1
EXHIBIT 10.1
--------------------------------------------------------------------------------
$172,500,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
among
SLEEPMASTER L.L.C.,
as Borrower,
SLEEPMASTER HOLDINGS, L.L.C.,
the Parent
and
THE DOMESTIC SUBSIDIARIES
OF THE BORROWER
FROM TIME TO TIME PARTIES HERETO
as Guarantors,
THE LENDERS PARTIES HERETO
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
FIRST UNION SECURITIES, INC.,
as Sole Arranger
XXXXXX FINANCIAL, INC.,
as Syndication Agent
and
SUNTRUST BANK,
as Documentation Agent
Dated as of June 30, 2000
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.......................................................................1
Section 1.1 Defined Terms..........................................................1
Section 1.2 Other Definitional Provisions.........................................26
Section 1.3 Accounting Terms......................................................27
ARTICLE II THE LOANS; AMOUNT AND TERMS.....................................................28
Section 2.1 Revolving Loans.......................................................28
Section 2.2 Tranche A Term Loan...................................................29
Section 2.3 Tranche B Term Loan...................................................31
Section 2.4 Swingline Loans.......................................................33
Section 2.5 Letter of Credit Subfacility..........................................35
Section 2.6 Fees..................................................................39
Section 2.7 Commitment Reductions.................................................39
Section 2.8 Prepayments...........................................................40
Section 2.9 Minimum Principal Amount of Tranches..................................42
Section 2.10 Default Rate and Payment Dates........................................42
Section 2.11 Conversion Options....................................................42
Section 2.12 Computation of Interest and Fees......................................43
Section 2.13 Pro Rata Treatment and Payments.......................................43
Section 2.14 Non-Receipt of Funds by the Administrative Agent......................45
Section 2.15 Inability to Determine Interest Rate..................................46
Section 2.16 Illegality............................................................46
Section 2.17 Requirements of Law...................................................47
Section 2.18 Indemnity.............................................................48
Section 2.19 Taxes.................................................................48
Section 2.20 Indemnification; Nature of Issuing Lender's Duties....................50
Section 2.21 Replacement of Lenders................................................51
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................................52
Section 3.1 Financial Condition...................................................52
Section 3.2 No Change.............................................................52
Section 3.3 Corporate Existence; Compliance with Law..............................53
Section 3.4 Corporate Power; Authorization; Enforceable Obligations; No Consents..53
Section 3.5 No Legal Bar; No Default..............................................53
Section 3.6 No Material Litigation................................................54
Section 3.7 Investment Company Act................................................54
Section 3.8 Margin Regulations....................................................54
Section 3.9 ERISA.................................................................54
Section 3.10 Environmental Matters.................................................55
Section 3.11 Use of Proceeds.......................................................55
Section 3.12 Subsidiaries..........................................................56
Section 3.13 Ownership.............................................................56
Section 3.14 Indebtedness..........................................................56
i
3
Section 3.15 Taxes.................................................................56
Section 3.16 Intellectual Property.................................................56
Section 3.17 Solvency..............................................................57
Section 3.18 Investments...........................................................57
Section 3.19 Security Documents....................................................57
Section 3.20 Location of Collateral................................................57
Section 3.21 No Burdensome Restrictions............................................57
Section 3.22 Brokers' Fees.........................................................58
Section 3.23 Labor Matters.........................................................58
Section 3.24 Accuracy and Completeness of Information..............................58
Section 3.25 Insurance.............................................................58
ARTICLE IV CONDITIONS PRECEDENT............................................................59
Section 4.1 Conditions to Closing Date and Initial Loans..........................59
Section 4.2 Conditions to All Extensions of Credit................................65
ARTICLE V AFFIRMATIVE COVENANTS............................................................66
Section 5.1 Financial Statements..................................................66
Section 5.2 Certificates; Other Information.......................................67
Section 5.3 Payment of Obligations................................................68
Section 5.4 Conduct of Business and Maintenance of Existence......................69
Section 5.5 Maintenance of Property; Insurance....................................69
Section 5.6 Inspection of Property; Books and Records; Discussions................70
Section 5.7 Notices...............................................................70
Section 5.8 Environmental Laws....................................................71
Section 5.9 Financial Covenants...................................................72
Section 5.10 Additional Subsidiary Guarantors......................................74
Section 5.11 Compliance with Law...................................................74
Section 5.12 Pledged Assets........................................................74
Section 5.13 Further Assurances....................................................75
ARTICLE VI NEGATIVE COVENANTS..............................................................75
Section 6.1 Indebtedness..........................................................75
Section 6.2 Liens.................................................................76
Section 6.3 Guaranty Obligations..................................................76
Section 6.4 Nature of Business....................................................77
Section 6.5 Consolidation, Merger, Sale of Assets, Permitted Acquisitions, etc....77
Section 6.6 Advances, Investments and Loans.......................................78
Section 6.7 Transactions with Affiliates..........................................78
Section 6.8 Ownership of Subsidiaries; Restrictions...............................78
Section 6.9 Fiscal Year; Organizational Documents; Material Contracts.............78
Section 6.10 Limitation on Restricted Actions......................................79
Section 6.11 Restricted Payments...................................................79
Section 6.12 Prepayments of Indebtedness, etc......................................80
Section 6.13 Sale Leasebacks.......................................................80
Section 6.14 No Further Negative Pledges...........................................80
Section 6.15 Intentionally Omitted.................................................80
ii
4
Section 6.16 Subordinated Debt.....................................................80
Section 6.17 Operating Leases......................................................81
Section 6.18 Parent Holding Company and Sleepmaster Finance Corporation............81
Section 6.19 Serta Licenses........................................................81
ARTICLE VII EVENTS OF DEFAULT..............................................................82
Section 7.1 Events of Default.....................................................82
Section 7.2 Acceleration; Remedies................................................84
ARTICLE VIII THE AGENT.....................................................................85
Section 8.1 Appointment...........................................................85
Section 8.2 Delegation of Duties..................................................85
Section 8.3 Exculpatory Provisions................................................85
Section 8.4 Reliance by Administrative Agent......................................86
Section 8.5 Notice of Default.....................................................86
Section 8.6 Non-Reliance on Administrative Agent and Other Lenders................86
Section 8.7 Indemnification.......................................................87
Section 8.8 Administrative Agent in Its Individual Capacity.......................87
Section 8.9 Successor Administrative Agent........................................88
Section 8.10 Release of Collateral.................................................88
Section 8.11 Syndication and Documentation Agents..................................88
ARTICLE IX MISCELLANEOUS...................................................................88
Section 9.1 Amendments and Waivers................................................88
Section 9.2 Notices...............................................................90
Section 9.3 No Waiver; Cumulative Remedies........................................90
Section 9.4 Survival of Representations and Warranties............................90
Section 9.5 Payment of Expenses and Taxes.........................................91
Section 9.6 Successors and Assigns; Participations; Purchasing Lenders............91
Section 9.7 Adjustments; Set-off..................................................94
Section 9.8 Table of Contents and Section Headings................................95
Section 9.9 Counterparts..........................................................95
Section 9.10 Effectiveness.........................................................95
Section 9.11 Severability..........................................................95
Section 9.12 Integration...........................................................96
Section 9.13 Governing Law.........................................................96
Section 9.14 Consent to Jurisdiction and Service of Process........................96
Section 9.15 Arbitration...........................................................96
Section 9.16 Confidentiality.......................................................98
Section 9.17 Acknowledgments.......................................................98
Section 9.18 Waivers of Jury Trial.................................................98
Section 9.19 Binding Effect; Termination of this Credit Agreement; Termination of
Existing Credit Agreement.............................................99
ARTICLE X GUARANTY.........................................................................99
Section 10.1 The Guaranty..........................................................99
Section 10.2 Bankruptcy...........................................................100
iii
5
Section 10.3 Nature of Liability..................................................100
Section 10.4 Independent Obligation...............................................100
Section 10.5 Authorization........................................................101
Section 10.6 Reliance.............................................................101
Section 10.7 Waiver...............................................................101
Section 10.8 Limitation on Enforcement............................................102
Section 10.9 Confirmation of Payment..............................................102
Section 10.10 Net Worth............................................................102
Schedules
---------
Schedule 1.1(a) Form of Account Designation Letter
Schedule 1.1(b) Liens
Schedule 1.1(c) Permitted Adjustments
Schedule 1.1(d) Sweep Plus Loan/Investment Services Description
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(d) Form of Tranche A Term Note
Schedule 2.3(d) Form of Tranche B Term Note
Schedule 2.4(d) Form of Swingline Note
Schedule 2.11 Form of Notice of Conversion/Extension
Schedule 2.19 Form of Section 2.19 Certificate
Schedule 3.4 Consents, Authorizations and Filings
Schedule 3.6 Litigation
Schedule 3.9 ERISA
Schedule 3.10 Environmental Matters
Schedule 3.12 Subsidiaries
Schedule 3.16 Material Intellectual Property
Schedule 3.20(a) Location of Real Property
Schedule 3.20(b) Location of Collateral
Schedule 3.20(c) Chief Executive Offices
Schedule 3.23 Labor Matters
Schedule 3.24 EBITDA Levels
Schedule 3.25 Insurance
Schedule 4.1(b) Form of Secretary's Certificate
Schedule 4.1(i) Form of Solvency Certificate
Schedule 4.1(v) Form of Financial Covenant Compliance Certificate
Schedule 5.10 Form of Joinder Agreement
Schedule 6.1(b) Indebtedness
Schedule 6.3 Guaranty Obligations
Schedule 6.7 Agreements with Affiliates
Schedule 9.2 Notices/Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
iv
6
THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 2000,
among SLEEPMASTER L.L.C., a New Jersey limited liability company (the
"Borrower"), SLEEPMASTER HOLDINGS L.L.C., a New Jersey limited liability company
(the "Parent") and those Domestic Subsidiaries of the Borrower identified as a
"Guarantor" on the signature pages hereto and such other Domestic Subsidiaries
of the Borrower as may from time to time become a party hereto (together with
the Parent, collectively, the "Guarantors"), the several banks and other
financial institutions as may from time to time become parties to this Agreement
(collectively, the "Lenders"; and individually, a "Lender"), and FIRST UNION
NATIONAL BANK, a national banking association, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the lenders party thereto (the
"Existing Lenders") and the Administrative Agent are party to that Second
Amended and Restated Credit Agreement, dated as of April 28, 2000 (the "Existing
Credit Agreement") pursuant to which the Existing Lenders have agreed to make
loans and other financial accommodations to the Borrower in the amount of up to
$103,875,000 pursuant to the terms and conditions contained therein.
WHEREAS, the Borrower has requested that the Lenders increase the amount
of loans and other financial accommodations available to the Borrower to an
amount of up to $172,500,000, as more particularly described herein; and
WHEREAS, the Lenders have agreed to amend and restate the Existing
Credit Agreement and make such increased loans and other financial
accommodations to the Borrower pursuant to the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, terms defined in the preamble to this
Agreement have the meanings therein indicated, and the following terms have the
following meanings:
"Account Designation Letter" shall mean the Notice of Account
Designation Letter dated the Closing Date from the Borrower to the
Administrative Agent substantially in the form attached hereto as Schedule
1.1(a).
7
"Acquisition" shall mean the purchase of the stock of Crescent pursuant
to the Acquisition Documents.
"Acquisition Documents" shall mean the Stock Purchase Agreement dated as
of June 30, 2000 between the Borrower, Crescent and the stockholders party
thereto;
"Xxxx Xxxxx Bond Indenture" shall mean that certain Trust Indenture
dated as of February 1, 1994 between County of Hamilton, Ohio, as Issuer and The
Fifth Third Bank, as Trustee.
"Additional Credit Party" shall mean each Person that becomes a
Guarantor by execution of a Joinder Agreement in accordance with Section 5.10.
"Administrative Agent" shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.
"Affiliate" shall mean as to any Person, any other Person (excluding any
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition, a
Person shall be deemed to be "controlled by" a Person if such Person possesses,
directly or indirectly, power either (a) to vote 10% or more of the securities
having ordinary voting power for the election of directors of such Person or (b)
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agreement" shall mean this Third Amended and Restated Credit Agreement,
as amended, modified or supplemented from time to time in accordance with its
terms.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof:
"Prime Rate" shall mean, at any time, the rate of interest per annum publicly
announced from time to time by First Union at its principal office in Charlotte,
North Carolina as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change in the Prime Rate
occurs. The parties hereto acknowledge that the rate announced publicly by First
Union as its Prime Rate is an index or base rate and shall not necessarily be
its lowest or best rate charged to its customers or other banks; and "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published on the next succeeding Business Day, the average of the quotations for
the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination shall be
conclusive in the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate
2
8
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the opening of business on the date of such change.
"Alternate Base Rate Loans" shall mean Loans that bear interest at an
interest rate based on the Alternate Base Rate.
"Applicable Percentage" shall mean, for any day, the rate per annum set
forth below opposite the applicable Level then in effect, it being understood
that the Applicable Percentage for (i) Revolving Loans or the Tranche A Term
Loans which are Alternate Base Rate Loans shall be the percentage set forth
under the column "Alternate Base Rate Margin for Revolving Loans and Tranche A
Term Loans", (ii) Revolving Loans or the Tranche A Term Loans which are LIBOR
Rate Loans shall be the percentage set forth under the column "LIBOR Rate Margin
for Revolving Loans and Tranche A Term Loans and Letter of Credit Fee", (iii)
the Tranche B Term Loans which are Alternate Base Rate Loans shall be the
percentage set forth under the column "Alternate Base Rate Margin for Tranche B
Term Loans", (iv) the Tranche B Term Loans which are LIBOR Rate Loans shall be
the percentage set forth under the column "LIBOR Rate Margin for Tranche B Term
Loans" (v) the Letter of Credit Fee shall be the percentage set forth under the
column "LIBOR Rate Margin for Revolving Loans and Tranche Term Loan and Letter
of Credit Fee"; and (vi) the Commitment Fee shall be the percentage set forth
under the column "Commitment Fee":
------ --------------------- --------------- ---------------- ----------- ----------- --------------
Alternate LIBOR Rate Alternate LIBOR
Base Rate Margin for Base Rate Rate
Leverage Margin for Revolving Margin Margin for Commitment
Level Ratio Revolving Loans and for Tranche B Fee
Loans and Tranche A Tranche Term
Tranche A Term Loans B Term Loans
Term Loans and Letter of Loans
Credit Fee
------ --------------------- --------------- ---------------- ----------- ----------- --------------
I => 5.50 to 1.0 2.25% 3.50% 2.75% 4.00% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
II < 5.50 to 1.0 but =>
5.00 to 1.0 2.00% 3.25% 2.50% 3.75% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
III < 5.00 to 1.0 but =>
4.50 to 1.0 1.75% 3.00% 2.50% 3.75% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
IV < 4.50 to 1.0 but =>
4.00 to 1.0 1.50% 2.75% 2.25% 3.50% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
V < 4.00 to 1.0 but =>
3.00 to 1.0 1.25% 2.50% 2.25% 3.50% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
VI < 3.00 to 1.0 1.00% 2.25% 2.25% 3.50% 0.50%
------ --------------------- --------------- ---------------- ----------- ----------- --------------
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date on which
the Administrative Agent has received from the Borrower the quarterly financial
information and certifications required to be delivered to the Administrative
Agent and the Lenders in accordance with the provisions of Sections 5.1(b) and
5.2(b) (each an "Interest Determination Date"). Such Applicable Percentage shall
be effective from such Interest Determination Date until the next such Interest
Determination Date.
3
9
The initial Applicable Percentages shall be based on a minimum of Level II until
the first Interest Determination Date occurring after December 31, 2000. After
the Closing Date, if the Borrower shall fail to provide the quarterly financial
information and certifications in accordance with the provisions of Sections
5.1(b) and 5.2(b), the Applicable Percentage from such Interest Determination
Date shall, on the date five (5) Business Days after the date by which the
Borrower was so required to provide such financial information and
certifications to the Administrative Agent and the Lenders, be based on Level I
until such time as such information and certifications are provided, whereupon
the Level shall be determined by the then current Leverage Ratio.
"Asset Disposition" shall mean the disposition (other than as a result
of a Recovery Event) of any or all of the assets (including, without limitation,
the Capital Stock of a Subsidiary or any ownership interest in a joint venture)
of any Credit Party, whether by sale, lease, transfer or otherwise. The term
"Asset Disposition" shall not include (i) Specified Sales, (ii) the sale, lease
or transfer of assets (including licensing of Intellectual Property) permitted
by Section 6.5(a)(iii) or (iv), or (iii) any Equity Issuance.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time to
time.
"Borrower" shall have the meaning set forth in the first paragraph of
this Agreement.
"Borrower Subordinated Credit Agreement" shall mean the Senior
Subordinated Credit Agreement dated as of June 27, 2000 by and among the
Borrower, the guarantors party thereto and Citibank, N.A., as lender.
"Borrower Subordinated Notes" shall mean those certain 13.4% senior
subordinated notes in an aggregate principal amount of $25,000,000 due 2009 of
the Borrower.
"Borrowing Date" shall mean, in respect of any Loan, the date such Loan
is made.
"Business" shall have the meaning set forth in Section 3.10(b).
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina or New York, New York
are authorized or required by law to close; provided, however, that when used in
connection with a rate determination, borrowing or payment in respect of a LIBOR
Rate Loan, the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the London
interbank market.
"Capital Lease" shall mean any lease of property, real or personal, the
obligations with respect to which are required to be capitalized on a balance
sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" shall mean the capitalized lease obligations
relating to a Capital Lease determined in accordance with GAAP.
4
10
"Capital Stock" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership, partnership
interests (whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition ("Government Obligations"), (ii)
U.S. dollar denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar certificates of
deposit of (y) any domestic commercial bank of recognized standing having
capital and surplus in excess of $250,000,000 or (z) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the equivalent thereof or
from Xxxxx'x is at least P-1 or the equivalent thereof (any such bank being an
"Approved Bank"), in each case with maturities of not more than 364 days from
the date of acquisition, (iii) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any variable
rate notes issued by, or guaranteed by any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
better by Moody's and maturing within six months of the date of acquisition,
(iv) repurchase agreements with a bank or trust company (including a Lender) or
a recognized securities dealer having capital and surplus in excess of
$500,000,000 for direct obligations issued by or fully guaranteed by the United
States of America, (v) obligations of any state of the United States or any
political subdivision thereof for the payment of the principal and redemption
price of and interest on which there shall have been irrevocably deposited
Government Obligations maturing as to principal and interest at times and in
amounts sufficient to provide such payment, and (vi) auction preferred stock
rated in the highest short-term credit rating category by S&P or Xxxxx'x.
"Casualty Event" shall mean any theft, loss, physical destruction or
damage, taking or similar event with respect to any property or assets.
"Change of Control" means (i) a sale of a majority of the consolidated
assets of the Parent and its Subsidiaries, in a single transaction or a series
of related transactions to any Person or two or more Persons acting in concert,
(ii) (A) prior to an initial public offering, the failure of Citicorp Venture
Capital, Inc. or one or more of its Affiliates and management shareholders
existing as of the Closing Date (together with their Permitted Transferees (as
such term is defined in the Securityholders Agreement referred to on Schedule
6.7)), collectively to own (directly or indirectly) at least 45% of the Voting
Stock on a fully diluted as if converted basis of the Parent, and (B) following
an initial public offering, the failure of Citicorp Venture Capital, Inc. or one
or more of its Affiliates and management shareholders existing as of the Closing
Date (together with their Permitted Transferees (as such term is defined in the
Securityholders Agreement referred to on Schedule 6.7)), to own (directly or
indirectly) at least 33% of the Voting Stock on a fully diluted as if converted
basis of the Parent or management shareholders existing as of the Closing Date
to own (directly or indirectly) at least 10% of the Voting Stock on a fully
diluted as if converted basis of the Parent or (iii) the Borrower shall cease to
be a
5
11
wholly-owned subsidiary of the Parent or (iv) any Person or two or more Persons
acting in concert shall have acquired beneficial ownership, directly or
indirectly, or shall have acquired by contract or otherwise control over, Voting
Stock of the Parent, representing (A) prior to an initial public offering, an
amount equal to or greater than the amount of Voting Stock of the Parent then
owned by Citicorp Venture Capital, Inc. or one or more of its Affiliates and
management shareholders on a fully diluted as if converted basis and (B)
following an initial public offering, an amount representing 25% or more of all
Voting Stock of the Parent on a fully diluted as if converted basis or (v)
Continuing Directors shall cease for any reason to constitute a majority of the
members of the board of directors of the Parent then in office. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of the
Securities and Exchange Commission promulgated under the Securities Exchange Act
of 1934.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean a collective reference to the collateral which
is identified in, and at any time will be covered by, the Security Documents.
"Commitment" shall mean the Revolving Commitment, the Swingline
Commitment, the Tranche A Term Loan Commitment, the Tranche B Term Loan
Commitment and the LOC Commitment, individually or collectively, as appropriate.
"Commitment Fee" shall have the meaning set forth in Section 2.6(a).
"Commitment Letter" shall mean the letter agreement dated April 4, 2000
addressed to the Borrower from the Administrative Agent, as amended, modified or
otherwise supplemented.
"Commitment Percentage" shall mean the Revolving Commitment Percentage,
the Tranche A Term Loan Commitment Percentage, the Tranche B Term Loan
Commitment Percentage and/or the LOC Commitment Percentage, as appropriate.
"Commitment Period" shall mean the period from and including the Closing
Date to but not including the Maturity Date.
"Commitment Transfer Supplement" shall mean a Commitment Transfer
Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean an entity, whether or not
incorporated, which is under common control with the Parent within the meaning
of Section 4001 of ERISA or is part of a group which includes the Parent and
which is treated as a single employer under Section 414 of the Code.
"Consolidated Capital Expenditures" means, for any period, all capital
expenditures of the Borrower and its Subsidiaries on a consolidated basis for
such period, as determined in accordance with GAAP. The term "Consolidated
Capital Expenditures" shall not include (i) capital expenditures in respect of
the reinvestment of proceeds derived from Recovery Events received by the
Borrower and its Subsidiaries to the extent that such reinvestment is permitted
6
12
under the Credit Documents and (ii) capital expenditures of up to $10,000,000
made on behalf of the Borrower and its Subsidiaries in connection with the
initial construction costs of a new facility in Vacaville, California during
fiscal year 2000.
"Consolidated EBITDA" means, for any period, the sum of (i) Consolidated
Net Income for such period, plus (ii) an amount which, in the determination of
Consolidated Net Income for such period, has been deducted for (A) Consolidated
Interest Expense, plus (B) total federal, state, local and foreign income,
franchise, value added and other taxes, plus (C) depreciation, amortization
expense and other non-cash charges (excluding any such charges that constitute
an accrual of or a reserve for cash charges for any future period), all as
determined in accordance with GAAP, plus (D) losses (or minus gains) from sales
or other dispositions of assets (other than sales of inventory in the ordinary
course of business) plus (E) Permitted Adjustments plus (F) Transaction Costs.
"Consolidated Interest Expense" means, for any period, all interest
expense (excluding pay-in-kind interest) of the Borrower and its Subsidiaries on
a consolidated basis including the interest component of Capital Lease
Obligations, as determined in accordance with GAAP. For purpose of calculating
the Interest Coverage Ratio only, "Consolidated Interest Expense" shall include
cash interest paid by the Parent in connection with the Existing Seller Debt and
the Permitted Seller Debt.
"Consolidated Net Income" means, for any period, net income (excluding
extraordinary items) after taxes for such period of the Borrower and its
Subsidiaries on a consolidated basis, as determined in accordance with GAAP.
"Consolidated Net Worth" means as of any date with respect to the
Borrower and its Subsidiaries on a consolidated basis, Consolidated Total Assets
minus Consolidated Total Liabilities, as determined in accordance with GAAP.
"Consolidated Total Assets" means, as of any date with respect to the
Borrower and its Subsidiaries on a consolidated basis, total assets, as
determined in accordance with GAAP.
"Consolidated Total Liabilities" means, as of any date with respect to
the Borrower and its Subsidiaries on a consolidated basis, total liabilities as
determined in accordance with GAAP.
"Consolidated Working Capital" means, at any time, the excess of (i)
current assets of the Borrower and its Subsidiaries on a consolidated basis at
such time less (ii) current liabilities of the Borrower and its Subsidiaries on
a consolidated basis at such time, all as determined in accordance with GAAP.
The term "Consolidated Working Capital" shall not include (i) cash and (ii)
current maturities of long-term Indebtedness.
"Continuing Directors" means during any period of up to 24 consecutive
months commencing after the Closing Date, individuals who at the beginning of
such 24 month period were directors of the Parent (together with any new
director whose election by the Parent board of directors or whose nomination for
election by the Parent's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of such period or whose election or nomination for election was
previously so approved).
7
13
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Credit Documents" shall mean this Agreement, each of the Notes, any
Joinder Agreement, the Letters of Credit, the LOC Documents, the Reimbursement
Agreement and the Security Documents.
"Credit Party" shall mean any of the Borrower or the Guarantors.
"Credit Party Obligations" shall mean, without duplication, (i) all of
the liabilities and obligations of the Credit Parties to the Lenders (including
the Issuing Lender) and the Administrative Agent, whenever arising, under this
Agreement, the Notes or any of the other Credit Documents (including, but not
limited to, any interest accruing after the occurrence of a filing of a petition
of bankruptcy under the Bankruptcy Code with respect to any Credit Party,
regardless of whether such interest is an allowed claim under the Bankruptcy
Code) and (ii) all liabilities and obligations, whenever arising, owing from any
Credit Party to any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Crescent" shall mean Crescent Sleep Products Company, a North Carolina
corporation.
"Crescent Bond Indentures" shall mean (i) that certain Indenture dated
as of March 1, 1995 between Crescent and the Iowa Finance Authority in the
principal amount of $3,000,000 and (ii) that certain Indenture dated as of March
4, 0000 xxxxxxx Xxxxxxxx xxx xxx Xxxxxxxx Xxxxxx Industrial Facilities and
Pollution Control Financing Authority in the original principal amount of
$5,900,000.
"Debt Issuance" shall mean the issuance of any Indebtedness for borrowed
money by any Credit Party (excluding, for purposes hereof, any Equity Issuance
or any Indebtedness of the Parent and its Subsidiaries permitted to be incurred
pursuant to Section 6.1).
"Default" shall mean any of the events specified in Section 7.1, whether
or not any requirement for the giving of notice or the lapse of time, or both,
or any other condition, has been satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that, at such
time (a) has failed to make a Loan required pursuant to the term of this Credit
Agreement, including the funding of a Participation Interest in accordance with
the terms hereof, (b) has failed to pay to the Administrative Agent or any
Lender an amount owed by such Lender pursuant to the terms of this Credit
Agreement, or (c) has been deemed insolvent or has become subject to a
bankruptcy or insolvency proceeding or to a receiver, trustee or similar
official.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Domestic Lending Office" shall mean, initially, the office of each
Lender designated as such Lender's Domestic Lending Office shown on Schedule
9.2; and thereafter, such other office of such Lender as such Lender may from
time to time specify to the Administrative Agent and
8
14
the Borrower as the office of such Lender at which Alternate Base Rate Loans of
such Lender are to be made.
"Domestic Subsidiary" shall mean any Subsidiary that is organized and
existing under the laws of the United States or any state or commonwealth
thereof or under the laws of the District of Columbia.
"Earnout Payments" shall mean any payments which any Credit Party is or
shall be legally obligated to make to Xxxxx Xxxxxx pursuant to the terms of
Section 2(c)(iv) of that certain Employment Agreement dated as of May 18, 1999
by and among Star Bedding Products Limited, Xxxxx Xxxxxx and Sleepmaster L.L.C.
"Environmental Laws" shall mean any and all applicable foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
Requirement of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time be in effect during the term of this
Agreement.
"Equity Issuance" shall mean any issuance by any Credit Party to any
Person which is not a Credit Party of (a) shares of its Capital Stock, (b) any
shares of its Capital Stock pursuant to the exercise of options or warrants or
(c) any shares of its Capital Stock pursuant to the conversion of any debt
securities to equity. The term "Equity Issuance" shall not include (i) any Asset
Disposition, (ii) any Debt Issuance, (iii) issuances to members of management
pursuant to stock option plans of the Credit Parties as in effect on the Closing
Date, or (iv) issuances of equity for all or a portion of the purchase price of
Permitted Acquisitions.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Reserve Percentage" shall mean for any day, the percentage
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or emergency reserves) in
respect of Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for a member
bank of the Federal Reserve System in New York City.
"Event of Default" shall mean any of the events specified in Section
7.1; provided, however, that any requirement for the giving of notice or the
lapse of time, or both, or any other condition, has been satisfied.
"Excess Cash Flow" means, with respect to any fiscal year period of the
Borrower and its Subsidiaries on a consolidated basis, an amount equal to (a)
Consolidated EBITDA for such period minus (b) capital expenditures made during
such period minus (c) increases (or plus decreases) in Consolidated Working
Capital for such period minus (d) Scheduled Funded Debt Payments made during
such period minus (e) Consolidated Interest Expense during such period minus (f)
amounts paid in respect of federal, state, local and foreign income, value added
and similar taxes with respect to such period minus (g) voluntary prepayments
made in accordance
9
15
with Section 2.8(a) made during such period minus (h) Restricted Payments
actually made during such period pursuant to Section 6.11(c)(i) through (v).
"Excluded Equity Issuance" shall mean any issuance by any Credit Party
of shares of its Capital Stock to members of management which result in Net Cash
Proceeds in an aggregate amount for all such issuances not to exceed $1,000,000.
"Existing Credit Agreement" shall have the meaning set forth in the
recitals hereto.
"Existing Lenders" shall have the meaning set forth in the recitals
hereto.
"Existing Letters of Credit" shall mean that (i) irrevocable direct pay
letter of credit issued by First Union to Branch Banking and Trust Company as
Credit Facility Trustee pursuant to the Reimbursement Agreement in the amount of
approximately $6,900,000 to support the PBBC Industrial Development Bonds, (ii)
Irrevocable Letter of Credit No. SM410694C issued by First Union to Fifth Third
Bank for the account of Xxxx Xxxxx Corporation in the amount of $2,284,425,
(iii) Irrevocable Letter of Credit No. SM408849C issued by First Union to Xxxxx
Mountain in the amount of $720,462, (iv) Irrevocable Letter of Credit No.
SM413263C issued by First Union to U.S. Bank Trust National Association in the
amount of $3,262,500.00; and (v) Irrevocable Letter of Credit No. SM413261C
issued by First Union to U.S. Bank Trust National Association in the amount of
$5,999,683.00.
"Existing Seller Debt" shall mean (i) those certain Junior Subordinated
Notes each dated as of November 14, 1996 as may be amended or exchanged from
time to time in an initial aggregate principal amount of $7,000,000 of the
Parent together with the pay-in-kind interest notes issued thereon, and (ii) the
Retroactive Notes.
"Extension of Credit" shall mean, as to any Lender, the making of a Loan
by such Lender or the issuance of, or participation in, a Letter of Credit by
such Lender.
"Federal Funds Effective Rate" shall have the meaning set forth in the
definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated April 25, 2000
addressed to the Borrower from the Administrative Agent, as amended, modified or
otherwise supplemented.
"First Union" shall mean First Union National Bank, a national banking
association.
"Fixed Charge Coverage Ratio" shall mean, as of the end of each fiscal
quarter of the Borrower, for the Borrower and its Subsidiaries on a consolidated
basis for the four consecutive quarters ending on such date, without
duplication, the ratio of (i) Consolidated EBITDA for the applicable period
minus Consolidated Capital Expenditures for the applicable period to (ii) the
sum of Consolidated Interest Expense for the applicable period plus taxes paid
in cash during the applicable period plus cash dividend payments or other
distributions made during the applicable period (including but not limited to
cash distributions made in connection with the Existing Seller Debt and the
Permitted Seller Debt) plus Scheduled Funded Debt Payments for the applicable
period. Notwithstanding the foregoing, for purposes of calculating the Fixed
Charge Coverage Ratio of the Borrower and its Subsidiaries for the first three
complete fiscal quarters to
10
16
occur after the Closing Date, the Fixed Charge Coverage Ratio shall be
determined by annualizing the Consolidated Interest Expense, the Scheduled
Funded Debt Payments and the cash taxes components thereof such that for the
first complete fiscal quarter to occur after the Closing Date such components
would be multiplied by four (4), the first two complete fiscal quarters would be
multiplied by two (2) and the first three complete fiscal quarters would be
multiplied by one and one-third (1 1/3).
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"Funded Debt" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clauses (e), (f) and (i) of the definition of
"Indebtedness" set forth in this Section 1.1, (b) all Funded Debt of others of
the type referred to in clause (a) above secured by (or for which the holder of
such Funded Debt has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of production from, property
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (c) all Guaranty Obligations of such Person with respect to
Funded Debt of the type referred to in clause (a) above of another Person, (d)
Funded Debt of the type referred to in clause (a) above of any partnership or
unincorporated joint venture in which such Person is legally obligated or has a
reasonable expectation of being liable with respect thereto, and (e) all Earnout
Payments capitalized on any Credit Party's balance sheet in accordance with
GAAP. For purposes of determining the Leverage Ratio only, Indebtedness of the
Parent owing in respect of the Existing Seller Debt and the Permitted Seller
Debt shall be deemed to be "Funded Debt" of the Borrower.
"GAAP" shall mean generally accepted accounting principles in effect in
the United States of America applied on a consistent basis, subject, however, in
the case of determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.
"Government Acts" shall have the meaning set forth in Section 2.20(a).
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property constituting security therefor, (ii) to advance or provide funds or
other support for the payment or purchase of any such Indebtedness or to
maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the purpose of assuring
the holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject
11
17
to any limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of the
Indebtedness in respect of which such Guaranty Obligation is made.
"Guarantor" shall mean (a) the Parent, (b) any of the Domestic
Subsidiaries identified as a "Guarantor" on the signature pages hereto and (c)
any Additional Credit Party which executes a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty" shall mean the guaranty of the Guarantors set forth in
Article X.
"Hedging Agreements" shall mean, with respect to any Person, any
agreement entered into to protect such Person against fluctuations in interest
rates, or currency or raw materials values, including, without limitation, any
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more counterparties, any foreign currency exchange agreement,
currency protection agreements, commodity purchase or option agreements or other
interest or exchange rate or commodity price hedging agreements.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business), (d) all obligations of such Person issued
or assumed as the deferred purchase price of Property or services purchased by
such Person (other than trade debt incurred in the ordinary course of business
and due within six months of the incurrence thereof) which would appear as
liabilities on a balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or under commodities
agreements, (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranty Obligations of such Person
with respect to Indebtedness of another Person, (h) the principal portion of all
obligations of such Person under Capital Leases, (i) all obligations of such
Person under Hedging Agreements, (j) the maximum amount of all standby letters
of credit issued or bankers' acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (k) all preferred Capital Stock issued by such Person and which
by the terms thereof could be (at the request of the holders thereof or
otherwise) subject to mandatory sinking fund payments, redemption (prior to the
Maturity Date) or other acceleration, (l) the principal balance outstanding
under any synthetic lease, tax retention operating lease, off-balance sheet loan
or similar off-balance sheet financing product, and (m) the Indebtedness of any
partnership or unincorporated joint venture in which such Person is a general
partner or a joint venturer.
"Indenture" shall mean that certain Indenture in respect of the
Subordinated Notes dated as of May 18, 1999.
12
18
"Insolvency" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term as used in
Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Intellectual Property" shall have the meaning set forth in Section
3.16.
"Interest Coverage Ratio" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis for the twelve month period ending on the
last day of any fiscal quarter of the Borrower and its Subsidiaries, the ratio
of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense
for such period. Notwithstanding the foregoing, for purposes of calculating the
Interest Coverage Ratio of the Borrower and its Subsidiaries for the first three
complete fiscal quarters to occur after the Closing Date, the Interest Coverage
Ratio shall be determined by annualizing the Consolidated Interest Expense
component thereof such that for the first complete fiscal quarter to occur after
the Closing Date such components would be multiplied by four (4), the first two
complete fiscal quarters would be multiplied by two (2) and the first three
complete fiscal quarters would be multiplied by one and one-third (l 1/3).
"Interest Payment Date" shall mean (a) as to any Alternate Base Rate
Loan, the last day of each March, June, September and December and on the
Maturity Date, (b) as to any LIBOR Rate Loan having an Interest Period of three
months or less, the last day of such Interest Period, and (c) as to any LIBOR
Rate Loan having an Interest Period longer than three months, each day which is
three months after the first day of such Interest Period and the last day of
such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Rate Loan,
(i) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such LIBOR Rate
Loan and ending one, two, three or six months thereafter, as selected by
the Borrower in the notice of borrowing or notice of conversion given
with respect thereto; and
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such LIBOR Rate Loan
and ending one, two, three or six months thereafter, as selected by the
Borrower by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto;
provided that the foregoing provisions are subject to the following:
(A) if any Interest Period pertaining to a LIBOR Rate
Loan would otherwise end on a day that is not a Business Day,
such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
Business Day;
(B) any Interest Period pertaining to a LIBOR Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no
13
19
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the
relevant calendar month;
(C) if the Borrower shall fail to give notice as provided
above, the Borrower shall be deemed to have selected an Alternate
Base Rate Loan to replace the affected LIBOR Rate Loan;
(D) any Interest Period in respect of any Loan that would
otherwise extend beyond the Maturity Date shall end on the
Maturity Date; and
(E) no more than eight (8) LIBOR Tranches may be in
effect at any time. For purposes hereof, LIBOR Rate Loans with
different Interest Periods shall be considered as separate LIBOR
Tranches, even if they shall begin on the same date and have the
same duration, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at the
end of existing Interest Periods to constitute a new LIBOR
Tranche.
"Issuing Lender" shall mean First Union.
"Issuing Lender Fees" shall have the meaning set forth in Section
2.6(c).
"Joinder Agreement" shall mean a Joinder Agreement substantially in the
form of Schedule 5.10, executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10.
"Lender" shall have the meaning set forth in the first paragraph of this
Agreement.
"Letters of Credit" shall mean (i) the Existing Letters of Credit, and
(ii) any new letter of credit issued by the Issuing Lender pursuant to the terms
hereof, as such Letters of Credit may be amended, modified, extended, renewed or
replaced from time to time.
"Letter of Credit Fee" shall have the meaning set forth in Section
2.6(b).
"Leverage Ratio" shall mean, as of the end of each fiscal quarter of the
Borrower, for the Borrower and its Subsidiaries on a consolidated basis for the
four consecutive quarters ending on such date, the ratio of (a) Funded Debt of
the Borrower and its Subsidiaries on a consolidated basis on the last day of
such period to (b) Consolidated EBITDA for such period.
"LIBOR" shall mean, for any LIBOR Rate Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR" shall mean, for any LIBOR Rate Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however, if more
than one rate is specified
14
20
on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of
all such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%). If,
for any reason, neither of such rates is available, then "LIBOR" shall mean the
rate per annum at which, as determined by the Administrative Agent, Dollars in
an amount comparable to the Loans then requested are being offered to leading
banks at approximately 11:00 A.M. London time, two (2) Business Days prior to
the commencement of the applicable Interest Period for settlement in immediately
available funds by leading banks in the London interbank market for a period
equal to the Interest Period selected.
"LIBOR Lending Office" shall mean, initially, the office of each Lender
designated as such Lender's LIBOR Lending Office shown on Schedule 9.2; and
thereafter, such other office of such Lender as such Lender may from time to
time specify to the Administrative Agent and the Borrower as the office of such
Lender at which the LIBOR Rate Loans of such Lender are to be made.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if necessary,
to the next higher 1/100th of 1%) determined by the Administrative Agent
pursuant to the following formula:
LIBOR Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest applicable to
which is based on the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Capital Lease having substantially the same economic effect as any of the
foregoing).
"Loan" shall mean a Revolving Loan, a Swingline Loan, the Tranche A Term
Loan and/or the Tranche B Term Loan, as appropriate.
"LOC Commitment" shall mean the commitment of the Issuing Lender to
issue new Letters of Credit and with respect to each Lender, the commitment of
such Lender to purchase participation interests in the Letters of Credit up to
the excess of (i) the LOC Committed Amount over (ii) the aggregate outstanding
face amount of the Existing Letters of Credit, such Lender's LOC Committed
Amount as specified in Schedule 2.1(a), as such amount may be reduced from time
to time in accordance with the provisions hereof.
"LOC Commitment Percentage" shall mean, for each Lender, the percentage
identified as its LOC Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in connection with any assignment made in accordance
with the provisions of Section 9.6(c).
"LOC Committed Amount" shall mean, collectively, the aggregate amount of
all of the LOC Commitments of the Lenders to issue and participate in Letters of
Credit as referenced in
15
21
Section 2.3(c) and, individually, the amount of each Lender's LOC Commitment as
specified in Schedule 2.1(a).
"LOC Documents" shall mean, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in connection
therewith, any application therefor, and any agreements, instruments, guarantees
or other documents (whether general in application or applicable only to such
Letter of Credit) governing or providing for (i) the rights and obligations of
the parties concerned or (ii) any collateral security for such obligations.
"LOC Obligations" shall mean, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be drawn
under Letters of Credit then outstanding, assuming compliance with all
requirements for drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by the Issuing
Lender but not theretofore reimbursed.
"Mandatory Borrowing" shall have the meanings set forth in Section
2.4(b)(ii) and Section 2.5(e).
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of the Parent and its Subsidiaries taken as a whole, (b) the ability
of the Borrower or any Guarantor to perform its obligations, when such
obligations are required to be performed, under this Agreement, any of the Notes
or any other Credit Document or (c) the validity or enforceability of this
Agreement, any of the Notes or any of the other Credit Documents or the rights
or remedies of the Administrative Agent or the Lenders hereunder or thereunder.
"Material Contract" shall mean any contract or other arrangement,
whether written or oral, to which the Borrower or any of its Subsidiaries is a
party as to which the breach, nonperformance, cancellation or failure to renew
by any party thereto could reasonably be expected to have a Material Adverse
Effect.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" shall mean (i) with respect to the Tranche A Term Loan,
the last scheduled quarterly payment date for the Tranche A Term Loan set forth
in Section 2.2(b), (ii) with respect to the Tranche B Term Loan, the last
scheduled quarterly payment date for the Tranche B Term Loan set forth in
Section 2.3(b), and (iii) with respect to the Revolving Loans, the Revolving
Commitment Termination Date.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgage Instruments" shall have the meaning set forth in Section
4.1(e).
"Mortgage Policies" shall have the meaning set forth in Section 4.1(e).
16
22
"Mortgaged Properties" shall have the meaning set forth in Section
4.1(e).
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received by
any Credit Party in respect of any Asset Disposition, Equity Issuance or Debt
Issuance, net of (a) direct costs (including, without limitation, legal,
accounting and investment banking fees, and sales commissions) and (b) taxes
paid or payable as a result thereof; it being understood that "Net Cash
Proceeds" shall include, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received by any Credit Party in
any Asset Disposition, Equity Issuance or Debt Issuance.
"Note" or "Notes" shall mean the Revolving Notes, the Swingline Note,
the Tranche A Term Notes and/or the Tranche B Term Notes, collectively,
separately or individually, as appropriate.
"Notice of Borrowing" shall mean the written notice of borrowing as
referenced and defined in Section 2.1(b)(i).
"Notice of Conversion/Extension" shall mean the written notice of
extension or conversion as referenced and defined in Section 2.11.
"Obligations" shall mean, collectively, Loans and LOC Obligations.
"Parent" shall have the meaning set forth in the first paragraph of this
Agreement.
"Participant" shall have the meaning set forth in Section 9.6(b).
"Participation Interest" shall mean the purchase by a Lender of a
participation interest in Letters of Credit as provided in Section 2.5(c).
"PBBC" shall mean Palm Beach Bedding Company, a Florida corporation and
a wholly-owned subsidiary of the Borrower.
"PBBC Industrial Development Bonds" shall mean the Variable Rate Demand
Industrial Development Prime Bonds (Palm Beach Bedding Company Project), Series
1996 in the original aggregate principal amount of $7,650,000 issued pursuant to
the PBBC Bond Indenture.
"PBBC Bond Indenture" shall mean that certain Trust Indenture dated as
of April 2, 1996, among the Palm Beach County, Florida, as Issuer, Branch
Banking and Trust Company, as Credit Facility Trustee and First Union National
Bank, as Bond Trustee.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.
"Permitted Acquisition" shall mean so long as no Default or Event of
Default shall have occurred and be continuing or would result therefrom on an
actual or pro forma basis, the
17
23
acquisition by the Borrower or any of its Subsidiaries of all or a majority of
the Capital Stock or other ownership interest in (or all or a substantial
portion of the assets, property and/or operations of) any Person (i) in a
similar or related line of business, (ii) which shall not have been rejected
initially or thereafter by such Person's board of directors, (iii) which shall
have had earnings before the deduction of interest, taxes, depreciation and
amortization expense for the two immediately preceding fiscal quarters in an
amount greater than $0 and (iv) which, in an aggregate amount for all such
acquisitions, shall not exceed $5,000,000 in any fiscal year.
"Permitted Adjustments" shall mean adjustments to Consolidated EBITDA
for the periods and in the amounts set forth on Schedule 1.1(c).
"Permitted Funds Transfer" shall have the meaning set forth in Section
9.6(c) hereof.
"Permitted Investments" shall mean:
(i) cash and Cash Equivalents;
(ii) receivables owing to the Borrower or any of its
Subsidiaries or any receivables and advances to suppliers, in each case
if created, acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms;
(iii) investments in and loans to any Credit Parties and as
otherwise permitted under Section 6.1(d);
(iv) loans and advances to officers, directors, employees and
Affiliates in an aggregate amount not to exceed $100,000 at any time
outstanding;
(v) investments (including debt obligations) received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business;
(vi) investments, acquisitions or transactions permitted under
Section 6.5(b);
(vii) additional loan advances and/or investments of a nature not
contemplated by the foregoing clauses hereof, provided that such loans,
advances and/or investments made pursuant to this clause (vii) shall not
exceed an aggregate amount of $100,000;
(viii) installment notes (to the extent the same could be
considered investments) issued in the ordinary course of business from
the Borrower and each of its Subsidiaries to Serta, Inc. in connection
with the Serta Licenses; and
(ix) shares of capital stock of Serta, Inc. held by the Borrower
and its Subsidiaries in connection with the Serta Licenses.
As used herein, "investment" means all investments, in cash or by
delivery of property made, directly or indirectly in, to or from any
Person, whether by acquisition of
18
24
shares of Capital Stock, property, assets, indebtedness or other
obligations or securities or by loan advance, capital contribution or
otherwise.
"Permitted Liens" shall mean:
(i) Liens created by or otherwise existing, under or in
connection with this Agreement or the other Credit Documents in favor of
the Lenders;
(ii) Liens in favor of a Lender hereunder in connection with
Hedging Agreements, but only (A) to the extent such Liens secure
obligations under Hedging Agreements with any Lender, or any Affiliate
of a Lender, (B) to the extent such Liens are on the same collateral as
to which the Administrative Agent on behalf of the Lenders also has a
Lien and (C) if such provider and the Lenders shall share pari passu in
the collateral subject to such Liens;
(iii) purchase money Liens securing purchase money indebtedness
(and refinancings thereof) to the extent permitted under Section 6.1(c);
(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of grace (not
to exceed 60 days), if any, related thereto has not expired or which are
being contested in good faith by appropriate proceedings, provided that
adequate reserves with respect thereto are maintained on the books of
the Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted accounting
principles in effect from time to time in their respective jurisdictions
of incorporation);
(v) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(viii) any extension, renewal or replacement (or successive
extensions, renewals or replacements) , in whole or in part, of any Lien
referred to in the foregoing clauses; provided that such extension,
renewal or replacement Lien shall be limited to all or a part of the
property which secured the Lien so extended, renewed or replaced (plus
improvements on such property);
(ix) Liens arising in connection with judgments to the extent
not resulting in an Event of Default under Section 7.1(f);
19
25
(x) other Liens existing from time to time in an aggregate
amount not to exceed $250,000; and
(xi) Liens existing on the Closing Date and set forth on
Schedule 1.1(b); provided, that (a) no such Lien shall at any time be
extended to cover property or assets other than the property or assets
subject thereto on the Closing Date and (b) the principal amount of the
Indebtedness secured by such Liens shall not be extended, renewed,
refunded or refinanced.
"Permitted Seller Debt" shall mean shall mean that certain Junior
Subordinated Note dated as of May 18, 1999 executed by the Parent in favor of
Nancourt, Inc. (formerly known as Star Bedding Products (1986) Limited) in an
original aggregate principal amount of $1,000,000 Canadian dollars of which
$1,000,000 Canadian dollars is outstanding as of the Closing Date.
"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PIK Subordinated Debt" shall mean pay in kind subordinated debt issued
by the Parent to Citicorp Mezzanine Partners, L.P. in an aggregate initial
amount not exceeding $10,000,000.
"Plan" shall mean, at any particular time, any employee benefit plan
which is covered by Title IV of ERISA and in respect of which the Borrower or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Third Amended and Restated Pledge
Agreement dated as of the Closing Date to be executed in favor of the
Administrative Agent by the Borrower and each of the other Credit Parties, as
amended, modified, restated or supplemented from time to time.
"Prime Rate" shall have the meaning set forth in the definition of
Alternate Base Rate.
"ProForma Adjusted EBITDA" shall mean, as to Crescent and its
Subsidiaries, the sum of net income plus an amount which, in the determination
of net income for such period, has been deducted for interest expense, taxes,
depreciation, amortization expense and other non-cash charges plus losses (or
minus gains) from sales or other dispositions of assets (other than sales of
inventory in the ordinary course) plus permitted adjustments as determined by
the Administrative Agent in its sole discretion, all as determined in accordance
with GAAP.
"Properties" shall have the meaning set forth in Section 3.10(a).
"Purchasing Lenders" shall have the meaning set forth in Section 9.6(c).
"Recovery Event" shall mean the receipt by the Parent or any of its
Subsidiaries of any cash insurance proceeds or condemnation award resulting from
a Casualty Event payable by reason of theft, loss, physical destruction or
damage, taking or similar event with respect to any of their respective property
or assets; provided, however, that for purposes of this Agreement, the
20
26
receipt of proceeds from the business interruption insurance relating to the
fire at the Borrower's Puyallup, Washington property shall not be considered to
be a Recovery Event hereunder.
"Register" shall have the meaning set forth in Section 9.6(d).
"Reimbursement Agreement" shall mean the Reimbursement Agreement, dated
as of April 1, 1996 between Palm Beach Bedding Company, a Florida corporation
and First Union, as amended by the Amendment to Reimbursement Agreement, dated
March 3, 1998, pursuant to which an irrevocable direct pay letter of credit was
issued to PBBC to enhance the security and marketability of the PBBC Industrial
Development Bonds.
"Reorganization" shall mean, with respect to any Multiemployer Plan, the
condition that such Plan is in reorganization within the meaning of such term as
used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the thirty-day notice
period is waived under PBGC Reg. Section 4043.
"Required Lenders" shall mean Lenders holding in the aggregate greater
than 50% of the Commitments and Participation Interests therein or outstanding
Loans and Participation Interests (including the Participation Interests of the
Issuing Lender in any Letters of Credit), as the case may be, provided, however,
that if any Lender shall be a Defaulting Lender at such time, then there shall
be excluded from the determination of Required Lenders, Obligations (including
Participation Interests) owing to such Defaulting Lender and such Defaulting
Lender's Commitments, or after termination of the Commitments, the principal
balance of the Obligations owing to such Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and Bylaws or other organizational or governing documents of such
Person, and each law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" shall mean, as to (a) the Borrower, the President
and Chief Executive Officer or the Chief Financial Officer or (b) any other
Credit Party, any duly authorized officer thereof.
"Restricted Payment" shall mean (a) any declaration (other than with
respect to pay-in-kind preferred equity in existence as of the Closing Date) or
payment of a dividend or other distribution, direct or indirect, on account of
any shares of any class of Capital Stock of the Borrower or any of its
Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of Capital Stock of the Borrower or any
of its Subsidiaries, now or hereafter outstanding, (c) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of the Borrower or
any of its Subsidiaries, now or hereafter outstanding, or (d) except as
permitted by Section 6.16, any payment or prepayment of principal of, premium,
if any, or interest on,
21
27
redemption, purchase, retirement, defeasance, sinking fund or similar payment
with respect to, any Subordinated Debt.
"Retroactive Notes" shall mean those certain Junior Subordinated Notes
of the Parent each dated on or following May 18, 1999 in an initial aggregate
principal amount not to exceed $600,000.
"Revolving Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans in an aggregate principal amount at any
time outstanding up to such Lender's Revolving Committed Amount as specified in
Schedule 2.1(a), as such amount may be reduced from time to time in accordance
with the provisions hereof.
"Revolving Commitment Percentage" shall mean, for each Lender, the
percentage identified as its Revolving Commitment Percentage on Schedule 2.1(a),
as such percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 9.6(c).
"Revolving Commitment Termination Date" shall mean December 31, 2005.
"Revolving Committed Amount" shall mean, collectively, the aggregate
amount of all Revolving Commitments as referenced in Section 2.1(a), as such
amount may be reduced from time to time in accordance with the provisions
hereof, and, individually, the amount of each Lender's Revolving Commitment as
specified on Schedule 2.1(a).
"Revolving Loans" shall have the meaning set forth in Section 2.1.
"Revolving Note" or "Revolving Notes" shall mean the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving Loans
provided pursuant to Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"Scheduled Funded Debt Payments" shall mean, as of any date of
determination for the Borrower and its Subsidiaries, the sum of all scheduled
payments of principal on Funded Debt for the applied period ending on the date
of determination (including the principal component of payments due on Capital
Lease Obligations during the applicable period ending on the date of
determination and all scheduled payments of principal to be made by the Parent
on the Permitted Seller Debt).
"Security Agreement" shall mean the Third Amended and Restated Security
Agreement dated as of the Closing Date given by the Borrower and the other
Credit Parties to the Administrative Agent, as amended, modified or supplemented
from time to time in accordance with its terms.
"Security Documents" shall mean the Security Agreement, the Pledge
Agreement, the Mortgage Instruments and such other documents executed and
delivered in connection with the
22
28
attachment and perfection of the Administrative Agent's security interests and
liens arising thereunder, including, without limitation, UCC financing
statements.
"Senior Funded Debt" shall mean as of any date of determination, with
respect to any Person, all Funded Debt (including without limitation Extensions
of Credit hereunder) which is not subordinate in right of payment to the Credit
Party Obligations.
"Senior Leverage Ratio" shall mean as of the end of each fiscal quarter
of the Borrower, for the Borrower and its Subsidiaries on a consolidated basis
for the four consecutive quarters ending on such date, the ratio of (a) Senior
Funded Debt of the Borrower and its Subsidiaries on the last day of such period
to (b) Consolidated EBITDA.
"Serta Consent" shall mean consent of the board of directors or
stockholders of Serta, Inc. in accordance with the applicable terms of any Serta
Licenses or the By-laws of Serta, Inc., as applicable, which provide, under
certain circumstances, that such consent shall not be unreasonably withheld.
"Serta Licenses" shall mean, collectively, (a) the two Standard License
Agreements and the two Memoranda of Agreement, dated January 12, 1995, between
the Borrower and Serta, Inc. covering certain territories in Pennsylvania, New
Jersey, New York, Connecticut, Maryland and Delaware, (b) the Standard License
Agreement and the Memoranda of Agreement, each dated November 4, 1989 between
Palm Beach Bedding Company and Serta Inc. covering a certain territory in
Florida, (c) the Standard License Agreement dated November 4, 1989, and the
Memoranda of Agreement dated December 1, 1969, between Xxxx Manufacturing
Company and Serta, Inc. covering certain territories in Pennsylvania, New York
and New Jersey, (d) the Standard License Agreement and the Memoranda of
Agreement, each dated December 1, 1969 between Xxxx Xxxxx, Inc. and Serta, Inc.,
(e) the Standard License Agreement dated November 4, 1989 between Xxxx Xxxxx,
Inc. and Serta, Inc., (f) the Standard License Agreement and the Memorandum of
Agreement, each dated as of December 1, 1998 between Xxxx Xxxxx, Inc. and Serta,
Inc., (g) Standard Canadian License Agreement dated as of May 18, 1999 between
Serta, Inc. and Star Bedding Products Limited, (h) License Agreement and the
Memorandum Agreement, each dated December 1, 1969 between Xxxx Xxxxx, Inc. and
Serta, Inc., (i) Memorandum of Agreement dated December 22, 1983 between Serta,
Inc. and Xxxx Xxxxx, Inc., (j) License Agreement by and between Serta, Inc. and
Simon Mattress Manufacturing Company, dated Xxxxx 00, 0000, (x) Memorandum of
Agreement between Serta, Inc. and Simon Mattress Manufacturing Company dated
Xxxxx 00, 0000, (x) License Agreement by and between Serta, Inc. and Simon
Mattress Manufacturing Co., dated November 4, 1989, (m) Memorandum of Agreement
between Serta, Inc. and Simon Mattress Manufacturing Company, dated November 4,
1989, (n) License Agreement by and between Serta, Inc. and Simon Mattress
Manufacturing Co., dated November 4, 1989, (o) Memorandum of Agreement between
Serta, Inc. and Simon Mattress Manufacturing Company dated November 4, 1989, (p)
Standard License Agreement and Memorandum of Agreement, each dated March 17,
1998, between Serta, Inc. and the Company (regarding Grovetown, Georgia and
related territories); (q) Standard License Agreement and Memorandum of
Agreement, each dated March 17, 1998, between Serta, Inc. and the Company
(regarding Greensboro, North Carolina and related territories); (r) Standard
License Agreement and Memorandum of Agreement, each dated March 17, 1998,
between Serta, Inc. and the Company (regarding Clear Lake, Iowa and related
territories) and (s)
23
29
all additional Standard License Agreements and Memoranda of Agreement entered
into between any Credit Party and Serta, Inc.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan.
"Solvent" shall mean, with respect to the Borrower, the Parent and their
Subsidiaries on a particular date, that any such Person (a) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is able to pay its debts as they
mature, (b) owns property having a value, both at fair valuation and at present
fair saleable value, greater than the amount required to pay its probable
liabilities (including contingencies), and (c) does not believe that it will
incur debts or liabilities beyond its ability to pay such debts or liabilities
as they mature.
"Specified Sales" shall mean (a) the sale, transfer or other disposition
of inventory, materials and licensing of Intellectual Property in the ordinary
course of business and (b) the sale, transfer or other disposition of Permitted
Investments described in clause (i) of the definition thereof.
"Subordinated Credit Agreement" shall mean the Subordinated Credit
Agreement dated as of November 5, 1999 by and between the Parent and Citicorp
Mezzanine Partners, L.P.
"Subordinated Debt" shall mean (i) the Subordinated Notes, (ii) the PIK
Subordinated Debt, (iii) the Borrower Subordinated Notes and (iv) any other
Indebtedness incurred by any Credit Party which by its terms is specifically
subordinated in right of payment to the prior payment of the Credit Party
Obligations.
"Subordinated Notes" shall mean those certain 11% senior subordinated
notes in an aggregate principal amount of $115,000,000 due 2009 of the Borrower
and Sleepmaster Finance Corporation issued pursuant to the Indenture.
"Subsidiary" shall mean, as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"Sweep Plus Arrangement" shall mean the Sweep Plus Loan/Investment
Services Description attached hereto as Schedule 1.1(d) or any similar
arrangement between the Borrower and the Swingline Lender by which Swingline
Loans may be advanced and deposited from time to time into a specified account
with the Swingline Lender and which deposits may be applied to repay the
Swingline Loans outstanding hereunder.
"Swingline Commitment" shall mean the commitment of the Swingline Lender
to make Swingline Loans in an aggregate principal amount at any time outstanding
up to the Swingline
24
30
Committed Amount, and the commitment of the Lenders to purchase participation
interests in the Swingline Loans as provided in Section 2.4(b)(ii), as such
amounts may be reduced from time to time in accordance with the provisions
hereof.
"Swingline Committed Amount" shall mean the amount of the Swingline
Lender's Swingline Commitment as specified in Section 2.4(a).
"Swingline Lender" shall mean First Union, in its capacity as such.
"Swingline Loan" or "Swingline Loans" shall have the meaning set forth
in Section 2.4(a).
"Swingline Note" shall mean the promissory note of the Borrower in favor
of the Swingline Lender evidencing the Swingline Loans provided pursuant to
Section 2.4(d), as such promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time.
"Taxes" shall have the meaning set forth in Section 2.19(a).
"Tranche" shall mean the collective reference to LIBOR Rate Loans whose
Interest Periods begin and end on the same day. A Tranche may sometimes be
referred to as a "LIBOR Tranche".
"Tranche A Term Loan" shall have the meaning set forth in Section
2.2(a).
"Tranche A Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make its portion of the Tranche A Term
Loan in a principal amount equal to such Lender's Tranche A Term Loan Commitment
Percentage of the Tranche A Term Loan Committed Amount (and for purposes of
making determinations of Required Lenders hereunder after the Closing Date, the
principal amount outstanding on the Tranche A Term Loan).
"Tranche A Term Loan Commitment Percentage" shall mean, for any Lender,
the percentage identified as its Tranche A Term Loan Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 9.6.
"Tranche A Term Loan Committed Amount" shall have the meaning set forth
in Section 2.2(a).
"Tranche A Term Note" or "Tranche A Term Notes" shall mean the
promissory notes of the Borrower in favor of each of the Lenders evidencing the
portion of the Tranche A Term Loan provided pursuant to Section 2.2(d),
individually or collectively, as appropriate, as such promissory notes may be
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time.
"Tranche B Term Loan" shall have the meaning set forth in Section
2.3(a).
25
31
"Tranche B Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make its portion of the Tranche B Term
Loan in a principal amount equal to such Lender's Tranche B Term Loan Commitment
Percentage of the Tranche B Term Loan Committed Amount (and for purposes of
making determinations of Required Lenders hereunder after the Closing Date, the
principal amount outstanding on the Tranche B Term Loan).
"Tranche B Term Loan Commitment Percentage" shall mean, for any Lender,
the percentage identified as its Tranche B Term Loan Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 9.6.
"Tranche B Term Loan Committed Amount" shall have the meaning set forth
in Section 2.3(a).
"Tranche B Term Note" or "Tranche B Term Notes" shall mean the
promissory notes of the Borrower in favor of each of the Lenders evidencing the
portion of the Tranche B Term Loan provided pursuant to Section 2.3(d),
individually or collectively, as appropriate, as such promissory notes may be
amended, modified, restated, supplemented, extended, renewed or replaced from
time to time.
"Transaction Costs" shall mean all costs and expenses incurred by the
Credit Parties in connection with the transactions closing as of the Closing
Date to the extent not capitalized on the balance sheet of the Parent in an
aggregate amount not to exceed $2,000,000.
"Transfer Effective Date" shall have the meaning set forth in each
Commitment Transfer Supplement.
"2.19 Certificate" shall have the meaning set forth in Section 2.19.
"Type" shall mean, as to any Loan, its nature as an Alternate Base Rate
Loan, LIBOR Rate Loan or Swingline Loan, as the case may be.
"Voting Stock" means, with respect to any Person, Capital Stock issued
by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote
has been suspended by the happening of such a contingency.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in this
Agreement shall have the defined meanings when used in the Notes or other Credit
Documents or any certificate or other document made or delivered pursuant
hereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
26
32
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 1.3 ACCOUNTING TERMS.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Borrower delivered to the Lenders;
provided that, if the Borrower notifies the Administrative Agent that it wishes
to amend any covenant in Section 5.9 (or the defined terms used therein) to
eliminate the effect of any change in GAAP on the operation of such covenant (or
if the Administrative Agent notifies the Borrower that the Required Lenders wish
to amend Section 5.9 for such purpose), then the Borrower's compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Borrower
and the Required Lenders.
The Borrower shall deliver to the Administrative Agent and each Lender
at the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (i) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.
The parties hereto acknowledge and agree that, for purposes of all
calculations made under the financial covenants set forth in Section 5.9
(including without limitation for purposes of the definition of "Applicable
Percentage" hereunder), (i) in connection with any asset sale or disposition as
contemplated by Section 6.5, (A) income statement items (whether positive or
negative) attributable to the Property disposed of shall be excluded to the
extent relating to any period occurring prior to the date of such transaction
and (B) Indebtedness which is retired shall be excluded and deemed to have been
retired as of the first day of the applicable period and (ii) in connection with
any acquisition, merger or consolidation as referred to in Section 6.5
(including specifically, without limitation, the Acquisition), income statement
items (whether positive or negative) and Indebtedness attributable to any Person
or Property so acquired shall, to the extent not otherwise included in such
income statements items for the Parent and its Subsidiaries on a consolidated
basis in accordance with GAAP or in accordance with any defined terms set forth
herein, be included to the extent relating to any period applicable in such
calculations and be deemed to have been included as of the first day of the
applicable period.
27
33
ARTICLE II
THE LOANS; AMOUNT AND TERMS
SECTION 2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make revolving
credit loans ("Revolving Loans") to the Borrower from time to time for the
purposes hereinafter set forth; provided, however, that (i) with regard to each
Lender individually, the sum of such Lender's share of outstanding Revolving
Loans plus such Lender's Revolving Commitment Percentage of outstanding
Swingline Loans plus such Lender's LOC Commitment Percentage of outstanding LOC
Obligations shall not exceed such Lender's Revolving Commitment Percentage of
the aggregate Revolving Committed Amount, and (ii) with regard to the Lenders
collectively, the sum of the aggregate amount of outstanding Revolving Loans
plus outstanding LOC Obligations shall not exceed the Revolving Committed
Amount. For purposes hereof, the aggregate amount available hereunder shall be
FORTY MILLION DOLLARS ($40,000,000) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 2.6, the "Revolving Committed
Amount"). Revolving Loans may consist of Alternate Base Rate Loans or LIBOR Rate
Loans, or a combination thereof, as the Borrower may request, and may be repaid
and reborrowed in accordance with the provisions hereof; provided that no more
than five (5) separate LIBOR Tranches shall be outstanding at any one time.
LIBOR Rate Loans shall be made by each Lender at its LIBOR Lending Office and
Alternate Base Rate Loans at its Domestic Lending Office.
(b) Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a Revolving
Loan borrowing by written notice (or telephone notice promptly confirmed
in writing which confirmation may be by fax) to the Administrative Agent
not later than 11:00 A.M. (Charlotte, North Carolina time) on the
Business Day prior to the date of requested borrowing in the case of
Alternate Base Rate Loans, and on the third Business Day prior to the
date of the requested borrowing in the case of LIBOR Rate Loans. Each
such request for borrowing shall be irrevocable and shall specify (A)
that a Revolving Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate principal
amount to be borrowed, (D) whether the borrowing shall be comprised of
Alternate Base Rate Loans, LIBOR Rate Loans or a combination thereof,
and if LIBOR Rate Loans are requested, the Interest Period(s) therefor.
A form of Notice of Borrowing (a "Notice of Borrowing") is attached as
Schedule 2.1(b)(i). If the Borrower shall fail to specify in any such
Notice of Borrowing (I) an applicable Interest Period in the case of a
LIBOR Rate Loan, then such notice shall be deemed to be a request for an
Interest Period of one month, or (II) the Type of Revolving Loan
requested, then such notice shall be deemed to be a request for an
Alternate Base Rate Loan hereunder. The Administrative Agent shall give
notice to each Lender promptly upon receipt of each Notice of Borrowing,
the contents thereof and each such Lender's share thereof. All Revolving
Loans made on the Closing Date shall bear interest at the Alternate Base
Rate until the earlier of (i) the completion of the syndication of the
28
34
Commitments to financial institutions which shall become Lenders
hereunder or (ii) thirty days from the Closing Date.
(ii) Minimum Amounts. Each Revolving Loan borrowing shall be in
a minimum aggregate amount of (A) with respect to LIBOR Rate Loans,
$1,000,000 and integral multiples of $250,000 in excess thereof (or the
remaining amount of the Revolving Committed Amount, if less) or (B) with
respect to Alternate Base Rate Loans, $500,000 and integral multiples of
$100,000 in excess thereof (or the remaining amount of the Revolving
Committed Amount, if less).
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the
Administrative Agent for the account of the Borrower at the office of
the Administrative Agent specified in Schedule 9.2, or at such other
office as the Administrative Agent may designate in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower by the Administrative Agent by crediting the
account of the Borrower on the books of such office with the aggregate
of the amounts made available to the Administrative Agent by the Lenders
and in like funds as received by the Administrative Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be
due and payable in full on the Revolving Commitment Termination Date.
(d) Interest. Subject to the provisions of Section 2.10, Revolving
Loans shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as Revolving
Loans shall be comprised of Alternate Base Rate Loans, each such
Alternate Base Rate Loan shall bear interest at a per annum rate equal
to the sum of the Alternate Base Rate plus the Applicable Percentage;
and
(ii) LIBOR Rate Loans. During such periods as Revolving Loans
shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall
bear interest at a per annum rate equal to the sum of the LIBOR Rate
plus the Applicable Percentage.
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
(e) Revolving Notes. Each Lender's Revolving Commitment Percentage of
the Revolving Loans shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in substantially the form of Schedule 2.1(e).
SECTION 2.2 TRANCHE A TERM LOAN.
(a) Tranche A Term Loan. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein, each
Lender severally and not jointly agrees to make available to the Borrower on the
Closing Date such Lender's Tranche A Term Loan Commitment Percentage of a term
loan in Dollars (the "Tranche A Term Loan") in the
29
35
aggregate principal amount of FIFTY-SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($57,500,000) (the "Tranche A Term Loan Committed Amount") for the purposes
hereinafter set forth. The Tranche A Term Loan may consist of Alternate Base
Rate Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower may
request provided that the Tranche A Term Loans made on the Closing Date shall
bear interest at the Alternate Base Rate until three (3) Business Days after the
Closing Date. The Borrower shall request the initial Tranche A Term Loan
borrowing by written notice (or telephone notice promptly confirmed in writing
which confirmation may be by fax) to the Administrative Agent not later than
11:00 A.M. (Charlotte, North Carolina time) on the Business Day prior to the
date of requested borrowing. Amounts repaid on the Tranche A Term Loan may not
be reborrowed. LIBOR Rate Loans shall be made by each Lender at its LIBOR
Lending Office and Alternate Base Rate Loans at its Domestic Lending Office.
(b) Repayment of Tranche A Term Loan. The principal amount of the
Tranche A Term Loan shall be repaid in 22 consecutive fiscal quarterly
installments as follows, unless accelerated sooner pursuant to Section 7.2, as
such amount may be reduced pursuant to Section 2.8:
------------------------ ------------------------
PRINCIPAL AMORTIZATION TERM LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION PAYMENT
------------------------ ------------------------
September 29, 2000 $2,156,250
------------------------ ------------------------
December 29, 2000 $2,156,250
------------------------ ------------------------
March 30, 2001 $2,156,250
------------------------ ------------------------
June 29, 2001 $2,156,250
------------------------ ------------------------
September 28, 2001 $2,156,250
------------------------ ------------------------
December 31, 2001 $2,156,250
------------------------ ------------------------
March 29, 2002 $2,156,250
------------------------ ------------------------
June 28, 2002 $2,156,250
------------------------ ------------------------
September 30, 2002 $2,875,000
------------------------ ------------------------
December 31, 2002 $2,875,000
------------------------ ------------------------
March 31, 2003 $2,875,000
------------------------ ------------------------
June 30, 2003 $2,875,000
------------------------ ------------------------
September 30, 2003 $2,875,000
------------------------ ------------------------
December 31, 2003 $2,875,000
------------------------ ------------------------
March 31, 2004 $2,875,000
------------------------ ------------------------
June 30, 2004 $2,875,000
------------------------ ------------------------
September 30, 2004 $2,875,000
------------------------ ------------------------
December 31, 2004 $2,875,000
------------------------ ------------------------
30
36
------------------------ ------------------------
March 31, 2005 $2,875,000
------------------------ ------------------------
June 30, 2005 $2,875,000
------------------------ ------------------------
September 30, 2005 $2,875,000
------------------------ ------------------------
December 31, 2005 $2,875,000
------------------------ ------------------------
(c) Interest on the Tranche A Term Loan. Subject to the provisions of
Section 2.10, the Tranche A Term Loan shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as the
Tranche A Term Loan shall be comprised of Alternate Base Rate Loans,
each such Alternate Base Rate Loan shall bear interest at a per annum
rate equal to the sum of the Alternate Base Rate plus the Applicable
Percentage; and
(ii) LIBOR Rate Loans. During such periods as the Tranche A Term
Loan shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan
shall bear interest at a per annum rate equal to the sum of the LIBOR
Rate plus the Applicable Percentage.
Interest on the Tranche A Term Loan shall be payable in arrears
on each Interest Payment Date.
(d) Term Notes. Each Lender's Tranche A Term Loan Commitment
Percentage of the Tranche A Term Loan outstanding as of the Closing Date shall
be evidenced by a duly executed promissory note of the Borrower to such Lender
in substantially the form of Schedule 2.2(d).
SECTION 2.3 TRANCHE B TERM LOAN.
(a) Tranche B Term Loan. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein, each
Lender severally and not jointly agrees to make available to the Borrower on the
Closing Date such Lender's Tranche B Term Loan Commitment Percentage of a term
loan in Dollars (the "Tranche B Term Loan") in the aggregate principal amount of
SEVENTY-FIVE MILLION DOLLARS ($75,000,000) (the "Tranche B Term Loan Committed
Amount") for the purposes hereinafter set forth. The Tranche B Term Loan may
consist of Alternate Base Rate Loans or LIBOR Rate Loans, or a combination
thereof, as the Borrower may request; provided that the Tranche B Term Loans
made on the Closing Date shall bear interest at the Alternate Base Rate until
three (3) Business Days after the Closing Date. The Borrower shall request the
initial Tranche B Term Loan borrowing by written notice (or telephone notice
promptly confirmed in writing which confirmation may be by fax) to the
Administrative Agent not later than 11:00 A.M. (Charlotte, North Carolina time)
on the Business Day prior to the date of requested borrowing. Amounts repaid on
the Tranche B Term Loan may not be reborrowed. LIBOR Rate Loans shall be made by
each Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its
Domestic Lending Office.
(b) Repayment of Tranche B Term Loan. The principal amount of the
Tranche B Term Loan shall be repaid in 26 consecutive fiscal quarterly
installments as follows, unless
31
37
accelerated sooner pursuant to Section 7.2, as such amount may be reduced
pursuant to Section 2.8:
------------------------ ------------------------
PRINCIPAL AMORTIZATION TERM LOAN PRINCIPAL
PAYMENT DATES AMORTIZATION PAYMENT
------------------------ ------------------------
September 29, 2000 $187,500
------------------------ ------------------------
December 29, 2000 $187,500
------------------------ ------------------------
March 30, 2001 $187,500
------------------------ ------------------------
June 29, 2001 $187,500
------------------------ ------------------------
September 28, 2001 $187,500
------------------------ ------------------------
December 31, 2001 $187,500
------------------------ ------------------------
March 29, 2002 $187,500
------------------------ ------------------------
June 28, 2002 $187,500
------------------------ ------------------------
September 30, 2002 $187,500
------------------------ ------------------------
December 31, 2002 $187,500
------------------------ ------------------------
March 31, 2003 $187,500
------------------------ ------------------------
June 30, 2003 $187,500
------------------------ ------------------------
September 30, 2003 $187,500
------------------------ ------------------------
December 31, 2003 $187,500
------------------------ ------------------------
March 31, 2004 $187,500
------------------------ ------------------------
June 30, 2004 $187,500
------------------------ ------------------------
September 30, 2004 $187,500
------------------------ ------------------------
December 31, 2004 $187,500
------------------------ ------------------------
March 31, 2005 $187,500
------------------------ ------------------------
June 30, 2005 $187,500
------------------------ ------------------------
September 30, 2005 $8,906,250
------------------------ ------------------------
December 31, 2005 $8,906,250
------------------------ ------------------------
March 30, 2006 $8,906,250
------------------------ ------------------------
June 30, 2006 $8,906,250
------------------------ ------------------------
September 30, 2006 $17,812,500
------------------------ ------------------------
December 31, 2006 $17,812,500
------------------------ ------------------------
32
38
(c) Interest on the Tranche B Term Loan. Subject to the provisions of
Section 2.10, the Tranche B Term Loan shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as the
Tranche B Term Loan shall be comprised of Alternate Base Rate Loans,
each such Alternate Base Rate Loan shall bear interest at a per annum
rate equal to the sum of the Alternate Base Rate plus the Applicable
Percentage; and
(ii) LIBOR Rate Loans. During such periods as the Tranche B Term
Loan shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan
shall bear interest at a per annum rate equal to the sum of the LIBOR
Rate plus the Applicable Percentage.
Interest on the Tranche B Term Loan shall be payable in arrears
on each Interest Payment Date.
(d) Tranche B Term Notes. Each Lender's Tranche B Term Loan Commitment
Percentage of the Tranche B Term Loan outstanding as of the Closing Date shall
be evidenced by a duly executed promissory note of the Borrower to such Lender
in substantially the form of Schedule 2.3(d).
SECTION 2.4 SWINGLINE LOANS.
(a) Swingline Commitment. During the Commitment Period, subject to the
terms and conditions hereof, the Swingline Lender, in its individual capacity,
agrees to make certain revolving credit loans to the Borrower (each a "Swingline
Loan" and, collectively, the "Swingline Loans") for the purposes hereinafter set
forth; provided, however, (i) the aggregate amount of Swingline Loans
outstanding at any time shall not exceed TWO MILLION DOLLARS ($2,000,000) (the
"Swingline Committed Amount"), and (ii) the sum of the aggregate amount of
Revolving Loans outstanding plus Swingline Loans outstanding plus LOC
Obligations outstanding shall not exceed the Revolving Committed Amount.
Swingline Loans hereunder may be repaid and reborrowed in accordance with the
provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement.
(A) Except as provided in subclause (B) below the
Swingline Lender will make Swingline Loans available to the
Borrower on any Business Day upon request made by the Borrower not
later than 2:00 P.M. (Charlotte, North Carolina time) on such
Business Day. A notice of request for Swingline Loan borrowing
shall be made in the form of Schedule 2.1(b)(i) with appropriate
modifications. Swingline Loan borrowings hereunder shall be made
in minimum amounts of $50,000 and in integral amounts of $50,000
in excess thereof.
(B) Subject to the Swingline Lender's sole discretion,
borrowings of Swingline Loans hereunder may be made from time to
time into a specified demand deposit account with the Swingline
Lender pursuant to the Sweep Plus Arrangement. Each such borrowing
shall be deemed a reaffirmation by the
33
39
Borrower that the representations and warranties set forth in
Article III are true and correct in all material respects as of
the date of such borrowing. Each Swingline Loan requested pursuant
to this subsection (B) shall be in such minimum amounts, if any,
provided in the Sweep Plus Arrangement.
(ii) Repayment of Swingline Loans. Unless repaid sooner in
accordance with the Sweep Plus Arrangement, each Swingline Loan
borrowing shall be due and payable on the Revolving Commitment
Termination Date. The Swingline Lender may, at any time, in its sole
discretion, by written notice to the Borrower and the Administrative
Agent, demand repayment of its Swingline Loans by way of a Revolving
Loan borrowing, in which case the Borrower shall be deemed to have
requested a Revolving Loan borrowing comprised entirely of Alternate
Base Rate Loans in the amount of such Swingline Loans; provided,
however, that, in the following circumstances, any such demand shall
also be deemed to have been given one Business Day prior to each of (i)
the Revolving Commitment Termination Date, (ii) the occurrence of any
Event of Default described in Section 7.1(e), (iii) upon acceleration of
the Credit Party Obligations hereunder, whether on account of an Event
of Default described in Section 7.1(e) or any other Event of Default,
and (iv) the exercise of remedies in accordance with the provisions of
Section 7.2 hereof (each such Revolving Loan borrowing made on account
of any such deemed request therefor as provided herein being hereinafter
referred to as "Mandatory Borrowing"). Each Lender having a Revolving
Commitment hereby irrevocably agrees to make such Revolving Loans
promptly upon any such request or deemed request on account of each
Mandatory Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (I) the
amount of Mandatory Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder, (II) whether
any conditions specified in Section 4.2 are then satisfied, (III)
whether a Default or an Event of Default then exists, (IV) failure of
any such request or deemed request for Revolving Loans to be made by the
time otherwise required in Section 2.1(b)(i), (V) the date of such
Mandatory Borrowing, or (VI) any reduction in the Revolving Committed
Amount or termination of the Revolving Commitments immediately prior to
such Mandatory Borrowing or contemporaneously therewith. In the event
that any Mandatory Borrowing cannot for any reason be made on the date
otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code), then each
Lender having a Revolving Commitment hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Borrowing would
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) from the
Swingline Lender such participations in the outstanding Swingline Loans
as shall be necessary to cause each such Lender to share in such
Swingline Loans ratably based upon its respective Revolving Commitment
Percentage (determined before giving effect to any termination of the
Commitments pursuant to Section 7.2); provided that (A) all interest
payable on the Swingline Loans shall be for the account of the Swingline
Lender until the date as of which the respective participation is
purchased, and (B) at the time any purchase of participations pursuant
to this sentence is actually made, the purchasing Lender shall be
required to pay to the Swingline Lender interest on the principal amount
of such participation purchased for each day from and including the day
upon which the Mandatory Borrowing would otherwise have occurred
34
40
to but excluding the date of payment for such participation, at the rate
equal to, if paid within two (2) Business Days of the date of the
Mandatory Borrowing, the Federal Funds Effective Rate, and thereafter at
a rate equal to the Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions of Section
2.10, Swingline Loans shall bear interest at a per annum rate equal to the
Alternate Base Rate plus the Applicable Percentage for Revolving Loans that are
Alternate Base Rate Loans. Interest on Swingline Loans shall be payable in
arrears on each Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in the original
amount of the Swingline Committed Amount and substantially in the form of
Schedule 2.4(d).
SECTION 2.5 LETTER OF CREDIT SUBFACILITY.
(a) Issuance. The Issuing Lender has heretofore issued the Existing
Letter of Credit. Subject to the terms and conditions hereof and of the LOC
Documents, if any, and any other terms and conditions which the Issuing Lender
may reasonably require, during the Commitment Period the Issuing Lender shall
issue, and the Lenders having a Revolving Commitment shall participate in,
Letters of Credit for the account of the Borrower from time to time upon request
in a form acceptable to the Issuing Lender; provided, however, that (i) the
aggregate amount of LOC Obligations shall not at any time exceed TWENTY-FIVE
MILLION DOLLARS ($25,000,000) (the "LOC Committed Amount"), (ii) the sum of the
aggregate amount of Revolving Loans outstanding plus Swingline Loans outstanding
plus LOC Obligations outstanding shall not at any time exceed the Revolving
Committed Amount, (iii) all Letters of Credit shall be denominated in Dollars
and (iv) Letters of Credit shall be issued for the purpose of supporting
tax-advantaged variable rate demand note financing and for other lawful
corporate purposes and may be issued as standby letters of credit, including in
connection with workers' compensation and other insurance programs, and trade
letters of credit. Except as otherwise expressly agreed upon by all of the
Lenders having a Revolving Commitment, no Letter of Credit (other than the
Existing Letter of Credit in favor of U.S. Bank Trust National Association in
the amount of $5,999,683 which has a stated expiry date of April 15, 2003) shall
have an original expiry date more than twelve (12) months from the date of
issuance; provided, however, that so long as no Default or Event of Default has
occurred and is continuing and subject to the other terms and conditions to the
issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit
may be extended annually or periodically from time to time on the request of the
Borrower or by operation of the terms of the applicable Letter of Credit to a
date not more than twelve (12) months from the date of extension; provided,
further, that no Letter of Credit, as originally issued or as extended, shall
have an expiry date extending beyond the Maturity Date. Each Letter of Credit
shall comply with the related LOC Documents. The issuance and expiry date of
each Letter of Credit shall be a Business Day. Any Letters of Credit issued
hereunder shall be in a minimum original face amount of $100,000. First Union
shall be the Issuing Lender on all Letters of Credit issued after the Closing
Date.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted to the Issuing Lender at least five (5) Business Days
prior to the requested date of issuance. The Issuing Lender will promptly upon
request provide to the Administrative Agent
35
41
for dissemination to the Lenders having a Revolving Commitment a detailed report
specifying the Letters of Credit which are then issued and outstanding and any
activity with respect thereto which may have occurred since the date of any
prior report, and including therein, among other things, the account party, the
beneficiary, the face amount, expiry date as well as any payments or expirations
which may have occurred. The Issuing Lender will further provide to the
Administrative Agent promptly upon request copies of the Letters of Credit. The
Issuing Lender will provide to the Administrative Agent promptly upon request a
summary report of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender having a Revolving Commitment upon
issuance of a Letter of Credit (or, with respect to the Existing Letter of
Credit, automatically, without any action by any Person, as of the Closing Date)
shall be deemed to have purchased without recourse a risk participation from the
Issuing Lender in such Letter of Credit and the obligations arising thereunder
and any collateral relating thereto, in each case in an amount equal to its LOC
Commitment Percentage of the obligations under such Letter of Credit and shall
absolutely, unconditionally and irrevocably assume, as primary obligor and not
as surety, and be obligated to pay to the Issuing Lender therefor and discharge
when due, its LOC Commitment Percentage of the obligations arising under such
Letter of Credit. Without limiting the scope and nature of each such Lender's
participation in any Letter of Credit, to the extent that the Issuing Lender has
not been reimbursed as required hereunder or under any LOC Document, each such
Lender shall pay to the Issuing Lender its LOC Commitment Percentage of such
unreimbursed drawing in same day funds on the day of notification by the Issuing
Lender of an unreimbursed drawing pursuant to the provisions of subsection (d)
hereof. The obligation of each participating Lender to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be affected by the
occurrence of a Default, an Event of Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise impair the obligation of
the Borrower to reimburse the Issuing Lender under any Letter of Credit,
together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower and the
Administrative Agent. The Borrower shall reimburse the Issuing Lender on the day
of drawing under any Letter of Credit (with the proceeds of a Revolving Loan or
a Swingline Loan obtained hereunder or otherwise) in same day funds as provided
herein or in the LOC Documents. If the Borrower shall fail to reimburse the
Issuing Lender as provided herein, the unreimbursed amount of such drawing shall
bear interest at a per annum rate equal to the Alternate Base Rate plus two
percent (2%). Unless the Borrower shall immediately notify the Issuing Lender
and the Administrative Agent of its intent to otherwise reimburse the Issuing
Lender, the Borrower shall be deemed to have requested a Swingline Loan, or if
and to the extent Swingline Loans shall be unavailable, a Revolving Loan in the
amount of the drawing as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The Borrower's
reimbursement obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of any rights of set-off, counterclaim or defense
to payment the Borrower may claim or have against the Issuing Lender, the
Administrative Agent, the Lenders, the beneficiary of the Letter of Credit drawn
upon or any other Person, including without limitation any defense based on any
failure of the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing Lender will
promptly notify the other Lenders of the amount of any unreimbursed drawing and
each Lender having a Revolving Commitment shall promptly pay
36
42
to the Administrative Agent for the account of the Issuing Lender in Dollars and
in immediately available funds, the amount of such Lender's LOC Commitment
Percentage of such unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing Lender if such notice is
received at or before 2:00 P.M. (Charlotte, North Carolina time), otherwise such
payment shall be made at or before 12:00 Noon (Charlotte, North Carolina time)
on the Business Day next succeeding the day such notice is received. If such
Lender does not pay such amount to the Issuing Lender in full upon such request,
such Lender shall, on demand, pay to the Administrative Agent for the account of
the Issuing Lender interest on the unpaid amount during the period from the date
of such drawing until such Lender pays such amount to the Issuing Lender in full
at a rate per annum equal to, if paid within two (2) Business Days of the date
of drawing, the Federal Funds Effective Rate and thereafter at a rate equal to
the Alternate Base Rate. Each such Lender's obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to receive the same,
shall be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations hereunder and shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, (i) a Swingline Loan
borrowing to reimburse a drawing under a Letter of Credit, the Swingline Lender
shall make the Swingline Loan advance pursuant to the terms of the request or
deemed request in accordance with the provisions for Swingline Loan advances
hereunder or (ii) a Revolving Loan to reimburse a drawing under a Letter of
Credit, the Administrative Agent shall give notice to the Lenders that a
Revolving Loan has been requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a Revolving Loan borrowing
comprised entirely of Alternate Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made (without giving effect to any
termination of the Commitments pursuant to Section 7.2) pro rata based on each
Lender's respective Revolving Commitment Percentage (determined before giving
effect to any termination of the Commitments pursuant to Section 7.2) and the
proceeds thereof shall be paid directly to the Issuing Lender for application to
the respective LOC Obligations. Each Lender hereby irrevocably agrees to make
such Revolving Loans immediately upon any such request or deemed request on
account of each Mandatory Borrowing in the amount and in the manner specified in
the preceding sentence and on the same such date notwithstanding (i) the amount
of Mandatory Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any conditions
specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event
of Default then exists, (iv) failure for any such request or deemed request for
a Revolving Loan to be made by the time otherwise required in Section 2.1(b),
(v) the date of such Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing should be less
than the minimum amount for borrowings of Revolving Loans otherwise provided in
Section 2.1(b)(ii), the Borrower shall pay to the Administrative Agent for its
own account an administrative fee of $500. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower), then each such Lender
hereby agrees that it shall forthwith fund (as of the date the Mandatory
Borrowing would
37
43
otherwise have occurred, but adjusted for any payments received from the
Borrower on or after such date and prior to such purchase) its Participation
Interests in the outstanding LOC Obligations; provided, further, that in the
event any Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount of such
Lender's unfunded Participation Interest therein shall bear interest payable to
the Issuing Lender upon demand, at the rate equal to, if paid within two (2)
Business Days of such date, the Federal Funds Effective Rate, and thereafter at
a rate equal to the Alternate Base Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of Credit shall,
for purposes hereof, be treated in all respects the same as the issuance of a
new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender shall have the
Letters of Credit be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the "UCP"), in which case the UCP may be incorporated therein and
deemed in all respects to be a part thereof.
(h) Conflict with LOC Documents. In the event of any conflict between
this Agreement and any LOC Document (including any letter of credit
application), this Agreement shall control. The Reimbursement Agreement is and
shall be deemed amended such that the representations and warranties, covenants
and events of default (and definitions related thereto) set out in the
Reimbursement Agreement (the "Existing Provisions"), except to the extent they
relate specifically to the relevant bonds or relevant remarketing program,
conform with the representations and warranties, covenants and events of default
(and definitions related thereto) set out in this Agreement (the "Incorporated
Provisions"). So long as any obligations remain outstanding under the PBBC
Industrial Development Bonds or any documentation related thereto, such
amendments shall survive (i) the payment in full of all obligations due the
Lenders by the Borrower under this Agreement, (ii) the termination (for any
reason) of this Agreement, (iii) the sale or participation (in whole or in part)
of a Lender's interest in this Agreement, or (iv) any other event which has an
effect to terminate the obligations of the Borrower to the Lenders under this
Agreement. Upon the happening of one of the events set forth in the immediately
preceding sentence, PBBC agrees to promptly execute a modification of the
Reimbursement Agreement to confirm such amendment. Notwithstanding the preceding
sentence or the failure of any such modification to be executed, the Credit
Parties, to the extent applicable, must remain in compliance with the
Incorporated Provisions as if set forth in the Reimbursement Agreement. Any
future modification of or amendment to the Incorporated Provisions shall be a
modification of or amendment to the relevant Reimbursement Agreements for
purposes of compliance with such agreements. Likewise, if First Union grants a
waiver of compliance of the Incorporated Provisions for any period, such waiver
shall be deemed to be a waiver of compliance of the relevant Reimbursement
Agreement for the limited period of time for which the waiver was granted.
(i) Designation of Credit Parties as Account Parties. Notwithstanding
anything to the contrary set forth in this Agreement, including without
limitation Section 2.5(a), a Letter of Credit issued hereunder may contain a
statement to the effect that such Letter of Credit is issued for the account of
a Credit Party other than the Borrower, provided that notwithstanding such
statement, the Borrower shall be the actual account party for all purposes of
the Credit
38
44
Agreement for such Letter of Credit and such statement shall not affect the
Borrower's reimbursement obligations hereunder with respect to such Letter of
Credit.
SECTION 2.6 FEES.
(a) Commitment Fee. In consideration of the Revolving Commitment, the
Borrower agrees to pay to the Administrative Agent for the ratable benefit of
the Lenders having a Revolving Commitment a commitment fee (the "Commitment
Fee") in an amount equal to the Applicable Percentage per annum on the average
daily unused amount of the aggregate Revolving Committed Amount. For purposes
hereof, Letters of Credit shall be considered usage but Swingline Loans shall
not be considered usage under the aggregate Revolving Committed Amount. The
Commitment Fee shall be payable quarterly in arrears on the 15th day following
the last day of each calendar quarter for the prior calendar quarter.
(b) Letter of Credit Fees. In consideration of the LOC Commitments,
the Borrower agrees to pay to the Issuing Lender a fee (the "Letter of Credit
Fee") equal to the Applicable Percentage per annum on the average daily maximum
amount available to be drawn under each Letter of Credit from the date of
issuance to the date of expiration. In addition to such Letter of Credit Fee,
the Issuing Lender may charge, and retain for its own account without sharing by
the other Lenders, an additional facing fee of one-eighth of one percent (1/8%)
per annum on the average daily maximum amount available to be drawn under each
such Letter of Credit issued by it. The Issuing Lender shall promptly pay over
to the Administrative Agent for the ratable benefit of the Lenders (including
the Issuing Lender) the Letter of Credit Fee. The Letter of Credit Fee shall be
payable quarterly in arrears on the 15th day following the last day of each
calendar quarter for the prior calendar quarter.
(c) Issuing Lender Fees. In addition to the Letter of Credit Fees
payable pursuant to subsection (b) hereof, the Borrower shall pay to the Issuing
Lender for its own account without sharing by the other Lenders the reasonable
and customary charges from time to time of the Issuing Lender with respect to
the amendment, transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the "Issuing Lender
Fees").
(d) Administrative Fee. The Borrower agrees to pay to the
Administrative Agent the annual administrative fee as described in the Fee
Letter.
SECTION 2.7 COMMITMENT REDUCTIONS.
(a) Voluntary Reductions. The Borrower shall have the right to
terminate or permanently reduce the unused portion of the Revolving Committed
Amount at any time or from time to time upon not less than three (3) Business
Days' prior notice to the Administrative Agent (which shall notify the Lenders
thereof as soon as practicable) of each such termination or reduction, which
notice shall specify the effective date thereof and the amount of any such
reduction which shall be in a minimum amount of $500,000 or a whole multiple of
$250,000 in excess thereof (or the remaining amount of the Loans, if less) and
shall be irrevocable and effective upon receipt by the Administrative Agent,
provided that no such reduction or termination shall be permitted if after
giving effect thereto, and to any prepayments of the
39
45
Revolving Loans made on the effective date thereof, the sum of the then
outstanding aggregate principal amount of the Revolving Loans plus Swingline
Loans plus outstanding LOC Obligations would exceed the Revolving Committed
Amount; and provided further that in the case of Swingline Loans made pursuant
to the Sweep Plus Arrangement, prepayments shall be in such minimum amounts, if
any, provided by the Sweep Plus Arrangement.
(b) Mandatory Reductions. On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section 2.8(b) (ii), (iii), (iv)
and (v), the Revolving Committed Amount shall be automatically permanently
reduced by the amount of such required prepayment and/or reduction.
(c) Revolving Commitment Termination Date. The Revolving Commitment
and the LOC Commitment shall automatically terminate on the Revolving Commitment
Termination Date.
SECTION 2.8 PREPAYMENTS.
(a) Optional Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part from time to time; provided, however, that each
partial prepayment of Revolving Loans, the Tranche A Term Loan and the Tranche B
Term Loan shall be in a minimum principal amount of $1,000,000 and integral
multiples of $250,000 in excess thereof with respect to LIBOR Rate Loans, and
$500,000 and integral multiples of $100,000 in excess thereof with respect to
Alternate Base Rate Loans, and each prepayment of Swingline Loans shall be in a
minimum principal amount of $100,000 and integral multiples of $100,000 in
excess thereof. The Borrower shall give three Business Days' irrevocable notice
in the case of LIBOR Rate Loans and one Business Day's irrevocable notice in the
case of Alternate Base Rate Loans, to the Administrative Agent (which shall
notify the Lenders thereof as soon as practicable). Subject to the foregoing
terms, amounts prepaid under this Section 2.8(a) shall be applied first ratably
to the Tranche A Term Loan to the remaining scheduled principal installments
thereof until paid in full and the Tranche B Term Loan to the remaining
scheduled principal installments thereof until paid in full and then second to
the Revolving Loans in each case first to Alternate Base Rate Loans and then to
LIBOR Rate Loans in direct order of Interest Period maturities. All prepayments
under this Section 2.8(a) shall be subject to Section 2.18, but otherwise
without premium or penalty. Interest on the principal amount prepaid shall be
payable on the next occurring Interest Payment Date that would have occurred had
such loan not been prepaid or, at the request of the Administrative Agent,
interest on the principal amount prepaid shall be payable on any date that a
prepayment is made hereunder through the date of prepayment. Amounts prepaid on
the Revolving Loans may be reborrowed in accordance with the terms hereof.
Amounts prepaid on the Tranche A Term Loan and the Tranche B Term Loan may not
be reborrowed.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time after the
Closing Date, the sum of the aggregate principal amount of outstanding
Revolving Loans plus outstanding Swingline Loans plus outstanding LOC
Obligations shall exceed the Revolving Committed Amount, the Borrower
immediately shall prepay the Revolving Loans and
40
46
(after all Revolving Loans have been repaid) cash collateralize the LOC
Obligations, in an amount sufficient to eliminate such excess.
(ii) Asset Dispositions. Promptly following any Asset
Disposition in excess of $250,000 in any fiscal year, the Borrower shall
notify the Administrative Agent thereof and prepay the Loans in an
aggregate amount equal to one hundred percent (100%) of the Net Cash
Proceeds derived from such Asset Disposition (such prepayment to be
applied as set forth in clause (vi) below); provided, however, that such
Net Cash Proceeds shall not be required to be so applied to the extent
the Borrower delivers to the Administrative Agent a certificate that it
intends to use such Net Cash Proceeds to acquire fixed or capital assets
in replacement of the disposed assets within 180 days of the receipt of
such Net Cash Proceeds, it being expressly agreed that any Net Cash
Proceeds not so reinvested shall be applied to repay the Loans.
(iii) Issuances. Immediately upon receipt by any Credit Party of
proceeds from (A) any Debt Issuance, the Borrower shall notify the
Administrative Agent thereof and prepay the Loans in an aggregate amount
equal to one-hundred percent (100%) of the Net Cash Proceeds of such
Debt Issuance to the Administrative Agent to be distributed to the
Lenders (such prepayment to be applied as set forth in clause (vi)
below) or (B) any Equity Issuance, other than an Excluded Equity
Issuance, the Borrower shall notify the Administrative Agent thereof and
prepay the Loans in an aggregate amount equal to one hundred percent
(100%) of the Net Cash Proceeds of such Equity Issuance to the
Administrative Agent to be distributed to the Lenders.
(iv) Recovery Event. To the extent of cash proceeds received in
connection with a Recovery Event which are not applied in accordance
with Section 6.5(a)(ii), immediately following the 180th day occurring
after the receipt by a Credit Party of such cash proceeds, the Borrower
shall notify the Administrative Agent thereof and prepay the Loans in an
aggregate amount equal to one-hundred percent (100%) of such cash
proceeds to the Administrative Agent to be distributed to the Lenders
(such prepayment to be applied as set forth in clause (vi) below).
(v) Excess Cash Flow. Within 90 days after the end of each
fiscal year (commencing with the fiscal year ending December 31, 2000),
the Borrower shall prepay the Loans in an amount equal to 50% of the
Excess Cash Flow earned during such prior fiscal year; provided,
however, that no prepayment shall be required pursuant to this Section
2.8(b)(v), if the Leverage Ratio shall be less than or equal to 3.25 to
1.0 as of the end of such fiscal year (such prepayment to be applied as
set forth in clause (vi) below).
(vi) Application of Mandatory Prepayments. All amounts required
to be paid pursuant to this Section 2.8(b) shall be applied as follows:
(A) with respect to all amounts prepaid pursuant to Section 2.8(b)(i),
to Revolving Loans and (after all Revolving Loans have been repaid) to a
cash collateral account in respect of LOC Obligations and (B) with
respect to all amounts prepaid pursuant to Section 2.8(b)(ii) through
(v), (1) first pro rata to the Tranche A Term Loan and the Tranche B
Term Loan (ratably to the remaining principal installments thereof); and
(2) second to the Revolving Loans and (after all Revolving Loans have
been repaid) to a cash collateral account in
41
47
respect of LOC Obligations. Within the parameters of the applications
set forth above, prepayments shall be applied first to Alternate Base
Rate Loans and then to LIBOR Rate Loans in direct order of Interest
Period maturities. All prepayments under this Section 2.8(b) shall be
subject to Section 2.18 and be accompanied by interest on the principal
amount prepaid through the date of prepayment.
(vii) Prepayment Account. If the Borrower is required to make a
mandatory prepayment of LIBOR Rate Loans under this Section 2.8(b), the
Borrower shall have the right, in lieu of making such prepayment in
full, to deposit an amount equal to such mandatory prepayment with the
Administrative Agent in a cash collateral account maintained (pursuant
to documentation reasonably satisfactory to the Administrative Agent) by
and in the sole dominion and control of the Administrative Agent. Any
amounts so deposited shall be held by the Administrative Agent as
collateral for the prepayment of such LIBOR Rate Loans and shall be
applied to the prepayment of the applicable LIBOR Rate Loans at the end
of the current Interest Periods applicable thereto. At the request of
the Borrower, amounts so deposited shall be invested by the
Administrative Agent in Cash Equivalents maturing prior to the date or
dates on which it is anticipated that such amounts will be applied to
prepay such LIBOR Rate Loans; any interest earned on such Cash
Equivalents will be for the account of the Borrower and the Borrower
will deposit with the Administrative Agent the amount of any loss on any
such Cash Equivalents to the extent necessary in order that the amount
of the prepayment to be made with the deposited amounts may not be
reduced.
SECTION 2.9 MINIMUM PRINCIPAL AMOUNT OF TRANCHES.
All borrowings, payments and prepayments in respect of the Revolving
Loans, the Tranche A Term Loan and the Tranche B Term Loan shall be in such
amounts and be made pursuant to such elections so that after giving effect
thereto the aggregate principal amount of the Revolving Loans, the Tranche A
Term Loan and the Tranche B Term Loan comprising any Tranche shall not be less
than (i) with respect to LIBOR Rate Loans, $1,000,000 or a whole multiple of
$250,000 in excess thereof and (ii) with respect to Base Rate Loans, $500,000 or
a whole multiple of $100,000 in excess thereof.
SECTION 2.10 DEFAULT RATE AND PAYMENT DATES.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than the rate which
would otherwise be applicable (or if no rate is applicable, whether in respect
of interest, fees or other amounts, then the Alternate Base Rate plus 2%).
SECTION 2.11 CONVERSION OPTIONS.
(a) The Borrower may, in the case of the Revolving Loans, the Tranche
A Term Loan and the Tranche B Term Loan, elect from time to time to convert
Alternate Base Rate Loans to LIBOR Rate Loans, by giving the Administrative
Agent irrevocable written notice of such
42
48
election not later than 11:00 a.m. (Charlotte, North Carolina time) on the date
which is three Business Days prior to the requested date of conversion. A form
of Notice of Conversion/ Extension is attached as Schedule 2.11. If the date
upon which an Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan
is not a Business Day, then such conversion shall be made on the next succeeding
Business Day and during the period from such last day of an Interest Period to
such succeeding Business Day such Loan shall bear interest as if it were an
Alternate Base Rate Loan. All or any part of outstanding Alternate Base Rate
Loans may be converted as provided herein, provided that (i) no Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default has
occurred and is continuing and (ii) partial conversions shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the expiration
of an Interest Period with respect thereto by compliance by the Borrower with
the notice provisions contained in Section 2.11(a); provided, that no LIBOR Rate
Loan may be continued as such when any Default or Event of Default has occurred
and is continuing, in which case such Loan shall be automatically converted to
an Alternate Base Rate Loan at the end of the applicable Interest Period with
respect thereto. If the Borrower shall fail to give timely notice of an election
to continue a LIBOR Rate Loan, or the continuation of LIBOR Rate Loans is not
permitted hereunder, such LIBOR Rate Loans shall be automatically converted to
Alternate Base Rate Loans at the end of the applicable Interest Period with
respect thereto.
SECTION 2.12 COMPUTATION OF INTEREST AND FEES.
(a) Interest payable hereunder with respect to Alternate Base Rate
Loans shall be calculated on the basis of a year of 365 days (or 366 days, as
applicable) for the actual days elapsed. All other fees, interest and all other
amounts payable hereunder shall be calculated on the basis of a 360 day year for
the actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Lenders of each determination of a LIBOR Rate on the
Business Day of the determination thereof. Any change in the interest rate on a
Loan resulting from a change in the Alternate Base Rate shall become effective
as of the opening of business on the day on which such change in the Alternate
Base Rate shall become effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of the effective date and the
amount of each such change.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Administrative Agent
in determining any interest rate.
SECTION 2.13 PRO RATA TREATMENT AND PAYMENTS.
(a) Subject to Section 2.13(b), each borrowing of Revolving Loans and
any reduction of the Revolving Commitments shall be made pro rata according to
the respective Commitment Percentages of the Lenders. Each payment under this
Agreement or any Note shall be applied, first, to any fees then due and owing by
the Borrower pursuant to Section 2.6, second, to interest then due and owing in
respect of the Notes and, third, to principal then due and owing hereunder
43
49
and under the Notes. Each payment on account of any fees pursuant to Section 2.6
shall be made pro rata in accordance with the respective amounts due and owing
(except as to the portion of the Letter of Credit retained by the Issuing Lender
and the Issuing Lender Fees). Each optional prepayment on account of principal
of the Loans shall be applied to such of the Loans in accordance with Section
2.8(a); provided, that prepayments made pursuant to Section 2.16 shall be
applied in accordance with such section. Each mandatory prepayment on account of
principal of the Loans shall be applied in accordance with Section 2.8(b). All
payments (including prepayments) to be made by the Borrower on account of
principal, interest and fees shall be made without defense, set-off or
counterclaim (except as provided in Section 2.19(b)) and shall be made to the
Administrative Agent for the account of the Lenders at the Administrative
Agent's office specified on Schedule 9.2 in Dollars and in immediately available
funds not later than 1:00 P.M. (Charlotte, North Carolina time) on the date when
due. The Administrative Agent shall distribute such payments to the Lenders
entitled thereto promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the LIBOR Rate Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension. If
any payment on a LIBOR Rate Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Allocation of Payments After Event of Default. Notwithstanding any
other provisions of this Agreement to the contrary, after the occurrence and
during the continuance of an Event of Default, all amounts collected or received
by the Administrative Agent or any Lender on account of the Credit Party
Obligations or any other amounts outstanding under any of the Credit Documents
or in respect of the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Administrative Agent in connection with enforcing the rights of the
Lenders under the Credit Documents and any protective advances made by
the Administrative Agent with respect to the Collateral under or
pursuant to the terms of the Security Documents;
SECOND, to payment of any fees owed to the Administrative Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party
Obligations owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations (including the payment or cash
collateralization of the outstanding LOC Obligations);
44
50
SIXTH, to all other Credit Party Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH"
above; and
SEVENTH, to the payment of the surplus, if any, to whomever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be
applied in the numerical order provided until exhausted prior to
application to the next succeeding category; (ii) each of the Lenders
shall receive an amount equal to its pro rata share (based on the
proportion that the then outstanding Loans and LOC Obligations held by
such Lender bears to the aggregate then outstanding Loans and LOC
Obligations) of amounts available to be applied pursuant to clauses
"THIRD", "FOURTH", "FIFTH" and "SIXTH" above; and (iii) to the extent
that any amounts available for distribution pursuant to clause "FIFTH"
above are attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the Administrative
Agent in a cash collateral account and applied (A) first, to reimburse
the Issuing Lender from time to time for any drawings under such Letters
of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses
"FIFTH" and "SIXTH" above in the manner provided in this Section
2.13(b).
SECTION 2.14 NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent shall have been notified in
writing by a Lender prior to the date a Loan is to be made by such Lender (which
notice shall be effective upon receipt) that such Lender does not intend to make
the proceeds of such Loan available to the Administrative Agent, the
Administrative Agent may assume that such Lender has made such proceeds
available to the Administrative Agent on such date, and the Administrative Agent
may in reliance upon such assumption (but shall not be required to) make
available to the Borrower a corresponding amount. If such corresponding amount
is not in fact made available to the Administrative Agent, the Administrative
Agent shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will promptly
notify the Borrower, and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent at a per annum rate equal to (i) from the Borrower at the
applicable rate for the applicable borrowing pursuant to the Notice of Borrowing
and (ii) from a Lender at the Federal Funds Effective Rate.
(b) Unless the Administrative Agent shall have been notified in
writing by the Borrower, prior to the date on which any payment is due from it
hereunder (which notice shall be effective upon receipt) that the Borrower does
not intend to make such payment, the Administrative Agent may assume that such
Borrower has made such payment when due, and the Administrative Agent may in
reliance upon such assumption (but shall not be required to)
45
51
make available to each Lender on such payment date an amount equal to the
portion of such assumed payment to which such Lender is entitled hereunder, and
if the Borrower has not in fact made such payment to the Administrative Agent,
such Lender shall, on demand, repay to the Administrative Agent the amount made
available to such Lender. If such amount is repaid to the Administrative Agent
on a date after the date such amount was made available to such Lender, such
Lender shall pay to the Administrative Agent on demand interest on such amount
in respect of each day from the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is recovered by the
Administrative Agent at a per annum rate equal to the Federal Funds Effective
Rate.
(c) A certificate of the Administrative Agent submitted to the
Borrower or any Lender with respect to any amount owing under this Section 2.14
shall be conclusive in the absence of manifest error.
SECTION 2.15 INABILITY TO DETERMINE INTEREST RATE.
Notwithstanding any other provision of this Agreement, if (i) the
Administrative Agent shall reasonably determine (which determination shall be
conclusive and binding absent manifest error) that, by reason of circumstances
affecting the relevant market, reasonable and adequate means do not exist for
ascertaining LIBOR for such Interest Period, or (ii) the Required Lenders shall
reasonably determine (which determination shall be conclusive and binding absent
manifest error) that the LIBOR Rate does not adequately and fairly reflect the
cost to such Lenders of funding LIBOR Rate Loans that the Borrower has requested
be outstanding as a LIBOR Tranche during such Interest Period, the
Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrower and the Lenders at least
two Business Days prior to the first day of such Interest Period. Unless the
Borrower shall have notified the Administrative Agent upon receipt of such
telephone notice that it wishes to rescind or modify its request regarding such
LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate Loans
shall be made as Alternate Base Rate Loans and any Loans that were requested to
be converted into or continued as LIBOR Rate Loans shall be converted into
Alternate Base Rate Loans. Until any such notice has been withdrawn by the
Administrative Agent, no further Loans shall be made as, continued as, or
converted into, LIBOR Rate Loans for the Interest Periods so affected.
SECTION 2.16 ILLEGALITY.
Notwithstanding any other provision of this Agreement, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof by the relevant Governmental Authority to any Lender shall
make it unlawful for such Lender or its LIBOR Lending Office to make or maintain
LIBOR Rate Loans as contemplated by this Agreement or to obtain in the interbank
eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Administrative Agent and
the Borrower thereof, (b) the commitment of such Lender hereunder to make LIBOR
Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended
until the Administrative Agent shall give notice that the condition or situation
which gave rise to the suspension shall no longer exist, and (c) such Lender's
Loans then outstanding as LIBOR Rate Loans, if any, shall be converted on the
last day of the Interest Period for such Loans or within such earlier period as
46
52
required by law as Alternate Base Rate Loans. The Borrower hereby agrees
promptly to pay any Lender, upon its demand, any additional amounts necessary to
compensate such Lender for actual and direct costs (but not including
anticipated profits) reasonably incurred by such Lender in making any repayment
in accordance with this Section including, but not limited to, any interest or
fees payable by such Lender to lenders of funds obtained by it in order to make
or maintain its LIBOR Rate Loans hereunder. A certificate as to any additional
amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive in the absence of
manifest error. Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its LIBOR Lending Office) to avoid or to minimize
any amounts which may otherwise be payable pursuant to this Section; provided,
however, that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender in its
sole discretion to be material.
SECTION 2.17 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to any Letter of Credit or any application relating
thereto, any LIBOR Rate Loan made by it, or change the basis of taxation
of payments to such Lender in respect thereof (except for (A) changes in
the rate of tax on the overall net income of such Lender or (B) any
changes in or additions to the rate or basis of taxation imposed on such
Lender by either its jurisdiction or formation or the jurisdiction in
which its lending office is located);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of,
advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the LIBOR Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to
such Lender of making or maintaining LIBOR Rate Loans or the Letters of
Credit or to reduce any amount receivable hereunder or under any Note,
then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such Lender with
respect to its LIBOR Rate Loans or Letters of Credit. A certificate as
to any additional amounts payable pursuant to this Section submitted by
such Lender, through the Administrative Agent, to the Borrower shall be
conclusive in the absence of manifest error. Each Lender agrees to use
reasonable efforts (including reasonable efforts to change its Domestic
Lending Office or LIBOR Lending Office, as the case may be) to avoid or
to minimize any amounts which might otherwise be payable pursuant to
this paragraph of this
47
53
Section; provided, however, that such efforts shall not cause the
imposition on such Lender of any additional costs or legal or regulatory
burdens deemed by such Lender to be material.
(b) If any Lender shall have reasonably determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application 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) from any central bank
or Governmental Authority made subsequent to the date hereof does or shall have
the effect of reducing the rate of return on such Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount reasonably
deemed by such Lender to be material, then from time to time, within fifteen
(15) days after demand by such Lender, the Borrower shall pay to such Lender
such additional amount as shall be certified by such Lender as being required to
compensate it for such reduction. Such a certificate as to any additional
amounts payable under this Section submitted by a Lender (which certificate
shall include a description of the basis for the computation), through the
Administrative Agent, to the Borrower shall be conclusive absent manifest error.
(c) The agreements in this Section 2.17 shall survive the termination
of this Agreement and payment of the Notes and all other amounts payable
hereunder.
SECTION 2.18 INDEMNITY.
The Borrower hereby agrees to indemnify each Lender and to hold such
Lender harmless from any funding loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in payment of the
principal amount of or interest on any Loan by such Lender in accordance with
the terms hereof, (b) default by the Borrower in accepting a borrowing after the
Borrower has given a notice in accordance with the terms hereof, (c) default by
the Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the
Borrower (which certificate must be delivered to the Administrative Agent within
thirty days following such default, prepayment or conversion) shall be
conclusive in the absence of manifest error. The agreements in this Section
shall survive termination of this Agreement and payment of the Notes and all
other amounts payable hereunder.
SECTION 2.19 TAXES.
(a) All payments made by the Borrower hereunder or under any Note will
be, except as provided in Section 2.19(b), made free and clear of, and without
deduction or withholding for,
48
54
any present or future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any Governmental
Authority or by any political subdivision or taxing authority thereof or therein
with respect to such payments (but excluding any tax imposed on or measured by
the net income or profits of a Lender pursuant to the laws of the jurisdiction
in which it is organized or the jurisdiction in which the principal office or
applicable lending office of such Lender is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "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 necessary so that every payment of all amounts
due under this Agreement 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. The Borrower will furnish to the Administrative Agent as soon
as practicable after the date the payment of any Taxes is due pursuant to
applicable law certified copies (to the extent reasonably available and required
by law) 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
and the Administrative Agent on or prior to the Closing Date, or in the case of
a Lender that is an assignee or transferee of an interest under this Agreement
pursuant to Section 9.6(c) (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) if the Lender is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying 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, either Internal Revenue Service Form 1001 or
4224 as set forth in clause (i) above, or (x) a certificate substantially in the
form of Schedule 2.19 (any such certificate, a "2.19 Certificate") and (y) two
accurate and complete original signed copies of Internal Revenue Service Form
W-8 (or successor form) certifying such Lender's entitlement to an 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 it will deliver upon the Borrower's request updated versions of the
foregoing, as applicable, whenever the previous certification has become
obsolete or inaccurate in any material respect, together with such other forms
as may be required in order to confirm or establish the entitlement of such
Lender to a continued exemption from United States withholding tax with respect
to payments under this Agreement and any Note. Notwithstanding anything to the
contrary contained in Section 2.19(a), but subject to the immediately succeeding
sentence, (x) each Borrower shall be entitled, to the extent it is required to
do so by law, to deduct or withhold 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 which 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 a complete exemption from such deduction or withholding and (y) the
Borrower shall not be obligated pursuant to Section 2.19(a)
49
55
to gross-up payments to be made to a Lender in respect of 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 2.19(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 2.19, the Borrower agrees to pay additional amounts and to
indemnify each Lender in the manner set forth in Section 2.19(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 Closing Date
in any applicable law, treaty, governmental rule, regulation, guideline or
order, or in the interpretation thereof, relating to the deducting or
withholding of Taxes.
(c) Each Lender agrees to use reasonable efforts (including reasonable
efforts to change its Domestic Lending Office or LIBOR Lending Office, as the
case may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender in its sole discretion to be material.
(d) If the Borrower pays any additional amount pursuant to this
Section 2.19 with respect to a Lender, such Lender shall use reasonable efforts
to obtain a refund of tax or credit against its tax liabilities on account of
such payment; provided that such Lender shall have no obligation to use such
reasonable efforts if either (i) it is in an excess foreign tax credit position
or (ii) it believes in good faith, in its sole discretion, that claiming a
refund or credit would cause adverse tax consequences to it. In the event that
such Lender receives such a refund or credit, such Lender shall pay to the
Borrower an amount that such Lender reasonably determines is equal to the net
tax benefit obtained by such Lender as a result of such payment by the Borrower.
In the event that no refund or credit is obtained with respect to the Borrower's
payments to such Lender pursuant to this Section 2.19, then such Lender shall
upon request provide a certification that such Lender has not received a refund
or credit for such payments. Nothing contained in this Section 2.19 shall
require a Lender to disclose or detail the basis of its calculation of the
amount of any tax benefit or any other amount or the basis of its determination
referred to in the proviso to the first sentence of this Section 2.19(d) to the
Borrower or any other party.
(e) The agreements in this Section 2.19 shall survive the termination
of this Agreement and the payment of the Notes and all other amounts payable
hereunder.
SECTION 2.20 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(a) In addition to its other obligations under Section 2.5, the
Borrower hereby agrees to protect, indemnify, pay and save each Issuing Lender
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees) that
the Issuing Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the issuance of any Letter of Credit or (ii) the failure of the
Issuing Lender to honor a drawing under a Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or omissions,
herein called "Government Acts").
50
56
(b) As between the Borrower and the Issuing Lender, the Borrower shall
assume all risks of the acts, omissions or misuse of any Letter of Credit by the
beneficiary thereof. The Issuing Lender shall not be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of a
Letter of Credit to comply fully with conditions required in order to draw upon
a Letter of Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (vii) for any consequences arising from causes beyond
the control of the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put such Issuing
Lender under any resulting liability to the Borrower. It is the intention of the
parties that this Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in the issuance
of the Letters of Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any Government Authority. The Issuing Lender
shall not, in any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
(d) Nothing in this Section 2.20 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.5(d) hereof. The
obligations of the Borrower under this Section 2.20 shall survive the
termination of this Agreement. No act or omissions of any current or prior
beneficiary of a Letter of Credit shall in any way affect or impair the rights
of the Issuing Lender to enforce any right, power or benefit under this
Agreement.
(e) Notwithstanding anything to the contrary contained in this Section
2.20, the Borrower shall have no obligation to indemnify any Issuing Lender in
respect of any liability incurred by such Issuing Lender arising out of the
gross negligence or willful misconduct of the Issuing Lender (including action
not taken by an Issuing Lender), as determined by a court of competent
jurisdiction.
SECTION 2.21 REPLACEMENT OF LENDERS.
If any Lender delivers a notice pursuant to Section 2.16, 2.17 or 2.19
(hereinafter any such Lender shall be referred to as a "Replaced Lender"), then
in such case, the Borrower may, upon at least five (5) Business Days' notice to
the Administrative Agent and such Replaced
51
57
Lender, designate a replacement lender (a "Replacement Lender") acceptable to
the Administrative Agent in its reasonable discretion, to which such Replaced
Lender shall, subject to its receipt (unless a later date for the remittance
thereof shall be agreed upon by the Borrower and the Replaced Lender) of all
amounts owed to such Replaced Lender hereunder, assign all (but not less than
all) of its rights and obligations hereunder, provided such assignment shall be
in accordance with the terms of Section 9.6 with respect to the procedures
regarding the Register, the exchange of Notes and the completion of tax forms.
Upon any assignment by any Lender pursuant to this Section 2.21 becoming
effective, the Replacement Lender shall thereupon be deemed to be a "Lender" for
all purposes of this Agreement and such Replaced Lender shall thereupon cease to
be a "Lender" for all purposes of this Agreement and shall have no further
rights or obligations hereunder (other than pursuant to Sections 2.16, 2.17,
2.18, 2.19 or 9.5 while such Replaced Lender was a Lender).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, the Credit Parties hereby represent
and warrant to the Administrative Agent and to each Lender that:
SECTION 3.1 FINANCIAL CONDITION.
The balance sheets and the related statements of income and of cash
flows of the Borrower for fiscal year 1997, fiscal year 1998 and fiscal year
1999 audited by PricewaterhouseCoopers L.L.P. are complete and correct and
present fairly the financial condition of the Borrower and its Subsidiaries as
of such dates. The monthly financial statements of the Borrower and its
Subsidiaries for the period beginning January 1, 2000 through the calendar month
ending immediately prior to the Closing Date are complete and correct in all
material respects and present fairly the financial condition of the Borrower and
its Subsidiaries as of such dates (provided that if the Closing Date is a date
prior to the twentieth day of any month, then such statements shall be provided
for the month-end occurring immediately prior to the last month then ended). The
balance sheets and the related statements of income and of cash flows of
Crescent for fiscal year 1998 and fiscal year 1999 audited by Xxxxxx Xxxxxxxx
L.L.P. are complete and correct and present fairly the financial condition of
Crescent and its Subsidiaries as of such dates. Additionally, the
company-prepared pro forma balance sheets of the Borrower and its Subsidiaries
and of Crescent and its Subsidiaries and the seven-year projections have been
prepared in good faith based upon reasonable assumptions. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as disclosed therein).
SECTION 3.2 NO CHANGE.
Since December 31, 1999 (and after delivery of annual audited financial
statements in accordance Section 5.1(a), from the date of the most recently
delivered annual audited financial
52
58
statements) there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Credit Parties (a) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (b) has
the requisite power and authority and the legal right to own and operate all its
material property, to lease the material property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified to
conduct business and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of its business
requires such qualification except to the extent that the failure to so qualify
or be in good standing could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS;
NO CONSENTS.
Each of the Borrower and the other Credit Parties has full power and
authority and the legal right to make, deliver and perform the Credit Documents
to which it is party and has taken all necessary limited liability company or
corporate action to authorize the execution, delivery and performance by it of
the Credit Documents to which it is party. Except as set forth on Schedule 3.4,
no consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery or
performance of any Credit Document by the Borrower or the other Credit Parties
(other than those which have been obtained) or with the validity or
enforceability of any Credit Document against the Borrower or the other Credit
Parties (except such filings as are necessary in connection with the perfection
of the Liens created by such Credit Documents). Each Credit Document to which it
is a party has been duly executed and delivered on behalf of the Borrower or any
other Credit Party, as the case may be. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of the Borrower and each
other Credit Party, as the case may be, enforceable against the Borrower or such
other Credit Party, as the case may be, in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
SECTION 3.5 NO LEGAL BAR; NO DEFAULT.
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law, any organizational document or any Contractual
Obligation of any Credit Party (except those as to which waivers or consents
have been obtained), and will not result in, or require, the creation or
imposition of any Lien on any of its or their respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation other than the
Liens arising under or contemplated in connection with the Credit Documents.
Neither the Borrower nor any Credit
53
59
Party is in default under or with respect to any of its Contractual Obligations
in any respect which could reasonably be expected to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing.
SECTION 3.6 NO MATERIAL LITIGATION.
Except as set forth in Schedule 3.6, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Borrower, threatened by or against the Borrower or
any other Credit Party or against any of its or their respective properties or
revenues (a) with respect to the Credit Documents or any Loan or any of the
transactions contemplated hereby, or (b) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.7 INVESTMENT COMPANY ACT.
Neither the Borrower nor any Credit Party is an "investment company", or
a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 3.8 MARGIN REGULATIONS.
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit
Parties taken as a group do not own "margin stock" except as identified in the
financial statements referred to in Section 3.1 and the aggregate value of all
"margin stock" owned by the Credit Parties taken as a group does not exceed 25%
of the value of their assets.
SECTION 3.9 ERISA.
Except as set forth in Schedule 3.9, neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) has occurred during the five-year period prior to the
date on which this representation is made or deemed made with respect to any
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such occurrence
or failure to comply would not reasonably be expected to have a Material Adverse
Effect. No termination of a Single Employer Plan has occurred resulting in any
liability that has remained underfunded, and no Lien in favor of the PBGC or a
Plan has arisen, during such five-year period which could reasonably be expected
to have a Material Adverse Effect. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as determined
in accordance with GAAP, could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Commonly Controlled Entity is currently
subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan which could reasonably be expected to have a Material Adverse
Effect.
54
60
SECTION 3.10 ENVIRONMENTAL MATTERS.
Except as set forth on Schedule 3.10 or except for matters which, in the
aggregate, could not be reasonably expected to have a Material Adverse Effect:
(a) The facilities and properties owned, leased or operated by the
Credit Parties (the "Properties") do not contain any Materials of Environmental
Concern in amounts or concentrations which (i) constitute a violation of, or
(ii) could give rise to liability under, any Environmental Law.
(b) The Properties and all operations of the Borrower and the other
Credit Parties at the Properties are in compliance, and have in the last five
years been in compliance, in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by the Borrower and the other Credit Parties (the
"Business").
(c) Neither the Borrower nor any other Credit Party has received any
written or actual notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Borrower nor any other Credit Party have knowledge or reason to
believe that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of the Borrower or any other Credit Party,
threatened, under any Environmental Law to which the Borrower, or any other
Credit Party, is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Borrower, or any other Credit Party, in connection with
the Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability under Environmental
Laws.
SECTION 3.11 USE OF PROCEEDS.
The proceeds of the Loans hereunder shall be used solely by the Borrower
to (i) finance the Acquisition including the fees and expenses incurred in
connection therewith, (ii) provide for working capital, capital expenditures and
other general corporate purposes, (iii) refinance existing indebtedness, and
(iv) finance acquisitions as permitted by the terms hereof. The Letters
55
61
of Credit shall be used only as referred to in Section 2.5(a) and for or in
connection with appeal bonds, reimbursement obligations arising in connection
with surety and reclamation bonds, reinsurance, domestic or international trade
transactions and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the ordinary course
of business.
SECTION 3.12 SUBSIDIARIES.
Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of the Credit Parties. Information on the attached Schedule
includes state of incorporation; the number of shares of each class of Capital
Stock or other equity interests outstanding; the number and percentage of
outstanding shares of each class of stock; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. The outstanding Capital Stock and other equity
interests of all such Subsidiaries are validly issued, fully paid and
non-assessable and are owned, free and clear of all Liens other than Permitted
Liens.
SECTION 3.13 OWNERSHIP.
Each of the Credit Parties is the owner of, and has sufficient and legal
title to, all of its respective assets, except as may be permitted pursuant to
Section 6.14 hereof, and none of such assets is subject to any Lien other than
Permitted Liens.
SECTION 3.14 INDEBTEDNESS.
Except as otherwise permitted under Section 6.1, the Credit Parties have
no Indebtedness.
SECTION 3.15 TAXES.
Each of the Credit Parties has filed, or caused to be filed, all tax
returns (federal, state, local and foreign) required to be filed and paid (a)
all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet delinquent or
(ii) that are being contested in good faith and by proper proceedings, and
against which adequate reserves are being maintained in accordance with GAAP.
Neither the Borrower nor any other Credit Party is aware as of the Closing Date
of any proposed tax assessments against it or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.16 INTELLECTUAL PROPERTY.
Each of the Credit Parties owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and processes
("Intellectual Property") necessary for each of them to conduct its business as
currently conducted. Set forth on Schedule 3.16 is a list of all registered
Intellectual Property and all other material unregistered Intellectual Property
owned by each of the Credit Parties or that any Credit Party has the right to
use pursuant to a written license. Except as provided on Schedule 3.16, no claim
by any Person challenging or questioning the use of any such Intellectual
Property or the validity or effectiveness of any such
56
62
Intellectual Property has been received by any Credit Party and is pending, nor
does any Credit Party have actual knowledge of any such claim, and, to the
knowledge of the Credit Parties, the use of such Intellectual Property by such
Credit Party does not infringe on the rights of any Person, except for such
claims and infringements that in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. Schedule 3.16 may be updated from time to
time by the Borrower to include new Intellectual Property by giving written
notice thereof to the Administrative Agent.
SECTION 3.17 SOLVENCY.
After giving effect to its rights and obligations hereunder (including
rights of contribution), the fair saleable value of each Credit Party's assets,
measured on a going concern basis, exceeds all probable liabilities, including
those to be incurred pursuant to this Agreement. None of the Credit Parties (a)
has unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Agreement, debts beyond
its ability to pay such debts as they become due.
SECTION 3.18 INVESTMENTS.
All investments of each of the Credit Parties are Permitted Investments.
SECTION 3.19 SECURITY DOCUMENTS.
The Security Documents create valid security interests in, and Liens on,
the Collateral, which security interests and Liens are currently (or will be,
upon the filing of appropriate financing statements in favor of First Union, as
Administrative Agent for the Lenders) perfected security interests and Liens,
prior to all other Liens other than Permitted Liens.
SECTION 3.20 LOCATION OF COLLATERAL.
Set forth on Schedule 3.20(a) is a list of the Properties of the Credit
Parties with street address, county and state where located. Set forth on
Schedule 3.20(b) is a list of all locations where any tangible personal property
of the Credit Parties is located, including county and state where located.
There is no tangible personal property owned by any Domestic Subsidiary of the
Borrower or any other Credit Party which is not itself a Credit Party. Set forth
on Schedule 3.20(c) is the chief executive office and principal place of
business of each of the Credit Parties. Schedules 3.20(a), 3.20(b) and 3.20(c)
may be updated from time to time by the Borrower to include new properties or
locations by giving written notice thereof to the Administrative Agent.
SECTION 3.21 NO BURDENSOME RESTRICTIONS.
Neither the Borrower nor any other Credit Party is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
57
63
SECTION 3.22 BROKERS' FEES.
Neither the Borrower nor any other Credit Party has any obligation to
any Person in respect of any finder's, broker's, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents other than the closing and other fees payable pursuant to this
Agreement.
SECTION 3.23 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Borrower or any other Credit Party as of the
Closing Date, other than as set forth in Schedule 3.23 hereto, and neither the
Borrower nor any other Credit Party (i) has suffered any strikes, walkouts, work
stoppages or other material labor difficulty within the last five years, other
than as set forth in Schedule 3.23 hereto or (ii) has knowledge of any potential
or pending strike, walkout or work stoppage.
SECTION 3.24 ACCURACY AND COMPLETENESS OF INFORMATION.
All written information furnished by the Borrower or any other Credit
Party to the Administrative Agent or any Lender for purposes of or in connection
with this Agreement or any other Credit Document, or any transaction
contemplated hereby or thereby, including, without limitation, the items set
forth in Schedule 3.24 hereto, is or will be true and accurate in all material
respects and not incomplete by omitting to state any material fact necessary to
make such information not misleading. There is no fact now known to any Credit
Party which has, or could reasonably be expected to have, a Material Adverse
Effect which fact has not been set forth herein, in the financial statements of
the Credit Parties furnished to the Administrative Agent and/or the Lenders, or
in any certificate, opinion or other written statement made or furnished by the
Borrower to the Administrative Agent and/or the Lenders.
SECTION 3.25 INSURANCE.
The present insurance coverage of the Credit Parties is outlined as to
carrier, policy number, expiration date, type and amount on Schedule 3.25. The
Credit Parties maintain insurance in accordance with past practices against such
risks and in such amounts as historically in effect.
58
64
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 CONDITIONS TO CLOSING DATE AND INITIAL LOANS.
This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Loans on the Closing Date is subject to, the
satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Administrative Agent shall have
received (i) counterparts of this Agreement, executed by a duly authorized
officer of each party hereto, (ii) duly executed Notes for the account of each
Lender, (iii) counterparts of the Security Agreement, and the Pledge Agreement,
and the Mortgage Instruments in each case conforming to the requirements of this
Agreement and executed by duly authorized officers of the Credit Parties, and
(iv) all other Credit Documents, each in form and substance reasonably
acceptable to the Administrative Agent in its reasonable discretion.
(b) Authority Documents. The Administrative Agent shall have received
the following:
(i) Organizational Documents. Copies of the limited liability
company operating agreement, articles of incorporation or other
organizational documents, as applicable, of each Credit Party certified
to be true and complete as of a recent date by the appropriate
governmental authority of the state of its organization.
(ii) Resolutions. Copies of resolutions of the managing member
(or, if required, of all members) or board of directors or advisors of
each Credit Party approving and adopting the Credit Documents, the
transactions contemplated therein and authorizing execution and delivery
thereof, certified by an officer of such Credit Party as of the Closing
Date to be true and correct and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of each Credit Party, if
applicable, certified by an officer of such Credit Party as of the
Closing Date to be true and correct and in force and effect as of such
date.
(iv) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to the each Credit Party
certified as of a recent date by the appropriate governmental
authorities of the state of incorporation and each other state in which
the failure to so qualify and be in good standing could reasonably be
expected to have a Material Adverse Effect on the business or operations
of the Credit Parties in such state and (ii) a certificate indicating
payment of all corporate franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and correct
as of the Closing Date.
59
65
(c) Legal Opinions of Counsel. The Administrative Agent shall have
received an opinion of (i) Xxxxxxxx & Xxxxx, counsel for the Credit Parties,
(ii) Xxxxx & Xxxxxxxxx, Ohio counsel to the Credit Parties, (iii) Xxxxx, Xxxxxxx
& Xxxxxxx, Pennsylvania counsel to the Credit Parties, (iv) Greenberg, Traurig,
Florida counsel to the Credit Parties, (v) Drinker, Xxxxxx & Xxxxxxx, New Jersey
counsel to the Credit Parties; (vi) Xxxxx & Xxxxx, LLP, California counsel to
the Credit Parties, and (vii) Hillis, Clark, Xxxxxx and Xxxxxxxx, Washington
counsel to the Credit Parties, each of the foregoing to be dated as of the
Closing Date and addressed to the Administrative Agent and the Lenders, in form
and substance acceptable to the Administrative Agent.
(d) Personal Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent:
(i) searches of Uniform Commercial Code ("UCC") filings in the
jurisdiction of the chief executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a filing would
need to be made in order to perfect the Administrative Agent's security
interest in the Collateral, copies of the financing statements on file
in such jurisdictions and evidence that no Liens exist other than
Permitted Liens;
(ii) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Administrative Agent's sole
discretion, to perfect the Administrative Agent's security interest in
the Collateral;
(iii) duly executed consents as are necessary, in the
Administrative Agent's sole discretion, to perfect the Lenders' security
interest in the Collateral; and
(iv) in the case of any personal property Collateral located at
premises leased by a Credit Party, such estoppel letters, consents and
waivers from the landlords on such real property as may be required by
the Administrative Agent.
(e) Real Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent:
(i) fully executed and notarized mortgages, deeds of trust, or
deeds to secure debt, (each, as the same may be amended, modified,
restated or supplemented from time to time, a "Mortgage Instrument" and
collectively the "Mortgage Instruments") encumbering the fee interest in
the properties listed in Schedule 3.20(a) as properties owned by the
Credit Parties (each a "Mortgaged Property" and collectively the
"Mortgaged Properties");
(ii) a title report obtained by the Credit Parties in respect of
each of the Mortgaged Properties;
(iii) With respect to each Mortgaged Property, an ALTA mortgagee
title insurance policies issued by Chicago Title Insurance Company (the
"Mortgage Policies"), in amounts not less than the respective amounts
designated in Schedule 3.20(a) with respect to any particular Mortgaged
Property, assuring the Administrative
60
66
Agent that each of the Mortgage Instruments creates a valid and
enforceable first priority mortgage lien on the applicable Mortgaged
Property, free and clear of all defects and encumbrances except
Permitted Liens, which Mortgage Policies shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall provide
for affirmative insurance and such reinsurance as the Administrative
Agent may reasonably request, all of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent;
(iv) evidence as to (A) whether any Mortgaged Property is in an
area designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards (a "Flood Hazard Property") and (B)
if any Mortgaged Property is a Flood Hazard Property, (1) whether the
community in which such Mortgaged Property is located is participating
in the National Flood Insurance Program, (2) the applicable Credit
Party's written acknowledgment of receipt of written notification from
the Administrative Agent (a) as to the fact that such Mortgaged Property
is a Flood Hazard Property and (b) as to whether the community in which
each such Flood Hazard Property is located is participating in the
National Flood Insurance Program and (3) copies of insurance policies or
certificates of insurance of the Borrowers and their Subsidiaries
evidencing flood insurance reasonably satisfactory to the Administrative
Agent and naming the Administrative Agent as sole loss payee on behalf
of the Lenders;
(v) maps or plats of an as-built survey of the sites of the
Mortgaged Properties certified to the Administrative Agent and the
Chicago Title Insurance Company in a manner reasonably satisfactory to
them, dated a date satisfactory to each of the Administrative Agent and
the Chicago Title Insurance Company by an independent professional
licensed land surveyor reasonably satisfactory to each of the
Administrative Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are based shall be sufficient to
delete any standard printed survey exception contained in the applicable
title policy and be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by
the American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the generality of
the foregoing, there shall be surveyed and shown on such maps, plats or
surveys the following: (A) the locations on such sites of all the
buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the
sites necessary to use the sites; (D) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (E)
any encroachments on any adjoining property by the building structures
and improvements on the sites; and (F) if the site is described as being
on a filed map, a legend relating the survey to said map; and
(vi) such estoppel letters, consents, subordinations and waivers
from the landlords (and any lenders or other Persons having a lien on or
security interest in such landlords' interest) on such real property as
may be required by the Administrative Agent.
61
67
(f) Liability and Casualty Insurance. The Administrative Agent shall
have received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements set forth
herein or in the Security Documents. The Administrative Agent shall be named as
loss payee and additional insured on all such insurance policies for the benefit
of the Lenders.
(g) Fees. The Administrative Agent shall have received all fees, if
any, owing pursuant to the Fee Letter and Section 2.6.
(h) Litigation. There shall not exist any pending litigation,
investigation, injunction, order or claim affecting or relating to the Borrower,
any other Credit Party, this Agreement or the other Credit Documents that in the
reasonable judgment of the Administrative Agent could materially adversely
affect on such Person, this Agreement or the other Credit Documents, that has
not been settled, dismissed, vacated, discharged or terminated prior to the
Closing Date.
(i) Solvency Evidence. The Administrative Agent shall have received an
officer's certificate for each Credit Party prepared by the chief financial
officer of each such Credit Party as to the financial condition, solvency and
related matters of each such Credit Party, in each case after giving effect to
the initial borrowings under the Credit Documents, in substantially the form of
Schedule 4.1(i) hereto.
(j) Account Designation Letter. The Administrative Agent shall have
received the executed Account Designation Letter in the form of Schedule 1.1(a)
hereto.
(k) Ownership Structure. The capital and ownership structure of the
Credit Parties (after giving effect to the transactions contemplated hereby)
shall be as described in Schedule 3.12. The Administrative Agent shall be
satisfied with management structure, legal structure, voting control, liquidity,
total leverage and total capitalization of the Borrower as of the Closing Date.
(l) Consents. The Administrative Agent shall have received evidence
that all governmental, shareholder and material third party consents (including
the Serta Consents) and approvals necessary in connection with the financings
and other transactions contemplated hereby have been obtained and all applicable
waiting periods have expired without any action being taken by any authority or
third party that could restrain, prevent or impose any material adverse
conditions on such transactions or that could seek or threaten any of the
foregoing.
(m) Compliance with Laws. The financings and other transactions
contemplated hereby shall be in compliance with all applicable laws and
regulations (including all applicable securities and banking laws, rules and
regulations).
(n) Bankruptcy. There shall be no bankruptcy or insolvency proceedings
with respect to any Credit Party or any of its Subsidiaries.
(o) Material Adverse Effect. No material adverse change shall have
occurred since December 31, 1999 in the business, properties, operations,
conditions (financial or otherwise) or prospects of the Credit Parties taken as
a whole.
62
68
(p) Financial Statements. The Administrative Agent shall have received
copies of all of the financial statements referred to in Section 3.1, each in
form and substance satisfactory to it.
(q) Due Diligence. (i) The Administrative Agent and the Arranger shall
have completed, in form and scope satisfactory thereto, their due diligence on
the Credit Parties and (ii) the Administrative Agent shall have received and
completed a review to its satisfaction of a due diligence report on Crescent
prepared by PricewaterhouseCoopers L.L.P. or another third party consultant
retained by the Borrower.
(r) Environmental Reports. The Administrative Agent shall have
received satisfactory environmental reviews of all real property owned by the
Credit Parties.
(s) Termination of Existing Indebtedness. All existing Indebtedness
for borrowed money of the Credit Parties (other than the Indebtedness listed on
Schedule 6.1(b)) shall have been repaid in full and all Liens relating thereto
terminated.
(t) Officer's Certificates. The Administrative Agent shall have
received a certificate or certificates executed by a responsible officer of the
Borrower as of the Closing Date stating that (i) no action, suit, investigation
or proceeding is pending or, to the knowledge of any Credit Party, threatened in
any court or before any arbitrator or governmental instrumentality that purports
to affect any Credit Party or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding could reasonably be
expected to have a Material Adverse Effect, (ii) immediately after giving effect
to this Credit Agreement, the other Credit Documents and all the transactions
contemplated therein to occur on such date, (A) no Default or Event of Default
exists, (B) all representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects, and (C) the
Credit Parties are in compliance with each of the financial covenants set forth
in Section 5.9 and (iii) the Borrower is in compliance with the indebtedness
incurrence tests set forth in Section 1008 of the Indenture and Section 6.1(b)
of the Subordinated Credit Agreement after giving effect to the incurrence of
the Credit Party Obligations with calculations attached thereto.
(u) Acquisition and Acquisition Documents. The Acquisition shall have
been consummated in accordance with the terms of the documentation related
thereto. There shall not have been any material modification, amendment,
supplement or waiver to the Acquisition Documents without the prior written
consent of the Administrative Agent, including, but not limited to, any
modification, amendment, supplement or waiver relating to the amount or type of
consideration to be paid in connection with the Acquisition and the contents of
all disclosure schedules and exhibits, and the Acquisition shall have been
consummated in accordance with the terms of the Acquisition Documents (without
waiver of any material conditions precedent to the obligations of the buyer
thereunder). The Administrative Agent shall have received final copies of the
Acquisition Documents, together with all exhibits and schedules thereto,
certified by an officer of the Borrower.
(v) Financial Covenant Compliance Certificate. The Administrative
Agent shall have received a certificate dated the Closing Date in substantially
the form of Schedule 4.1(v) executed by a responsible officer of the Borrower
demonstrating pro forma compliance with the
63
69
financial covenants set forth in Section 5.9 for the last twelve consecutive
calendar month period ending on May 31, 2000 as if the Acquisition had occurred
on the first day of such twelve month period.
(w) Minimum EBITDA and Maximum Total Funded Debt. The Administrative
Agent shall have received evidence reasonably satisfactory to it that:
(i) Consolidated EBITDA before giving effect to the Acquisition
for the Borrower and its Subsidiaries on a consolidated basis, for the
twelve consecutive calendar month period ending with the last calendar
month immediately preceding the Closing Date (demonstrated on a
quarterly basis detailing the portion of such calculation for each
Subsidiary individually) shall have been not less than $39,000,000
(provided, that if the Closing Date shall occur prior to the twentieth
day of any month, then such determination shall be made using the
month-end occurring immediately prior to the last month then ended);
(ii) minimum Pro Forma Adjusted EBITDA of Crescent and its
Subsidiaries (as determined by the Administrative Agent) for the twelve
consecutive calendar month period ending with the last calendar month
immediately preceding the Closing Date (demonstrated on a quarterly
basis detailing the portion of such calculation for each Subsidiary
individually) shall not have been less than $17,000,000 (provided, that
if the Closing shall occur prior to the twentieth day of any month, then
such determination shall be made using the month-end occurring
immediately prior to the last month then ended); and
(iii) Total Funded Debt of the Borrower and its Subsidiaries on a
consolidated basis on the Closing Date, after giving effect to the
Acquisition on a pro forma basis, shall not exceed $310,000,000 (of
which, the total amount of Indebtedness (including Letters of Credit
issued and outstanding) loaned by banks shall not exceed $160,000,000).
(x) Equity Contribution. The Administrative Agent shall have received
evidence to its satisfaction that the Borrower has received proceeds from an
equity contribution to the Parent in an aggregate principal amount of
$41,500,000 on terms satisfactory to the Administrative Agent.
(y) No Default. On the Closing Date, no default or event of default
(or other such equivalent) shall have occurred, be continuing or result under
any material contract or agreement of the Borrower, including without
limitation, the bond financing or Subordinated Debt documentation of the
Borrower.
(z) No Conflict with Subordinated Notes, etc. The Administrative Agent
shall have received evidence to its satisfaction that the transactions
contemplated hereunder, under the Acquisition Documents and under the other
Credit Documents do not conflict with and will not cause a default or event of
default under any of the Borrower Subordinated Credit Agreement, the
Subordinated Credit Agreement, the Indenture, the Xxxx Xxxxx Bond Indenture, the
PBBC Bond Indenture and the Crescent Bond Indentures.
64
70
(aa) Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to the Administrative Agent and
its counsel.
SECTION 4.2 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit hereunder
is subject to the satisfaction of the following conditions precedent on the date
of making such Extension of Credit:
(a) Representations and Warranties. The representations and warranties
made by the Credit Parties herein, in the Security Documents or which are
contained in any certificate furnished at any time under or in connection
herewith and taking into account any amendments to the Schedules or Exhibits
hereto, except as such relate explicitly to an earlier date, shall be true and
correct in all material respects on and as of the date of such Extension of
Credit as if made on and as of such date.
(b) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on such date or after giving effect to the
Extension of Credit to be made on such date unless such Default or Event of
Default shall have been waived in accordance with this Agreement.
(c) Compliance with Commitments. Immediately after giving effect to
the making of any such Extension of Credit (and the application of the proceeds
thereof), (i) the sum of the aggregate principal amount of outstanding Revolving
Loans plus outstanding LOC Obligations shall not exceed the Revolving Committed
Amount and (ii) the outstanding LOC Obligations shall not exceed the LOC
Committed Amount.
(d) Additional Conditions to Revolving Loans. If such Loan is made
pursuant to Section 2.1, all conditions set forth in such Section shall have
been satisfied.
(e) Additional Conditions to Tranche A Term Loans. If such Loan is
made pursuant to Section 2.2, all conditions set forth in such Section shall
have been satisfied.
(f) Additional Conditions to Tranche B Term Loans. If such Loan is
made pursuant to Section 2.3, all conditions set forth in such Section shall
have been satisfied.
(g) Additional Conditions to Swingline Loans. If such Extension of
Credit is made pursuant to Section 2.4, all conditions set forth in such Section
shall have been satisfied.
(h) Additional Conditions to Letters of Credit. If such Extension of
Credit is made pursuant to Section 2.5, all conditions set forth in such Section
shall have been satisfied.
Each request for an Extension of Credit and each acceptance by the
Borrower of any such Extension of Credit shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a) through (f) of this
Section have been satisfied.
65
71
ARTICLE V
AFFIRMATIVE COVENANTS
The Credit Parties hereby covenant and agree that on the Closing Date,
and thereafter for so long as this Agreement is in effect and until the
Commitments have terminated, no Note remains outstanding and unpaid and the
Credit Party Obligations, together with interest, Commitment Fees and all other
amounts then due and owing to the Administrative Agent or any Lender hereunder,
are paid in full, the Credit Parties shall, and shall cause each of their
Subsidiaries (other than in the case of Sections 5.1, 5.2 or 5.7 hereof), to:
SECTION 5.1 FINANCIAL STATEMENTS.
Furnish to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in any
event within ninety (90) days after the end of each fiscal year of the Borrower,
a copy of the consolidated and consolidating balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income and retained earnings and of
cash flows of the Borrower and its consolidated Subsidiaries for such year, and
a copy of the company-prepared balance sheet of the Parent as at the end of such
fiscal year and the related statements of income and retained earnings and of
cash flows of the Parent for such year, in the case of the statements of the
Borrower and its consolidated Subsidiaries only, audited by a firm of
independent certified public accountants of nationally recognized standing
reasonably acceptable to the Required Lenders, setting forth in each case in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification indicating that
the scope of the audit was inadequate to permit such independent certified
public accountants to certify such financial statements without such
qualification;
(b) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each of the fiscal quarters
of the Borrower (other than at the end of a fiscal year, in which case 90 days
after the end thereof), a company-prepared consolidated balance sheet and a
company-prepared consolidating balance sheet of the Borrower and its
consolidated Subsidiaries and a company-prepared balance sheet of the Parent as
at the end of such period and related company-prepared statements of income and
retained earnings and of cash flows for the Borrower and its consolidated
Subsidiaries and the Parent, respectively, for such quarterly period and for the
portion of the fiscal year ending with such period, in each case, setting forth
in comparative form consolidated and consolidating (in the case of the Borrower
and its Subsidiaries) figures for the corresponding period or periods of the
preceding fiscal year (subject to normal recurring year-end audit adjustments);
(c) Monthly Financial Statements. As soon as available and in any
event within thirty (30) days after the end of each month (other than (i) at the
end of a fiscal quarter, in which case 45 days after the end thereof and (ii) at
the end of a fiscal year, in which case 90 days after the end thereof), a
company-prepared consolidated balance sheet of the Borrower and its consolidated
Subsidiaries as at the end of such period and related company-prepared
statements
66
72
of income and retained earnings and of cash flows for the Borrower and its
consolidated Subsidiaries for such monthly period and for the portion of the
fiscal year ending with such period, in each case setting forth in comparative
form consolidated and consolidating figures for the corresponding period or
periods of the preceding fiscal year (subject to normal recurring year-end audit
adjustments and the absence of footnotes); and
(d) Annual Budget Plan. As soon as available, but in any event within
thirty (30) days after the end of each fiscal year, a copy of the detailed
annual budget or plan of the Borrower for the next fiscal year on a
month-by-month basis, in form and detail reasonably acceptable to the
Administrative Agent and the Required Lenders, together with a summary of the
material assumptions made in the preparation of such annual budget or plan;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments and, with respect to the monthly financial
statements, the absence of footnotes) and to be prepared in reasonable detail
and, in the case of the annual and quarterly financial statements provided in
accordance with subsections (a) and (b) above, in accordance with GAAP applied
consistently throughout the periods reflected therein and further accompanied by
a description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.
SECTION 5.2 CERTIFICATES; OTHER INFORMATION.
Furnish to the Administrative Agent and each of the Lenders:
(a) concurrently with the delivery of the financial statements of the
Borrower referred to in Section 5.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements of the
Borrower referred to in Sections 5.1(a), 5.1(b) and 5.1(c) above, a certificate
of a Responsible Officer stating that, to the best of such Responsible Officer's
knowledge, each of the Credit Parties during such period observed or performed
in all material respects all of its covenants and other agreements, and
satisfied in all material respects every condition, contained in this Agreement
to be observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as specified
in such certificate and such certificate shall include (except in the case of
those statements delivered only pursuant to Section 5.1(c)) the calculations in
reasonable detail required to indicate compliance with Section 5.9 as of the
last day of such period;
(c) promptly after the same are sent, copies of all reports (other
than those otherwise provided pursuant to Section 5.1 and those which are of a
promotional nature) and other financial information which the Borrower sends to
its members, and within thirty days after the same are filed, copies of all
financial statements and non-confidential reports which the Borrower may
67
73
make to, or file with the Securities and Exchange Commission or any successor or
analogous Governmental Authority;
(d) within ninety (90) days after the end of each fiscal year of the
Borrower, a certificate containing information regarding the amount of all Asset
Dispositions, Debt Issuances, and Equity Issuances that were made during the
prior fiscal year and a calculation of Excess Cash Flow and amounts received in
connection with any Recovery Event during the prior fiscal year;
(e) promptly upon receipt thereof, a copy of any other report or
"management letter" submitted by independent accountants to the Borrower or any
other Credit Party in connection with any annual, interim or special audit of
the books of such Person;
(f) within ninety (90) days after the end of each fiscal year of the
Borrower a certificate signed by the chief financial officer of each Borrower
that summarizes the insurance policies, including, without limitation, key-man
life insurance, if requested by the Administrative Agent, carried by the
Borrower and each Subsidiary of the Borrower (such certificate to be in form and
substance reasonably satisfactory to Administrative Agent), and written
notification 30 days prior to any cancellation or material change of any such
insurance by the Borrower or any Subsidiary, as the case may be, within 10 days
after receipt of any notice (whether formal or informal) of cancellation,
reduction in coverage, shortening of policy period or material adverse change by
any of such Person's insurers;
(g) within ten (10) Business Days after each anniversary of the
Closing Date, a complete list of the officers and directors (or members of the
board of advisors or other similar governing body) of the Borrower, and within
fifteen (15) Business Days after any change in the information provided pursuant
to the foregoing clause, written notice of such change;
(h) within thirty (30) days after the filing thereof, copies of all
income tax returns filed by the Parent with any Federal or state taxing
authority and within thirty (30) days after receipt thereof by the Borrower,
evidence of payment of property taxes by the Borrower; and
(i) promptly, such additional financial and other information
regarding the business, properties, prospects or financial condition of the
Borrower as the Administrative Agent, on behalf of any Lender, may from time to
time reasonably request.
SECTION 5.3 PAYMENT OF OBLIGATIONS.
Pay, discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, in accordance with industry and
historical company practice (subject, where applicable, to specified grace
periods) all its material obligations (including, without limitation, all taxes)
of whatever nature and any additional costs that are imposed as a result of any
failure to so pay, discharge or otherwise satisfy such obligations, except when
the amount or validity of such obligations and costs is currently being
contested in good faith by appropriate proceedings and reserves, if applicable,
in conformity with GAAP with respect thereto have been provided on the books of
the Borrower or any other Credit Party, as the case may be.
68
74
SECTION 5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Continue to engage in business of the same general type as now conducted
by it on the Closing Date and preserve, renew and keep in full force and effect
its existence as a corporation or limited liability company, as applicable, and
take all reasonable action to maintain all rights, privileges and franchises
material to its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 5.5 MAINTENANCE OF PROPERTY; INSURANCE.
(a) Maintain all material property in good working order and condition
(ordinary wear and tear and obsolescence excepted) and in accordance with past
practices;
(b) (i) Maintain such insurance as may be required by law, by the
Security Documents or otherwise by the Required Lenders, all to such extent and
against such hazards and liabilities, as is maintained by such Person on the
Closing Date, (ii) maintain a sufficient amount of insurance so that no Credit
Party and no Subsidiary of any Credit Party nor the Administrative Agent or any
Lender will be considered a co-insurer or co-insurers, (iii) with respect to
each liability insurance policy, (A) cause such policy to provide, pursuant to
endorsements in form and substance reasonably satisfactory to the Administrative
Agent, that the Administrative Agent and "Lenders" are identified as additional
insureds and (B) notify the Administrative Agent within five (5) days after
obtaining any new policy, or increasing coverage under any existing policy,
describing in detail in such notice any such new policy or increase, and (iv)
with respect to each physical damage or casualty policy and each life insurance
policy, (A) cause such policy to provide, pursuant to endorsements in form and
substance reasonably satisfactory to the Administrative Agent, that
Administrative Agent is named as a loss payee as to personal property and a
mortgagee as to real property, (B) cause such policy to provide, pursuant to
endorsements in form and substance satisfactory to the Administrative Agent,
that the insurance shall not be invalidated as against the Administrative Agent
or any Lender by any action or inaction of such Person other than the
Administrative Agent or such Lender, regardless of any breach or violation of
any warranty, declaration or condition contained in such policy, (C) as against
the Administrative Agent and Lenders, the insurers shall waive any rights of
subrogation to the extent that the named insured has waived such rights (and
each Credit Party hereby irrevocably and unconditionally waives any right of
subrogation against the Administrative Agent and Lenders, except for claims
arising out of the gross negligence or willful misconduct of the Administrative
Agent or Lenders), and (D) notify the Administrative Agent within five (5) days
of obtaining any new policy or increasing coverage under any existing policy,
describing in detail in such notice any such new policy or increase.
(c) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Administrative Agent generally
describing the nature and extent of such damage or destruction. In case of any
loss, damage to or destruction of the Collateral of any Credit Party or any part
thereof, such Credit Party, whether or not the insurance proceeds, if any,
received on account of such damage or destruction shall be sufficient for that
purpose, at such Credit Party's
69
75
cost and expense, will promptly repair or replace the Collateral (or similar
assets or property in replacement thereof) of such Credit Party so lost, damaged
or destroyed.
SECTION 5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and account containing entries correct in
all material respects and in conformity with GAAP and all material Requirements
of Law concerning all dealings and transactions in relation to its businesses
and activities, and permit, during regular business hours and upon reasonable
notice by the Administrative Agent or any Lender, the Administrative Agent or
any Lender to visit and inspect any of its properties and examine and make
abstracts from any of its books and records (other than materials protected by
the attorney -client privilege and materials which the Borrower may not disclose
without violation of a confidentiality obligation binding upon it) at any
reasonable time and as often as may reasonably be desired, and to discuss the
business, operations, properties and financial and other condition of the Credit
Parties with officers and employees of the Credit Parties and with its
independent certified public accountants; provided, however, that so long as no
Default or Event of Default shall have occurred or be continuing, there shall be
not more than one visit to or inspection of the properties of the Credit Parties
per fiscal quarter of the Borrower.
SECTION 5.7 NOTICES.
Give notice in writing to the Administrative Agent (which shall promptly
transmit such notice to each Lender) of:
(a) promptly, but in any event within two (2) Business Days after the
Borrower knows or has reason to know thereof, the occurrence of any Default or
Event of Default;
(b) promptly, any default or event of default under any Contractual
Obligation of any Credit Party which could reasonably be expected to have a
Material Adverse Effect;
(c) promptly, any litigation, or any investigation or proceeding
(including, without limitation, any governmental or environmental proceeding)
known to the Borrower, affecting any Credit Party which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect;
(d) as soon as possible and in any event within thirty (30) days after
the Borrower knows or has reason to know thereof: (i) the occurrence or expected
occurrence of any Reportable Event with respect to any Plan, a failure to make
any required contribution to a Plan, the creation of any Lien in favor of the
PBGC (other than a Permitted Lien) or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan; and
(e) promptly, any other development or event which could reasonably be
expected to have a Material Adverse Effect.
70
76
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower proposes to take with respect
thereto. In the case of any notice of a Default or Event of Default, the
Borrower shall specify that such notice is a Default or Event of Default notice
on the face thereof.
SECTION 5.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws except to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect;
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings or the pendency of such proceedings could not reasonably
be expected to have a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers and directors,
from and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower or any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this paragraph shall survive
repayment of the Notes and all other amounts payable hereunder.
71
77
SECTION 5.9 FINANCIAL COVENANTS.
Commencing on the day immediately following the Closing Date, the
Borrower and its Subsidiaries shall comply with the following financial
covenants:
(a) Leverage Ratio. The Leverage Ratio, as of the last day of each
fiscal quarter occurring during the periods indicated below, shall be less than
or equal to the following:
Period Ratio
------ -----
Closing Date through and including December 31, 2000 5.75 to 1.0
January 1, 2001 through and including March 31, 2001 5.50 to 1.0
April 1, 2001 through and including June 30, 2001 5.25 to 1.0
July 1, 2001 through and including December 31, 2001 5.00 to 1.0
January 1, 2002 through and including December 31, 2002 4.25 to 1.0
January 1, 2003 and thereafter 3.75 to 1.0
(b) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter occurring during the periods indicated below,
shall be greater than or equal to the following:
Period Ratio
------ -----
Closing Date through and including March 31, 2001 1.80 to 1.0
April 1, 2001 through and including December 31, 2001 1.90 to 1.0
January 1, 2002 through and including December 31, 2002 2.10 to 1.0
January 1, 2003 through and including December 31, 2003 2.50 to 1.0
January 1, 2004 and thereafter 2.75 to 1.0
(c) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as
of the last day of each fiscal quarter occurring during the periods set forth
below, shall be greater than or equal to the following:
Period Ratio
------ -----
Closing Date through and including December 31, 2000 1.05 to 1.0
January 1, 2001 through and including December 31, 2002 1.10 to 1.0
January 1, 2003 through and including December 31, 2003 1.15 to 1.0
January 1, 2004 and thereafter 1.20 to 1.0
(d) Consolidated Net Worth. Consolidated Net Worth as of the last day
of each fiscal quarter shall be greater than or equal to (i) 80% of the
Consolidated Net Worth as of the Closing
72
78
Date, plus (ii) 50% of positive Consolidated Net Income following the Closing
Date, plus (iii) 100% of Equity Issuances on or following the Closing Date.
(e) Senior Leverage Ratio. The Senior Leverage Ratio, as of the last
day of each fiscal quarter occurring during the periods indicated below, shall
be less than or equal to the following:
Period Ratio
------ -----
Closing Date through and including September 30, 2000 3.25 to 1.0
October 1, 2000 through and including December 31, 2000 3.00 to 1.0
January 1, 2001 through and including June 30, 2001 2.75 to 1.0
July 1, 2001 through and including December 31, 2001 2.50 to 1.0
January 1, 2002 and thereafter 2.25 to 1.0
(f) Consolidated Capital Expenditures.
(i) Consolidated Capital Expenditures as of the end of any
fiscal year of the Borrower shall not exceed $7,000,000 in the aggregate
during such fiscal year; provided, however, that 50% of any amounts not
utilized during any fiscal year may be carried forward to the
immediately following fiscal year only.
(ii) Expansion capital expenditures (as excluded in clause (ii)
of the definition of Consolidated Capital Expenditures) shall not exceed
$10,000,000 in the aggregate for fiscal year 2000 (as demonstrated on a
quarterly basis in the compliance certificate delivered pursuant to
Section 5.2(b) which shall detail the amount of such expenditures made
as of such quarter-end date) during the term of this Agreement.
(g) Minimum Consolidated EBITDA. Consolidated EBITDA, as of the last
day of each fiscal quarter occurring during the periods indicated below for the
twelve month period then ended, shall not be less than the following:
Period Amount
Closing Date through and including June 30, 2001 $56,000,000
July 1, 2001 through and including December 31, 2001 $57,000,000
January 1, 2001 through and including March 31, 2002 $58,000,000
April 1, 2002 through and including December 31, 2002 $60,000,000
January 1, 2003 through and including March 31, 2003 $62,000,000
April 1, 2003 through and including June 30, 2003 $64,000,000
July 1, 2003 through and including December 31, 2003 $66,000,000
January 1, 2004 through and including March 31, 2004 $68,000,000
73
79
April 1, 2004 through and including June 30, 2004 $70,000,000
July 1, 2004 through and including September 30, 2004 $72,000,000
October 1, 2004 through and including December 31, 2004 $74,000,000
January 1, 2005 through and including December 31, 2005 $75,000,000
January 1, 2006 and thereafter $80,000,000
SECTION 5.10 ADDITIONAL SUBSIDIARY GUARANTORS.
Cause each of their Domestic Subsidiaries, whether newly formed, after
acquired or otherwise existing, to promptly become a Guarantor hereunder by way
of execution of a Joinder Agreement. The Guaranty Obligations of any such
Additional Credit Party shall be secured by, among other things, the Collateral
of the Additional Credit Party.
SECTION 5.11 COMPLIANCE WITH LAW.
Cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its property (including, without
limitation, all ERISA laws and regulations) except to the extent that
noncompliance with any such law, rule, regulation, order or restriction could
not reasonably be expected to have a Material Adverse Effect.
SECTION 5.12 PLEDGED ASSETS.
(a) Be subject at all times to a first priority, perfected Lien with
respect to all of such Credit Party's property and assets (subject in each case
to Permitted Liens and excluding assets in the nature of stock of Serta Inc. to
the extent the same is prohibited from being pledged or assigned) in favor of
the Administrative Agent for the benefit of the Lenders pursuant to the terms
and conditions of the Security Documents or such other security documents as the
Administrative Agent shall reasonably request. Each Credit Party shall, and
shall cause each of its Subsidiaries to, adhere to the covenants regarding the
location of personal property as set forth in the Security Documents.
(b) Take such action at its own expense as requested by the
Administrative Agent (including, without limitation, any of the actions
described in Section 4.1(d) or (e) hereof) to ensure that the Administrative
Agent has a first priority perfected Lien to secure the Credit Party Obligations
in (i) all personal property of the Credit Parties located in the United States,
(ii) all real property of the Credit Parties located in the United States and
(iii) to the extent deemed to be material by the Administrative Agent or the
Required Lenders in its or their sole reasonable discretion, all other personal
and real property of the Credit Parties, subject in each case only to Permitted
Liens. Notwithstanding anything to the contrary contained in this Section 5.12,
(i) no Credit Party shall be required to pledge or grant to the Administrative
Agent, for the benefit of the Lenders, indirectly or directly more than 65% of
its voting stock in any Foreign Subsidiary and (ii) no Foreign Subsidiary shall
be required to pledge or grant to the Administrative Agent, for the benefit of
the Lenders, indirectly or directly, any of its assets.
74
80
SECTION 5.13 FURTHER ASSURANCES.
(a) As soon as practicable, but in any event within 45 days following
the Closing Date, the Borrower shall have (i) made an application for
registration with the United States Copyright Office for those certain
proprietary computer software programs set forth on Schedule 3.16 in item IX(f)
therein to the extent such programs are, in the aggregate, material to the
Borrower and/or any of its Subsidiaries and (ii) delivered to the Administrative
Agent appropriate notice filings related thereto as required under the Security
Agreement; and
(b) As soon as practicable, but in any event within 15 days following
the Closing Date, the Borrower shall have used its commercially reasonable best
efforts to deliver to the Administrative Agent, a landlord lien waiver letter
from the landlord of the manufacturing facility located at 94 000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxx, 00000.
ARTICLE VI
NEGATIVE COVENANTS
The Credit Parties hereby covenant and agree that on the Closing Date,
and thereafter for so long as this Agreement is in effect and until the
Commitments have terminated, no Note remains outstanding and unpaid and the
Credit Party Obligations, together with interest, Commitment Fees and all other
amounts then due and owing to the Administrative Agent or any Lender hereunder,
are paid in full that:
SECTION 6.1 INDEBTEDNESS.
The Credit Parties will not, nor will they permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and the
other Credit Documents;
(b) Indebtedness of the Credit Parties existing as of or incurred on
the Closing Date and described on Schedule 6.1(b) and renewals, refinancings or
extensions thereof in a principal amount not in excess of that outstanding as of
the date of such renewal, refinancing or extension;
(c) Indebtedness of the Borrower and its Subsidiaries incurred after
the Closing Date consisting of Capital Leases or Indebtedness incurred to
provide all or a portion of the purchase price or cost of construction of an
asset provided that (i) such Indebtedness when incurred shall not exceed the
purchase price or cost of construction of such asset; (ii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing; and (iii) the total amount
of all such Indebtedness shall not exceed $2,500,000 at any time outstanding;
(d) Unsecured intercompany Indebtedness (i) among the Credit Parties
and (ii) between the Borrower and Star Bedding Products Limited, provided that
any such Indebtedness
75
81
shall be fully subordinated to the Credit Party Obligations hereunder on terms
reasonably satisfactory to the Administrative Agent;
(e) Indebtedness and obligations owing under Hedging Agreements
relating to the Loans hereunder and other Hedging Agreements entered into in
order to manage existing or anticipated interest rate, exchange rate or
commodity price risks and not for speculative purposes;
(f) Indebtedness and obligations of Credit Parties owing under
documentary letters of credit for the purchase of goods or other merchandise
generally (but not under standby, direct pay or other letters of credit except
for the Letters of Credit hereunder);
(g) Indebtedness of the Credit Parties in respect of the Subordinated
Notes in an aggregate amount not to exceed $115,000,000;
(h) Indebtedness in respect of judgment liens not resulting in an
Event of Default pursuant to Section 7.1(f);
(i) Indebtedness in respect of trade payables incurred in the ordinary
course of business;
(j) Unsecured Indebtedness owing in respect of the performance bonus
in favor of Xxxxx Xxxxxx pursuant to Section 2(c)(ii) of that certain Employment
Agreement dated as of May 18, 1999 by and among Star Bedding Products Limited,
Xxxxx Xxxxxx and the Borrower;
(k) Indebtedness in respect of the PIK Subordinated Debt;
(l) Installment notes (to the extent the same could be considered
Indebtedness) from the Borrower and each of its Subsidiaries to Serta, Inc. in
connection with the Serta Licenses issued in the ordinary course of business;
(m) Indebtedness of the Credit Parties in respect of the Borrower
Subordinated Notes in an aggregate amount not to exceed $25,000,000; and
(n) other Indebtedness of the Borrower and its Subsidiaries which does
not exceed $2,500,000 in the aggregate at any time outstanding.
SECTION 6.2 LIENS.
The Credit Parties will not, nor will they permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Lien with respect to any
of its property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.
SECTION 6.3 GUARANTY OBLIGATIONS.
The Credit Parties will not, nor will they permit any Subsidiary to,
enter into or otherwise become or be liable in respect of any Guaranty
Obligations (excluding specifically therefrom
76
82
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) other than (i) those in favor of the Lenders in
connection herewith, (ii) Guaranty Obligations of Indebtedness permitted under
Section 6.1(g) and (iii) Guaranty Obligations set forth on Schedule 6.3.
SECTION 6.4 NATURE OF BUSINESS.
The Credit Parties will not, nor will they permit any Subsidiary to,
alter the character of its business in any material respect from that conducted
as of the Closing Date other than logical extensions thereof.
SECTION 6.5 CONSOLIDATION, MERGER, SALE OF ASSETS, PERMITTED
ACQUISITIONS, ETC.
The Credit Parties will not, nor will they permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer, lease
or otherwise voluntarily dispose of its property or assets or agree to do so at
a future time except the following, without duplication, shall be expressly
permitted:
(i) Specified Sales; and
(ii) the sale, transfer, lease or other disposition of property
or assets (a) to an unrelated party not in the ordinary course of
business (other than Specified Sales), where and to the extent that they
are the result of a Casualty Event or (b) the sale, lease, transfer or
other disposition of machinery, parts and equipment no longer used or
useful in the conduct of the business of such Credit Party or any of its
Subsidiaries, as appropriate, in its reasonable discretion, so long as
and the net proceeds therefrom are used to repair, replace or relocate
damaged property or to purchase or otherwise acquire new assets or
property;
(iii) the sale, lease or transfer of property or assets (at fair
value) between the Borrower and any Guarantor;
(iv) the sale, lease or transfer of property or assets (at fair
value) from a Credit Party other than the Borrower to another Credit
Party; and
(v) the sale, lease or transfer of property or assets not to
exceed $350,000 in the aggregate in any fiscal year, provided, however
that the sale of the manufacturing facility in Vacaville, California as
previously disclosed to the Administrative Agent shall be permitted and
not be subject to the foregoing limitation so long as the Net Cash
Proceeds derived therefrom are applied in accordance with the provisions
of Section 2.8(b)(ii);
provided, that in each case at least 75% of the consideration
received therefor by any Credit Party is in the form of cash or Cash
Equivalents; provided, further, that with respect to sales of assets
permitted hereunder only, the Administrative Agent shall, without the
consent of the Required Lenders, release its Liens relating to the
particular assets sold;
77
83
(b) enter into any transaction of merger or consolidation, except for
the merger or consolidation of a Credit Party with and into another Credit
Party, provided that if the Borrower is a party thereto, the Borrower will be
the surviving corporation; and
(c) enter into any transaction or series of transactions for the
purposes of acquiring all or a substantial portion of the assets, property
and/or Capital Stock of any Person other than Permitted Acquisitions.
SECTION 6.6 ADVANCES, INVESTMENTS AND LOANS.
The Credit Parties will not, nor will they permit any Subsidiary to,
lend money or extend credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person except for Permitted Investments.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES.
Except (i) with respect to the agreements listed on Schedule 6.7 as such
are in existence on the Closing Date, (ii) as permitted in subsection (iv) of
the definition of Permitted Investments, (iii) for the issuance of capital
stock, warrants, options or other rights to acquire stock in connection with any
employee stock option or purchase plans, and (iv) for employment arrangements
and compensation (including bonuses) in the ordinary course of business, the
Credit Parties will not, nor will they permit any Subsidiary to, enter into any
transaction or series of transactions, whether or not in the ordinary course of
business, with any officer, director, shareholder or Affiliate other than on
terms and conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder or Affiliate.
SECTION 6.8 OWNERSHIP OF SUBSIDIARIES; RESTRICTIONS.
The Credit Parties will not, nor will they permit any Subsidiary to,
create, form or acquire any Subsidiaries, except for Domestic Subsidiaries which
are joined as Additional Credit Parties in accordance with the terms hereof;
provided, however, notwithstanding any other provision of this Agreement to the
contrary, so long as Bedtime Stores, Inc. has no assets or operations (other
than as necessary to maintain its corporate existence) it shall not be required
to become a Guarantor hereunder, it being understood and agreed that if Bedtime
Stores, Inc. shall acquire any assets or conduct any operations other than as
set forth above prior to the same being joined as an Additional Credit Party,
then an Event of Default shall occur hereunder. The Credit Parties will not
sell, transfer, pledge or otherwise dispose of any Capital Stock or other equity
interests in any of their Subsidiaries, nor will they permit any of their
Subsidiaries to issue, sell, transfer, pledge or otherwise dispose of any of
their Capital Stock or other equity interests, except in a transaction permitted
by Section 6.5.
SECTION 6.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS; MATERIAL CONTRACTS.
The Credit Parties will not, nor will they permit any of their
Subsidiaries to, change their fiscal year. The Credit Parties will not, nor will
they permit any Subsidiary to, amend, modify or change their limited liability
company operating agreement or articles of incorporation, as
78
84
applicable (or corporate charter or other similar organizational document) or
bylaws (or other similar document) in any way that could reasonably be expected
to have an adverse effect on the Lenders without the prior written consent of
the Required Lenders. The Credit Parties will not, nor will they permit any of
their Subsidiaries to, without the prior written consent of the Administrative
Agent, amend, modify, cancel or terminate or fail to renew or extend or permit
the amendment, modification, cancellation or termination of any of the Material
Contracts, except in the event that such amendments, modifications,
cancellations or terminations could not reasonably be expected to have a
Material Adverse Effect.
SECTION 6.10 LIMITATION ON RESTRICTED ACTIONS.
The Credit Parties will not, nor will they permit any Subsidiary 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
(a) pay dividends or make any other distributions to any Credit Party on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other obligation owed to
any Credit Party, (c) make loans or advances to any Credit Party, (d) sell,
lease or transfer any of its properties or assets to any Credit Party, or (e)
act as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing under or by reason of (i) this Agreement
and the other Credit Documents, (ii) applicable law, (iii) any document or
instrument governing Indebtedness incurred pursuant to Section 6.1(c), provided
that any such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith, (iv) any Permitted Lien or any
document or instrument governing any Permitted Lien, provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien or (v) Indebtedness incurred pursuant to Section 6.1(b) and
6.1(g).
SECTION 6.11 RESTRICTED PAYMENTS.
The Credit Parties will not, nor will they permit any Subsidiary to,
directly or indirectly, declare, order, make or set apart any sum for or pay any
Restricted Payment, except (a) to make dividends payable solely in the same
class of Capital Stock of such Person, (b) to make dividends or other
distributions payable to any Credit Party other than the Parent (directly or
indirectly through Subsidiaries), and (c) provided that no Default or Event of
Default has occurred and is continuing at such time or would be directly or
indirectly caused as a result thereof and provided that the Borrower is in pro
forma compliance with all provisions of this Agreement before and after giving
effect thereto, the Borrower may pay cash distributions to the Parent (i) to
repurchase membership interests held by management in an aggregate amount not to
exceed $2,500,000 in the aggregate during the term of this Agreement, (ii) to
pay taxes of the Credit Parties to the extent actually incurred and/or due and
payable, (iii) to pay other expenses of the Parent in an aggregate amount not to
exceed $100,000, (iv) to pay cash interest expense as required under the
Existing Seller Debt in an aggregate amount not to exceed 6% of the principal
amount of the Existing Seller Debt per annum; provided that if the Consolidated
Fixed Charge Coverage Ratio (as such term is defined in the Indenture) shall
exceed 2.0 to 1.0 as of the end of the immediately preceding fiscal quarter,
then the Borrower may make distributions to the Parent to pay cash interest
expense in an aggregate amount not to exceed 12% of the principal amount
79
85
of the Existing Seller Debt per annum, and (v) after May 18, 2002, to make
payments owing under the Permitted Seller Debt.
SECTION 6.12 PREPAYMENTS OF INDEBTEDNESS, ETC.
Following the Closing Date, the Credit Parties will not, nor will they
permit any Subsidiary to, after the issuance thereof, amend or modify (or permit
the amendment or modification of) any of the terms of any Indebtedness if such
amendment or modification would add or change any terms in a manner adverse to
the issuer of such Indebtedness, or shorten the final maturity or average life
to maturity or require any payment to be made sooner than originally scheduled
or increase the interest rate applicable thereto or change any subordination
provision thereof.
SECTION 6.13 SALE LEASEBACKS.
The Credit Parties will not, nor will they permit any Subsidiary to,
directly or indirectly, become or remain liable as lessee or as guarantor or
other surety with respect to any lease, whether an operating lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired in excess of $250,000 in the aggregate on an annual basis,
(a) which any Credit Party or any Subsidiary has sold or transferred or is to
sell or transfer to a Person which is not the Borrower or any Subsidiary or (b)
which any Credit Party or any Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by any Credit Party or any Subsidiary to another Person which is not
a Credit Party or a Subsidiary in connection with such lease.
SECTION 6.14 NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not, nor will they permit any Subsidiary to,
enter into, assume or become subject to any agreement (other than the Indenture,
the Xxxx Xxxxx Bond Indenture, the PBBC Bond Indenture or the Crescent Bond
Indentures as in effect on the Closing Date) prohibiting or otherwise
restricting the creation or assumption of any Lien upon their properties or
assets, whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other obligation,
except (a) pursuant to this Agreement and the other Credit Documents, (b)
pursuant to any document or instrument governing Indebtedness incurred pursuant
to Section 6.1(c), provided that any such restriction contained therein relates
only to the asset or assets constructed or acquired in connection therewith and
(c) in connection with any Permitted Lien or any document or instrument
governing any Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Permitted Lien.
SECTION 6.15 INTENTIONALLY OMITTED.
SECTION 6.16 SUBORDINATED DEBT.
No Credit Party will (i) make or offer to make any payments with respect
to any Subordinated Debt, (ii) redeem or offer to redeem any Subordinated Debt,
or (iii) deposit any funds intended to discharge or defease any or all
Subordinated Debt; provided, however, that so long as no Default or Event of
Default shall have occurred or be continuing or would occur on an
80
86
actual or pro forma basis as a result thereof, the (i) Borrower may make
payments in respect of cash interest obligations owing under the Subordinated
Notes and the Borrower Subordinated Notes in an aggregate amount not to exceed
$16,250,000 during any fiscal year, and (ii) the Parent may make interest
payments in respect of the Existing Seller Debt and may make payments in respect
of the Permitted Seller Debt as set forth in Section 6.11(c)(iv) and 6.11(c)(v).
No Subordinated Debt may be amended or modified in any material manner without
the prior written consent of the Required Lenders, it being specifically
understood and agreed that no amendment to Article X or Article XIII of the
Indenture shall be made without the prior written consent of the Required
Lenders.
SECTION 6.17 OPERATING LEASES.
The Credit Parties will not, nor will they permit any Subsidiary to,
incur or permit to exist any obligations in respect of operating leases which
require rental payments in excess of $6,500,000 in the aggregate for all such
Persons in the aggregate during any fiscal year.
SECTION 6.18 PARENT HOLDING COMPANY AND SLEEPMASTER FINANCE
CORPORATION.
The Parent will not engage in any activities or operations whatsoever
(exclusive of general administrative and other functions required by law) other
than owning 99.9% of the Borrower's membership interests and obligations related
thereto and otherwise permitted hereunder, including, without limitation, being
obligated under the Existing Seller Debt and the Permitted Seller Debt, entering
into this Agreement and the other Credit Documents and performing its
obligations hereunder and thereunder. Sleepmaster Finance Corporation will not
engage in any activities or operations whatsoever other than as set forth in the
Indenture and the Subordinated Notes and entering into this Agreement and the
other Credit Documents and performing its obligations hereunder and thereunder.
SECTION 6.19 SERTA LICENSES.
The Credit Parties will not, nor will they permit any Subsidiary to,
enter into or permit to exist any Serta License not in existence on the Closing
Date, without (i) the express prior written consent of the Required Lenders
(which consent will not be unreasonably withheld), and (ii) the delivery to the
Administrative Agent of a copy of such Serta License, a new Serta Consent
covering such new Serta License, all documentation required by the
Administrative Agent to effect the grant to the Administrative Agent for the
benefit of the Administrative Agent and Lenders of a first priority, perfected
security interest therein, and such other documentation required by the
Administrative Agent in its reasonable discretion in connection therewith.
81
87
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) The Borrower shall fail to pay any principal of any Loan when due
in accordance with the terms hereof; or the Borrower shall fail to reimburse the
Issuing Lender for any LOC Obligations when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Note or any fee or
other amount payable hereunder when due in accordance with the terms thereof or
hereof and such failure shall continue unremedied for three (3) Business Days
(or any Guarantor shall fail to pay on the Guaranty in respect of any of the
foregoing or in respect of any other Guaranty Obligations thereunder within the
time periods set forth in this clause (a)); or
(b) Any representation or warranty made or deemed made herein, in the
Security Documents or in any of the other Credit Documents or which is contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with this Agreement shall prove to have been false,
misleading or incorrect in any material respect on or as of the date made or
deemed made; or
(c) (i) Any Credit Party shall fail to perform, comply with or observe
any term, covenant or agreement applicable to it contained in Section 5.7(a),
Section 5.9 or Article VI hereof; or (ii) any Credit Party shall fail to comply
with any other covenant, contained in this Credit Agreement or the other Credit
Documents or any other agreement, document or instrument among any Credit Party,
the Administrative Agent and the Lenders or executed by any Credit Party in
favor of the Administrative Agent or the Lenders (other than as described in
Sections 7.1(a) or 7.1(c)(i) above), and in the event such breach or failure to
comply is capable of cure, is not cured within thirty (30) days of its
occurrence; or
(d) Any Credit Party shall (i) default in any payment of principal of
or interest on any Indebtedness (other than the Notes) in a principal amount
outstanding of at least $1,000,000 in the aggregate for the Credit Parties
beyond the period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created; or (ii)
default (after giving effect to any applicable period of grace) in the
observance or performance of any other agreement or condition relating to any
Indebtedness in a principal amount outstanding of at least $1,000,000 in the
aggregate for the Credit Parties or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity; or
82
88
(e) (i) Any Credit Party shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or any Credit Party shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Credit Party any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Credit Party any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) any Credit Party shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) any Credit Party shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(f) One or more judgments or decrees shall be entered against any
Credit Party involving in the aggregate a liability (to the extent not paid when
due or covered by insurance) of $750,000 or more and all such judgments or
decrees shall not have been paid and satisfied, vacated, discharged, stayed or
bonded pending appeal within 10 days from the entry thereof; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan (other than a Permitted Lien) shall arise on the assets of
the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a Trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) any Credit Party or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, any
Multiemployer Plan or (vi) any other similar event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could have a Material Adverse Effect; or
(h) There shall occur a Change of Control; or
(i) The Guaranty or any provision thereof shall cease to be in full
force and effect or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm any Guarantor's obligations under the
Guaranty; or
83
89
(j) Any other Credit Document shall fail to be in full force and
effect or to give the Administrative Agent and/or the Lenders the security
interests, liens, rights, powers and privileges purported to be created thereby
(except as such documents may be terminated or no longer in force and effect in
accordance with the terms thereof, other than those indemnities and provisions
which by their terms shall survive);
(k) Any Serta License is terminated, assigned or deemed assigned;
(l) An event of default occurs under (i) the PBBC Bond Indenture or
any of the other "Bond Documents" (as such term is defined therein), (ii) the
Xxxx Xxxxx Bond Indenture or any of the other documents related thereto or (iii)
the Crescent Bond Indentures or any of the other documents related thereto; or
(m) (i) Any Governmental Authority with applicable jurisdiction
determines that the Lenders are not holders of Senior Indebtedness (as defined
in the Indenture, the Subordinated Credit Agreement and/or the Borrower
Subordinated Credit Agreement) or (ii) the subordination provisions of the
Subordinated Notes, the Borrower Subordinated Notes or the PIK Subordinated Debt
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable as to any holder of the Subordinated
Notes, the Borrower Subordinated Notes or the PIK Subordinated Debt, as
applicable; or
(n) Any default shall occur under the Subordinated Debt or any of the
other documents evidencing the same and shall not be remedied or waived within
the applicable period of grace or the Subordinated Debt shall cease for any
reason to be validly subordinated to the Credit Party obligations as provided in
the Subordinated Debt or any of the other documents evidencing the same, or any
Credit Party or any Affiliate of any Credit Party shall so assert.
SECTION 7.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, then, and in any such event,
(a) if such event is an Event of Default specified in Section 7.1(e) above,
automatically the Commitments shall immediately terminate and the Loans (with
accrued interest thereon), and all other amounts under the Credit Documents
(including without limitation the maximum amount of all contingent liabilities
under Letters of Credit) shall immediately become due and payable, and (b) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) the Administrative Agent may, or upon the written
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the written consent of
the Required Lenders, the Administrative Agent may, or upon the written request
of the Required Lenders, the Administrative Agent shall, by notice of default to
the Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable forthwith
and direct the Borrower to pay to the Administrative Agent cash collateral as
security for the LOC Obligations for subsequent drawings under then outstanding
Letters of Credit an amount equal to the maximum amount of which may be drawn
under Letters of Credit then outstanding, whereupon the same shall immediately
become due and payable.
84
90
ARTICLE VIII
THE AGENT
SECTION 8.1 APPOINTMENT.
Each Lender hereby irrevocably designates and appoints First Union
National Bank as the Administrative Agent of such Lender under this Agreement,
and each such Lender irrevocably authorizes First Union National Bank, as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Administrative Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Administrative Agent.
SECTION 8.2 DELEGATION OF DUTIES.
The Administrative Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint one of its
affiliates as its agent to perform the functions of the Administrative Agent
hereunder relating to the advancing of funds to the Borrower and distribution of
funds to the Lenders and to perform such other related functions of the
Administrative Agent hereunder as are reasonably incidental to such functions.
SECTION 8.3 EXCULPATORY PROVISIONS.
Neither the Administrative Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Borrower or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Borrower
to perform its obligations hereunder or thereunder. The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Borrower of any of the agreements contained
in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrower.
85
91
SECTION 8.4 RELIANCE BY ADMINISTRATIVE AGENT.
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it in
good faith to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless (a) a written notice of assignment, negotiation
or transfer thereof shall have been filed with the Administrative Agent and (b)
the Administrative Agent shall have received the written agreement of such
assignee to be bound hereby as fully and to the same extent as if such assignee
were an original Lender party hereto, in each case in form satisfactory to the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any of the Credit Documents in accordance with a request of the Required Lenders
or all of the Lenders, as may be required under this Agreement, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Notes.
SECTION 8.5 NOTICE OF DEFAULT.
The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default. In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided, however, that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders except
to the extent that this Credit Agreement expressly requires that such action be
taken, or not taken, only with the consent or upon the authorization of the
Required Lenders, or all of the Lenders, as the case may be.
SECTION 8.6 NON-RELIANCE ON ADMINISTRATIVE AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Administrative Agent
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to it and that no act by the
Administrative Agent hereinafter taken, including any review of the affairs of
the Borrower, shall be deemed to constitute any representation or warranty by
the Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative
86
92
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Administrative Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 8.7 INDEMNIFICATION.
The Lenders agree to indemnify the Administrative Agent in its capacity
hereunder (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Commitment Percentages in effect on the date on which indemnification is sought
under this Section, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without
limitation, at any time following the payment of the Notes) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of any Credit Document or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in
connection with any of the foregoing; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
to the extent resulting from the Administrative Agent's gross negligence or
willful misconduct, as determined by a court of competent jurisdiction. The
agreements in this Section 8.7 shall survive the termination of this Agreement
and payment of the Notes and all other amounts payable hereunder.
SECTION 8.8 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.
The Administrative Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with the Borrower as
though the Administrative Agent were not the Administrative Agent hereunder.
With respect to its Loans made or renewed by it and any Note issued to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Lender and may exercise the same as though it were not the Administrative
Agent, and the terms "Lender" and "Lenders" shall include the Administrative
Agent in its individual capacity.
87
93
SECTION 8.9 SUCCESSOR ADMINISTRATIVE AGENT.
The Administrative Agent may resign as Administrative Agent upon 30
days' prior notice to the Borrower and the Lenders. If the Administrative Agent
shall resign as Administrative Agent under this Agreement and the Notes, then
the Required Lenders shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall be acceptable to the Borrower,
whereupon such successor agent shall succeed to the rights, powers and duties of
the Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section 8.9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
SECTION 8.10 RELEASE OF COLLATERAL.
Each Lender hereby irrevocably authorizes the Administrative Agent, as
its option and in its discretion, to release any Lien granted to or held by the
Administrative Agent upon any property covered by this Agreement or the other
Credit Documents (i) upon termination of the Commitments and payment and
satisfaction of all Obligations then due and payable, (ii) constituting property
being sold or disposed of if Borrower certifies to the Administrative Agent that
the sale or disposition is made in compliance with the provisions of this
Agreement (and the Administrative Agent may rely in good faith conclusively on
any such certificate, without further inquiry); or (iii) constituting property
leased to Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by Borrower to be, renewed or extended.
SECTION 8.11 SYNDICATION AND DOCUMENTATION AGENTS.
Notwithstanding any other provision hereof, each of the Syndication
Agent and the Documentation Agent identified on the cover page of this
Agreement, in their respective capacities as such, shall have no duties or
responsibilities and shall incur no liability under this Agreement or the other
Credit Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 AMENDMENTS AND WAIVERS.
Neither this Agreement, nor any of the Notes, nor any of the other
Credit Documents, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this Section nor
may any Credit Party be released except as specifically provided herein or in
the Security Documents or in accordance with the provisions of this Section 9.1.
The Required Lenders may, or, with the written consent of the Required Lenders,
the Administrative Agent may, from time to time, (a) enter into with the
Borrower
88
94
written amendments, supplements or modifications hereto and to the other Credit
Documents for the purpose of adding any provisions to this Agreement or the
other Credit Documents or changing in any manner the rights of the Lenders or of
the Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Required Lenders may specify in such instrument, any of the requirements
of this Agreement or the other Credit Documents or any Default or Event of
Default and its consequences; provided, however, that no such waiver and no such
amendment, waiver, supplement, modification or release shall:
(i) reduce the amount or extend the scheduled date of maturity
of any Loan or Note or any installment thereon, or reduce the stated
rate of any interest or fee payable hereunder (other than interest at
the increased post-default rate) or extend the scheduled date of any
payment thereof or increase the amount (other than in connection with an
assignment or participation made in accordance with Section 9.6) or
extend the expiration date of any Lender's Commitment, in each case
without the written consent of all of the Lenders, or
(ii) amend, modify or waive any provision of this Section 9.1 or
reduce the percentages specified in the definition of Required Lenders,
without the written consent of all the Lenders, or
(iii) amend, modify or waive any provision of Article VIII
without the written consent of the then Administrative Agent, or
(iv) release any of the Guarantors from their obligations under
the Guaranty, without the written consent of all of the Lenders, or
(v) release all or substantially all of the Collateral, without
the written consent of all of the Lenders, or
(vi) amend, modify or waive any provision of the Credit
Documents requiring consent, approval or request of the Required Lenders
or all Lenders, without the written consent of all of the Required
Lenders or Lenders as appropriate and, provided, further, that no
amendment, waiver or consent affecting the rights or duties of the
Administrative Agent or the Issuing Lender under any Credit Document
shall in any event be effective, unless in writing and signed by the
Administrative Agent and/or the Issuing Lender, as applicable, in
addition to the Lenders required hereinabove to take such action.
Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the other Credit Parties, the Lenders, the Administrative
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the other Credit Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
outstanding Loans and Notes and other Credit Documents, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
Notwithstanding any of the foregoing to the contrary, the consent of the
Borrower shall not be required for any amendment, modification or waiver of the
provisions of Article VIII
89
95
(other than the provisions of Section 8.9); provided, however, that the
Administrative Agent will provide written notice to the Borrower of any such
amendment, modification or waiver. In addition, the Borrower and the Lenders
hereby authorize the Administrative Agent to modify this Credit Agreement by
unilaterally amending or supplementing Schedule 2.1(a) from time to time in the
manner requested by the Borrower, the Administrative Agent or any Lender in
order to reflect any assignments or transfers of the Loans as provided for
hereunder; provided, however, that the Administrative Agent shall promptly
deliver a copy of any such modification to the Borrower and each Lender.
Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersede the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
SECTION 9.2 NOTICES.
Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (c) the day following the day on which the same has been
delivered prepaid to a reputable national overnight air courier service, or (d)
the third Business Day following the day on which the same is sent by certified
or registered mail, postage prepaid, in each case, addressed to each such party
at the address set forth on Schedule 9.2, or to such other address as may be
hereafter notified by the respective parties hereto and any future holders of
the Notes.
SECTION 9.3 NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made hereunder and in any document,
certificate or written statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
Notes and the making of the Loans, provided that all such representations and
warranties shall terminate on the date upon which the Commitments have been
terminated and all amounts owing hereunder and under any Notes have been paid in
full.
90
96
SECTION 9.5 PAYMENT OF EXPENSES AND TAXES.
The Borrower agrees (a) to pay or reimburse the Administrative Agent for
all its reasonable out-of-pocket costs and expenses incurred in connection with
the preparation, negotiation, printing and execution of, and any amendment,
supplement or modification to, this Agreement and the other Credit Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, together with the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under, or defense against any actions arising out
of, this Agreement, the Notes and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and to the Lenders (including reasonable allocated costs of
in-house legal counsel), and (c) on demand, to pay, indemnify, and hold each
Lender and the Administrative Agent harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, the Credit Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their Affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of the Credit Documents and any such other documents and the use,
or proposed use, of proceeds of the Loans (all of the foregoing, collectively,
the "indemnified liabilities"); provided, however, that the Borrower shall not
have any obligation hereunder to the Administrative Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Administrative Agent or any such Lender, as determined by a
court of competent jurisdiction. The agreements in this Section 9.5 shall
survive repayment of the Loans, Notes and all other amounts payable hereunder.
SECTION 9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING
LENDERS.
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Administrative Agent, all future holders of the
Notes and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement or
the other Credit Documents without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender, or any
other interest of such Lender hereunder. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall remain
unchanged, such Lender shall remain solely responsible for the performance
thereof, such Lender shall remain the holder of
91
97
any such Note for all purposes under this Agreement, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Agreement. 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 Credit Document except to the extent such amendment or waiver would (i)
extend the scheduled maturity of any Loan or Note or any installment thereon in
which such Participant is participating, or reduce the stated rate or extend the
time of payment of interest or fees thereon (except in connection with a waiver
of interest at the increased post-default rate) or reduce the principal amount
thereof, or increase the amount of the Participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without consent of any participant if the Participant's participation is not
increased as a result thereof), (ii) release any of the Guarantors from their
obligations under the Guaranty, (iii) release all or substantially all of the
Collateral, or (iv) consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement. In the case of any such
participation, the Participant shall not have any rights under this Agreement or
any of the other Credit Documents (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 the Borrower hereunder shall be determined as if such Lender had not
sold such participation, provided that each Participant shall be entitled to the
benefits of Sections 2.17, 2.18, 2.19 and 9.5 with respect to its participation
in the Commitments and the Loans outstanding from time to time; provided, that
no Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time, sell or assign to any Lender, any
Affiliate thereof and in the case of any Lender that is a fund that invests in
commercial loans, to any other fund that invests in commercial loans and that is
managed or advised by the same investment advisor or fund manager as such Lender
or an Affiliate of such investment advisor or fund manager (a "Permitted Funds
Transfer") and with the consent of the Administrative Agent and, so long as no
Default or Event of Default has occurred and is continuing, the Borrower (in
each case, which consent shall not be unreasonably withheld), to one or more
additional banks, financial institutions or special purpose investment funds
which are organized for the specific purpose of making, acquiring participations
in or investing in loans of the type made pursuant to this Agreement
("Purchasing Lenders"), all or any part of its rights and obligations under this
Agreement and the Notes in minimum amounts of $1,000,000 with respect to its
Revolving Commitment and its Loans (or, if less, the entire amount of such
Lender's obligations), pursuant to a Commitment Transfer Supplement, executed by
such Purchasing Lender and such transferor Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an affiliate thereof, the
Administrative Agent and, so long as no Default or Event of Default has occurred
and is continuing, the Borrower), and delivered to the Administrative Agent for
its acceptance and recording in the Register (the recording in the Register a
condition to such transfer); provided, however, that any sale or assignment to
an existing Lender shall not require the consent of the Administrative Agent or
the Borrower nor shall any such sale or assignment be subject to the
92
98
minimum assignment amounts specified herein. Upon such execution, delivery,
acceptance and recording, from and after the Transfer Effective Date specified
in such Commitment Transfer Supplement, (x) the Purchasing Lender thereunder
shall be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein, and (y) the transferor Lender thereunder shall,
to the extent provided in such Commitment Transfer Supplement, be released from
its obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of a transferor Lender's rights
and obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a
portion of the rights and obligations of such transferor Lender under this
Agreement and the Notes. On or prior to the Transfer Effective Date specified in
such Commitment Transfer Supplement, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the Notes
delivered to the Administrative Agent pursuant to such Commitment Transfer
Supplement new Notes to the order of such Purchasing Lender in an amount equal
to the Commitment assumed by it pursuant to such Commitment Transfer Supplement
and, unless the transferor Lender has not retained a Commitment hereunder, new
Notes to the order of the transferor Lender in an amount equal to the Commitment
retained by it hereunder. Such new Notes shall be dated the Closing Date and
shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Administrative
Agent to the Borrower marked "canceled".
(d) The Administrative Agent shall maintain at its address referred to
in Section 9.2 a copy of each Commitment Transfer Supplement delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly executed Commitment Transfer
Supplement, together with payment to the Administrative Agent by the transferor
Lender or the Purchasing Lender, as agreed between them, of a registration and
processing fee of $3,000.00 for each Purchasing Lender listed in such Commitment
Transfer Supplement and the Notes subject to such Commitment Transfer
Supplement, the Administrative Agent shall (i) accept such Commitment Transfer
Supplement, (ii) record the information contained therein in the Register and
(iii) give prompt notice of such acceptance and recordation to the Lenders and
the Borrower; provided, however, that no fee shall be required in the case of a
Permitted Funds Transfer.
(f) The Borrower authorizes each Lender to disclose to any Participant
or Purchasing Lender (each, a "Transferee") and any prospective Transferee any
and all financial information in such Lender's possession concerning the
Borrower and its Affiliates which has been delivered to such Lender by or on
behalf of the Borrower pursuant to this Agreement or which has been
93
99
delivered to such Lender by or on behalf of the Borrower in connection with such
Lender's credit evaluation of the Borrower and its Affiliates prior to becoming
a party to this Agreement, in each case subject to Section 9.16.
(g) At the time of each assignment pursuant to this Section 9.6 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 and the Administrative Agent the appropriate Internal Revenue Service
Forms (and, if applicable, a 2.19 Certificate) described in Section 2.19.
(h) Nothing herein shall prohibit (i) any Lender from pledging or
assigning any of its rights under this Agreement (including, without limitation,
any right to payment of principal and interest under any Note) to any Federal
Reserve Bank in accordance with applicable laws and (ii) in the case of any
Lender that is a fund that invests in commercial loans, any pledge or assignment
of all or any portion of such Lender's rights under this Agreement to any
holders of obligations owed, or securities issued, by such Lender as security
for such obligations or securities, or to any trustee for, or any other
representative of, such holders, and this Section shall not apply to any such
pledge or assignment of a security interest; provided, however, that in each
case such Lender shall remain a "Lender" under this Agreement and shall continue
to be bound by all the terms and conditions set forth in this Agreement and the
other Credit Documents and any such assignment shall be, to the extent
applicable, subject to the provisions of Section 9.6(c).
SECTION 9.7 ADJUSTMENTS; SET-OFF.
(a) Each Lender agrees that if any Lender (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7.1(e), or otherwise) in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Loans, or interest thereon, (except as otherwise
permitted herein) such benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other Lender's
Loan, or shall provide such other Lenders with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
benefited Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Borrower agrees that each Lender so purchasing a portion of another Lender's
Loans may exercise all rights of payment (including, without limitation, rights
of set-off) with respect to such portion as fully as if such Lender were the
direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided by
law (including, without limitation, other rights of set-off), each Lender shall
have the right, without prior notice to the Borrower, any such notice being
expressly waived by the Borrower to the extent permitted by applicable law, upon
the occurrence of any Event of Default, to setoff and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether
94
100
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower, or any part thereof in such amounts as
such Lender may elect, against and on account of the obligations and liabilities
of the Borrower to such Lender hereunder and claims of every nature and
description of such Lender against the Borrower, in any currency, whether
arising hereunder, under the Notes or under any documents contemplated by or
referred to herein or therein, as such Lender may elect, whether or not such
Lender has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. The aforesaid right of
set-off may be exercised by such Lender against the Borrower or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor of the
Borrower, or against anyone else claiming through or against the Borrower or any
such trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Lender prior to the occurrence of any Event of Default. Each
Lender agrees promptly to notify the Borrower and the Administrative Agent after
any such set-off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.
SECTION 9.8 TABLE OF CONTENTS AND SECTION HEADINGS.
The table of contents and the Section and subsection headings herein are
intended for convenience only and shall be ignored in construing this Agreement.
SECTION 9.9 COUNTERPARTS.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Borrower and the Administrative Agent.
SECTION 9.10 EFFECTIVENESS.
This Credit Agreement shall become effective on the date on which all of
the parties have signed a copy hereof (whether the same or different copies) and
shall have delivered the same to the Administrative Agent pursuant to Section
9.2 or, in the case of the Lenders, shall have given to the Administrative Agent
written, telecopied or telex notice (actually received) at such office that the
same has been signed and mailed to it.
SECTION 9.11 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
95
101
SECTION 9.12 INTEGRATION.
This Agreement and the Notes represent the agreement of the Borrower,
the Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Administrative Agent, the Borrower or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the Notes and
this Agreement supersedes the Commitment Letter (except to the extent that the
Commitment Letter provides that certain terms contained therein shall expressly
survive the execution hereof).
SECTION 9.13 GOVERNING LAW.
This Agreement and the Notes and the rights and obligations of the
parties under this Agreement and the Notes shall be governed by, and construed
and interpreted in accordance with, the law of the State of North Carolina.
SECTION 9.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against the Borrower and/or any other
Credit Party with respect to this Agreement, any Note or any of the other Credit
Documents may be brought in any state or federal court of competent jurisdiction
in the State of North Carolina, and, by execution and delivery of this
Agreement, each of the Borrower and the other Credit Parties accepts, for itself
and in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
from which no appeal has been taken or is available. Each of the Borrower and
the other Credit Parties irrevocably agrees that all service of process in any
such proceedings in any such court may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to it at its address set forth in Section 9.2 or at such other
address of which the Administrative Agent shall have been notified pursuant
thereto, such service being hereby acknowledged by the each of the Borrower and
the other Credit Parties to be effective and binding service in every respect.
Each of the Borrower, the other Credit Parties, the Administrative Agent and the
Lenders irrevocably waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter have to the bringing of any such action or
proceeding in any such jurisdiction. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
any Lender to bring proceedings against the Borrower or the other Credit Parties
in the court of any other jurisdiction.
SECTION 9.15 ARBITRATION.
(a) Notwithstanding the provisions of Section 9.14 to the contrary,
upon demand of any party hereto, whether made before or within three (3) months
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement and other Credit
Documents ("Disputes") between or among parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a
96
102
matter is subject to arbitration, claims brought as class actions, claims
arising from Credit Documents executed in the future, or claims arising out of
or connected with the transaction reflected by this Agreement.
Arbitration shall be conducted under and governed by the Commercial
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in Charlotte, North Carolina. A hearing shall begin within 90
days of demand for arbitration and all hearings shall be concluded within 120
days of demand for arbitration. These time limitations may not be extended
unless a party shows cause for extension and then no more than a total extension
of 60 days. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. Arbitrators shall be
licensed attorneys selected from the Commercial Financial Dispute Arbitration
Panel of the AAA with expertise in corporate finance. The parties hereto do not
waive applicable Federal or state substantive law except as provided herein.
Notwithstanding the foregoing, this arbitration provision does not apply to
disputes under or related to Hedging Agreements.
(b) Notwithstanding the preceding binding arbitration provisions, the
Administrative Agent, the Lenders, the Borrower and the other Credit Parties
agree to preserve, without diminution, certain remedies that the Administrative
Agent on behalf of the Lenders may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration action is
brought. The Administrative Agent on behalf of the Lenders shall have the right
to proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under Credit Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.
(c) The parties hereto agree that they shall not have a remedy of
punitive or exemplary damages against the other in any Dispute and hereby waive
any right or claim to punitive or exemplary damages they have now or which may
arise in the future in connection with any Dispute whether the Dispute is
resolved by arbitration or judicially.
(d) By execution and delivery of this Agreement, each of the parties
hereto accepts, for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction relating to any arbitration
proceedings conducted under the Arbitration Rules in Charlotte, North Carolina
and irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Agreement from which no appeal has been taken or is
available.
97
103
SECTION 9.16 CONFIDENTIALITY.
The Administrative Agent and each of the Lenders agrees that it will use
its best efforts not to disclose without the prior consent of the Borrower
(other than to its employees, affiliates, auditors or counsel or to another
Lender) any information with respect to the Credit Parties which is furnished
pursuant to this Agreement, any other Credit Document or any documents
contemplated by or referred to herein or therein and which is designated by the
Borrower to the Lenders in writing as confidential or as to which it is
otherwise reasonably clear such information is not public, except that any
Lender may disclose any such information (a) as has become generally available
to the public other than by a breach of this Section 9.16, (b) as may be
required or appropriate in any report, statement or testimony submitted to any
municipal, state or federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or the OCC or the NAIC or similar organizations
(whether in the United States or elsewhere) or their successors, (c) as may be
required or appropriate in response to any summons or subpoena or any law,
order, regulation or ruling applicable to such Lender, (d) to any prospective
Participant or assignee in connection with any contemplated transfer pursuant to
Section 9.6, provided that such prospective transferee shall have been made
aware of this Section 9.16 and shall have agreed to be bound by its provisions
as if it were a party to this Agreement, (e) to Gold Sheets and other similar
bank trade publications, such information to consist of deal terms and other
information regarding the credit facilities evidenced by this Credit Agreement
customarily found in such publications, (f) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 9.16), or (g) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender.
SECTION 9.17 ACKNOWLEDGMENTS.
The Borrower and the other Credit Parties each hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of each Credit Document;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrower or any other Credit Party arising out
of or in connection with this Agreement and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrower and the other
Credit Parties, on the other hand, in connection herewith is solely that of
debtor and creditor; and
(c) no joint venture exists among the Lenders or among the Borrower or
the other Credit Parties and the Lenders.
SECTION 9.18 WAIVERS OF JURY TRIAL.
THE BORROWER, THE OTHER CREDIT PARTIES, THE ADMINISTRATIVE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
98
104
WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
SECTION 9.19 BINDING EFFECT; TERMINATION OF THIS CREDIT AGREEMENT;
TERMINATION OF EXISTING CREDIT AGREEMENT.
(a) This Credit Agreement shall become effective at such time when all
of the conditions set forth in Section 5.1 have been satisfied or waived by the
Lenders and it shall have been executed by each Credit Party and the
Administrative Agent, and the Administrative Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the signatures
of each Lender, and thereafter this Credit Agreement shall be binding upon and
inure to the benefit of each Credit Party, the Administrative Agent and each
Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the other
Credit Documents shall remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been irrevocably satisfied
in full and all of the Commitments hereunder shall have expired or been
terminated.
(c) The Credit Parties and the Existing Lenders (including the Issuing
Lender) party to the Existing Credit Agreement each hereby agrees that, at such
time as the Credit Agreement shall have become effective pursuant to the terms
of subsection (a) above, (i) the Existing Credit Agreement automatically shall
be deemed amended and restated in its entirety by this Credit Agreement, (ii)
the Commitments under the Existing Credit Agreement and as defined therein
automatically shall be terminated and replaced with the Commitments hereunder
and (iii) all of the promissory notes executed by the Borrower in connection
with the Existing Credit Agreement automatically shall be canceled and replaced
by the Notes.
ARTICLE X
GUARANTY
SECTION 10.1 THE GUARANTY.
In order to induce the Lenders to enter into this Agreement and to
extend credit hereunder and in recognition of the direct benefits to be received
by the Guarantors from the Extensions of Credit hereunder, each of the
Guarantors hereby agrees with the Administrative Agent and the Lenders as
follows: the Guarantor hereby unconditionally and irrevocably jointly and
severally guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all Credit Party Obligations. If any or all of the Credit Party
Obligations becomes due and payable hereunder, each Guarantor unconditionally
promises to pay such indebtedness to the Administrative Agent and the Lenders,
on order, or demand, together with any and all reasonable expenses which may be
incurred by the Administrative Agent or the Lenders in collecting any of the
Credit Party Obligations.
99
105
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, to the extent the obligations of a Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of each such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state and including, without limitation, the
Bankruptcy Code).
SECTION 10.2 BANKRUPTCY.
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all indebtedness of the
Borrower to the Lenders whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7.1(e), and unconditionally
promises to pay such Credit Party Obligations to the Administrative Agent for
the account of the Lenders, or order, on demand, in lawful money of the United
States. Each of the Guarantors further agrees that to the extent that the
Borrower or a Guarantor shall make a payment or a transfer of an interest in any
property to the Administrative Agent or any Lender, which payment or transfer or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, or otherwise is avoided, and/or required to be repaid to the
Borrower or a Guarantor, the estate of the Borrower or a Guarantor, a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such avoidance or
repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made.
SECTION 10.3 NATURE OF LIABILITY.
The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the indebtedness of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor's liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor or of any other party as to the indebtedness of the
Borrower, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by the Borrower, or (e) any payment made to the Administrative
Agent or the Lenders on the indebtedness which the Administrative Agent or such
Lenders repay the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each of the Guarantors waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
SECTION 10.4 INDEPENDENT OBLIGATION.
The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.
100
106
SECTION 10.5 AUTHORIZATION.
Each of the Guarantors authorizes the Administrative Agent and each
Lender without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to (a) renew, compromise, extend, increase,
accelerate or otherwise change the time for payment of, or otherwise change the
terms of the indebtedness or any part thereof in accordance with this Agreement,
including any increase or decrease of the rate of interest thereon, (b) take and
hold security from any guarantor or any other party for the payment of this
Guaranty or the indebtedness and exchange, enforce waive and release any such
security, (c) apply such security and direct the order or manner of sale thereof
as the Administrative Agent and the Lenders in their discretion may determine
and (d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors.
SECTION 10.6 RELIANCE.
It is not necessary for the Administrative Agent or the Lenders to
inquire into the capacity or powers of the Borrower or the officers, directors,
members, partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
SECTION 10.7 WAIVER.
(a) Each of the Guarantors waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent or any Lender to (i) proceed against the Borrower, any
other guarantor or any other party, (ii) proceed against or exhaust any security
held from the Borrower, any other guarantor or any other party, or (iii) pursue
any other remedy in the Administrative Agent's or any Lender's power whatsoever.
Each of the Guarantors waives any defense based on or arising out of any defense
of the Borrower, any other guarantor or any other party other than payment in
full of the indebtedness, including without limitation any defense based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the indebtedness or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the indebtedness. Without limiting the generality of the
provisions of this Article X, each of the Guarantors hereby specifically waives
the benefits of N.C. Gen. Stat. Section 26-7 through 26-9, inclusive. The
Administrative Agent or any of the Lenders may, at their election, foreclose on
any security held by the Administrative Agent or a Lender by one or more
judicial or nonjudicial sales, whether or not every aspect of any such sale is
commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy the Administrative Agent and any
Lender may have against the Borrower or any other party, or any security,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the indebtedness has been paid. Each of the
Guarantors waives any defense arising out of any such election by the
Administrative Agent and each of the Lenders, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or other right
or remedy of the Guarantors against the Borrower or any other party or any
security.
101
107
(b) Each of the Guarantors waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notice of protest, notices of dishonor, notices of acceptance of
this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the indebtedness
and the nature, scope and extent of the risks which such Guarantor assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any
Lender shall have any duty to advise such Guarantor of information known to it
regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise any
rights of subrogation which it may at any time otherwise have as a result of
this Guaranty (whether contractual, under Section 509 of the U.S. Bankruptcy
Code, or otherwise) to the claims of the Lenders against the Borrower or any
other guarantor of the indebtedness of the Borrower owing to the Lenders
(collectively, the "Other Parties") and all contractual, statutory or common law
rights of reimbursement, contribution or indemnity from any Other Party which it
may at any time otherwise have as a result of this Guaranty until such time as
the Loans hereunder shall have been paid and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to exercise any
right to enforce any other remedy which the Administrative Agent and the Lenders
now have or may hereafter have against any Other Party, any endorser or any
other guarantor of all or any part of the indebtedness of the Borrower and any
benefit of, and any right to participate in, any security or collateral given to
or for the benefit of the Lenders to secure payment of the indebtedness of the
Borrower until such time as the Loans hereunder shall have been paid and the
Commitments have been terminated.
SECTION 10.8 LIMITATION ON ENFORCEMENT.
The Lenders agree that this Guaranty may be enforced only by the action
of the Administrative Agent acting upon the instructions of the Required Lenders
and that no Lender shall have any right individually to seek to enforce or to
enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent for the benefit of the
Lenders under the terms of this Agreement. The Lenders further agree that this
Guaranty may not be enforced against any director, officer, employee or
stockholder of the Guarantors.
SECTION 10.9 CONFIRMATION OF PAYMENT.
The Administrative Agent and the Lenders will, upon request after
payment of the indebtedness and obligations which are the subject of this
Guaranty and termination of the Commitments relating thereto, confirm to the
Borrower, the Guarantors or any other Person that the such indebtedness and
obligations have been paid and the Commitments relating thereto terminated,
subject to the provisions of Section 10.2.
SECTION 10.10 NET WORTH.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any
102
108
Guarantor (a "Funding Guarantor") under this Guaranty, such Funding Guarantor
shall be entitled to a contribution from all other Guarantors in a pro rata
amount based on the Adjusted Net Assets (as defined below) of each Guarantor
(including the Funding Guarantor) for all payments, damages and expenses
incurred by that Funding Guarantor in discharging any Borrower's Obligations
with respect to the Guaranty Obligations or any other Guarantor's obligations
with respect to this Guaranty. The term "Adjusted Net Assets" of each Guarantor
at any date shall mean the lesser of the amount of which (x) the fair value of
the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities, but excluding liabilities
under this Guaranty, of such Guarantor at such date and (y) the present fair
salable value of the assets of such Guarantor at such date exceeds the amount
that will be required to pay the probable liability of such Guarantor on its
debt (after giving effect to all other fixed and contingent liabilities),
excluding debt in respect of this Guaranty, as they become absolute and matured.
All rights for contribution of any Guarantor shall be subordinated to the prior
payment in full of the Guaranty Obligations under this Guaranty.
103
109
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by its proper and duly authorized officers as of the
day and year first above written.
BORROWER: SLEEPMASTER L.L.C.,
a New Jersey limited liability company
By: /s/ XXXXX X. XXXXXXX
-----------------------------------
Name:
Title:
GUARANTORS: SLEEPMASTER HOLDINGS L.L.C.,
a New Jersey limited liability company
LOWER ROAD ASSOCIATES, LLC,
a New Jersey limited liability company
PALM BEACH BEDDING COMPANY,
a Florida corporation
XXXX MANUFACTURING COMPANY,
a Pennsylvania corporation
SLEEPMASTER FINANCE CORPORATION,
a Delaware corporation
XXXX XXXXX CORPORATION,
a Delaware corporation
SIMON MATTRESS MANUFACTURING CO.,
a California corporation
CRESCENT SLEEP PRODUCTS COMPANY,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXX
----------------------------------
Name:
Title:
[signature pages continue]
110
AGENT AND LENDERS: FIRST UNION NATIONAL BANK,
as Administrative Agent and as a Lender
By: /s/ XXXXX XxXXXXXX
--------------------------------------
Name:
Title:
XXXXXX FINANCIAL, INC.
By: /s/ XXXXXXXX XXXXX
--------------------------------------
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ XXXXXXX XXXXXX
--------------------------------------
Name:
Title:
FIFTH THIRD BANK
By: /s/ XXXX X. XXXX, XX.
--------------------------------------
Name:
Title:
FIRSTAR BANK, N.A.
By: /s/ XXXX X. XXXXXXXX
--------------------------------------
Name:
Title:
FIRSTRUST BANK
By: /s/ XXXX XXXXXX
--------------------------------------
Name:
Title:
111
GMAC BUSINESS CREDIT, LLC
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX PRIME
INCOME TRUST
By: /s/ XXXXX XXXXXXX
--------------------------------------
Name:
Title:
SUNTRUST BANK
By: /s/ XXXXXX X. XXXXXXXX
--------------------------------------
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as trustee of the Antares
Funding Trust created under the Trust
Agreement dated as of November 30, 1999
By: /s/ XXXXXX XXXX
--------------------------------------
Name:
Title:
ANTARES FUNDING, L.P.
By: /s/ XXXXX XXXXX
--------------------------------------
Name:
Title:
XXX XXXXXX SENIOR FLOATING RATE FUND
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name:
Title:
112
XXX XXXXXX SENIOR INCOME TRUST
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ XXXXX X. XXXXXX
--------------------------------------
Name:
Title:
KZH SHOSHONE LLC
By: /s/ XXXXX XXX
--------------------------------------
Name:
Title:
XXXXXXXXXXX SENIOR FLOATING RATE FUND
By: /s/ XXXXX FOXHOVER
--------------------------------------
Name:
Title:
