Exhibit 10.7
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$3,000,000
SENIOR SUBORDINATED LOAN AGREEMENT
among
THANE INTERNATIONAL, INC.
and
VARIOUS LENDERS
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Dated as of June 10, 1999
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TABLE OF CONTENTS
Page
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SECTION 1. Amount and Terms of Loans .........................................1
1.01 The Loans .........................................................1
1.02 Notice of Borrowing ...............................................1
1.03 Disbursement of Funds .............................................1
1.04 Notes .............................................................1
1.05 Interest ..........................................................2
1.06 Capital Adequacy Regulations ......................................2
SECTION 2. Commitments; Repayment; Prepayments; Payments; Taxes ..............3
2.01 Termination of Commitments; Payment of Loans ......................3
2.02 Mandatory and Voluntary Prepayments ...............................3
2.03 Method and Place of Payment .......................................5
2.04 Net Payments ......................................................5
SECTION 3. Conditions Precedent to Loans on the Funding Date .................7
3.01 Notes .............................................................7
3.02 Officers' Certificate .............................................7
3.03 Opinions of Counsel ...............................................7
3.04 Corporate Documents; Proceedings ..................................7
3.05 Subordinated Guaranty .............................................8
3.06 Consummation of the Recapitalization; Corporate Structure .........8
3.07 Credit Documents ..................................................9
3.08 Litigation ........................................................9
3.09 Fees, Etc. ........................................................9
3.10 Approvals .........................................................9
3.11 Financial Statements; Projections; Pro Forma; Management
Letter Reports; Background Investigation Reports ..................9
3.12 Existing Indebtedness ............................................11
3.13 Material Adverse Change, Etc .....................................11
3.14 Employee Benefit Plans; Securityholders' Agreements;
Management Agreements; Employment Agreements; Collective
Bargaining Agreements; Debt Agreements; Affiliate
Contracts; Tax Sharing Agreements and Material Contracts .........11
3.15 Solvency Certificate; Insurance Analyses; Etc ....................12
3.16 No Default; Representations and Warranties .......................13
3.17 Warrants .........................................................13
3.18 Refinancing ......................................................13
3.19 Funding ..........................................................13
3.20 Borrower's Certificate of Incorporation ..........................14
3.21 Consent Letter ...................................................14
3.22 Borrowing Base Certificate .......................................14
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SECTION 4. Representations, Warranties and Agreement ........................14
4.01 Status ...........................................................14
4.02 Power and Authority ..............................................14
4.03 No Violation .....................................................15
4.04 Governmental Approvals ...........................................15
4.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; Etc. ...................................15
4.06 Litigation .......................................................17
4.07 True and Complete Disclosure .....................................17
4.08 Use of Proceeds; Margin Regulations ..............................17
4.09 Tax Returns and Payments .........................................17
4.10 Compliance with ERISA ............................................18
4.11 Representations and Warranties in Documents ......................19
4.12 Properties .......................................................19
4.13 Capitalization ...................................................19
4.14 Subsidiaries .....................................................19
4.15 Compliance with Statutes, Etc ....................................20
4.16 Investment Company Act ...........................................20
4.17 Public Utility Holding Company Act ...............................20
4.18 Environmental Matters ............................................20
4.19 Labor Relations ..................................................21
4.20 Patents, Licenses, Franchises and Formulas .......................21
4.21 Existing Indebtedness ............................................22
4.22 Restrictions on or Relating to Subsidiaries ......................22
4.23 The Transaction ..................................................22
4.24 Material Contracts ...............................................23
4.25 Year 2000 Reprogramming ..........................................23
4.26 Special Purpose Corporation ......................................23
4.27 Offer of Notes and Warrants ......................................23
4.28 Valid Issuance of Common Stock ...................................23
SECTION 5. Affirmative Covenants ............................................24
5.01 Information Covenants ............................................24
5.02 Books, Records and Inspections ...................................27
5.03 Maintenance of Property, Insurance ...............................27
5.04 Corporate Franchises .............................................27
5.05 Compliance with Statutes, Etc ....................................27
5.06 Compliance with Environmental Laws ...............................28
5.07 ERISA ............................................................28
5.08 End of Fiscal Years; Fiscal Quarters .............................29
5.09 Performance of Obligations .......................................30
5.10 Payment of Taxes .................................................30
5.11 Use of Proceeds, Margin Regulations ..............................30
5.12 Year 2000 Compliance .............................................30
5.13 Observation Rights ...............................................30
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5.14 Intellectual Property Rights .....................................31
SECTION 6. Negative Covenants ...............................................31
6.01 Liens ............................................................31
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc ...........33
6.03 Dividends ........................................................36
6.04 Indebtedness .....................................................36
6.05 Transactions with Affiliates .....................................37
6.06 No Further Negative Pledges ......................................37
6.07 Capital Expenditures .............................................38
6.08 Fixed Charge Coverage Ratio ......................................38
6.09 Consolidated Indebtedness to Consolidated EBITDA .................39
6.10 Minimum EBITDA ...................................................40
6.11 Restrictions on Additional Subordinated Indebtedness .............41
6.12 Limitation on Voluntary Payments and Modifications;
Limitation on Modifications of Certificate of
Incorporation, By-Laws and Certain Other Agreements; Etc. ........41
6.13 Limitation on Certain Restrictions on Subsidiaries ...............42
6.14 Limitation on Issuance of Capital Stock ..........................42
6.15 Business .........................................................42
6.16 Limitation on Creation of Subsidiaries ...........................42
6.17 Amendments with Respect to Senior Debt ...........................43
6.18 Product Acquisition Expenditures .................................43
SECTION 7. Events of Default ................................................43
7.01 Payments .........................................................43
7.02 Representations, Etc .............................................43
7.03 Covenants ........................................................43
7.04 Default Under Other Agreements ...................................43
7.05 Bankruptcy, Etc ..................................................44
7.06 ERISA ............................................................44
7.07 Judgments ........................................................45
7.08 Subordinated Guaranty ............................................45
7.09 Change in Control ................................................45
7.10 Change in Management .............................................45
SECTION 8. Definitions and Accounting Terms .................................46
8.01 Defined Terms ....................................................46
SECTION 9. Subordination ....................................................61
9.01 Obligations Subordinate to Senior Indebtedness ...................61
9.02 Payment Over of Proceeds Upon Dissolution ........................61
9.03 No Payment in Certain Circumstances ..............................63
9.04 Acceleration Rights; Remedies ....................................64
9.05 Payment Otherwise Permitted ......................................64
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9.06 Subrogation to Rights of Holders of Senior Debt ..................64
9.07 Provisions Solely to Define Relative Rights ......................65
9.08 No Waiver of Subordination Provisions; Amendment .................65
9.09 Reliance on Judicial Order or Certificate of Liquidating
Agent ............................................................65
9.10 Turnover; Miscellaneous Subordination Provisions .................65
SECTION 10. Miscellaneous ....................................................67
10.01 Payment of Expenses, Etc .........................................67
10.02 Right of Setoff ..................................................67
10.03 Notices ..........................................................68
10.04 Benefit of Agreement .............................................68
10.05 No Waiver; Remedies Cumulative ...................................69
10.06 Payments Pro Rata ................................................70
10.07 Calculations; Computations .......................................70
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL ....................................................70
10.09 Counterparts .....................................................71
10.10 Effectiveness ....................................................72
10.11 Headings Descriptive .............................................72
10.12 Amendment or Waiver ..............................................72
10.14 Survival .........................................................74
10.15 Domicile of Loans ................................................74
10.16 Post-Closing Obligations .........................................74
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Schedules and Exhibits
SCHEDULE I Commitments
SCHEDULE II Insurance Policies
SCHEDULE III Subsidiaries
SCHEDULE IV Existing Liens
SCHEDULE V Real Property
SCHEDULE VI Material Contracts
SCHEDULE VII Capitalization, Stock Options and Other Rights
SCHEDULE VIII Projections
SCHEDULE IX Plans
SCHEDULE X Existing Indebtedness
EXHIBIT A Form of Note
EXHIBIT B Form of Section 2.04(b)(ii) Certificate
EXHIBIT C Form of Opinion
EXHIBIT D Form of Officers' Certificate
EXHIBIT E Form of Subordinated Guaranty
EXHIBIT F Form of Solvency Certificate
EXHIBIT G Form of Amended and Restated Certificate of Incorporation
EXHIBIT H Form of Warrant
EXHIBIT I Form of Warrant Agreement
EXHIBIT J Form of Equityholders Agreement
EXHIBIT K Form of Assignment and Assumption Agreement
EXHIBIT L Form of Intercompany Note
EXHIBIT M Form of Subordination Provisions
EXHIBIT N Form of Subordinated Redemption Note
EXHIBIT O Form of Stockholders Agreement
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SENIOR SUBORDINATED LOAN AGREEMENT, dated as of June 10, 1999, among
THANE INTERNATIONAL, INC., a corporation, organized and existing under the laws
of the State of Delaware (the "Borrower") and the financial institutions party
hereto from time to time (each, a "Lender" and, collectively, the "Lenders").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 8 are used herein as therein defined.
W I T N E S S E T H:
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WHEREAS, the Borrower has requested that the Lenders lend to the
Borrower $3,000,000 for the purposes specified herein; and
WHEREAS, subject to and upon the terms and conditions herein set
forth, the Lenders are willing to make loans to the Borrower in an aggregate
amount of $3,000,000;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Loans.
1.01 The Loans. Subject to and upon the terms and conditions set
forth herein, each Lender severally agrees to make, on the Funding Date, a loan
in Dollars (each, a "Loan" and, collectively, the "Loans") to the Borrower in a
principal amount equal to such Lender's Commitment. Any amount of any Loan
prepaid or repaid may not be reborrowed.
1.02 Notice of Borrowing. The Borrower shall give each Lender at
the address specified opposite its signature below, prior to 12:00 Noon (New
York time) on the Business Day preceding the Funding Date, written notice (or
telephonic notice promptly confirmed in writing) of the proposed Borrowing of
Loans.
1.03 Disbursement of Funds. Subject to the terms and conditions
hereof, no later than 2 p.m. (New York time) on the Funding Date, each Lender
will make available to the Borrower an amount equal to such Lender's Commitment,
by wire transfer to an account designated in writing by the Borrower to the
Lenders in Dollars and immediately available funds.
1.04 Notes.
(a) The Borrower's obligation to pay the principal of, and
interest on, the Loan made to it by each Lender, shall be evidenced by a
promissory note substantially in the form of Exhibit A, with blanks
appropriately completed in conformity herewith (each, a "Note" and,
collectively, the "Notes").
(b) The Note issued to each Lender shall (i) be executed by the
Borrower, (ii) be payable to the order of such Lender or its registered assigns
and be dated the Funding Date, (iii) be in the stated principal amount equal to
the Loan made by such Lender on the Funding Date and be payable in the principal
amount of the Loan evidenced thereby, (iv) mature on the Maturity Date, (v) bear
interest as provided in Section 1.05, (vi) be subject to voluntary repayment and
mandatory
repayment as provided in Section 2.02 and (vii) be entitled to the benefits of
this Agreement and the Subordinated Guaranty.
(c) Each Lender will note on its internal records the amount of
each Loan made or acquired by it and each payment in respect thereof and will,
prior to any transfer of any Note, endorse on the reverse side thereof the
outstanding principal amount of the Loan evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of the
Loans.
1.05 Interest.
(a) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Loan from the date such Loan is made until the maturity
thereof (whether by acceleration or otherwise), at a rate which shall at all
times be equal to 12% per annum.
(b) The principal amount of each Loan and, to the extent permitted
by law, interest in respect of each Loan and any other amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to 14% (or, in the
event the non-payment of any such overdue amounts results from the application
of the blockage restrictions on Subordinated Obligations set forth in Section
9.03,17%) at all times beginning on the date on which an Event of Default occurs
and ending on the date on which such Event of Default is cured and shall be
payable on demand.
(c) Accrued and unpaid interest shall be payable quarterly in
arrears on each Quarterly Payment Date, on any repayment (on the amount repaid),
at maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(d) All computations of interest hereunder shall be made in
accordance with Section 10.07(b).
1.06 Capital Adequacy Regulations. If any Lender shall have
determined that after the date hereof, the adoption or effectiveness of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender or any
corporation 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 other corporation's capital or assets as
a consequence of such Lender's Commitment or Commitments or Loans hereunder or
its obligations hereunder to a level below that which such Lender or such other
corporation could have achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's or such other corporation's
policies with respect to capital adequacy), then from time to time, upon written
demand by such Lender, accompanied by the notice referred to in the last
sentence of this Section 1.06, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such other
corporation for such reduction. In determining such additional amounts, each
Lender will act reasonably and in good faith and will use reasonable averaging
and attribution methods. Each Lender, upon determining that any additional
amounts will be payable pursuant to
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this Section 1.06, will give prompt written notice thereof to the Borrower,
which notice shall set forth in reasonable detail the basis of the calculation
of such additional amounts, although the failure to give any such notice shall
not release or diminish the Borrower's obligations to pay additional amounts
pursuant to this Section 1.06 upon the subsequent receipt of such notice.
SECTION 2. Commitments; Repayment; Prepayments; Payments; Taxes.
2.01 Termination of Commitments; Payment of Loans.
(a) The Total Commitment (and the Commitment of each Lender
hereunder) shall terminate on the Expiration Date unless the Funding Date has
occurred on or before such date.
(b) The unpaid principal amount of the Loans plus all accrued and
unpaid interest thereon and all other amounts owed hereunder with respect
thereto shall be paid in full in cash on the Maturity Date.
2.02 Mandatory and Voluntary Prepayments.
(a) The Borrower may, upon not less than three Business Days' and
not more than five Business Days' prior written notice to the Lenders (which
notice shall be irrevocable), at any time and from time to time, prepay the
Loans in whole or in part, provided, however, that each partial prepayment
pursuant to this Section 2.02(a) shall be in an aggregate principal amount of at
least $100,000 and, if greater, in integral multiples of $100,000. In connection
with any voluntary prepayment, the Borrower shall prepay the Loan at the
prepayment price set forth below (plus all accrued interest):
% of Principal
Prepayment Date During the Period Being Paid
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From the Funding Date to 103%
but not including the first anniversary of the
Funding Date
From the first anniversary of the Funding 102%
Date to but not including the second
anniversary of the Funding Date
From the second anniversary of the Funding 101%
Date to but not including the third anniversary
of the Funding Date
From the third anniversary of the Funding 100%
Date and at any time thereafter
(b) All prepayments (whether voluntary or mandatory) shall include
payment of accrued interest on the principal amount of the Loans so prepaid and
shall be applied to payment of
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accrued interest before application to principal. Any payment of the Loans as a
result of an Event of Default (or the acceleration of the Loans resulting
therefrom) and all mandatory prepayments (including, without limitation,
payments pursuant to Section 2.02(c)) shall be deemed a voluntary prepayment for
the purposes of this Section 2 and shall be paid at the payment price specified
in Section 2.02(a) as if such payment had been voluntary. Except in the event a
given Lender waives any right to payment of the Loans resulting from an Event of
Default or mandatory prepayment payment pursuant to Section 2.02(c) (or waives,
in part, repayment of a portion of its outstanding Loans to which it is
otherwise entitled as a result of an Event of Default or mandatory prepayment of
its outstanding Loans in a lesser principal amount than it is otherwise entitled
to pursuant to Section 2.02(c)), all prepayments which are applied to principal
will be applied on a pro rata basis to all Loans.
(c) The Borrower will apply, or cause its Subsidiaries to apply,
the following amounts first to the permanent reduction of the then outstanding
Senior Debt under the Credit Agreement and any commitments thereunder to make
revolving loans or issue letters of credit (in each case to the extent required
under the terms of the Senior Debt) and next, to the extent not so used to
prepay such Senior Debt in permanent reduction thereof or to permanently reduce
the commitments therefor, to the Obligations in the manner set forth in Section
2.02(b):
(i) on the date of the receipt (whether by contribution or
otherwise) thereof by the Borrower or any Subsidiary of the Borrower, the
Borrower shall repay, in accordance with Section 2.02(b), an amount equal
to (A)100% of the cash proceeds (net of underwriting discounts and
commissions and all other reasonable costs associated with such
transaction) from any sale or issuance after the Effective Date of equity
of the Borrower or any Subsidiary of the Borrower or from any equity
contributions made to the Borrower or any Subsidiary of the Borrower
(excluding equity contributions to any Subsidiary of the Borrower
otherwise permitted hereunder); and (B) 100% of the cash proceeds (net of
underwriting discounts and commissions, loan fees and all other reasonable
costs associated with such transaction) from any incurrence of any
Indebtedness by the Borrower or any Subsidiary of the Borrower (other than
Indebtedness permitted to be incurred pursuant to Section 6.04 as said
Section is in effect on the Effective Date);
(ii) on each date after the Effective Date on which the Borrower or
any Subsidiary of the Borrower receives Net Sale Proceeds from any sale or
other disposition of assets (including capital stock and securities other
than capital stock or securities the proceeds from the sale of which are
recaptured pursuant to Section 2.02(c)(i)(A) or would be recaptured under
Section 2.02(c)(i)(A) but for the exception contained therein), an amount
equal to 100% of such Net Sale Proceeds, but excluding Net Sale Proceeds
of (A) sales of inventory in the ordinary course of business, and (B)
other sales of assets so long as the aggregate amount of Net Sale Proceeds
excluded pursuant to this clause (B) shall not exceed $200,000 in the
aggregate for all such asset sales in any one fiscal year of the Borrower;
and
(iii) on each date after the Effective Date on which the Borrower or
any Subsidiary of the Borrower receives cash proceeds of any Recovery
Event, an amount equal to 100% of such cash proceeds of such Recovery
Event (net of reasonable costs incurred in connection
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with such Recovery Event, including the estimated marginal increase in
income taxes which will be payable as a result of such Recovery Event by
the Borrower or any Subsidiary of the Borrower); provided, however, that,
so long as no Default or Event of Default then exists and (A) such
proceeds are not in excess of $500,000 in the aggregate for all Recovery
Events described in clause (i) of the definition thereof that occur during
one fiscal year of the Borrower and $2,000,000 in the aggregate for all
such Recovery Events that occur during the term of the Agreement, such
proceeds shall not be required to be so repaid on such date to the extent
that the Borrower delivers a certificate to the Lenders on or prior to
such date stating that such proceeds shall be used (or shall be
contractually committed to be used) to replace or restore any properties
or assets in respect of which such proceeds were paid within a period
specified in such certificate not to exceed one hundred eighty (180) days
after the date of receipt of such proceeds (which certificate shall set
forth estimates of the proceeds to be so expended); and (B)(x) if the
amount of such proceeds from any such Recovery Event described in clause
(i) of the definition thereof, when aggregated with the total amount of
all such proceeds from all Recovery Events occurring during the same
fiscal year exceeds $500,000 or during the term of this Agreement exceeds
$2,000,000 (excluding any amounts from any Recovery Events previously
repaid pursuant to this Section 2.02(c)(iii)), the entire amount of
proceeds from such Recovery Event shall be repaid, and (y) if all or any
portion of such proceeds not so repaid pursuant to this Section
2.02(c)(iii) are not so used (or are not so contractually committed to be
used) within the period specified in the relevant certificate furnished
pursuant to the preceding clause (A), such remaining portion shall be
repaid on the last day of such specified period.
2.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
each Lender not later than 12:00 Noon (New York time) on the date when due and
shall be made in Dollars and in immediately available funds at the address
specified opposite such Lender's signature below. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a day which is not
a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal, interest shall be
payable at the applicable rate during such extension.
2.04 Net Payments.
(a) All payments made by the Borrower hereunder or under any Note
will be made without setoff, counterclaim or other defense. Except as provided
in Section 2.04(b), all such payments will be made free and clear of, and
without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax imposed on or
measured by the net income of a Lender pursuant to the laws of the jurisdiction
or any political subdivision or taxing authority thereof or therein in which the
principal office or applicable lending office of such Lender is located) and all
interest, penalties or similar liabilities with respect thereto (collectively,
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be
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necessary so that every payment of all amounts due hereunder or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, then the Borrower shall
be obligated to reimburse each Lender, upon the written request of such Lender,
for taxes imposed on or measured by the net income of such Lender pursuant to
the laws of the jurisdiction or any political subdivision or taxing authority
thereof or therein in which the a principal office or applicable lending office
of such Lender is located as such Lender shall determine are payable by such
Lender in respect of such amounts so paid to or on behalf of such Lender
pursuant to the preceding sentence and in respect of any amounts paid to or on
behalf of such Lender pursuant to this sentence. The Borrower will furnish to
each Lender within 45 days after the date of the payment of any Taxes due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
on or prior to the Effective Date, or in the case of a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to Section
10.04 (unless the respective Lender was already a Lender hereunder immediately
prior to such assignment or transfer), on the date of such assignment or
transfer to such Lender, (i) two accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor forms) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments to be made under this Agreement and under any Note
or (ii) if the Lender is not a "bank" within the meaning of Section 881
(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service Form
4224 or 1001 pursuant to clause (i) above, (x) a certificate substantially in
the form of Exhibit B (any such certificate, a "Section 2.04(b)(ii)
Certificate") and (y) two accurate and complete original signed copies of
Internal Revenue Service Form W-8 (or successor form) certifying to such
Lender's entitlement to a complete exemption from United States withholding tax
with respect to payments of interest to be made under this Agreement and under
any Note. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
2.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower of its inability to deliver any such Form or Certificate, in
which case such Lender shall not be required to deliver any such Form or
Certificate pursuant to this Section 2.04(b). Notwithstanding anything to the
contrary contained in Section 2.04(a), but subject to the immediately
succeeding sentence, (x) the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold income or similar taxes imposed
by the United States (or any political subdivision or taxing authority thereof
or therein) from interest, fees or other amounts payable hereunder for the
account of any Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes
to the extent that such Lender has not provided to the Borrower U.S. Internal
Revenue Service Forms that establish
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a complete exemption from such deduction or withholding and (y) the Borrower
shall not be obligated pursuant to Section 2.04(a) hereof to gross-up payments
to be made to a Lender in respect of income or similar taxes imposed by the
United States if (I) such Lender has not provided to the Borrower the Internal
Revenue Service Forms required to be provided to the Borrower pursuant to this
Section 2.04(b) or (II) in the case of a payment, other than interest, to a
Lender described in clause (ii) above, to the extent that such forms do not
establish a complete exemption from withholding of such taxes. Notwithstanding
anything to the contrary contained in the preceding sentence or elsewhere in
this Section 2.04, the Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner set forth in Section 2.04(a) (without regard
to the identity of the jurisdiction requiring the deduction or withholding) in
respect of any amounts deducted or withheld by it as described in the
immediately preceding sentence as a result of any changes after the Effective
Date in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of income or similar Taxes.
SECTION 3. Conditions Precedent to Loans on the Funding Date. The
obligation of each Lender to make its Loan on the Funding Date is subject to (a)
the condition precedent that the Effective Date shall have occurred and (b) the
satisfaction of the following additional conditions precedent:
3.01 Notes. On the Funding Date, there shall have been delivered to
each Lender the appropriate Note, in each case executed by the Borrower and in
the amount, maturity and as otherwise provided herein.
3.02 Officers' Certificate. On the Funding Date, each Lender shall
have received a certificate, dated the Funding Date, signed by the Chief
Executive Officer, Chief Financial Officer, President or any Vice President of
the Borrower stating that all of the conditions specified in this Section 3 have
been satisfied on such date; provided that such certificate shall not be
required to include a certification as to acceptability of any matters to the
Lenders described in said Sections.
3.03 Opinions of Counsel. On the Funding Date, each Lender shall
have received (i) from White & Case, special counsel to the Borrower and its
Subsidiaries, an opinion addressed to each of the Lenders and dated the Funding
Date covering the matters set forth in Exhibit C and (ii) counsel rendering such
opinions, reliance letters addressed to the Lenders dated the Funding Date with
respect to all legal opinions delivered in connection with the Transaction on
the Funding Date, which legal opinions and reliance letters shall be in form and
substance satisfactory to the Lenders.
3.04 Corporate Documents; Proceedings.
(i) On the Funding Date, each Lender shall have received a
certificate, dated the Funding Date, signed by the Chief Executive
Officer, Chief Financial Officer, President or any Vice President of each
Loan Party and of Newco, and attested to by the Secretary or any Assistant
Secretary of such Loan Party or Newco, as the case may be, in the form of
Exhibit D with appropriate insertions, together with copies of the
certificate of formation, certificate of limited partnership, partnership
agreement, operating agreement, certificate of incorporation and by-laws
(or other equivalent organizational documents) of such Loan Party
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or Newco, as the case may be and the resolutions of such Loan Party or
Newco, as the case may be or its general partner or manager or other
authorizing body referred to in such certificate, and the foregoing shall
be acceptable to the Lenders in their sole discretion.
(ii) All corporate, partnership, limited liability company and
legal proceedings and all instruments and agreements relating to the
transactions contemplated by this Agreement, the other Loan Documents and
the other Documents shall be satisfactory in form and substance to the
Lenders, and each Lender shall have received all information and copies of
all documents and papers, including records of corporate, limited
liability company or partnership proceedings, governmental approvals, good
standing certificates and bring-down telegrams, if any, which such Lender
may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
3.05 Subordinated Guaranty. On the Funding Date, each Subsidiary of
the Borrower, shall have duly authorized, executed and delivered a Subordinated
Guaranty in the form of Exhibit E (as amended, modified or supplemented from
time to time in accordance with the terms hereof and thereof, the "Subordinated
Guaranty"), and the Subordinated Guaranty shall be in full force and effect.
3.06 Consummation of the Recapitalization; Corporate Structure.
(a) On or prior to the Funding Date, there shall have been
delivered to the Lenders true and correct copies of all Recapitalization
Documents, and all terms and provisions of such Recapitalization Documents shall
be in form and substance reasonably satisfactory to the Lenders. The
Recapitalization, including all of the terms and conditions thereof, shall have
been duly approved by the board of directors and (if required by applicable law)
the shareholders of the parties thereto, and all Recapitalization Documents
shall have been duly executed and delivered by the parties thereto and shall be
in full force and effect. The representations and warranties set forth in the
Recapitalization Documents shall be true and correct in all material respects as
if made on and as of the Funding Date unless stated to relate to a specific
date, in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date. Each of the conditions
precedent to the obligations of Newco, the Borrower and the Continuing
Stockholders to consummate the Recapitalization as set forth in the applicable
Recapitalization Documents shall have been satisfied to the reasonable
satisfaction of the Lenders or waived with (in the case of any condition deemed
material by PCF in its reasonable discretion) the consent of the Lenders and the
Recapitalization shall have been consummated in accordance with all applicable
law and (except to the extent waived as aforesaid) the Recapitalization
Documents, and the consideration payable in connection therewith shall not
exceed the Merger Consideration.
(b) On the Funding Date, after giving effect to the Transaction,
the ownership and capital structure of Holdings and its Subsidiaries (including,
without limitation, the terms of any capital stock, options, warrants or other
securities issued or to be issued by Holdings or any of its Subsidiaries), and
the management of Holdings and its Subsidiaries, shall be in form and substance
reasonably satisfactory to the Lenders.
-8-
3.07 Credit Documents. On or prior to the Funding Date, there shall
have been delivered to the Lenders true and complete copies of the Credit
Documents, the PNA Warrant Documents and all schedules, annexes and exhibits
thereto (certified as such by an appropriate officer of the Borrower), and all
of the foregoing shall be in form and substance satisfactory to the Lenders. All
conditions precedent to the making of the initial loans thereunder shall have
been satisfied, and all representations and warranties set forth in the Credit
Documents shall be true and complete in all material respects as if made on and
as of the Funding Date.
3.08 Litigation. On the Funding Date, no litigation by any entity
(private or governmental) shall be pending or threatened with respect to this
Agreement, any other Document or any documentation executed in connection
herewith or with respect to the Transaction, or which any Lender shall determine
could reasonably be expected to have an adverse effect on the Transaction or a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole (after giving
effect to the Transaction).
3.09 Fees, Etc.
(a) On the Funding Date, the Borrower shall have paid to each
Lender a financing fee equal to 2.375% of the Commitment of such Lender as in
effect on the Funding Date (immediately prior to the incurrence of Loans on such
date).
(b) On the Funding Date, the Borrower shall have paid in full to
each Lender all costs, fees and expenses (including, without limitation, all
legal fees and expenses) payable to such Lender to the extent then due pursuant
hereto or as otherwise agreed between the Borrower and such Lender.
3.10 Approvals. All necessary governmental and third party
approvals in connection with the Transaction and the transactions contemplated
by the Documents and otherwise referred to herein or therein (including, but not
limited to those approvals required in respect of existing permits, landlord
consents and transfers of contract rights) shall have been obtained and remain
in effect and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes, in the sole judgment of a Lender, adverse conditions upon the
consummation of the Transaction or the other transactions contemplated by the
Documents and otherwise referred to herein or therein. There shall not exist any
judgment, order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified prohibiting or
imposing materially adverse conditions upon the consummation of the Transaction,
the transactions contemplated by the Documents, or the making of the Loans.
3.11 Financial Statements; Projections; Pro Forma; Management
Letter Reports; Background Investigation Reports.
On or prior to the Funding Date, the Lenders shall have
received (i) the consolidated balance sheets of the Borrower at March 31,1997
and March 31,1998 and the related
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consolidated statements of income and cash flows and changes in shareholders'
equity of the Borrower for the fiscal years ended as of said dates, (ii) the
unaudited consolidated balance sheet of the Borrower for the eleven-month period
ended February 28, 1999 and the related consolidated statements of income and
cash flows and changes in shareholders' equity of the Borrower for such period
ended as of such date and (iii) either (A) consolidated balance sheets of the
Borrower and its Subsidiaries as at March 31, 1999, and the related consolidated
statements of income and retained earnings and cash flows of the Borrower and
its Subsidiaries for the fiscal period ended as of such date, or (B) copies of
the report prepared by PricewaterhouseCoopers LLP for HIG with respect to the
Borrower and its Subsidiaries; all of which financial statements referenced in
clauses (i), (ii) and (iii)(A) above shall be prepared in accordance with
generally accepted accounting principles consistently applied and which
financial statements (other than the statements referred to in clause (ii)) have
been audited by Ernst & Young, who delivered an unqualified opinion with respect
thereto, and shall (x) be in form and substance satisfactory to the Lenders, (y)
not disclose any material adverse differences in the business, properties,
assets, liabilities, results of operations, condition (financial or otherwise)
or prospects of the Borrower and its Subsidiaries taken as a whole, from that
previously disclosed to the Lenders and (z) be in reasonable detail and
certified by the Chief Financial Officer of the Borrower that they fairly
present the financial condition of the Borrower and its Subsidiaries taken as a
whole, at the dates indicated and the results of operations and their cash flows
for the periods indicated.
(a) On or prior to the Funding Date, the Lenders shall have
received detailed consolidated financial projections for the Borrower and its
Subsidiaries, certified by the Chief Financial Officer of the Borrower, which
include the projected results of the Borrower, after giving effect to the
Transaction and the other transactions contemplated herein, for the period
commencing on the Funding Date and ending on the fifth anniversary of the
Funding Date (the "Projections"), which Projections, and the supporting
assumptions and explanations thereto, and the accounting practices and
procedures to be utilized by the Borrower following the Funding Date, shall be
satisfactory in form and substance to the Lenders and shall be as set forth on
Schedule VIII hereto.
(b) On the Funding Date, the Lenders shall have received a pro
forma consolidated balance sheet, dated the Funding Date, of the Borrower and
its Subsidiaries (after giving effect to the Transactions and the related
financing thereof) which pro forma balance sheet shall be prepared in accordance
with generally accepted accounting principles consistently applied and in form,
scope and substance satisfactory to the Lenders, which shall not disclose any
material adverse differences in the business, properties, assets, liabilities,
results of operations, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole from that previously disclosed to
the Lenders.
(c) On or prior to the Funding Date, the Lenders shall have
received a copy of any "management letter" received by the Borrower or any of
its Subsidiaries from its certified public accountants during the three-year
period prior to the Funding Date.
(d) No later than one week prior to the Funding Date, the Lenders
shall have received and shall be satisfied with a copy of a background check on
certain key members of
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management of the Borrower and its Subsidiaries specified by the Senior Agent to
HIG prior to the Funding Date, prepared by a firm satisfactory to PCF.
3.12 Existing Indebtedness. On the Funding Date and after giving
effect to the Loans incurred on the Funding Date, the Recapitalization and the
other transactions contemplated hereby, none of the Borrower or any of its
Subsidiaries shall have any Indebtedness or preferred stock or interests
outstanding except for the Loans, the Senior Debt and the Existing Indebtedness.
3.13 Material Adverse Change, Etc. Since March 31, 1998, nothing
shall have occurred (and none of the Lenders shall have become aware of any
facts or conditions not previously known) which the Required Lenders shall
determine (i) could reasonably be expected to have a material adverse effect on
the rights or remedies of the Lenders or on the ability of any Loan Party to
perform its obligations to the Lenders under this Agreement or any other Loan
Document, (ii) could reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of any Loan Party
and its Subsidiaries taken as a whole (after giving effect to the Transaction)
or (iii) reasonably indicates the inaccuracy in any material respect of the
information previously provided to any Lender in connection with its analysis of
the transactions contemplated hereby or reasonably indicates that the
information previously provided omitted to disclose any material information
necessary to make the statements contained therein not misleading.
3.14 Employee Benefit Plans; Securityholders' Agreements;
Management Agreements; Employment Agreements; Collective Bargaining Agreements;
Debt Agreements; Affiliate Contracts; Tax Sharing Agreements and Material
Contracts. On or prior to the Funding Date, there shall have been delivered to
each Lender true and correct copies, certified as true and complete by an
appropriate officer of the Borrower of:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of the
most recent such report (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting
statements, certifications, schedules and information), and for each such
Plan that is a "single-employer plan," as defined in Section 4001(a)(15)
of ERISA, the most recently prepared actuarial valuation therefor) and any
other "employee benefit plans," as defined in Section 3(3) of ERISA, and
any other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Borrower or any of its
Subsidiaries or any ERISA Affiliate (provided that the foregoing shall
apply in the case of any multiemployer plan, as defined in 4001(a)(3) of
ERISA, only to the extent that any document described therein is in the
possession of the Borrower or any Subsidiary of the Borrower or any ERISA
Affiliate or reasonably available thereto from the sponsor or trustee of
any such plan) (collectively, the "Employee Benefit Plans");
(ii) all agreements entered into by any Loan Party or any
agreements among the partners or other equityholders of any such Person,
governing the terms and relative rights of its partnership interests,
member interests, capital stock and any agreements entered into by
partners, members or shareholders relating to any such entity with respect
to their
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partnership interests, member interests, capital stock (collectively, the
"Securityholders' Agreements");
(iii) all agreements with members of, or with respect to the,
management of any Loan Party other than Employment Agreements
(collectively, "Management Agreements");
(iv) any employment agreements entered into by any Loan Party with
any officer or director (collectively, the "Employment Agreements");
(v) all collective bargaining agreements applying or relating to
any employee of any Loan Party (collectively, the "Collective Bargaining
Agreements");
(vi) all agreements evidencing or relating to Indebtedness of each
Loan Party whether or not such agreement is to remain outstanding after
giving effect to the incurrence of Loans on the Funding Date
(collectively, the "Debt Agreements");
(vii) all tax sharing, tax allocation and other similar agreements
entered into by any Loan Party (collectively, the "Tax Sharing
Agreements");
(viii) all contracts, agreements or understandings entered into
between any Loan Party on the one hand, and any of its Affiliates, on the
other hand (collectively, the "Affiliate Contracts"); and
(ix) all material contracts and licenses of each Loan Party that
are to remain in effect after giving effect to the consummation of the
Transaction (collectively, the "Material Contracts");
all of which Employee Benefit Plans, Securityholders' Agreements, Management
Agreements, Employment Agreements, Collective Bargaining Agreements, Debt
Agreements, Tax Sharing Agreements, Affiliate Contracts and Material Contracts
shall be in form and substance satisfactory to the Required Lenders and shall be
in full force and effect on the Funding Date.
3.15 Solvency Certificate; Insurance Analyses; Etc. On the
Funding Date, the Borrower shall cause to be delivered to each of the Lenders
(i) a solvency certificate, in the form of Exhibit F, from the chief financial
officer of the Borrower addressed to each of the Lenders and dated the Funding
Date and in form and substance satisfactory to the Lenders, setting forth the
conclusion that, after giving effect to the Transaction and the incurrence of
all financings contemplated hereby, each Loan Party and all Loan Parties taken
as a whole are not insolvent and will not be rendered insolvent by the
Indebtedness incurred in connection with the Transaction, will not be left with
unreasonably small capital with which to engage in their respective businesses
and will not have incurred debts beyond their ability to pay such debts as they
mature and become due and (ii) evidence of insurance complying with the
requirements of Section 5.03, in scope, form and substance satisfactory to the
Lenders.
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3.16 No Default; Representations and Warranties. At the time of the
incurrence of the Loans and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Loan Documents shall be true and complete with
the same effect as though such representations and warranties had been made on
the Funding Date, except to the extent that such representations and warranties
expressly relate to an earlier date.
3.17 Warrants. On the Funding Date, each Lender shall have received
the Warrants to be received by such Lender and the other Warrant Documents, in
each case duly executed by the parties thereto pursuant to the Warrant
Documents.
3.18 Refinancing.
(a) The Lenders shall be satisfied with the amount of and the
terms and conditions of the repayment of, and termination of all commitments and
documentation relating to, all Indebtedness repaid by the Borrower or its
Subsidiaries, in connection with the transactions contemplated hereby
(collectively, the "Refinanced Indebtedness") and the amount of all accrued
interest, premiums, fees, commissions and expenses owing in connection with the
repayment of such Refinanced Indebtedness. In no event shall the aggregate
amount paid pursuant to the preceding sentence exceed $50,000. All Liens arising
in connection with such Refinanced Indebtedness shall have been terminated (and
all appropriate releases, termination statements or other instruments of
assignment with respect thereto shall have been obtained), in each case to the
satisfaction of the Lenders.
(b) The Lenders shall have received copies, certified as true and
complete by an appropriate officer of the Borrower, of all documents executed in
connection with the repayment and termination of the Refinanced Indebtedness and
the release of the Liens thereunder (the "Debt Termination Documents") all of
which shall be in form and substance satisfactory to the Lenders.
3.19 Funding.
(a) On or prior to the Funding Date, (i) Holdings shall have
received an aggregate of at least $6 million in cash equity contributions from
the HIG Funds and the other shareholders of Holdings reasonably acceptable to
the Lenders and in such proportions as are reasonably acceptable to the Lenders,
(ii) Holdings shall have contributed the full amount of such cash equity
contributions to Newco pursuant to the terms of the Contribution Agreement,
(iii) the Continuing Stockholders shall have contributed 2,165,978 shares of
Common Stock to Newco pursuant to the Contribution Agreement, and (iv) following
the consummation of the Merger, the Borrower shall have utilized the full amount
of the cash equity contribution referred to in clause (ii) to make payments
owing in connection with the Transaction prior to or concurrently with the
utilization of any proceeds of the Loans for such purposes.
(b) On or prior to the Funding Date, (i) the Borrower shall have
received $19,500,000 in cash proceeds from the incurrence of loans under the
Credit Agreement and (ii) the Borrower shall have utilized the full amount of
such cash proceeds to make payments owing in
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connection with the Transaction prior to or concurrently with the utilization of
any proceeds of the Loans for such purposes.
(c) On or prior to the Funding Date, there shall have been
delivered to the Lenders true and correct copies of all Equity Financing
Documents and all of the terms and conditions of such Equity Financing Documents
(including, without limitation, with respect to the terms of the distributions,
voting and redemption rights) shall be in form and substance satisfactory to the
Required Lenders.
3.20 Borrower's Certificate of Incorporation. On the Funding Date,
there shall have been delivered to the Lenders copies of the Amended and
Restated Certificate of Incorporation of Borrower, certified as true and
complete by the President of Borrower and which shall be in the form attached
hereto as Exhibit G, and all the terms and provisions of which shall be in form
and substance satisfactory to the Lenders and shall be in full force and effect.
3.21 Consent Letter. The Lenders shall have received a letter from
CT Corporation System, presently located at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, indicating its consent to its appointment by the Borrower and its
Subsidiaries as their agent to receive service of process as specified in
Section 10.08 of this Agreement and Section 23 of the Subordinated Guaranty.
3.22 Borrowing Base Certificate. On the Funding Date, the Borrower
shall have delivered to the Lenders its initial borrowing base certificate under
the Credit Agreement.
SECTION 4. Representations, Warranties and Agreements. In order to
induce the Lenders to enter into this Agreement and to make the Loans, the
Borrower makes the following representations, warranties and agreements as to
itself and its Subsidiaries on and as of the Funding Date (both before and after
giving effect to the Loans and to the Transaction), all of which
representations, warranties and agreements shall survive the execution and
delivery of this Agreement and the other Loan Documents:
4.01 Status. Each Loan Party and its Subsidiaries (i) is a duly
organized or formed and validly existing corporation (or a limited liability
company or partnership, as applicable) in good standing under the laws of the
jurisdiction of its organization, (ii) has the power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where the ownership,
leasing or operation of property or the conduct of its business requires such
qualifications except for failures to be so qualified which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole.
4.02 Power and Authority. Each Loan Party and its Subsidiaries has
the power to execute, deliver and perform the terms and provisions of each of
the Documents to which it is party and has taken all necessary corporate action
(or limited liability company or partnership action if applicable) to authorize
the execution, delivery and performance by it of each of such Documents.
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Each Loan Party and its Subsidiaries has duly executed and delivered each of the
Documents to which it is party, and each of such Documents constitutes its
legal, valid and binding obligation enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by general equitable principles (regardless of whether the
issue of enforceability is considered in a proceeding in equity or at law).
4.03 No Violation. Neither the execution, delivery or performance
by any Loan Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any order, writ, injunction or
decree of any court or governmental instrumentality applicable to it, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Credit Documents) upon any of the property or assets of any Loan Party or
its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which any of them are a party or by which any of their
property or assets is bound or to which any of them may be subject or (iii) will
violate any provision of the partnership agreement, operating agreement,
certificate of incorporation or by-laws (or similar organizational documents) of
any Loan Party or its Subsidiaries.
4.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Funding Date and are in
full force and effect), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with, (i) the execution, delivery and performance of any Document,
(ii) the legality, validity, binding effect or enforceability of any such
Document or (iii) the Transaction.
4.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; Etc.
(a)(i) The financial statements of the Borrower and its Subsidiaries
delivered pursuant to Section 3.11, which in the case of the consolidated
financial statements for the years ended March 31, 1997, 1998 and if delivered,
1999 have been examined or reviewed by the accountants referred to therein, who
delivered unqualified opinions in respect thereto and (ii) the pro forma (after
giving effect to the Transaction and the related financing thereof) consolidated
balance sheet of the Borrower as at the Funding Date, copies of all of which
financial statements referred to in the preceding clauses (i) and (ii) have
heretofore been furnished to each Lender, present fairly the financial position
of the respective entities at the dates of said statements and the results of
operations for the period covered thereby (or, in the case of the pro forma
balance sheet, present a good faith estimate of the pro forma financial
condition of the Borrower and its Subsidiaries (after giving effect to the
Transaction) on a consolidated basis at the date thereof). All such financial
statements have been prepared in accordance with generally accepted accounting
principles and practices consistently applied except with respect to the
eleven-month interim financial statements which are subject to normal and
recurring year-end audit adjustments (which shall not be material)
-15-
and the absence of footnotes. Since March 31,1998, there has been no material
adverse change in the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
(b) On and as of the Funding Date, on a pro forma basis after
giving effect to the Transaction and all other transactions contemplated by the
Documents and to all Indebtedness (including, without limitation, the Loans)
being incurred in connection with the Transaction, and Liens created, and to be
created, by each Loan Party in connection therewith: (a) the sum of the assets
(including all contribution and subrogation rights and other intangible assets),
at a fair valuation, of each Loan Party will exceed its debts; (b) no Loan Party
has incurred or intends to, or believes that it will, incur debts beyond its
ability to pay such debts as such debts mature; and (c) each Loan Party will
have sufficient capital with which to conduct its business. For purposes of this
Section 4.05(b) "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, subordinated, disputed,
undisputed, secured or unsecured.
(c) Except as fully reflected in the financial statements and the
notes related thereto described in Section 4.05(a), there were as of the Funding
Date (and after giving effect to the Transaction and the other transactions
contemplated hereby and by the Documents) no liabilities or obligations with
respect to any Loan Party of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
the aggregate, could reasonably be expected to be material to any Loan Party and
its Subsidiaries taken as a whole. As of the Funding Date, no Loan Party knows
of any basis for the assertion against any Loan Party of any liability or
obligation of any nature whatsoever that is not fully reflected in the financial
statements and the notes related thereto described in Section 4.05(a) which,
either individually or in the aggregate, could reasonably be expected to be
material to any Loan Party and its Subsidiaries taken as a whole. As of the
Funding Date (and after giving effect to the Transaction), no Loan Party will
have any outstanding Indebtedness or preferred stock or other preferred equity
interests other than (i) the Loans (ii) the Senior Debt and (iii) the Existing
Indebtedness.
(d) On and as of the Funding Date, the Projections have been
prepared in good faith by the Borrower with the participation of management of
the Borrower and have been prepared on a basis consistent with the pro forma
financial statements referred to in Section 4.05(a) and there are no statements
or conclusions in any of the Projections which are based upon or include
information known to any Loan Party to be misleading or which fail to take into
account material information regarding the matters reported therein. On the
Funding Date, the Borrower believes that the Projections were reasonable and
attainable (it being recognized by the Lenders that projections as to future
events are not to be viewed as facts and actual results during the periods
covered by the Projections probably will differ from the projected results and
that those differences may be material, and no representation is made that the
Projections will in fact be attained).
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4.06 Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of the Borrower, threatened (i) with respect to any
Document or the transactions contemplated thereby, or (ii) that are likely to
materially and adversely affect the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of any Loan Party and its Subsidiaries taken as a whole.
4.07 True and Complete Disclosure. All factual information (taken
as a whole, it being understood that the Projections shall not be deemed to be
factual information) heretofore or contemporaneously furnished by or on behalf
of any of the Loan Parties or their Subsidiaries in writing to any Lender
(including, without limitation, all information contained in the Documents) for
purposes of or in connection with this Agreement, the other Loan Documents or
any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of any of the
Loan Parties and their Subsidiaries in writing to any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact.
There is no fact known to the Borrower which is reasonably likely to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of any Loan Party and its Subsidiaries taken as a whole, which has not
been disclosed herein or in the other Loan Documents or such other documents,
certificates and statements furnished to the Lenders for use in connection with
the transactions contemplated hereby.
4.08 Use of Proceeds; Margin Regulations.
(a) All proceeds of the Loans shall be used by the Borrower (i) to
repay the Refinanced Indebtedness, (ii) to finance, in part, the
Recapitalization Consideration, (iii) to pay Transaction Fees and Expenses and
(iv) for other working capital and general corporate purposes.
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
4.09 Tax Returns and Payments. Each of the Loan Parties and each of
their Subsidiaries has filed or caused to be timely filed with the appropriate
taxing authority, all returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income, properties or
operations of such Loan Party or such Subsidiary. The Returns accurately reflect
all liability for taxes of such Loan Party or such Subsidiary as a whole for the
periods covered thereby. Each of the Loan Parties and each of their Subsidiaries
has paid all taxes payable by it which have become due other than those
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. There is no material
action, suit, proceeding, investigation, audit, or claim now pending or, to the
best knowledge of any of the Loan Parties and each of their Subsidiaries,
threatened by any authority regarding any taxes relating to any Loan Party or
any of its Subsidiaries. As of the Funding Date, none of the Loan Parties or
their Subsidiaries has entered into an agreement or waiver or has been
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requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of any of the Loan
Parties or their Subsidiaries, or is aware of any circumstances that would cause
the taxable years or other taxable periods of any of the Loan Parties or their
Subsidiaries not to be subject to the normally applicable statute of
limitations. None of the Loan Parties or their Subsidiaries has provided, with
respect to themselves or property held by them, any consent under Section 341 of
the Code. None of the Loan Parties or their Subsidiaries has incurred, or will
incur, any material tax liability in connection with the Transaction or any
other transactions contemplated hereby.
4.10 Compliance with ERISA. Schedule IX sets forth each Plan; each
Plan (and each related trust, insurance contract or fund) is in substantial
compliance with its terms and with all applicable laws, including, without
limitation, ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code; no
Reportable Event has occurred; no Plan which is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA) is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan which is subject to Section 412 of the
Code or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; all contributions required to be made with respect to a Plan have been
timely made; neither any Loan Party nor any Subsidiary of a Loan Party nor any
ERISA Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, 502(i), 502(1), 515 or 4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or Section 401(a)(29), 4971 or Section 4975 of the Code or expects to
incur any such liability under any of the foregoing sections with respect to any
Plan; no condition exists which presents a material risk to any Loan Party or
any Subsidiary of a Loan Party or any ERISA Affiliate of incurring a liability
to or on account of a Plan pursuant to the foregoing provisions of ERISA and the
Code; no proceedings have been instituted to terminate or appoint a trustee to
administer any Plan which is subject to Title IV of ERISA; no action, suit,
proceeding, hearing, audit or investigation with respect to the administration,
operation or the investment of assets of any Plan (other than routine claims for
benefits) is pending, expected or threatened; using actuarial assumptions and
computation methods consistent with Part 1 of subtitle E of Title IV of ERISA,
the aggregate liabilities of the Loan Parties and their ERISA Affiliates to all
plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date hereof, would not
exceed $50,000; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or former
employees of any Loan Party, any Subsidiary of a Loan Party or any ERISA
Affiliate has at all times been operated in compliance with the provisions of
Part 6 of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien
imposed under the Code or ERISA on the assets of any Loan Party or any
Subsidiary of a Loan Party or any ERISA Affiliate exists or is likely to arise
on account of any Plan; and the General Partner, the Borrower and its
Subsidiaries may cease contributions to or terminate any employee benefit plan
maintained by any of them without incurring any material liability.
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4.11 Representations and Warranties in Documents. All
representations and warranties set forth in the Documents and their
corresponding annexes, exhibits and schedules are true in all material respects
at the time as of which such representations and warranties were made and on the
Funding Date.
4.12 Properties. Each of the Borrower and each of its Subsidiaries
has good and merchantable title to all material properties owned by them,
including all property reflected in the consolidated pro forma balance sheet
(after giving effect to the Transaction) referred to in Section 4.05(a) (except
as sold or otherwise disposed of since the date of such balance sheet in the
ordinary course of business or as permitted by Section 6.02), free and clear of
all Liens, other than (i) as referred to in such consolidated pro forma balance
sheet or in the notes thereto or (ii) Liens otherwise permitted by Section 6.01.
Schedule V contains a true and complete list of each parcel of Real Property
owned or leased by the Borrower or any of its Subsidiaries on the Funding Date
and the type of interest therein held by the Borrower or such Subsidiary.
4.13 Capitalization. On the Funding Date, after giving effect to
the Transaction, the attached Schedule VII accurately sets forth the following
information with respect to each Loan Party's capitalization: (1) the authorized
partnership interests, capital stock, shares or membership interests of such
Loan Party, (2) the number of units of each class of partnership interests,
capital stock, shares or membership interests issued and outstanding in each
case (i) as of the Funding Date and (ii) assuming exercise of the Warrants, (3)
the number of units of each class of partnership interests, capital stock,
shares or membership interests reserved for issuance upon exercise of options,
warrants (including the Warrants) or convertible securities, (4) the name of
each holder of partnership interests, capital stock, shares or membership
interests and the number of units and percentage interest owned by each such
holder and (5) with respect to all outstanding options and rights to acquire
such Loan Party's equity interests: the holder, the number of units or other
interests covered, the exercise price and the expiration date. No Loan Party has
violated any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its equity interests (including the Warrants)
or the Notes, and the offer, sale and issuance of the Notes or the Warrants or
the issuance of Common Stock upon the exercise of the Warrants or conversion of
one class of Common Stock to another do not require registration under the
Securities Act or any applicable state securities laws. There are no agreements
between any Loan Party's equityholders with respect to the voting or transfer of
the equity interests of such Loan Party or with respect to any other aspect of
such Loan Party's affairs, except for the Equityholders Agreement and the
Certificate of Incorporation of the Borrower. All of the outstanding equity
interests of each Loan Party have been duly and validly issued, are fully paid
and nonassessable and except as set forth on Schedule VII and as provided for in
the Warrant Documents and the Stockholders Agreement, there are no
subscriptions, options, warrants, rights, puts, calls, commitments, conversion
rights, profit participation rights, equity appreciation rights, phantom equity
plans, rights of exchange, preemptive rights (statutory or contractual), rights
of first refusal, rights of first offer, registration rights, plans or other
agreements of any character providing for the purchase, issuance or sale of any
equity interest of any Loan Party.
4.14 Subsidiaries. On the Funding Date, the corporations, limited
liability companies and partnerships listed on Schedule III are the only
Subsidiaries of the Borrower.
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Schedule III correctly sets forth, as of the Funding Date, the percentage
ownership (direct and indirect) of the Borrower in each class of capital stock
(or other equity interests) of such Subsidiaries and also identifies the direct
owner thereof.
4.15 Compliance with Statutes, Etc. Each of the Loan Parties and
each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except with respect to each of the foregoing such noncompliance as
could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Loan Party and its Subsidiaries taken as a whole.
4.16 Investment Company Act. None of the Loan Parties is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.17 Public Utility Holding Company Act. None of the Loan Parties
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,
as amended.
4.18 Environmental Matters.
(a) Each of the Loan Parties and each of its Subsidiaries is in
compliance with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws except for such noncompliances
which, in the aggregate, could not reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Loan Party and its Subsidiaries taken as a whole. There are no
past, pending or, to the best knowledge of any Loan Party, threatened material
Environmental Claims against any Loan Party or any of its Subsidiaries. There
are no pending or, to the knowledge of any Loan Party threatened material
Environmental Claims against any Real Property currently owned or operated by
any Loan Party or any of its Subsidiaries. There are no past Environmental
Claims against any Real Property currently owned or operated by any Loan Party
or any of its Subsidiaries which could reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Loan Party and its Subsidiaries taken as a whole. There are no
facts, circumstances, conditions or occurrences concerning the business or
operations of any Loan Party or any of its Subsidiaries or any Real Property
owned or operated at any time by any Loan Party or any of its Subsidiaries or,
to the knowledge of any Loan Party, any property adjoining any such Real
Property that could reasonably be expected (i) to form the basis of an
Environmental Claim against any Loan Party or any of its Subsidiaries or any
Real Property owned or operated by any Loan Party or any of its Subsidiaries or
(ii) to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use
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or transferability of such Real Property under any Environmental Law except such
Environmental Claims and restrictions which individually or in the aggregate
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole.
(b) No Loan Party nor any of its Subsidiaries has, at any time,
generated, used, treated, stored, transported or released Hazardous Materials
on, to or from any Real Property at any time owned, leased or operated by such
Loan Party or any of its Subsidiaries, except for such Hazardous Material of a
type and in a quantity used in the normal course of business of such Loan Party
or its Subsidiaries, which Hazardous Material is being held, used, stored and
disposed of in material compliance with applicable Environmental Laws.
(c) There are not now and never have been any underground storage
tanks located on any Real Property owned or operated by any Loan Party or any of
its Subsidiaries.
(d) No Real Property at any time owned or at any time operated by
any Loan Party or any of its Subsidiaries is located on any site listed on, or
proposed in the Federal Register for listing on, the Superfund National
Priorities List, or listed on the Comprehensive Environmental Response
Compensation and Liability Information System or their state equivalents.
4.19 Labor Relations. No Loan Party nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
material adverse effect on such Loan Party and its Subsidiaries taken as a
whole. There is (i) no significant unfair labor practice complaint pending
against any Loan Party or any of its Subsidiaries or, to the best knowledge of
any Loan Party, threatened against any of them, before the National Labor
Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against such Loan Party or any of its Subsidiaries or, to the best
knowledge of any Loan Party, threatened against any of them and (ii) no
significant strike, labor dispute, slowdown or stoppage pending against any Loan
Party or any of its Subsidiaries or, to the best knowledge of any Loan Party,
threatened against any Loan Party or any of its Subsidiaries.
4.20 Patents, Licenses, Franchises and Formulas.
(a) Each Loan Party, together with its Subsidiaries, has a license
to use or otherwise has the right to use, free and clear of Liens, all the
material patents, patent applications, trademarks, service marks, trade names,
trade secrets, copyrights, proprietary information, computer programs, data
bases, licenses, franchises and formulas, or rights with respect to the
foregoing (collectively, "Intellectual Property"), and has obtained all licenses
and other rights of whatever nature, necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, could reasonably be expected to
have a material adverse effect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of any Loan Party and its Subsidiaries taken as a whole.
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(b) Each Loan Party, together with its Subsidiaries has the right
to practice under and use all of its Intellectual Property.
(c) No Loan Party or any of its Subsidiaries has knowledge of any
claim by any third party contesting the validity, enforceability, use or
ownership of the Intellectual Property, or of any existing state of facts that
would support a claim that use by any Loan Party or any of its Subsidiaries of
any such Intellectual Property has infringed or otherwise violated any
Intellectual Property right of any other Person and that to the best knowledge
of each Loan Party and its Subsidiaries no claim is threatened except for such
claims that could not individually or in the aggregate reasonably be expected to
have a material adverse affect on the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of any Loan Party and its Subsidiaries taken as a whole.
4.21 Existing Indebtedness. Schedule X sets forth a true and
complete list of all Indebtedness (other than the Loans and loans under the
Credit Agreement) and preferred stock of the Borrower and each of its
Subsidiaries as of the Funding Date after giving effect to the Transaction and
the other transactions contemplated hereby (the "Existing Indebtedness"), in
each case showing the aggregate amount thereof and the name of the respective
obligor and any other entity which directly or indirectly guaranteed such debt.
None of the Existing Indebtedness was incurred in connection with, or in
contemplation of, the Transaction or the other transactions contemplated hereby.
4.22 Restrictions on or Relating to Subsidiaries. There does not
exist any encumbrance or restriction on the ability of (i) any Loan Party or any
Subsidiary thereof to pay dividends or make any other distributions on its
capital stock, partnership interests or any other interest or participation in
its profits, or to pay any Indebtedness, (ii) any Loan Party or any Subsidiary
thereof to make loans or advances to another Loan Party or any Subsidiary
thereof or (iii) any Loan Party or any Subsidiary thereof to transfer any of its
properties or assets to another Loan Party or any Subsidiary thereof, except for
such encumbrances or restrictions existing under or by reason of (x) applicable
law, (y) this Agreement, the other Loan Documents and the Credit Documents and
(z) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of any Loan Party or any Subsidiary thereof.
4.23 The Transaction. All aspects of the Transaction have been
effected in accordance with the Documents and all applicable law. At the time of
consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities and all third parties required in
order to consummate the Transaction shall have been obtained, given, filed or
taken and are in full force and effect (or effective judicial relief with
respect thereto has been obtained). All applicable waiting periods with respect
thereto have or, prior to the time when required, will have, expired without, in
all such cases, any action being taken by any competent authority which
restrains, prevents or imposes adverse conditions upon the consummation of the
Transaction. Additionally, at the time of consummation thereof, there does not
exist any judgment, order or injunction prohibiting or imposing adverse
conditions upon the consummation of the Transaction, and there does not exist
any judgment, order or injunction prohibiting or imposing any adverse condition
upon the Loans or the
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performance by any of the Loan Parties or their Subsidiaries of their
obligations under the Documents.
4.24 Material Contracts. All Material Contracts of the Borrower and
its Subsidiaries in effect on the Funding Date are listed on Schedule VI hereto.
As of the Funding Date, no Loan Party nor any of its Subsidiaries is in, nor has
any Loan Party or any of its Subsidiaries received any notices alleging any,
breach or default by any Loan Party or any of its Subsidiaries under any
Material Contract.
4.25 Year 2000 Reprogramming. Any reprogramming required to permit
the proper functioning, in and following the year 2000, of the Borrower's or any
of its Subsidiaries' (i) computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with which the
Borrower's systems interface) and the testing of all such systems and equipment,
as so reprogrammed, shall be completed by September 30,1999. The costs to the
Borrower of such reprogramming and testing and of the reasonably foreseeable
consequences of year 2000 (including, without limitation, reprogramming errors
and the failure of others' systems or equipment) could not reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
Except for such of the reprogramming referred to in the preceding sentence as
may be necessary, the computer and management information systems of the
Borrower and its Subsidiaries are, and with ordinary course upgrading and
maintenance will continue to be for the term of this Agreement, sufficient to
permit the Borrower and its Subsidiaries to conduct its business without such
conduct resulting in a material adverse effect on the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
4.26 Special Purpose Corporation. Newco was formed solely to enter
into the Recapitalization Documents and effect the Recapitalization, and except
in connection therewith, as at the Funding Date has no assets or liabilities and
has engaged in no other business activities.
4.27 Offer of Notes and Warrants. Neither the Borrower nor any
Person acting on its behalf has directly or indirectly offered the Notes or the
Warrants or any part thereof or any similar securities for sale to, or solicited
any offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than the Lenders and not more than five
other institutional investors. Neither the Borrower nor any Person acting on its
behalf has taken or will take any action which would subject the issuance and
sale of the Notes or the Warrants to the provisions of Section 5 of the
Securities Act, or to the provisions of any state securities law requiring
registration of securities, notification of the issuance or sale thereof or
confirmation of the availability of any exemption from such registration.
4.28 Valid Issuance of Common Stock. The Borrower has duly
authorized and reserved a sufficient number of Class B Shares for issuance upon
the exercise of the Warrants and a sufficient number of Class A Shares for
issuance upon conversion of such Class B Shares, in each case without giving
effect to any additional shares of Common Stock which may be issued after
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giving effect to antidilution adjustments to the Warrants after the Funding Date
pursuant to the Warrant Agreement. The Class B Shares, when issued and delivered
by the Borrower pursuant to the Warrants, will be duly and validly issued with
no liability on the part of the holders thereof and fully paid and nonassessable
shares of Common Stock of the Borrower free and clear of all Liens, and no
Person has any preemptive rights, rights of first refusal or rights of first
offer with respect thereto.
SECTION 5. Affirmative Covenants. The Borrower covenants and agrees
that on and after the Effective Date and until the Loans and Notes, together
with interest, and all other Obligations, are paid in full and for so long as
the Commitment is outstanding:
5.01 Information Covenants. The Borrower shall furnish to each
Lender:
(a) Monthly Reports. Within 30 days after the end of each fiscal
month the consolidated balance sheets of the Borrower and its Subsidiaries as at
the end of such month and the related consolidated statements of earnings for
such month and for the elapsed portion of the fiscal year ended with the last
day of such month, setting forth comparative figures for the corresponding month
and elapsed portion of such fiscal year for the prior fiscal year and comparable
budgeted figures for such period, all of which shall be certified by the chief
financial officer or controller of the Borrower as fairly presenting the
financial condition of the Borrower at such time and as of the end of such
periods, subject to normal and recurring year-end audit adjustments.
(b) Quarterly Financial Statements. Within 45 days after the close
of each quarterly accounting periods in each fiscal year of the Borrower, the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such quarterly period and the related consolidated statements of earnings and
shareholders' equity and statement of cash flows for such quarter, in each case
for such quarterly period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, in each case setting forth
comparative figures for the related periods in the prior fiscal year and
comparable budgeted figures for such period, all of which shall be certified by
the chief financial officer or controller of the Borrower as fairly presenting
the financial condition of the Borrower at such time and as of the end of such
periods, subject to normal year-end audit adjustments.
(c) Annual Financial Statements. Within 120 days after the close
of each fiscal year of the Borrower, the consolidated balance sheets of the
Borrower and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of earnings and shareholder's equity and statement of
cash flows for such fiscal year and setting forth comparative figures for the
preceding fiscal year and comparable budgeted figures for such period and
certified as fairly presenting the financial condition of the Borrower at such
time and as of the end of such periods by any of the "big five" or
other-independent certified public accountants of recognized national standing
reasonably acceptable to the Required Lenders, together with a signed opinion of
such accounting firm (which opinion shall not be qualified in any respect)
stating that in the course of its regular audit of the financial statements of
the Borrower, which audit was conducted in accordance with generally accepted
auditing standards, such accounting firm obtained no knowledge of any Default or
Event of Default which has occurred and is continuing or, if in the opinion of
such
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accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and shall be accompanied by a
management discussion and analysis of the results of operations and financial
condition with respect to such period.
(d) Management Letters. Promptly after the receipt thereof by
Holdings, the Borrower or any Subsidiary of the Borrower, a copy of any
"management letter" received by Holdings, the Borrower or such Subsidiary from
its certified public accountants.
(e) Budgets. As soon as available but in no event later than 30
days after the first day of each fiscal year of the Borrower, a budget for the
Loan Parties in form customarily prepared by the Borrower (including budgeted
statements of earnings and sources and uses of cash, capital expenditures, cash
flow statements and balance sheets) prepared by the Borrower for each calendar
month of such fiscal year and on an annual basis for the next succeeding fiscal
year prepared in reasonable detail with appropriate presentation and discussion
of the principal assumptions upon which such budgets are based, accompanied by
the statement of the chief financial officer or controller of the Borrower to
the effect that, to the best of his or her knowledge, the budget is a reasonable
estimate for the periods covered thereby.
(f) Officers' Certificates. At the time of the delivery of the
financial statements provided for in Section 5.01(a), (b) and (c), a certificate
of the chief financial officer or controller, of the Borrower to the effect that
no Default or Event of Default has occurred and is continuing or, if any Default
or Event of Default has occurred and is continuing, specifying the nature and
extent thereof, which certificate, in the case of certificates delivered
pursuant to Section 5.01 (b) or (c), shall set forth the calculations required
to establish whether the Borrower was in compliance with the provisions of
Sections 2.02(c), 6.02, 6.04 and 6.07 through 6.10, inclusive, at the end of
such fiscal quarter or year, as the case may be.
(g) Notice of Default or Litigation. Promptly, and in any event
within two Business Days after an officer of any of the Loan Parties or any of
their Subsidiaries obtains knowledge thereof, notice of (i) the occurrence of
any event which constitutes a Default or Event of Default, (ii) any litigation
or governmental investigation or proceeding pending (x) against any of the Loan
Parties or any of their Subsidiaries which could reasonably be expected to
materially and adversely affect the performance, business, assets, nature of
assets, liabilities, operations, properties, condition (financial or otherwise)
or prospects of any Loan Party and its Subsidiaries taken as a whole or (y) with
respect to any Document, (iii) any other event which could reasonably be
expected to materially and adversely affect the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of any Loan Party and its Subsidiaries taken as a whole
and (iv) any default or breach by any Loan Party or any of its Subsidiaries
under any Material Contract, or receipt of any notice of such default or breach
received from any party to any Material Contract.
(h) Other Reports and Filings. Promptly upon transmission thereof,
copies of any financial information, proxy materials and other information and
reports, if any, which any of the Loan Parties or any of their Subsidiaries (x)
has filed with the Securities and Exchange Commission or any successor thereto
(the "SEC"), (y) has delivered to holders of, or any agent or trustee with
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respect to, Indebtedness (including the holders of any Senior Indebtedness) of
such Loan Party or such SubsidiarY in its capacity as such a holder, agent, or
trustee or (z) has delivered to its partners or shareholders generally.
(i) Environmental Matters. Promptly upon, and in any event within
five Business Days after an officer of any of the Loan Parties or any of their
Subsidiaries obtains knowledge thereof, notice of any of the following
environmental matters: (i) any pending or threatened material Environmental
Claim against any of the Loan Parties, any of their Subsidiaries, any Real
Property owned or operated by any of the Loan Parties or any of their
Subsidiaries; (ii) any condition or occurrence on or arising from any Real
Property owned or operated at any time by any of the Loan Parties or any of
their Subsidiaries that (A) could reasonably be anticipated to result in a
material noncompliance by such Loan Party or Subsidiary with any applicable
Environmental Law, or (B) could reasonably be anticipated to form the basis of a
material Environmental Claim against such Loan Party or Subsidiary or any Real
Property owned or operated by such Loan Party or Subsidiary; (iii) any condition
or occurrence on any Real Property owned or operated by any of the Loan Parties,
any of their Subsidiaries or any property adjoining such Real Property that
could reasonably be anticipated to cause any of such Real Property owned or
leased by any Loan Party or any of its Subsidiaries to be subject to any
material restrictions on the ownership, occupancy, use or transferability of
such Real Property under any Environmental Law; and (iv) the taking of any
removal or remedial action in response to a material Release or material
threatened Release or the actual or alleged presence of any Hazardous Material
on or from any Real Property owned or operated at any time by any of the Loan
Parties or any of their Subsidiaries in each case as required by any
Environmental Law or any governmental or other administrative agency. All such
notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and such Loan
Party's or such Subsidiary's response thereto. In addition, each Loan Party will
provide the Lenders with copies of all material communications with any
government or governmental agency relating to Environmental Claims, all material
communications with any person relating to material Environmental Claims, and
such detailed reports of any material Environmental Claim as may reasonably be
requested by any of the Lenders.
(j) Credit Agreement Notices and Amendments. Promptly upon
transmission thereof, a copy of any notice of default furnished by the Borrower
under the Credit Documents simultaneously with the delivery thereof to any of
the Banks or to the Senior Agent. Upon execution thereof, a copy of each
amendment, modification, consent and waiver of or under any of the Credit
Documents.
(k) Annual Meetings with Lenders. Within 120 days after the close
of each fiscal year of the Borrower, the Borrower shall, at the request of the
Required Lenders, hold a meeting (at a mutually agreeable site and time), with
all Lenders who choose to attend such meeting at which meeting shall be reviewed
the financial results of the previous fiscal year and the financial condition of
the Loan Parties and their Subsidiaries and the budgets presented for the
current fiscal year of the Loan Parties and their Subsidiaries.
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(l) Other Information. From time to time, such other information
or documents (financial or otherwise) with respect to any Loan Party or its
Subsidiaries, as any Lender may reasonably request.
5.02 Books, Records and Inspections. Each Loan Party will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries, in conformity with United States generally
accepted accounting principles and all requirements of law, shall be made of all
dealings and transactions in relation to its business and activities. Each Loan
Party shall, and shall cause each of its Subsidiaries to, permit, upon
reasonable notice, officers and designated representatives of any Lender to
visit and inspect, under guidance of officers of the Borrower or such
Subsidiaries, any of the properties of any Loan Party or its Subsidiaries, and
to examine the books of account of each Loan Party or its Subsidiaries and
discuss the affairs, finances and accounts of each Loan Party or its
Subsidiaries with, and be advised as to the same by, its and their officers, all
at such reasonable times and intervals and to such reasonable extent as such
Lender may request.
5.03 Maintenance of Property, Insurance. Schedule II sets forth a
true and complete listing of all insurance maintained by each Loan Party and
each of its Subsidiaries as of the Effective Date. Each Loan Party will, and
will cause each of its Subsidiaries to, (i) keep all material property useful
and necessary in its business in good working order and condition (ordinary wear
and tear excepted), (ii) maintain with financially sound and reputable insurance
companies insurance on all its property in at least such amounts and against at
least such risks and liabilities as are described on Schedule II (including,
without limitation, key-man life insurance on the lives of each of ▇▇▇▇▇▇▇ ▇.
▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Hay in an amount of at least $5,000,000 for each such
Person), and (iii) furnish to each Lender, upon written request, full
information as to the insurance carried.
5.04 Corporate Franchises. Each Loan Party shall, and shall cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and its rights,
franchises licenses and patents necessary for the operation of its businesses;
provided, however, that nothing in this Section 5.04 shall prevent the
withdrawal of any such Person of its qualification as a foreign CORPORATION in
any jurisdiction where such withdrawal could not reasonably be expected to have
a material adverse effect on the performance, business, assets, nature of
assets, liabilities, properties, operations, condition (financial or otherwise)
or prospects of such Loan Party and its Subsidiaries taken as a whole.
5.05 Compliance with Statutes, Etc. Each Loan Party shall, and
shall cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property except such noncompliance as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Loan Party and its Subsidiaries taken as a whole.
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5.06 Compliance with Environmental Laws.
(a) Each Loan Party shall, and shall cause each of its
Subsidiaries to, comply, in all material respects, with all Environmental Laws
applicable to the ownership or use of all the Real Property, and shall promptly
pay, or cause its Subsidiaries to promptly pay all costs and expenses incurred
in such compliance, and will keep or cause to be kept such Loan Party's or its
Subsidiaries' interest in all owned Real Properties free and clear of any Liens
imposed pursuant to such Environmental Laws imposed in connection with their
ownership or use. No Loan Party or any of its Subsidiaries will generate, use,
treat, store, release or dispose of, or permit the generation, use, treatment,
storage, Release or disposal of Hazardous Materials on any Real Property, or
transport or permit the transportation of Hazardous Materials to or from any
Real Property, other than in the normal course of business in compliance with
applicable law. If required to do so under any applicable directive or order of
any governmental agency, each Loan Party agrees to undertake, and cause each of
its Subsidiaries to undertake, any clean up, removal, remedial or other action
necessary remove and clean up any Hazardous Materials from any Real Property
owned, leased or operated by a Loan Party or any of its Subsidiaries in
accordance with, in all material respects, such orders and directives of all
governmental authorities, except to the extent that such Loan Party or such
Subsidiary is contesting such order or directive in good faith and by
appropriate proceedings and for which adequate reserves have been established to
the extent required by GAAP.
(b) At the request of the Required Lenders at any time and from
time to time during the existence of this Agreement: (i) if an Event of Default
exists under this Agreement, (ii) upon the reasonable belief by the Required
Lenders that the Borrower or any of its Subsidiaries has breached any
representation or covenant herein with respect to any environmental matters and
such breach is continuing or (iii) in the event notice is provided under Section
5.01 (i) herein the Borrower will provide, at its sole cost and expense (or will
cause the Borrower to provide at its sole cost and expense), an environmental
site assessment report reasonable in scope concerning any Real Property of any
Loan Party or its Subsidiaries, prepared by an environmental consulting firm
approved by the Required Lenders, indicating the presence or Release of
Hazardous Materials on or from any of the Real Property and the potential cost
of any removal or remedial action in connection with any Hazardous Materials on
such Real Property. If the Borrower fails to provide the same after thirty days'
notice, the Required Lenders may order the same, and the Borrower shall grant
and hereby grants to each of the Lenders and their agents access to such Real
Property and specifically grants each of the Lenders and irrevocable
non-exclusive license to undertake such an assessment all at the Borrower's
expense.
5.07 ERISA. As soon as possible and, in any event, within ten (10)
days after any Loan Party, any Subsidiary of any Loan Party or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following,
the Borrower will deliver to each of the Lenders a certificate by the chief
financial officer of the Borrower setting forth the full details as to such
occurrence and the action, if any, that such Loan Party, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed by such Loan Party, such
Subsidiary, the Plan Administrator or such ERISA Affiliate to or with the PBGC
or any other governmental agency, or a Plan participant and any notice received
by such Loan Party, such Subsidiary or ERISA Affiliate from the PBGC or any
other government agency, or a
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Plan participant, or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that a contributing sponsor (as defined in
Section 4001(a)(13) of ERISA) of a Plan subject to Title IV of ERISA is subject
to the advance reporting requirement of PBGC Regulation Section 4043.61 (without
regard to subparagraph (b)(1) thereof), and an event described in subsection
.62, .63, .64, .65, .66, .67 or .68 of PBGC Regulation Section 4043 is
reasonably expected to occur with respect to such Plan within the following 30
days; that an accumulated funding deficiency, within the meaning of Section 412
of the Code or Section 302 of ERISA, has been incurred or an application may be
or has been made for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of ERISA
with respect to a Plan; that any contribution required to be made with respect
to a Plan has not been timely made; that a Plan has been or may be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability; that proceedings may be or have been
instituted to terminate or appoint a trustee to administer a Plan which is
subject to Title IV of ERISA; that a proceeding has been instituted pursuant to
Section 515 of ERISA to collect a delinquent contribution to a Multiemployer
Plan; that any Loan Party, any Subsidiary of any Loan Party or any ERISA
Affiliate will or may incur any liability (including any indirect, contingent,
or secondary liability) to or on account of the termination of or withdrawal
from a Plan or Multiemployer Plan under Section 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29), 4971,
4975 or 4980 of the Code or Section 409 or 502(i) or 502(1) of ERISA or with
respect to a group health plan (as defined in Section 607(1) of ERISA or Section
4980B(g)(2) of the Code) under Section 4980E of the Code; or that any Loan Party
or any Subsidiary of any Loan Party may incur any material liability pursuant to
any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that
provides benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or any Plan. The Borrower will deliver to each
of the Lenders copies of any records, documents or other information that must
be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of
ERISA. The Borrower will also deliver to each of the Lenders a complete copy of
the annual report (on Internal Revenue Service Form 5500-series) of each Plan
(including, to the extent required, the related financial and actuarial
statements and opinions and other supporting statements, certifications,
schedules and information) required to be filed with the Internal Revenue
Service. In addition to any certificates or notices delivered to the Lenders
pursuant to the first sentence hereof, copies of annual reports and any records,
documents or other information required to be furnished to the PBGC or any other
government agency, and any material notices received by any Loan Party, any
Subsidiary of any Loan Party or any ERISA Affiliate with respect to any Plan
shall be delivered to the Lenders no later than ten (10) days after the date
such annual report has been filed with the Internal Revenue Service or such
records, documents and/or information has been furnished to the PBGC or any
other government agency or such notice has been received by any Loan Party, the
Subsidiary or the ERISA Affiliate, as applicable.
5.08 End of Fiscal Years; Fiscal Quarters. Each Loan Party will
cause its, and each of its Subsidiaries', fiscal years to end on March 31 of
each year and each of its, and each of its Subsidiaries', four fiscal quarters
to end on March 31, June 30, September 30 and December 31 of each year.
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5.09 Performance of Obligations. Each Loan Party will, and will
cause each of its Subsidiaries to, perform all of its obligations under the
terms of each Material Contract, mortgage, indenture, security agreement and
other debt instrument by which it is bound, except such nonperformances as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of such Loan Party and its Subsidiaries taken as a whole.
5.10 Payment of Taxes. Each Loan Party shall, and shall cause each
of its Subsidiaries to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties would
otherwise attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of any of its Subsidiaries not otherwise
permitted under Section 6.01; provided, however, that no Loan Party or any of
its Subsidiaries shall be required to pay any such tax, assessment, charge, levy
or claim which is being contested in good faith and by proper proceedings if it
has maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
5.11 Use of Proceeds, Margin Regulations.
(a) The Borrower shall use all proceeds of the Loans as provided
in Section 4.08(a).
(b) No part of the proceeds of any Loan will be used to purchase
or carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of the
Regulation T, U or X of the Board of Governors of the Federal Reserve System.
5.12 Year 2000 Compliance. The Borrower will ensure that any
reprogramming required to permit the proper functioning, in and following the
year 2000, of the Borrower's or any of its Subsidiaries' (i) computer systems
and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's systems interface) and
the testing of all such systems and equipment, as so reprogrammed, is completed
by September 30,1999, except insofar as the failure to do so will not have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, and the
Borrower will notify the Lenders promptly upon detecting any failure to achieve
year 2000 computer readiness. In addition, the Borrower will provide any Lender
with such information about its year 2000 computer readiness (including, without
limitation, information as to contingency plans, budgets and testing results) as
such Lender shall reasonably request.
5.13 Observation Rights. PCF may designate one individual (the
"Observer") to attend (in person or by telephone) all meetings of the Board of
Directors of the Borrower and of any similar governing body of the Borrower (and
any committees thereof) at the reasonable expense of
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the Borrower, provided that in the case of telephonic meetings conducted in
accordance with the Certificate of Incorporation and By-Laws and applicable law,
the Observer will be given the opportunity to participate in such telephonic
meetings. The Observer shall be entitled to receive all reports, presentations
and materials, as if such Observer were a member of each such board or other
body, at the same time that such Persons are provided such information, all at
the reasonable expense of the Borrower. Following any such meeting, the Borrower
shall provide the Observer with copies of the agenda and minutes with respect
thereto, whether or not an Observer participated in or attended such meeting.
The Borrower agrees to give the Observer prior written notice of all meetings
(including telephonic meetings) of such board or other body (and any committees
thereof) promptly after the scheduling thereof and in any event no later than
five Business Days prior to such meeting, or if such meeting is scheduled less
than five Business Days in advance, on the Business Day preceding the date for
which such meeting has been scheduled. If any such board or other body proposes
to take any action by written consent in lieu of a meeting, the Borrower shall
forward the form of such written consent to the Observer prior to its execution
and at the same time as it is forwarded to, or prepared by, such board or other
body.
5.14 Intellectual Property Rights. Each Loan Party will, and will
cause each of its Subsidiaries to, maintain in full force and effect all
Intellectual Property rights necessary or appropriate to the business of such
Loan Party or any Subsidiary of such Loan Party and take no action (including,
without limitation, the licensing of Intellectual Property), or fail to take an
action, as the case may be, in connection with such Intellectual Property rights
which could reasonably be expected to result in a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole. Each Loan Party shall, and shall cause
each of its Subsidiaries to, diligently prosecute all pending applications filed
in connection with seeking the Intellectual Property rights and take all other
reasonable actions necessary for the protection and maintenance of the
Intellectual Property rights necessary or appropriate to the business of such
Loan Party or any Subsidiary of such Loan Party at all times from and after the
Funding Date other than any such actions the failure of which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of such Loan Party
and its Subsidiaries taken as a whole.
SECTION 6. Negative Covenants. The Borrower hereby covenants that on
and after the Effective Date and until the Loans and Notes, together with
interest and all other Obligations incurred hereunder and thereunder, have been
paid in full and the Commitment is no longer outstanding:
6.01 Liens. The Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of their respective property or assets (real or personal,
tangible or intangible), whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable with recourse to such Person), or assign any right to receive income
or permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice
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statute with respect to property or assets of any Loan Party or any of its
Subsidiaries; provided, however, that the provisions of this Section 6.01 shall
not prevent the Borrower or any of its Subsidiaries from creating, incurring,
assuming or permitting the existence of the following (Liens described below are
herein referred to as "Permitted Liens"):
(i) inchoate Liens with respect to the Borrower or any
Subsidiary of the Borrower for taxes not yet due or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves have been established in accordance with generally
accepted accounting principles;
(ii) Liens in respect of property or assets of the
Borrower or any Subsidiary of the Borrower imposed by law, which were
incurred in the ordinary course of business and do not secure
Indebtedness for borrowed money, such as carriers', warehousemen's,
materialmen's, mechanics' and landlords' liens and other similar Liens
arising in the ordinary course of business, and (x) which do not in the
aggregate materially detract from the value of the Borrower's or any of
its Subsidiaries' property or assets or materially impair the use
thereof in the operation of the business of the Borrower or the
Subsidiaries of the Borrower or (y) which are being contested in good
faith by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or assets subject to
any such Lien;
(iii) Liens of the Borrower or the Subsidiaries in
existence on the Effective Date which are listed, and the property
subject thereto described, on Schedule IV;
(iv) Liens securing Senior Debt under the Credit
Agreement;
(v) easements, rights-of-way, restrictions, covenants,
encroachments and other similar charges or encumbrances on the real
property of the Borrower or any of its Subsidiaries arising in the
ordinary course of business and not materially interfering with the
conduct of the business of the Borrower or any of its Subsidiaries;
(vi) Liens on property of the Borrower and its
Subsidiaries subject to, and securing only, Capitalized Lease
Obligations to the extent such Capitalized Lease Obligations are
permitted by Section 6.04(iii), provided that such Liens only serve to
secure the payment of Indebtedness arising under such Capitalized Lease
Obligation and the Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any other asset of the
Borrower or any of its Subsidiaries;
(vii) Liens (other than any Lien imposed by ERISA) on
property of the Borrower or any Subsidiary of the Borrower incurred or
deposits made in the ordinary course of business in connection with (x)
workers' compensation, unemployment insurance and other types of social
security or (y) to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money), provided that the aggregate amount of cash and the
fair
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market value of the property encumbered by Liens described in this
clause (vi) shall not exceed $200,000;
(viii) Liens placed upon equipment or machinery used in the
ordinary course of business of the Borrower or any Subsidiary of the
Borrower within 90 days following the time of purchase thereof by the
Borrower or any of its Subsidiaries and improvements and accretions
thereto to secure Indebtedness incurred to pay all or a portion of the
purchase price thereof or any Indebtedness incurred to refinance such
Indebtedness, provided that (x) the aggregate principal amount of all
Indebtedness secured by Liens permitted by this clause (vii) does not
exceed the aggregate amount of Indebtedness permitted under Section
6.04(iii) with respect to all machinery and equipment, (y) in all
events, the Lien encumbering the equipment or machinery so acquired and
improvements and accretions thereto does not encumber any other asset
of the Borrower or any of its Subsidiaries and (z) the Indebtedness
secured by any such Lien does not exceed 100%, nor is less than 70%, of
the lesser of the fair market value or the purchase price of the
property being purchased at the time of the incurrence of such
Indebtedness;
(ix) Liens arising from precautionary UCC-1 financing
statement filings regarding operating leases entered into by the
Borrower or any Subsidiary of the Borrower in the ordinary course of
business;
(x) inchoate Liens (where there has been no execution or
levy and no pledge or delivery of collateral) arising from and out of
judgments or decrees in existence at such time not constituting an
Event of Default under Section 7.07;
(xi) licenses of Intellectual Property permitted to be
granted to third-persons in accordance with Section 6.02;
(xii) any interest or title of a licensor of Intellectual
Property licensed by the Borrower or any of its Subsidiaries or of any
lessor under any lease permitted by this Agreement; and
(xiii) additional Liens incurred by the Borrower and its
Subsidiaries so long as the value of the property subject to such
Liens, and the Indebtedness and other obligations secured thereby, do
not exceed $100,000.
6.02 Consolidation, Merger, Purchase or Sale of Assets,
Etc. The Borrower shall not, and shall not permit any of its Subsidiaries to,
(i) wind up, liquidate or dissolve its affairs, (ii) enter into any transaction
of merger or consolidation, (iii) convey, sell, lease or otherwise dispose of
(or agree to do any of the foregoing at any future time) all or any part of its
property or assets, including without limitation assets consisting of capital
stock of a Subsidiary thereof or stock equivalents thereof, (iv) enter into any
partnerships, joint ventures or sale-leaseback transactions, or (v) purchase,
lease or otherwise acquire (in one or a series of related transactions) any part
of the property or assets (other than purchases or other acquisitions by the
Borrower or any of its Subsidiaries of inventory, materials and equipment in the
ordinary course of business, it being
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understood that Product Acquisition Expenditures shall not be considered within
the scope of this exception) of any Person, or make or maintain any loan,
extension of credit or advance to any Person, or own or purchase or otherwise
acquire any capital stock or equity interests or obligations of or other
securities of any Person, or otherwise make any other investment or capital
contribution in any Person, or purchase or own a futures contract or otherwise
become liable for the purchase or sale of currency or other commodities at a
future date in the nature of a futures contract, or hold any cash or Cash
Equivalents, except that the following shall be permitted:
(A) Capital Expenditures by the Borrower and its
Subsidiaries to the extent permitted pursuant to Section 6.07;
(B) the Borrower and its Subsidiaries may sell obsolete,
worn-out or uneconomic equipment in the ordinary course of business so
long as the amount of Net Sale Proceeds from such sales in any one
fiscal year does not exceed $200,000 in the aggregate and such proceeds
are applied in accordance with the term 2 of Section 2.02(c);
(C) the Borrower and its Subsidiaries may enter into
operating leases in the ordinary course of business;
(D) the Borrower and its Subsidiaries may make and
maintain investments (1) consisting of receivables owing to any of them
(including, without limitation, through the indirect acquisition
thereof through a security interest), if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary terms, (2) in cash and Cash Equivalents; (3) in Interest
Rate Contracts permitted under Section 6.04(iii), (4) consisting of
loans and advances in the ordinary course of business and consistent
with past practices to their respective employees for moving, travel
and emergency expenses and other similar expenses, so long as the
aggregate principal amount thereof at any one time outstanding
(determined without regard to any write-downs or write-offs of such
loans and advances) shall not exceed $100,000, (5) consisting of
purchases or acquisitions of securities of trade creditors or customers
received in any plan of reorganization or similar arrangement on the
bankruptcy or insolvency of such trade creditors or customers or
received in settlement of delinquent obligations of, and other disputes
with, suppliers arising in the ordinary course of business, (6)
consisting of obligations, so long as the aggregate outstanding amount
does not exceed $250,000, of one or more officers or other employees of
the Borrower or its Subsidiaries in connection with such officers' or
employees' acquisition of shares of Common Stock so long as no cash is
paid by the Borrower or any of its Subsidiaries in connection with the
acquisition of any such obligations and (7) consisting of additional
investments or loans in an aggregate amount after the Funding Date not
to exceed $500,000;
(E) the Borrower and its Subsidiaries may sell inventory
in the ordinary course of business;
(F) the Loan Parties may consummate the Transaction in
accordance with the Documents;
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(G) the Borrower and its Subsidiaries may sell or
discount, in each case without recourse, accounts receivables arising
in the ordinary course of business, but only in connection with the
compromise or collection thereof;
(H) Dividends may be paid to the extent permitted by
Section 6.03;
(I) the Borrower may transfer assets (including without
limitation cash, and which transfer may be effected by way of asset
transfer, loan or equity contribution) to Wholly-Owned Domestic
Subsidiaries which are Subordinated Guarantors and Wholly Owned Foreign
Subsidiaries; provided. that the aggregate fair market value of all
such assets so transferred (determined in good faith by the Board of
Directors or senior management of the Borrower) to all such Foreign
Subsidiaries does not exceed $200,000;
(J) any Foreign Subsidiary may be merged with and into,
or be dissolved or liquidated into, or transfer any of its assets to,
any Wholly-Owned Foreign Subsidiary so long as such Wholly-Owned
Foreign Subsidiary is the surviving corporation of any such merger,
dissolution or liquidation;
(K) the assets of any Foreign Subsidiary may be
transferred to the Borrower or any of its Wholly-Owned Domestic
Subsidiaries which is a Subordinated Guarantor, and any Foreign
Subsidiary may be merged with and into, or be dissolved or liquidated
into, the Borrower or any of its Wholly-Owned Domestic Subsidiaries
which is a Subordinated Guarantor so long as the Borrower or such
Wholly-Owned Domestic Subsidiary is the surviving corporation of any
such merger, dissolution or liquidation;
(L) any Domestic Subsidiary of the Borrower may transfer
assets to the Borrower or to any other Wholly-Owned Domestic Subsidiary
of the Borrower which is a Subordinated Guarantor;
(M) any Wholly-Owned Domestic Subsidiary of the Borrower
may merge with and into the Borrower so long as the Borrower is the
surviving corporation of such merger;
(N) any Domestic Subsidiary of the Borrower may merge
with and into, or be dissolved or liquidated into, any other
Wholly-Owned Domestic Subsidiary of the Borrower which is a
Subordinated Guarantor so long as such Wholly-Owned Domestic Subsidiary
of the Borrower is the surviving corporation of such merger,
dissolution or liquidation; and
(O) each of the Borrower and its Subsidiaries may, in the
ordinary course of business, license as licensee or licensor patents,
trademarks, copyrights and know-how to or from third Persons, so long
as (a) to the extent such licensing involves Product Acquisition
Expenditures, such Product Acquisition Expenditures are permitted under
Section 6.18 and (b) any such license by the Borrower or any of its
Subsidiaries in its capacity as licensor is permitted to be assigned
pursuant to the Credit Documents (to the extent that a security
interest in such patents, trademarks, copyrights and know-how is
granted thereunder) and
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does not otherwise prohibit the granting of a Lien by the Borrower or
any of its Subsidiaries pursuant to the Credit Documents in the
intellectual property covered by such license.
6.03 Dividends. The Borrower shall not, and shall not
permit any of its Subsidiaries to, declare or pay any Dividends, except that (i)
any Subsidiary of the Borrower may pay Dividends to the Borrower or any
Wholly-Owned Domestic Subsidiary of the Borrower, (ii) so long as no Default or
Event of Default is then in existence or would result from the payment of the
respective Dividend, the Borrower may pay Dividends for one or more purchases of
Warrants pursuant to the put rights under Section 11 of the Warrant Agreement
and (iii) the Borrower may redeem or purchase shares of Common Stock or options
to purchase Common Stock, as the case may be, held by the management of the
Borrower following the termination, death or disability of such individuals,
provided that (x) the aggregate amount paid by the Borrower in cash and
subordinated notes of the Borrower in the form of Exhibit N (the "Subordinated
Redemption Note") in respect of all such redemptions and/or purchases shall not
exceed $250,000 per fiscal year or $1 million since the Funding Date and (y) at
the time of any payment permitted to be made pursuant to this Section 6.03(iii),
no Default or Event of Default shall then exist or result therefrom.
6.04 Indebtedness. The Borrower shall not, and shall not
permit any of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Loan Documents;
(ii) Senior Debt;
(iii) Indebtedness of the Borrower or any of its
Subsidiaries under (a) any Interest Rate Contract or under any similar
type of agreement to the extent such is entered into to satisfy the
requirements of the Credit Agreement as in effect on the date hereof,
or any other interest rate caps entered into to protect the Borrower
against fluctuations in interest rates in respect of its obligations
under the Credit Agreement or (b) Indebtedness under Interest Rate
Contracts providing protection against fluctuations in currency values
in connection with the Borrower's or any of its Subsidiaries'
operations so long as the entering into of such agreements are bona
fide hedging activities in connection with the purchase or sale of
goods;
(iv) Indebtedness of the Borrower and its Subsidiaries
evidenced by Capitalized Lease Obligations and Indebtedness secured by
Liens permitted by Section 6.01(vii); provided that the aggregate
amount of Indebtedness evidenced by Capitalized Lease Obligations under
all Capital Leases when aggregated with the amount of Indebtedness
secured by Liens permitted by Section 6.01(vii), in each case, incurred
after the Funding Date, shall not exceed $1,000,000;
(v) Existing Indebtedness outstanding on the Funding Date
and listed on Schedule X (other than Senior Debt), without giving
effect to any subsequent extension, renewal or refinancing thereof;
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(vi) Indebtedness consisting of guaranties (x) by the
Borrower of Indebtedness, leases and other obligations permitted to be
incurred by Wholly-Owned Domestic Subsidiaries which are Subordinated
Guarantors, (y) by Domestic Subsidiaries of Indebtedness, leases and
other obligations permitted to be incurred by the Borrower or other
Wholly-Owned Domestic Subsidiaries, and (z) by Foreign Subsidiaries of
Indebtedness, leases and other obligations permitted to be incurred by
other Wholly-Owned Foreign Subsidiaries;
(vii) the Borrower and its Subsidiaries may make
intercompany loans between or among one another ("Intercompany Loans"),
only to the extent permitted in accordance with Section 6.02; provided
that (x) each Intercompany Loan made by a Foreign Subsidiary to the
Borrower or a Domestic Subsidiary and each Intercompany Loan made to
the Borrower shall contain the subordination provisions set forth on
Exhibit M, and (y) each Intercompany Loan shall be evidenced by an
Intercompany Note;
(viii) Indebtedness of the Borrower under any Subordinated
Redemption Note issued under and in compliance with Section 6.03(iii);
and
(ix) additional Indebtedness of the Borrower and its
Domestic Subsidiaries not otherwise permitted hereunder not exceeding
$200,000 in aggregate principal amount at any time outstanding.
6.05 Transactions with Affiliates. The Borrower shall not,
and shall not permit any of its Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of Holdings, the Borrower, any Loan Party or any of
their respective Subsidiaries or any Affiliate of any other stockholder of
Holdings or the Borrower unless such transaction or series of related
transactions is in writing and on terms that are no less favorable to the
Borrower or such Subsidiary, as the case may be, than those that would be
available in a comparable transaction in arm's-length dealings with an unrelated
third party, except that (i) the Borrower and its Subsidiaries may effect the
Transaction, (ii) the Borrower and its Subsidiaries may enter into the
Employment Agreements, (iii) loans may be made to employees pursuant to the
terms of Section 6.02(D)(4), (iv) the Borrower may pay annual management fees of
up to $250,000 per annum to HIG quarterly in arrears and out-of-pocket expenses
to HIG; provided, however, to the extent there shall exist a Default or Event of
Default then no such management fee will be payable until such Default or Event
of Default is cured or waived, but may instead accrue, and (v) the Borrower may
pay to HIG an investment banking fee in connection with the Transaction as part
of the Transaction Fees and Expenses; provided that the aggregate amount of any
such fee paid in connection with the Transaction shall not exceed 2% of the
value (as calculated for such purposes in accordance with customary practice in
the investment banking industry) of the Transaction. Except as provided in the
immediately preceding sentence, in no event may any management, closing or
similar fees be paid or payable by, the Borrower or any of its Subsidiaries to
HIG, any HIG Fund or any Affiliate of the Borrower or any of its Subsidiaries
6.06 No Further Negative Pledges. Except (a) as otherwise
permitted by or under the terms of this Agreement, and (b) with respect to
specific property encumbered to secure payment
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of particular Indebtedness permitted to be incurred by the terms hereof, the
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any agreement prohibiting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired.
6.07 Capital Expenditures.
(a) The Borrower will not, and will not permit any of its
Subsidiaries to, make any Capital Expenditures, except that during any fiscal
year of the Borrower (commencing with fiscal year 2000) the Borrower and its
Subsidiaries may make Capital Expenditures so long as the aggregate amount
thereof does not exceed the amount set forth opposite such fiscal year below:
Fiscal Year
Ended March 31 Amount
-------------- ------
2000 $300,000
2001 $300,000
2002 $300,000
2003 $300,000
(b) Notwithstanding the foregoing, in the event that the
amount of Capital Expenditures permitted to be made by the Borrower and its
Subsidiaries pursuant to clause (a) above in any period (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
its Subsidiaries during such period, such excess (the "Rollover Amount") may be
carried forward and utilized to make Capital Expenditures in the next succeeding
fiscal year; provided that in no event shall the aggregate amount of Capital
Expenditures made by the Borrower and its Subsidiaries during any fiscal year
pursuant to Section 6.07(a) and this Section 6.07(b) exceed 200% of the amount
permitted to be made in such fiscal year pursuant to Section 6.07(a); and
provided, further, however, to the extent unutilized Capital Expenditures are
carried forward to the next succeeding year, any Capital Expenditure made in
such succeeding fiscal year shall be applied first to the Capital Expenditures
permitted to be incurred during such fiscal year without giving effect to any
Rollover Amount and Capital Expenditures carried forward to one year shall not
be permitted to be carried forward again.
(c) Notwithstanding the foregoing, the Borrower and its
Subsidiaries may make Capital Expenditures (which Capital Expenditures will not
be included in any determination under the foregoing clause (a)) with the
insurance proceeds received by the Borrower or any of its Subsidiaries from any
Recovery Event so long as such Capital Expenditures are utilized (or
contractually committed to being utilized) to replace or restore any properties
or assets in respect of which such proceeds were paid within 180 days following
the date of the receipt of such insurance proceeds to the extent such insurance
proceeds are not required to be applied to repay Loans pursuant to Section
2.02(c).
6.08 Fixed Charge Coverage Ratio. The Borrower will not
permit the Fixed Charge Coverage Ratio for any period of four consecutive fiscal
quarters ending on a date set forth
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below (or, if shorter, the period beginning on July 1,1999 and ending on a date
set forth below), in each case taken as one accounting period, to be less than
the ratio set forth opposite such date:
Ended Fiscal Ouarter Ratio
----- --------------------
September 30,1999 0.85:1.00
December 31,1999 1.00:1.00
March 31, 2000 1.00:1.00
June 30, 2000 1.00:1.00
September 30, 2000 1.00:1.00
December 31, 2000 1.00:1.00
March 31, 2001 1.00:1.00
June 30, 2001 1.00:1.00
September 30, 2001 1.00:1.00
December 31, 2001 1.00:1.00
March 31, 2002 1.00:1.00
June 30, 2002 1.00:1.00
September 30, 2002 1.00:1.00
December 31, 2002 1.00:1.00
March 31, 2003 1.00:1.00
June 30, 2003 1.00:1.00
September 30, 2003 1.00:1.00
December 31, 2003 1.00:1.00
March 31, 2004 1.00:1.00
June 30, 2004 1.00:1.00
6.09 Consolidated Indebtedness to Consolidated EBITDA. The
Borrower will not permit the ratio of Consolidated Indebtedness as at the end of
any fiscal quarter ended on a date set forth below to Consolidated EBITDA for
any period of four consecutive fiscal quarters ending on a date set forth below
(or, if shorter, for the period beginning on July 1,1999 and ending on a date
set forth below; provided that for any such shorter period, Consolidated EBITDA
shall be annualized for purposes of this Section 6.10 by multiplying the actual
Consolidated EBITDA for such period by a fraction the numerator of which is four
and the denominator of which is (i) for the period ending on September 30,1999,
one, (ii) for the period ending on December 31,1999, two, and (iii) for the
period ending on March 31, 2000, three), in each case taken as one accounting
period, to be greater than the ratio set forth opposite such date below:
Fiscal Quarter Ratio
Ended -----
--------------
September 30,1999 3.25:1.00
December 31, 1999 2.50:1.00
March 31, 2000 2.50:1.00
June 30, 2000 2.50:1.00
September 30, 2000 2.50:1.00
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December 31, 2000 2.00:1.00
March 31, 2001 2.00:1.00
June 30, 2001 1.75:1.00
September 30, 2001 1.50:1.00
December 31, 2001 1.50:1.00
March 31, 2002 1.50:1.00
June 30, 2002 1.25:1.00
September 30, 2002 1.00:1.00
December 31, 2002 1.00:1.00
March 31, 2003 0.75:1.00
June 30, 2003 0.75:1.00
September 30, 2003 0.75:1.00
December 31, 2003 0.75:1.00
March 31, 2004 0.75:1.00
June 30, 2004 0.75:1.00
6.10 Minimum EBITDA. The Borrower will not permit its
Consolidated EBITDA for any period of four consecutive fiscal quarters ending on
a date set forth below (or, if shorter, for the period beginning on July 1,1999
and ending on a date set forth below), in each case taken as one accounting
period, to be less than the amount set forth opposite such date set forth below:
Fiscal Quarter Amount
Ended ------
--------------
September 30, 1999 $ 1,660,000
December 31, 1999 $ 4,120,000
March 31, 2000 $ 6,600,000
June 30, 2000 $ 7,800,000
September 30, 2000 $ 8,690,000
December 31, 2000 $ 9,040,000
March 31, 2001 $ 9,390,000
June 30, 2001 $ 9,650,000
September 30, 2001 $10,000,000
December 31, 2001 $10,540,000
March 31, 2002 $11,070,000
June 30, 2002 $11,200,000
September 30, 2002 $11,370,000
December 31, 2002 $11,630,000
March 31, 2003 $11,890,000
June 30, 2003 $11,980,000
September 30, 2003 $12,110,000
December 31, 2003 $12,310,000
March 31, 2004 $12,500,000
June 30, 2003 $12,600,000
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6.11 Restrictions on Additional Subordinated Indebtedness.
The Borrower will not, and will not permit any of its Subsidiaries to create or
suffer to exist any Indebtedness for borrowed money which (i) provides that it
is subordinate in right of payment to any Senior Debt and (ii) is senior in
right of payment to the Loans or other Obligations.
6.12 Limitation on Voluntary Payments and Modifications;
Limitation on Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; Etc. The Borrower shall not, and shall not permit any of its
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary
or optional payment or prepayment on or voluntary or optional
redemption (including pursuant to any change of control provision) or
voluntary or optional acquisition for value of (including, without
limitation, by way of depositing with the trustee with respect thereto
money or securities before due for the purpose of paying when due), of
any Indebtedness that is not Senior Debt;
(ii) amend or modify, or permit the amendment or
modification of any provision of the Documents (other than the Credit
Documents) or the Existing Indebtedness or any agreement relating to
any of the foregoing in any manner adverse to the Lenders;
(iii) amend, modify or change its partnership agreement,
operating agreement, certificate of incorporation (including, without
limitation, by the filing or modification of any certificate of
designation), by-laws (or similar organizational documents) or any
agreement entered into by it with respect to its capital stock or other
equity interests in any manner adverse to the Lenders or enter into any
new agreement with respect to its capital stock in a manner that could
reasonably be expected to be adverse to the Lenders;
(iv) amend, modify or change or terminate, any
equityholders' agreement or enter into any other agreement with respect
to its equity interests, except for such amendments, modifications or
changes which are not in a manner adverse to the Lenders;
(v) amend, modify or change, terminate or enter into any
new Tax Sharing Agreement;
(vi) amend, modify or change, or enter into any new
Management Agreement, Employee Benefit Plan or Employment Agreements
except if the aggregate cost to the Borrower and its Subsidiaries as a
result of such amendments, modifications, changes to such plans and
agreements and new plans and agreements is not reasonably likely to
have a material adverse effect on the performance, business, property,
assets, nature of assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a
whole; or
(vii) make any payment of any type with respect to any
Indebtedness that is subordinated to the Senior Subordinated Notes,
other than regularly scheduled payments of interest to the extent
required by (and subject to the subordination provisions contained in)
the indenture or other agreement governing such subordinated
Indebtedness.
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6.13 Limitation on Certain Restrictions on Subsidiaries.
The Borrower will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Person to (i) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (ii) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (iii) transfer any of its properties or assets to the Borrower,
except for such encumbrances or restrictions existing under or by reason of (w)
applicable law, (x) this Agreement, the other Loan Documents and the Credit
Documents, (y) customary provisions restricting subletting or assignments of any
lease governing a leasehold interest of the Borrower or any other Subsidiary of
the Borrower and (z) the asset transfer restrictions imposed by purchase money
financing permitted pursuant to Section 6.04(iii).
6.14 Limitation on Issuance of Capital Stock.
(a) The Borrower shall not permit any of its Subsidiaries
to, issue any capital stock (including by way of sales of treasury stock) or
other ownership interests or any options or warrants to purchase, or securities
convertible into, capital stock, except (i) for transfers and replacements of
then outstanding shares, or (ii) for stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership of any Person in any
class of the capital stock of the Borrower or such Subsidiary.
(b) The Borrower will not issue any capital stock, except
for issuances of Borrower Common Stock and Permitted Borrower Securities;
provided that in each case the issuance thereof would not give rise to a Change
of Control.
6.15 Business. The Borrower will not, and will not permit
any of its Subsidiaries to, engage (directly or indirectly) in any business
other than a Permitted Business.
6.16 Limitation on Creation of Subsidiaries. The Borrower
will not, and will not permit any Subsidiary to, establish, create or acquire
any new Subsidiary; provided that the Borrower and its Wholly-Owned Subsidiaries
shall be permitted to establish, create or acquire Wholly-Owned Subsidiaries so
long as (i) at least 15 days' prior written notice thereof (or such lesser
notice as is acceptable to the Lenders) is given to the Lenders and (ii) such
new Subsidiary executes a counterpart of the Subordinated Guaranty; provided,
however, that in the event the Lenders reasonably determines, in light of all
the circumstances (including, without limitation, the value to the Lenders of
the Foreign Subsidiary entering into the documents described in clause (ii) as
compared to any adverse tax consequences that the Borrower may experience as a
result thereof, not to require any Foreign Subsidiary to enter into the
documentation described in clause (ii), then such Foreign Subsidiary shall not
be required to do so. In addition, at the request of Lenders, each new
Wholly-Owned Subsidiary that is required to execute any Loan Document shall
execute and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Section 3 as such new Subsidiary would
have had to deliver if such new Subsidiary were a Loan Party on the Funding
Date.
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6.17 Amendments with Respect to Senior Debt. The Borrower will not, and
will not permit any Subsidiary to, amend, modify or restate the terms of any
Senior Debt if such amendment, modification or restatement would (i) decrease
the average weighted-life to maturity of the Senior Debt by more than one and
one-half (1 1/2) years from that in effect on the date hereof (calculated as if
such amendment was entered into on the date hereof and taking into account all
previous amendments) or (ii) increase the interest rate of the Senior Debt to a
rate in excess of the maximum interest rates calculated from time to time
permitted under Section 1.08(a) and (b) of the Credit Agreement as such Sections
are in effect on the date hereof, plus 2%.
6.18 Product Acquisition Expenditures. Anything contained in this
Agreement to the contrary notwithstanding, (i) the Borrower and its Subsidiaries
may make Product Acquisition Expenditures in any fiscal year in an aggregate
amount not to exceed (a) $500,000 in respect of any individual product or
product line and (b) $1.5 million in respect of all products and product lines,
and (ii) no other provision of this Agreement shall be deemed to permit the
Borrower and its Subsidiaries to make Product Acquisition Expenditures in any
fiscal year in aggregate amounts in excess of those specified in clauses (a) and
(b) of the immediately preceding clause (i).
SECTION 7. Events of Default. Upon the occurrence of any of the
following specified events (each, an "Event of Default"):
7.01 Payments. Any Loan Party shall (i) default in the payment when due
of any principal of any Loan or any Note or (ii) default, and such default shall
continue unremedied for five or more Business Days, in the payment when due of
any interest on any Loan or Note, or any Fees or any other amounts owing by it
hereunder or thereunder or under any other Loan Document; or
7.02 Representations, Etc. Any representation, warranty or statement
made by any Loan Party herein or in any other Loan Document, or in any
certificate delivered pursuant hereto or thereto, shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
7.03 Covenants. (a) Any Loan Party or any of its Subsidiaries shall (i)
default in the due performance or observance by it of any term, covenant or
agreement contained in Section 5.01(g)(i), (j) or (k), 5.08, 5.12 or 6 and (ii)
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by any
Lender or (b) any Loan Party shall default in the due performance or observance
by it of any term, covenant or agreement contained in any other Loan Document
after any applicable notice provided for therein has been given or any lapse of
time provided for therein has occurred; or
7.04 Default Under Other Agreements. (i) Any Loan Party or any of its
Subsidiaries shall default in any payment of any Indebtedness (other than the
Obligations) at final maturity; or (ii) any Indebtedness of any Loan Party or
any of its Subsidiaries (other than the Obligations) shall be declared to be due
and payable prior to the stated maturity thereof, provided that it shall not
constitute an Event of Default pursuant to this Section 7.04 unless the
aggregate
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amount of all Indebtedness referred to in clauses (i) and (ii) above exceeds
$500,000 at any one time; or
7.05 Bankruptcy, Etc. Any Loan Party or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against any
Loan Party or any of its Subsidiaries and the petition is not controverted
within 10 days, or is not dismissed or discharged, within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
any Loan Party or any of its Subsidiaries, or any Loan Party or any of its
Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to any Loan Party or any of its Subsidiaries, or there is
commenced against any Loan Party or any of its Subsidiaries any such proceeding
which remains undismissed or undischarged for a period of 60 days, or any Loan
Party or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or any Loan Party or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; any Loan Party or any of its
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Loan Party or any of its Subsidiaries for the
purpose of effecting any of the foregoing; or
7.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA shall be subject to the advance reporting
requirement of PBGC Regulation Section 4043.61 (without regard to subparagraph
(b)(1) thereof), and an event described in subsection .62, .63, .64, .65, .66,
.67 or .68 of PBGC Regulation Section 4043 shall be reasonably expected to occur
with respect to such Plan within the following 30 days; any Plan which is
subject to Title IV of ERISA shall have had or is likely to have a trustee
appointed to administer such Plan, any Plan or Multiemployer Plan which is
subject to Title IV of ERISA is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any Plan shall have
an Unfunded Current Liability, a contribution required to be made with respect
to a Plan or Multiemployer Plan has not been timely made, any Loan Party or any
Subsidiary of any Loan Party or any ERISA Affiliate has incurred or is likely to
incur any liability to or on account of a Plan or Multiemployer Plan under
Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or Section 401(a)(29),4971 or 4975 of the Code or on account of a group
health plan (as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the
Code) under Section 4980B of the Code, or any Loan Party or any Subsidiary of
any Loan Party has incurred or is likely to incur liabilities pursuant to one or
more employee welfare benefit plans (as defined in Section 3(1) of ERISA) that
provide benefits to retired employees or other former employees (other than as
required by Section 601 of ERISA) or Plans a "default," within the meaning of
Section 4219(c)(5) of ERISA, shall occur with respect to any Plan; any
applicable law, rule or regulation is adopted, changed or
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interpreted, or the interpretation or administration thereof is changed, in each
case after the date hereof, by any governmental authority or agency or by any
court (a "Change in Law"), or, as a result of a Change in Law, an event occurs
following a Change in Law, with respect to or otherwise affecting any Plan; (b)
there shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and (c) such lien, security interest or liability, individually,
and/or in the aggregate, in the opinion of the Required Lenders, has had, or
could reasonably be expected to have, a material adverse effect upon the
business, operations, condition (financial or otherwise) or prospects of any
Loan Party or any Subsidiary of any Loan Party; or
7.07 Judgments. One or more judgments or decrees shall be entered
against any Loan Party or any of its Subsidiaries involving in the aggregate for
the Loan Parties and their Subsidiaries a liability in excess of $500,000 and
all such judgments or decrees shall not be satisfied, vacated, discharged or
stayed or bonded pending appeal for any period of 60 consecutive days; or
7.08 Subordinated Guaranty. The Subordinated Guaranty or any provision
thereof shall cease to be in full force or effect as to any Subordinated
Guarantor, or any Subordinated Guarantor or any Person acting by or on behalf of
any Subordinated Guarantor shall deny or disaffirm such Subordinated Guarantor's
obligations under the Subordinated Guaranty, or any Subordinated Guarantor shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to the Subordinated Guaranty
and such default shall continue beyond any grace period specifically applicable
thereto; or
7.09 Change in Control. Any time (i) a Change in Control shall occur or
(ii) a "change in control" or similar event shall occur as provided under any
Credit Document; or
7.10 Change in Management. Either or both of ▇▇▇▇▇▇▇ ▇. ▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Hay shall cease to devote his or her full time, energy and talents
exclusively to serving in a managerial capacity for the Borrower or one of its
Subsidiaries; provided that in the event such cessation is the result of the
death, disability or termination of employment of the applicable individual,
such cessation shall not constitute an Event of Default unless a successor
individual satisfactory to the Required Lenders shall not have replaced such
individual in his or her managerial capacity within 90 days after the date of
such cessation;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Required Lenders (or, in the case of an Event of
Default under Section 7.01, Lenders holding at least 25% of the then outstanding
Loans) may, by written notice to the Borrower, take any or all of the following
actions, without prejudice to the rights of any other Lender or the holder of
any Note to enforce its claims against any Loan Party (provided that, if an
Event of Default specified in Section 7.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by the
Required Lenders to the Borrower as specified in clause (i) below shall occur
automatically without the giving of any such notice): (i) declare the principal
of and any accrued interest in respect of all Loans and the Notes and all
Obligations to be, whereupon the same shall, subject to Section 9.04 hereof,
become, forthwith due and payable without presentment,
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demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and (ii) exercise any rights or remedies under the Subordinated
Guaranty.
SECTION 8. Definitions and Accounting Terms.
8.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Additional Senior Credit Indebtedness" shall mean term Indebtedness of
the Borrower under the Credit Agreement, in addition to the term loans made
thereunder on the Funding Date, in an aggregate amount not to exceed $2,500,000.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited, to all
directors, officers and trustees of such Person), controlled by, or under direct
or indirect common control with, such Person; provided, however, that for
purposes of Section 6.05, an Affiliate of the Borrower shall include (w) any
Person that directly or indirectly (including through limited partners, general
partner or limited liability company interests) owns more than 5% of any class
of the capital stock or other equity interests of the Borrower or Holdings, (x)
any officer, director, trustee or beneficiary of the Borrower or any such
shareholder, (y) any spouse, parent, sibling or descendant of any such person in
clause (w) or (x) above, and (z) any trust for the benefit of any such Person or
for any spouse, issue or lineal descendant of such Person described in clauses
(w) through (y) above. For all purposes of this Agreement, none of the Banks,
any Lender or any of their respective Affiliates, shall be considered an
Affiliate of Holdings, the Borrower or any Subsidiary of the Borrower. A Person
shall be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Affiliate Contracts" shall have the meaning set forth in Section 3.14.
"Agreement" shall mean this loan agreement, as modified, supplemented
or amended from time to time.
"Banks" shall mean, collectively, each institution which becomes a
"Bank" under the Credit Agreement pursuant to the terms thereof.
"Bankruptcy Code" shall have the meaning provided in Section 7.05.
"Bankruptcy Event" shall have the meaning provided in Section 9.02.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean the borrowing of Loans from all the Lenders
having Commitments on a pro rata basis on the Funding Date.
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"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Capital Expenditures" as applied to any Person, shall mean
expenditures by such Person for fixed or capital assets, including without
limitation expenditures for maintenance and repairs which should be capitalized
in accordance with generally accepted accounting principles and including
Capitalized Lease Obligations; provided that Capital Expenditures shall not
include Product Acquisition Expenditures.
"Capitalized Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with generally accepted accounting principles, is accounted for as
a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations under Capitalized Leases, in each case taken at the amount thereof
accounted for as Indebtedness in accordance with generally accepted accounting
principles; provided, that in no event shall Product Acquisition Expenditures be
deemed to be Capitalized Lease Obligations.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued
or directly and fully guaranteed or insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having maturities of not more than
six months from the date of acquisition, (ii) time deposits and certificates of
deposit of any commercial bank organized under the laws of the United States,
any State thereof or the District of Columbia having, or which is the principal
banking subsidiary of a bank holding company organized under the laws of the
United States, any State thereof, or the District of Columbia having, capital,
surplus and undivided profits aggregating in excess of $200,000,000 and having a
long-term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Corporation ("S&P") or "A2" or the equivalent thereof from
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's"), with maturities of not more than
six months from the date of acquisition by such Person, (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (ii) above, (iv) commercial paper issued by
any Person incorporated in the United States and/or tax exempt securities issued
by any agency or instrumentality of any state of the United States or
subdivision thereof, in each case rated at least A-2 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Moody's and in each case
maturing not more than six months after the date of acquisition by such Person,
and (v) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Cash Merger Consideration" shall mean the "Cash Amount" under, and as
defined in, the Merger Agreement which shall not exceed $29,825,606.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. Section 9601 et seq.
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"Change in Control" means the occurrence of one or more of the
following: (i) Holdings shall cease to have the power, or shall cease to use the
power, to elect a majority of the Board of Directors of the Borrower, (ii)
Holdings shall cease to own, of record and beneficially, at least 80% of the
Common Stock and warrants to acquire Common Stock purchased by Holdings on the
Funding Date; provided that (a) in the event any such warrants are exercised by
Holdings, the Common Stock issued upon such exercise shall thereafter be deemed
to have been issued on the Funding Date, in lieu of the warrants so exercised,
for all purposes of this clause (ii), and (b) in the event any such warrants
expire by their terms without having been exercised, such warrants shall be
deemed never to have been issued for all purposes of this clause (ii), (iii) the
HIG Funds and certain employees of HIG shall cease to own, beneficially and of
record, at least 95% (calculated on a fully diluted basis) of the economic and
voting securities of Holdings or (iv) the Borrower shall cease to own 100% of
the capital stock of each of its Subsidiaries other than Thane Direct, Inc.,
which it own at least 85% of its capital stock, and Fox Marketing Associates,
Inc., which it own at least 80% of its capital.
"Change in Law" shall have the meaning provided in Section 7.06.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Class A Shares" shall mean the Class A Common Stock, par value $0.0001
per share, of the Borrower.
"Class B Shares" shall mean the Class B Common Stock, par value $0.0001
per share, of the Borrower.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collective Bargaining Agreements" shall have the meaning set forth in
Section 3.14.
"Commitment" shall mean, for each Lender, the loan commitment set forth
opposite such Lender's name in Schedule I hereto.
"Common Stock" shall mean the Class A Shares, the Class B Shares and
any other equity of the Borrower which is not limited to a fixed sum or stated
value in respect of the rights of the holders thereof to participate in
dividends or distributions or in the distribution of assets upon any
liquidation, dissolution or winding up of the Borrower or any other securities
of the Borrower into which such Common Stock or such other securities shall be
reclassified or changed, including by reason of a merger, consolidation,
reorganization or recapitalization.
"Consolidated EBIT" shall mean, for any period, the Consolidated Net
Income before interest income, Consolidated Interest Expense, non-cash interest
expense, and provision for taxes
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and without giving effect to any extraordinary gains or losses, gains or losses
from sales of assets (other than inventory sold in the ordinary course of
business) or unrealized foreign exchange gains or losses.
"Consolidated EBITDA" for any period shall mean Consolidated EBIT,
adjusted by adding thereto the amount of all (i) amortization of Transaction
Fees and Expenses and (ii) depreciation of property, plant and equipment, in
each case to the extent the same were deducted in arriving at Consolidated Net
Income for such period.
"Consolidated Indebtedness" shall mean, at any time, all Indebtedness
of the Borrower and its Subsidiaries determined on a consolidated basis
(excluding all Indebtedness of the type described in clause (vii) of the
definition thereof, except to the extent amounts are owing with respect thereto
upon the termination of the respective agreement constituting such Indebtedness)
plus any original issue discount attributable to such Indebtedness.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated cash interest expense of the Borrower and its Subsidiaries for such
period (calculated without regard to any limitations on the payment thereof)
payable during such period in respect of all Indebtedness of the Borrower and
its Subsidiaries, on a consolidated basis, for such period (including, without
duplication, that portion of Capitalized Lease Obligations of the Borrower and
its Subsidiaries representing the interest factor for such period).
"Consolidated Net Income" shall mean, for any period, net income of the
Borrower and its Subsidiaries for such period determined on a consolidated basis
(after provision for taxes); provided, however, the net income of any Subsidiary
of the Borrower which is not a Wholly-Owned Subsidiary shall be included in the
Consolidated Net Income of the Borrower and its Subsidiaries only to the extent
of the amount of cash dividends or distributions paid by such Subsidiary to the
Borrower.
"Contingent Obligation" shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (x) for the purchase or payment of any such primary obligation or (y) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect thereof; provided,
however, that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable,
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the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
"Continuing Stockholders" shall mean the existing stockholders of the
Borrower party to the Contribution Agreement.
"Contribution Agreement" shall mean the Contribution Agreement, dated
as of May 21,1999, by and among Newco, Holdings and the Continuing Stockholders,
as the same may be supplemented, modified, amended or restated from time to time
in accordance with Section 6.12.
"Credit Agreement" shall mean the Credit Agreement, dated as of June
10,1999, among the Borrower, the Banks and the Senior Agent, as such agreement
may, subject to Section 6.17, be amended, supplemented, refinanced, restructured
or otherwise modified from time to time (in whole or in part without limitation
(except as provided in this Agreement) as to terms, extensions of maturities,
increasing the amount of borrowings or other conditions or covenants), including
subject to Section 6.17 all related notes, collateral documents, guarantees,
Interest Rate Contracts, instruments and agreements entered into in connection
therewith, as the same may be amended, modified or supplemented from time to
time.
"Credit Documents" shall mean the "Credit Documents", as defined in the
Credit Agreement as in effect on the date hereof.
"Credit Party" shall mean the Borrower and each of its Subsidiaries
party to any Credit Document.
"Debt Agreements" shall have the meaning set forth in Section 3.14.
"Debt Termination Documents" shall have the means provided in Section
3.18.
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Dividend", with respect to any Person, shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than capital stock or other equity interest of such Person) or cash to
its stockholders in their capacity as stockholders, or redeemed, retired,
purchased or otherwise acquired, directly or indirectly, for a consideration any
shares of any class of its capital stock outstanding on or after the Effective
Date (or any options or warrants issued by such Person with respect to its
capital stock), or set aside any funds for any of the foregoing purposes, or
shall have permitted any Subsidiary of such Person to purchase or otherwise
acquire for a consideration any shares of any class of the capital stock of such
Person outstanding on or after the Funding Date (or any options or warrants
issued by such Person with respect to its capital stock). Without limiting the
foregoing, "Dividends" with respect to any Person shall also include all cash
payments made or required to be made by such Person with respect to any stock
appreciation rights, equity incentive plans or any similar plans or setting
aside of any funds for the foregoing purposes.
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"Documents" shall mean the Loan Documents, the Debt Termination
Documents, the Equity Financing Documents, the Recapitalization Documents, the
Credit Documents and the PNA Warrant Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower which
is not a Foreign Subsidiary.
"Effective Date" shall have the meaning provided in Section 10.10.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution, other "accredited investor" (as defined in Regulation D
of the Securities Act) other than an individual, or a "qualified institutional
buyer" as defined in Rule 144A of the Securities Act.
"Employee Benefit Plans" shall have the meaning set forth in Section
3.14.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions suits demands demand letters directives claims
liens notices of noncompliance or violation, investigations or proceedings
relating in any way to any violation of, or liability under, any Environmental
Law or any permit issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation, (a) any and all Claims
by governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, policy and rule of common law
now or hereafter in effect (including, without limitation, the EPA guidance on
asbestos abatement and removal) and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C.Section 1251 et seq.; the
Toxic Substances Control Act, 15 U.S.C. Section 7401 et seq.; the Clean Air Act,
42 U.S.C.Section 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section
3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.Section 2701 et seq.; the
Occupational Safety and Health Act, 29 U.S.C.Section 651 et seq.; and any
applicable state and local or foreign counterparts or equivalents.
"Equity Financing Documents" shall mean all documents executed or
delivered in connection with the issuance by Holdings or any Subsidiaries of
Holdings including the Borrower of any equity interests on or prior to the
Funding Date, including, without limitation, the
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Contribution Agreement, the Stockholders Agreement, the Certificates of
Incorporation and other documents related to the equity of the Borrower and the
equity interests of Holdings.
"Equityholders Agreement" means the Equityholders Agreement, dated as
of the date hereof, among the Borrower and the investors named therein, in
substantially the form of Exhibit J hereto, as the same may be amended, modified
and/or supplemented from time to time in accordance with the terms thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement, and to any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which, together with each Loan Party or any Subsidiary of a Loan Party,
would be deemed to be a "single employer" (i) within the meaning of Section
414(b), (c), (m) or (o) of the Code or (ii) as a result of the a Loan Party or a
Subsidiary of a Loan Party being or having been a general partner of such
person.
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the Effective Date.
"Existing Indebtedness" shall have the meaning provided in Section
4.21.
"Expiration Date" shall mean June 30,1999.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Fixed Charge Coverage Ratio" for any period shall mean the ratio of
(x) Consolidated EBITDA less the amount of all Capital Expenditures (exclusive
of Capital Expenditures made in accordance with Section 6.07(c)) made by the
Borrower or any of its Subsidiaries for such period to (y) Fixed Charges for
such period.
"Fixed Charges" for any period shall mean the sum of (i) Consolidated
Interest Expense for such period, (ii) the aggregate principal amount of all
scheduled payments of Indebtedness (including the principal portion of rentals
under Capitalized Lease Obligations but excluding repayment of Revolving Loans
and Swingline Loans (in each case under and as defined in the Credit Agreement
as in effect on the date hereof) not accompanied by a permanent reduction to the
Total Revolving Loan Commitment (under and as defined in the Credit Agreement as
in effect on the date hereof)) required to be made during such period, (iii)
taxes paid by the Borrower and its Subsidiaries during such period and (iv) all
Dividends paid by the Borrower.
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"Foreign Subsidiary" shall mean each Subsidiary of the Borrower that is
incorporated under the laws of any jurisdiction other than the United States of
America, any state thereof or any territory thereof.
"Funding Date" shall mean the one and only day on which Loans are made.
"Hazardous Materials" means (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, transformers or other equipment that contain, dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous waste," "hazardous materials," "extremely
hazardous waste," restricted hazardous waste, toxic substances, toxic
pollutants, contaminants, or pollutants, or words of similar meaning and
regulatory effect, under any applicable Environmental Law; and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated under applicable Environmental Laws.
"HIG" shall mean H.I.G. Capital Management, Inc., a Delaware
corporation.
"HIG Funds" shall mean H.I.G. Investment Group L.P., a Cayman Islands
corporation, H.I.G. Investment Group II, L.P., a Cayman Islands limited
partnership and H.I.G. Capital Partners II, L.P., a Delaware limited
partnership.
"Holdings" shall mean HIG Infomercial Company, a Cayman Islands
corporation.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of such
Person for borrowed money or for the deferred purchase price of property or
services other than trade payables and accrued expenses arising in the ordinary
course of business (which are not more than 90 days past due), (ii) the maximum
amount available to be drawn under all letters of credit issued for the account
of such Person and all unpaid drawings in respect of such letters of credit,
(iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v),
(vi), (vii) or (viii) of this definition secured by any Lien on any property
owned by such Person, whether or not such Indebtedness has been assumed by such
Person, (iv) all Capitalized Lease Obligations of such Person, (v) all
obligations of such person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person, (vii) all
obligations under any Interest Rate Contracts or under any similar type of
agreement and (viii) mandatory obligations of such Person to redeem or purchase
stock or other equity interests or purchase or repay Indebtedness.
"Indemnified Matters" shall have the meaning provided in Section 10.01.
"Indemnitees" shall have the meaning provided in Section 10.01.
"Indemnity Escrow Account" shall mean the escrow account established
pursuant to the Indemnity Escrow Agreement.
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"Indemnity Escrow Amount" shall mean the amount deposited in the
Indemnity Escrow Account on the Funding Date pursuant to the Merger Agreement,
which shall equal $3,300,000.
"Indemnity Escrow Agreement" shall mean that certain Escrow Agreement
dated as of June 10,1999 by and among Newco, the Borrower, the "Indemnification
Representative" referred to therein, and SunTrust Bank, Miami, N.A., as the same
may be supplemented, modified, amended or restated from time to time in
accordance with Section 6.12.
"Intellectual Property" shall have the meaning provided in Section
4.20.
"Interest Rate Contract" shall mean interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest rate
insurance, and other agreements or arrangements designed to provide protection
against fluctuations in interest rates, each as in effect on the date hereof.
"Intercompany Loans" shall have the meaning provided in Section 6.04.
"Intercompany Note" shall mean promissory notes, in the form of Exhibit
L, evidencing Intercompany Loans.
"Leasehold Properties" of any Person means all right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of this
Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" has the meaning specified in Section 1.01.
"Loan Documents" shall mean, collectively, this Agreement, each Note,
each Subordinated Guaranty and the Warrant Documents.
"Loan Party" means each of the Borrower and each Subordinated
Guarantor.
"Management Agreements" shall have the meaning provided in Section
3.14.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Contracts" shall have the meaning provided in Section 3.14.
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"Maturity Date" shall mean June 10, 2004.
"Merger" shall mean the merger of Newco with and into the Borrower,
with the Borrower being the surviving corporation of the Merger.
"Merger Agreement" shall mean the Merger Agreement, dated as of May 21,
1999, by and between Newco and the Borrower, as the same may be supplemented,
modified, amended or restated from time to time in accordance with Section 6.12.
"Merger Consideration" shall mean the sum of the Cash Merger
Consideration and the Indemnity Escrow Amount.
"Merger Documents" shall mean all documents entered into or delivered
in connection with the Merger, including, without limitation, the Merger
Agreement and the certificate of merger filed with the state of Delaware.
"▇▇▇▇▇'▇" shall have the meaning provided in the definition of "Cash
Equivalents."
"Net Sale Proceeds" shall mean for any sale or other disposition of
assets including capital stock and securities, the gross cash proceeds
(including any cash received by way of deferred payment pursuant to a promissory
note, receivable or otherwise, but only as and when received) received from such
sale, net of (x) reasonable transaction costs (including, without limitation,
attorneys' fees), (y) the amount of such gross cash proceeds required to be used
to permanently repay any Indebtedness which is secured by the respective assets
which were sold, and (z) the estimated marginal increase in income taxes and any
stamp tax which will be payable by the Borrower's consolidated group as a result
of such sale.
"Newco" shall mean Thane Acquisition Corporation, a Delaware
corporation.
"Non-Payment Blockage Notice" shall have the meaning provided in
Section 9.03.
"Non-Payment Blockage Period" shall have the meaning provided in
Section 9.03.
"Non-Payment Default" shall have the meaning provided in Section 9.03.
"Note" shall have the meaning provided in Section 1.04(a).
"Notice of Borrowing" shall have the meaning provided in Section 1.02.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to any
Lender pursuant to the terms of this Agreement or any other Loan Document,
including without limitation, all principal, interest, premium, penalties, fees,
expenses, indemnification, reimbursements, damages and any other liabilities,
together with and including any amounts received upon the exercise of rights of
recession or other rights of action (including claims for damages) or otherwise.
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"PNA Warrant Agreement" shall mean the Warrant Agreement, dated as of
the date hereof, between the Borrower and the Banks as the same may be amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof.
"PNA Warrant Documents" mean the PNA Warrant, the PNA Warrant Agreement
and the Equityholders Agreement.
"Prepaid Advertising" shall mean, as of any date of determination, the
gross dollar value (valued at cost) of all prepaid network or cable television
airtime carried on the books of the Borrower and its Subsidiaries.
"Product Acquisition Expenditures" shall mean expenditures by the
Borrower and its Subsidiaries consisting of (i) royalty advances to other
Persons in connection with the acquisition of product distribution rights from
such other Persons pursuant to a profit-sharing or similar arrangement and (ii)
expenditures to acquire Intellectual Property relating to the production,
distribution or marketing of products by the Borrower and its Subsidiaries in
the ordinary course of business.
"Projections" shall have the meaning provided in Section 3.11(b).
"Quarterly Payment Date" shall mean the first Business Day of each
March, June, September and December of each calendar year.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. Section 6901 et seq.
"Recapitalization" shall mean the transactions contemplated by the
Recapitalization Documents described in clauses (i) through (vii) of the
definition thereof.
"Recapitalization Documents" shall mean (i) the Contribution Agreement,
(ii) the Merger Documents, (iii) the Stockholders Agreement, (iv) the Indemnity
Escrow Agreement, (v) the warrants for Common Stock issued by the Company to HIG
on the date hereof, (vi) the warrants for Common Stock issued by the Company to
▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Hay on the date hereof and (vii) all other
documents entered into or delivered in connection with the Recapitalization, as
the same may be supplemented, modified, amended or restated from time to time in
accordance with Section 9.12 provided therein.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leasehold Properties.
"Recovery Event" shall mean the receipt by the Borrower or any
Subsidiary of the Borrower of any cash insurance proceeds (i) payable by reason
of theft, physical destruction, damage or any other event with respect to any
properties or assets of the Borrower or any of its Subsidiaries, (ii) pursuant
to any business interruption insurance maintained by the Borrower or any of its
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Subsidiaries, or (iii) pursuant to any "key man" life insurance policies
covering any officers or employees of the Borrower or any of its Subsidiaries.
"Redemption Agreement" shall mean that certain Redemption Agreement,
dated as of the date hereof, between the Borrower and HIG Infomercial Company.
"Refinanced Indebtedness" shall have the meaning provided in Section
3.18.
"Regulation T" shall mean Regulation T of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof.
"Related Fund" shall mean, with respect to any Lender that is a fund
that invests in loans, any other fund that invests in loans and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"Release" shall mean disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other than
those events as to which the 30-day notice period is waived under subsection
.22, .23, .25, .27 or. 28 of PBGC Regulation Section 4043.
"Required Banks" shall have the meaning set forth in the Credit
Agreement as in effect on the date hereof.
"Required Lenders" shall mean, at any time, Lenders the sum of whose
then outstanding Loans represents at least a majority of all then outstanding
Loans.
"Returns" shall have the meaning provided in Section 4.09.
"Rollover Amount" shall have the meaning provided in Section 6.07(b).
"S&P" shall have the meaning provided in the definition of "Cash
Equivalents."
"SEC" shall have the meaning provided in Section 5.01(h).
"Section 2.04(b)(ii) Certificate" shall have the meaning provided in
Section 2.04(b)(ii).
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"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Securityholders Agreements" shall have the meaning set forth in
Section 3.14.
"Senior Agent" shall mean Paribas, as agent for the Banks under the
Credit Agreement, or any successor thereto appointed pursuant to the terms
thereof.
"Senior Debt" shall mean all payment and performance obligations now or
hereafter incurred pursuant to and in accordance with the terms of the Credit
Agreement and the other Credit Documents (including without limitation all
principal, interest (including, without limitation, any post-petition interest
on such obligations at the rate set forth in the Credit Agreement, accruing
whether or not granted or permitted in connection with an event of the type
referred to in Section 7.05 hereof), premium, penalties, fees, expenses,
indemnification, reimbursements, damages and other liabilities payable under the
Credit Agreement and the other Credit Documents) and any Interest Rate Contract;
provided, that in no event shall the principal amount of Senior Debt (exclusive
of interest rate protection obligations) exceed the sum of (i) $19,000,000 (as
such amount is reduced by repayments of term loans and by reductions of
commitments of term loans under the Credit Agreement after the Closing Date),
(ii) an amount equal to the revolving loans and commitments therefor outstanding
under the Credit Agreement from time to time to the extent they do not exceed
$5,000,000 as reduced by permanent commitment reductions and (iii) any
Additional Senior Credit Indebtedness less, with respect to this clause (iii),
(x) the amount of any permanent reduction of commitments thereunder, (y) any
repayment of loans thereunder (other than loans which can be reborrowed) and (z)
any other repayment accompanied by a permanent reduction of commitments
thereunder. Senior Debt outstanding under the Credit Agreement shall continue to
constitute Senior Debt for all purposes hereof, notwithstanding that such Senior
Debt or any claim in respect thereof may be disallowed, avoided or subordinated
pursuant to any insolvency law, the Bankruptcy Code or any similar federal or
state law for the relief of debtors or other applicable insolvency law or
equitable principles as a claim for unmatured interest.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
the date hereof, among the Borrower and the investors named therein, in
substantially the form of Exhibit O hereto, as the same may be amended, modified
and/or supplemented from time to time in accordance with the terms thereof and
Section 6.12 hereof.
"Subordinated Guarantor" shall mean each Subsidiary of the Borrower and
each other Person which has entered into the Subordinated Guaranty in accordance
with this Agreement.
"Subordinated Guaranty" shall have the meaning provided in Section
3.05, as the same may be amended, modified or supplemented from time to time.
"Subordinated Obligations" shall have the meaning set forth in
Section 9.01.
"Subordinated Redemption Note" shall have the meaning provided in
Section 6.03.
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"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
directly or indirectly through one or more Subsidiaries of such Person has more
than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean each Subsidiary of the Borrower.
"Tax Sharing Agreements" shall have the meaning set forth in Section
3.14.
"Taxes" shall have the meaning provided in Section 2.04(a).
"Total Commitment" means the aggregate Commitments of the Lenders.
"Transaction" shall mean collectively, (i) the execution and delivery
of the Loan Documents and the incurrence of Loans hereunder on the Funding Date
and the issuance of the Warrants, (ii) the execution and delivery of the Credit
Agreement and the incurrence of the loans thereunder on the Funding Date, (iii)
the consummation of the Recapitalization on the Funding Date, (iv) the payment
of the Transaction Fees and Expenses in connection therewith, (v) the entering
into of the Equity Financing Documents and issuance of Common Stock of the
Borrower in connection with the transactions contemplated hereby and (vi) the
repayment of all Refinanced Indebtedness, together with all accrued interest,
premiums, fees, commissions and expenses owing in connection therewith and the
termination of all commitments thereunder.
"Transaction Fees and Expenses" shall mean all fees and expenses
incurred in connection with and arising out of the Transaction and the
transactions contemplated thereby and hereby; provided, however, that the
aggregate amount of such fees and expenses shall be approximately $2,000,000.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan determined on a plan termination basis in accordance with actuarial
assumptions at such time consistent with those prescribed by the PBGC for
purposes of Section 4044 of ERISA, exceeds the fair market value of all plan
assets allocable to such liabilities under Title IV of ERISA (excluding any
accrued but unpaid contributions).
"United States" and "U.S." shall each mean the United States of
America.
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"Warrant" shall mean, collectively, one or more warrants
issued to a Lender or its assignees in connection with this Agreement,
substantially in the form of Exhibit H hereto, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof.
"Warrant Agreement" shall mean the Warrant Agreement, dated as
of the date hereof, between the Borrower and the Lenders, in substantially the
form of Exhibit I hereto, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof.
"Warrant Documents" mean the Warrant, the Warrant Agreement,
the Redemption Agreement and the Equityholders Agreement.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any
Person, any Wholly-Owned Subsidiary of such Person that is a Domestic
Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 100% equity
interest at such time.
SECTION 9. Subordination.
9.01 Obligations Subordinate to Senior Indebtedness. The
Borrower covenants and agrees, and each Lender and each other holder of any
Note, if any, likewise covenants and agrees, that, (a) to the extent and in the
manner hereinafter set forth in this Section 9, the payment of the Obligations,
including pursuant to any amendment, modification, restatement or renewal
thereof (the "Subordinated Obligations"), is hereby expressly made subordinated
and subject in right of payment to the prior payment in full of all Senior Debt
and (b) the terms and conditions of such subordination is for the benefit of the
holders of the Senior Debt and each such holder may enforce such subordination.
The Obligations shall rank equally with all existing and future indebtedness of
the Borrower (other than the Senior Debt and any other indebtedness that is
fully and adequately secured) except for such indebtedness as may be subordinate
thereto and as may be required by bankruptcy or other laws affecting the rights
of creditors generally.
9.02 Payment Over of Proceeds Upon Dissolution. In the event
of (i) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Borrower or to its assets, or (ii) any liquidation,
dissolution or other winding up of the Borrower, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Borrower (collectively, "Bankruptcy Events"), then and in any
such event:
(a) the holders of Senior Debt shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Debt (including interest after the
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commencement of a Bankruptcy Event at the rate specified in the Senior Debt,
whether or not allowed), before any Lender is entitled to receive any direct or
indirect payment or distribution on account of Subordinated Obligations
including, without limitation, by exercise of set-off and any payment which may
be payable or deliverable by reason of any other Indebtedness being subordinated
in right of payment to the Subordinated Obligations;
(b) any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities (including,
without limitation, securities of the Borrower or any successor), by set-off or
otherwise, to which any Lender would be entitled on account of the Subordinated
Obligations but for the provisions of this Section 9, including any such payment
or distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Borrower being subordinated to the payment of
Subordinated Obligations (except for any such payment or distribution (1)
authorized by an unstayed, final, nonappealable order or decree stating that
effect is being given to the subordination of such Subordinated Obligations to
the Senior Debt, and made by a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or (2) of
securities which, if debt securities, are subordinated to at least the same
extent as the Subordinated Obligations are to (A) such Senior Debt or (B) any
securities issued in exchange for Senior Debt: provided, however, that (w) such
securities shall be unsecured, (x) the final maturity of such securities shall
not be earlier than one year following the maturity date of the last to mature
of the Senior Debt (including any securities issued in exchange therefor) at the
time outstanding and the scheduled amortization thereof shall not be more
favorable (as to amount or time of payment) than the scheduled amortization of
the principal amount of the Subordinated Obligations, (y) such securities shall
contain covenants which are no more restrictive than the covenants contained
herein and shall not contain greater defaults than as are contained herein, and
(z) such securities shall bear interest at a rate per annum less than or equal
to 17% per annum computed on the same basis as described herein) shall be paid
by the liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of all Senior Debt or their representative
or representatives or to the trustee or trustees under any indenture under which
any instruments evidencing any of such Senior Debt may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of such Senior
Debt held or represented by each, to the extent necessary to make payment in
full of all such Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 9, any Lender shall have received any such payment or
distribution of assets of the Borrower of any kind or character on account of
the Subordinated Obligations, whether, property or securities (including,
without limitation, securities of the Borrower or any successor thereto),
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other Indebtedness of the Borrower being
subordinated to the payment of the Subordinated Obligations (but excluding any
payment of the character described in the parenthetical clause in the foregoing
paragraph (b)) before all Senior Debt is paid in full, then and in such event
such payment or distribution shall be paid over or delivered, in accordance with
Section 9.10 hereof, forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Borrower for application to the payment of all
such
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Senior Debt remaining unpaid, to the extent necessary to pay such Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Debt.
If, notwithstanding the provisions of this Agreement, there
shall occur any consolidation of the Borrower with, or any merger of the
Borrower into, another corporation or the liquidation or dissolution of the
Borrower following any conveyance, transfer or lease of its properties and
assets substantially as an entirety to another corporation, such consolidation,
merger or liquidation shall not be deemed a Bankruptcy Event; provided, that no
other Bankruptcy Event shall have occurred and be continuing at the time of such
consolidation, merger or liquidation. The Senior Agent is hereby authorized to
file an appropriate proof of claim only on behalf of the Lenders if the Lenders
do not file such claim or there is not filed on behalf of the Lenders a proper
proof of claim in the form required in any Bankruptcy Event prior to thirty (30)
days before the expiration of the time to file such claim or claims.
9.03 No Payment in Certain Circumstances. In the event that
(i) the Borrower shall fail to pay when due (after giving effect to any
applicable grace periods), upon acceleration or otherwise, any amount or
obligation with respect to Senior Debt under the Credit Agreement (a "Payment
Default") which Payment Default shall not have been cured or waived in writing,
or (ii) an Event of Default (other than a Payment Default) under and as defined
in the Credit Agreement shall occur and be continuing, which shall not have been
cured or waived in writing or otherwise cease to exist (a "Non-Payment
Default"), and the Borrower and each Lender receive written notice of such
Non-Payment Default from either the Senior Agent or the holders of at least a
majority in aggregate principal amount of the Senior Debt under the Credit
Agreement at the time outstanding (a "Non-Payment Blockage Notice"), then no
payment on account of the Subordinated Obligations shall be made by the Borrower
or otherwise on account of the Subordinated Obligations (x) in the case of any
Payment Default, unless and until such Senior Debt shall have been paid in full
or until such Payment Default shall have been cured or waived in writing, or (y)
in the case of any Non-Payment Default, from the date on which the Borrower and
each Lender receive such Non-Payment Blockage Notice until (but excluding) the
earlier of (1) 179 days after such date and (2) the date, if any, on which the
Senior Debt under the Credit Agreement is paid in full or such Non-Payment
Default is waived by the holders of such Senior Debt under the Credit Agreement
or otherwise cured or ceases to exist (a "Non-Payment Blockage Period");
provided, that, (x) only one Non-Payment Blockage Notice may be given in any
360-day period, (y) no Non-Payment Default or event which, with the giving of
notice and/or lapse of time, would become a Non-Payment Default which, in either
case, existed or was continuing on the date of the commencement of any
Non-Payment Blockage Period shall be, or be made, the basis for the commencement
of a subsequent Non-Payment Blockage Period unless such Non-Payment Default or
event, as the case may be, shall in the interim have been cured or waived in
writing for period of not less than 90 consecutive days and (z) there must be a
181 consecutive day period in any 360 consecutive day period during which no
Non-Payment Blockage Period is in effect; provided, further, however, that if
within the Non-Payment Blockage Period, the holders of Senior Debt have not
declared the Senior Debt to be immediately due and payable (or have declared
such Senior Debt to be immediately due and payable and within such period have
rescinded such acceleration), then and in that event, all payments then or
previously due with respect to Subordinated Obligations shall be paid at the end
of such Non-Payment Blockage Period.
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In the event that, notwithstanding the foregoing, any Lender
shall have received any payment or distribution on account of the Subordinated
Obligations contrary to the foregoing provisions of this Section 9.03, then and
in such event such payment shall be paid over and delivered forthwith to the
holders (or their agent or trustee) of the relevant Senior Debt in accordance
with Section 9.10 hereof. The provisions of this Section 9.03 shall not apply to
any payment with respect to which Section 9.02 would be applicable.
9.04 Acceleration Rights: Remedies. If an Event of Default,
other than an Event of Default under Sections 7.05 or 7.09, shall exist at any
time that any Senior Debt under the Credit Agreement shall be outstanding or
there shall exist any obligation of any Bank to make any loan or advance
thereunder, no Lender nor any other holder of the Notes shall take any action,
judicial or otherwise, to accelerate or collect payment on the Subordinated
Obligations or to pursue any other remedy with respect to the Subordinated
Obligations (including, without limitation, commencing or joining with any other
creditor of the Borrower in commencing any proceeding in bankruptcy) prior to
the earlier of (i) the expiration of 30 days immediately following such Event of
Default, (ii) the acceleration of the Senior Debt under the Credit Agreement,
(iii) the payment in full of all outstanding Senior Debt under the Credit
Agreement, (iv) the express waiver or amendment by or on behalf of the Banks
under the Credit Agreement of the restrictions, during such standstill period,
on asset sales or dispositions by the Borrower or any of its Subsidiaries so as
to permit the Borrower or any of its Subsidiaries to transfer or apply the net
proceeds from such asset sales or dispositions to or for the benefit of any
holders of Indebtedness of the Borrower other than to repay obligations under
the Credit Agreement, (v) the express waiver or amendment, during such
standstill period, by or on behalf of the Banks under the Credit Agreement of
the prohibition on the creation of Liens on property, revenue or assets of the
Borrower or any of its Subsidiaries so as to permit the creation of Liens
(including without limitation judgment Liens) securing payment of Indebtedness
of the Borrower or any of its Subsidiaries which ranks pari passu with the Notes
or is subordinate or junior in right of payment to the Notes or (vi) such time
as holders of a majority of the outstanding Senior Debt consent in writing to
the termination of the standstill period, but such action may only be taken if
at the end of such period such Event of Default has not been cured or waived;
provided, that any amount received by any of the Lenders as a result of any
acceleration permitted above prior to payment in full of the Senior Debt under
the Credit Agreement shall be paid to the Banks in accordance with the
provisions of this Section 9.
9.05 Payment Otherwise Permitted. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes shall prevent the
Borrower, at any time except as set forth in Section 9.02 or under the
conditions described in Section 9.03, from making payments at any time of
principal of and interest on the Loans or any other amount payable by the
Borrower under the Notes or this Agreement. Notwithstanding the provisions of
this Section 9, no Lender shall be charged with knowledge of the existence of
any facts, including of the occurrence of a Payment Default, which would
prohibit the making of any payment or distribution by the Borrower or of any
other payment on account of the Subordinated Obligations or the receipt or
retention thereof by any Lender, or the taking of any action by any Lender of
the type referred to in Section 9.04, unless such Lender shall have received at
least two Business Day's prior written notice of such facts.
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9.06 Subrogation to Rights of Holders of Senior Debt. Subject
to, and solely effective following, the final payment in full of all Senior
Debt, the Lenders shall be subrogated to the rights of the holders of Senior
Debt to receive payments and distributions of cash, property and securities
applicable to such Senior Debt to the extent of the payments or distributions
made to the Senior Agent or any Bank or other holder of Senior Debt, or
otherwise applied to payment of, the Senior Debt pursuant to the provisions of
this Section 9 until the principal of and interest on the Loans and the Notes
shall be paid in full in cash. For purposes of such subrogation, no payments or
distributions to the holders of Senior Debt of any cash, property or securities
to which the Lenders would be entitled except for the provisions of this Section
9, and no payments over pursuant to the provisions of this Section 9 to the
holders of Senior Debt by the Lenders shall, as among the Borrower, its
creditors (other than holders of Senior Debt) and the Lenders, be deemed to be a
payment or distribution by the Borrower to or on account of the Senior Debt.
9.07 Provisions Solely to Define Relative Rights. The
provisions of this Section 9 are and are intended solely for the purpose of
defining the relative rights of the holders of the Notes on the one hand and the
holders of Senior Debt on the other hand. Nothing contained in this Section 9 or
elsewhere in this Agreement or in the Notes is intended to or shall (i) impair,
as among the Borrower, its creditors (other than holders of Senior Debt) and the
Lenders, the obligation of the Borrower, which is absolute and unconditional, to
pay to the Lenders the principal of, and premium and interest on, and any other
amount payable by the Borrower under, the Loans, the Notes or this Agreement as
and when the same shall become due and payable in accordance with its terms; or
(ii) affect the relative rights against the Borrower of the Lenders and its
creditors (other than the holders of Senior Debt); or (iii) prevent the Lenders
from accelerating the Loans and exercising all other remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Section 9 of the holders of Senior Debt (x) upon the
occurrence of a Bankruptcy Event, to receive, pursuant to and in accordance with
Section 9.02, cash, property and securities otherwise payable or deliverable to
the Lenders, (y) under the conditions specified in Section 9.03, to prevent any
payment prohibited by such Section or (z) under Section 9.04.
9.08 No Waiver of Subordination Provisions: Amendment. No
right of any present or future holder of any Senior Debt to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Borrower or by any act
or failure to act, in good faith, by any such holder, or by any non-compliance
by the Borrower with the terms, provisions, and covenants of this Agreement,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
9.09 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Borrower or any other
payment on account of the Subordinated Obligations referred to in this Section
9, the Lenders shall be entitled to rely upon any unstayed, final, nonappealable
order or decree entered by any court of competent jurisdiction in which a
Bankruptcy Event is pending, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Debt of the Borrower, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Section 9.
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9.10 Turnover; Miscellaneous Subordination Provisions.
(a) If a payment or distribution is made to any holder of
Subordinated Obligations that because of this Section 9 should not have been
made to it, such holder shall segregate such payment or distribution from its
other funds and property and hold it in trust for the benefit of, and, upon
written request, pay it over (in the same form as received, with any necessary
endorsement) to, the holders of Senior Debt as their interests may appear, or
the Senior Agent or other agent or representative or the trustee under the
Credit Agreement, indenture or other agreement (if any) pursuant to which Senior
Debt may have been incurred or issued, as their respective interests may appear,
for application (in the case of cash) to, or as collateral (in the case of
non-cash property or securities) for the payment or prepayment of, all
obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such obligations in full in accordance with their terms, after giving
effect to an concurrent payment or distribution to or for the holders of Senior
Debt.
(b) A distribution may consist of cash, securities or other
property, by set-off or otherwise, and a payment or distribution on account of
any obligations with respect to the holders of Subordinated Obligations shall
include any redemption, purchase or other acquisition of the Subordinated
Obligations.
(c) For the purpose of this Section 9, all Senior Debt now or
hereafter existing shall not be deemed to have been paid in full unless the
holders or owners thereof shall have received payment in full in cash.
(d) The agreements contained in this Section 9 shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
of any of the Senior Debt is rescinded or must otherwise be returned by any
holder of Senior Debt upon any Bankruptcy Event of the Borrower, all as though
such payment had not been made.
(e) All rights and interests under this Agreement of the
holders of Senior Debt, and all agreements and obligations of the holders of
Subordinated Obligations and the Borrower under this Section 9, shall remain in
full force and effect irrespective of (i) any lack of validity or enforceability
of the Credit Agreement, any promissory notes evidencing the Indebtedness
thereunder, or any other agreement or instrument relating thereto or to any
other Senior Debt, including, without limitation, any agreement referred to in
the definition of Credit Agreement, or (ii) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any holders of
Subordinated Obligations or the Borrower.
(f) The provisions set forth in this Section 9 constitute a
continuing agreement and shall (i) be and remain in full force and effect until
payment in full of all Senior Debt at such time when no Bank shall have any
obligation to make advances under the Credit Agreement, (ii) be binding upon the
holders of Subordinated Obligations, the Borrower and their respective
successors, transferees and assigns, and (iii) inure to the benefit of, and be
enforceable directly by, each of the holders of Senior Debt and their respective
successors, transferees and assigns.
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(g) No waiver of the rights of the holders of the Senior Debt
hereunder shall be deemed made unless the same shall be in writing, duly signed
by an authorized officer of the Senior Agent or the holders of a majority of the
outstanding principal amount of the Senior Debt under the Credit Agreement, and
each waiver, if any, shall apply only to the specific instance involved and
shall in no way impair the rights of such holder, or the obligations of the
Lenders, in any other respect at any other time.
SECTION 10. Miscellaneous.
10.01 Payment of Expenses, Etc. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of each Lender (including, without
limitation, the reasonable fees and disbursements of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇) in
connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein and any amendment, waiver or consent relating hereto or thereto, and
of each of the Lenders in connection with the enforcement of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel for each of the Lenders); (ii) pay and hold each of the
Lenders harmless from and against any and all present and future stamp, excise
and other similar taxes with respect to the foregoing matters and save each of
the Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such taxes; and (iii) defend,
protect, indemnify and hold harmless each Lender and each of its officers,
directors, employees, representatives, attorneys, agents, Affiliates, any other
Person in control of any Lender or its affiliates (collectively called the
"Indemnitees") from and against any and all liabilities, obligations (including
removal or remedial actions), losses, damages (including foreseeable and
unforeseeable consequential damages and punitive damages), penalties, claims,
actions, judgments, suits, proceedings, costs, expenses and disbursements
(including reasonable attorneys' and consultants fees and disbursements) of any
kind or nature whatsoever that may at any time be incurred by, imposed on or
assessed against the Indemnitees directly or indirectly based on, or arising or
resulting from, or in any way related to, or by reason of (a) any investigation,
litigation or other proceeding (whether or not any Lender is a party thereto and
whether or not any such investigation, litigation or other proceeding is between
or among any Lender, any Loan Party or any of its Subsidiaries, or any third
Person or otherwise) related to the entering into and/or performance of this
Agreement or any other Document or the proceeds of any Loans hereunder or the
consummation of any transactions contemplated herein (including, without
limitation, the Transaction) or in any other Document or the exercise of any of
their rights or remedies provided herein or in the other Loan Documents; or (b)
the actual or alleged generation, presence or Release of Hazardous Materials on
or from, or the transportation of Hazardous Materials to or from, any Real
Property owned or at any time operated by any Loan Party or any of its
Subsidiaries; or (c) any Environmental Claim relating to any Loan Party, any of
its Subsidiaries or any Real Property owned or at any time operated by any Loan
Party or any of its Subsidiaries; or (d) the exercise of the rights of any
Lender under any of the provisions of this Agreement, any other Loan Document or
any Loans hereunder; or (e) the consummation of any transaction contemplated
herein (including, without limitation, the Transaction) or in any other Document
(the "Indemnified Matters") regardless of when such Indemnified Matter arises,
but
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excluding any such Indemnified Matter based solely on the gross negligence or
willful misconduct of such Indemnitee.
10.02 Right of Setoff. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to any
Loan Party or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, but in any event subject to Section 9, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of any Loan Party or any of its Subsidiaries against
and on account of the Subordinated Obligations and liabilities of each Loan
Party or any of its Subsidiaries to such Lender under this Agreement or under
any of the other Loan Documents, including, without limitation, all interests in
Subordinated Obligations purchased by such Lender pursuant to Section 10.06(b),
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Loan Document, irrespective of whether or not
such Lender shall have made any demand hereunder and although said Subordinated
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. The Lenders hereby agree to provide notice to the Borrower of any
action taken pursuant to this Section 10.02; provided, that the failure to give
such notice shall not affect any action taken by such Lender pursuant to this
Section 10.02.
10.03 Notices. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
its address specified opposite its signature below; if to any Lender, at its
address specified opposite its name below; if to the Senior Agent, to the
address specified in the Credit Agreement; or, as to the General Partner or
Borrower or any Lender, at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall, when mailed, telegraphed, telexed, facsimile, or cabled or
sent by overnight courier, be effective three Business Days after deposited in
the mails, certified, return receipt requested, when delivered to the telegraph
company or cable company or one Business Day following delivery to an overnight
courier, as the case may be, or when sent by telex or facsimile device, except
that notices and communications to a Lender shall not be effective until
received by such Lender.
10.04 Benefit of Agreement.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided, however, that no Loan Party may assign or transfer any
of its rights, obligations or interest hereunder or under any other Loan
Document without the prior written consent of all Lenders; and provided,
further, that although any Lender may transfer, assign or grant participations
in its rights hereunder, such Lender shall remain a "Lender" for all purposes
hereunder (and may not transfer or assign all or any portion of its Loans
hereunder except as provided in Section 10.04(b) and the transferee, assignee or
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participant, as the case may be, shall not constitute a "Lender" hereunder; and
provided, further, that no Lender shall transfer or grant any participation
under which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Loan Document except to the extent such
amendment or waiver would: (i) extend the final scheduled maturity of any Loan
or Note in which such participant is participating, or reduce the rate or extend
the time of payment of interest (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof over the amount thereof then in effect (it being
understood that waivers of any Defaults or Events of Default or of a mandatory
repayment shall not constitute a change in the terms of such participation), or
(ii) consent to the assignment or transfer by or a release of the Borrower or
any Subordinated Guarantor of any of its rights and obligations under this
Agreement or any other Loan Document other than, in the case of any Subordinated
Guaranty, as otherwise provided therein. In the case of any such permitted
participation, the participant shall not have any rights under this Agreement or
any of the other Loan Documents other than Section 10.02 (the participant's
rights against such Lender in respect of such participation to be those set
forth in the agreement executed by such Lender in favor of the participant
relating thereto) and all amounts payable by any Loan Party hereunder and
thereunder shall be determined as if such Lender had not sold such
participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender
together with one or more other Lenders) may assign all or a portion of its
outstanding principal amount of Loans to one or more Eligible Transferees or to
a Related Fund each of which assignees shall become a party to this Agreement as
a Lender by execution of an assignment and assumption agreement substantially in
the form of Exhibit K (appropriately completed); provided that: (i) at such time
Schedule I shall be deemed modified to reflect the outstanding Loans of such new
Lender and of the existing Lenders; (ii) new Notes will be issued, at the
Borrower's expense, to such new Lender and to the assigning Lender upon the
request of such new Lender or assigning Lender, such new Notes to be in
conformity with the requirements of Section 1.04 (with appropriate
modifications) to the extent needed to reflect the revised outstanding Loans;
and (iii) notice that such new Lender has become a Lender hereunder is provided
to the Borrower in accordance with Section 10.03. At the time of each assignment
pursuant to this Section 10.04(b) to a Person which is not already a Lender
hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower the appropriate Internal Revenue
Service Forms (and, if applicable, a Section 2.04(b)(ii) Certificate) required
by Section 2.04(b).
10.05 No Waiver; Remedies Cumulative. No failure or delay on
the part of any Lender or any holder of any Note in exercising any right, power
or privilege hereunder or under any other Loan Document and no course of dealing
between any Loan Party or any of its Subsidiaries and any Lender or the holder
of any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Loan Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which any Lender or the
holder of any Note would otherwise have. No notice to or demand on any Loan
Document or any of its Subsidiaries in any case shall entitle any such Person to
any other or further
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notice or demand in similar or other circumstances or constitute a waiver of the
rights of any Lender or the holder of any Note to any other or further action in
any circumstances without notice or demand.
10.06 Payments Pro Rata. Each of the Lenders agrees that, if
it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, of a sum which with respect to the
related sum or sums received by other Lenders is in a greater proportion than
the total of such Subordinated Obligations then owed and due to such Lender
bears to the total of such Subordinated Obligations then owed and due to all of
the Lenders immediately prior to such receipt, then such Lender receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Lenders an interest in the Subordinated Obligations to such other Lenders
in such amount as shall result in a proportional participation by all the
Lenders in such amount; provided, that if all or any portion of such excess
amount is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery, but
without interest.
10.07 Calculations; Computations.
a) The financial statements to be furnished to the Lenders
pursuant hereto shall be made and prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout the
periods involved; provided, that except as otherwise specifically provided
herein, all computations determining compliance with Sections 6.07 through 6.10,
inclusive, including the definitions used therein, shall utilize accounting
principles and policies in conformity with those used to prepare the financial
statements delivered to Lenders pursuant to Section 6.01(a) with respect to the
first quarter following the Funding Date (including, without limitation, the
amortization of production costs over a period not to exceed 18 months) and
provided further, that the effects of purchase price accounting adjustments
required or permitted by APB 16 and 17 shall be excluded.
(b) All computations of interest hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest is payable.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY IRREVOCABLY DESIGNATES, ACCEPTS AND EMPOWERS FOR
ITSELF AND IN
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RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM WITH OFFICES ON THE DATE
HEREOF AT ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, AS ITS DESIGNEE, APPOINTEE
AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN
RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, AND THE BORROWER AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT
ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT
UNDER THIS AGREEMENT. BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER THE BORROWER AND AGREES NOT TO PLEAD OR
CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
LOAN DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS
JURISDICTION OVER THE BORROWER. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE
BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE
AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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10.09 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be maintained by the
Borrower and the Lenders.
10.10 Effectiveness. This Agreement shall become effective on
the date (the "Effective Date") on which the Borrower and each of the Lenders
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to each other party hereto at the appropriate address
required by Section 10.03.
10.11 Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
10.12 Amendment or Waiver. Neither this Agreement nor any
other Loan Document nor any terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing signed by the respective Loan Parties
party thereto and the Required Lenders; provided, that no such amendment,
change, waiver, discharge or termination shall, without the consent of each
Lender: (i) extend the final scheduled maturity of any Loan or Note beyond the
Maturity Date, or reduce the rate or extend the time of payment of interest
thereon, or reduce the principal amount thereof; (ii) amend, modify or waive any
provision of this Section 10.12; (iii) reduce the percentage specified in, or
otherwise modify, the definition of Required Lenders (it being understood that,
with the consent of the Required Lenders, additional extensions of credit
pursuant to this Agreement may be included in the determination of the Required
Lenders on substantially the same basis as the extensions of Loans are included
on the Effective Date); (iv) consent to the assignment or transfer by the
Borrower any of its rights and obligations under this Agreement; or (v) amend or
waive the provisions of Section 6.19 or 9 or the first parenthetical appearing
in the last paragraph of Section 7. The Borrower and the Lenders hereby agree
for the benefit of the holders of Senior Debt that no amendment of. supplement
of, modification to or waiver under any provision of this Agreement or any Notes
will be entered into or effected with respect to Section 9.
10.13 Interest. (a) It is the intention of the parties hereto
that each Lender shall conform strictly to usury laws applicable to it.
Accordingly, the parties hereto stipulate and agree that none of the terms and
provisions contained in the Notes, this Agreement, or any of the other Loan
Documents shall ever be construed to create a contract to pay to any Lender for
the use, forbearance, or retention of money at a rate in excess of the Highest
Lawful Rate applicable to such Lender, and that for purposes hereof, "interest"
shall include the aggregate of all charges or other consideration which
constitute interest under applicable law and are contracted for, taken,
reserved, charged, or received under any of this Agreement, the Notes, or the
other Loan Documents or otherwise in connection with the transactions
contemplated by this Agreement. Further, if the transactions contemplated hereby
would be usurious as to any Lender under laws applicable to it, then, in that
event, notwithstanding anything to the contrary in the Notes, this Agreement or
in any other Loan Document or agreement entered into in connection with or as
security for the Notes, it
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is agreed as follows: the aggregate of all consideration which constitutes
interests under law applicable to each such Lender that is contracted for,
taken, reserved, charged, or received by such Lender under the Notes, this
Agreement, or under any of the other Loan Documents or agreements or otherwise
in connection with the Notes shall under no circumstances exceed the maximum
amount allowed by the law applicable to such Lender, and any excess shall be
credited by such Lender on the principal amount of the Indebtedness of the
Borrower owed to such Lender (or, if the principal amount of such Indebtedness
shall have been paid in full, to the extent such interest has been received by a
Lender it shall be refunded by such Lender to the Borrower). The provisions of
this Section 10.12(a) shall control over all other provisions of this Agreement,
the Notes, and the other Loan Documents which may be in apparent conflict
herewith. The parties further stipulate and agree that, without limitation on
the foregoing, all calculations of the rate or amount of interest contracted
for, taken, reserved, charged or received under any of this Agreement, the
Notes, and the other Loan Documents which are made for the purpose of
determining whether such rate or amount exceed the Highest Lawful Rate shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating, and spreading during the period of the full stated term of the
Indebtedness, and if longer and if permitted by applicable law, until payment in
full, all interest at any time so contracted for, taken, reserved, charged, or
received.
(b) If at any time the effective rate of interest which would
otherwise apply to any Indebtedness hereunder or evidenced by any Lender's Notes
would exceed the Highest Lawful Rate applicable to such Lender (taking into
account the interest rate applicable to such Indebtedness pursuant to the other
provisions of this Agreement, plus all additional charges and consideration
which have been contracted for, taken, reserved, charged, or received under this
Agreement, such Lender's Notes and the other Loan Documents, or any of them, and
which additional charges or consideration (the "Additional Charges") constitute
interest with respect to such Indebtedness), the effective interest rate to
apply to such Indebtedness made by such Lender shall be limited to the Highest
Lawful Rate, but any subsequent reductions in the interest rate applicable to
such Indebtedness owed to such Lender shall not reduce the effective interest
rate to apply to such Indebtedness owed to such Lender below the Highest Lawful
Rate applicable to such Lender until the total amount of interest accrued on
such Indebtedness equals the amount of interest which would have accrued if the
interest rate from time to time applicable to such Indebtedness owed to such
Lender had at all times been in effect with respect to such Indebtedness
pursuant to the other provisions of this Agreement and the other Loan Documents
and if the Lenders had collected all Additional Charges called for under this
Agreement, the Notes, and the other Loan Documents. If at maturity or final
payment of such Lender's Obligations the total amount of interest paid to any
Lender hereunder and under the other Loan Documents (including amounts
designated as "interest" plus any Additional Charges which constitute interest
with respect to such Lender, and taking into account the limitations of the
first sentence of this Section 10.12(b)) is less than the total amount of such
"interest" which would have been paid if all amounts were paid as required by
this Agreement (without giving effect to this Section 10.12) and the other Loan
Documents (the amount of the difference described above, the "Deficiency"), then
the Borrower agrees, to the fullest extent permitted by the laws applicable to
such Lender, to pay to such Lender an amount equal to the lesser of (i) the
difference between (1) the amount of such "interest" which would have accrued on
such Lender's Notes if the Highest Lawful Rate had at all times been in effect,
and (2) the amount of interest actually paid on such Lender's Notes (including
amounts designated as "interest" plus any
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Additional Charges which constitute interest with respect to such Lender's
Notes) and (ii) the amount of the Deficiency.
10.14 Survival. All indemnities set forth herein including,
without limitation, in Sections 2.04 and 10.01 shall survive the execution and
delivery of this Agreement and the Notes and the making and repayment of the
Loans.
10.15 Domicile of Loans. Each Lender may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Lender.
10.16 Post-Closing Obligations. The Borrower hereby
acknowledges that in connection with certain assignments hereof, any of the
Lenders may be required to obtain a rating of the Subordinated Obligations and
Commitments hereunder of the Borrower and the Borrower hereby consents to such
Lenders providing to the respective rating agency on a confidential basis such
information regarding the Subordinated Obligations and creditworthiness of the
Borrower as is customary practice of such rating agency.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address: THANE INTERNATIONAL, INC.
▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ [illegible]
-------------------------------------
Attention: ▇▇▇▇▇▇▇ ▇▇▇ Title:
Telephone:
Facsimile:
with a copy to:
HIG Infomercial Company
c/o HIG Capital Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Address: PARIBAS CAPITAL FUNDING LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ [illegible]
-------------------------------------
Telephone: ▇▇▇-▇▇▇-▇▇▇▇ Title:
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(SENIOR SUBORDINATED LOAN AGREEMENT SIGNATURE PAGE)
EXECUTION COPY
FIRST AMENDMENT OF
SENIOR SUBORDINATED LOAN AGREEMENT
THIS FIRST AMENDMENT OF SENIOR SUBORDINATED LOAN AGREEMENT, dated as of
January 12, 2001 (this "Amendment"), is by and among Thane International, Inc.,
a Delaware corporation (the "Borrower") and the financial institutions party
thereto (each a "Lender" and collectively, the "Lenders").
RECITALS:
WHEREAS, the parties hereto are parties to that certain Senior
Subordinated Loan Agreement dated as of June 10,1999 (the "Loan A Agreement);
and
WHEREAS, the Borrower has incurred Loans from and issued Notes to the
Lenders;
WHEREAS, the parties hereto desire to amend the Loan Agreement on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings given them in the Loan
Agreement.
SECTION 2. Amendments to the Loan Agreement. The Loan Agreement is, as
of the Effective Date (as defined in Section 5 below), hereby amended as
follows:
1. Section 6.04 of the Loan Agreement is hereby amended by
adding new subsection 6.04(x) immediately following subsection 6.04(ix)
as follows:
"(x) Indebtedness under the HIG Subordinated Notes."
2. Section 6.09 of the Loan Agreement is hereby amended by
deleting only the fiscal quarters set forth below appearing under the
heading "Fiscal Quarter Ended" in such Section opposite such fiscal
quarters set forth below and substituting therefor the following:
"Fiscal Quarter Ended Ratio
--------------------- -----
December 31, 2000 2:25:1.00
March 31, 2001 1:85:1.00
June 30, 2001 1:85:1.00
September 30, 2001 1:85:1.00
December 31, 2001 1:80:1.00
March 31, 2002 1:60:1.00
June 30, 2002 1:55:1.00
September 30, 2002 1:30:1.00
December 31, 2002 1:10:1.00
March 31, 2003 1:05:1.00"
3. Section 6.10 of the Loan Agreement is hereby amended by deleting
only the fiscal quarters set forth below appearing under the heading "Fiscal
Quarter Ended" in such Section opposite such fiscal quarters set forth below and
substituting therefor the following:
"Fiscal Quarter Ended Amount
--------------------- ------
December 31, 2001 $10,450,000
March 31, 2002 $10,450,000
June 30, 2002 $10,700,000
September 30, 2002 $10,700,000
December 31, 2002 $10,950,000
March 31, 2003 $10,950,000
June 30, 2003 $10,950,000"
4. Section 6.12 of the Loan Agreement is hereby amended by adding a new
subsection 6.12(viii) immediately following subsection 6.12(vii) as follows:
"(viii) amend, modify or change in any manner the HIG
Subordinated Notes or make any payment of principal or interest thereon
or reimburse any of the HIG Funds for any payments made by any HIG Fund
under the HIG Guaranty."
5. Amendments to Definitions. (a) The following definitions are hereby
inserted in Section 8 in their proper alphabetical order:
""First Amendment" means that certain First Amendment of
Senior Subordinated Loan Agreement dated as of January 12, 2001 by and
among the Borrower and the Lenders."
""First Amendment Effective Date" means the date upon which
all of the conditions under Section 5 of the First Amendment are
satisfied."
""HIG Guaranty" means that certain Amended and Restated HIG
Guaranty dated as of January 12, 2001 made by HIG Capital
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Partners II, L.P. and HIG Investment Group II, L.P. in favor of the
Senior Agent for the benefit of the Banks in respect of up to $2
Million of the Borrower's Senior Debt."
""HIG Subordinated Notes" means those certain Amended and
Restated Subordinated Notes dated as of January 12, 2001 issued by
Thane International, Inc. in favor of each of HIG Investment Group II,
L.P. and HIG Capital Partners II, L.P. in the aggregate principal
amount of up to $2,000,000."
(b) The definition of "Additional Senior Credit Indebtedness"
appearing in Section 8 of the Loan Agreement is hereby amended by
deleting the amount "$2,500,000" appearing therein and inserting in
lieu thereof the text "$2,500,000 (provided however that from the First
Amendment Effective Date until the first anniversary of the First
Amendment Effective Date such amount shall be increased to $3,333,333
and provided further that during the period from the First Amendment
Effective Date until the first anniversary of the First Amendment
Effective Date, such Indebtedness may be in the form of the revolving
Indebtedness)."
SECTION 3. Waivers. The Lenders hereby waive any Default or Event of
Default caused by the failure to comply with Section 6.04 or 6.11 of the Loan
Agreement arising prior to the Effective Date as a result of the Borrower's
incurrence of indebtedness in favor of one or more of the HIG Funds prior to the
Effective Date. The waiver set forth in the previous sentence shall be limited
precisely as written and relate solely to the matters referred to therein and
nothing in this Amendment shall be deemed to constitute a waiver of any
noncompliance by the Borrower of any other term, provision or condition of the
Loan Agreement or of Sections 6.04 or 6.11 as a result of any other matter
occurring as of the Effective Date or occurring or recurring in the future.
SECTION 4. Acknowledgment and Consent. Each of Bioslim, Inc., Xebec
Productions, Inc., Fox Marketing Associates, Inc., Time Prophets, Inc., Thane
Direct FSC, Inc., Thane Direct Inc. and Thane Direct Canada, Inc. (each, a
"Subordinated Guarantor") hereby acknowledge that such Subordinated Guarantor
has read this Amendment and consents to the terms hereof and further confirms
and agrees that, notwithstanding the effectiveness of this Amendment, the
obligations of such Subordinated Guarantor under each Subordinated Guaranty
shall not be impaired and each Subordinated Guaranty is and shall continue to be
in full force and effect and is hereby confirmed and ratified in all respects.
SECTION 5. Conditions Precedent to Effectiveness of Amendment. This
Amendment shall become effective upon the date (the "Effective Date") when each
of the following conditions have been satisfied:
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1. Execution of Amendment. The Borrower, each Subordinated Guarantor
and each Lender shall have executed and delivered this Amendment (whether the
same or different counterparts).
2. Second Amendment to Credit Agreement. On or before the Effective
Date, the Lenders shall have received an executed copy of the Second Amendment
to Credit Agreement, and each additional "Credit Document" to be executed and
delivered in connection therewith, certified as true, correct and complete by
the President of the Borrower, all in form and substance satisfactory to the
Lenders.
3. HIG Documents. On or before the effective date, the lenders shall
have received an executed copy of the HIG Guaranty and the HIG Subordinated
Notes and all other amendments and documents executed pursuant thereto all in
form and substance satisfactory to the Lenders.
4. Loan Agreement Documents. On or before the Effective Date, the
Borrower shall deliver or cause to be delivered to the Lenders the documents
listed below, each, unless otherwise noted, dated the Effective Date, duly
executed, in form and substance satisfactory to the Lenders and in quantities
designated by the Lenders:
(a) Consents, etc. Copies of all documents evidencing any
necessary corporate action, consents and governmental,
regulatory or third party approvals (including from the Banks
under the Credit Agreement) with respect to this Amendment,
the Amended and Restated Credit Agreement, and any other
documents to be executed by the Borrower and the Subordinated
Guarantors pursuant hereto or thereto.
(b) Opinion of Counsel. An opinion of White & Case, counsel to the
Borrower and Subordinated Guarantors in form and substance
reasonably acceptable to the Lenders and its counsel.
(c) Other Documents. Such other documents as a Lender may
reasonably request.
5. Payment of Fees. The Borrower shall have paid to the Lender an
amendment fee of 50 bps ($15,000) plus all accrued and unpaid fees, costs and
expenses to the extent then due and payable on the Effective Date, together with
attorneys' fees and expenses of the Lenders, including any such costs, fees and
expenses arising under or referenced in Section 10.01 of the Loan Agreement, and
as specified in Section 8 of this Amendment.
SECTION 6. Representations and Warranties of Borrower. The Borrower and
each Subordinated Guarantor represents and warrants to the lenders that the
following statements are true, correct and complete as follows:
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l . The representations and warranties contained in the Loan Agreement
and each Subordinated Guaranty are true and correct in all material respects at
and as of the date hereof as though made on and as of the date hereof (it being
understood that any representation or warranty made as of a specific date shall
be true, correct and complete as of such date).
2. No Event of Default or Default has occurred and is continuing.
3. The execution, delivery and performance of this Amendment and each
other document executed in connection herewith has been duly authorized by all
necessary action on the part of, and duly executed and delivered by, the
Borrower and each Subordinated Guarantor and each of this Amendment and each
other document executed in connection herewith is a legal, valid and binding
obligation of the Borrower and each Subordinated Guarantor enforceable against
the Borrower and each Subordinated Guarantor in accordance with its terms,
except as the enforcement thereof may be subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at law).
4. The execution, delivery and performance of each of this Amendment
and each other document executed in connection herewith do not conflict with or
result in a breach by the Borrower or any Subordinated Guarantor of any term of
any contract, loan agreement, indenture or other agreement or instrument to
which the Borrower or any Subordinated Guarantor is a party or is subject.
5. The Borrower and each Subordinated Guarantor has obtained all
necessary corporate, governmental, regulatory and other third party consents and
approvals required in connection with its execution, delivery and performance of
each of this Amendment, the Second Amendment to Credit Agreement, the HIG
Guaranty, the HIG Subordinated Notes and each other documents to be executed by
such entity pursuant hereto or thereto.
SECTION 7. References to and Effect on the Loan Agreement and Notes.
1. On and after the Effective Date each reference in the Loan Agreement
to "this Agreement," "hereunder," "hereof," "herein," or words of like import,
and each reference to the Loan Agreement in the Loan Documents and other
documents (collectively, the "Ancillary Documents") delivered in connection with
the Loan Agreement shall mean and be a reference to the Loan Agreement as
amended hereby.
2. Except as specifically amended above, the Loan Agreement and all
other Ancillary Documents shall remain in full force and effect and are hereby
ratified and confirmed.
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3. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the holders of Notes under the Loan Agreement or the
Ancillary Documents.
4. This Amendment shall be binding on the Borrower and the Lenders and
shall inure to the benefit of the Borrower and the Lenders and the successors
and assigns of the Lenders.
SECTION 8. Fees and Expenses. a Borrower agrees to pay to the Lenders
all fees as otherwise agreed to between Borrower and the Lenders and to
reimburse the Lenders upon demand for all expenses, reasonable fees of
attorneys, and reasonable legal expenses, incurred by the Lenders in the review,
preparation, negotiation and execution of this Amendment and any other document
required to a furnished herewith, and in enforcing the obligations of the
Borrower he under, which obligations of the Borrower shall survive any
termination of a Loan Documents.
SECTION 9. Execution in counterparts. This Amendment may a executed in
counterparts, each of which when so executed and delivered shall be deemed to
be original and all of which taken together shall constitute but one and the
same instrument. This Amendment shall be binding upon the respective parties
hereto upon the execution and deliver of this Amendment by the Borrower and the
Lenders. Delivery of executed counterpart of a signature page of this Amendment
by facsimile transmission shall be effective delivery of a manually executed
counterpart of this Amendment,
SECTION 10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT LAW RULES OR PROVISIONS
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
SECTION 11 Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
date above first written.
THANE INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: President
BIOSLIM, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
XEBEC PRODUCTIONS
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Hay
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Hay
Title: President
FOX MARKETING ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Director
TIME PROPHETS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Director
THANE DIRECT FSC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: Director
THANE DIRECT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: CEO
THANE DIRECT CANADA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇
Title: CEO
PARIBAS CAPITAL FUNDING LLC
By:
--------------------------
Name:
Title:
THANE DIRECT FSC, INC.
By:
--------------------------
Name:
Title:
THANE DIRECT, INC.
By:
--------------------------
Name:
Title:
THANE DIRECT CANADA, INC.
By:
--------------------------
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
By: /s/ illegible
--------------------------
Name:
Title:
