 3.25:1.0
September 30, 2005 3.00:1.0
December 31, 2005 2.85:1.0
March 31, 2006 2.75:1.0
June 30, 2006 2.50:1.0
September 30, 2006 2.50:1.0
December 31, 2006 2.35:1.0
March 31, 2007 2.25:1.0
June 30, 2007 2.10:1.0
September 30, 2007 2.10:1.0
December 31, 2007 2.10:1.0
March 31, 2008 and thereafter 2.00:1.0
7.14.5 EBITDA. Not permit EBITDA for any Computation Period to be less
than the applicable amount set forth below for such Computation Period:
Computation Period Ending Ratio
------------------------- -----
December 31, 2003 $7,100,000
March 31, 2004 $7,200,000
June 30, 2004 $7,500,000
September 30, 2004 $7,500,000
December 31, 2004 $7,500,000
March 31, 2005 $7,750,000
June 30, 2005 $8,000,000
September 30, 2005 $8,250,000
December 31, 2005 $8,500,000
March 31, 2006 $9,000,000
June 30, 2006 $9,250,000
September 30, 2006 $9,500,000
December 31, 2006 $9,750,000
March 31, 2007 and thereafter $10,000,000
7.14.6 Capital Expenditures.
(a) Not permit the aggregate amount of all Capital Expenditures
made by Borrower and the Subsidiaries in any Fiscal Year beginning with Fiscal
Year 2004 to exceed $400,000 for such Fiscal Year.
(b) Notwithstanding the foregoing, in the event that the amount
of Capital Expenditures permitted to be made by the Borrower and the
Subsidiaries pursuant to clause (a) above in any Fiscal Year (before giving
effect to any increase in such permitted expenditure amount pursuant to this
clause (b)) is greater than the amount of such Capital Expenditures made by the
Borrower and the Subsidiaries during such Fiscal Year, 50% of such excess (the
"Rollover Amount") may be carried forward and utilized to make Capital
Expenditures in the next succeeding Fiscal Year provided, for purposes of
determining compliance with clause (a) above, any Capital Expenditures made in
such succeeding Fiscal Year shall be deemed made first out of the Rollover
Amount for such Fiscal Year.
(c) Notwithstanding the foregoing, Borrower may incur Waco
Build-out Capex in an amount not to exceed $1,200,000 in the aggregate, which
amount shall not be included for purposes of calculating Capital Expenditures
pursuant to clause (a) or clause (b) of this Section 7.14.6.
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7.15 Sale-Leasebacks. Not, and will not permit any of the Subsidiaries
to, directly or indirectly, sell or otherwise dispose of any of its property if,
as part of the same transaction or series of related transactions, any such
Person shall then or thereinafter rent or lease as lessee, or similarly acquire
the right to possession or use of, such property (or a major portion thereof),
or other property which it intends to use for substantially the same purpose or
purposes, under any lease, agreement or other arrangement which obligates any
such Person to pay rent as lessee or make any other payments for such possession
or use.
Section 8 Events of Default; Remedies.
8.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
8.1.1 Non-Payment of Credit. Default in the payment when due of the
principal of any Loan; or default, and continuance thereof for two days, in the
payment when due of any interest, fee, reimbursement obligation with respect to
any Letter of Credit or other amount payable by Borrower hereunder or under any
other Loan Document.
8.1.2 Default Under Other Debt. Any default shall occur under the terms
applicable to any Debt of any Loan Party in an aggregate amount (for all such
Debt so affected and including undrawn committed or available amounts and
amounts owing to all creditors under any combined or syndicated credit
arrangement) exceeding $500,000 and such default shall (a) consist of the
failure to pay such Debt when due, whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable (or require Borrower or any Subsidiary to purchase or redeem
such Debt or post cash collateral in respect thereof) prior to its expressed
maturity.
8.1.3 Bankruptcy; Insolvency. Any Loan Party becomes insolvent or
generally fails to pay, or admits in writing its inability or refusal to pay,
debts as they become due; or any Loan Party applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian such
Loan Party or any property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for any Loan
Party or for a substantial part of the property of any thereof and is not
discharged within 60 days; or any bankruptcy, reorganization, debt arrangement,
or other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect of any Loan
Party, and if such case or proceeding is not commenced by such Loan Party, it is
consented to or acquiesced in by such Loan Party, or remains for 60 days
undismissed; or any Loan Party takes any action to authorize, or in furtherance
of, any of the foregoing.
8.1.4 Non-Compliance with Loan Documents. (a) Failure by Borrower or
Holdings to comply with or to perform any covenant set forth in Sections 6.1.1,
6.1.2, 6.1.3, 6.1.4, 6.1.5(a), 6.1.6, 6.3(b) and (c), 6.5, 6.7, 6.9 and 7; or
(b) failure by any Loan Party to comply with or to perform any other provision
of this Agreement or any other Loan Document applicable to it (and not
constituting an Event of Default under any other provision of this Section 8)
and continuance of such failure described in this clause (b) for 30 days.
8.1.5 Representations; Warranties. Any representation or warranty made
by any Loan Party herein or any other Loan Document is breached or is false or
misleading in any material respect, or any
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schedule, certificate, financial statement, report, notice or other writing
furnished by any Loan Party to Agent or any Lender in connection herewith is
false or misleading in any material respect on the date as of which the facts
therein set forth are stated or certified.
8.1.6 Pension Plans. Except as would not reasonably be expected to have
a Material Adverse Effect, (a) Institution of any steps by any Person to
terminate a Pension Plan if as a result of such termination Borrower or any
member of the Controlled Group could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension Plan; (b)
a contribution failure occurs with respect to any Pension Plan sufficient to
give rise to a Lien under Section 302(f) of ERISA; or (c) there shall occur any
withdrawal or partial withdrawal from a Multiemployer Pension Plan.
8.1.7 Judgments. Final judgments which exceed an aggregate of $500,000
shall be rendered against any Loan Party and shall not have been paid,
discharged or vacated or had execution thereof stayed pending appeal within 45
days after entry or filing of such judgments.
8.1.8 Invalidity of Collateral Documents. Any Collateral Document shall
cease to be in full force and effect in any material respect; or any Loan Party
(or any Person by, through or on behalf of any Loan Party) shall contest in any
manner the validity, binding nature or enforceability of any Collateral
Document.
8.1.9 Invalidity of Subordination Provisions. Any subordination
provision in any document or instrument governing Subordinated Debt, or any
subordination provision in any guaranty by any Loan Party of any Subordinated
Debt, shall cease to be in full force and effect or cease to be enforceable
against any holder of Subordinated Debt by Agent and the Lenders, or any Person
(including the holder of any applicable Subordinated Debt) shall contest in any
manner the validity, binding nature or enforceability of any such provision.
8.1.10 Change of Control. A Change of Control occurs.
8.2 Remedies. If any Event of Default described in Section 8.1.3 shall
occur in respect of the Borrower, the Commitments shall immediately terminate
and the Loans and all other Obligations hereunder shall become immediately due
and payable and Borrower shall become immediately obligated to Cash
Collateralize all Letters of Credit in a manner acceptable to Agent, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default shall occur and be continuing, Agent (upon the written request of
Required Lenders) shall declare the Commitments to be terminated in whole or in
part and/or declare all or any part of the Loans and other Obligations hereunder
to be due and payable and/or demand that Borrower immediately Cash Collateralize
all or any Letters of Credit in a manner acceptable to Agent, whereupon the
Commitments shall immediately terminate (or be reduced, as applicable) and/or
the Loans and other Obligations hereunder shall become immediately due and
payable (in whole or in part, as applicable) and/or Borrower shall immediately
become obligated to Cash Collateralize the Letters of Credit (all or any, as
applicable) in a manner acceptable to Agent, all without presentment, demand,
protest or notice of any kind. Agent shall promptly advise Borrower of any such
declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default of
any event described in Section 8.1.1 or Section 8.1.3 or may only be waived by
the written concurrence of each Lender, and the effect as an Event of Default of
any other event described in this Section 8 may be waived by the written
concurrence of Required Lenders. Any cash collateral delivered hereunder shall
be held by Agent (without liability for interest thereon) and applied to
Obligations arising in connection with any drawing under a Letter of Credit.
After the expiration or termination of all Letters of Credit, such cash
collateral shall be applied by Agent
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to any remaining Obligations hereunder and any excess shall be delivered to
Borrower or as a court of competent jurisdiction may elect.
Section 9 Agent.
9.1 Appointment; Authorization. Each Lender hereby irrevocably
appoints, designates and authorizes Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duty or responsibility except those expressly
set forth herein, nor shall Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent.
(a) Subject to Section 2.3.3(b), Issuing Lender shall act on behalf
of Lenders (according to their Pro Rata Revolving Share) with respect to any
Letters of Credit issued by it and the documents associated therewith. Issuing
Lender shall have all of the benefits and immunities (i) provided to Agent in
this Section 9 with respect to any acts taken or omissions suffered by Issuing
Lender in connection with Letters of Credit issued by it or proposed to be
issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent", as used in
this Section 9, included Issuing Lender with respect to such acts or omissions
and (ii) as additionally provided in this Agreement with respect to Issuing
Lender.
9.2 Delegation of Duties. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 Limited Liability. None of Agent or any of its directors, officers,
employees or agents shall (a) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except to the extent
resulting from its own gross negligence, bad faith or willful misconduct as
determined by a court of competent jurisdiction), or (b) be responsible in any
manner to any Lender for any recital, statement, representation or warranty made
by Borrower or any Subsidiary or Affiliate of Borrower, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document (or the creation,
perfection or priority of any Lien or security interest therein), or for any
failure of Borrower or any other party to any Loan Document to perform its
Obligations hereunder or thereunder. 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, this Agreement or any other
Loan Document, or to inspect the properties, books or records of Borrower or any
of Borrower's Subsidiaries or Affiliates.
9.4 Reliance. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document 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
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counsel to Borrower), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless it shall first receive
such advice or concurrence of Required Lenders as it deems appropriate and, if
it so requests, confirmation from Lenders of their obligation to indemnify Agent
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of Required
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon each Lender.
9.5 Notice of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Event of Default or Default except with respect
to defaults in the payment of principal, interest and fees required to be paid
to Agent for the account of Lenders, unless Agent shall have received written
notice from a Lender or Borrower referring to this Agreement, describing such
Event of Default or Default and stating that such notice is a "notice of
default". Agent will notify Lenders of its receipt of any such notice. Agent
shall take such action with respect to such Event of Default or Default as may
be requested by Required Lenders in accordance with Section 8; provided that
unless and until Agent has received any such request, Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Default as it shall deem advisable or in the
best interest of Lenders.
9.6 Credit Decision. Each Lender acknowledges that Agent has not made
any representation or warranty to it, and that no act by Agent hereafter taken,
including any review of the affairs of Borrower and the Subsidiaries, shall be
deemed to constitute any representation or warranty by Agent to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
Agent and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrower and the Subsidiaries, and made its own decision to enter into this
Agreement and to extend credit to Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon Agent and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents
expressly herein required to be furnished to Lenders by Agent, Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
or other condition or creditworthiness of Borrower which may come into the
possession of Agent.
9.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, each Lender shall indemnify upon demand Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
pro rata, from and against any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including Legal Costs, except to the extent
any thereof result from the applicable Person's own gross negligence, bad faith
or willful misconduct, as determined by a court of competent jurisdiction.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
Legal Costs) incurred by Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or
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referred to herein, to the extent that Agent is not reimbursed for such expenses
by or on behalf of Borrower. The undertaking in this Section 9.7 shall survive
repayment of the Loans, cancellation of the Notes, expiration or termination of
the Letters of Credit, any foreclosure under, or modification, release or
discharge of, any or all of the Collateral Documents, termination of this
Agreement and the resignation or replacement of Agent.
9.8 Agent Individually. Madison and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrower and its Subsidiaries and
Affiliates as though Madison were not Agent hereunder and without notice to or
consent of any Lender. Each Lender acknowledges that, pursuant to such
activities, Madison or its Affiliates may receive information regarding Borrower
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of Borrower or such Affiliate) and acknowledge that Agent
shall be under no obligation to provide such information to them. With respect
to their Loans (if any), Madison and its Affiliates shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though Madison were not Agent, and the terms "Lender" and "Lenders" include
Madison and its Affiliates, to the extent applicable, in their individual
capacities.
9.9 Successor Agent. Agent may resign as Agent upon 30 days' notice to
Lenders. If Agent resigns under this Agreement, Required Lenders shall, with (so
long as no Event of Default exists) the consent of Borrower (which shall not be
unreasonably withheld or delayed), appoint from among Lenders a successor agent
for Lenders. If no successor agent is appointed prior to the effective date of
the resignation of Agent, Agent may appoint, after consulting with Lenders and
Borrower, a successor agent from among Lenders. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent, and the retiring Agent's appointment, powers
and duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 9 and Sections 10.4 and 10.5
shall continue to inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement. If no successor agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as Required Lenders appoint a
successor agent as provided for above.
9.10 Collateral Matters. Lenders irrevocably authorize Agent, at its
option and in its discretion, (a) to release any Lien granted to or held by
Agent under any Collateral Document (i) upon termination of the Commitments and
payment in full of all Loans and all other Obligations and the expiration or
termination of all Letters of Credit; (ii) constituting property sold or to be
sold or disposed of as part of or in connection with any disposition permitted
hereunder; or (iii) subject to Section 10.1, if approved, authorized or ratified
in writing by Required Lenders; or (b) to subordinate its interest in any
Collateral to any holder of a Lien on such Collateral which is permitted by
clause (d) of Section 7.2 (it being understood that Agent may conclusively rely
on a certificate from Borrower in determining whether the Debt secured by any
such Lien is permitted by Section 7.1(b)). Upon request by Agent at any time,
Lenders will confirm in writing Agent's authority to release, or subordinate its
interest in, particular types or items of Collateral pursuant to this Section
9.10. Each Lender hereby authorizes Agent to give blockage notices in connection
with the Subordinated Debt at the direction of Required Lenders and agrees that
it will not act unilaterally to deliver such notices.
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Section 10 Miscellaneous.
10.1 Waiver; Amendments. No delay on the part of Agent or any Lender in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Agreement or the Notes shall in any event be
effective unless the same shall be in writing and approved by Lenders having
aggregate Pro Rata Shares of not less than the aggregate Pro Rata Shares
expressly designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement, by Required Lenders, and then
any such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No
amendment, modification, waiver or consent shall increase any Commitment of any
Lender without such Lender's consent, extend the date scheduled for payment of
any principal of (except as set forth below) or interest on the Loans (other
than default rates) or any fees payable hereunder or reduce the principal amount
of any Loan, the rate of interest thereon (other than default rates) or any fees
payable hereunder, without, in each case, the consent of each Lender affected
thereby. No amendment, modification, waiver or consent shall, except in
connection with a Disposition permitted by Section 7.5, release any party from
its guaranty under the Guarantee and Collateral Agreement or all or any
substantial part of the Collateral granted under the Collateral Documents,
change the definition of Required Lenders, change any provision of this Section
10.1 or reduce the aggregate Pro Rata Share required to effect any amendment,
modification, waiver or consent, without, in each case, the consent of all
Lenders. No provision of Sections 2.10.2 or 2.10.3 with respect to the timing or
application of mandatory prepayments of the Loans shall be amended, modified or
waived without the consent of Lenders having a majority of the aggregate Pro
Rata Shares of the Term Loans affected thereby. No provision of Section 9 or
other provision of this Agreement affecting Agent in its capacity as such shall
be amended, modified or waived without the consent of Agent. No provision of
this Agreement relating to the rights or duties of Issuing Lender in its
capacity as such shall be amended, modified or waived without the consent of
Issuing Lender.
10.2 Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3,
all notices hereunder shall be in writing (including facsimile transmission) and
shall be sent to the applicable party at its address shown on Annex II or at
such other address as such party may, by written notice received by the other
parties, have designated as its address for such purpose. Notices sent by
facsimile transmission shall be deemed to have been given when sent; notices
sent by mail shall be deemed to have been given three Business Days after the
date when sent by registered or certified mail, postage prepaid; and notices
sent by hand delivery or overnight courier service shall be deemed to have been
given when received. For purposes of Sections 2.2.2 and 2.2.3, Agent shall be
entitled to rely on telephonic instructions from any person that Agent in good
faith believes is an authorized officer or employee of Borrower, and Borrower
shall hold Agent and each other Lender harmless from any loss, cost or expense
resulting from any such reliance.
10.3 Computations. Unless otherwise specifically provided herein, any
accounting term used in this Agreement (including in Section 7.14 or any related
definition) shall have the meaning customarily given such term in accordance
with GAAP, and all financial computations (including pursuant to Section 7.14
and the related definitions, and with respect to the character or amount of any
asset or liability or item of income or expense, or any consolidation or other
accounting computation) hereunder shall be computed in accordance with GAAP
consistently applied; provided that if Borrower notifies Agent that Borrower
wishes to amend any covenant in Section 7.14 (or any related definition) to
eliminate or to take into account the effect of any change in GAAP on the
operation of such covenant (or if Agent notifies
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Borrower that Required Lenders wish to amend Section 7.14 (or any related
definition) for such purpose), then Borrower's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn
or such covenant (or related definition) is amended in a manner satisfactory to
Borrower and Required Lenders. The explicit qualification of terms or
computations by the phrase "in accordance with GAAP" shall in no way be
construed to limit the foregoing.
10.4 Costs; Expenses. Borrower agrees to pay on demand all reasonable
out-of-pocket costs and expenses of Agent (including Legal Costs) in connection
with the preparation, execution, syndication, delivery and administration
(including perfection and protection of Collateral) of this Agreement, the other
Loan Documents and all other documents provided for herein or delivered or to be
delivered hereunder or in connection herewith (including any amendment,
supplement or waiver to any Loan Document), and all reasonable out-of-pocket
costs and expenses (including Legal Costs) incurred by Agent and, in addition to
counsel for the Agent, one additional counsel for all Lenders after an Event of
Default in connection with the collection of the Obligations and enforcement of
this Agreement, the other Loan Documents or any such other documents. In
addition, Borrower agrees to pay, and to save Agent and Lenders harmless from
all liability for, any fees of Borrower's auditors in connection with any
reasonable exercise by Agent and Lenders of their rights pursuant to Section
6.2. All Obligations provided for in this Section 10.4 shall survive repayment
of the Loans, cancellation of the Notes, expiration or termination of the
Letters of Credit and termination of this Agreement).
10.5 Indemnification by Borrower. In consideration of the execution and
delivery of this Agreement by Agent and Lenders and the agreement to extend the
Commitments provided hereunder, Borrower hereby agrees to indemnify, exonerate
and hold Agent, each Lender and each of the officers, directors, employees,
Affiliates and agents of Agent and each Lender (each a "Lender Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including Legal Costs (collectively, the
"Indemnified Liabilities"), incurred by Lender Parties or any of them as a
result of, or arising out of, or relating to (a) any tender offer, merger,
purchase of equity interests, purchase of assets (including the Related
Transactions) or other similar transaction financed or proposed to be financed
in whole or in part, directly or indirectly, with the proceeds of any of the
Loans, (b) the investigation, cleanup or remediation required under
Environmental Laws arising out of the use, handling, release, emission,
discharge, transportation, storage, treatment or disposal of any hazardous
substance at any property owned or leased by Borrower or any Subsidiary, (c) any
violation of any Environmental Laws with respect to conditions at any property
owned or leased by Borrower or any Subsidiary or the operations conducted
thereon, (d) the investigation, cleanup or remediation required under
Environmental Laws of offsite locations at which Borrower or any Subsidiary or
their respective predecessors are alleged to have directly or indirectly
disposed of hazardous substances or (e) the execution, delivery, performance or
enforcement of this Agreement or any other Loan Document by any Lender Party,
except to the extent any such Indemnified Liabilities result from the applicable
Lender Party's own gross negligence, bad faith or willful misconduct as
determined by a court of competent jurisdiction. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, Borrower hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. All
Obligations provided for in this Section 10.5 shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the Letters of
Credit, any foreclosure under, or any modification, release or discharge of, any
or all of the Collateral Documents and termination of this Agreement.
10.6 Marshaling; Payments Set Aside. Neither Agent nor any Lender shall
be under any obligation to marshal any assets in favor of Borrower or any other
Person or against or in payment of any
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or all of the Obligations hereunder. To the extent that Borrower makes a payment
or payments to Agent or any Lender, or Agent or any Lender enforces its Liens or
exercises its rights of set-off, and such payment or payments or the proceeds of
such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by Agent in its discretion) to be repaid
to a trustee, receiver or any other party in connection with any bankruptcy,
insolvency or similar proceeding, or otherwise, then (a) to the extent of such
recovery, the obligation hereunder or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred and (b)
each Lender severally agrees to pay to Agent upon demand its ratable share of
the total amount so recovered from or repaid by Agent.
10.7 Nonliability of Lenders. The relationship between Borrower on the
one hand and Lenders and Agent on the other hand shall be solely that of
borrower and lender. Neither Agent nor any Lender shall have any fiduciary
responsibility to Borrower. Neither Agent nor any Lender undertakes any
responsibility to Borrower to review or inform Borrower or any matter in
connection with any phase of Borrower's business or operations. Execution of
this Agreement by Borrower constitutes a full, complete and irrevocable release
of any and all claims which Borrower may have at law or in equity in respect of
all prior discussions and understandings, oral or written, relating to the
subject matter of this Agreement and the other Loan Documents. Neither Agent nor
any Lender shall have any liability with respect to, and Borrower hereby waives,
releases and agrees not to xxx for, any special, indirect, punitive or
consequential damages or liabilities.
10.8 Assignments; Participations.
10.8.1 Assignments. (a) Any Lender may at any time assign to one or
more Persons (any such Person, an "Assignee") all or any portion of such
Lender's Loans and Commitments, with the prior written consent of Agent, Issuing
Lender (for an assignment of the Revolving Loans and the Revolving Loan
Commitment) and, so long as no Event of Default exists, Borrower (which consents
shall not be unreasonably withheld or delayed and shall not be required for an
assignment by a Lender to a Lender or an Affiliate of a Lender). Except as Agent
may otherwise agree, any such assignment shall be in a minimum aggregate amount
equal to $5,000,000 (or, $1,000,000, in the case of the Term B Loan) or, if
less, the Commitment or the principal amount of the Loan being assigned.
Borrower and Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned to an Assignee
until Agent shall have received and accepted an effective Assignment Agreement
executed, delivered and fully completed by the applicable parties thereto and a
processing fee of $3,500. No assignment may be made to any Person if at the time
of such assignment Borrower would be obligated to pay any greater amount under
Section 3 to the Assignee than Borrower is then obligated to pay to the
assigning Lender under such Sections (and if any assignment is made in violation
of the foregoing, Borrower will not be required to pay such greater amounts).
Any attempted assignment not made in accordance with this Section 10.8.1 shall
be treated as the sale of a participation under Section 10.8.2. Borrower shall
be deemed to have granted its consent to any assignment requiring its consent
hereunder unless Borrower has expressly objected to such assignment within five
Business Days after notice thereof.
(b) From and after the date on which the conditions described above
have been met, (i) such Assignee shall be deemed automatically to have become a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to such Assignee pursuant to such Assignment Agreement, shall have the
rights and obligations of a Lender hereunder and (ii) the assigning Lender, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, shall be released from its rights (other
than its indemnification rights) and obligations hereunder. Upon the
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request of the Assignee (and, as applicable, the assigning Lender) pursuant to
an effective Assignment Agreement, Borrower shall execute and deliver to Agent
for delivery to the Assignee (and, as applicable, the assigning Lender) a Note
in the principal amount of the Assignee's Pro Rata Share of the Revolving Loan
Commitment plus the principal amount of the Assignee's Term Loans (and, as
applicable, a Note in the principal amount of the Pro Rata Share of the
Revolving Loan Commitment retained by the assigning Lender plus the principal
amount of the Term Loans retained by the assigning Lender). Each such Note shall
be dated the effective date of such assignment. Upon receipt by the assigning
Lender of such Note, the assigning Lender shall return to Borrower any prior
Note held by it.
(c) Agent, acting solely for this purpose as an agent of Borrower,
shall maintain at one of its offices in the United States a copy of each
Assignment Agreement delivered to it and a register for the recordation of the
names and addresses of each Lender, and the Commitments of, and principal amount
of the Loans owing to, such Lender pursuant to the terms hereof. The entries in
such register shall be conclusive, and Borrower, Agent and Lenders may treat
each Person whose name is recorded therein pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. Such register shall be available for inspection by Borrower and
any Lender, at any reasonable time upon reasonable prior notice to Agent.
(d) Notwithstanding the foregoing provisions of this Section 10.8.1 or
any other provision of this Agreement, any Lender may at any time assign all or
any portion of its Loans and its Note as collateral security to a Federal
Reserve Bank or, as applicable, to such Lender's trustee for the benefit of its
investors (but no such assignment shall release any Lender from any of its
obligations hereunder).
(e) Notwithstanding any other provision of this Agreement to the
contrary, neither the Lenders nor any of their successors or assigns shall
assign or transfer any interest herein without obtaining a prior determination
from Borrower that any such assignment or transfer would not result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the IRC.
10.8.2 Participations. Any Lender may at any time sell to one or more
Persons participating interests in its Loans, Commitments or other interests
hereunder (any such Person, a "Participant"). In the event of a sale by a Lender
of a participating interest to a Participant, (a) such Lender's obligations
hereunder shall remain unchanged for all purposes, (b) Borrower and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations hereunder and (c) all amounts payable by
Borrower shall be determined as if such Lender had not sold such participation
and shall be paid directly to such Lender. No Participant shall have any direct
or indirect voting rights hereunder except with respect to any event described
in Section 10.1 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders. Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. Borrower agrees that if amounts
outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement; provided that such right of set-off shall be subject to the
obligation of each Participant to share with Lenders, and Lenders agree to share
with each Participant, as provided in Section 2.12.5. Borrower also agrees that
each Participant shall be entitled to the benefits of Section 3 as if it were a
Lender (provided that no Participant shall receive any greater compensation
pursuant to Section 3 than would have been paid to the participating Lender if
no participation had been sold).
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10.9 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all information provided to them by any Loan Party and designated
as confidential, except that Agent and each Lender may disclose such information
(a) to Persons employed or engaged by Agent or such Lender in evaluating,
approving, structuring or administering the Loans and the Commitments; (b) to
any assignee or participant or potential assignee or participant that has agreed
to comply with the covenant contained in this Section 10.9 (and any such
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any federal or state regulatory
authority or examiner, or any insurance industry association, or as reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
litigation to which Agent or such Lender is a party; (f) to any nationally
recognized rating agency that requires access to information about a Lender's
investment portfolio in connection with ratings issued with respect to such
Lender; or (g) that ceases to be confidential through no fault or gross
negligence of Agent or any Lender. Notwithstanding the foregoing, Borrower
consents to the publication by Agent or any Lender of a tombstone or similar
advertising material relating to the financing transactions contemplated by this
Agreement, and Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements. Notwithstanding anything in this Agreement to the contrary, the
Agent, the Lenders, the Borrower and all other parties to the transactions
contemplated hereunder (collectively, the "Parties") hereby agree that all
parties (and each employee, representative, or other agent of such Parties) may
disclose to any and all persons, without limitation of any kind, the U.S. "tax
treatment" or "tax structure" (in each case, within the meaning of Treasury
Regulation section 1.6011-4) of the transactions contemplated hereunder and all
materials of any kind (including opinions or other tax analyses) that are
provided to such Parties relating to such U.S. "tax treatment" and "tax
structure" (in each case, within the meaning of Treasury Regulation section
1.6011-4).
10.10 Captions. Captions used in this Agreement are for convenience
only and shall not affect the construction of this Agreement.
10.11 Nature of Remedies. All Obligations of Borrower and rights of
Agent and Lenders expressed herein or in any other Loan Document shall be in
addition to and not in limitation of those provided by applicable law. No
failure to exercise and no delay in exercising, on the part of 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.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement. Receipt
by telecopy of any executed signature page to this Agreement or any other Loan
Document shall constitute effective delivery of such signature page.
10.13 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
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10.14 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the parties
hereto and supersedes all prior or contemporaneous agreements and understandings
of such Persons, verbal or written, relating to the subject matter hereof and
thereof (except as relates to the fees described in Section 2.8.3) and any prior
arrangements made with respect to the payment by Borrower of (or any
indemnification for) any fees, costs or expenses payable to or incurred (or to
be incurred) by or on behalf of Agent or Lenders.
10.15 Successors; Assigns. This Agreement shall be binding upon
Borrower, Lenders and Agent and their respective successors and assigns, and
shall inure to the benefit of Borrower, Lenders and Agent and the successors and
assigns of Lenders and Agent. No other Person shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents. Borrower may
not assign or transfer any of its rights or Obligations under this Agreement
without the prior written consent of Agent and each Lender.
10.16 Governing Law. THIS AGREEMENT AND EACH NOTE SHALL BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.
10.17 Forum Selection; Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF
ILLINOIS. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
10.18 Waiver of Jury Trial. EACH OF BORROWER, AGENT AND EACH LENDER
HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN
DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING
FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY.
[signature pages follow]
- 60 -
The parties hereto have caused this Agreement to be duly executed and
delivered by their duly authorized officers as of the date first set forth
above.
TDG MERGER CO.
(To be merged with and into on the Closing Date:
THE XXXXX GROUP, INC.)
By:
----------------------------------------
Title:
----------------------------------------
[Signature Page to The Xxxxx Group, Inc.
Credit Agreement]
MADISON CAPITAL FUNDING LLC,
as Agent and a Lender
By:
---------------------------------
Title:
---------------------------------
[Signature Page to The Xxxxx Group, Inc.
Credit Agreement]
FIRST AMERICAN BANK, SSB
By:
---------------------------------
Title:
---------------------------------
[Signature Page to The Xxxxx Group, Inc.
Credit Agreement]
Annex I
Commitments and Pro Rata Shares
Revolving
Commitment Pro Rata Term A Loan Pro Rata Term B Loan Pro Rata
Lender Amount Share Commitment Share Commitment Share
-------------------------- ---------- -------- ----------- -------- ----------- --------
Madison Capital Funding $3,000,000 50% $ 4,500,000 45% $ 8,500,000 100%
LLC
First American Bank, SSB $3,000,000 50% $ 5,500,000 55% $ -0- 0%
---------- -------- ----------- -------- ----------- --------
TOTALS $6,000,000 100% $10,000,000 100% $ 8,500,000 100%
========== ======== =========== ======== =========== ========
I-1
Annex II
Addresses
The Xxxxx Group, Inc.
0000 X. Xxxxxxxxxx Xxxxx Xxxxx
X.X. Xxx 0000
Xxxx, Xxxxx 00000
Attn: Chief Financial Officer
Telecopy: (000) 000-0000
with a copies to:
The Riverside Company
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
and
Xxxxx Day
Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Madison Capital Funding LLC,
as Agent and a Lender
Address for Notices:
000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Account Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address for Payments:
Bank: LaSalle Bank National Association
ABA #: 000000000
Account #: 5800299108
Reference: Madison Capital Funding LLC
Address: Xxxxxxx, Xxxxxxxx 00000
II-1
First American Bank, SSB
as a Lender
Address for Notices:
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Account Manager
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Address for Payments:
Bank: First American Bank, SSB
ABA #: 000000000
Account #: 065511170030
Reference: The Xxxxx Group, Inc.
Address: Dallas, TX
II-2
Exhibit A
Form of Assignment Agreement
This Assignment Agreement (this "Assignment Agreement") is
entered into as of __________ by and between the Assignor named on the signature
page hereto ("Assignor") and the Assignee named on the signature page hereto
("Assignee"). Reference is made to the
Credit Agreement dated as of October 30,
2003 (as amended or otherwise modified from time to time, the "
Credit
Agreement") among The Xxxxx Group, Inc. ("Borrower"), the financial institutions
party thereto from time to time, as Lenders, and Madison Capital Funding LLC, as
Agent. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
Assignor and Assignee agree as follows:
1. Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases
and assumes from Assignor the interests set forth on the schedule attached
hereto, in and to Assignor's rights and obligations under the Agreement as of
the Effective Date (as defined below). Such purchase and sale is made without
recourse, representation or warranty except as expressly set forth herein.
2. Assignor (i) represents that as of the Closing Date, it is the legal and
beneficial owner of the interests assigned hereunder free and clear of any
adverse claim, (ii) makes no other representation or warranty and assumes no
responsibility with respect to any statement, warranties or representations made
in or in connection with the Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Agreement, any Loan
Documents or any other instrument or document furnished pursuant thereto; and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Loan Party or any other Person or the
performance or observance by any Loan Party of its Obligations under the
Agreement or the Loan Documents or any other instrument or document furnished
pursuant thereto.
3. Assignee (i) represents and warrants that it is legally authorized to enter
into this Assignment Agreement; (ii) confirms that it has received a copy of the
Agreement, together with copies of the most recent financial statements
delivered pursuant thereto and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment Agreement; (iii) agrees that it will, independently and without
reliance upon Agent, Assignor 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 decisions in taking or not taking action under the Agreement; (iv)
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under the Agreement as are delegated to Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all obligations which
by the terms of the Agreement are required to be performed by it as a Lender;
(vi) represents that on the date of this Assignment Agreement it is not
presently aware of any facts that would cause it to make a claim under the
Agreement; and (vii) if organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States, which have been duly executed, certifying as to Assignee's
exemption from United States withholding taxes with respect to all payments to
be made to Assignee under the Agreement or such other documents as are necessary
to indicate that all such payments are subject to such tax at a rate reduced by
an applicable tax treaty.
A-1
4. The effective date for this Assignment Agreement shall be as set forth on the
schedule attached hereto (the "Effective Date"). Following the execution of this
Agreement and Acceptance, it will be delivered to Agent for acceptance and
recording by Agent pursuant to the Agreement.
5. Upon such acceptance and recording, from and after the Effective Date, (i)
Assignee shall be a party to the Agreement and, to the extent provided in this
Assignment Agreement, have the rights and obligations of a Lender thereunder and
(ii) Assignor shall, to the extent provided in this Assignment Agreement,
relinquish its rights and be released from its obligations under the Agreement.
6. Upon such acceptance and recording, from and after the Effective Date, Agent
shall make all payments in respect of the interest assigned hereby (including
payments of principal, interest, fees and other amounts) to Assignee. Assignor
and Assignee shall make all appropriate adjustments in payments for periods
prior to the Effective Date by Agent or with respect to the making of this
assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.
A-2
The parties hereto have caused this Agreement to be executed and
delivered as of the date first written above.
ASSIGNOR:
----------------------
By:
---------------------------
Title:
---------------------------
ASSIGNEE:
--------------------------------
By:
---------------------------
Title:
---------------------------
Consented to:
Madison Capital Funding LLC,
as Agent
By:
---------------------------
Title: ]
---------------------------
The Xxxxx Group, Inc.
By:
---------------------------
Title: ]
---------------------------
A-3
Schedule to Assignment Agreement
Assignor:
---------------------
Assignee:
---------------------
Effective Date:
---------------------
Credit Agreement dated as of October 30, 2003 among The Xxxxx
Group, Inc., as Borrower, the financial institutions party
thereto from time to time, as Lenders, and Madison Capital
Funding LLC, as Agent
Interests Assigned:
Revolving Loan
Commitment/Loan Commitment Term A Loan Term B Loan
------------------------------- --------------------------- -------------------- --------------------
Assignor Amounts $ $ $
Amounts Assigned $ $ $
Assignee Amounts
(post-assignment) $ $ $
Assignee Information:
Address for Notices: Address for Payments:
___________________________ Bank: _______________
___________________________ ABA #: _______________
Attention: _______________ Account #: _______________
Telephone: _______________ Reference: _______________
Telecopy: _______________
A-4
Exhibit B
Form of Compliance Certificate
Please refer to the
Credit Agreement dated as of October 30, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
the undersigned ("Borrower"), the financial institutions party thereto and
Madison Capital Funding LLC, as Agent. This certificate (this "Certificate"),
together with supporting calculations attached hereto, is delivered to Agent and
Lenders pursuant to the terms of the Credit Agreement. Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.
Enclosed herewith is a copy of the [annual audited/quarterly/monthly]
report of Borrower as at ________________ (the "Computation Date"), which report
fairly presents in all material respects the financial condition and results of
operations [(subject to the absence of footnotes and to normal year-end
adjustments)] of Borrower as of the Computation Date and has been prepared in
accordance with GAAP consistently applied.
Borrower hereby certifies and warrants that the computations set forth
on the schedule attached hereto correspond to the ratios and/or financial
restrictions contained in the Credit Agreement and such computations are true
and correct as at the Computation Date.
Borrower further certifies that no Event of Default or Default has
occurred and is continuing.
Borrower has caused this Certificate to be executed and delivered by
its duly authorized officer on this ___ day of ____, 200_.
THE XXXXX GROUP, INC.
By
----------------------------------------
Title
-------------------------------------
B-1
Schedule to Compliance Certificate
Dated as of _________________
A. Section 7.14.1 - Minimum Fixed Charge Coverage Ratio
1. Consolidated Net Income $________
2. Plus: Interest Expense $________
income tax expense $________
depreciation $________
amortization $________
3. Total (EBITDA)(1) $________
4. Income taxes(2) paid $________
5. Capital Expenditures(3) $________
6. Management Fees $________
7. Director Fees and Expenses $________
8. Sum of (4), (5), (6) and (7) $________
9. Remainder of (3) minus (8) $________
10. Interest Expense paid in cash $________
11. Scheduled payments of
principal of Debt
(including Term Loans but
excluding Revolving Loans) $________
12. Sum of (10) and (11) $________
13. Ratio of (9) to (12) ____ to 1
12. Minimum Required ____ to 1
----------
(1) See definition of EBITDA for other addbacks.
(2) Other than any one time tax payment by the Borrower during such period for
historical tax liabilities arising out of a determination by the Internal
Revenue Service that 40 percent or more of the Borrower's adjusted ordinary
gross income for prior reporting periods was "personal holding company
income" within the meaning of Code section 543.
(3) Other than Waco Build-out Capex permitted by Section 7.14.6.(c) of the
Credit Agreement paid during such period.
B-2
B. Section 7.14.3 - Maximum Senior Debt to EBITDA Ratio
1. Senior Debt $________
2. EBITDA $________
(from Item A(3) above)
3. Ratio of (1) to (2) ____ to 1
4. Maximum allowed ____ to 1
C. Section 7.14.4 - Maximum Total Debt to EBITDA Ratio
1. Total Debt $________
2. EBITDA $________
(from Item A(3) above)
3. Ratio of (1) to (2) ____ to 1
4. Maximum allowed ____ to 1
D. Section 7.14.5-Minimum EBITDA
1. EBITDA
(from Item A(3) above) $_________
2. Minimum required $_________
E. Section 7.14.6 - Capital Expenditures
1. Capital Expenditures for the
Fiscal Year $__________
2. Maximum Permitted Capital
Expenditures $__________
B-3
Exhibit C
Form of Availability Certificate
Please refer to the Credit Agreement dated as of October 30, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
the undersigned ("Borrower"), the financial institutions party thereto from time
to time, as Lenders, and Madison Capital Funding LLC, as Agent. This certificate
(this "Certificate"), together with supporting calculations attached hereto, is
delivered to Agent and Lenders pursuant to the terms of the Credit Agreement.
Capitalized terms used but not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
Borrower hereby certifies and warrants that at the close of business on
__________________ (the "Calculation Date"), Borrowing Availability was
$_____________, computed as set forth on the schedule attached hereto.
Borrower has caused this Certificate to be executed and delivered by
its duly authorized officer on this ___ day of ________, 200_.
THE XXXXX GROUP, INC.
By
-------------------------------------
Title
----------------------------------
D-1
Schedule to Availability Certificate
Dated as of _________________
1. Gross Accounts $_________
2. Less Ineligibles
(a) Agent's Lien Not Perfected $_________
(b) If a Note Receivable, Original Promissory
Note Is Not In Agent's Possession $_________
(c) Subject to other Lien $_________
(d) Subject to Offset, etc. $_________
(e) Account Debtor not in U.S. or Canada $_________
(f) Sale on Approval, Sale or
Return, Xxxx and Hold or
Consignment $_________
(g) Over 60 days past due or
over 90 days past invoice
date (Other than Note Receivable) $_________
(h) Principal and Interest on Note Receivable
more than 60 days past due $_________
(i) Affiliate Receivables $_________
(j) Arises out of a Franchise Agreement
Which is Not Assigned to Agent or
Franchise Agreement Contains
Restrictions on Assignment to Agent $_________
(k) Accounts owed by Account Debtor
where 15% or more of such Account
Debtor's Accounts are ineligible pursuant
to clause (g) above or any of such
Account Debtor's Accounts are
ineligible pursuant to clause (h) above(4) $_________
(l) Other $_________
(m) Total $_________
3. Eligible Accounts [Item 1 minus Item 2] $_________
4. Eligible Accounts which are Note Receivables $_________
5. Item 4 times 50% $_________
6. Standard Eligible Accounts
[Item 3 minus Item 4] $_________
7. Item 6 times 85% $_________
----------
(4) Item K shall not apply to any Account Debtor whose Accounts total no more
than $2,000 in the aggregate.
B-2
8. Item 5 plus Item 7 $_________
9. Lesser of Item 8 and Revolving Loan Commitment $_________
10. Reserves and allowances $_________
11. Personal Holding Company Tax Reserve $[1,000,000 or
such greater
amount see
below](5)
12. Borrowing Availability
[Item 9 minus Item 10 minus Item 11] $_________
13. Revolving Outstandings $_________
14. Net Availability
[Excess of Item 12 over Item 13] $_________
15. Required Prepayment
[Excess of Item 13 over Item 12] $_________
Renegotiated Franchise Notes
Principal amount of Renegotiated Franchise Notes outstanding $_________
Franchise Basket $[300,000](6)
Ineligible Royalty Notes
Principal amount of Ineligible Royalty Notes outstanding $__________
Royalty Basket $[50,000](6)
----------
(5) Until such date as the Equity Call Agreement is terminated pursuant to
clause (ii) of the definition of Equity Call Termination Date, an amount
equal to $1,000,000 or such lesser amount as may be agreed to by the Agent,
and (ii) thereafter, $1,000,000 plus the Remaining Infusion Amount as of
such Equity Call Termination Date or such lesser amount as may be agreed to
by the Agent.
(6) The Franchise Basket and the Royalty Basket each shall increase or
decrease, as applicable, each Fiscal Year by 1% for each percentage point
that consolidated revenue increases or decreases, as applicable, over the
prior Fiscal Year; provided, further, however, that the Franchise Basket
and the Royalty Basket shall in no event decrease below $300,000 and
$50,000, respectively and in no event shall the sum of outstanding
principal amount of Renegotiated Franchise Notes and Royalty Notes exceed
20% of the current amount of Eligible Accounts.
B-3
Exhibit D
Form of Note
--------------
$ Chicago, Illinois
------------------------
The undersigned ("Borrower"), for value received, promises to pay to
the order of _____________ ("Lender") at the principal office of Madison Capital
Funding LLC (the "Agent") in Chicago, Illinois the aggregate unpaid amount of
all Loans made to Borrower by Lender pursuant to the Credit Agreement referred
to below, such principal amount to be payable on the dates set forth in the
Credit Agreement.
Borrower further promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such Loan is paid in full,
payable at the rate(s) and at the time(s) set forth in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of the
United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Credit Agreement, dated as of October 30, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement"; terms
not otherwise defined herein are used herein as defined in the Credit
Agreement), among Borrower, the financial institutions (including Lender) party
thereto from time to time and Agent, to which Credit Agreement reference is
hereby made for a statement of the terms and provisions under which this Note
may or must be paid prior to its due date or its due date accelerated.
This Note is made under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within such
State.
THE XXXXX GROUP, INC.
By:
------------------------
Title:
------------------------
B-4
Exhibit E
Form of Notice of Borrowing
Please refer to the Credit Agreement dated as of October 30, 2003 (as
amended or otherwise modified from time to time, the "Credit Agreement") among
the undersigned ("Borrower"), the financial institutions party thereto from time
to time, as Lenders, and Madison Capital Funding LLC, as Agent. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
thereto in the Credit Agreement. This notice is given pursuant to Section 2.2.2
of the Credit Agreement. Borrower hereby requests a borrowing under the Credit
Agreement as follows:
The aggregate amount of the proposed borrowing is $______________. The
requested borrowing date for the proposed borrowing (which is a Business Day) is
______________, ____. The Revolving Loans comprising the proposed Borrowing are
[Base Rate] [LIBOR] Loans. The duration of the Interest Period for each LIBOR
Loan made as part of the proposed Borrowing, if applicable, is __________ months
(which shall be 1, 2, 3 or 6 months).
Borrower has caused this Notice to be executed and delivered
by its duly authorized officer on this ___ day of ____, 200__.
THE XXXXX GROUP, INC.
By:
------------------------
Title:
------------------------
B-5
Exhibit F
Form of Notice of Conversion/Continuation
Please refer to the Credit Agreement, dated as of October 30, 2003 as
amended or otherwise modified from time to time, the "Credit Agreement"), among
the undersigned ("Borrower"), the financial institutions party thereto from time
to time, as Lenders, and Madison Capital Funding LLC, as Agent. This notice is
given pursuant to Section 2.2.3 of the Credit Agreement. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed thereto in the
Credit Agreement. Borrower hereby requests a [conversion][continuation] of [Term
[A][B] Loans][Revolving Loans] as follows:
The date of the proposed [conversion] [continuation] is ______________,
____ (which shall be a Business Day). The aggregate amount of the [Term [A][B]
Loans] [Revolving Loans] proposed to be [converted] [continued] is
$______________. [Specify which part is to be converted and which part is to be
continued, if appropriate.] The Loans to be [continued] [converted] are [Base
Rate Loans] [LIBOR Loans] and the Loans resulting from the proposed [conversion]
[continuation] will be [Base Rate Loans] [LIBOR Loans]. The duration of the
requested Interest Period for each LIBOR Loan made as part of the proposed
[conversion] [continuation] is ___________ months (which shall be 1, 2, 3 or 6
months).
Borrower has caused this Notice to be executed and delivered by its
duly authorized officer on this ___ day of ____, 200__.
THE XXXXX GROUP, INC.
By:
------------------------
Title:
------------------------
B-6
Exhibit H
Form of
Borrower Assignment and Assumption Agreement
Please refer to the Credit Agreement, dated as of October 30, 2003 as amended or
otherwise modified from time to time, the "Credit Agreement"), among the
undersigned ("Borrower"), the financial institutions party thereto from time to
time, as Lenders, and Madison Capital Funding LLC, as Agent. This notice is
given pursuant to Section 4.1(w) of the Credit Agreement. Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed thereto in the
Credit Agreement.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound,
(a) Mergeco hereby assigns, transfers, conveys and delivers to Xxxxx, and
Xxxxx hereby accepts delivery of, all of Mergeco's benefits,
privileges, rights, title and interest in and to the foregoing Credit
Agreement, the other Loan Documents (including the Notes and Collateral
Documents) and all other agreements to which Mergeco is a party in
connection therewith (as each of the foregoing may be amended,
restated, supplemented or otherwise modified from time to time,
collectively, the "Assumed Documents"); and
(b) Xxxxx hereby fully and completely succeeds to, assumes and agrees to
pay, perform and discharge, in accordance with its terms, the
Obligations under the Assumed Documents (including the granting of
security interests in the properties of Xxxxx in connection therewith),
and Xxxxx hereby fully makes the representations and warranties
contained in the Assumed Documents, all as if Xxxxx were an original
party thereto.
This Borrower Assignment and Assumption Agreement is hereby attached to and made
a part of said Credit Agreement. Capitalized terms used but not defined herein
are used as defined in said Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Borrower
Assignment and Assumption Agreement to be duly executed and delivered by their
duly authorized officers as of ________, 2003.
Mergeco
TDG MERGER CO.
By:
--------------------------------------
Title:
----------------------------------
Xxxxx
THE XXXXX GROUP, INC.
By:
--------------------------------------
Title:
----------------------------------
B-7
